What is Strategy - Essay Example

The profitability of a company is heavily influenced by both the internal and the external drivers of a company which is comprised of different business factors. These factors play an important role in determining the business and the success of a company. These drivers improve the overall efficiency of an organization. It is highly important for a business to understand and analyze the role of these internal and external drivers, how these factors affect the overall strategy of the business, and how these drivers can help the customer to maintain their trust in the organization, increase the performance efficiency, grab the maximum market share and what strategies a company would implement to approach the customers.

Internal Drivers of profitability in a company:

Internal drivers comprise situations where the company is influenced to manage its profitability and retain its customers by applying various internal strategies. The internal drivers within an organization are centered to deliver:

• Customer satisfaction
• To maintain high service and product quality
• Increased competitive advantage
• Targeting the customers

According to Michael Porter’s book, ‘Competitive Advantage: Creating and Sustaining Superior Performance” published in 1985, the concept of Value Chain was first coined (Michael Porter). According to this concept, the value chain comprises the entire primary and secondary activities within an organization that would help the firm to strengthen its position in the market as well as to improve its product or service efficiency within the market.

Primary Activities:

These include:

• Inbound Logistics:

At this stage, it is important for MMM & Co. to focus on all the activities of the organization that are related to the receiving and storing of the raw materials especially those products which are used by the company to produce the end products. The better the inbound logistic system of the company would be, the better would be quality of the products and the raw materials.

• Operations:

MMM & Co. needs to focus its attention on the operations within the company that initiates from the manufacturing of the products which involves the receiving of the raw materials and end on the final production. Throughout the operations, the company is in dire need to maintain the flow of the operations smooth as well as, to maintain control on all the steps.

• Outbound Logistics:

Outbound logistics play a key role in getting the finished products to the customers. It revolves around the handling and shipping of the products from one place to another. The smooth flow of outbound logistics plays a crucial role in determining the profitability of the company.

• Marketing and Sales:

MMM & co. needs to focus its attention on this activity. Marketing and sales stand as the cornerstone to establishing the consumer division in any company. This activity revolves around creating awareness among the masses, giving information to customers on products, their usage, price details, benefits, and offering discounts, sales, and other sales promotions to make them loyal customers.