Sustainable Competitive Advantage - Australian Car Industry - Case Study Example

Sustainable Competitive Advantage Table of Contents Introduction 3 Analysis 3 Car and Banking Industry Analysis 3 Porter’s Generic Strategy 5 AAA Framework 6 Conclusion 8 References 9 Introduction Australian car and banking industry has become highly competitive as several leading organisations are adopting and implementing unique strategies in business operation process. These unique strategies have helped the organisations to gain potential competitive advantages over their competitors. On the other hand, some organisations have failed to maintain this competitive edge in the competitive business environment. This assignment will analyse the competitive strategies and flexible approaches that are developed by the organisations within Australian banking and car industry. Analysis This part of the assignment will address competitive strategies and flexible approaches that are developed by three car manufacturing organisations and three banks. Moreover, the study will analyse whether the organisations have succeeded to maintain their competitive edge or not. Porter’s generic strategy and AAA framework has been considered to analyse the situations of these organisations. Car and Banking Industry Analysis Australian car industry is highly competitive due to presence of several leading organisations, such as Toyota, Honda, Hyundai, Holden, Mitsubishi and Nissan. Toyota, Honda and Holden motors have developed and implemented several competitive strategies in business operation process in order to gain potential competitive advantages over their competitors. Toyota is one of the leading car manufacturing and distributing organisations within Australian car industry (Sema, 2000, p.1). It is the first car maker in Australia that has manufactured and distributed both petrol and diesel vehicle. Apart from this, the organisation has developed several innovative strategies to maintain its competitive edge in Australian market. Cost effective distribution network and installation of high performance advanced technological broadband network services enhanced the communication process between headquarter, dealers and customers (Koppel and Reynolds, 2001, p.11). But, recently the organisation is facing huge challenges in Australia as other competitors are also implementing competitive strategies. Hike in fuel price and global economic crunch affected the buying power of customers. Therefore, Honda Motors has introduced Honda Hybrid electronic cars to support the reduced purchasing power of the customers (Perdiguero and Jimenez, 2012, p.19). Moreover, strict government regulations and price war between the organisations affected the business output of Toyota in recent years. Honda is one of the leading organisations comparing to Toyota and Holden that has developed flexible and competitive business strategy. Holden is the subsidiary of General Motors. It is one of the leading car manufacturers in Australia. In 1990s the organisation had huge market share in Australia as the organisation merged with several brands (Princeton, 2013, p.1). But, inadequate adoption and implementation of cost leadership strategy caused huge loss for organisation in 2000s. Australian banking industry has also become highly competitive as several leading banks provide differentiated and high quality service for the users. Commonwealth bank is one of the leading banks in Australia. Effective customer service, business expansion and online core banking are the major competitive strategies and flexible approaches that have been implemented by Commonwealth Bank (Heraldsun, 2013, p.1). Westpac is another one of the leading and popular banks among the Australians. Increase in funds and trustees in SMSF sector has influenced the management of Banks to develop unique strategies according to the future market trend and current needs of common people (Packham and Li, 2010, p.4). Effective financial planning for clients according to the recent economic position and income level of country increased its competitive position amo0ng target clients and customers. ANZ is another prestigious bank within Australian banking sector. However, the organisation has provided effective facilities for the foreigners. Significant facilities and effective service schemes for all the foreigners have increased its flexibility and competitiveness in the banking sector. Porter’s Generic Strategy It is an important business management framework that helps an organisation to develop and implement appropriate business level strategy according to the nature of current market demand and needs of target customer. Porter’s generic strategy consists of three business level strategies, such as cost-leadership strategy, differentiation strategy and focus strategy. Each of these strategies will be discussed considering above organisations. Cost-Leadership Strategy Toyota and Commonwealth Bank has adopted and implemented cost leadership strategy. These organisations always try to provide products and services at economic price. It is true that the management of Toyota has installed cost-effective distribution network to reduce business operation cost. It helps the management to offer cars at reasonable economic price. On the other hand, Commonwealth Bank has sourced and adopted advanced technological resources in order to gain potential competitive advantages over its competitors. Differentiation Strategy Honda Motors and ANZ bank has adopted and implemented differentiation business level strategy in business operation processes in order to maintain their competitive edge in marketplace. It is true that recent financial crisis and economic recession affected the purchasing power of people. In addition to this, constant hike in fuel price forced people to reduce the level of consumption of private vehicles. Looking into this matter, Honda Motors has launched newly developed electronic cars in order to support the purchasing power of common people. This differentiation strategy will help the customers to avoid the option of consumption of fuel consuming cars. In terms of ANZ bank, the management of this bank has introduced low tax schemes and facilities for the foreigners have helped the bank to differentiate its services from other competitors (MIIS, 2004, p.8). Focus Strategy It is true that focus strategy is the combination of both cost-leadership and differentiation strategy. Holden Motors and Westpac Bank has significantly adopted and implemented focus business level strategy in order to gain potential competitive advantages over the competitors. Holden is quite successful in Australia due to its effective implementation of focus business level strategy. Merging with global top brands has helped the organisation to offer differentiated cars at economic price level. On the other hand, Westpac bank has provided several services for commercial houses as well as common people. These are differentiated customer services. On the other hand, the bank has maintained lower pricing strategy for each of its schemes and low interest rate of each service has the example of effective implementation of focus business level strategy of a bank (Allen, 2010, p.26). AAA Framework This AAA framework consists of three strategies, such as adoption, aggregation and arbitrage. Adoption Commonwealth Bank and Holden Motor’s business operation strategy can be considered as adoption business strategy under AAA framework. It is true that demand for high quality services and products at economic price are significantly increasing among the Australians. Demand for trendy and high quality cars has significantly increased among the Australians. Therefore, Holden Motors has made partnership with several international brands and provided differentiated cars to the customers at economic price level (Richmond, 2012, p.2). On the other hand, Commonwealth bank has adopted advanced technological models ion business process to gain potential competitive advantages over the competitors (Depaul, 2006, p.1). Aggregation Toyota and ANZ bank has significantly adopted and implemented aggregation strategy in business operation process to gain potential competitive advantages over other competitors. Toyota is one of the leading car manufacturers and distributors in Australian market. The organisation has effectively adopted and implemented regional approaches in business process to bring globalisation in regional areas in Australia. Introduction of both diesel and petrol cars can be considered as the example of adoption of regional approaches. On the other hand, ANZ bank has also adopted regional approaches in its business operation process (Roberts and Amit, 2003, p.112). The organisation used to provide facilities and several customer friendly schemes to foreigners who used to come and stay in Australia for a longer period of time. Limited or low tax rate can be considered as its aggregation approach in business operation process. Arbitrage Development of third generic strategy for global advantage can be known as arbitrage. Honda Motors and Westpac bank can be considered as effective examples of implementation of arbitrage approaches in its business operation process. Global business environment is highly competitive. In addition to this, several organisations are trying to implement unique strategies in business operation process in order to maintain their competitive edge in market place. However, Honda motor has introduced hybrid electric cars for the Australians in order to create benchmark within the industry (Cob, 2012, p.1). Moreover, this strategy has increased its brand name in global market place quite effectively. On the other hand, Westpac Bank also has introduces focus generic strategy by implementing cost-effective and differentiated customer service for its commercial and private clients. These strategies have helped the organisations to maintain the competitive position in Australian market place. In addition to these, arbitrage strategic approach has helped these organisations to bring flexibility in overall business operation process. Conclusion It is clear from above analysis that leading organisations within Australian banking and car industry has developed and implemented several unique strategies in business operation process in order to gain potential competitive advantages over their competitors. Effective adaption and implementation of competitive business level strategy and flexible approaches in business operation process has helped the organisations to enhance positive business growth rate. It is true that, these adopted and implemented strategies has helped the organisations to avoid the decline stage of product life cycle as the newly developed cost-leadership or differentiation strategy reduced the threat of intense market competition. References Allenj, F., 2010. Transmission of bank liquidity shyocks in loan and deposit markets. [PDF]. Available at: http://finance.wharton.upenn.edu/~allenf/download/Vita/10-28.pdf. [Accessed on August 25, 2014]. Cob., 2012. Honda Motor Co., Ltd: Annual report 2012. [PDF]. Available at: https://aspnet.cob.ohio.edu/isms/upload/documents/2866_634947243127737028_Honda_Annual_Report.pdf. [Accessed on August 25, 2014]. Depaul., 2006. Project Australia. [Online]. Available at: http://facweb.cs.depaul.edu/yele/Course/IS540/Global-Project/20045/Australia/website/networkeconomy.html. [Accessed on August 25, 2014]. Heraldsun., 2013. Commonwealth Bank chief Ian Narev aims for the common good. [Online]. Available at: http://www.heraldsun.com.au/business/commonwealth-bank-chief-ian-narev-aims-for-the-common-good/story-fni0dcne-1226707863664?nk=e592b41af079f1fdce3bc987fa3b9091. [Accessed on August 25, 2014]. Koppel, T., and Reynolds, J., 2001. A fuel-cell primer: The promise and the pitfalls. [PDF]. Available at: http://www.engr.uconn.edu/~jmfent/FuelCell%20Primer.pdf. [Accessed on August 25, 2014]. MIIS., 2004. United Nations Security Council. [PDF]. Available at: http://cns.miis.edu/inventory/pdfs/AQT_fiji09092004.pdf. [Accessed on August 25, 2014]. Packham, N., and Li, H., 2010. International banking regulation and supervision after the crisis. [PDF]. Available at: http://www.ceibs.edu/bmt/images/20101207/29144.pdf. [Accessed on August 25, 2014]. Perdiguero, J., and Jimenez, l. J., 2012. Policy options for the promotion of electric vehicles: a review. [PDF]. Available at: http://www.ub.edu/irea/working_papers/2012/201208.pdf. [Accessed on August 25, 2014]. Pinceton., 2013. Holden. [Online]. Available at: https://www.princeton.edu/~achaney/tmve/wiki100k/docs/Holden.html. [Accessed on August 25, 2014]. Richmond., 2012. General Motors Company: Restructured to rediscover American innovation. [PDF]. Available at: http://robins.richmond.edu/documents/cases/GeneralMotors.pdf. [Accessed on August 25, 2014]. Roberts, P., and Amit, R., 2012. The dynamics of innovative activity and competitive advantage. [PDF]. Available at: < http://goizueta.emory.edu/upload/155/rad0A4FA.pdf>. [Accessed on August 25, 2014]. Sema., 2000. Australia- Automotive industry sector analysis. [Online]. Available at: < http://www2.sema.org/Main/SemaOrgHome.aspx?ID=50739>. [Accessed on August 25, 2014]. Read More