Corporate Level Strategy of Qantas, Australian Supermarket Industry - Case Study Example

Title: Strategic management Name Institution Date of submission Strategic management Topic 1: Business level Strategy Case 1: Facebook Company Facebook is a social networking platform that was launched in 2004 by Mark Zuckerberg. The main objective of the founder was to ensure that there was an interaction between the students in Harvard University. Currently, Facebook has become an important tool that is used by both individuals and businesses to pass information. From the case, Facebook business model strategy is ‘brilliant’ because of the following reasons observed from the case: 1. The users are the customers and they do the work: Very few, if any, companies are employing people and at the end of the day not paying them. Facebook company is one of them and it has employed more than 900 million people who are unpaid (Pretty, 2012). From the case, we find that about 520 million users are actively using Facebook each day. While the number of users continues to grow especially the marketers, this is creating a strong commercial base of the Facebook Company. 2. Facebook brands send traffics thus creating revenue: The reports from Altimeter Research shows that Facebook contribute up to 65% traffics of social media sites. This has made Facebook to have a strong competitive edge in the market compared to other social media platforms. From the case, Facebook was involved in advertising activities where businesses used Facebook to advertise their products and services. This boosted the traffics in the website thus earning Facebook huge among of revenue (Piskorski, 2011). 3. Facebook Company is agile: The annual revenue of Facebook is about $ 3.7 billion. The cost incurred to have this revenue is about $ 800 million leaving us with big surprise of large profit margin. Apparently, there is no shortage of investors in Facebook Company and no single day passes without having a new investor-either a marketer or an information passer. This increases the traffic thus increasing revenue of the company. Facebook success comes from out contribution Facebook business model is tremendous even without manufacturing, distribution and consumption stages (Pretty, 2012). The business strategy of Facebook depends on users and those who have accounts with Facebook boost the company’s business model. Topic 2: Corporate Level strategy Case 2: Corporate Level Strategy of Qantas According to corporate level strategy of an organization is concerned with all the strategic decisions made by a business which affects the image of the entire organization (Nickless, 2012). It incorporates decisions on financial performance, acquisitions, human resources and resource allocation. Queensland and Northern Territory Aerial Services (QANTAS) was established in 1920 with the objective of offering transport carrier services. From the case, it is noted that corporate strategy of QANTAS is directly aligned to the values of the organization. Qantas has successfully applied strategic marketing theories in order to strengthen its corporate strategy. These theories include market research and use of marketing intelligence tools (audit and planning). Market research The case shows that market research has increased market exposure of Qantas Airlines. The use of marketing intelligence tools have seen the company expand from domestic to international operations in 2009. On the side of financial management, this implied that Qantas delivered a significant positive profit margin of 45.9% (Skulley, , et al., 2011). Marketing audit: Qantas is committed in undertaking regular market audit as a way of protecting its corporate strategy from being destroyed by cases of changes in prices of fuels. For example, in 2009, a rising Australian Dollar could mean that the company could suffer from an economic downturn (Nickless, 2012). In response to this, the company implemented an operational tactics such as deferring aircraft orders in order to reduce overcrowding in aircrafts. Also, the domestic route fares were raised by ten dollars in order to boost profitability. These are operational tactics employed by the company after effectively reviewing the market thus securing their corporate strategy. Market planning: Moving upmarket for the domestic services by establishing a business-class segments in the market reflects how intelligent corporate strategy of Qantas is (Skulley, , et al., 2011). There was also expansion of international destination network. At the end of the day, this boosted the financial position of the company. Employee engagement: This is a unit of corporate strategy that may have impacted negatively on the strategic managing of Qantas Company. The human resource department was performing poorly since the industry survey indicated that employee engagement in Qantas was rated at 32% compared to the close competitor, Virgin, which was rated at 76%. This implied that employees could consider working in other companies rather than Qantas (Skulley, , et al., 2011). This may have negative impact to the corporate strategy of the company. Topic 3: Improvement of organizational performance Case 3: Fortunes Metals Group Limited The main focus of Fortunes Metals Group Company is to maximize output, minimize costs and increasing shareholder value. This will make them to be the safest with low cost iron ore producer in the industry. This report evaluates how the company improves its organizational performance a) The nature and source of competitive advantage of the company Fortescue commitment to its mission statement has attracted both many people as well as empowering the community around. It has provided economic opportunities for a number of citizens in the region this showing a respect for both people and the environment. Its source of competitive advantage comes from its strong financial position in the market, experience, well networked and community engagement (Annual Report, 2011). These strengths have boosted company’s reputation in the industry. 2. How goals and objectives values have boosted organizational performance The company is consistent with its goals and values and has incorporated social responsibility when it comes to all decision making processes. Also, there is transparency when it comes giving reports about the performance of the company to the stakeholders. Therefore, this commitment to business ethics and principles demonstrates a good attitude towards carbon tax obligations. In this case, the goal of sustainable development is maintained (Duffy, 2012). Apparently, the state of paly in mining industry in both Australia and globally is inadequate. This has called the national government to mainstream regulations attached to maximizing sustainable development. Perhaps this may not affect Fortescue since the company is committed to its goals and values always. Corporate governance structure is another source of high performance of the company. It is evident from the case that there is a continuous development of codes of conduct for both directors and employees in order to suit to their changing needs (Duffy, 2012). Top managers ensure that employees and contractors become aware of these codes. The future of Fortescue Company is bright since the company has strong capital structure as well as great experience. There are plans for expansion which could cost the company $ 1.5 billion (Annual Report, 2011). An evidence of improved performance is seen from the plans of expanding the company, reducing workforce and reducing operating costs. Topic 4: Porter’s Five forces Analysis Case 4: Australian Supermarket Industry From the case, reduce in consumer sentiment and disposable income have affected their purchase power. Also, there is a global financial crisis which has altered how consumers purchase products. There is a rise in living costs in Australia which has led to consumers reduce their spending on secondary wants. As a result, the Australian has been upset be these macro-economic factors and it has led to reduce in profit margins. Porter’s five forces Industry analysis Threat of substitutes: Supermarket industry in Australia has many players selling similar products and offering the same services. This makes the threat of substitutes to be high for example, Woolworths and Cole are two major competitors that offer almost the same products to the consumers. In this case, it is evident that Woolworth faces a direct viable substitute from Cole which will pose a serious threat to the future of the company. Woolworth may have to lower its prices in order to attract more consumers. If the supermarket raises its prices, consumers will look for a substitute from the direct competitor (Smith, 2006). Rivalry: It is evident from the case that there is high degree of rivalry among the direct competitors in the industry. Lack of proper differentiation of the products because of the generic nature of the products primarily subjects the rivalry to prices. However, it is found from the case that supermarket location and diversity of products also reduces the case of rivalry in the industry. Therefore, Woolworth should ensure that it offers variety of product choices to the consumers as well as providing convenience to these products. Suppliers bargaining power: From the case, it clear that Woolworth and Cole are controlling the industry both are having collective share of more than 70% (Smith, 2006). The two supermarkets have undermined other local supermarkets thus not daring to upset the retailers. There supermarkets are competing with retailers on products such as milk and therefore the supplies are taking it easy for both the retailers and supermarkets. In this case, the supplier bargaining power is moderate since the future of the market is seen to have a lot of intermediaries (Polites, 2012). Buyer bargaining power: There is a possibility that the buying power of consumers is going to increase. The main area where buyer’s power will rise is on the food products. The acquisition strategy of Woolworth is one of the strategic responses in ensuring that they earn maximum revenues in times of high bargaining power of buyers in the industry. This implies that a change in strategy how to get products from suppliers is needed so as to ensure constant supply at relative constant costs. Also, a trend that is realized where the supermarkets are replacing retail chains with theirs shows how they want to be divers in the industry (Polites, 2012). These two strategic options are taken by Woolworth and Cole supermarkets. Threat of new entrants: Despite of low entry barriers and good investment returns in the industry, the threat of new entry is very low. The duopoly of the industry however has made new entrants to think of risks of uncertainties. Regarding the strategic management, the two supermarkets should engage in acquisitions in order to weaken any case of new entrance in to the industry. In this case, thy will continue enjoying undisturbed profit margins. Woolworth business strategy is based on monitoring product strategies. This has led to more of acquisition processes in order to ensure that the capital invested earn strong return revenue. Cole on the other side is based on identifying market niches. From the case, Cole is reducing prices of 6000 products in order fill the specify demands of the consumers (Polites, 2012). With the strategic competences and the power of duopoly of Woolworth and Coles, it is hard for ALDI and Costco to pose a threat in the industry. The acquisitions and replacement of retail intermediary chains with theirs will make it difficult for the new entrants to adapt to the competitive nature of the market. Topic 5: PESTEl Analysis Case 5: INDIA’S CUP OF TEA a) Political and legal factors Some part of Eastern India experienced political situation that involved some people engaging to rebellion against the government. This was because the government and people were on the opposite side of the negotiation table. Indian government was advocating for growing of tea while people on the other side were refusing to use their lands to grow tea (Tea Board of India, 2012). Also, some of the trade acts by Unilever were unfavorable to the workers working in tea growing farms. This was because there was no harmonization between the national laws with those of international companies. In this case, the company may be restricted by these laws from expanding its operations. Analyzing political factors is important for strategic management since it points out areas that needs advocacy. b) Economic factors The prices of tea outside India are low since there are a lot of exporters in the industry. This is a pitfall to India’s Cup of Tea since they will have to lower the prices of the exported tea in order to have market share in the global market thus putting pressure on the cost of production. As a result, the competitive policies of India tea industry are overshadowed. The advantage of being a monopoly in back tea production will help India sustains itself in the market because of diverse segments the company has in the world (Bhatt, Patel and Trivedi, 2009). c) Social factors According to the results from the case, tea is the most popular drink used after water in the world. Among the majority users are the Indian people who uses green tea for health benefits. Considering a case where there are no demographic restrictions, India’s Cup of Tea industry can supply up to 150 million cups daily around the world. The basic quality of tea in terms of pleasure and health benefits produced in India is transforming India to a café society nation (Bhatt, Patel and Trivedi, 2009). This means that in developing a strategy, one should focus on the social factors related to the product and the level of attachment to the product by the consumers. d) Legal factors From the case, India incurs higher costs of corporate social responsibility more than Kenya and Sri Lanka’s. The Plantation Labour Act, 1951 states that any tea grower with more than 5 acres of land and employs more than 15 workers should provide free accommodation, free medical care and free schooling for children of the workers. This often affects profitability when it comes to strategic management (Tea Board of India, 2012). Technological factors The use of computers in most of the operations has reduced costs and fastens the rate of production thus increasing profitability. References Annual Report, (2011). Annual Report. Fortescue Metals Group Limited. Bhatt, M., Patel, A. and Trivedi, S. (2009). MRP-I Tea Industry. Analysis on Indian Tea Industry. [online] Available at: http://www.scribd.com/doc/54109654/MRP-I-Tea-Industry#scribd [Accessed 12 May 2015]. Duffy, A. (2012). Mining boom is dead: Government. Australian Mining, [online] pp.14-22. Available at: http://www.miningaustralia.com.au [Accessed 12 May 2015]. Nickless, R. (2012). Productivity: Changing the IR laws won’t be enough’. Australian Financial Review, pp.15-19. Piskorski, M. (2011). Social strategies that work. Harvard Business Review, 19(11), pp.117-119. Polites, H. (2012). Woolworths trials virtual supermarket, [online] Technology Spectator,. Available at: http://www.technologyspectator.com.au [Accessed 12 May 2015]. Pretty, M. (2012). Mobile internet growth has just tapped the surface. The Sydney Morning Herald,, p.10. Skulley, ,, M., Beeby,, M., Crowe, D., Kerin,, J. and Woodhead, B. (2011). Qantas IR action terminated. Australian Financial Review, 29(1), pp.14-35. Smith, M. (2006). Organic produce in Australia’s major supermarkets’. Australian Organic Journal, [online] p.20. Available at: http://www.bfa.com.au. Tea Board of India, (2012). Tea Board of India. About Tea Board. [online] Available at: http://www.teaboard.gov.in. [Accessed 12 May 2015]. Read More