Analysis of Strategy for Competitive Advantage and Superior Performance - Term Paper Example

April 30, CEO and the Board of Directors of Benetton Richard Simpson (Senior Manager of Benetton) RE: Analysis of strategy for competitive advantage and superior performance. Thank you for the opportunity to evaluate the strategy currently being applied by Benetton in order to increase profitability and attain sustainability in business operations in the market segment. Different strategies can be employed, but for Benetton, providing additional support to retailers and or licensees existing will be a smart move for the organization. This strategy will enable the organization continue to meet their market segment and niche, which looks into the rising competition. This strategy involves further research and development that will help the organization in maintaining a competitive advantage. The strategy entails giving loan and credit facilities to existing retailers that can embrace the use of low cost strategy. Since Benetton has been able to produce and market their products in an efficient way as compared to its competitors, then this strategy is appropriate for the organization. Additionally, their uniqueness and superior value to buyers gives them an advantage. This is evident with their united color scheme, quality of products among other special features of the organization. Opportunities The efficiency of the strategy is the reality that the retailers and licensees seeking support are familiar with the operations of the organization. Therefore, much of the resources will be directed towards giving support to the existing running businesses since they meet organizational goals and objectives. The productivity of employees is sufficient in meeting customer demands. Furthermore, productivity is sustained due to the efficiency of capital and R&D collaboration. These elements are key measures that facilitate the high increase of profits for the Benetton. The quality of excellence shows that the organization has superior qualities because of their style, features and functions, design, level of service and aesthetic appeal of products. The reliability of the products has enabled consumers realize the value attributed to Benetton’s products. As such, the needs of customers are satisfied and hence, value is attributed to the product by the consumer of the product. Risks Apart from the opportunities, the external and internal risks involved in this strategy are the high level of imitators from competing organizations. This lowers the standards and quality of products produced. However, Benetton still has an advantage because the marketing strategy employed in the advertising of products covers this area. Therefore, the organization needs to ensure that other risks of selling at a lower market price are abolished. Current situation Currently, the organization has over 6000 stores sales and is listed in the stock market. This will mean that the company should engage in activities that are competitive because of high levels of competition. So far, the business is doing well, but needs to put in place measures that will assist it to attain sustainability and still be competitive in the market. The unique products assembled by the organization has enabled them maintain the majority of their customers. Additional support provided to retailers and licensees will enable Benetton to create differentiation and ultimately lead to a competitive advantage, which means higher customer response increases value of the product. For example, in Japan the group shows an increase in the number of stores in operation between 1986 and 1993. The profits and employees working in the organization has increased, which shows that the organization is running at a profit and is maximizing on the number of outlets available in order to foster values of products among consumers in a market niche. Recommendations In this instance, by providing additional support to the existing licensees or retailers strategy best suits the needs of Benetton because it matches with their goals and objectives. The input and output of the organization are also working together in meeting the market demand of products like accessories. Outsourcing to licensees needs to be looked into because it will mean that they are a team and their ideas are implemented. Additional support to retailers is a key gauge that needs to be incorporated during production and or manufacture of products and look into the high capital needed by individual retailers. This strategy encompasses many aspects of business operations and looks at measures like SWOT and PESTEL. For instance, they will be able to accommodate potential labor costs and problems of employee motivation techniques. These aspects give an organization direction and enables executive personnel of the company investigate the strategy that best meets all their needs. Through applying this strategy, innovation, leverage and communication in Benetton will be enhanced. Pros and cons For every strategy, there are pros and cons. For Benetton, this strategy will entail further R&D, but that is an advantage to the organization because they are able to investigate further on areas not touched by other departments to facilitate the planning of a strategy that meets the demand. The supply of the products can be a hindrance to planning because in some cases low supply means that the resources available are minimal. In addition, the high costs associated with this strategy led to the drop of profits and also the high production rates in Japan contributed to low profit levels. This strategy ignores the power of collecting data, which aims at maximizing the value for the organization. This method entails repetition, which is not embraced by many organizations. However, by repeating, the organization will perfect their weak areas and use alternative methods that foster cooperation with retailers. Conclusion Providing assistance to retailers/licensees strategy is beneficial for Benetton because the plan of action for implementing the strategy looks into the threats and weaknesses of existing business operations. Therefore, it is a systematic approach that covers all areas of an organization by emphasizing on organizational goals and objectives. This means that it has the aptitude to inspect the development of competitive advantage for Bentton. Furthermore, contributions from different organization functions are shown according to the process of assistance accorded to retailers/licensees. Additionally, the force between business and levels of operations are coordinated well and hence, is a benchmarking basis against best practice on various chain dimensions. It is also a useful tool when it comes to outsourcing decisions in the firm. Under this strategy, there is continuous improvement that looks into the performance and sustainability of the organization. Work Cited Porter, Michael. Competitive Advantage: Creating and Sustaining Superior Performance. New York City: Simon and Schuster, 2008. Print. Read More