A Strategic Analysis for Red Team - Case Study Example

A Strategic Analysis for Red Team

This paper analyses the Red Team strategies for the last four rounds based on given topics to evaluate the effectiveness of their strategies.

Diagnoses Overview

Diagnosis is a key used to confirm the interrelated business strategy established by a firm. It can be described as a powerful tool used by firms to evaluate the difference in company assets such as process, skills, organization, partner competencies among others with an aim of identifying growth opportunity as well as challenges facing a firm (Chapter 8, pg. 82). For firms that need to conduct a diagnosis, it is important for such firms to clearly establish the global vision, mission, and objectives of the company. Diagnosis also involves extensive assessment of the challenges facing the firm that the strategy being developed needs to overcome and also analysis of resources at their disposal (Chapter 10, pg. 103). Diagnosis applies models such as SWOT analysis matrix as well as PESTLE analysis.

Looking at the application of strategic diagnosis in simulation, it is possible to achieve growth in a highly competitive market with rapid changes with well-conducted diagnoses. High competition and rapid changes that characterized simulation gaming industry present the major challenge to firms in the industry like Red Team and can only be identified from diagnoses. Diagnoses reveal high competition among other major problems as negatively affecting the growth in size as well as profit of firms operating in such industry (Chapter 8, pg. 83). Diagnoses in this industry are initiated by all firms engaging in the production of numerous simulation gaming products as well as the availability of resources and expertise to produce the gaming products. SWOT analysis as well as PESTLE analysis as tools for diagnosing gaming markets often reflect many factors such as high competition as one of the major challenges facing firms across all industries but mostly occurs in simulation gaming fields that to need to be addressed.

This concept can also reveal rapid changes in culture, taste, preference and technology that often cause firms to abandon or revise old strategies or even develop new product lines. For instance, application of diagnosis in determining technological and economic changes can reveal that these elements change very fast in the gaming industry, therefore, risks firms in this industry since their product becomes obsolete as well as outdated very fast due to the high cost of transaction and production (Chapter 9, pg. 93). Applying diagnosis principles in analyzing simulation firms like Red Team, help them achieve competitive advantage and will increase their market share through continuous growth if any case their strategies are constantly directed toward overcoming high competition and rapid changes in the simulation gaming market.

Strategic Intent Overview

Strategic intent encompasses deliberate and active management process and practice that focus the firm on the essence of winning. The intent is normally stable, and it often lengthens the plan of the organization. It involves creation and communication of winning obsession at all organizational levels that aim to achieve the results since it encompasses the definition of broad vision, transforming vision into the meaningful mission, goal specification as well as operationalization of strategic objectives (Chapter 10, pg. 103). The intent should match with the assigned strategies, time and scope of the firm since it involves broad and long-term market target. It should remain the commitment of top management to decide on the strategic intent since it creates a sense of improvement drive as well as urgency (Chapter 10, pg. 100).

The strategic intent for the first year or round in simulation gaming industry should focus majorly on achieving high market share by the next three years through the integration of key capability of the firms such as superior ability in R&D, cost reduction, and competitive pricing to satisfy and benefit from the increasing demand in the market. The established intent needs to remain the same in the second up to the fourth year as seen in the case of Red Team. In the third year, strategic intent should aim at achieving more than 20% global market share in the next 3 and above years as seen for the case of Red Team. The strategic intent should be feasible with the underlined capability, opportunity, and the timeframe stated. For instance, increasing market share in a highly competitive and rapidly changing gaming industry requires Red Team to expand their activities more rapidly. Firms' ability to carry out research and development, cost reduction as well as adopting competitive pricing mechanism in this market segment will enable them to achieve growth in the stated timeframe to greater extents (Chapter 8, pg. 83). A time frame of 3 to 6 years is recommended for strategic intent to hold since it allows firms in simulation market to make necessary growth adjustment as well as effective strategy implementation. It can, therefore, be seen that the Red Team strategic intent for the last four rounds was appropriate and was developed according to the correct use of principles. It is important to note that the realization of these intents will be determined by the simulation firms' available cost, resources, funds as well as managerial ability available.

Strategic Intent: Tactics

The tactic, therefore, refers to techniques used in choosing how to engage with products, services, and markets to utilized prevailing opportunity. According to Ansoff's matrix, these tactics includes market penetration where firm increase its market share in the existing market using existing products, Product development where existing customers are being presented with new, or at least modified, products or services, market development where organizations look for new customers for existing product or services, and finally the diversification where a firm develop new offering for new markets (Chapter 8, pg. 84). According to strategic management principle, Market penetration, product development and market development remains the best strategy for new firms to achieve growth in market share since they cope up well with R&D and cost leadership strategy.

Tactics used in selling simulation product and services in the first to third rounds should be a market and product development while in the fourth year and above should be retrenchment and diversification tactics. It can be said that many firms selling simulation product often misuse or neglect the principle of management in their first round of operation as for the case of Red Team. The first tactic that needs to be implemented in the first round is market penetration because of the weak customer base as well as low funds to develop new products. Firms need to consider selling more of their simulation gaming products first in existing market through increased promotion, competitive price reduction as well as online marketing as a better route to markets. This will enable these firm like Red Team to develop a broader customer base in their current market as well as accumulate more funds necessary to develop their existing products (Chapter 8, pg. 85). From around two to three, it is appropriate to consider product development due to increased funds, enlarge customer base and strong strategic linkages, intense competition as well as rapid product and market changes (Chapter 10, pg. 105). Retrenchment tactic is an appropriate tactic in the fourth round and above to eliminate less profitable simulation game market segment as well as reducing cost while maintaining growth, and also gaining competitive advantage like in the case of Red Team. Diversification tactics are inappropriate in the first round and should be avoided according to the principle. Market and product development are less problematic with organic growth method instead of acquisition and partnership which are considered as relatively expensive, controversial, more problematic and risky for startup businesses like Red Team (Chapter 8, pg. 85).

Strategic Intent: Competitive Stance

According to Porter, competitive stance refers to the basis of competition. Cost leadership stance helps the firm win customers by the economy of their product which is available at lower prices than achieved by competitors due to lower operating costs and higher efficiencies (Chapter 8, pg. 86). Differentiation strategy is where the firm targets market with wide range of good and services. The premium strategy is where firm compete by offering luxury, heritage, high performance, rarity products or by combining these features. Finally, the blue ocean is where products of high value are delivered at low costs to mass markets (Chapter 8, pg. 86). Differentiation, premium, and blue ocean strategy are not appropriate at initiation because they are too risky, expensive and more problematic when it comes to implementation by a young firm.

To succeed in highly competitive and rapidly growing simulation gaming industry, firms need to make strategic decisions that consider cost as a competitive stance because it is an appropriate, achievable and most beneficial stance for firm considering growth. A firm such as Red Team seeks to achieve growth by offering its products at lower prices to attract more customers. To achieve this, firms selling simulation products need to apply this stance by lowering their cost of production and also by increasing efficiency in every activity they do to meet their mission objective. For instance, looking at the capability of Red Team to implement cost reduction strategy, it is possible for the firm to lower its current operating cost while maintaining it higher efficiency to effectively implement cost leadership. Adoption of this cost leadership strategy would enable simulation firms to consolidate their recourses, offer the product at a lower price than its competitors thus attracting more customers for competitive advantage. Application of cost strategy is appropriate from round one and above. Also, firm selling simulation products need to consider differentiation stance from year two and above especially when the competition is stiff as for the case of Red Team. In round four and above, a firm can apply Blue Ocean or premium since they are most expensive and more problematic for new firm thus, can lead to receivership or negative profits because new are not in financial position to achieve economies of scale and benefit from these strategies (Chapter 8, pg. 87).

Strategic Intent: Porter's Five Forces

Porter five forces are one of the environmental analysis tool used to analyze firms' external environment. It involves the threat of new entrants, rivalry among existing firms, the threat of substitute product and services, buyer bargaining power as well as the supplier bargaining power (Chapter 10, pg. 107). For the Red Team, a simulation game firm, the following presents Porter five forces analysis. The threat of new entrant relates to size and number of firms joining a given market segment. Rivalry relates to the amount of competition in the market segment. The threat of substitutes refers to some product serving the same roles of the company products. The strength of the buyer is where there are only one buyer and many other companies producing the same product. Supplier power is when there are one supplier and many buyers.

The threat of new entrants- The threat of new firms entering the gaming market is relatively high because the firms' market share is low, the presence of rapid technology changes, turnaround strategies as well as low brand awareness causing the firm to join. Threat of new entrants erodes the market share of the existing firms since new firm may come up with various predation strategies that would often remove the existing firm from the markets

Rivalry among existing firm- The competitive rivalry is relatively high due to a large number of firms in the gaming market. Existing firms such as gray, green, blue sky and orange will focus on gaining competitors' marker shares and sale with very vibrant strategies. In simulation gaming market, existing firms come up with strategic options that seek to increase their current market share. Without appropriate restraining options, a firm might lose all it customers to rival firm thus leading to collapse.

The Threat of Substitutes - the High threat of substitutes exist in the strategic market because consumers possess very low brand recognition of simulation games segment and also due to inadequate property protection rights causing other firms to develop other gaming products that serve the same purpose as simulation games offered by Red Team.

Bargaining power of the suppliers – Suppliers in the gaming markets is many therefore their power is always low thus, cannot control the input prices very much. If any case a supplier offers a high price, Red Team can consider getting it from anther supplier.

Bargaining power of the buyers- Since the buyer of simulation games are many worldwide, bargaining power of the buyer would be low therefore simulation gaming market cannot be a buyer market.

Evaluation of Strategy

Strategic evaluation refers to the final phase of strategic management, and its significance lies in the coordination of the tasks performed by top management (Chapter 9, pg. 97). All business strategies are subjected to future changes and adjustments because external and internal factors are constantly changing. Evaluation, therefore, help managers to determine whether the selected strategies are meeting the company objective. The basic strategy-evaluation activities include reviewing external versus internal environmental factors which represent the basis for present changes. This is followed by performance measurement in a four scale table that is whether the strategy is appropriate for meeting firms' mission, achievable regarding cost and resources of the firm, astute on firms' culture as well as sustainable for long-term survival of the firm. Final part involved taking corrective measure or action.

Looking at the strategy of Red Team, It can be said that the overall strategy to increase market share is appropriate, achievable, astute and sustainable as shown in the table below. The overall strategy is appropriate because it matched the astute of the Red Team. It is also achievable because of the growing capacity, funds and opportunity of the firm. Growth as the aim of the Red Team is also appropriate, sustainable, achievable and astute because the firms are still small and has to exploit all its opportunities, time, and resources to meet its long-term objectives with the culture and norms of the firm. Product development as strategic growth option is appropriate, achievable, sustainable and astute in the second and third rounds but not in the first round. It is inappropriate in the first round because of resource limitation and not sustainable since it can lead to the collapse of the firm in the first year of operation since it is still expensive.

Retrenchment in the fourth year, organic growth and cost leadership strategy adopted are appropriate, sustainable, achievable and astute since they aim to reduce the cost to arrive at faster growth (Chapter 9, pg. 97). The blue ocean strategy adopted in the fourth round is not appropriated because the Red Team will face challenges with its funds to adopt right kind of technology to the developed high quality of product to be sell at lower prices. Blue Ocean is also not achievable and sustainable since it is expensive strategy and can lead to the collapse of the firm which is not astute of the Red Team.

In conclusion, it is evidenced that Red Team developed appropriate strategic options that can allow them to meet their long-term objectives that would help them meet their mission. Product development in the first year and blue ocean stance are not effective and may negatively affect firms' profits. The organic growth method, as well as their strategic intent, are appropriate and achievable to meet sustainability and astute in the Red Team operations. Appropriate change, therefore, need to be made in areas considered not appropriate, achievable, astute as well as sustainable.

Reference

…Chapter 8, 9 & 10 of the book provided, 82-157