Business Analysis of Acme Corporation - Case Study Example

ASSESSMENT 4: Evaluation of business case Introduction The main objective of this paper is to present an evaluation of a business case study focusing on Acme Corporation, an Australian company in building and construction market ('Evaluation of Business Case' 2015). This paper will provide a summary of the case study, employ the use of three criteria and perform an evaluation of the company based on the criteria identified. The paper will also provide a recommendation for the company to ensure it maintains its competitive advantage in the market. Summary of case study From the case study, it is critical to note that Acme has two principal competitors: Shesright Pty Ltd and Hammer & Tong (H&T). Shesright is a Tasmanian-based company focusing on the production of similar products to Acme. Nevertheless, the entity is considerably smaller in relation to sales revenue while focusing on the trade sales (no DIY) under the influence of specialist distribution channels. On the other hand, Hammer & Tong comes out as a Sydney-based subsidiary of a French entity with operations in more than 52 nations in the globalized economy. H&T focuses on supplying DIY customers with the premium priced products, which are attractive, easy to use, integration of lifetime warranties, and availability on online platforms, as well as major cities ('Evaluation of Business Case' 2015). The issue of contention relates to the potentiality of Arrow Inc. entering the market with reference to the Australian building products industry by the end of 2015. Acme’s main competitors have focused on reacting very differently in relation to the impending Arrow market entry. In the case of Shesright, the CEO of the organization depicts Arrow as a ‘low cost/low quality’ player with zero threat to the trade customers constituting the company’s heartland market loyal to the firm and ‘made in Australia’ branding. On the other hand, H&T has focused on reacting positively to the Arrow’s market entry, thus the announcement of an end to the firm’s traditional ‘made in France’ sourcing policy. The objective of the organization is to create a new line in relation to more affordable products from the low cost suppliers with the intention of appealing to more price sensitive consumers in the emerging and mature markets ('Evaluation of Business Case' 2015). From this perspective, the organization believes that Arrow could fit into the strategy, thus becoming a partner within the Australian market situation, which will enable H&T to expand into adjacent product segments. Acme focused on the transformation of the cost structure, thus the potentiality of integrating some belt tightening measures, which are essential in generating quick savings, thus the opportunity to make the company cost effective ('Evaluation of Business Case' 2015). The purpose of this case analysis is to device three criteria for evaluation how each CEO is proposing to respond in relation to the market entry by Arrow Inc. Criteria There are three Criteria used to evaluate For each of CEOs response, the three criteria is Disruptive innovation, Culture and threat of new entrant. Acme response Disruptive innovation Acme views the entry of Arrow into the Australian market as a disruptive to the status quo and this explains the desire by the company to introduce cost cutting initiatives and develop an effective competitive advantage. Disruptive innovation is also an aspect that threatens to revolutionize the approach that different problems within the systems will be solved. The introduction of a new player disrupts the operations within the system and this necessitates the development of the possibility that those in an innovators dilemma such as the incumbent companies will introduce measures aims at confronting the disruption as a way of sustaining their presence in the market (Brown 2012, p. 65). Acme Corporation through its cost cutting initiatives endeavors to generate alternative approaches to the realization of company’s objectives within the highly competitive environment. According to Acme CEO Arrow Inc causes disruption in the market by its decision to target is also targeting trade and DIY platforms of making sales. It is possible that the arrow will negotiate better deals for retail companies such as Bunnings to attract them as B2B clients. This threatens the existence and success of Acme which operates as a B2B company exclusively. The disruptive nature of the company also emanates from the understanding that its lower prices and ability to provide variety of products will also ensure that it operates on a huge competitive advantage in the Australian market. Acme considers Arrow Inc as part of disruptive innovation not only because it seeks to alter the status quo but also because the company endeavors to displace the incumbents from their position in the market. This has been through the desire to sell its products at 30% below the marked price. Culture Acme supplies its clients with products that are made in Australia. According to Shesright CEO, Australians are patriotic in nature and they hold the belief that products made within their country are of high quality compared to those from foreign countries. This is an approach that enhances critical thinking in relation to the identification of existing problems and the development of probable solutions. According to systems approach to understanding of culture, it is relatively complex to understand the parts of any business without the development of an effective understanding on the way an entire business operates (Hoskisson et al 2013, p. 56). This approach can also be used in the understanding of markets. This is through the development of an argument that the desire or decision by a company to invest in a market must always be inspired by the desire to ensure that it is more productive and able to attract more customers within the specific market. Acme perceives the introduction of Arrow Inc as an aspect of Cultural Revolution and the need for the incumbents to assess cultural elements that are less profitable in relation to the new trend that is to be established by Arrow Inc in the Australian market. The need to embrace a new culture in business will propel the ability of the organization to realize its objectives. The essence of a revolution and the need to reinvent the Australian building markets culture is based on the understanding that the culture within a specific market platy an essential role in the determination of the type of products and services that are more likely to succeed and those that are more likely to fail in the process of ensuring any development in the society Threat of a new entrant Acme Corporation aims at introducing cost cutting initiatives by implementing belt tightening measures for generating savings and making the company for competitive in matters related to cost of production. According the company’s CEO, companies in different markets always endeavor to introduce measures that affect the operation of their competitors. This is often through the development of strategies that aim at improving on their competitive advantage. This explains why Arrow Inc is introducing highly discounted products as a technique of establishing its presence in the Australian market. Shesright Strategic response Disruptive innovation In the Australian building market, incumbent companies are faced with innovation dilemma due to the threat of Arrow Inc entering the market with quality products at relatively lower prices. The dilemma emanates from the desires by the incumbent companies to ensure that they provide better products without losing their customers to Arrow Inc. this is attributable to the understanding that selling products at 30% below the marked price is significantly discounted and it might therefore lower the switching cost including nationalistic affinities to products made in Australia. Culture A system consists of elements, interconnections and function. This means that all these elements must be included in a process of understanding the operations within a market. Culture has been assumed to be a defining element in determining the products and services that customers will purchase (Gharajedaghi 2011, p. 16). This according to the CEO of Shesright Company is a contributing factor to customer loyalty that the company has been enjoying considering sale of its made in Australia products. According to Shesright CEO, Australians are patriotic in nature and they hold the belief that products made within their country are of high quality compared to those from foreign countries. For Shesright CEO, culture is inclusive of a set of beliefs that emanate from the emotional, social, spiritual and intellectual platforms among members of a social group (UNESCO 2001, p. 6). These beliefs affect not only their understanding of the environment but also the lifestyle of the said social group. Individual that subscribe to the same understanding of their environment are believed to belong to the same culture (Thomas 2008, p. 54). In the Australian market, market culture plays a role in the determination of the direction any product or service. In the Australian building and construction market for instance culture is associated with established beliefs on the quality of products and source of products. Threat of a new entrant One element that inspires companies to develop such strategies is the introduction of a new competitor in the market (Albrecht 2010, p. 11). This not only destabilizes the status quo but also increases the possibility that customers will receive better products or services at affordable prices (Valenzuela 2013, p.18). Shesright Pty Ltd views the decision to sell products at relatively lower prices as a sign of low quality products. this explains the company’s decision to continue with the sale of quality products that are made in Australia as the only approach towards the realization of company goals and objectives while maintaining its 46% control of the market share . Hammer & Tong Strategic response Disruptive innovation When the Australian market is assessed from the systems approach it is possible to understand the threat posed by Arrow Inc in its decision to invest in the Australian market. H&T CEO views its competitor as a set of interconnected set of elements organized coherently in ways that ensured they achieved their goals and objectives despite the levels of competition. Arrow Inc threated to destabilize the system hence the need for every player in the system to institute measures that will ensure that the system resumes its normal operations. Culture H&T operates by supplying products sourced from France. The success of the company in the foreign market is related to its decision to source aesthetically designed and easy to use products as a competitive advantage in a society where patriotism is a defining aspect of the possibility that a product will be purchased. The introduction of Arrow Inc into the system threatens to revolutionize the essence of culture as the market will begin functioning on additional elements such as price. H&T responded to this aspect by embracing low cost product suppliers as a way of retaining its customers. While using the price strategy H&T seeks to revolutionize and alter cultural beliefs of the Australian population. In addition, it is also techniques that endeavor to demonstrate to the Australian population the existence of alternative means of acquiring similar products at relatively lower prices and this may improve on customer loyalty to the company within the Australian market. Threat of a new entrant H&T have been involved in positive reaction towards the threat of Arrow Inc. the company intends to create a new line of more affordable products sourced regionally from low cost suppliers. The company endeavors to make Arrow Inc one of its partners especially in the supply of products. The desire by H&T to attract more customers and retain already existing customers while diluting the impact of Arrow Inc forms the objective of this approach to the Australian market. This is based on the realization that the new company aims at acquiring customers from existing companies hence the creation of some form of dilemma and high level competition in the market (Valenzuela 2013, p.20). Recommendations Acme Corporation should proceed in the short-term (1-2 years). Customer service and the production of quality products is one of the ways through which Acme Corporation can ensure that it sustains itself in the highly competitive Australian market. This can be ensured thorough the introduction of employee involvement mechanisms. Employees highly interact with customers and this means that they are aware of initiatives that the company can introduce to ensure that it sustains its high level of competitive advantage despite the existence of Arrow Inc which sells its products at relatively lower prices (Albrecht 2010, p. 45). Customer service helps in maintaining and improving n customer loyalty considering that it is only through this approach that the company can ensure that it meets the dynamic a divergent needs of the customers across the market (Wang 2010, p. 56). In addition, the involvement of employees in the decision making process also increases the possibility that the company will make deliberations inspired by the prevailing situation in the market (Porter & Kramer 2011, p. 67). In the long-term (5+ years), Acme Company needs to expand its target market. The company has been operating on a B2B platform. This limits its number of target customers and its ability to interact with the need user of the product (Crane et al 2014, p. 134). It is important that it begins targeting different types of customers such as DIY, trade and B2C. Through such strategies its will improve on its market share and customer base. This approach will also help the company in boosting its competitive advantage in due to its ability to command large deferments of the market (Valenzuela 2013, p. 78). Conclusion Acme’s main competitors have focused on reacting very differently in relation to the impending Arrow market entry. The purpose of this case analysis was to device three criteria for evaluation how each CEO is proposing to respond in relation to the market entry by Arrow Inc. In the process of evaluating the three strategic options, the focus was on implementation of three success criteria for the achievement of effective and efficient assessment. 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