Dick Smith Foods Company - Strategic Management - Case Study Example

Competitive advantage Student’s Name: Instructor’s Name: Course Code: Date of Submission: Introduction Strategic management comprise of planned activities by an organization which enables it to gain competitive advantage. It consists of long term plans like the marketing plans and business expansion plans (Gulati & Kletter 2005). Well implemented strategic plans will lead to success of an organization in the global market. This is because they help it to have unique strategies than the competitors’ hence competitive advantage. Many organizations are contemplating on how they can excel in the extensively competitive market. One of the ways they can achieve such goals is through strategic planning (Collis & Cynthia 2008). Without effective strategic planning, an organization can be driven out of the market by others. This is because of high competition in various industries hence the need for effective and better planning. This paper will therefore discuss the ways in which an organization’s competencies, resources and capabilities among others can be utilized to create competitive advantage. An organization can create a competitive advantage through its various resources. These include the valuable assets, knowledge, financial capacity, learning and development, dynamic processes and manufacturing processes (Salvador 2005). The quality of the products being manufactured greatly depends on the consistency and the quality of the equipment for manufacturing. Effective machines produce quality products that can meet the customers’ demands leading to satisfaction. Therefore, the company will attract and maintain a large share of customers than the competitors’ hence competitive advantage (Barney 2001). For example, Dick Smith Foods Company has been performing well in the market since its re-branding. This is because the company has used the resources to source products from the companies of Australia that makes it less costly than manufacturing their own products. The company has been able to manufacture water cracker biscuits which require special skills to manufacture. Due to its financial capacity, it has been able to hire qualified employees who have the relevant skills for manufacturing the water cracker biscuits. Not many companies have the skills and resources of manufacturing the water cracker biscuits. Therefore, the Dick Smith Foods company has gained competitive advantage through its resources and the fact that it manufactures a variety of products. Ability to develop effective policies for learning and development can enable an organization to create competitive advantage. The capacity of an organization to train and develop the skills of their employees than the competitors is also crucial (Lei 2003). This is because after training and developing the employees, This will improve their skills and make the company lead in innovations leading to the manufacturing of quality products hence meeting the customers’ demands. The cognitive learning theory proposes that employees can improve their productivity through learning. Organizational development can be achieved through providing programs or procedures that should be followed by employees. This can ensure they eliminate any deviations from the core values of the organization (Priem & Butler 2001). For instance, Woolworths Company has managed to maintain its competitive advantage because of training and developing the skills of their employees. The company has programs and procedures to follow when accomplishing tasks. There are programs which ensure that each employee undergo training and development every after six months. This has enabled the company’s employees to improve their skills. Thus they have improved their production as well as increased innovation of the products and channels of distribution like using the middlemen. These innovative ideas are unique from those of the competitors thus the company has gained a competitive advantage (Robb 2013). Another resource that can help to create competitive advantage in an organization is the availability of information. If an organization is able to collect and analyze data concerning the market and the competitors, then it will be able to create competitive advantage (McEvily & Chakrabarthy 2002). Information collected includes that of the products, price, place, promotion and people who are the customers of the company. For instance, information about the product will enable the company to decide on using lean manufacturing or JIT manufacturing processes to increase product quality. For example, Bakers Delight Company has created a competitive advantage through searching various information. This is because it has enabled the company to invest in JIT and lean manufacturing processes. This has made the prices of their products slightly lower than those of competitors and the quality is even higher. This has enabled it attract and maintain a lot of customers (Bakers Delight 2013). The company has a research and development department which is responsible of carrying out market research and giving recommendations depending on the information collected. The company carried out research in the year 2010 on various customer segments. It is from that information that they decided to categorize their customers into urban and rural segments among others. This enabled the company to meet the different requirements of their customers like the variety and size of the products they require hence meeting customers’ demands. In addition, a strong brand can be used to build competitive advantage. When an organization has a unique and a strong brand, many customers will be attracted to the products and services offered (Mahoney & Pandian 1992). The organization will sell more of the products than the competitors thus increased customer base due to increased loyalty. For example, Elfin Sports Cars Company has a unique and strong brand due to its good reputation. Therefore, many customers are attracted to the company’s products compared to those of competitors hence increased sales (Elfin Sports Cars 2013). The company is known to produce best sports cars globally like the MR8 and ME5. Therefore, the company has attracted and maintained many customers because they manufacture unique products compared to those of the competitors. On the other hand, there are core competencies which can be applied by an organization to build competitive advantage like value chain management. Value chain is the process that starts with delivery of materials and ends with the supply of products to the customers (Miller 2002). Effective supply chain can enable an organization to meet the demands of the customer than the competitors whose supply chain is not properly managed. In order to build competitive advantage through supply chain, the systems should be cost effective and add value to the products. This will make the company unique from those of the competitors. A good example is the Woolworths Company. The company has an effective supply chain which includes middlemen. As a way of improving the value chain, the company was innovative and was the first to introduce cash registers for printing receipts for customers. Cash registers enabled the Woolworths to create competitive advantage as service delivery to customers was faster (Robb 2013). The company also uses middlemen in its products distribution thus customers get them at the right time and in the right quality compared to its competitors. Another key competency that can be used to create competitive advantage is the leadership style. Leadership style greatly affects the motivation of the employees and also the skills development (Cynthia 2008). Democratic style of leadership motivates the employees as they feel their efforts are being appreciated through their involvement in the management and decision-making. Through motivation, the employees can offer their best skills to improve the quality of the products. Furthermore, they can also improve their productivity unlike the dictatorial style of leadership where employees work because they want to be paid. Democratic leadership style can therefore improve the productivity of the employees enabling the organization to create competitive advantage. The most common theory applied in leadership to gain competitive advantage is the theory of cost leadership. This is the strategy which aims at reducing the overall cost of the organization. This is by increasing the company’s market share and eliminating the operations which do not add value to the products. This strategy will reduce the overall production costs which in turn lower the prices of the products than the competitors. On the other hand, competitive advantage can also be built from some capacities. In the first place, it can be achieved through the capacity to implement appropriate technology in the manufacture of products (Collin & Cynthia 1995). An organization which uses appropriate technology in the manufacture of their products leads to the production of quality products. Therefore, it meets and satisfies the customers’ demand unlike the organizations which apply crude technology. In some occasions, customers want to know the type of technology used to manufacture the products they purchase. Therefore, if the organization does not use the appropriate technology, the customers will not buy the products. On the other hand, if the company uses appropriate technology advocated by customers, the company’s products will have higher preference among customers. For instance, Woolworths applies modern technology preferred by many customers as well as utilizing capital intensive strategy in its operations. This technique has enabled the company to manufacture the right quantity of materials at a low cost. Also through the use of machines like robots, defaults are minimized thus the production resources are utilized effectively. Moreover, the capacity to have effective promotional strategies plays a key role in building competitive advantage. The revenues of the company depend on the capacity to promote their products (Wiggins & Ruefli 2002). Through effective marketing strategies, an organization will be able to create awareness of the products and convince the customers of their products’ quality. Effective promotional strategies will reach out many customers. Therefore, in this effect, an organization will attract many customers. This will lead to competitive advantage than the competitors who do not have efficient promotional strategies. For instance, Billabong Company has effective promotional strategies like using the personal selling. This gives the customers a chance to know how the products are unique from other companies’ products (Billabong 2013). For example, during world sports or events, Billabong Company promotes their products like selling of T-shirts for games. This enables the company to advertise their products in a large pool of customers. The company further offers free samples and gifts to customers as a way of enticing them to the company’s products and services. Also, if the organization has the ability to price their products and services effectively, it can create competitive advantage. Effective pricing can be done after the organization has collected and analyzed the information concerning the competitors and the strategies they use (Ray et al 2004). An organization can build competitive advantage through competitive pricing where the products are priced slightly lower than those of the competitors but not too low to make losses. This will enable the organization to attract many customers and maintain them leading to competitive advantage. A good example of a company which has effectively applied competitive pricing is Bulla Dairy Foods. Its products are considered to be of good quality but the price tags are slightly lower than those of the competitors. The company has segmented its market into high income and low income. The prices charged in these different markets are different depending on the financial capacity of the customers. High income earners can pay more than lower income earners (Bulla Dairy Foods 2013). In addition, outsourcing can also be a source of competitive advantage for an organization. Outsourcing can enable an organization to access materials which are of high quality and can be used in turn to manufacture quality products (Collin & Cynthia 1995). The quality of the output depends greatly on the quality of the input. Therefore, outsourcing provides a large supplier base. This enables the company to select the best qualified supplier to supply quality materials. This enables an organization to manufacture quality products than the competitors. Conclusion In conclusion, strategic management can enable an organization to have a competitive advantage. An organization can build it through various competencies like environmental scanning to get relevant information, effective supply chain, pricing strategies and ability to monitor and use efficient manufacturing processes. Resources used to build competitive advantage include valuable assets, knowledge and strong brand among others. The organizational capacities that can be used to create competitive advantage include use of appropriate technology in manufacturing, effective and competent promotional strategies, appropriate pricing and the ability to outsource materials. Competitive advantage improves the performance of an organization in the market by attracting many customers thus increasing the revenues of the company. Therefore, there is a need for an organization to invest in areas that ensures its above its competitors. References Barney, J. (2001). “Is the resource-based ‘view’ a useful perspective for strategic Management Research? Yes”. Academy of Management Review, 26(1), 41-56. Bakers Delight. (2013). Bakers Delight. Retrieved on 24th Sep 2013 http://www.bakersdelight.com.au/aboutus/companyprofile.aspx Billabong. (2013). Billabong Company. Retrieved on 24th Sept. 2013 http://www.billabong.com.au/ Bulla Dairy Foods. (2013). Bulla Dairy Foods. Retrieved on 24th Sept. 2013 http://bulladairyfoods.com.au/ Collis, D. J. & Cynthia A. M. (2008). “Best of HBR”. Harvard Business Review, 86(1), 54–60. Collis, D. J. & Cynthia A. M. (1995). “Best of HBR”. Harvard Business Review, 73(7), 118– 128. Cynthia A. M. (2008). “Best of HBR”. Harvard Business Review, 86(1), 54–60. Elfin Sports Cars. (2013). Elfin Sports Cars. Retrieved on 24th Sept. 2013 http://www.elfinheritage.com.au/forsale.html Gulati, R & Kletter, D. (2005). “Shrinking Core, Expanding Periphery: The Relational Architecture of High Performing Organizations”. California Management Review, 47(3), 77-103. Lei, D. (2003). “Competition, cooperation and learning: the new dynamics of Strategy organization design for the innovation net”. International Journal of Technology Management, 26(7), 694-712. McEvily, S. & Chakrabarthy, B. (2002). “The persistence of knowledge-based advantage: An empirical test for product performance and technological knowledge”. Strategic Management Journal, 23(4), 285-305. Mahoney, J. & Pandian, J.R. (1992). “The resource-based view within the conversation Of strategic management”. Strategic Management Journal, 13(5), 363-80. Miller, D. (2002). “Knowledge inventories and managerial myopia”. Strategic Management Journal, 23(8), 689-706. Priem, R.L. & Butler, J.E. (2001). “Is the resource-based ‘view’ a useful perspective for Strategic management research?” Academy of Management Review, 26(1), 22-40. Ray, G. Barney, J. B & Muhanna, W.A. (2004). “Capabilities, business processes, And competitive advantage: choosing the dependent variable in empirical tests of the Resource-based view”. Strategic Management Journal, 25(1), 23-37. Robb M. S. (2013). Woolworths. Retrieved on 24th Sept. 2013, http://www.theaustralian.com.au/business/companies/woolworths-delivers-25pc-profit-hike-to-226-billion/story-fn91v9q3-1226705614531 Salvador, V. L. (2005). "Competitive advantage and strategy formulation: The key role of dynamic capabilities". Management Decision, 43(5), 661– 669. Webb, R. (2013). "Dick Smith Foods to change aim, retrieved on 24th Sept. 2013 http://en.wikipedia.org/wiki/Dick_Smith_Foods Wiggins, R.R. & Ruefli, T.W. (2002). “Competitive advantage: temporal dynamics and the incidence and persistence of superior economic performance”. Organization Science, 13(1), 82-105. Read More