Strategies That Are Useful in Attaining Market-Based Competitive Advantage - Assignment Example

1. Market-led strategies are bought up with better understanding of the market in which the firm is operating. Market-led strategies are developed inorder to attain competitive advantage in the long run. Strategies that are useful in attaining market based competitive advantage are mainly of the following type; Inside out versus outside in strategies and Strategy for market-based competitive advantage and it includes Porter’s generic strategies and Bowman and D’Aveni’s market facing strategies. Porter’s generic strategies include Cost leadership strategy, Differentiation strategy, and Focus strategy. (Porter 1999-2007). Bowman and D’Aveni’s market facing strategies focuses customer needs in a better way than the competitor does. By relating the price and the value that the customer receives, Bowman propounded six more strategies. They are No frills strategy, Lower price-quality maintenance strategy, Hybrid strategy, Differentiation –value added strategy, Focused differentiation strategy. Competitive advantage can be attained by applying strategies and it may be either price based one or a differentiation or a lock in. The main aspects to be considered in marketing are- focusing more towards customer needs to make marketing worth to the money spend on it and uses new medias to reach more customers, integrate marketing with other activities of the firm, ensure that money spent on advertisement is worth while and enable the firm to cope up with new trends. TESCO’s strategy helped to achieve a good position in the European market. Pricing strategy helped them to boost up the sales. Through their strategy ‘everyday low pricing’, they are selling goods to its customers at a lower price, and this scheme is a regular one. Differentiation-value added strategy played an important role in TESCO’s success. They were offering a wide variety of services to the customers to make the shopping easy like improved product availability, well trained staff, providing product and cost information through web site .Most of all they had placed customers at the heart 2 Chief marketing officer is responsible in different areas of marketing i.e. Product developments, distribution pricing, and customer service. CMO is facing many challenges in market led strategies. An effective CMO should have the following activities. Consumers are heart of marketing Consumers are the main sources of the business. Product development and the strategies should have to focus on consumer’s perception and needs. Focusing on the customer consciousness leads to the more areas of marketing so the companies can spread their activities into different areas. “To build empathy for what consumers are going through and create an appreciation for the value of talking to consumers.” (Harter et al 2007). Consumer’s mindset is one of the important factors in developing the strategies and the marketing staff also should have to take an effort identifying and creating the new development in business. In the case of Procter and Gamble, Jim Stengel undertook the assignment of global marketing officer for the world’s largest consumer package Marketing : an accountable activity Marketing accountability evaluates the resource allocation, trade off across geographies and marketing vehicles. In the case of American Express Company, CMO John Hayes explains measurability of information has completely changed the companies approach to its customers. Adoption of new method for marketing For a successful marketing, marketers should have to take new and adventures form of marketing methods to reach the customers. CMO need to take new Medias which will beneficiary for change and consequently the reward of commitment will be high. In the case of PEPSI, COLA has changed the media model like an experimental way and it caused a great change in business. 3 core competencies Core competencies are capabilities for business in achieving competitive advantage. It helps to create new product and services to access variety of market, it also contribute to customer value which will enable to deliver fundamental customer benefit. “A core competency is an area of specialized expertise that is the result of harmonizing complex streams of technology and work activity." (Kotelnikov 2008). Tesco used the core competencies and capabilities to develop their business by working hard to provide best to the customer; they are also providing a variety of product. Tesco is making a feel to customer that store is designed and operated for customer welfare and provide benefit to shake holders. Tesco manages its business by following basic principles i.e. by building and installing a strong system and supply chain the led the core competencies. The price competitive is the basic feature of Tesco, by this way the led the market. Knowing the customer very closely will help to know the taste and preference, and there by the can succeed the market. As then customer is the king of the market. By satisfying them only they can success. Tesco core competencies is as follows World class system and supply chain, operating multiple formats, Customer driven, detailed culture, Strong private label program Morning news beat.com 4 Tesco value chain Tesco is the one of the biggest retailers in different countries. Its operation is mainly related to food items, Tesco is having the stores in different places. Tesco had faced some challenges in the past years because of the low population, relatively higher supermarket in UK .Scarcity of new ideas in the market etc. Consequently Tesco increased its activities through customer focus, new channels, through innovation of new services, products etc. Tesco diversified its activities through online and also door to door to service also. Now the company is having the international brand and its supply chain is diversified into different stores and different countries. Tesco is doing the business in a supermarket way, so it leading to highly competitive way .Tesco having a great power in its market. In the year 2006 Tesco having 30.6% super markets share in the world super market. Tesco is a rapid growth company and it is likely to plan to deliver the goods in different areas and focusing to investing in future also. “We are delighted to be able to report strong results in what has been a challenging year. Sales have increased by 10.9% to £46.6 billion, Group profit before tax is up by 20.3%. Underlying profit has grown by 13.2% to £2,545 million. Underlying diluted earnings per share are up 11.6% and the full year dividend, which now benefits from our rising flow of property profits, is up 11.7.” (Reid 2007). Tesco is having an international growth of 25%, it is diversifying its activities into different activities it should be a competitive one but Tesco has a good value chain activity in its competitive advantage. 5. Arguments for and against multiple forms of acquisitions: Whenever a multi-national company plans to enter a new market anywhere in the world, the main factor it has to content with is the ability to compete with local firms. Local firms have certain advantages like experience and knowledge about legal formalities and social customs. A new entrant is hence at a disadvantage regarding these matters. One option is to buy out a local company that has the ability to be competitive in the market. An obstacle is that in most emerging markets there, still exists, regulations regarding takeovers. The usual methods followed to comply with legal provisions is to form joint ventures or through legally permitted acquisitions. But companies need not follow these methods strictly. The best option would be to customise the terms of joint venture that would best suit each country or market. Advantages of alliances and joint ventures: A joint venture or merger will enable the company to take advantage of economies of scale. Market risks can be shared equally and access to technology and market knowledge is possible. Another advantage is immediate access to a larger market. The chance of entry into emerging economies by itself is an advantage. “Joint Ventures may provide the best and sometimes only realistic route for gaining entry to new emerging markets in areas such as Eastern Europe or Asia……” (Hewitt 2005, p.6). Obtaining finance would be easier. Possibility of taking over the local company at a later date is also possible. Disadvantages include lack of cohesion, clash of corporate cultures, and reduction in flexibility of operations, increase in costs for the purpose of maintaining relationships between the two firms and risk of company owned technology and secrets being leaked out or stolen. 6. Carlsberg’s Strategies: The Company’s strategy regarding its product is to strengthen its range. It does these two ways. The first strategy is to focus on strengthening its international brands. The second strategy is to strengthen or create its regional brands. Its strategy regarding its market is to focus on the four economies. They are Western Europe, The Baltic Countries, Eastern Europe (excluding the Baltic countries) and Asia. In order to grow in these markets, the company plans to bring new products, device a pricing strategy that will suit individual economies, learn to cope with cultural differences and to think both locally and internationally. The next strategy is innovation and to see that the management of its companies in each market is receptive to it. There have been instances where there was reluctance to share an innovation developed by companies in its local markets to other group companies. To tackle this problem, the company had opened its Central Innovation Centre in 2004. The company plans to make this centre its focal point for all innovations which it will pass on to group companies. The centre closely coordinates with the company’s supply chain for smooth operation. An innovative idea to share news and information about activates at its Innovation Centre, the company has made available a confidential website called Innvation.net. Idea sharing is also encouraged. Results: Western Europe is still the company’s biggest market having a share of above 60% of its revenues. This is also the market where consumption and revenues were going down. Even though Carlsberg has managed to stabilise the markets in many countries, markets continued to fall in some others. Strategy is to increase profits by streamlining operations and cutting costs. In the Baltic countries, Russia is its biggest market. Emerging markets include Kazakhstan, Uzbekistan and Belarus. It is presently the fastest growing market with a share in revenue and profits of 23% and 40% respectively. Growth through new products and investment is planned for this region. Eastern Europe excluding the Baltic countries have a share of under 10% of revenue. Focus is on growth though strengthening of local and international brands. Carlsberg has had a presence in Asia for more than a century. It traditional markets include Malaysia, Hong Kong and Singapore. Its strongest emerging market is China. The company plans to give China more focus by investing more in that country. “From the analysis of our assignment, we concluded that, in addition to having a strong international brand, we needed to focus on regional preferences.” (Carlsberg Case. 2004) 7. Organizational change Organizational change is the changing the entire activities of organization. This can be saying that changing the organizational state and rules, changing the organizational structure, population pattern etc “Organizational change is defined as change that has an impact on the way work is performed with significant effects on University employees.” (Definition of Organisational Change. 2007). Cultural Web Culture is how people doing the business around the world .Corporate culture explain the various activities of business; it is focusing both internal and external part of the business Cultural web having six elements, stories, rituals and routines, Symbols, organizational structure, control Systems, power structures. (The Cultural Web Aligning your Organizations Culture with Strategy). Force field analysis Force field analysis is a method analyzing the change and which can be carried out through various activities. Firstly describing the a situation, analyzing the factors what are affecting to it listing the resisting factor, describing the change factor analyzing Whether the change will lead to good one and describing some formulas etc. Analysis present culture Analyzing the customer reactions, expectation, organizational structure and other relevant factors is helping to understand the present level of performance of the company. Understanding the level of change Here organization should have the reasons for change and to analyze the level of change to adopt and how it will be. Measuring the level of change Here identifying the change level and measuring the differences in present level and the changed level. Force field analysis also helping to the organizations understand the change, here creating a situation and making analysis to it, analyzing the resisting factors and taking place the change actions. Seven multinational enterprises are doing the business in world wide; their operation is carried towards almost in all countries 8. In the 21st century global economy are complex, challenging, and filled with competitive opportunities and threats. By effective strategic leadership practise will only help the firm to compete in an unpredictable environment. Strategic leadership include capacity to learn, the capacity to change, and managerial wisdom. Strategic leadership include studying of the people at the top level of the organisation. Strategic leadership is not focusing on the relationship between the follower and leader but rather how the dominant coalition of the firm influences the strategic process of organisational learning. The ability to manage human capital and social capital is most important for a strategic leader. Human capital is the firm’s repository of valuable knowledge and skill and social capital is providing access to critical resources so the leader must manage the resources effectively for the organisation. The design of strategic leadership is integrated group of practices that make the company’s capacity to change. For developing this capacity four element is to be integrated together i.e. by making commitment to company’s purpose , the making up of top management team , using the capabilities and motivation of the people through out the organisation and a sequence of focused and well choose strategy initiative to make the company to achieve the goal . The basic objective of strategic leadership is to provide vision, direction, and growth purpose. Strategy leadership is not only about business strategy, it also provides to create value. The main function of strategic leadership is to achieve a common task so that all will contribute to achieve that goal and the second is to build and maintain as a team, only by team work an organisation can achieve the goal, they third function is to develop and motivate the individual. The motivation is the main factor for developing the individual. Only by motivating organisation will achieve the task of the organisation. 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Last accessed 10 March 2008 at: http://books.google.com/books?id=_rjWa2oZRG0C&pg=PA105&dq=uk+advantages+of+Joint+ventures&ei=KO_UR9X9I4eqtgPF8Yn2Aw&sig=hPVczDiGtld6FwS9dYE4uH1CCKI#PPA6,M1 KOTELNIKOV, Vadim (2008). Ecoach. PORTER, Michael E (1999-2007). Porter’s Generic Strategies. [online]. Strategic Management. QuickMBA. Last accessed 10 March 2008 at: http://www.quickmba.com/strategy/generic.shtml REID, David (2007). Chairman’s statement. [online]. Tesco. Annuls Review and Summary Financial Statement. Last accessed 10 March 2008 at: http://www.tescocorporate.com/annualreview07/04_chairmans/chairmans.html The Cultural Web Aligning your Organizations Culture with Strategy. [online]. Elements of the Cultural Web. Last accessed 10 March 2008 at: http://www.mindtools.com/pages/article/newSTR_90.htm Read More