Competitive Strategies. Chaos Camera Company Competitive Advantages - Assignment Example

? s This paper analyses the performance of our team in the simulation of a camera company. The company, Chaos Camera Company, was run as a team. The analysis is broken down into various parts: our competitive strategies, competitive advantage and actions of our competitors, our offensive and defensive strategic options, regional strategic approach, decisions supporting strategy execution, improving value chain activities, corporate social responsibility and finally our decision making style. The analysis is made on all these accounts and keenly canvasses the company on the competitive advantage it gains over other companies in the industry and the strategies that the company undertakes to sustain this advantage. Competitive advantage being key to any business’ success is therefore a crucial aspect of a company and is well elaborated throughout the course of the paper. An analysis of the strategic approach that the company made to compete successfully in four geographic regions is also made. We also examine the ways that the company could improve the important value chain activities it has. An elaborate break down is made of the company’s corporate social responsibilities it has running and justifications made on why the company is running them. The style of making decisions that the company used is also explained in the paper as well as the decisions that supported the team’s strategy execution efforts. The team mandated with the task of running the company did a tremendous job through cooperation and hard work and these elements of the team are outlined throughout the whole paper. Competitive Strategies In order to find a footing in the fiercely competitive digital camera market, our company had to undertake a series of strategies that helped us be competitive. First and foremost, we had to attract customers with the best possible product at a competitive price. Therefore, we made a high quality product and offered it at a price that gave value for money. The company had to set a price that was reasonable to most customers and at the same time offer a product that was of higher value than what our competitors offered at the same price. Capitalization on attractive growth opportunities also gave our company the edge over other companies in the market. The business incessantly looked for growth opportunities in the market to exploit and make a killing. This helped the company increase its revenue streams as well as better position the business in the marketplace. It is imperative for any business to find ways of lowering their costs. Through this a business is able to make profits out of its business and our company subscribed to this school of thought. The company constantly looked for ways to reduce the operational costs by better managing the functional pieces of the business. The business that better manages its operations to lower its costs and eventually makes a higher profit, holds a competitive advantage over its rivals. (Mooij, (2009) This was one of our company’s fundamental objectives since it helped us gain a competitive advantage over our competitors. Performance targets are a guide as to the amount of revenue or profits that the business should earn over a given period of time. These targets are crucial since they guide the company on how much to strive for but the targets should not deviate and contradict with the quality of the product. The company always ascertained that performance targets and product quality were directly related therefore ensuring that product quality was not severed in the process of achieving high performance targets. Sustainable Competitive Advantage Gaining a competitive advantage over our rivals was crucial but sustaining that competitive advantage was even of more essence. Our team looked into various ways of sustaining our competitive advantage; firstly improving our product design was of fundamental importance to any success that we would have. Therefore, we focused on producing an unbeatable product design, one which would simply sell itself. A good product design would be irresistible to customers making the sales of the product shoot through the roof! Our team also ensured that it always looked for ways to improve our Performance/Quality. The performance of our company as well as our products and the quality of all our products always had to be at a higher level than those of our archrivals. Otherwise, dropping our performance or quality below our competition’s level would have had detrimental effects to our market share. The stiff competition that we faced in the rapidly changing market did not leave any room for complacency. Thus, performance and quality of products were non-negotiable tools for us to sustain our competitive advantage over our rivals. Sustaining our competitive advantage also involved improving our finances by maintaining a good credit rating, selling and buying back stock, paying off loans, and investing in Research and Development (R&D). Maintaining a good credit rating was essential since it gave our company adequate creditworthiness that would reassure lenders such as banks, that our company would repay any loans advanced to us. Paying off any loans that we had borrowed also improved our credit rating. Investing in R&D enabled the company to foster innovation of new products hence evolving with the changing market demands. Innovation was crucial since it distinguished the company from other industry players thereby sustaining our competitive advantage. (Sniukas, 2012) Offensive and Defensive Strategies The camera market is an industry with stiff competition and us as a company had to implement both offensive and defensive strategies so as to be competitive and remain relevant in the market. Our company offered an equally good product if not better whenever a rival company launched a new product in the market. This was an example of a defensive strategy since it countered what the competitors offered by putting up a better product at a lower price. Whenever a rival company came up with a new product, we had to react fast and counter their product with our own product that was of higher quality but at a lower cost. This strategy helped us to win over the customers loyal to the competitor and at the same time maintaining our own customer base. By so doing the company ensured that it had a significant standing in the market by constantly seeking to increase its market share as well as improve its financial performance. Our company also continuously pursued product innovation to draw sales and market share away from less innovative rivals. This offensive strategy ascertained that the business reinvented itself by adapting to the changing market demands through innovation. (Sniukas, 2012) The digital camera market was a dynamic and an ever changing market thus players in the industry have to think on their feet and find new ways of meeting the demands of the customers. Our company identified product innovation as a means to satisfying our customers’ demands and remaining relevant in this ferociously competitive market. Consequently, the business was able to gain significant market share from those players in the market who did not constantly innovate their products to align them with the ever changing market demands. Some say that there is nothing new under the sun and that people only find ways of doing the same thing differently. As a result, our company sometimes adopted and improved on the good ideas of other rival companies. Using the ideas from other companies gave our R&D department a platform to develop our own unique products that branded our company differently in the market. (Smith, 2006) This offensive strategy enabled the company to improve its share of the market as well as its financial status. Strategic Approach taken to Compete in the Global Market Our company undertook the approach of thinking global but acting local. This strategy involves having a vision for the globalization of the firm and its products but setting up local channels first before venturing for the global market. This strategy is important for businesses that are just starting out and have the potential to pan out to become a global venture but due to the company’s limited resources, they have to first become successful locally before they broaden their wings to the global market. The company has the potential to become successful given the strategies that our team undertook to gain and sustain competitive advantage over other rival companies. This factor gives us a basis for us to think of the company as a global enterprise in the long run. As a new business however, the company is not able to test the waters of the global market as of yet. Therefore, the business decided to first venture into the local market and dominate it in the next couple of years before competing successfully in the global digital camera market. Decisions Supporting Strategy Execution It was of significant importance that our company looked for ways to support our strategy execution efforts. Firstly, we looked into buying back stock; which we felt made our company more stable. Through repurchasing of stock, we ensured that we held a significant portion of the company shares such that we had a controlling interest in the business. Thus buying back stock offered an opportunity for us not to give up ownership of the company by retaining our shareholding in the company. Paying down loans also helped with the overall strength of the company since we reduced the debt levels of the company and consequently lowered the company’s total leverage. A highly geared company had tremendous risks especially if the debts are secured on company assets. Default on payment represented the tremendous risk that the company was faced with since the company assets could be used as collateral. By paying down loans, the profits of the company increased because less interest was being paid on loans. Therefore the increase in profits helped in supporting our efforts to execute our strategies. Thirdly, investment in R&D to improve our products and customer satisfaction /service was also a way that helped in strategy execution. Through R&D we offered our customers high quality products that provided an edge over other products in the market. High quality products tailored to meet customer demands enabled the company to better satisfy our clients and gave customers value for money. Improving Performance of Value Chain Activities Improvement in the performance of certain value chain activities is fundamental to any business. Our company attempted to constantly evaluate and improve the way we performed these activities so as to be successful. We looked for ways to improve employee productivity through investment in employee pay and benefit. By so doing employees were motivated to work harder and subsequently their productivity increased as a result. Increase in employee productivity increases the revenue streams of any company and so our profits were destined to grow from thereon. The design of our product had to be unique and be identifiable to us as a company. Therefore ways of improving the product design had to be discovered through R&D. an appealing product design had to be used to attract and sustain customers in the fiercely competitive camera market. (Capon, 2007) An aggressive marketing campaign had to be implemented for us to get a piece of the market share. The market was filled with a number of various products and we had to have an effective marketing strategy for us to penetrate this market and have a significant market share. For a new business, marketing of the company’s product is of great importance since awareness has to be made of the existence of the product to customers who know nothing about the company nor its products. Therefore, a penetration marketing strategy had to be formulated by the team and strictly adhered to so as the company could increase their revenue from the product. (Capon, 2007) Marketing involved promotion through advertising, publicity to raise awareness of the company and its products, proper distribution channels outlining how the product was to reach the customer and finally the pricing of the product. (Cavusgil, 2009) Corporate Social Responsibility As a company we recognize the fact that we must give back to the society since it is the same society that we are operating the business. Therefore, we must take part in solving some of the societal issues because the whole society forms part of the stakeholders in our company. From our customers, suppliers, shareholders, government and lenders all of them form part of the society and for our company to be successful; we must do our part in addressing the issues that affect them all. Our Corporate Social Responsibility (CSR) initiatives included charitable contributions, energy efficient programs and supplier code of conduct and compliance monitoring. All these initiatives would be funded by a portion of our annual profit and as a company we believe that the resources were spent on noble causes. In year ten, 2% of our annual operating profit was set aside for charitable contributions. Energy efficiency programs were funded by $3,000,000 of our capital investment. It was of great importance for the company to give back to the society and we identified a number of charities which we could work with. These charities strived to make a difference in the society in their different endeavors and our company decided to contribute a fraction of our profits to their causes. By so doing we created awareness of these charities as well as gave back to support the causes that these charities were campaigning for. Energy efficiency programs were inducted due to the rising threat facing our environment. In order to conserve the environment our company decided to set about programs that used energy efficiently. The company also scrutinized our suppliers such that they adhered to our supplier code of conduct and compliance monitoring. Energy efficiency programs ensured that us as a company did not waste energy during production or any other logistical operation therefore conserving the environment. Decision Making Style Our company relied upon the consensus style of decision making to conduct the internal operations of the business. This style involves taking into account the views of everyone before settling for the appropriate decision to take on. The main advantage of this approach is that it brings into consideration what everyone concerned thinks of the issue on the table. Therefore, decisions that are undertaken are fully agreed upon by those charged with the duty of making decisions. This style also helps foster a sense of belonging to those making decisions in the company since everyone’s input is taken into consideration. Thus, others do not feel alienated or disjointed from the process of making decisions in the company. Consensus style of making decisions is also important since it gives different views on a particular subject. Different people have different opinions on any given subject and this gives the opportunity for an issue to be properly dissected and weighed by everyone so as to make the correct decision. Therefore, a consensus takes into account many options that are suggested by others before any final decision is made. However, regardless of the benefits of this approach, it has a few disadvantages. The decision making process takes longer using this approach since everyone needs to be on board for a decision to be passed. Therefore, dragging the whole process longer than it would have taken had the decision been made by one or a few individuals. The consensus style of decision making also does not appreciate the hierarchical structure of a company, in that, the manager of the company has to pass over the power to make a key decision to others. Therefore, this approach might dilute the power of those in charge since not one person is charged with the responsibility to make key strategic decisions. References Capon, N. (2007). Managing Marketing in the 21st Century. New York: Wessex Press. Cavusgil, T. (2009). Export Marketing Strategy: Tactics and Skills that Work. New York: Business Expert Press. Mooij, M. (2009). Global Marketing and Advertising: Understanding Cultural Paradoxes. New York: Sage Press. Smith, H. (2006). Process Innovation: Beyond SWOT and towards change. Retrieved October 19, 2012 from www.bpttrends.com. Sniukas, M. (2012). How to make Business Model Innovation Happen. Innovation Management. Retrieved October 11, 2012 from http://www.innovationmanagement.se/2012/07/02/how-to-make-business-model-innovation-happen/ Read More