Firms Performance - Source of Competitive Advantage, Performance Objective, Key Success Factors - Case Study Example

Table of Contents Introduction 2 Part A: Developing a Strategy 2 Business Definition 2 Source of Competitive Advantage 3 Performance Objective 5 Key Success Factors 6 Strategic Assumptions 7 Part B: Competitor Analysis 7 Chosen Firm 8 Business Definition 8 Source of Competitive Advantage 9 Strengths & Weakness 10 Self Analysis 11 Strategic Assumptions 11 Conclusion 12 Introduction This report looks to analyze the performance of Firm A based on different factors and simulations. The paper will look to compare the performance between 5 different firms and will help to identify the future strategy which firm A is looking to adopt. The report is mainly divided into 2 parts where the first part focuses on firm A and analyzes its performance based on different dimensions. This will help to identify the manner in which business performance will be shaped and improved in the future. This will be followed by the second part which will look to present the strategy of competitor and the manner in which they have performed against firm A. In this part special emphasis will be given to the strategy adopted by competitors and their strengths and weakness by looking at different simulations and identifying the manner in which performance is being shaped up. Part A: Developing a Strategy This section looks to develop the strategy for firm A and concentrates towards presenting the manner in which different dimensions have been ingrained in strategy formulation. This will help to work on aspect through which performance will improve and will help to chalk out the path which the business looks to follow in the future. Business Definition Firm A looks to function in the economy segment where they look to provide customers with utility vehicle. This is on the background that in period 1 firm A has 63.5% market share in the economy segment and 21.9% in the utility segment. The prime reason for serving the value seekers and utility customers is that their base is continuously increasing and is the highest purchaser. It is clearly seen that 792,000 vehicles were purchased by value seekers, 1663,000 vehicles by families and 851,000 vehicles by singles. This is the maximum base of customer who are seeking to purchase vehicles and firm A has looked towards attracting those segment of the consumers. In addition to it the vehicles sold in different regions includes 914,000 in economy segment and 1439,000 in family segment. This segment is growing at a rapid pace which has thereby provided firm A with an opportunity to tap a large market. Since, their product is being tailor made to fit the market it has been able to capture a larger market share and occupies around 28.2% market share. The business as a result has been developed on strong grounds and has used the different synergy and resources to work at a utility capitalization of 95%. This is very sound and signifies that the different resources are used in the best possible manner. The market segment has been thereby able to meet the different needs in a specific manner as the resources are used effectively. Thereby firm A has been able to look towards targeting the price conscious customers who look for value and utility and has been able to identify the mechanism through which they will be able to grow in the same segment. This will thereby help firm A to formulate strategy which will meet the different needs and chalk out the road map through which different business needs will be better met. Source of Competitive Advantage The major hurdle while competing with other firms comes from firm E and firm D. Firm A faces competition from other players as well but the degree of competition is very high when we consider firm E and D. This is primarily due to the fact that both the firm looks towards the same customer segment. With regard to firm D it is seen that they look to work in the economy and family segment thereby resulting in direct competition from the players. Firm D has 36.5% market share in case of economy segment and 29% in case of family segment whereas firm A has 63.5% market share in the economy segment and 21.9% in the utility segment which has resulted in direct competition from firm D. With regard to firm E it is seen that they look to work in the utility and family segment thereby resulting in direct competition from the players. Firm E has 29.1% market share in case of economy segment and 51.5% in case of family segment whereas firm A has 63.5% market share in the economy segment and 21.9% in the utility segment which has resulted in direct competition from firm E. Thus, the degree of competition is very high as two players are directly confronting firm A and they need to look at identifying synergies which will help them to be ahead of other players. Firm A despite facing competition from other players have been able to ensure a competitive advantage due to the following reasons Firstly, the dealer coverage for firm A is high compared to other competitors in the market. The data clearly denotes that dealer coverage for firm A is 0.6 whereas for firm D and firm E it is 0.5 and 0.47 respectively. This denotes better market penetration and availability of products which will thereby help to improve their reach and ensure that they are able to attract all customers looking for those products. Secondly, strong distribution network as firm A has 480 dealers where as firm D and E has 400 and 380 dealers respectively. This has thereby helped firm A to gain an advantage as their product are better visible in the market which has been witnessed through the marketing communication table. It clearly highlights that all the 3 firms nearly look to spend similarly on marketing communication but due to strong network and presence of dealers firm A has a better market presence which has enabled them to meet the expectations of a larger chunk of customers Thirdly, Firm A has a higher technology capability in comparison to firm D and E as greater emphasis has been given on interiors, styling and quality. This has thereby enabled better use of resources and has ensured that the firm is working at 95% capacity utilization is comparison to others which is low. This signifies that the different resources are used in a better way and has enabled the business to gain competitive advantage. Performance Objective The manner in which firm A has performed in period 1 clearly quantifies the fact that the company main focus is towards improving its market share. This can be seen from the fact that it has over 23.7% of the market share by value in consideration to the other players. This is nearly 1/4th of the market share signifying that the business focuses heavily on market share. The same can be justified from their positioning statement where they look to target the value seekers and utility customers. This is substantiated by the fact that firm A has 63.5% market share in the economy segment and 21.9% in the utility segment. In addition to it firm A also focuses towards having maximum sales which has been justified in period 1 as the business has the highest sale which is 20516. Higher sales doesn’t signifies higher profits but it signifies the fact that the business looks to concentrates towards having more and more units being sold at a lower price. The focus is thereby towards having more units being sold in the market at competitive pricing so that market share improves. All the factors which firm A has undertaken are interlinked to one another and look towards focusing on the lower and economic segment of the society who look for value for the money spend. This has thereby been a strategy which has helped firm A in period 1 and has been able to work all around based on the same. The impetus has thereby improved and the overall dimension through which business performance can be shaped has been looked at. Key Success Factors The success of firm A bas been based on different dimensions which has been used together and has helped them to devise a strategy which has kept them ahead of competition. The key factors which have contributed towards the success of firm A are as Firstly, targeting the correct customer base of value seekers and family has helped firm A. Since, they are the largest when it comes to buying vehicles which has helped them to ensure that they have a huge base of customers. It is clearly seen that 792,000 vehicles were purchased by value seekers, 1663,000 vehicles by families and 851,000 vehicles by singles which thereby provides a ready market to capture. Having appropriate strategies which were meant for that section of the society ensured that firm A had an advantage which contributed towards their success. Secondly, strong distribution network as firm A has 480 dealers. This has thereby helped firm A to gain an advantage as their product are better visible in the market which has been witnessed through the marketing communication table. It clearly highlights that firm A spends very high on marketing communication which has helped them to attract a large section of the society. This in addition to a strong dealer has ensured better market presence and has provided an opportunity through which market share has increased. This has acted as a key success factor and has contributed towards their success. Thirdly, the use of technology capability is the best for firm A. This has ensured that the plant works at maximum capacity utilization. The use of proper technology and high capacity utilization has ensured that resources are used in the optimum way. This is in addition to the fact that firm A relies on producing 2 to 3 model of vehicles which has helped to reduce the amount of inventory and has designed a process where the focus is primarily towards building better products. Fourthly, the spending on marketing activities is high considering the fact that they focus towards utility and families. Firm A spends $387 million on marketing activities which is very high considering the fact that despite having the highest sales the profits are similar to other players in the market. The use of marketing activities has thereby contributed towards the success of firm A and has helped them to come up with different mechanism which has contributed towards improving their presence and ensured success in the market. Strategic Assumptions The different assumptions which have been undertaken are as Firstly, there is no competition from other international players apart from the 5 players and all the products which are produced are sold in the local markets. There is no presence of global players and the entire business is carried out on similar grounds Secondly, the policies of the government is similar for all type of vehicles irrespective of the fact whether they are aimed at higher or lower income group Thirdly, during a particular period the technology remains the same and each competitor knows the strategy of other competitor and based on it develops their strategies so that they are able to ensure better productivity and growth in the target segment which they are looking to position their product. Part B: Competitor Analysis This section will look to present an analysis of the competitor of firm A and concentrates towards presenting the manner in which different dimensions have been ingrained in strategy formulation. This will help to understand the manner in which different players looks to formulate strategies for the future and will direct the manner in which different decisions will be taken in the future. Chosen Firm The firm which has been chosen for analysis is firm D. The prime reason for choosing firm D is that it has the second highest percentage share market value wise and also looks to work in the same market segment where firm A is working. Firm D has a market share of 26.3% and looks to attract similar segment of the society. Further, it also seen that the strategy adopted by Firm D is very similar to those of firm A and is looking towards maximizing their market share so the focus will be to identify the manner in which they compete against firm A. Business Definition Firm D looks to function in the economy segment where they look to provide customers with vehicles at a lower cost. This is on the background that in period 1 firm D has 36.5% market share in the economy segment and 29% in the family segment. Firm D looks at serving the value seekers at they have the highest population and provides an opportunity to cater to a large section of the society. It is clearly seen that 792,000 vehicles were purchased by value seekers, 1663,000 vehicles by families and 851,000 vehicles by singles. This is the maximum base of customer who are seeking to purchase vehicles and firm D has looked towards attracting those segments of the consumers. In addition to it the vehicles sold in different regions includes 914,000 in economy segment and 1439,000 in family segment. This segment is growing at a rapid pace which has thereby provided firm D with an opportunity to tap a large market. Since, their product is being tailor made to fit the market it has been able to capture a larger market share and occupies around 26.3% market share. The business has been determined towards value seekers and strategies are being formulated towards meeting their needs. This has helped firm D to identify the correct markets and has helped them to develop strategies which will meet their different needs and provide a ready market through which different needs can be easily met. Source of Competitive Advantage Firm D faces competition from other players as well but the degree of competition is very high when we consider firm A. This is primarily due to the fact that both the firm looks towards the same customer segment. With regard to firm D it is seen that they look to work in the economy and family segment thereby resulting in direct competition from the players. Firm D has 36.5% market share in case of economy segment and 29% in case of family segment whereas firm A has 63.5% market share in the economy segment and 21.9% in the utility segment which has resulted in direct competition from firm D. Firm D despite facing competition from other players have been able to ensure a competitive advantage due to the following reasons Firstly, the dealer coverage for firm D is the second highest in the market after firm A which has helped to ensure better market coverage. The data clearly denotes that dealer coverage for firm D is 0.5 whereas for firm A it is 0.6. This denotes better market penetration and availability of products which will thereby help to improve their reach and ensure that they are able to attract all customers looking for those products. Secondly, strong distribution network as firm D has 400 dealers where as firm A has 480 dealers. This has ensured better market presence and ability to reach to a larger section of the society. The availability of products has further aided towards better opportunities of growth and catering to a large market share Thirdly, firm D gives special focus towards technology and nearly matches their competitor firm A and has thereby contributed towards improving their chances of success. This has helped to ensure better market presence and has enabled them to develop strategies through which they are able to ensure continuous innovation. It is seen that firm D follows firm A on innovation and clearly brings forward the different dimensions which have been concentrated on while developing strategies for the future. Strengths & Weakness The strength which firm D denotes are Firstly, the ability to pursue with their business strategy of attracting value seekers and family despite having stiff competition signifies proper use of resources and strategies so that overall business potential improves Secondly, the appropriate use of resources and continuous innovation to meet the need and demands of value seekers has helped them to ensure better market coverage Thirdly, high market presence signifies the manner in which different marketing strategies are being used. This also is followed by bigger sales and technology advancement which has helped them to improve their chances of succeeding. Despite the different strengths firm D also experiences certain weakness and is as Firstly, they are not market leader as firm A dominates the market in all areas which is followed by firm D thereby signifying that they are not able to lead but follow what others are doing in the market Secondly, the lack of ability to come up with a first mover advantage which has thereby impacted the manner in which they design different things and thereby doesn’t provides the total business gains to them. Self Analysis The degree of competition is very stiff especially from firm A. Firm D is doing good as they have a huge market share of 26.3% but still lacks to become a market leader. Further both firm A and D looks to work in the same segment and attract value seekers and families. They are in direct competition to each other and will require identification of strategies through which they are able to lead the market. In addition to it firm D is not being able to act as market leader and are followers which has thereby increased the degree of competition. The business thereby is in a situation where they need to re-evaluate their strategy and develop appropriate strategies which helps them to become market leader and are able to work as a differentiator. Strategic Assumptions Firm D will look to work in the following directions so that the goals are achieved Firstly, consolidate their market share by improving it and capturing a larger chunk of the market through better market presence and penetration Secondly, increase their dealer size and presence in the market so that the product is available on every nook and corner of the country Thirdly, have aggressive marketing strategy and ensure generation of positive synergy through the use of different resources so that the business becomes better controlled and is able to use the resources in a better way Fourthly, act as a differentiator by having strategy which helps them to act as a market leader who sets example for other players to follow. This will help them to gain first mover advantage and provide better opportunities to grow in the market Conclusion The paper thereby looks to present the business simulation strategies which have been adopted by form A and its competitor. It also lays down the path which both the players look to follow and shows that having similar strategies has stiffened competition which needs to be considered so that better formulation becomes possible. The report highlights the different areas of focus and brings forward the areas of concerns which needs to be addressed in the future so that better business development becomes possible. Read More