Strategic Management Frontiers - Coursework Example

Week 5 Learning Activities

Learning Activity #1

The factors considered when choosing exporting include costs of transportation, geographical proximity, the performance of the local distributor, and cultural factors. Exporting is a low-cost market if the transportation costs are low (Root, 1994). The proximity of the international market in terms of geography and availability of transport link between the two countries also affects the transportation of products to the international market. If the international distributor offers poor customer service, the brand image may be ruined.

Creating a wholly subsidiary depends on culture differences between the host and home country and availability of resources to build a new subsidiary. The firm should a market that the culture is similar to that of the home country so that the company can understand its customers in the host market. Furthermore, building a new subsidiary requires sufficient financial resources.

Franchising is affected by the nature of products or services, organizational goals, and laws of the local market (Lymbersky, 2010). Franchising is appropriate for service industries such as food and beverages, and restaurants industries. It is also appropriate when the company’s goals are to lower expenses and increase its presence worldwide. Local laws may also favour local businesses

Licensing is also affected by the nature of industry – appropriate for service industries. The legal environment of the local market also affects the acceptability of the foreign firm for licensing (Root, 1994). The cost of licensing in the host market also affects this strategy. Lastly, joint ventures and strategic alliances depend on the goals of each firm. The firms form a strategic alliance or joint venture if they have common or complementary goals.

Learning Activity #2

One of the strategies that a firm can use to re-establish competitive advantage under a disruptive move of adopting a new innovative technology is to consider the relationship between the technology and the strategy as a circular relationship in which the strategy guides the firm to make greater technology investment; and the technology provides lessons to improve the strategy as the business environment evolves.

Another strategy of creating a disruptive technology that enhances competitive advantage is to focus on efficiency and improvement of customer experience with new product development. A disruptive technology may be developed to support a product development strategy in which a new product with unique features is introduced in the market to meet the needs of the customer, and improve the customer experiences (Brinker, 2014). In this case, the disruptive technology should be efficient to develop a new product, service, or customer experience that can be accepted in the market.

In terms of a dramatic decrease in price, a firm may enhance its competitive advantage by pursuing a cost leadership strategy in which the company attempts to bargain for lower costs of production and transfer the cost savings to consumers through reduced prices (Cisco, 2015). Reduced costs of production can be enhanced by buying products in large scale or developing a strong relationship with suppliers. Backward vertical integration in which the firm controls the entire supply chain to supply its own business with superior raw materials at lower costs; hence transferring the product superiority and low costs to the consumer through quality and low prices, hence achieving higher competitive advantage.