External Forces, Brand Strategy and Strategic Position - Fransoko Group - Case Study Example

A Case Study on External Forces, Brand Strategy and Strategic Position Contents Contents 2 3 Introduction 3 Discussion 4 Conclusion 10 References 11 Abstract The case study on external forces, brand strategy and strategic position mainly encompasses the company Fransoko Group that has been developed internationally for carrying out its trade in different areas. The main aim of Fransoko is to extend its line of operation in the untapped segment of the world. Introduction The case deals with the company name Fransoko group that is engaged in establishing trade in wide areas. The company has developed its own brand identity and it is competing with various well known companies. It took the business from its competitor by highlighting and indicating the weakness of its competitor. The company mainly focuses on creating goodwill and building reputation in the market. The company also trained its staff to interact with each other in order to solve any related issues or problems. The main objective of the company is to provide quality and best service to its customers. Fransoko also provides importance and motivation to its staff as it believes in the philosophy that motivated employees will provide satisfied service to its customers. Fransoko has established its business in rail and airlines service. The chairman of Fransoko is very committed to his work and company and he expects the same level of commitment from his employees. As compared to the airlines service of Fransoko the rail service of Fransoko did not achieve the success in the same pace. The reason for the not achieving success up to the level of expectation by its rail service is due to the complaints registered by the customer for providing delay services. Discussion (a) Importance of the external forces faced by Fransoko in its worldwide business development The importance of the external forces faced by Fransoko in its worldwide business development can be explained with the help of the Porters model. Figure 1: Porter five forces model The external forces that are faced by Fransoko are bargaining power of the supplier, bargaining power of the buyers, threat of the new entrants and the threat of substitute. The bargaining power of the suppliers signifies that there are few suppliers in the market and the consumers have no option for substitutes and the suppliers can take the advantage of providing the value added services. Fransoko is concerned with carrying out trade in different areas it is mainly concerned with providing rail and airlines services (Luxinnovation, 2008). The suppliers in the trade industry is less so there is an added advantage of Fransoko to carry out its operation as less choice is left with the customers. Bargaining power of the buyers signifies the value and the importance of each buyer in the business. The company having some powerful buyers can bring more sales to the company. Fransoko mainly focuses and provides importance to its customers and it has also related its brand name as the consumer champion through which it is prioritizing its customers. Threat of the new entrants it signifies that the ability of the new entrant entering into the market and competing with other companies. The new entrant can enter and challenge those firms which have low economies of scale. Fransoko has large economies of scale and it has already taken the business from some of its competitors by indicating the weakness of its competitor companies. Fransoko is also enjoying its success in the local market. Threat of substitute is the challenges that are faced by the firms from its customer if they switch to some other product or services. Fransoko is providing additional service to its customers and it is providing importance to its customers with the objective of not disappointing its customers (Porter, 2008). (b).Evaluation of the performance of Fransoko Airlines and Fransoko rail companies by comparing the financial and other performance indicators: On the basis of financial performance: Financial Performance 2013 2014 Turnover £m £m Airlines 570 678 Rails 410 423 Pre-tax profit Airlines 60 80 Rails 30 32 Capital employed Airlines 750 790 Rails 530 640 Fransoko has entered into a joint venture partnership that has lead to the success of its air industry. But Fransoko did not apply the same strategy for its rail industry. Therefore the rail industry of Fransoko did not achieve success as compared to that of its airline industry. On the basis of the comparison it is found that the turnover of the Fransoko airlines is more both in 2013 and 2014 as compared to that of the Fransoko rail. High turnover is not good for an employee as it affects the productivity. As it is observed that the airline of Fransoko is achieving success the turnover should also be minimized as the loss of skilful staff may lead to the loss of Fransoko. Pre-tax profit for Fransoko airlines in the year 2013 and 2014 is more as compared to that of the rail in 2013 and 2014. Pre-tax profit margin is usually applied as a tool for measuring the profitability by the aviation industry. This profit is calculated before including the tax. The pre-tax profit assists a company in analyzing the profitability trend and comparisons of the present margin with that of the historical or previous margin. The pre-tax profit of Fransoko airlines is more it indicates that Fransoko airline is earning profit. The pre tax profit of Fransoko rail should be improved for comparing the profitability and efficiency with its competitor in the same industry. The pre- tax profit of both the industry has increased in 2014 as compared to that in 2013. It resembles the profitability and growth of Fransoko. Capital Employed is usually defined as the indicator in observing and finding out whether the funds of the company has been utilized effectively or not. It is referred to as the value that leads to the generation of revenue. The capital employed of their Fransoko airlines is more than that of the Fransoko rail in 2013 and in 2014. But it is observed that the capital employed of both the rail and airlines industry of Fransoko have increased in 2014 as compared to that in 2013. This is a good indicator for Fransoko for generating revenue (Pandey, 1995). On the basis of other performance indicator The performance of Fransoko rail and Fransoko airlines can be analyzed as: Airlines 2013 2014 Number of passengers 1.2 million 1.4 million Passenger miles travelled 3, 000 million 3, 300 million Ratio of cabin to staff to passengers (excluding aircrew, i.e. Pilots and navigators)     Economy Class 1 to 10 1 to 12 Business and first class 1 to 4 1 to 5 Number of airline routes flown 40 44 Rail 2013 2014 Number of passengers 4.5 million 4.3 million Passengers miles travelled 160 million 150 million Ratio of attendants to passengers     Standard class 1 to 100 1 to 120 First class 1 to 20 1 to 25 Number of routes travelled 25 25 Fransoko airlines are charging more for its first class as compared to that of its economy class. Fransoko is also entering into a partnership which helps Fransoko into explore new routes and expand its operations. Fransoko has been rated among the top three aviation company in the home country. Fransoko by adopting competitive strategy has entered into the market which was previously dominated by its competitors. The number of routes has also increased in 2014 as compared to that in 2013. The distance travelled in 2013 has also increased in 2014. The progress in the Fransoko airline industry in 2014 as compared to that in 2013 indicates that it is moving towards its success and achievement of its goal. Fransoko rail has entered into a franchise agreement which can be renewed for a period of five years. The government authority which is responsible for its supervision is constantly forcing the franchise to improve the delay in service provided by Fransoko to its customers. The number of passengers that used to travel in 2013 has decreased in 2014 and even there number of routes travelled has also not increased in 2014. This signifies that Fransoko rail has not shown any sign for progress and development in 2014 rather the progress has deteriorated. Fransoko have to design new plan and implement new strategy for its growth and development and achieving long term success. (c.) Brand extension strategy adopted by Fransoko: Brand extension refers to as the strategy for entering into a new area or exploring a new segment. This can be explained with the help of the diagram Figure 2: Brand Extension Strategy Brand extension reduces the marketing cost. Brand extension helps in communicating, positioning and creating awareness which will result in lowering of risk. Fransoko is adopting brand extension strategy with the intention of making the product available to those consumers abiding in those areas where the service is not available or where the consumers are not aware of the services. With the help of the diagram it can be explained that the product or services that are offered where the consumers are unaware of the services. Fransoko in recent year is trying to extend its air and rail services in new areas (Pringle, 2008). Brand is the name or identity of the product or the services offered by the company that distinguishes it from others. Fransoko is a distinctive brand it applies its brand name in different areas. To maintain the brand image Fransoko has a wide responsibility for not disappointing its customers. Brand equity is referred to as the ability of the company to acquire the preference of the customers. Fransoko is well known for entering in the market which was previously dominated by its competitors by indicating the loopholes in their business and attaining success in the business and also achieving success. Brand positioning refers to placing the service in a way that it captivates the customers. Fransoko has established the brand name as consumer champion (Vukasovič, 2012). Brand development can be defined as the level of attachment the consumer has for its product or services. Fransoko is very well known for providing quality service to its customers and differentiating it from others. Brand extension signifies stretching the marketing tactics. Fransoko is adopting brand extension for its rail service by stretching its brand strategy. Name selection is very important element for brand extension but Fransoko need not select the name as the services will be under the same name of Fransoko. Fransoko will adopt sponsorship and advertisement for promoting its services in the untapped areas. Adoption of all the process will lead to the success of the brand (Kapferer, 2008). (d.) Main Factors contributing Fransoko commercial success are: The main factors contributing to the commercial success of Fransoko are it has developed a reputation by capturing those market which was captured by its competitors, Stretching its brand across different areas, Fransoko has related the brand name with consumer champion, importance in providing quality services to its customers, the philosophy followed by Fransoko in motivating its staff who in return will provide satisfactory service to its customers. The responsibility of the chairman towards its joint venture partners can be explained as the chairman has entered into a cash injection with its joint venture partner which will help Fransoko in extending and developing its service in the untapped segment and also exploring new areas. The responsibility towards its group of shareholders, employees and customers can be explained with the philosophy that is followed by the chairman that the employees are to be motivated in such a way that they provide quality services that satisfies the customers and also benefits the shareholders. It motivates its employees to interact with each other and solve different issues. Conclusion The case study resembles that Fransoko is adopting every step in providing quality service to the customers and exploring the untapped segment. By analyzing the two services that is the air and the rail services that is provided by Fransoko it can be observed that Fransoko has achieved more success and recognition from its customers for its air service as compared to that of the rail services. By observing the performance indicator and comparing it with 2013 and 2014 it can be resembled that Fransoko has achieved success and growth in 2014 as compared to that in 2013 in its air service. On the contrary the rail service performance has decreased in 2014 as compared to that in 2013. The reason for the less success of rail is the delay in services. Therefore it can be concluded that Fransoko has to also prioritize its rail service and develop and implement strategy in such a way so that the loopholes can be rectified. References Kapferer, J.N. 2008. The New Strategic Brand Management: Creating and Sustaining Brand Equity Long Term. Philadelphia: Kogan Page Publishers. Luxinnovation, G.I.E. 2008. Porter’s 5 Forces Analysis. [Online] Available at: http://www.innovation.public.lu/en/ir-entreprise/techniques-gestion-innovation/outils-gestion-strategique/080905-5-forces-Porter-eng-2.pdf. [Accessed on 28 November 2014]. Pandey, I.M. 1995. Finance: A Management Guide. New Delhi: PHI Learning Pvt. Ltd. Porter, M. E. 2008. Competitive Strategy: Techniques for Analyzing Industries and Competitors. New York: Simon and Schuster. Pringle, H. 2008. Brand Immortality: How Brands Can Live Long and Prosper. Philadelphia: Kogan Page Publishers. Vukasovič, T. 2012. Launching of a new product with the brand extension strategy. [Online] Available at: http://www.issbs.si/press/ISBN/978-961-6813-10-5/papers/ML12_039.pdf. [Accessed on 28 November, 2014]. Read More