Category: Business Strategy

Analyze how your organization ensure/can ensure that HR strategy is fully aligned with the business strategy

Human resource management is vital for any organization that seeks to add value to its employees to ensure the growth of the business. Holbeche (1999) says that in the 21^st-century business environment, HR has been transformed to become a core business leadership role (p.156). Good management of the human capital of a business ensures employee satisfaction while keeping costs under control. According to DuBrin (2009), HRM critically contributes to the success of business strategy through the development of high-performance work practices (p, 410).

It is important for human resources leaders to find key prerequisites of human capital management. Integration of the Human resource strategy with business strategy requires human resources professionals to identify the businesss needs and goals and ways to achieve them through the available pool of employees.

Strategy integration also entails ways of using the existing pool of human capital to achieve the goals of the organization. It is important to note that human resources departments have to understand the business strategy of the organization for them to use it as a template in training employees to achieve organizational goals (Armstrong 2007). More often than not, when the HR strategy is aligned with the business strategy, it is common for HR to overlook priced practices like employee retention and satisfaction.

A vital skill of the HR Professional is the need to balance effectiveness, efficiency, and fairness. Discuss

According to Taylor (2005), effectiveness, efficiency, and fairness can be understood through the analysis of three basic questions. They include if; HR is carrying out effectively its functions, if the HR is carrying out its functions efficiently and if the HR is carrying out its functions fairly. Fulfillment of the organizational objectives means the HR is carrying out its core functions effectively (p. 227). The HR ensures effectiveness through making sure that policies and practices that are enshrined in the business strategy and mission are carried out.

Additionally, it ensures the policies and practices that are set by the organization to achieve its goals in the organization (Ehnert 2008). To ensure effectiveness, there is a need for HR to carry out continuous training in order to keep employees updated on the business strategy as well as any changing business practices. If an organization achieves its targets, then it means that HR is carrying out its core functions effectively.

Efficiency is achieved through a smooth flow of information and quick resolution of problems in the organizations. Quick resolution of employee issues ensures a smooth running of a business organization hence increasing productivity and growth of the business. Efficiency also goes a long way in cutting costs associated with running a company. While effectiveness and efficiency are important, they can be greatly affected if employees feel that the element of fairness is missing.

Fairness in HR Management ensures adherence to ethical standards and codes. According to Taylor (2005), fairness ensures the HR and by extension, an organization meets the legal obligations especially in avoiding discrimination. Fairness also ensures that dismissal law is applied where it is required without any prejudice. Similarly, the principle applies when issuing disciplinary actions. The HR is expected to meet out punitive measures in equal measure. Fairness also assures an organization of employee commitment and loyalty (p. 415).

Effectiveness, efficiency, and fairness therefore cannot be applied separately. Any competent HR department must employ all the above for the effective delivery of services.

References

Armstrong, M. (2007) A handbook of human resource management practice. Philadelphia: Koran Page Ltd.

DuBrin, (2009) Essentials of Management. Mason: Cengage Learning.

Ehnert, I. (2008) Sustainable Human Resource Management: A Conceptual and Exploratory Analysis Fro a Paradox Perspective. London: Springer Doldrecht.

Holbeche, L. (1999) Aligning human resources and business strategy. Oxford: Elsevier.

Taylor, S. (2005) People Resourcing. London: Chatered Institute of Personal Development.

Introduction

Global crises significantly influence various aspects of business, including production, distribution, sales, and stakeholder relationships. COVID-19 pandemic that is currently affecting most countries of the world has changed the reality for many companies in a variety of industry sectors, introducing unprecedented issues. One of these is interruptions in production or service delivery due to supply chain issues. Lockdowns imposed by governments affected the ability of many suppliers to deliver materials, causing delays and shortages. Consequently, many companies suffered performance and profitability losses due to not having an opportunity to continue serving customers. Demand for suppliers who are still capable of delivering materials and parts amid a pandemic is very high, and they can be tempted to set higher prices or reject some clients. Negotiation strategies can assist businesses in building and maintaining relationships with suppliers amid a pandemic.

Background

The 2020 coronavirus pandemic has shaken the entire business world since it began earlier this year. The virus first surfaced at the end of 2019 in Wuhan, China (Taylor, 2020). On 31 December 2019, the Chinese government confirmed that some people in the area were being treated for pneumonia caused by a new virus (Taylor, 2020). It was still unknown whether humans could spread this virus, and Wuhan was not closed off from the rest of the country until late January, contributing to the fast growth in the number of people infected (Taylor, 2020). As the outbreak occurred during the holiday season, when many people travel, the virus spread quickly to other areas in China, Asia, Europe, and the Americas.

Soon, it became evident to global and local authorities that the virus had significant pandemic potential. The World Health Organization officially declared the virus a global health emergency at the end of January, when thousands of people were already infected, and dozens died from complications (Taylor, 2020). Travel to and from China was restricted to prevent further development of the problem, but the virus was highly contagious, and so the number of new cases grew each day. Iran and Italy saw a significant increase in the number of cases and deaths, and travel in Europe and the Middle East was also halted by governments efforts to contain COVID-19.

As part of measures to prevent further disease spread, many countries introduced lockdowns designed to keep people from contracting the virus. Although the specifics of these regulations varied considerably between countries, in many locations, non-essential businesses were closed temporarily, and people were required to avoid leaving their homes except for urgent matters, such as going to the pharmacy or purchasing groceries (Taylor, 2019). These efforts likely contributed to the fight against COVID-19 but did not end the pandemic. At the moment, the total number of cases reaches nearly 12 billion, with more than 540,000 people dead in 177 affected countries (Taylor, 2019). Lockdown measures have already been lifted in most states, but people are still wary of the disease. Furthermore, the pandemic had devastating on businesses and led to many significant problems and obstacles.

Impact of COVID-19 on Supply Chains

One of the most significant problems the pandemic brought for businesses was the disruption of supply chains on both local and global levels. According to Fernandes (2020), the virus affected supply networks worldwide, which contributed to its adverse effects on the economy. There are several ways in which this effect came into existence.

First of all, travel restrictions created issues for international supply networks. For instance, many businesses today purchase materials or parts from suppliers in other countries. However, the coronavirus outbreak affected their ability to do so by prompting governments to impose travel restrictions (Ding et al., 2020; Taylor, 2020). As a result, some businesses could not produce goods or deliver services if the materials they needed were sourced from outside of their home country. Travel bans also affected companies that were developing their supplier networks internationally by delaying negotiations and contracts (Ding et al., 2020). In this way, the efforts of different world governments designed to prevent further escalation of the situation worsened businesses access to their existent or prospective suppliers.

Secondly, lockdown measures that were imposed in many countries also stopped manufacturing operations. This was particularly relevant for companies that source parts from their suppliers rather than raw materials. For example, in the car industry, many production plants could not manufacture vehicles due to the lack of parts (Fernandes, 2020). According to scholars, this is happening in most industrial sectors. Even in luxury goods, like Swiss watches, manufacturers are facing disrupted supplies of components (Fernandes, 2020, p. 13). The adverse effects of lockdowns on suppliers were thus prominent and influenced supply chains in all industry sectors.

Another important mechanism by which the coronavirus pandemic affected supply chains globally is financial. Researchers state that operational disruptions caused by the pandemic affected the profitability of a wide variety of businesses (Fernandes, 2020; Ivanov & Dolgui, 2020; Ivanov, 2020; Ivanov & Das, 2020). Moreover, lockdowns affected the demand for non-essential goods in the general population. As a result of these factors, suppliers also face difficulties in re-establishing their operations and agreeing with clients on prices since their ability to cover costs of operations and logistics has decreased.

These forces have contributed to current issues in supply chain management, causing difficulties both for businesses and for their suppliers. The adverse consequences are likely to be significant and long-lasting. For example, Fernandes (2020) states that 75% of companies in the United States reported disruptions in their supply chains. This, in turn, has increased the costs of manufacturing in most industries, from food to luxury accessories: As factories shut down in China and transportation routes collapse, it has been increasingly difficult for a company like Hasbro to get its products to market (Fernandes, 2020, p. 13). Nevertheless, it is also essential to understand the impact that the pandemic had on supply chain management in the general sense. Topics like supply chain resilience have become particularly prominent because, for years, most businesses focused on the efficiency of their supply chains rather than on emergency planning and management (Fernandes, 2020; Ivanov & Dolgui, 2020; Ivanov, 2020; Ivanov & Das, 2020). For instance, in the current situation, the just-in-time strategy that companies often relied on to decrease their costs has become irrelevant and even harmed businesses (Fernandes, 2020). Thus, the impact of the pandemic was instrumental not only to individual companies but for supply chain management practice in general.

Issues in Procurement and Supply Chain Management

In order to explore and explain how negotiation strategies can support businesses in these difficult times, it is essential to highlight current problems in procurement and supply chain management. The main issue that was caused by the coronavirus was access to suppliers and their goods (Fernandes, 2020; Ivanov & Dolgui, 2020; Ivanov, 2020; Ivanov & Das, 2020). Being cut off from their sources of parts or materials, companies faced manufacturing disruptions and financial losses, as explained above. In procurement, companies have also lost access to potential partners both locally and internationally due to lockdowns and travel bans; this halted supplier relations and procurement efforts in a variety of industry sectors.

The second important issue that should be taken into account is that, as businesses lost access to their existing suppliers, the demand for materials and parts surged significantly. In order to limit the financial repercussions of the pandemic, it was crucial for companies to minimize disruptions to their production and service delivery (Fernandes, 2020). As a result, the bargaining power of suppliers who were minimally affected by the pandemic and could still provide parts or materials to partners increased substantially. The power of local suppliers who could fulfill international contracts lost to travel restrictions has increased accordingly. For instance, in the United States, many large companies that had supply chain networks across Asia were forced to seek replacements locally or source from countries not affected by travel bans (Fernandes, 2020). The increased bargaining power of suppliers has a negative effect on supply chain management as a whole since it allows suppliers to raise prices on goods that they deliver. Moreover, other conditions of contracts can also be affected, such as delivery times. Amid a pandemic, companies will have to accept worse terms than they enjoyed before this health crisis in order to avoid further financial and performance losses.

The third issue in procurement that should be addressed in the current context concerns the quality or types of goods that companies can now source. Before the pandemic, businesses could generally choose the types of materials or parts that they needed to source and had more options. Since only a limited number of suppliers are available now, companies might face new difficulties in finding the right materials for their products or services. As a result, they could be forced to work with several suppliers rather than with one or accept materials of low quality in order to be able to serve customers. This is a crucial problem that also affects various businesses, regardless of their size or industry sector.

The Need for Negotiation Strategies

As examined in the previous sections, modern companies face a wide array of problems related to supply chain management and procurement as a result of the COVID-19 pandemic. These difficulties can have various negative effects, ranging from significant financial losses due to being unable to produce and deliver products to customers to decreased customer satisfaction due to the reduced quality of materials used in manufacturing. These problems are nearly universal in their scope; even companies that had well-developed supply chains before the pandemic are facing these problems now. While making changes to the design of supply chains and making them more resilient is essential to avoid similar issues in the future, companies also need short-term strategies that can assist in overcoming procurement and supply chain barriers while the pandemic is in full swing. In particular, these strategies should seek to address the increased power of suppliers in the current situation, as this would help businesses to negotiate better contracts with suppliers who are still available and can deliver uninterrupted service.

The process of negotiating is integral to business since companies have to establish ties with suppliers, distributors, and many other actors. Negotiation is thus a crucial aspect of purchasing and acquisitions management. When executed correctly, this process supports win-win agreements between businesses and their suppliers. As explored by Geiger (2017), negotiations in procurement help to fulfill two goals. On the one hand, they safeguard the negotiation process, thus ensuring that the buyer and the supplier will sign a contract. On the other hand, they assist companies in achieving tactical advantages (Geiger, 2017). Without negotiation, businesses would simply accept or deny suppliers initial proposal without attempting to change it in their favor. Applying negotiation strategies could help companies to overcome the increased power of suppliers, thus allowing them to negotiate better prices, short deliveries, and other aspects of supplier contracts. Therefore, negotiation strategies can be useful in procurement amid a pandemic as they could assist businesses in reducing expenses and interruptions in their operations, leading to improved resilience to the global emergency.

Better Prices

The primary issue that negotiations can assist with is supplier pricing. When the demand for similar parts or subassemblies rises, suppliers are commonly tempted to contract with the highest bidder, causing companies who need the same parts or materials to spend more than they would do under normal circumstances. If companies agree with the high prices set by suppliers without negotiating, they increase the costs of production, which decreases profitability. The correct application of negotiation strategies, on the contrary, can help businesses to avoid or minimize the increase in supply costs amid a pandemic. Research shows that the frameworks and models that underpin negotiation strategies can be applied successfully to obtain better prices (Leu et al., 2015). As a result, businesses can use them to gain access to high-quality parts or subassemblies without paying more during a pandemic. This, in turn, prevents further increases in operational and production costs, making companies more profitable and increasing their survivability amidst COVID-19.

Increased Bargaining Power

In relationships between businesses and their partners, bargaining power is of utmost importance. Relationships where there is a significant imbalance in power typically deliver different benefits to the two sides (OBrien, 2016). For instance, when a buyer has significantly more power than their supplier, their deal would be worse for the latter, and vice versa. In procurement, the balance of power depends on a variety of factors concerning the two sides and their offers. As noted by OBrien (2016), suppliers power is the greatest when they have a unique or scarce offer that several buyers would be willing to compete for. In this case, the high bargaining power allows suppliers to change contract conditions in their favor, both in terms of price and in relation to other parts of the agreement. The deal that the supplier agrees on, in this case, might be unfavorable for the buyer, but having no other options would still require them to consider it and, possibly, agree on the conditions.

The effects that the pandemic had on supply chains of various companies and on the industry as a whole left a lot of suppliers inaccessible to businesses. Given the decreased competition and the lack of alternatives, the offers of many suppliers became unique and highly desirable, leaving them with higher bargaining power than ever before. However, negotiation strategies can help companies to overcome this problem in procurement. The focus of many negotiation models and frameworks is on the power dynamics that characterize a relationship, and negotiation theory offers ways of increasing the buyers power (OBrien, 2016). As a result of applying these strategies, companies can avoid unfavorable conditions in their new procurement contracts and negotiate benefits that would support their operations during the pandemic.

Access to Reliable Suppliers

The changes caused by the pandemic have influenced not only the suppliers power to negotiate better conditions for themselves but also the access to reliable suppliers in general. With a limited number of suppliers currently available to companies operating in a specific industry and location, the demand might become higher than suppliers are willing to produce. As a result, many companies would have to opt for inexperienced or unreliable suppliers and face delays or decreased product quality. Approaching reliable suppliers in the right way and negotiating with them could help companies to solve this problem. For example, the company could use negotiation strategies to attract a particular supplier with better contract conditions than offered by its competitors, thus earning a valuable advantage (OBrien, 2016). The company could also use negotiation to influence the decisions of suppliers who are in high demand in relation to their buyer choices (OBrien, 2016). In this way, the use of negotiation strategies could help companies to avoid dealing with less professional and reliable suppliers.

Improved Relationships with Suppliers

One of the most crucial lessons that the pandemic taught businesses is that it is vital to develop and maintain relationships with reliable partners to avoid further interruptions during a crisis. While it might seem that negotiation strategies are aimed at obtaining benefits for one side, the reality is that they can also help to improve relationships with suppliers. This is very important to procurement as long-term collaborations contribute to the quality and efficiency of supplier networks of a company and allow limiting the risks associated with new suppliers. OBrien (2016) notes that long-term relationships in procurement depend on the value that both players obtain from this relationship. Negotiation, in this case, can help companies to find ways of creating or claiming value, thus getting similar levels of benefits from an agreement and avoiding win-lose contracts (OBrien, 2016). By utilizing negotiation strategies appropriately and consistently, companies can not only ensure that they yield valuable advantages from the deal but also develop long-term cooperation with reliable suppliers who could help them to grow in the future after the pandemic.

Reduced Service or Production Interruptions

Amid a pandemic, companies all over the world experience service and production interruptions due to lockdowns and other restrictions. When suppliers are unable to deliver materials, parts, or subassemblies without delays or disturbances, manufacturers experience losses due to lost outputs and operational time. These losses add to other problems caused by the pandemic and damage businesses further. Hence, avoiding service and production interruptions is crucial to survivability in the current economy. Negotiation strategies can be applied by companies in procurement to settle contract terms regarding delivery times, risk of delays, safeguards against interruptions, compensation for lost production time, and related factors that impact the continuity of service and the adverse effects of disruptions (OBrien, 2016). Consequently, businesses can enjoy reduced service and production interruptions while also avoiding losses due to unforeseen circumstances.

Competitive Advantage

In the current environment, businesses ability to negotiate with suppliers is a significant source of their competitive advantage. Procurement allows companies to establish collaborations that can support the delivery of products and services to the market faster and more efficiently. This, in turn, has a direct impact on the companys competitiveness. On the one hand, by reducing the expenses associated with procurement and supply chain management, companies save finances that can be reinvested to increase the quantity or quality of goods produced, growing their market share. On the other hand, avoiding delays in production and distribution also distinguishes businesses from competitors during difficult times, as customers can only purchase what they can access. Managing supply chains effectively while also applying negotiation strategies to agree on the best terms for procurement can thus bring financial and market advantages to companies during a crisis.

Supply Chain Resilience and Viability

As explained in the previous sections, the pandemic has caused a shift in supply chain management theory from efficiency and speed to resilience. When faced with a global health threat and opposed by governments efforts to contain the outbreaks, many supplier networks collapsed regardless of their past efficiency (Fernandes, 2020). On the global level, 94% of large companies faced disruptions in their supply chains (Ivanov & Dolgui, 2020). While it is possible that the situation will improve once the pandemic is over, failing to develop supply chain resilience and viability, this time puts companies at risk of suffering during future emergencies. According to Ivanov and Dolgui (2020), the viability of a supply chain determines its ability to meet the demands of surviving in a changing environment (p. 3). Supply chain resilience is a more general term used to denote its readiness for emergencies, the ability to function under unexpected circumstances, and the capacity to restore original performance as quickly as possible after the risk passes (Ivanov & Dolgui, 2020).

While efficiency and agility affect supply chain performance under normal circumstances, resilience and viability are crucial for businesses to survive emergencies and crises. By supporting businesses in agreeing on better contract conditions, accessing reliable, high-quality suppliers, and improving relationships with them, negotiation strategies also help the development supply chains resilience and viability. Consequently, their use by businesses is essential both during a pandemic and after it to enhance the companys readiness for unforeseen situations in the future.

Conclusion

Overall, the coronavirus pandemic has inflicted significant damage on the supply chains of many companies through travel restrictions, lockdowns, and other measures that governments of the affected countries used to contain the outbreak. Under these circumstances, successful procurement relies on negotiation strategies to access reliable suppliers, correct power imbalance, and agree on conditions that benefit both parties. The use of various negotiation strategies can help businesses to reduce losses and service interruptions during a pandemic, thus offering a significant competitive advantage. Furthermore, negotiation strategies support the formation of long-term relationships between buyers and suppliers, which is instrumental in building viable and resilient supply chains that could withstand future crises.

References

Ding, W., Levine, R., Lin, C., & Xie, W. (2020). Corporate immunity to the COVID-19 pandemic. National Bureau of Economic Research. Web.

Geiger, I. (2017). A model of negotiation issuebased tactics in business-to-business sales negotiations. Industrial Marketing Management, 64, 91-106.

Ivanov, D., & Das, A. (2020). Coronavirus (COVID-19/SARS-CoV-2) and supply chain resilience: A research note. International Journal of Integrated Supply Management, 13(1), 90-102.

Ivanov, D., & Dolgui, A. (2020). Viability of intertwined supply networks: Extending the supply chain resilience angles towards survivability. A position paper motivated by COVID-19 outbreak. International Journal of Production Research, 58(10), 2904-2915.

Ivanov, D. (2020). Predicting the impacts of epidemic outbreaks on global supply chains: A simulation-based analysis on the coronavirus outbreak (COVID-19/SARS-CoV-2) case. Transportation Research Part E: Logistics and Transportation Review, 136, 101922.

Leu, S. S., Son, P. V. H., & Nhung, P. T. H. (2015). Optimize negotiation price in construction procurement using Bayesian Fuzzy Game Model. KSCE Journal of Civil Engineering, 19(6), 1566-1572.

OBrien, J. (2016). Negotiation for procurement professionals (2nd ed.). Kogan Page Limited.

Taylor, D. B. (2020). A timeline of the coronavirus pandemic. The New York Times. Web.

Fernandes, N. (2020). Economic effects of coronavirus outbreak (COVID-19) on the world economy. SSRN. Web.

Introduction

Porsche emerged when its founder produced his first sports car. Ferdinand Porsche used his expertise to engineer a quality car that fulfilled his expectations. This approach gave Porsche a powerful image that lasted for many years. Porsche has always supported the needs of its customers. Such practices made it easier for Porsche to compete in the sports car industry. However, the 2008 financial crisis affected the companys performance. The company has now become a branch of VW. However, Porsche has specific strengths that can make it successful. This essay will analyze the aspects of Porsches industry in order to determine the most appropriate business strategies.

Situation Analysis

General Environmental Analysis

Different segments are affecting the performance of sports car manufacturers. The changing expectations of many customers are forcing such companies to redefine their strategies. This demand has affected Porsches position. Many governments are focusing on sustainable cars. These issues will have much influence on Porsche over the next 5-10 years.

Industry Analysis

Porters five forces

• Bargaining Power of Suppliers: Volkswagen has established a network characterized by many suppliers. These suppliers provide the required materials. The current changes in global oil prices will affect the company.
• Bargaining Power of Consumers: Many customers are looking for fuel-efficient cars. Most of VWs segments should focus on this changing need.
• The threat of substitutes: Companies such as Honda, Toyota, and Nissan are marketing fuel-efficient cars. Mercedes Benz and BMW are also manufacturing powerful sports cars.
• The threat of New Entrants: The sports car industry is less attractive. Newcomers should invest a lot of money in order to succeed in this competitive industry.
• Industry Rivalry: The existing companies are using powerful strategies in order to emerge successfully. Such companies are using new innovations.

The attractiveness of the Industry

Porsche is operating in a very complex industry. More individuals are purchasing sports cars. The emergence of different economies has increased the market for sports cars. However, newcomers might not survive in this segment. Many car producers have faced numerous challenges in the past.

Competitor Analysis

Strategic Groups

Porsche used to compete with companies such as Lamborghini, Ferrari, and McLaren. However, the company has become a branch of VW. That being the case, the firm has decided to introduce new cars that can satisfy the changing needs of different customers. The firm is also competing with companies such as BMW and Mercedes Benz.

Competitor Analysis

The above competitors have the potential to dominate the market. For instance, BMW has numerous resources. It has manufacturing plants in different parts of the globe. Mercedes Benz dominates various markets across the globe. These firms also have powerful brand images. McLaren also fulfills the needs of its consumers. On the other hand, Porsche produces high-performance cars. The company supports its customers using the best maintenance strategies.

Internal Analysis

The four criteria for sustainable competitive advantages support Porsches future performance. Porsches cars are superior and impossible to duplicate. The cars are also valuable. The products are also unique and rare. The firm produces powerful cars using edge-cutting technologies. The companys automobiles are also non-substitutable.

Porsche can use a powerful value chain analysis to achieve its future goals. To begin with, the firm uses appropriate technologies to produce competitive cars. The firm can add value to these activities by producing fuel-efficient cars. Such cars should also be fast and stable. The firm can collaborate with different partners in order to boost its image.

SWOT Analysis

Solutions and Recommendations: Strategy Formulation and Implementation

Strategic Formulation

Customer Analysis

Porsche has always targeted specific customers. However, these customers have become sensitive about the issue of fuel consumption. They are focusing on powerful but fuel-efficient cars. This situation explains why the firm is trying to produce fuel-efficient cars. This approach is expected to weaken the companys image.

Current Business Strategy

The firm is using various strategies to achieve its goals. Mathias Muller wants to improve Porsches product line. The company focuses on quality cars that can satisfy the needs of its consumers. It has also diversified its cars in order to attract more customers.

Strategic Alternatives

New alternatives are needed in order to make this company successful. The first alternative is focusing on the strengths of the Volkswagen Auto Group. This approach will ensure the company produces acceptable cars. It should also market cars to different buyers across the globe. The other alternative is focusing on its original image. This image focuses on quality sports cars that support the needs of its traditional customers. This business strategy will ensure the company does not dilute its image. The third alternative is striking a balance between the above suggestions. Porsche can produce superior sports cars while introducing new brands such as the proposed Cajun. The firm should also restructure its business practices.

Alternative Evaluation

The most appropriate alternative is producing fuel-efficient cars. VW should also retain the original image of Porsche. This goal can be achieved by producing superior cars such as the Cayenne. This approach is critical because many customers want to retain the same image. These two approaches will create a powerful strategy. Porsche should also embrace new technologies and innovations. The approach will ensure every Porsche car is successful.

Strategic Alternative Implementation

Action Items

Volkswagen should use its strategic alliances to market the Porsche brand. Porsche should also hire competent individuals. The firm should ensure every new car retains the unique Porsche image. This approach will make it easier for the firm to focus on its traditional buyers. The firm should also use modern technologies to produce quality cars. It should also locate its manufacturing plants in different countries in order to improve its business performance.

Action Plan

The firm should identify the most appropriate goals. Porsche should produce new cars that deliver its original image. The firm should employ new engineers to design the best cars. A powerful marketing approach is needed to improve the companys performance. Porsche should target new markets in Asia, Africa, and Latin America. The firm should also use powerful strategies in order to deal with competition.

Issues Prevalent In Influencing Starbucks Future Internationalisation Agenda

The main driver of growth within the retail coffee sector is domestic and international expansion. The majority of stakeholders in this industry rely on company-operated outlets as the main distribution points, which have to be located in high-traffic areas (Glowik, 2017). Furthermore, competition in this sector is structured around the ability to open and run new retail shops in large cities throughout the globe (Richey and Ponte, 2020). Starbucks, in the case of this paper, has been opening stores in various markets in Australia, the UK, Japan, Latin America, and the Middle East. This level of expansion is what Sholihah et al. (2016) consider to be the driver of growth in the retail coffee sector. In this regard, the retailer seeks to have over 30,000 stores across all its international markets in the coming ten years (Garthwaite et al., 2017). As a matter of competition, such retailers as Dunkin Donuts also seek similar levels of internationalization to confront Starbucks in the international arena.

A second issue likely to influence the coffee retailers future internationalization agenda is product innovation. Like many other coffee shop contenders, Starbucks offers a selection of products beyond the traditional cup of coffee (Gorgoglione et al., 2018). Companies operating within the retail coffee sector boast of menus offering coffees, bottled water, pastries, and even sandwiches. Upon launching in such countries as China, Starbucks made an effort to adapt itself to the local environment, a strategy that has proven to be instrumental to its internationalization (Qian and Xing, 2016). It would be necessary for the company to continue doing so in its ambition of expanding to other foreign markets. Product innovation has made it possible for Starbucks to outdo early entrants in China, and this has been driven by extensive research and design (Azriuddin et al., 2020). By launching new seasonal drinks on an annual basis, the retailer sustains and increases its customer base. Importantly, Starbucks continued use of product innovation should consider not only customer acceptance but also the fitness of the product to the chains ergonomic flow.

A further determinant of the internationalization strategy is collaboration and partnership, which is also tied to the focus on product innovation. Starbucks was amongst the first companies in the retail coffee sector to reap the benefits of this entry mode by seeking collaboration with powerhouse brands, such as United Airlines, Pepsi, and Nordstrom (Garthwaite et al., 2017). In this case, the retailer was able to develop new products, enter new markets, gain customers, and venture into new distribution channels such as the airline and cruise line industries. However, competitors like Caribou followed in these footsteps to partner with General Mills, therefore, producing breakfast bars (Sholihah et al., 2016). In realizing its future internationalization agenda, Starbucks can consider venturing into more partnerships in the foreign markets and directly compete with existing retailers. Such alliances would allow the company to become innovative and extend its channels as well as geographic coverage.

Another driving force shaping the retail coffee industry is the level of disposable income in the country of operation. According to Ferreira (2018), this is a key element that all actors in the specialty coffee sector should be keen to observe. Starbucks stock, for example, was hit significantly during the 2008 economic crisis. The value of its shares dropped by a great margin from $40 to less than $10 between 2007 and early 2009 (Chang, 2020). Such a decline was an indication that consumers scaled back their budgets on the consumption of specialty coffee due to the tough economy. However, BRIC nations have recently recorded a growth in their upper and middle class (Alwaleed et al., 2019). These markets present an opportunity for Starbucks to take advantage of the population with gained finances, expended income, and the ability to afford specialty coffee. If the company takes into consideration the power of expendable income in its internationalization strategy, it is likely to become successful.

Industrialization has also been a driving force for internationalization in the coffee industry. Countries are becoming more industrialized, which Shih (2017) considers to be influenced by westernization. India, for example, has tea as the dominant beverage amongst upper and middle-class families and individuals (Fischer, 2019). However, the effects of industrialization have made coffee to be a statement of wealth and prosperity. Starbucks should monitor the global trends of industrialization and subsequent westernization in developing countries, considering that coffee is likely to emerge as the beverage of choice. In this regard, it is expected that a rise in industrialization the main driver of disposable income  will have a significant effect on the coffee industry in the future as new countries will follow the trends in India and create a market for specialty coffee vendors.

Starbucks Trouble Establishing and Sustaining Its Presence in Australia

Australias love for coffee began with the influx of immigrants from European countries after World War II. The migrants, who were mostly Greeks and Italians, established the culture, with the rest later embracing it during the 1980s (Tucker, 2017). All along, Australians were used to a variety of coffee experiences, even when Starbucks it in the US, and savoring morning coffee seemed to be a ritual for them (Garthwaite et al., 2017). It would be fair to describe the Australian coffee culture as striving and sophisticated by the time Starbucks joined the market. With such an established culture, Australians did not find the need to move out of their way in favor of Starbucks, considering that they had already developed a cult-like following of local brands. Given the nature of the Australian coffee consumers, it would not be easy for a global chain to replicate the intimacy and personalization of the local boutique café (Honack and Waikar, 2017). Besides, unlike American consumers, Australians enjoyed their coffee straighter and without disguised flavors and syrupy shots throughout the years of coffee drinking.

Starbucks was successful in such markets as the UK and China. They happened to have introduced the coffee culture in these countries, given that the preferred beverage was tea. On the contrary, Australia had a well-established independent coffee culture (Tucker, 2017). Besides, Starbucks did not use above-the-line promotional activities and instead relied on the brand name and stores as the core of the business (Sholihah et al., 2016). This initiative was introduced by Howard Shultz using the slogan Build Starbucks one cup at a time. The motto meant that the company relied on customer experience for generating loyalty and word-of-mouth advertising, hence the growth of the business (Honack and Waikar, 2017). However, the strategy could not apply to a market as competitive as Australia, where consumer loyalty was with particular baristas. Considering the lack of advertising, Australians were unable to shift to Starbucks. On the other hand, such competitors as McDonalds effectively communicated their messages.

Starbucks failed to customize its business model to fit the Australian market based on the assumption that what worked in the US would work in any other English-speaking nation. Contrastingly, the companys success in the first place in Asian markets was a result of its ability (Glowik, 2017) to adjust the original business model. Even though Starbucks made changes to the Japanese and Saudi Arabian menus, the retailer generally offers similar products in all its international markets. This explains why it introduced and applied the American offering in Australia without taking the time to understand the locals preferences. Australia has at least 235 ethnicities, which means that a company will need to be aware of the homogeneous nature of the country before settling on an entry strategy (Tucker, 2017). Further, coffee consumers in Australia are used to the idea of buying local, sharing bonds with sellers, and supporting ethically-minded businesses. The business model used by Starbucks clashed completely with the interests of the locals to the point of considering the company non-corporate.

Starbucks started its US business with a single store and proceeded to capture the imagination of consumers, leading to second, third, and more outlets. It did not take long for the retailer to become a demand-driven phenomenon (Alwaleed et al., 2019). A similar case happened with McDonalds in Australia, starting with one shop in each city and creating a buzz around the brand experience (Honack and Waikar, 2017). On the contrary, Starbucks immediately imposed itself in Australia by opening multiple establishments in every city. The company, therefore, denied Australians an opportunity to discover the brand. According to Tucker (2017), the company identified strategic sites, put up huge signs, and introduced non-traditional coffee names and sizes. This amounted to showing Australians a new way to drink coffee, an initiative that quickly resulted in market saturation. On the other hand, Starbucks expansion had little impact on competitors, and instead, the company was cannibalizing its stores. Furthermore, Starbucks ended up violating the principles of novelty and scarcity by initiating too many outlets.

The Geographic (Country) Targets; Their Historical Sequence; and Entry Modes for Starbucks International Expansion to Date

The decision for international expansion came after Starbucks had focused on the North American market for an extended time. Since being founded in 1971, the company grew to over 700 outlets by the mid-1990s, with the growth taking place within the US and Canada (Yurtseven and Sandir, 2018). Starbucks made its first entry into the international scene in 2000, and by the year 2006, the company was operating about 11,000 shops. However, only 30% were international, with the remaining 70% in the US (Garthwaite, et al., 2017). On the other hand, the revenue obtained from foreign-based stores accounted for 20% of its total revenue (Glowik, 2017). Surprisingly, Starbucks used a similar coffee menu in other nations as it did in the US but customized a range of other items, such as coffee mugs, depending on local customs and tastes.

The first move to an international market outside the traditional US and Canada was in Japan and came in as a joint venture. The internalization of the company was motivated by the fact that Japans economy was second largest to the US and consistently appeared among the top importers of coffee in the world (Li, 2017). The company decided to use a joint venture as an entry strategy in Japan because the senior executives were concerned that they lacked local knowledge and questioned the ability to attract local talent (Chuang, 2019). This proves the extent to which Starbucks acutely acknowledged that doing business in Japan was different from the situation in the US, and they did not have the necessary experience to succeed alone. The major concern for Starbucks to operate in Japan was paying for the shipping of coffee from the Washington roasting facility to Japan and the cost of retail space in Tokyo (Honack and Waikar, 2017). Starbucks, therefore, saw it best to form an alliance with a local entity with enough experience operating in Japanese cities.

In China, Starbucks chose to settle for minority share licensing agreements with local companies as a way of minimizing entry risks. The partners took care of all capital costs to bring the Starbucks brand abroad (Sholihah et al., 2016). The company was, therefore, relieved of general and administrative expenses and established its presence in China more quickly than if it invested its capital and absorbed all start-up losses. In this case, Starbuckss main consideration was the potential risks of entering China (Chuang, 2019). On the other hand, the untapped Chinese coffee market offered high-volume opportunities despite the potential problems posed by the prevailing culture and politics. The ordering of Kentucky Fried Chicken in Beijing to close its store after the expiration of its lease in 2002 demonstrated the ambiguity of doing business in China (Qian and Xing, 2016). Another challenge for Starbucks operations in China was the recruitment of the right talent, given that the brand was driven by the uniformity of coffee quality and customer experience. The use of licensing agreements ensured that the company got everything right and preserved its image globally.

Unlike the internationalization strategies for Asian and Middle East markets, Starbucks used acquisition in place of partnerships when entering the United Kingdom. The company needed the fastest way to enter the fast-growing UK (Campbell and Helleloid, 2016). Moreover, it found that labor economics, language, and culture were similar to the countries the management was accustomed to. Given these dynamics, Starbucks concluded that a 100% ownership of UK stores could succeed from the outset (Chuang, 2019). The leadership modeled the company to grow based on its style of operations. The acquisition and rebranding of Seattle Coffee Company in the UK were driven by a focus on small market capitalization and the fact that the company already had retail units (Glowik, 2017). Having started at 52 shops in 1998, Starbucks had 469 by 2005, making the UK Starbuckss third-largest market after the US and Japan.

The strategies adopted by Starbucks when venturing into new international markets are meant to lower costs while increasing customer accessibility. Considerably, the geographic targets of Starbucks are dependent on the extent to which the political and economic characteristics favor the nature of the business (Kang and Namkung, 2018). Additionally, the company looks at the strategic location of stores within the cities in areas where customers can easily access products and services (Campbell and Helleloid, 2016). Given these strategies, Starbucks has been able to expand and establish a foothold in different parts of the world. More especially, the focus of the management has been to increase convenience through capacity and flexibility of low operating costs and attract greater market share.

Challenges and Opportunities for Starbucks in Securing Supply Chains in Its International Expansion Strategy

Overall, Starbucks operates using a generic strategy, which is guided by its competitive scope. The company puts much emphasis on the cost of leadership, differentiation, and the anticipated marketing. Starbucks finds it necessary to control profit margins by focusing on customers needs (Gouda and Saranga, 2018). Besides, the retailer also develops a seasonal product, commits to the advertisement, and ensures satisfactory customer service (Chuang, 2019). Interestingly, the coffee retailer has unique products and services which are well-positioned in the market. The generic strategy used helps the company deal with limitations, enhance the identity of the brand and maintain customer loyalty. However, some areas, such as working with multiple distributors of coffee and other business partners, pose challenges for the company (Tucker, 2017). In this regard, the executives at Starbucks address potential challenges about the respective geography and product lines. This makes the overall focus of the company to be on differentiation.

In recent years, Starbucks has had increased visibility in its supply chain. Practically, the decision made it easier for the company to better foresee potential shortages (Alwaleed et al., 2019). Given that the majority of the coffee used by Starbucks is grown in developing countries, the company has in the past faced significant supply shortages caused by instabilities in the regions (Honack and Waikar, 2017). Without much visibility, Starbucks was not in a position to reliably predict the consequences of such shortfalls on its coffee supply. Today, it exercises increased the attention given to corporate activities to the point of linking various forms of instability to reductions in particular coffee types and finding alternative sources (Shih, 2017). In this regard, Starbucks has been proactive in the management of supply disruptions.

The fact that no coffee is grown in the US makes the production and delivery of coffee critical global processes. It is, therefore, upon Starbucks to initiate procedures for protecting the raw supply chain, which translates to ensuring the satisfaction of customers (Azriuddin et al., 2020). As an initial step, Starbucks success comes from the purchase and use of only high-quality coffee beans. To secure its competitive position over its rivals, Starbucks has a dedicated category of personnel visiting coffee-producing countries regularly (Ferreira, 2018). Through the visits, the company has improved its relationships with actors in the supply chain while identifying diverse sources capable of meeting its standards for quality and flavor. The strategy used by Starbucks affirms the strong belief that success in the coffee business relies on the quality of the beans (Glowik, 2017). Apart from the focus on the production line, Starbucks leads in the promotion of sustainable practices in the coffee-origin countries. The organizations policy includes the payment of prices high enough to meet the production cost and improve the living standards of farmers.

Starbucks has set up a formal process for coming up with strategies and operations, therefore ensuring that there is a link between the manufacturing, procurement, and logistics functions in a manner that meets the business needs. The flow of materials begins with the purchase of green coffee beans, their shipment to the company, roasting, packaging, and serving of brewed coffee to customers (Gouda and Saranga, 2018). Throughout all these processes, Starbucks ensures that only high-quality products move to the next stage of the value chain. In all Starbucks outlets throughout the globe, there are yet to be serious concerns from customers regarding the quality of the products (Azriuddin et al., 2020). The companys standardization helps with maintaining a reputation for its products to consolidate the relationship with its consumers.

Reference List

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Campbell, K. & Helleloid, D. (2016) Starbucks: social responsibility and tax avoidance, Journal of Accounting Education, 37, pp. 38-60. doi: 10.1016/j.jaccedu.2016.09.001

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Introduction

An organizations business strategy and its relationship with its internal and external environments play a major role in its success by guiding policy development and decision-making toward achieving goals. Thus, a business analysis assesses an institutions corporate strategies to identify the need for change and design solutions that maximize the value of services provided by the organization. The UnitedHealth Group is a medical organization dedicated to advancing health equity, improving patient experiences in medical institutions, and enhancing healthcare accessibility across populations. Thus, its business model is focused on designing effective governance through independence and board diversity. However, the organization has several other attributes that enable it to achieve high success levels. The following paragraphs analyze the organizations corporate model, business strategies, business structures, management systems, and strategic fit. The organizations commitment to ethics, integrity, supply chain management and data security has enabled it to gain consumer trust and grow toward sustaining a high-quality health service system.

UnitedHealth Groups Generic Business Strategies

The UnitedHealth Group is currently one of the most successful healthcare service providers worldwide. The organization serves more than 34 million individuals and thousands of medical institutions worldwide due to its emphasis on value-based healthcare services and expanding access to care (Buchwald, 2022). UnitedHealth Groups generic business strategy is focused on differentiation to achieve sustainability and ensure continuous growth. Apart from providing insurance coverage, the organization has online platforms that it uses to offer mental health management programs, a pharmacy distribution chain, and advanced technological systems for medical institutions (Lensing et al., 2019). Nevertheless, the organization also takes advantage of cost leadership strategies and high-quality service delivery to achieve its development goals.

The UnitedHealth Group is also devoted to improving healthcare affordability and advancing health equity for all individuals regardless of their financial status, social standing, abilities, and background, thus advancing its cost leadership strategies. The organization has streamlined its financial systems and adopted price transparency tools for pricing and drug prescriptions. According to Kim (2021), its members save close to $225 on every transcription due to the tools effectiveness. Similarly, the UnitedHealth Group works towards facilitating health equity by engaging with underserved communities and providing support. For example, the organization occasionally invests in scholarships for Black-American students and assists individuals from marginalized communities to secure job opportunities (UnitedHealth Group, 2022). Additionally, it oversees infrastructural advancements and staffing of medical institutions in marginalized regions. Moreover, it donated to community organizations that advocate for reduced disparities. Its community approaches have enabled it to become a global leader in health service provision and medical advancements.

UnitedHealth Groups Marketing Business Strategy

Marketing is a critical aspect of business organizations seeking to diversify their consumer base and maximize revenue. The UnitedHealth Groups marketing process comprises a series of steps that identify consumer issues and maximize on gaps in the healthcare industry (Jahn & Bohnet-Joschko, 2022). Generally, the organization provides healthcare services to individuals and their families with a focus on high-quality care and value-based services. Its price transparency, integrity, and accountability have enabled it to gain consumer trust and recommendations as a reliable health service provider (Buchwald, 2022). The UnitedHealth Group offers its members health coverage and plans tailored to their needs. Although their pricing strategy is differentiated, they take advantage of government programs to reduce costs. Therefore, they can effectively serve customers without restrictions due to financial difficulties.

The UnitedHealth Group applies a marketing distribution strategy that targets specific market segments and geographical locations to provide services tailored to their needs. This approach enables the organization to address a range of needs and demands using limited resources. In addition, their advanced digital presence allows them to reach individuals globally and deliver medical services using telemedicine technologies (Crow, 2020). The company is active on social media and uses several platforms to create awareness about its services. Moreover, their presence on Facebook, Instagram, and Twitter allows them to reach millions of people and deliver their message to a broad consumer base. These marketing solutions are cost-effective because they involve negligible investment.

UnitedHealth Groups Business Model

The UnitedHealth Group is an internationally established organization that works with several other companies in the healthcare industry to oversee its initiatives and achieve sustainable development. The UnitedHealth group is an organization that offers a variety of health benefits to enable more affordable health coverage. In addition, it provides its partners with consultation services, medical technology, and management systems to support a unique healthcare experience and access to optimum quality medical services (Buchwald, 2022). The organization specializes in delivering care driven by data and technology, and scientific innovations. As a result, it empowers individuals and provides its partners with the facilities and technological tools required to achieve better public health outcomes.

The UnitedHealth Group generates a considerable portion of its revenue from selling insurance premiums. However, it also offers coverage for risk-based medical products, collects fees for health services, and sells medical products (Crow, 2020). The organization is also known to purchase competing health service providers, enabling it to gain ground in the industry. Recently in 2019, it purchased PatientsLikeMe, an online health service provider with a patient platform (Jahn & Bohnet-Joschko, 2022). As a result, its strategy allows it to expand and advance its earning potential. Currently, the organization serves more than 74 million individuals and thousands of organizations worldwide that facilitate its continuous revenue flow. Nevertheless, the organization is forecasted to increase its revenue due to its ambitions to diversify its consumer segments.

The UnitedHealth Groups value proposition is facilitating the provision of accessible and high-quality healthcare services using cutting-edge methods and technology-driven medical solutions. The organization ensures value for its customers by championing affordable healthcare, equipping health service providers and the medical task force, strengthening patient-physician relationships, and building healthier communities (Lensing et al., 2019). Its product diversification is one of the main components that ensure it covers the most critical medical field and engages in clinical research. In addition, their high levels of integrity and transparency have enabled them to build strong consumer relationships and advance to other fields. Thus, its value proposition reflects its vision and mission of delivering sustainable health services on a global scale.

The UnitedHealth Group is a leading organization in the US and the rest of the world in terms of revenue streams, which play a major role in driving up its profits. In 2021, the organization made more than $17.3 billion in profits, according to its earnings report (Kim, 2021). However, in 2022, the organization forecasts making $21.40 to $21.90 per share in profits. Every year, the organizations revenue grows by 11.8%, summing up to about $30 million (Crow, 2020). During the Covid 19 period, the organization experienced a sharp increase in its profits as more people deferred most medical procedures thus diminishing medical costs. However, Optum Health, a subsidiary of the organization, contributes more than half of its revenue (Buchwald, 2022). Nevertheless, the organization intends to increase its profits in the future due to its expansion initiatives.

UnitedHealth Groups Corporate Strategy

The UnitedHealth group is an organization that serves shareholders in the healthcare industry by offering a range of products and services. As a result, its corporate strategy is geared toward using its competencies in clinical excellence to improve health care experiences for individuals worldwide (UnitedHealth Group, 2022). Over the years, the organization has engaged in research to improve health outcomes using technological applications and evidence-based solutions. Similarly, the company has invested in additional supply chains that develop medical technologies for multinational healthcare employers, national governments, and individuals worldwide (Jahn & Bohnet-Joschko, 2022). Most recently, the organization decided to integrate its healthcare and pharmacy services to form Optum, one of its most successful ventures (Kim, 2021). Nevertheless, the organization has acquired several other institutions to increase its supply chain efficiencies and keep up with core industry trends such as data analytics, consumerism, and value-based healthcare.

UnitedHealth Group is an organization that is committed to surpassing industry standards. As a result, it bases its corporate strategies on appropriate business behaviors, ethical conduct, and service diversification. Apart from offering insurance and technological solutions, the organization is leading innovation toward gamification as a tool to enhance teamwork and improve the status of employees in medical organizations (Lensing et al., 2019). Moreover, the organization implements a vertical integration strategy that involves market expansion by increasing the quality of its services and improving beyond its rivals. As a result, the organization has sustained continuous development over several years of service by continuously focusing on diversity and advancement.

The organizations top leadership is its Board of Governors, whose members serve on various committees within the organization, including the compensation and human resources committee, audit, and finance committee, nomination advisory committee, and the code of conduct committees (UnitedHealth Group, 2022). The organization has bases in several other states around the US and major cities across the world. Although the Board of Governors is responsible for overseeing major decision-making initiatives, the organization has officials in its subsidiaries responsible for their operation and appropriate functioning.

Since its inception, the UnitedHealth Group has adopted several business strategies that have enabled it to diversify its products. Although the UnitedHealth Group was incorporated as an insurance company, it ventures in several other fields in medical service provision, including population health management and pharmacy services (Jahn & Bohnet-Joschko, 2022). Most recently, the organization advanced its clinical research resources, allowing it to provide its shareholders with critical and reliable information regarding problematic health issues such as oncology and other chronic illnesses (Lensing et al., 2019). In addition, it liaises with players in the healthcare industry including government entities, non-governmental organizations, investors, start-ups, medical communities, and big-pharmaceutical companies worldwide to design reliable health financing solutions and payment systems. Thus, the organization has a unique vertical integration strategy and a corporate structure that allows it to thrive worldwide.

The UnitedHealth Group owes most of its success to its global alliances that enable it to serve its members over a wider scale. For example, the organization partnered with Universal Health Coverage in 2019 to unite global health leaders and advocate for the establishment of common goals for sustainable development. Moreover, the organization collaborates with institutions such as the Al Sagr National Insurance Company through its subsidiary, UnitedHealthcare International, to provide international health insurance coverage to employees in the Middle East (UnitedHealth Group, 2022). The health coverage is extended to the general community and the organizations members in Saudi Arabia, Jordan, Qatar, Kuwait, Lebanon, Bahrain, the Sultanate of Oman, and other Middle Eastern nations. Nevertheless, the organization has partnered with several other key players worldwide to improve healthcare service provision.

The Strategic Fit of the UnitedHealth Groups Business and its Corporate Strategies

The UnitedHealth Group has maintained an impressive track record due to its strategic corporate strategy and culture guided by high ethical attributes and integrity. The healthcare landscape has significantly changed over the past years and is currently characterized by a high demand for high-quality health services (Lensing et al., 2019). Moreover, cutting-edge technology and information sharing have enabled the general population to alter their health-seeking behaviors, resulting in a rise in the number of individuals seeking medical attention. Therefore, UnitedHealth Groups initiatives toward providing the highest possible quality of care and customer value are fit for its business and corporate strategies as they allow higher customer satisfaction and sustainability.

The UnitedHealth Groups product diversification strategy is also beneficial for its business as it allows it to serve a larger consumer base and drive up its profits. For example, apart from offering health benefits and coverage to individuals, employees, and organizations, the company control several hospitals, public health organizations, and a pharmacy that provides prescription drug services to its members (Buchwald, 2022). Moreover, the company ventures in medical information technology, scientific research, and consultation, allowing it to become an industry leader in global health and medicine. Moreover, its diversification plans are aligned with its expansion strategy as the organization continuously improves interoperability and encourages interprofessional collaboration between experts in its subsidiaries and partners.

The UnitedHealth Groups Globalization strategy and partnerships with other leading medical corporations have allowed it to maintain its position as a powerful brand. Currently, the organization has contracts with more than 6000 health institutions and over one million medical practitioners worldwide. It provides services to more than 74 million individuals, which is made possible by its global networks and partnerships (Crow, 2020). Additionally, the organization heavily invests in information technology, equips its members with advanced technological solutions, and offers training on how to enhance the effectiveness of systems. As a result, they can easily manage their global networks, communicate with their shareholders, and serve customers more efficiently using online platforms and application solutions.

Conclusion

The UnitedHealth Group is an American organization with branches worldwide. Although the companys main business is offering health coverage and benefits to individuals and its members, the organization engages in diverse initiatives across the healthcare industry. The UnitedHealth Groups mission is to facilitate high-quality and accessible health care to individuals in various regions. Therefore, the organization works with partners all over the world to enhance healthcare service delivery and improve its systems. The organization is headed by a Board of Governors who oversees critical decision-making. However, all subsidiaries have managers and officials who run processes within the supply chain. Over the years, the UnitedHealth Group has shifted its focus toward innovation and technological advancement in healthcare. As a result, it has been ranked one of the top technological healthcare companies in the US. Its corporate strategy is based on offering value and establishing positive consumer relationships, enabling it to gain trust and significant market influence. Thus, its business approaches have played a major role in its success and position as a global brand.

References

Buchwald, H. (2022). Payers. In Healthcare upside down (pp. 51-59). Springer, Cham.

Crow, C. 2020. Strategic Audit of Optum. Undergraduate Honors Thesis. University of Nebraska-Lincoln. Web.

Jahn, J., & Bohnet-Joschko, S. (2022). Health insurers: Evolving into ecosystem-based service companies. Journal of Business Strategy,(ahead-of-print). Web.

Kim, M. (2021). The Optum-Atrius transaction: A model for reviewing mid-sized health transactions. American Journal of Law & Medicine, 47(4), 523-530. Web.

Lensing, C. J., Garth, S. R., Ehlert, B. W., Duerr, J. M., Wagner, C. D., Kapov, K. A., Jones, J. P. & Hoversten, S. R. (2019). Empowering patients and providers with more and better data: Innovative concepts in type 2 diabetes management. Diabetes Spectrum, 32(4), 323-330. Web.

UnitedHealth Group. (2022). Who we are; Our Business. UHG. Web.

Executive Summary

The purpose of this management report will be to focus on the business strategy of a particular industry. The industry will be identified and discussed in the introductory part of the report and the various firms that operate within the industry will be identified. An analysis of the industry will be conducted through the use of Porters Five Forces model for industry analysis.

From the analysis, the key drivers that influence strategic thinking and profitability within the industry will be identified and discussed. The sources of competitive advantage within the industry will also be identified during the discussion. Strategic options that a firm within the industry can be able to adopt as well as an assessment of the implementation risks associated with the strategic options will also be discussed in the management report.

Introduction

The industry that will be focused on in the management report will be the global petroleum or oil industry that is responsible for the production of petroleum and oil products. The main processes that are conducted by the oil industry involve the exploration, production and refining of oil and natural gas to be marketed and sold to various countries around the world. The main products that are manufactured by the oil industry around the world include oil, natural gas and petroleum with petroleum being used to produce other commodities such as fertilizers, chemical pesticides, plastic equipment, pharmaceutical products and chemical solvents.

Before the oil industry was established, petroleum was used in its unrefined state for domestic and lighting purposes for over 5000 years. This unrefined petrol was extracted from naturally occurring rock formations to be used for mostly lighting purposes. According to Persian history, petroleum was used for medicinal purposes as well as for illumination and warfare. The ancient Chinese used petroleum for lighting purposes as well as for warfare. The first petroleum industry was established in the 8^th century in Baghdad, Iraq with the oil fields within the Baku and Azerbaijan regions of Iraq being exploited during the 9^th century (Frank 2005).

The importance of the oil industry in the world continued to evolve slowly over the centuries as many people around the world relied on coal and wood for the energy source. The industrial revolution however increased the use of oil and petroleum products as a source of energy and power in many of the industries that were established during the revolution. Research was conducted on other forms of energy that could be used in the industries apart from coal and whale oil. The discovery that kerosene could be extracted from crude oil created a demand for petroleum or oil products in many of these industries and by the 20^th century, oil had become the most valuable commodity in the global world (Frank 2005).

The oil industry accounts for a large percentage of the worlds energy consumption in many countries around the world. There are many companies within the oil industry that are involved in oil extraction, refining and marketing activities with some of the most common being British Petroleum (BP), Chevron, Shell, PetroChina, Total and ExxonMobil. 80% of the worlds oil and natural gas reserves are controlled by national oil companies while 15% of the worlds total supply is controlled by the major oil companies within the oil industry such as BP, Shell and ExxonMobile (BBC 2008). The diagram below demonstrates the distribution of oil and natural gas products amongst 50 of the largest oil companies in the world.

Objective of the Report

The objective of this report is to analyse the current competitive environment of the oil industry by focusing on the various competitive environments that exist within the oil industry. The analysis of the industrys competitive environment will lead to the identification and determination of key industry drivers that enhance the strategic thinking and planning of companies within this industry. The industry analysis of the competitive environments will also ensure the key drivers that are necessary for profitability within the industry have been identified and discussed. The industry analysis will also pave the way for the identification of sources of competitive advantage that exist within the industry and how these sources affect the profitability of companies.

Structure of the Industry

There are five sectors that make up the structure of the petroleum industry and these sectors include the upstream sector which is concerned with exploration and production activities, the downstream industry sector which deals with the refining and marketing of petroleum, the pipeline sector which deals with transportation, the marine sector and the service supply sector. The upstream sector within the petroleum industry deals with the exploration and production of natural oil and gas.

The activities that fall under the upstream sector involve geological assessments of oil fields and wells that have natural oil reserves and the drilling of these fields to gain access to the oil reserves. The upstream sector also involves the use of high-tech offshore drilling platforms to produce oil and petroleum products that are used in the downstream sector of the industry. The United States, which is the worlds third largest producer of oil products, has 3,800 offshore drilling platforms and 500,000 oil wells that are based in areas owned by the country. This has enabled the US to produce over 2 million barrels of oil ever year (American Petroleum Institute 2010).

The downstream sector of the oil industry involves the refining and marketing activities for the industrys petroleum products. Refining or refinery activities are those processes that are used to package crude oil into usable petroleum products. Oil refineries around the world are used to process more than a billion barrels of crude oil on a daily basis. These crude oil products are then marketed to the various companies that exist within the global oil industry through the use of marketing activities that are designed for petroleum products. The pipeline sector of the industry deals with the transportation of crude oil or unrefined petroleum to various oil refineries for refining operations after which the oil is transported to various oil retail outlets around the world (Journal of Petroleum Technology 2007).

The marine sector of the oil industry involves the transportation of petroleum and petroleum based products through the use of ships and shipping lines. Oil tankers are used to transport oil around the world while port operations are used to monitor oil operations in offshore drilling platforms that are based in the ocean.

Maritime fire fighting and oil spill response are segments that fall under the marine sector of the oil industry that are mainly involved in dealing with oil spill disasters in the ocean or other mainland areas involved in oil production. The service and supply sector deals with the provision of equipment that will be used for oil exploration and extraction operations in the upstream sector of the industry. The sector also provides equipment that will be used in the distribution of the oil to various retail outlets around the world (Pirog 2007).

Analysis of the Current Environment

The analysis of the oil industry is complex in nature given the changing economic situations around the world that affect the production and distribution of oil to various consumers around the world. The most appropriate model that can be used to analyse the oil industry is Porters Five Forces model which stipulates that any industry is influenced by five forces that are deemed to be the competitive environments of an industry. These five forces include the power of the buyer, the power of the supplier, the threat of substitutes, barriers to entry and industry rivalry. With relation to barriers of entry, various factors make it difficult for companies that are interested in joining a particular industry from entering that market (Hill and Jones 2009)

The most common barriers of entry in any industry include government restrictions and regulations, patents and intellectual property rights, economies of scale and asset specificity. With regards to government restrictions and regulations, governments require companies interested in entering the oil industry to have adequate capital to finance oil exploration and production activities as well as refinery and marketing activities.

This means that companies interested in the oil industry should have high capital expenditure requirements so that they can be allowed by the government to operate within the oil industry (Lynch 2006). The government regulations are also a barrier to entry into the oil industry as they ensure that the supply and distribution of oil is maintained at a constant rate. High government taxes and subsidies that have been placed on the production of petroleum and petroleum based products as well as the importation and exportation of oil have also made it difficult for oil firms to break into the industry (Grunig and Kuhn 2008).

Apart from government restrictions and regulations, economies of scale create a barrier to entry within the oil industry because of capital intensive nature of the industrys operations where a large amount of capital is needed to conduct operations within the industry. This high capital intensive nature has made it difficult for oil producing companies to enter the oil industry. The minimum efficient scale (MES) has also created a barrier to entry within the industry because of the high production costs that are needed to produce and manufacture crude oil. Asset specificity is a major contributor to barriers of entry in the oil industry as it involves the use of highly specialized technology to produce different products within the industry. Asset specificity becomes a barrier when a company cannot be able to convert its assets or equipment for other uses in the event the venture fails (Kurtz et al 2010)

The average oil industry requires the use of equipment to perform the various activities that fall under the industrys five sectors. These equipments are varied and they are in high demand for all the companies based in the petroleum industry. This means that asset specificity is high within the oil industry. Patents have also created barriers to entry in the oil industry because of the similar products produced by the various corporations within the industry. The proliferation of similar oil products in the oil market has made it difficult for intellectual property rights to be applied within the industry. The similar oil products have also made it difficult for consumers to differentiate between a companys products in the event there is no patent (Detomasi 2008).

The threat of substitutes according to Porter (2004) is the products and services that pose a threat to a companys products. The substitute products that can be used for energy purposes instead of oil or petroleum products include bio fuels, wind or solar power, hydro electric power and nuclear energy. These substitute products will continue to exist within the oil industry if the demand for oil and oil based products is influenced by price changes and fluctuations within the industry. To further explain this statement, the price of oil and petroleum products is constrained by the price of these substitute products whose industry which is different from the oil industry does not pose any form of competition or rivalry to oil companies within the industry (Porter 2004).

The power of buyers as described by Porter (2004) is the impact that consumers have on the products produced by certain companies and industries. The power of buyers over an industrys products is usually high when the industrys market has only one buyer and various suppliers. The power of the buyer comes into force when they determine and set the price of the commodity, creating a market known as a monopsony. Such a market does not exist within the oil industry and the power of buyers is nonexistent in this industry as the prices for oil and oil products are determined by the threat of substitute products, the major oil supplying countries in the world, oil availability, low product differentiation and the price of oil barrels.

The power of suppliers within the oil industry is relatively high as they are charged with the supply of crude oil to various oil companies around the world. Oil suppliers determine the price of oil and petroleum products based on the availability of oil and its supply to various countries around the world. Supplier power within the industry is usually demonstrated when petroleum is sold at a higher price than its original retail price.

This is done to capture industry profits from the various players that exist within the oil industry. The power that oil suppliers have on the price of oil is influenced by factors such as the demand for crude oil, low switching costs that exist within the industry and the few oil suppliers that exist in the world. Most of the worlds oil supply is obtained from countries such as Nigeria, Kuwait, Iraq, Saudi Arabia, Kazakhstan and Azerbaijan (World Energy Research 2009).

According to Porter, rivalry within an industry is influenced by factors such as high fixed costs, high exit barriers, brand differentiation and the various rivals that exist within the industry. The intensity of rivalry that exists within the oil industry is mostly determined by the various oil companies that exist within the market. Some of these companies include BP, ExxonMobile, Shell, Chevron and Total which have all created a sense of rivalry of within the industry because of the various products that they manufacture and produce for sale within the oil industry.

Competitive rivalry within the industry has also been determined by the prices of oil products being offered by the various companies in the industry. If a competitor changes their oil prices, all the other companies will have to adjust their prices to ensure that they do not lose their customers to the rivals within the industry (Grant 2005). The diagram below demonstrates the analysis of the oil industrys competitive environment.

Key Drivers that influence Strategic Thinking and Profitability

Like any other industry in the world, the oil industry is subject to various drivers that influence the strategic thinking of most oil companies in the industry as well as the profitability of these companies. One of these drivers is globalization which has affected the various sectors of the industry. The oil industry is made up of some of the worlds largest multinational corporations that have their operations in many countries around the world.

Oil companies that are state owned operate within the national boundaries of their respective countries which means that they get to develop their business strategies based on a national or regional perspective. The multinational oil corporations however have to determine their business strategies from a global perspective where they have to consider the needs of the international market when exploring and producing crude oil. Globalization has been a key industry driver in the oil market as the worlds energy needs continue to grow as a result of modernization. Globalization has allowed multinational oil corporations to maximise their resources and equipment to achieve profitability (Naimi 2005).

Another key driver that has influenced the strategic thinking and profitability within the oil industry is neo-liberalism where the deregulation and privatization of oil companies around the world has strengthened the strategic thinking in oil markets. Neo liberalism has also ensured that oil companies are able to achieve profitability through the regulation of oil prices within the various oil markets that exist around the world. Market forces have been strengthened in the oil market to ensure that oil companies continue to conduct oil exploration and production activities. Apart from neo-liberalism, technology has played an important part in the global oil industry. New technological innovations within the industry have ensured that oil fields and wells that were deemed unprofitable are able to achieve profitability (Johnson and Turner 2003).

Technological innovations and improvements within the oil industry have also made it possible to improve the accessibility to oil fields and wells that were inaccessible. Technology has also ensured that the amount of oil recovered from these oil fields is enough to offset the costs incurred by the company during the drilling and extraction operations. The use of technology that incorporates energy efficient features has ensured that the global energy consumption around the world has been maintained to ensure that economic growth has been achieved. The global supply and demand of oil is also a key driver in the oil industry as it determines the price of oil and petroleum based products. The supply of oil in the past and in the present has mostly been affected by political disturbances in oil producing countries such as Kuwait and Iraq (Johnson and Turner 2003).

Such disturbances have driven the cost of oil and oil based products up, forcing many multinational corporations to adjust their prices to deal with losses caused by these disturbances. These political disturbances affect the profitability of multinational companies for the duration of the conflict. The demand for oil has also played an important role in the oil industry especially in developing countries such as Asia and Latin America that have faced continued economic growth in the recent years. Government politics have also played a major role in influencing the oil industry where legislators participate in matters that relate to price regulation within the oil market. Presidential campaigns such as the Bush campaign have focused on the energy industry during their campaigns by encouraging the perception that the oil industry affects energy and environmental policies (Johnson and Turner 2003).

Government politics affects the strategic thinking of many companies as they have to adjust their strategies and objectives to meet with the government regulations established by various government agencies around the world. In terms of price regulation, multinational oil companies have had to adjust their prices to ensure that they do not go against the set out price regulations in the global oil market. These companies have to consider price regulations when developing marketing strategies that will be used to market their products in both the national and international oil market. These drivers of the oil industry are important as they determine the performance of the industry in both the political, technological and economical environment (Detomasi 2008).

Sources of Competitive Advantage within the Oil Industry

According to Edmilson (2000), determining the sources of competitive advantage amongst companies within the oil industry will involve assessing the behaviour of the various players in the industry. The analysis of industry behaviour will be conducted through the use of generic competitive strategies and strategic positioning of companies within the industry.

Different industries have different competitive strategies that allow them to have a competitive advantage over other companies within the same industry. These competitive strategies are used to determine the level of profitability that exists within the industry. Porter developed three generic competitive strategies that can be used by businesses in different industries to achieve competitive advantage over their rivals (Griffin 2008).

These competitive strategies include cost leadership, focus strategy and product or cost differentiation where cost leadership involves a company selling its products at a lower price than its competitors and product differentiation involves providing customers with a unique package of benefits that are different from those of competitors. Focus strategy involves concentrating on a single segment of the companys market, a geographic area or section of the industry in which to sell its products (Botten 2007).

Porters generic strategies have been incorporated within the oil industry to provide the various players within the industry with a source of competitive advantage. The sources of competitive advantage within the oil industry based on Porters strategies include the geographic scope of the oil industry where multinational oil companies that focus their business on geographic parameters are able to achieve a competitive advantage. Oil companies that have their operations in various countries can be able to achieve expansion through cost reduction and differentiation strategies. The geographic scope therefore plays an important role in determining the competitive scope of these companies (Edmilson 2000).

Technology is another important source of competitive advantage within the oil industry where various technological innovations have been developed to deal with oil consumption in the global market. The oil crisis in 1973 saw many oil corporations developing technology that could be used in dealing with oil shortages and oil supply (Detomasi 2008). Technology has gained a lot of importance within the industry, a result of which has driven the industry to become one of the most dynamic in the world. Technology with relation to Porters generic strategies is an important driving force in cost reduction and product differentiation strategies where oil companies view technology to be an important strategic aspect when it comes to achieving a competitive advantage within the industry (Edmilson 2000).

Another source of competitive advantage within the oil industry is oil-politics where the political dimension influences the differentiation generic strategy within the industry. Both the national and multinational oil companies develop their focus strategies based on the political differentiations of the oil market. Politics plays an important role in the oil market as it influences the public policies and government behaviour with regards to oil regulations and policies (Edmilson 2000).

Strategic Options

PetroChina is one of the largest oil corporations in the world and it is the dominant player in the oil industry within China. The company has incorporated the use of three strategic options which will ensure that the economic growth of the industry in China has been achieved. These three strategic options include internationalization, oil resources and oil markets in both the national and international markets of the company. In terms of resources, Petrochina has developed a business strategy that has ensured the maximization of hydrocarbon resources within China in its exploration and production actvities. It has also chosen to expand its exploration of offshore resources to increase its oil and natural gas reserves in both the national and international markets of the company (PetroChina 2008).

Other strategic options that are available to PetroChina include developing substitutable energy sources to achieve a rapid growth in the energy sector of China, consolidating the upstream sector of the countrys oil industry and strengthening the foundations that exist in China for sustainable oil development. With regards to market, the strategic options that are available to PetroChina to enhance its competitive position in Chinas oil industry will be to pursue a leading role in the oil market that will ensure the maximization of profits.

The company could also take advantage of the economies of scale that exist within the market to achieve profit maximization as well as integrate their upstream operations with their downs stream businesses. They could also incorporate the strategic options of expanding high efficiency markets within the oil industry and also promoting their competitive power in both the domestic and foreign oil markets (PetroChina 2008).

The internationalization strategic options that the company can incorporate in its business strategies include concentrating on overseas oil and natural gas exploration activities, incorporating the use of outgoing and incoming resources in the production of oil in the international operations as well as the exportation of the companys products to international oil markets. Another strategic option that would ensure that the company is able to achieve a competitive advantage in both the national and international oil markets would be to trade oil and natural gas in the international market. This would ensure that the company continues to be the dominant player in the oil industry within China (PetroChina 2008).

The implementation risks that will be experienced by PetroChina when incorporating the above strategic options into its business strategy will include capital expenditure requirements which will be higher should the company consider to expand its operations to additional countries around the world. The company also faces the risk of government restrictions and regulations when it comes to price regulations within its various markets. In its diversification strategies, PetroChina faces the risk of losing its existing businesses if some of its financial assets would be used in the expansion effort.

Conclusion

The management report has focused on the global oil and gas industry by conducting an industry analysis of the oil market. The analysis involved the use of Porters Five Forces model for industry analysis which assessed the various competitive environments that exist within the oil industry. The report has also focused on the key drivers that influence the oil industry in the global context and these drivers include neo-liberalism, technology, globalization and government politics.

These drivers are important as they ensure that the oil company is able to develop products that are up to date and meet the international and national needs of the oil market. The report has also focused on the various sources of competitive advantage for companies within the oil industry and these forces include technology, oil politics and the geographic scope of oil companies which has been deemed to play an important role in providing these companies with a competitive advantage within the oil industry.

References

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BBC (2008) Global oil industry in figures. 

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Edmilson, M. S., (2000) Competitive strategies and strategic positioning of oil companies in the international oil business: theory and practice in perspective. Web.

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Griffin, R.W., (2008) Fundamentals of management. New York: Cengage Learning.

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Hill, C.W., and Jones, G.R. (2008) Strategic Management Theory: An Integrated Approach. 8th Edition. Boston, US: College Permissions.

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Executive Summary

Target operates under a very competitive and challenging market environment characterized by aggressive and advanced competitors. Although it has a strong brand image, the company is lagging behind its key competitors. During the fiscal year 2020, Target had total assets amounting to $42,779 billion, while Walmart and Amazon had $236,495 billion and $321,195 billion, respectively (Walmart Total Assets). New players within the marketplace, such as the Dollar store and Kroger Inc., have grown to become Targets serious competitors. Given that the company faces stiff competition on multiple fronts, effective strategies are critical to its survival.

Three strategic issues impact Targets business operations: first, the companys market is characterized by stiff competition with little opportunity to compete on prices. Its competitors have similar product offerings, yet Targets stores are always out of stock. The second issue relates to its operational management; the company sources most of its products from China, which is problematic considering the current turbulent American-Chinese business relationship. The final issue relates to the companys damaged reputation caused by the recent legal violations. We look at how this negative publicity may affect the business and how it can revamp its image. We also recommend various strategies the company can implement to become the industrys market leader.

The paper is divided into three parts: the first section provides a comprehensive discussion of Targets market environment and the approach it needs to implement to become a market leader. The second segment highlights the companys operational management and the potential for acquisitions and strategic alliances in revamping its business. The last part discusses the organizations brand image and how it can exploit it to boost its market position.

Introduction

Strategic plans are crucial in creating a roadmap for a company to align its functional organizational activities and practices to achieve its strategic goals. It guides decision-making and resource allocation, thus improving a companys operational efficiency. This report analyses Target Corporations current business practices and provides strategic recommendations on improving its competitive advantage and market position. The paper offers suggestions in three key areas: its market, operational management, and brand image.

Market

Competition

Target operates under a very competitive and challenging market environment characterized by aggressive and advanced competitors. Some of these competitors offer equally good products and are also deliberately attacking Targets market segments to make huge profits. While Target has opened only eight neighborhood stores (Targets niche) since 2015, Walmart has opened approximately 270 to 300 such stores within the same timeframe (SWOT Analysis of Target Corporation). Amazon has a more substantial reputation in eCommerce, while Walmart is a low-cost provider. Other competitors such as Kroger Inc. have identical product offerings as Target, but its prices often undercut or match Targets.

A close analysis of the companys main competitors shows that most, if not all, discount retailers in the country have similar product offerings and cost strategies. Target competes in this environment mainly through focused differentiation and innovation. It primarily focuses on its core customer segments instead of trying to be everything to everyone. This strategy has given it a competitive edge over its competitors. A detailed SWOT analysis reveals that the company has a strong brand image and loyalty as its core competencies. Unlike its competitors that are viewed as low-class, Target is considered hip, trendy, and appealing, especially to young customer populations.

The company should leverage these core competencies as a preemptive strike against its rivals. According to Tabish et al., a strong brand image can give the company a sustainable competitive advantage and profitability (153). Accordingly, it is natural to argue that Targets brand name will influence its offensive strategies against its competitors. In line with this argument, the company should invest in products and activities that accentuate its image as a classy and hip retailer store to become a leading competitor in the market.

Cost/Prices

Costco and Walmart are cost leaders in the retail industry; they appeal to customers by selling products at low prices. Targets cost strategy is different from these companies, and it should remain so because being a second or third lowest cost provider is not always the best strategy. According to Thompson, low-cost strategies are only advantageous under two conditions: if market competitors do not counter-respond with their price cuts and if the profits in unit sales can offset the impacts of thinner profit margin per unit sold. While Targets prices are higher than its competitors, its best-cost strategy has helped it keep overhead costs low (SWOT Analysis of Target Corporation). Therefore, the company should avoid competing based on prices and focus on other strategies to give it a competitive advantage.

There is minimal opportunity for Target to compete on prices considering that prices are usually the main selling points for discount retailers. This characteristic calls for guerilla warfare strategies to grab customers from its rivals (Thompson 128). Guerilla tactics involve initiating occasional low prices to attract customers away from competitors. For example, the company can implement seasonal promotional activities that offer customers discounts for one week or a preferred timeframe to attract new customers to its business.

Market Segment

Convenience as a Core Value Proposition

Businesses can attain a competitive advantage through low costs, differentiation, or unique value. A typical strategic issue about target stores is that they are always out of stock, and their customers seldom find all of their desired products. On the other hand, its market competitors, including new market entrants, offer customers a one-stop shopping experience. Target needs to consider a business model that addresses convenience as a primary core value proposition. Empirical evidence has shown that customers are always willing to pay more for value (Thompson 126). Additionally, according to Thompson, having a broad product offering will help the company spread its fixed operating costs over many items.

Todays world is fast-paced, and people have busy lifestyles; therefore, convenience is a critical factor that influences customers purchasing decisions. Consumers value time  most of them want to purchase products with little effort and planning. Therefore, Targets out-of-stock problem is a significant deal-breaker for its customers. The company should ensure product availability to all customer segments through extensive distribution. Its physical stores should be strategically positioned, particularly in heavily traveled sites, popular shopping malls, next to a cheap transportation network, market outlet, or at an interchange. It should ensure that consumers have access to a wide range of products in those market outlets and retail stores. The company can achieve this goal by offering a broad range of products.

Target Audience

Until now, Target has differentiated itself from other discount retailers by tending to the hipper market. Unlike Walmart and dollar stores, Target is not perceived as a low-class retailer (SWOT Analysis of Target Corporation). Targets consumer market consists of trend-conscious and middle-class individuals aged between 18 and 44 years (SWOT Analysis of Target Corporation). Target can improve its market position by targeting a more diverse customer population. It can attract more customers by offering unique products that cater to their individual needs and concentrating on underserved market segments. For example, middle-aged adults and older adults are widely ignored in the eCommerce market. Because the company has a brick-and-mortar strategy, it should consider this population as a potential customer segment. The approach will allow this population to visit the retail store if they need extra help.

There is a multitude of literature showing that the aging population is significantly increasing. The United Nations reports that the global population of older adults is approximately 962 million; this number is projected to increase by 2050 to reach at least 2.1 billion (World Population Ageing 10). Through innovative technology, such as assistive technology, Target can attend to this population. Amazon has already implemented technology such as Amazon Echo, Alexa, and automatic re-ordering to improve mature adults and senior citizens shopping experiences. Target should be a fast adopter and implement such technology to capitalize on this untapped market.

Product Offerings

The company can also reach a more extensive and diverse target audience by offering more products. Most discount retailers have similar product offerings, making it difficult for companies to differentiate themselves. Of Targets product offerings, beauty and household essentials and apparel and accessories are the most important. The former generated $17.73 billion, while the latter generated approximately $15 billion in net revenues in 2018 (SWOT Analysis of Target Corporation). The company should invest in products that generate significant revenues and de-invest in the least important ones.

The blue ocean strategy is a unique tactic that will differentiate the company from its competitors. It refers to a market space/industry that does not yet exist and is untainted by competition (Thompson 127). It involves inventing distinct market segments and creating new market demands. Coca-Cola has acquired a strong market position by using this strategy (Thompson 127). For example, through research and development, Coca-Cola realized some customers valued healthy living lifestyles. Therefore, Coca-Cola developed new products such as Coke-zero and sugarless beverages to appeal to these customer segments (Thompson 127). Similarly, Target should research its market, identify untapped markets or customer needs, and develop products that will appeal to these markets. This new market space offers excellent opportunities for profits and rapid growth.

The company should consider entering new markets, especially the global market. The brick-and-mortar strategy provides the organization with a unique opportunity to expand to new geographic regions at low costs. The company only needs a web store to display products and a system for filing and delivering customers orders. The companys retail store personnel can fill and ship orders to local customers and attend to those who opt to pick theirs from the store. It can establish distribution and delivery channels globally by partnering or getting into joint ventures with established companies in those markets. Partnering and allying with established companies will give the firm the needed capabilities to penetrate new markets. It reduces risk by lowering costs while concurrently offering value and quality to customers (Thompson 128). Targets first attempt to venture into the global market failed because of the rapid expansion. On the contrary, the company should open small retail stores in selected areas and then slowly expand its operations.

Marketing Strategy

Targets decision to venture into eCommerce increased its competition as Walmart and Amazon are already well-established in the field. However, one of Targets core competencies is its unique and captivating marketing strategies. The company uses the brick and mortar strategy: customers can shop at its physical stores or online stores. The company should establish an approach that will convert its website traffic into revenues. According to SWOT Analysis of Target Corporation, Targets advert on Lilly Pulitzer fashion merchandise attracted a massive audience that its website crashed. Target should leverage such capabilities to give customers a superior shopping experience and turn web surfers into actual customers. Its strategy should be intriguing and appealing enough to make customers return to the website again.

Operational Management

In regards to its other product offerings, Target depends on third-party vendors outside the United States. The tension between China and U.S. after the Covid-19 debacle has made the business environment unpredictable and unattractive. A recent study by the Federal Reserve Bank revealed that U.S. companies lost $1.7 trillion in stocks due to the Chinese-American feud (Hass and Denmark). It is crucial that Target quickly adjusts its business operations in response to the current political environment. Currently, China is the companys largest source of merchandise. However, due to the current political climate, the company should consider sourcing its products locally. It should liaise with the best distributors and suppliers in the region through exclusive partnerships, contracts, or even acquisitions. These strategic partnerships will provide the company with the expertise and first-class capabilities needed to compete in the domestic market. The strategic alliances will also allow the company to concentrate on its core business proposition.

The company should outsource its order fulfillment activities to become competitive in eCommerce. According to Thompson, outsourcing order fulfillment activities is cost-effective, reduces the firms exposure to ever-changing technologies and buyer preferences, and improves its ability to innovate. However, to make the most out of outsourcing strategy, the company should only outsource distribution, manufacturing, administrative activities, information/data processing, and order fulfillment activities. According to Thompson, a company will only be sabotaging itself if it depends on outsiders to provide skills, capabilities, and expertise in areas that give its competitive advantage. Therefore, product design should be done in-house as it is one of its core value-propositions.

Brand Image

Over the recent years, Target has received negative attention from the media for supporting an anti-gay political activist. Additionally, the company is facing a legal suit for violating dozens of health and safety regulations. It was accused of disposing of hazardous wastes, including aerosols, pool chemicals, pesticides, and flammable substances, risking the community and animal health in the process (Rosen). As mentioned previously, Targets brand image plays a significant role in the companys business. There is a causal relationship between a companys green activities and its profitability. A companys green image positively influences customers perception of its products, promoting its brand loyalty (Assaker et al. 948). Thus, the bad press the company has been recently receiving is detrimental to its brand image. Target should implicitly communicate its values and commitment to maintaining the environments health. It should hire an expert to help rebuild its damaged image and build trust with the community. Investing in corporate social responsibility activities can also the company improve its reputation in the community.

Conclusion

Target should implement offensive strategies to outcompete its competitors. Target has a strong brand loyalty that it can use as a preemptive strike against its rivals. It should avoid competing on prices and focus on differentiation instead. It should offer its customers convenience as a core value proposition and ensure product availability in all retail stores and outlets. The company should consider entering new market segments, including the global market. The older population offers promising opportunities, but only if mediated by innovative technology. The company should also seek differentiation by creating new markets undiscovered by its competitors. It should outsource non-critical value chain activities to keep operational costs low. Strategic alliances and partnerships will help the company establish a strong foothold in new markets, especially the global market. Finally, it should concentrate on rebuilding its brand image to sustain its core competency.

Works Cited

Assaker, Guy, Peter OConnor, and Rania El-Haddad. Examining an Integrated Model of Green Image, Perceived Quality, Satisfaction, Trust, and Loyalty in Upscale Hotels. Journal of Hospitality Marketing & Management vol. 29, no. 8, 2020, pp. 934955. Web.

Hass, Ryan, and Abraham Denmark. More Pain than Gain: How the US-China Trade War Hurt America. Brookings, 2020, Web.

Rosen, Jeffrey. Target Corporation to Pay $22.5 Million Settlement for Environmental Violations. County of Santa Clara, 2018, Web.

SWOT Analysis of Target Corporation. PESTLE Analysis, 2015, Web.

Tabish, Muhammad, Syed Furqan Hussain, and Saher Afshan. Factors That Affect Brand Loyalty: A Study of Mobile Phone Industry of Pakistan. KASBIT Business Journal (KBJ), vol. 10, 2017, pp. 151170. Web.

Thompson, Arthur. Strategy: Core Concepts and Analytical Approaches. 6^th ed., McGraw-Hill, Irwin, 2020.

Walmart Total Assets 2006-2020: WMT. MacroTrends, Web.

World Population Ageing 2020 Highlights. United Nations, 2020.

Wells Fargo Strategy: Essay Introduction

Wells Fargo & Company (also called Wells Fargo) is one of the leading financial services holding companies in the globe (Our strategy, 2016, para. 3). The firm has numerous stores across the United States. The company has been leveraging its distribution strategy in order to improve its business performance. With the current level of consolidation experienced in the United States, the company has been forced to tackle the problem of competition in the industry. This study examines the nature and organizational strategy of the company. The paper goes further to outline the best strategies that can be implemented to revolutionize the firms performance.

Nature of the Organization

Wells Fargo is a public company that operates in the Finance and Banking industry. This industry is associated with the provision of banking and financial services to different consumers in the targeted market (Crotty, 2008). The company offers a wide range of products to its customers such as private equity, corporate banking, wealth management credit cards, foreign currency exchange, financial services, mortgage loans, and consumer banking (Wells Fargo, 2016).

This company was started by William Fargo and Henry Wells in 1852 to provide banking products to Californians (Wells Fargo, 2016). The firm acquired Overland Mail and Holladay in 1866 (Wells Fargo, 2016). Throughout the years, Wells Fargo has merged with different firms such as Union Trust, American Trust Company, and First Security Corporation. The company established Wells Fargo Securities in the year 2009 (Our strategy, 2016). This move supported its performance in investment banking. The organization currently has a total of 265,000 employees.

The other critical issue affecting Wells Fargo is the increasing level of competition. Wells Fargo is one of the companies with a superior management approach. The company has recorded positive results within the past three decades. However, the issue of complexity and size continues to affect this industry. The firm faces competition from giants such as Citigroup, JPMorgan Chase, and the Bank of America (Wells Fargo, 2016). Wells Fargo is the leader in terms of market capitalization. JPMorgan Chase and Bank of America have huge total deposits thus making it impossible for Wells Fargo to compete with them.

Organizational Chart

This corporation has a unique organizational structure that supports its business goals. The organization has a Board of Directors (BoD) to ensure the major functions are completed in a timely manner. The companys leadership is shared by different executive officers (Eos). The firm has eight EOs who manage different departments and functions. For example, David Carroll is the Senior EO for Wealth and Investment Management (Wells Fargo, 2016). The current Chief Executive Officer (and President) is Timothy Sloan. The Chief Risk Officer is Michael Loughlin while the Chief Finance Officer is called John Shrewsberry.

The CEO monitors various organizational activities and encourages every EO to focus on the companys goals. The Chairman of the BoD overseas the major functions of the firm to ensure they are legal and sustainable (Wells Fargo, 2016). The Chief Finance Officer (CFO) monitors and manages the companys financial matters. The role of the Risk Officer is to ensure the best investment decisions are made at the company. The firms quality assurance (QA) department improves service delivery.

Wells Fargo Business Strategy

The success of Wells Fargo in the Banking and Finance industry can be attributed to its unique business strategy. The firm has developed a powerful business strategy that is guided by specific principles. The companys vision is to satisfy the customers financial needs and help them succeed financially (Our strategy, 2016, para. 1). The firm embraces the power of determination, persistence, and hard work to ensure the targeted goals are realized. The firm uses its core values to build sustainable relationships with every client. The created relationships make it easier for the company to discover the diverse needs of the customers. By so doing, the company develops a powerful model that can deliver the best support to the customers.

In order to achieve its best goals, Wells Fargo creates new teams that can deliver exemplary results. The firm creates new opportunities for its customers in different regions. The move to understand the unique financial needs of the customers plays a critical role towards reshaping the business strategy (Our strategy, 2016). The company uses its financial resources to innovate and develop superior financial products. The next step is channeling such products to the targeted customers. The firms ultimate objective has been to ensure the companys customers realize their potentials.

The firms strategy is supported by the concept of risk management. The risk management department is always committed to the emerging needs of different customers. The firm uses effective capital management to ensure its business more sustainable and safe. The company monitors the financial needs of its clients in order to address risk before its affects them (Our strategy, 2016, para. 9).

This approach explains why the company has specialized in a number of products such as mortgage, investment, and banking. The managers work tirelessly to avail the companys services to more people across the globe. The firm is also known to distribute its diversified earnings equally. This strategy has been observed to support the firms profitability and business performance (Wells Fargo, 2016). This analysis shows clearly that Wells Fargo uses a powerful business strategy that is guided by its core values and principles.

Specific Area to Address

It is agreeable that Wells Fargos business model has made it one of the most successful financial institutions in North America. The firms products and services continue to address the needs of many customers in the region. Some threats such as the increasing level of consolation and meltdown in asset-backed securities continue to affect Wells Fargo (Oxelheim, Randoy, & Stonehill, 2011, p. 12). That being the case, Wells Fargo must restructure its model in order to overcome these challenges. For instance, the firm can expand its operations in order to target more customers in the developing world (Fama & French, 2008). A powerful strategy characterized by superior financial products will make it easier for the company to realize its potentials (Hunt, 2014). This gap explains why the targeted study will focus on the best approaches to overcome these threats affecting Wells Fargo and eventually make its successful.

Wells Fargo Strategy: Essay Conclusion

This discussion has showed conclusively that Wells Fargo is one of the successful providers of financial services in the United States. The companys business strategy is guided by the best values and ideas thus remaining sustainable. However, competition from giant corporations such as Citigroup and JPMorgan Chase remains a major threat. A revision of the current business strategy can make it possible for Wells Fargo to expand its operations and eventually become more profitable (Hunt, 2014). In conclusion, Wells Fargo & Company should implement a new business model in an attempt to address the increasing level of competition the industry.

References

Crotty, J. (2008). If financial market competition is intense, why are financial firm profits so high: Reflections on the current golden age of finance. Competition & Change, 14(2), 167-183.

Fama, F., & French, K. (2008) Dissecting anomalies. Journal of Finance, 63(1), 1653-1678.

Hunt, T. (2014). Common sense talent management. Hoboken, NJ: John Wiley and Sons.

Our strategy. (2016). Web.

Oxelheim, L., Randoy, T., & Stonehill, A. (2011). What can international finance add to international strategy? IFN Working Paper, 1(8), 1-28.

Wells Fargo. (2016). Web.