The Strategy of Whichever Business - Assignment Example

Name: Tutor: Course: Date: Table of Contents SDM Case 3 Introduction 3 Overview of the case 3 Symptoms of strategic wellness and the companies’ goals 4 Analysis of the strategies used by the alternative beverage producers in the industry 5 Models, theories, and conceptual tools 8 Conclusion 9 Works Cited 10 SDM Case Introduction A strategy helps an organization improve its economic performance, strengthen its position in competition, and achieve a sustainable advantage over its rivals in the market. The strategy of whichever business ought to include a well-established approach for locating the business, the business’s competitiveness, satisfaction of the customer and the process of obtaining great business. This is why a strategy remains an essential factor since it entails choices and alternatives of management, approaches of competition, and routine operational practices. One basic importance of an excellent strategy is that it facilitates a business to perform productively and efficiently find the way through unforeseeable occurrences, competition, or obstacles as well (Grant, 2008). Since strategy concerns competing in a different way from rivals, this paper will therefore analysis how various companies in the beverages and drinks industry used various strategies to be successful in the industry, with regards to the case study. Overview of the case Alternative beverages like sports drinks, energy drinks, and vitamin-enhanced drinks were the beverage industry’s stars in the mid-2000s. Speedy growth within the group, together with best prices and margins of high profit made alternative drinks a significant element of beverage companies’ listings of brands. International beverage companies like PepsiCo and Coca-Cola had depended on such drinks to sustain capacity growth in established markets where users were decreasing their consumption of soft drinks that were carbonated. Additionally, PepsiCo, Coca-Cola, and other companies that produced beverages were targeting to expand the alternative beverages’ market through introduction of sports drinks, energy drinks, as well as vitamin drinks in the upcoming global markets. It was not just the international beverage manufacturers to gain from growing customer demand for choices of alternative beverages. Entrepreneurs like originators of Red Bull GmbH, Rockstar, Inc., Living Essentials (founder of 5-Hour Energy), Energy Brands (maker of glaceau vitaminwater), and Hansen Natural Corporation (originator of Monster Energy) had turned out to be multimillionaires via their initiative and business of alternative beverages. On the other hand, the best-priced market of alternative beverage had been hit particularly hard by the economic downtown within the United States (US). Sports drinks sales decreased by around 12.3% within 2008-2009, and vitamin-enhanced as well as flavored waters sales reduced by 12.5% within the same duration. The energy drinks’ sale fared better, although 2009 sales segment surpassed sales in 2008 by approximately 0.2%. This made it hard for industry analysts to decide on what fraction of the 2009 poor performance for alternative drinks was linked with the general economy and how much may perhaps attributed to market establishment. Symptoms of strategic wellness and the companies’ goals Alternative beverage companies, Pepsi-Co in particular illustrated strategic success as marked by growth in the company’s sales and shares in the market. Another indication of competitive advantage is a result of attaining a high position on key success factor. The company had rising margins of profit. Both Coca-Cola and Pepsi-Co managed to acquire and retain their customers through their attractive assortment of their products. Indicators of strategic wellness are characterized by the fact that the firm is accomplishing its stated strategic and financial objectives. Furthermore, the firm is an industry performer that is above-average. Other symptoms of strategic success include growth in the company’s market share and sales, increasing margins in profits, customers’ acquisition and retention, and growing financial potency and credit ranking (Cavusgil, et al, 2008). All these are factors that Coca-Cola and PepsiCo displayed as their strategic success indicators. The goal of the alternative beverage companies was to expand the alternative beverage’s market and enhance sales as well as market share. Goals are accomplished through the firm’s vision, mission and objectives. Instituting a strategic vision provides direction for the company. Coca-Cola’s vision for that matter serves as the outline for the roadmap and governs each aspect of the business by defining what the company need to achieve so as to continue accomplishing sustainable, quality development. One fundamental importance of conveying the strategic vision is that it promotes employee dedication to the company’s desired strategic direction (Cavusgil, et al, 2008). Core values are the traits, behavioural norms, and beliefs that employees are required to present in conducting the company’s business and in accomplishing its strategic mission and vision. The purpose of objectives setting is to convert the mission and vision into specific, assessable, sensible performance targets. Analysis of the strategies used by the alternative beverage producers in the industry Analysis will be done with respect to SWOT analysis which denotes the company’s Strength, Weakness, Opportunities, and Threats (Grant, 2008). The major strength that the companies had was innovation in flavors, brands, and formulations as it was essential for encouraging best pricing and capacity increases. Analysts in the industry were optimistic that such interesting flavors as hibiscus, cupuacu, and cardamom may prove to be upbeat in 2011 and 2012 (Gamble). Innovation of products had been amongst the most significant competitive elements of the industry of alternative beverage following Gatorade introduction in 1967. Alternative drinks competed on the ground of differentiation from conventional drinks like fruit juices or carbonated soft beverages and were further placed in their respective parts on the differentiation basis (Gamble). For instance, every brand of energy drink tried to develop loyalty of the brand with respect to taste, the ingredients properties in energy-boosters, and image. Since one of the signs of a company’s competitive strength is that its bundled capacities are producing a sustainable competitive benefit (Cavusgil, et al, 2008), Pepsi-Cola and Coca-Cola’s enormous distribution system of the beverages facilitated the two companies to produce SoBe, Powerade, glaceau vitamin water, and Gatorade available anyplace Pepsi or Coke may possibly be purchased. Coca-Cola and PepsiCo were amongst the better-fitting alternative drinks manufacturers to cost-effectively distribute vitamin-enhanced and sports beverages to restaurants because they likely offered fountain beverages to such companies (Gamble). Maintaining the competitive advantage of a firm relies on its capabilities, competences, and resources that are not easy for rivals to copy and lack good replacements (Harvard Business School, 2006). Grant (2008), argues that the benefits of differentiation include premium costs for products, brand loyalty, and increased sales of unit. The companies did not escape critics loop. This was posed as a weakness since a weakness is a condition that places a company at a competitive disadvantage within the marketplace (Cadle, et al, 2010). Some health experts were concerned about the high content of caffeine in energy drinks and the impacts of caffeine in large doses on people, particularly children. The major health problems linked with consumption of caffeine in high doses were insomnia and arrhythmia. Medical professionals also warned that combining energy drinks with drugs bought over the counter like NoDoz may possibly bring about seizures (Gamble). On the other hand, clinical research had indicated that, in sensible doses, caffeine contributed to weight loss in a healthy way. According to Gamble, one of the opportunities that the companies had was that Coca-Cola and Pepsi-Cola’s business of soft drink facilitated the two organizations in establishing alternative drinks available in supercentres, supermarkets, wholesale clubs, and convenience stores. Pepsi-Cola and Coca-Cola managed to encourage their clients to buy items across its line of product to guarantee prompt and absolute shipment of major products of soft drink (Gamble). Another opportunity the companies had is that due to the difficulty for distributors of food service to refill vending devices and provide alternative drinks to special occasions, Pepsi-Cola and Coca-Cola managed to lead such channels because they could deliver vitamin-enhanced beverages and sports drinks together with their carbonated soft beverages deliveries (Gamble). Expansion in the global market is a great opportunity to the industry as it facilitates market competitiveness (Alkhafaji, 2003). For instance, with regards to the market shares established both worlds widely and regionally for the leading alternative beverages producers in 2009, PepsiCo appeared to be on the lead in market shares, followed by its close competitor Coca-Cola. In terms of threats, the general conditions of the economy is considered the macro-environment since it encompasses strategically significant components through which the company does not have direct control (Reading, 2002); therefore the major threat that the alternative beverages industry faced was the poor economic state caused by the recession. This affected all the companies. It is important to recognize the threats to the firm’s future vision in order to assess the necessary strategic actions to be taken so as to lessen or neutralize their impact (Coulter, 2002). Models, theories, and conceptual tools Strategic thinking about a company’s internal and external environment helps a company form a strategic image of where the company ought to head, form potential strategic options for the company, and choose the suitable strategy and business model for the company (Cadle, et al, 2010). With regards to the case study, this is illustrated when international firms like PepsiCo and Coca-Cola had depended on alternative drinks to maintain capacity growth in established markets where customers were decreasing their carbonated soft beverages consumption. On the competitive strategy basis, the alternative beverage companies were able to offer consumers something attractively dissimilar from what their rivals offered through broad differentiation. Ability to provide better commodities at premium prices was another competitive strategy used by the alternative beverage companies. With regards to product line, through focused differentiation, the companies had attributes and features customized to the requirements and tastes of role members. This is illustrated through various flavours like cupuacu, hibiscus, and cardamom that the companies offered in their drinks. The importance of making a strategy is that it fosters actions to carry out things in a different manner from rivals instead of moving with the crowd. In accordance with the hierarchy of strategy making, corporate strategy is about gaining synergies from controlling a business’s portfolio together instead of divided business. Business strategy is about strengthening market place and obtaining competitive advantage (Cavusgil, et al, 2008), as illustrated by Coca-Cola and Pepsi-Co. According to the concept of value chain, a company is able to identify the fundamental internal activities that make consumer value and the correlated support activities. Value chain displays the highlight that a company puts on activities that promote differentiation and foster premium prices. One method through which Coca-cola and PepsiCo to improve the effectiveness and efficiency of value chain practices that are supplier related is that they collaborated directly with suppliers to distinguish opportunities that are cost-saving. The companies used marketing strategy by offering product assortments to attract their clientele. Quality and price are competing drivers (Cavusgil, et al, 2008). Hence, the alternative beverages companies chose to concentrate on quality, thus prices were premium compared to their competitors. In terms of growth strategy, the companies worked closely with suppliers in attractive markets to expand its capacity. Global expansion in other countries was also positive. Satisfying customer needs and wants at a price consumer with regards to good value is a major element of business model (Cadle, et al, 2010). The higher the provided value and the lower the cost, the more appealing the proposition of value is to consumers. Business model is about whether costs and revenues from the strategy illustrate a business is able to be viable and profitable. Conclusion In conclusion, effective strategic approaches help companies to compete well in the marketplace. Globally, Coca-Cola Company was ranked the leading producer, marketer, and supplier of nonalcoholic drinks concentrates, with about $31 billion in 2009 revenues and sales in not less than 200 nations. Although Coca-Cola was the global leader in sales of carbonated soft beverages, it had fought to build shares in the market in alternative drinks and followed PepsiCo by a substantial margin globally in sports drinks, energy drinks, and beverages that were vitamin-enhanced. Works Cited Gamble, John. Competition in Energy Drinks, Sports Drinks, and Vitamin-Enhanced Beverages. Grant, Robert M. Contemporary Strategy Analysis. Malden, MA: Blackwell Pub, 2008. Print. Cavusgil, S T, Gary A. Knight, and John R. Riesenberger. International Business: Strategy, Management, and the New Realities. Upper saddle River, N.J: Pearson Prentice Hall, 2008. Print. Reading, Clive. Strategic Business Planning: A Dynamic System for Improving Performance & Competitive Advantage. London: Kogan Page, 2002. Print. Harvard Business School. Press . What Is Marketing?Boston, Mass: Harvard Business School Press, 2006. Print. Alkhafaji, Abbass F. Strategic Management: Formulation, Implementation, and Control in a Dynamic Environment. New York: Haworth Press, 2003. Print. Coulter, Mary K. Strategic Management in Action. Upper Saddle River, N.J: Prentice Hall, 2002. Print. Cadle, James, Debra Paul, and Paul Turner. Business Analysis Techniques: 72 Essential Tools for Success. Swindon: British Computer Society, 2010. Print. Read More