Category: Competition

Abstract

The occurrence of bottlenecks in a supply chain process is something that affects the performance of every organization. Bottlenecks are potential obstacles known to affect the integrity of a supply chain system. Some of the major infrastructure bottlenecks affecting logistic systems include social factors, people, management processes, physical infrastructures, technologies, processes, environmental forces, and policies.

Whenever such bottlenecks occur, companies should manage their employees in a professional manner in order to streamline their business processes. This research paper, therefore, gives a detailed analysis of the major bottlenecks affecting different supply chain processes. The paper also offers meaningful ideas and approaches that can be used to support the supply chain processes and logistical operations in many organizations.

Introduction

Agrawal and Choudhary (2014) define “reverse logistics as the movement of finished products or services from their final destinations to the company for the purpose of disposal or capturing value” (p. 15). This measure is undertaken in order to transform the situation and support the needs of the targeted customers. The presence of numerous after-sale supply chain issues should be considered carefully in every organization (Olorunniwo & Li, 2011).

1. The importance of reverse logistics to the competition: Businesses should eliminate bottlenecks in order to achieve cost reduction and efficiency in the management of every supply chain.
2. Additional challenges: whenever one challenge is eliminated, new problems tend to emerge. Such problems might not mirror the old ones.
3. Introduction of constraints: This concept refers to a business’s ability to utilize resources so that it can add value to its supply chain system.
4. Key focus: This research paper focuses on various social-bottlenecks that affect manufacturing. Methods that can be used as solutions are also presented. The paper also argues that business corporations should utilize their resources valuably and effectively in order to add value to their systems.
5. Thesis Statement: A proper knowledge of the gaps and infrastructural bottlenecks affecting the reverse logistics process results in effective business practices that can become potential solutions and eventually increase the level of competitiveness.

Background Literature Review

Different theories of management outline the best practices that can add value to a business. The managerial process should consider the best approaches and strategies that can improve the level of performance. Proper leadership presents new approaches such as empowerment, motivation, collaboration, encouragement, and employee support (Savitskie, 2007). A motivated worker will also be a resourceful asset thus promoting the best outcomes. Management theorists support the use of positive leadership approaches in order to ensure every business function produces the best results.

As well, business theorists believe strongly that diverse problems will always be encountered in different organizations. The best thing for organizations is to be aware of the best approaches to delivering desirable results (Naslund & Williamson, 2010). Effective management is a critical field that should support every aspect of the targeted supply chain. This move should be taken seriously if a firm is to realize its business potentials. Return management (RM) has become a meaningful concept that coordinates various practices associated with reverse logistics. This subfield of supply chain network is “founded on the argument that some products will be returned to the manufacturer for disposal, refurbishing, or remanufacturing” (Naslund & Williamson, 2010, p. 18).

Business theorists believe that various supply chain bottlenecks can be avoided through the continued use of effective managerial practices (Savitskie, 2007). The skills and employees’ competencies embraced within an organization determine the effectiveness of every business process. Disorientation and lack of motivation are some of the major malpractices known to have a bad impact on the effectiveness of a supply chain process. Khor and Udin (2012) argue that “poor business practices result in inappropriate or inferior products that must go through the reverse supply chain” (p. 7). The presence of infrastructural bottlenecks within the reverse supply chain is a crucial factor causing delays. Such bottlenecks also minimize the profits of the targeted company.

According to Hou et al. (2015), inappropriate employee management practices have remained a major concern in many business organizations. Such malpractices have been observed to present a major social infrastructure bottleneck. Individuals involved throughout the supply chain process should possess desirable competencies and skills in order to produce notable results. Khor and Udin (2012) observed that the use of various empowerment strategies was critical when delivering desirable results. Companies that fail to use appropriate managerial practices and human resource (HR) strategies have higher chances of facing negative outcomes (Savitskie, 2007).

Employees in a supply chain process should possess appropriate managerial competencies, that will eventually promote the best logistical operations. The employees also must possess diverse skills and knowledge (Naslund & Williamson, 2010). In order to achieve a goal, the supply chain manager (SCM) should be able to balance these differences and mentor the workers using his or her aptitudes. Successful logistical operations, therefore, depend on the professionalism and efforts of the SCM.

According to Naslund and Williamson (2010), various infrastructural bottlenecks will inevitably affect the reverse logistics system. For instance, climatic changes and rains can destroy different infrastructural resources thus affecting the integrity of the logistical process. Inadequate investment in the infrastructural aspects of the supply chain would make it impossible for many organizations to realize their potential. Poor maintenance and failure to provide adequate resources will negatively affect the targeted goals. These bottlenecks have been observed to affect the reverse logistics pursued by many companies and cause great losses. For instance, companies involved in global logistics “incur expenses of around 40 billion US dollars every year” (Agrawal & Choudhary, 2014, p. 16).

The nature of the resources used to support the supply chain process determines its effectiveness. For instance, labor unavailability remains a major supply chain bottleneck that affects the performance of many supply chain networks (Savitskie, 2007). Some companies create artificial barriers thus dictating the performance of the supply chain process. For instance, a company might fail to coordinate the major processes thus affecting the targeted results.

Technological failure might occur thus affecting the level of information exchange. Communication breakdown becomes a major bottleneck because it can result in delayed shipments (Olorunniwo & Li, 2011). Many experts argue that the continued use of proper leadership processes encourages more employees to promote the best logistical practices (Bozon, Spricigo, Rodriguez, de Queiroz, & Miguel, 2015). The approach will resolve various problems and cease, or at least reduce, technological breakdowns that can bring an adverse impact on the reverse logistics process.

Research Approach

This study focused on the major social infrastructure bottlenecks that make it impossible for many corporations to have successful supply chain processes (Naslund & Williamson, 2010). The research study targeted various articles, reports, and books in order to analyze the issues associated with supply chain management and reverse logistics.

Findings

a. Some factors such as illnesses, training challenges, and motivation affect the supply chain (Bouzon et al., 2015).

The completed research study observed that various barriers affect the performance of many companies, which mainly focuses on the success of their supply chain processes and logistical operations (Olorunniwo & Li, 2011). This focus is significant for it ensures every final product is delivered to the targeted consumers in a timely manner. Savitskie (2007) indicates that a firm with a proper supply chain system has higher chances of achieving its goals and gaining a competitive edge. For example, The Coca-Cola Company has always been embracing the best practices in order to attain its logistical objectives (Piotrowicz & Cuthbertson, 2014). Within the past four decades, the company attracted more customers through the proper use of its supply chain system (Piotrowicz & Cuthbertson, 2014).

Poor management of workers throughout the supply chain process is something that could ruin every possibility to accomplish a targeted objective (Naslund & Williamson, 2010). Differences in experience, personality, background, and professional qualifications of employees can influence the effectiveness of various supply chain practices. Supply Chain Managers (SCMs) should use their competencies wisely in order to obtain positive results.

b. The primary concern should revolve around the ability of businesses to manage people in order to deliver quality goods to the consumer (Bouzon et al., 2015).

Every management process should consider the uniqueness of the targeted employees (Agrawal & Choudhary, 2014). The strengths and weaknesses of the employees should be used to reduce conflicts and promote the best organizational practices. Proper management of human resources (HR) throughout the reverse logistics process is invaluable when improving the level of performance. A company that engages in poor management of its workers will end up bearing with unsustainable supply chain practices (Savitskie, 2007). This bottleneck has been observed to affect the brand image of many companies across the globe. This weakness also reduces the competitiveness of many organizations.

Various training challenges affect the performance and views of the targeted workers. The workers cannot manage to get the required resources, ideas, and skills thus failing to ensure the success of the supply chain process. Managers who are not able to motivate their employees involuntarily make room for new misbehaviors. This malpractice eventually results in poor coordination (Piotrowicz & Cuthbertson, 2014). Consequently, new challenges such as communication breakdowns and constrained relationships emerge.

The study also identified disaster preparedness and response as a powerful concept towards dealing with various infrastructural problems. Such problems include weather changes, unforeseeable events, and natural disasters. The ultimate goal should be to ensure the supply chains and reverse logistics processes are executed in a timely and effective manner. Companies embracing the power of disaster preparedness avail the right resources and finances in order to deal with every possible infrastructural problem (Savitskie, 2007). This strategy has the potential to increase the competitiveness of a particular company.

Conclusion

Organizations that take on the use of positive returns management (RM) strategies will improve their ability to compete. The first approach is to be aware of the major infrastructure bottlenecks that lead to the production of substandard products. The targeted organization will use this knowledge to introduce better HR practices such as decision-making, motivation, and provision of the most appropriate resources (Piotrowicz & Cuthbertson, 2014). The organizational process will also focus on the best ideas such as employee empowerment and collaboration. The best actions will be undertaken in order to add value to every targeted consumer.

Consumer retention is one of the most relevant issues of business practice (Piotrowicz & Cuthbertson, 2014). Firms that want to realize their potentials should constantly address the changing expectations and needs of their target audiences. The products delivered to the consumers should be of the highest quality and capable of addressing their unique needs (Piotrowicz & Cuthbertson, 2014). The same idea should be echoed throughout the entire reverse logistics process. It means that the products being returned to the company should be refurbished or remanufactured within the shortest time possible. The individuals involved in the reverse chain process should be provided with the best skills and equipment (Hou et al., 2015). The contented consumer will always support the targeted business.

Businesses can improve their internal processes through the use of integration (Hou et al., 2015). Employees should be motivated in order to promote the best practices in the manufacturing process. The use of these approaches will incomparably improve the competitiveness of the company. This study has also supported the importance of combining marketing approaches with logistics (Piotrowicz & Cuthbertson, 2014). Continued integration will ensure the external factors affecting the supply chain process are addressed.

Business organizations should, therefore, use different functions in order to meet their potentials fully. Theories of management support the power of leadership because it has the ability to mentor employees and eventually deliver considerable results. The supply chain is one of the core functions of an organization. This process supports the marketing of the product thus delivering value to the targeted consumer. A satisfied consumer will always purchase his or her favorite products from the targeted company – the notion of brand loyalty is based on this fact (Piotrowicz & Cuthbertson, 2014).

Business organizations promoting the best supply chain processes realize their goals within the shortest time possible (Savitskie, 2007). As well, successful companies have a tendency of promoting the best strategies in order to eliminate the major bottlenecks affecting their supply chain networks. Under the control of effective management teams, companies can deliver quality products to their customers and improve their brand reputation at the same time.

Summary

a. Social infrastructure bottlenecks focus on the ability of management to employ qualified employees in order to support the manufacturing process and supply chain.

Social infrastructure bottlenecks arise from various human aspects fostering the effectiveness of the supply chain process. The workers within an organization should wield the necessary skills in order to promote the best outcomes (Olorunniwo & Li, 2011). Employees might encounter diverse issues negatively impacting their level of performance. This study has indicated companies that embrace the best business processes will find it easier to achieve their potentials (Piotrowicz & Cuthbertson, 2014). The first trick is to be aware of the major infrastructure bottlenecks entailing flaws in the integrity of the supply chain process (Hou et al., 2015). Disaster preparedness and response structures will ensure the supply chain remains intake in case of some undesirable situation.

b. The experience of each worker should also be taken into account since it influences every aspect of the supply chain process.

Business organizations should use the implications of the existing bottlenecks. This approach will present new practices such as effective management. The management team should also hire qualified workers who have desirable skills in supply chain management. Managers should be aware of the experiences and competencies of these workers. The important objective is to ensure every person is capable of supporting the productivity and success of the logistical system (Bouzon et al., 2015).

c. Some factors such as diseases, illnesses, vacancies, inadequate training, and hiring should be addressed in order to increase the level of competitiveness.

Managers should be ready to deal with various challenges such as communication breakdown and lack of motivation (Hou et al., 2015). In summary, organizations should be aware of every infrastructural bottleneck capable of affecting the RM process. Such bottlenecks can be reversed using appropriate business practices in order to deliver remarkable results. Such strategies can produce new solutions, support the needs of more clients, and eventually increase the level of competitiveness of a certain company (Piotrowicz & Cuthbertson, 2014).

Future Research Recommendations

This research has outlined the major infrastructure bottlenecks able to influence both the reverse logistics and the supply chain process. The study presented new practices and initiatives that can be used to improve the supply chain process. The research also emphasized the benefits of effective returns management. However, the findings did not present conclusive ideas that can be replicated by companies to streamline their reverse logistics processes.

That being the case, future researches should use specific case studies to explain how companies can benefit from effective supply chain management (Naslund & Williamson, 2010). Future scholars should also consider the implications of proper leadership and managerial theories towards reshaping the effectiveness of every supply chain network. They can examine as well how proper marketing practices support different supply chain practices. These approaches will present powerful ideas that can improve the performance of many firms across the globe.

Reference List

Agrawal, A., & Choudhary, V. (2014). Reverse Logistics: Performance Measures and their Effect in Product Lifecycle. International Journal of Core Engineering and Management, 1(2), 14-22.

Bouzon, M., Spricigo, R., Rodriguez, T., de Queiroz, A., & Miguel, A. (2015). Reverse logistics drivers: empirical evidence from a case study in an emerging economy. Production Planning & Control, 26(16), 1368-1385.

Hou, H., Kataev, M., Zhang, Z., Chaudhry, S., Zhu, H., Fu, L.,…Yu, M. (2015). An Evolving Trajectory: From PD, Logistics, SCM to the Theory of Material Flow. Journal of Management Analytics, 2(2), 138–153.

Khor, K., & Udin, Z. (2012). Impact of Reverse Logistics Product Disposition towards Business Performance in Malaysian E&E Companies. IBIMA Publishing, 2(1), 1-19.

Naslund, D., & Williamson, S. (2010). What is Management in Supply Chain Management: A Critical Review of Definitions, Frameworks and Terminology. Journal of Management Policy and Practice, 11(4), 11-28.

Olorunniwo, F., & Li, X. (2011). An Overview of Some Reverse Logistics Practices in the United States. Supply Chain Forum, 12(3), 2-9.

Piotrowicz, W., & Cuthbertson, R. (2014). Supply Chain Design and Management for Emerging Markets. New York, NY: Springer Shop.

Savitskie, K. (2007). Internal and External Logistics Information Technologies: The Performance Impact in an International Setting. International Journal of Physical Distribution & Logistics Management, 37(6), 454-468.

Plentyoffish.com is one of the most efficient and profitable networking sites, with $10 million in annual revenues (Cheung et al.). However, apart from its superior financial performance, its business strategy is questionable since it heavily relies on advertising and makes it the only source of revenue (Cheung et al.). Consequently, this paper’s primary goal is to present an analysis of the current competition, assess its strategy, and suggest the most appropriate tactics for improvement.

Nature of Competition

As it was mentioned earlier, Plentyoffish.com generated its revenues from the advertisers while the usage of the website was entirely free of charge (Cheung et al.). The company was able to attract different agencies and enterprises to use this platform as a promotion instrument due to high activity on the website (Cheung et al.). However, it was not the only website focusing on providing similar dating services. In this case, the major trigger for the constantly intensifying competition was the technological development and Web 2.0 (Cheung et al.).

These factors, along with other Internet-based features, contributed to the escalating usage of the World Wide Web and increased the popularity of online social networks. According to the case study, Frind, the CEO of Plentyoffish.com, views dating (Match.com) and listing sites (Craigslist) and other online communities (MySpace and Facebook) as the major competitors (Cheung et al.). Due to low entry barriers, a threat of new entrants is also high, and this factor implies that the competition will become even more saturated shortly. Meanwhile, the market will continue to be represented by niche service providers and widely known networks and attract customers by the user-friendly interface, constant support, and high-quality offerings.

The article published in the New York Times might be considered another trigger for the increasing competition, as this publication reveals the success of Plentyoffish.com and describes its revenue-generating tool (Cheung et al.). In this instance, the competitors will attempt to copy this strategy or implement its best features. The rapid development of technology will assist them in attracting more users to their services while decreasing the flow of customers and their activity at Plentyoffish.com. Overall, it could be said that the company has to be prepared for changes in the nature and structure of the competition and its intensity, as the rival firms will react very fast (within several months) to this announcement.

Evaluation of the Strategy

Based on the aspects indicated above, it could be said that Frind should consider revising his strategy, as having advertising as the main source of revenue is rather risky. Currently, the business model is neither sustainable nor solid because it does not have a long-term orientation or a plan that ensures business continuity. Thus, the overall idea and framework seem to be competitive. In this instance, the main strategic goals should cover continuous growth, expansion, and an introduction of various levels of services. Consequently, they can be formulated as

• creating different levels of offerings such as premium and average by the end of 2009,
• discovering several new markets such as the UK and Australia and occupying 20% of their market shares in 2009,
• expanding a pool of employees to nine people in 2009 to enhance its working processes, and
• having a 10% annual increase in revenues in 2009.

These strategies will help improve the website and attract more customers to the social network while enhancing its position in the market.

Due to fast technological progress and know-how of Internet features such as ASP.NET, Frind should continue growing his business. Its hardware and software are currently inexpensive, and this strategy helps the company minimize its costs while generating extremely high revenues (Cheung et al.). Thus, hiring staff can be viewed as a priority, as experienced employees are the company’s most important assets, and they contribute to its growth and constant development. Overall, it could be said that the existent economic environment, rapid technological growth, the rising popularity of online social networks, and profound understanding of the Internet processes can be considered as critical advantages and the main reasons for aiming at continuing operations in this sphere.

The Best Model of Going Forward

Nevertheless, apart from the positive aspects mentioned above, the company should consider designing a well-developed business model for future growth. These matters would contribute to a simultaneous increase in the rivalry. In this case, there is a diversity of strategies, and one of them implies continuing to provide free services (a). The analysis of the strategy conducted previously depicts that this approach is rather risky and cost-ineffective. In this instance, the company’s management has to consider offering subscriptions and proposing a certain way to divide services into levels (d). For example, it is possible to provide free services and premium subscriptions covering special features. This approach will secure the streams of revenue and help attract a different segment of users.

Thus, an alternative strategy might be expanding offerings, and the current provided service range (b). This approach could not be discovered as the most suitable one for Plentyoffish.com. It is more reasonable to rely on the existent competitive advantage by constantly improving the quality of the delivered services. Creating additional ones might saturate the business and question its competitiveness in the market. Another possible strategy is to continue expanding traffic by providing its services to more countries (c). This approach is also reasonable since it will attract additional revenues by occupying market segments in different geographical areas. To summarize, it could be said that it will be rational for Plentyoffish.com to integrate several strategies (c and d), give priority to the development of premium service, and consider its international expansion as a subsequent step. Only with a combination of these ideas, the company will be able to gain its worldwide recognition and become one of the market leaders in its area of operation.

Conclusion

This paper shows that even successful companies such as Plentyoffish.com have to enhance their strategies. It is necessary due to the rapidly escalating competition and changing economic and technological environment. Plentyoffish.com has to revise its business strategy since it has some gaps, such as using advertising as the only source of revenue. In this instance, the management of the company should consider its expansion and combine the development of different levels of subscriptions and the growth of its traffic. With the integration of these ideas, it will be possible to reach the set goals such as 10% annual revenue growth and develop a distinct competitive advantage.

Work Cited

Cheung, Wilfred, et al. “Swimming in the Virtual Community Pool with Plentyoffish.” Harvard Business Review. 2008. Web.

Strategies to effectively compete with a computer company that is using a proprietary operating system

As the computer industry is developing at geometrical rates, so does the competition. Companies protect their rights and ideas in order to stay successful within the demanding market. The proprietary operating system enables a company to own all materials and products, particularly, software, ideas, and programs with the rights of ownership and primary developers. This greatly adds to the competition between companies and others are forced to come up with alternative avenues in securing their place in the business.

The proprietary operating system creates a sort of monopoly that allows the owner to use the software or program, make any copies of it, and add modifications in a complete or partial set. Since there are legal laws and patents that protect the usage of systems by other companies, other organizations have to come up with ways to counteract the competition. Privately owned software is usually encrypted with passwords or codes, is readable on a limited amount of computers or programs, and is restricted to the use of only a particular company.

In order for competitors to succeed, they could follow a similar strategy and limit the customer in their investment and usage of the software. So, a company could provide a person with a program or software and any add-ons or extensions of the software can only be purchased from the primary company, as they will only function with the original software (Stair 158). Often, competitors use high pricing, so that the customer is discouraged to pay a large sum of money again by switching to another company.

In this case, the customer has no choice but to continue using the products and services of the company he dealt with from the beginning. This is sometimes referred to as a “lock-in” strategy where a person is limited in their choices by the wants of the company (Zhu and Zhou 2). But the process changes when a company competes with another business that does not have private ownership of products and services.

The most effective type of pricing strategy

The modern world has experienced a great leap forward in computer technology and other innovations. This led to a lot of companies providing software that can be used publicly. This creates serious completion for companies that do not share their programs and ideas. Customers that acquire services of proprietary vendors become dependent on the company, whereas open-source programs and distributors allow for free access, modification, distribution, and copying of software.

Comparing to the privately-owned information, the public ones have less competition with the industry and are able to have lower expenses in producing and maintaining the software. Discounts and special offers can be used to attract returning customers and thus, the equation benefits both companies and consumers (Amant 104).

In the end, the benefits of public software outweigh the privately-owned ones because the decrease in competition and costs leads to a better attitude and return rates. People are able to exchange information, copy and upgrade the software using a vast amount of programs, and the number of companies involved in the business drastically increases. It is clearly evident that public networking and sharing of information is far more beneficial for companies than private ownership.

Works Cited

Amant, Kirk. Handbook of Research on Open Source Software. Hershey, United States: Idea Group Inc., 2007. Print.

Stair, Ralph. Principles of Information Systems. Boston, United States: Cengage Learning, 2011. Print.

Zhu, Kevin and Zach Zhou. “Lock-In Strategy in Software Competition: Open-Source Software vs. Proprietary Software.” Articles in Advance 1110.0358 (2011): 1-10. Print.

Generic Competitive Strategies

Several generic competitive strategies are adopted by different business entities across the globe depending on their products, strategic marketing approach, and geographical location. Among the most common generic competitive strategies are low-cost provider, broad differentiation, best-cost provider, market niche low cost, and differentiation based strategies.

Specifically, the BMW motor company has adopted the broad differentiation strategy that captures performance and engineering design in its numerous models. Due to technological leadership, BMW has strategically cut an excellent market niche due to its highly structured and broad differentiation strategy. This strategy aims at establishing the broadest possible mechanism for optimizing returns by dwelling on specific features that make the product unique and appealing to target clients.

Across the globe, BMW models are top performers. Lulu Company has successfully adopted the low-cost provider strategy which aims at providing the best quality at a minimal possible cost to its customers. Across America, Lulu products are cheaper than most of their competitors’ despite being of high quality. The company benefits from economies of scale since it optimizes sales through the provision of affordable high-quality products.

Hilton uses the market niche (focused) strategy which is based on differentiation depending on the market niche. For instance, the branch in Indian serves both traditional and other meals. The same trend is used to appeal to customers on other continents who are looking for quality and cultural integration in services. A focused differentiation strategy is also applied by Rolex Company. The focus of Rolex Company is on relatively wealthy clients who desire the best in the market.

Since the target group for Rolex Company is already established, the company has managed to remain profitable and has an admirable potential for growth. Besides, few rivals are interested in the upend market clients who have established loyalty to Rolex watches.

Tamweel’s Outsourcing Strategy

Tamweel Company has successfully adopted an outsourcing strategy in a bid to carry out expansion especially from the United States of America. Tamweel Company was introduced in 2004 and has grown to be the largest in Abu Dhabi real estate industry. It is a government-owned real estate firm. It is located in the Middle East. Currently, the institution has financed property worth over AED 10 billion.

It is one of the most active financiers of real estate development in the U.A.E. Tamweel Company specializes in financing investment projects following the Islamic Sheria. Among the finance models, it adopts include the Ijara. Ijara is a contractual agreement in which Tamweel purchases an asset from the owner for a defined amount as demanded by the client. The company has four branches across the United Arabs Emirate. Currently, Tamweel controls forty percent of ownership, and the other part is opened to foreign investors from its trading partners.

As part of its policy, this institution specializes in customer-based vis-à-vis in line with the Islamic Sheria provisions. Currently, the company offers five key products. These are home finance plus, home finance takeover program, BAITI-National home finance program, home refinance program, and non- residents program. These programs are run concurrently though each is independent of the other.

In an efficient control matrix, these aspects must operate simultaneously within the set guidelines that determine and create a scheme for control. Thus, outsourcing has become a necessity for ensuring that these segments run optimally. Since the company deals with many products, it was necessary to outsource support services and skills that are necessary for completing the product-market cycle from the United States of America.

Introduction

Competition in the corporate world has been a never-ending rat race. Businesses all over the world are in a constant bid to expand the whole or part of their cycle. Growth, however, is not a walk in the park for any business. Consideration upon consideration must be made to ensure a smooth transition for change, as it does not come without its fair share of inconvenience. Therein lies the real conundrum: choosing the way and means for growth. In this case, understanding the ins and outs of vertical and horizontal integration as a way of growth is necessary (Competitive advantage, 2014).

Vertical Integration

Vertical integration is the process where different production and distribution stages of a product or service are managed by one company to increase its popularity (Vertical Integration, 2014). There are three types of vertical integration. First is the forward integration, which manifests when a business entity attempts to control aspects that occur after production, such as the supply network. As a case in point, a textile company that opens a chain of clothing shops is an ideal example of forwarding integration. Conversely, when a business unit seeks to take charge of processes taking place before production and distribution, it portrays the second kind of vertical integration, referred to as backward integration.

One of the examples of backward integration, that can be mentioned, is a clothing retailer company that sets up a textile factory. Lastly, a combination of the aforementioned types of vertical integration spawns balanced integration. Needless to say, balanced integration describes a scenario where a company controls all the activities from production to supply. In the oil industry, Shell is a quintessence of balanced integration.

Regulating production costs and determining product quality are two of the chief utilities of vertical integration. Be that as it may, flexibility and resilience are compromised.

Horizontal Integration

Horizontal integration, also referred to as lateral integration, describes the merger of separate business entities or the acquisition of one by another (What is Vertical and Horizontal Integration? 2011). Mergers involve combining two distinct businesses by purchase acquisition or by putting resources together. Acquisition refers to the friendly or hostile takeover of the business by purchase or exchange of stock (Horizontal Integration, 1999).

Lateral integrations are principally orchestrated to increase a company’s market take off. As a case in history, Standard Oil’s acquisition of forty refineries in the past century significantly increased its market apportionment and likewise its monopoly.

Notable advantages of lateral integration include penetration into previously untapped markets, neutralization of competition by joining forces, and the growth of a company in a cost-efficient way. Integrating horizontally is cheaper than building from the ground up. Lateral integrations fall victim to certain consumer perception stigmas. Companies that acquire other companies are often perceived as insatiable corporate domineers that are out to sabotage competition and secure monopoly in their given field. Indubitably, such a view of consumers has a negative impact on sales (Moore, 2014).

Conclusion

It is worth noting that from the onset of the 21^st century, lateral integration has gained widespread popularity as a convenient means for growth. Vertical integration is still a favored method with oil companies. Over and above, both approaches to corporate growth are still viable depending on a myriad of factors unique to specific corporations (Vertical Integration, 2014).

References

Competitive advantage (2014). Web.

Horizontal Integration. (1999). Web.

Vertical Integration. (2014). Web.

Moore, N. (2014). Difference between Vertically Integrated Company and Horizontally Integrated Company. Web.

What is Vertical and Horizontal Integration? (2011). Web.

Review Questions

• Discuss the differences between the trade, i.e. airlines who buy the airport facilities direct and the general public or travelers who consume the airport product.
  • The difference between the trade and passengers is in the fact that to attract these customers, airports need to propose different types of adequate services. Thus, when passengers are interested in the easy access to the airport, presence of airline lounges, and costs, airlines are interested in the airport’s capacity and frequency.
• A common way to segment demand is by airline product type. Assume you were an airport manager. Discuss the following marketing approaches for your airport: full-cost traditional service, a low-cost service, and charter service for your airport.
  • The full-cost traditional service is appropriate for large international airports, where customers are interested in the quality and types of the provided services. A low-cost service is appropriate for domestic airports in order to guarantee the customers’ interest and frequency. Charter can also be used in international airports, but the focus is on timely services, rather than on a variety of services.
• For airports that attract many business travelers, marketing research related to the size of nearby businesses and any new development can prove very successful to assess future demands. Discuss other marketing research-related activities that could help an airport manager in estimating demand.
  • In order to estimate demand, a marketer should focus on researching the environment and passengers’ interests. It is important to examine the particular features of the geographic location, transport connection, and infrastructure. A marketer should realize the needs of customers to determine whether to propose full-cost, low-cost, or charter services. Much information about passengers is important to examine their purposes of travel and specific behaviors and interests in order to be able to propose the expected services.
• In Chapter 7 of the Graham textbook the concept of “airport groups” is discussed. Explain this concept.
  • Airport groups consist of several airports that are organized or privatized as one group in order to realize the coordinated management. Airports within the group follow one strategy, and they can share different types of resources in order to reduce costs and risks. As a result, airport groups can effectively compete within the industry (Graham, 2008, p. 237).

Playing the Role of an Airport Manager

In order to attract more customers and increase frequency, the international airport should implement the following discount scheme:

• New routes discounts on landing charges:
  • Year 1 – Intercontinental (100%), Europe (85%);
  • Year 2 – Intercontinental (90%), Europe (75%).
• New routes discounts on passenger charges:
  • Year 1 – Intercontinental (100%), Europe (70%);
  • Year 2 – Intercontinental (80%), Europe (50%).
• Flight frequency discount:
  • Year 1- 40%,
  • Year 2 – 30%.

This discount scheme represents comparably low airport charges that can be discussed as attractive for customers. Decreases in airport charges regarding new routes often lead to increasing the number of new routes and to increases in the overall capacity. Furthermore, decreases in the charges on passengers also lead to encouraging capacity and to the guaranteed increases in the number of travelers (Graham, 2008, p. 248). The provision of the high flight frequency discount has a similar effect that also contributes to increasing capacity and frequency.

Discussion: Airline Discounts

Many types of discounts are used in Warsaw Chopin Airport, Poland, to overcome economic challenges in the aviation market. To increase the number of new routes, Leads Bradford Airport, UK, actively uses the new routes landing charge discount. In the United States, many airports use additional flights landing charge discounts to attract customers to certain destinations, such as Las Vegas. Exeter International Airport, UK, additionally introduced the landing charge discount for non-stop service to increase the number of new routes.

Landing charge discount for positioning flights and aircraft parking charge discount is introduced in the Newquay Cornwall Airport, UK, because of the necessity to base aircraft. Transfer passenger and passenger charge discounts are typical for London Heathrow Airport, UK, because these approaches increase the number of passengers and overall frequency. Daytime flight passenger and landing charge discounts are used in Essendon Airport, Australia, because of the increased capacity and frequency (Graham, 2008, p. 249).

Reference

Graham, A. (2008). Managing airports. London, UK: Routledge.

What are the issues that Alias must resolve?

The Alias Company must resolve the issue of price adjustments when competition persists. The policy of the company about the pricing of products has not been favorable to the sales reps. For example, Isaac Babbs was disappointed when he lost a contract to Wavefront. This was the fourth time to lose a sale contract due to the high prices. The company has fixed prices, which the sales reps should follow.

Describe the Alias’ advantages and disadvantages

Advantages

The products of the company could be designed in different forms. The products did not require extensive training. The company has a strong culture that allows the employees to be innovative.

Disadvantages

The company has fixed prices that hinder sales reps from competing with other companies. The products of the company were not compatible with many other products.

Where are Alias’ opportunities and the most serious competition?

The market size grew each year, and Alias acquired additional customers.

The emergence of many companies using the Alias software offered a good opportunity to expand its business. Alias experienced serious price competition from other companies.

How should Alias Research proceed?

Alias Research should research the behavior of competitors to know their strategies. The company should also research strategies for product differentiation to achieve a competitive edge.

Should sales reps be allowed to negotiate prices?

The company should allow the sales reps to negotiating the prices. The competitors allow their sales reps to negotiating the prices, and they sell products easily. The company has lost many contracts because the prices are fixed. Allowing the sales reps to negotiate the prices will help create bargaining power.

The Company

The Alias Research Company was introduced in 1983. The founders are Stephen Bingham, Nigel McGrath, Susan McKenna, and David Springer. The founders had few resources when establishing the company. Thus, they had to borrow money to get enough resources. Alias grew fast because the founders and employees were willing to achieve the goals of the company. The company applied informal culture in the management of all activities. The company had a strong team spirit, which allowed the employees to unite and consult each other.

Competitors

The major competitors were Wavefront, TDI, and E&S.

Customers

The company served automobile companies.

Recommendations

The management should allow the sales reps to fix prices depending on the pricing strategies of the competitors. The culture of the company should be changed to allow innovations into different products.

A SWOT Analysis

Introduction

The globalization of the world has allowed companies to source their technology, goods, supplies, and information from remote locations without the need to choose local options. However, the geographic situation of a business remains high due to the existence of clusters on the world’s economic map. Clusters are places with organizations that amass critical competitive success in a specific field. They can vary in size, often spanning across a metropolitan area, a state, a country, or a group of nations. For example, the fashion and design industries of Italy or a wine production system in California are considered to be clusters. These systems include a network of companies, organizations, and institutions that operate in a particular field. A cluster can have suppliers, manufacturers, retailers, universities, governmental institutions, and other elements that contribute to the industry’s activities. Due to their complex structure that does not fit industries’ classifications, clusters can stay unrecognized for a long time.

Main body

Clusters offer companies a comparative advantage and promote cooperation simultaneously. Inside the cluster, rivals compare their prices and products making competition for customer retention more rigorous. On the other hand, the integration of different organizations leads to better vertical cooperation between different levels of industries such as suppliers and manufacturers. Clusters are essential for increasing and maintaining competition because they affect companies’ productivity – the central aspect of competitiveness. Thus, local businesses that compare their quality of services to each other strive to offer better products and improve their processes. The quality of the local environment strongly influences competition as it provides businesses with supplies, customers, and infrastructure. Moreover, clusters drive innovation forward and invite new companies to be established in the area, further contributing to competition and innovation.

It is advantageous for new and established companies to base their primary business in a cluster as it provides a developed infrastructure with resources and clients. For instance, a cluster can have an existing pool of employees that are experienced in the field and have needed knowledge for the firm to avoid additional costs of training. Moreover, it can have suppliers that know which materials are required for the type of business. Thus, clusters are better than vertical integration as they give companies more choices. Furthermore, they attract customers who are acquainted with the quality of the cluster and its range of offered services. Thus, a level of entry in a cluster is low for new companies. Clusters also promote innovation of all its members which further increases the quality of the final product or service.

Conclusion

Clusters can appear due to historical reasons, customers’ needs, the prior existence of suppliers, and chance events. Some innovative companies can develop a cluster around themselves by attracting different businesses into the region. The process of a cluster’s formation leads to the creation of a self-reinforcing cycle that allows the cluster to evolve. The growth of a cluster impacts governmental and educational institutions and promotes change in the region. A merge of two interconnected clusters produces even better results. However, clusters’ success can decline due to changes in customers’ needs, resistance to change, technological discontinuities, and the lack of innovation. In order to sustain a cluster, companies should think about all their parts, including competitors, suppliers, governmental institutions, and employees. Here, collaboration and engagement become increasingly crucial in upgrading the cluster.

Abstract

The InBev Company is the largest Brewery in the world, that has the annual net income more than $3 billion. The departments and subsidiaries are located all over the world, but mainly the industry is concentrated in Europe. However the South American market is also among the largest. InBev owns 50% of the Mexican Brewery, and 27% of Chinese brewery. The current paper is aimed to analyze the historical perspective, Strategic Business Unit identification that classifies the whole corporation as the world Corporation, Relative Positioning, Corporate Culture, and Stakeholder Mapping. These parameters and points of business activity shape the manner of business leading, and give the clear realization on the perspectives. It is necessary to mention, that this analysis is essential for the business forecasts, and for theorizing the models of successful business activities. These models may be applied for the action of the Trans National Corporations, which aim to serve several brands.

Introduction

Anheuser-Busch InBev is one of the leading breweries in the world, that enters the top five of the consumer preferences list. Anheuser-Busch InBev is a real consumer-centric, sales regulated company, that manages over 200 brands all over the world, that include global, multi-national and local beer brands. Budweiser, Stella Artois and Beck’s are among these brands. The sales are held in more than 130 countries (Brito, 2008).

Geographically expanded with the objective exposure to the developed brands, and the bands that are currently developing, Anheuser-Busch InBev manages the staff of more than 120 thousand workers, employed for the operation in more than 30 countries all over the world.

InBev is the subsidiary of the Anheuser-Busch InBev, and it is necessary to emphasize, that it existed absolutely independently at first, soon after its creation. In 2007, it owned the market of €30.6 billion, and the net profit entailed €3.2 billion. The sales volumes were €13.3 billion.

Historical Perspective

In 2006 it was confirmed, that the company’s brewing factory would move from Hoegaarden, where the equipment for brewery was regarded as obsolete, to Piedboeuf brewery in Jupille. Originally it caused numerous protests of the employees, and the disappointment of the citizens of Hoegaarden, who were proud of the status of the town, as the hugest brewery in Europe. As for the quality of the production, it should be mentioned, that it essentially increased because of the innovative technologies, and the re-equipment of the factory. Currently, the beer is made of the very special yeast, that is difficult to keep alive for a long time, and it is not cultivated somewhere outside Brussels.

Originally, the brewery in Jupille-based was not capable to keep the necessary level of quality and production volumes, and everything, that the management could do in the circumstances was to get back to Hoegaarden. This getting back caused too much sarcasm in the mass media, and within the citizens of Hoegaarden. Nevertheless, the brewery was continued in 2007.

In 2008, InBev proclaimed, that the incomes resulted US$46 billion. Currently, the negotiations are arranged, and, if successful, InBev would join two of the world’s four hugest brewing companies, and thus the company will be created, that brews three of the most popular beers in the world: Bud Light, Budweiser and Skol. InBev management also argued that this unification would not cause any U.S. brewery closures, and the management and running of both companies would be supported.

Originally, the history of InBev is not so huge, as the history of most other breweries, that is why there is no an opportunity to speak of the historical perspective. Nevertheless these few years appeared to be rather fruitful for the company’s development and the increase of quality and sales volumes, essential for the equal unification with top US breweries, and for the joint brewing of three top beer brands (Lager Going Flat as Beer Thirst Declines; Brewing, 2007).

SBU Identification

Only the company itself may best describe the structure, as the essential part of the identification. The official web page provides the following facts on the structure:

• 6 operational Zones: North America, Latin America North, Latin America South, Western Europe, Central & Eastern Europe, and Asia Pacific.
• Stella Artois and Beck’s connect with consumers across the Globe.
• Leffe, Brahma, Staropramen and Hoegaarden also represent InBev’s premium multi-country brands across continents
• Over 200 local brands worldwide continue to form the bedrock of the business.

As for the structure of the production, the following units re required:

• Raw materials delivery
• Glass industry (bottles)
• Tin industry (cans)
• Paper industry (labels)
• Brewing works
• Refrigerators
• Net of dealers
• Delivery services

Strategic Event

The most significant strategic event happened when the company was created. Anyway, all the successes could be achieved only with skillful and experienced management, that constantly lead the company to the welfare and rapid development. In November 2008 the company signed the treaty of the year, acquiring the Anheuser-Busch for $52 billion, and thus, InBev became the world’s largest brewer (even overtaking SABMiller). The created Anheuser-Busch InBev now owns the product list consisting of more than 200 beer brands, and this list includes global best-sellers Budweiser, Stella Artois, and Beck’s. The company also produces the long list of regional beers, that mainly act the role of supportive brands, or the brands, which the people got used to (before the local breweries united with InBev). These are Leffe and Hoegaarden, as well as a slew of local favorites, such as Michelob, Skol, and Brahma. Currently, the company possesses approximately 50% of Mexico’s brewing industry (Grupo Modelo, brewer of Corona beer brand), and approximately 27% of Chinese breweries (InBev Practices No-Frills Approach to Corporate Leadership, 2007).

Originally, all the strategic events that were undertaken by InBev management had successful consequences, as even the getting back to Hoegaarden, after leaving it for Jupille, first reasoned the sarcasm and hostility, but, consequently turned successfully, and InBev acquired the reputation of the company that would not stop before any obstacles to achieve success.

Business Environment

The business environment for the company, that that is regarded to be the largest brewing company in the world can not be inauspicious. At InBev, management and employees are committed to holding all the business activities in socially responsible manner. The industrial process is supported by the extensive social support of the working staff, as the working conditions include the protection of the employees, stakeholders, customers and the environment.

The management issues, both local and global, are regarded to be responsible for the fulfillment with all the applicable lawful and corporative requirements and will offer the leadership, that is essential for creating the positive business environment, and overcoming the troubles of inauspicious surroundings, that may harm the implementation of the policies and principles. The operating model for any business environment looks the following:

In order to adapt to any business environment, the following principles of the adaptation are used.

The fact is that, these principles can not be regarded as original and unique, nevertheless, the InBev has succeed in their implementation as any other company. As for the Winning Brand, it should be emphasized, that the same Brand will be sold differently in different business environments regardless of the promo campaigns intensiveness, the resources spent for the promo campaigns and other factors. The fact is that, different brands are differently accepted by the consumers: thus, Brahma will be better sold in Latin American States, Stella Artois or Staropramen – in Europe. Beck’s, Budweiser are the global brands. Actually, there is no much difference in the tastes or technologies of brewing (though the brewers always emphasize the unique technologies, exclusive equipment and so on), and similar brands (Light, Dark, Premium) taste similarly. The only difference is in the brand name and brand image and the way it is represented on a market.

The Winning at the Point of Connection requires the implementation of thoroughly elaborated wholesaler strategy, customer management strategy and the occasion based activation of the necessary effect. It is claimed, that the winning point of connection generally depends not only on the business environment, but also on the marketing strategy, and, surely, the preliminary market research. The good tool of starting the successful campaign is the intriguing of the potential customer, so the customer should be puzzled. InBev rarely uses this strategy, however, if used, it has the immense effect, as it is bright, eye catching, intriguing and easily remembered.

World Class Efficiency is closely linked with the “winning brand”, with the only particularity, that it requires the implementation of production optimization. It requires the deeper understanding of price drivers in the particular regions and clear realization of the target audience.

Positioning

The issues of positioning of the InBev Company are regarded as the up-to-date, but contradictory in some moments. Some brands are positioned as the brands for the youth, and the advertisement campaigns emphasize, that it is fashionable to drink beer. Other brands are aimed at the elder generations, and the campaigns claim, that these brands are brewed in accordance with the ancient traditions of brewery. It is emphasized, that drinking noble beer is prestigious, and is attributed to those, who succeeded in life. Here is the first contradiction: all the commercial videos highlight, that drinking too much beer is harmful for health. Surely, the advertising departments would take of all the warnings, nevertheless, the national laws often require these warnings to be included, as people should be aware on the harm that drinking of beer may cause.

All the brands are positioned as high quality beer that is brewed in accordance with the ancient traditions and recipes that were used by the monks in Europe (especially if the brand is European). On the other hand, it is claimed, that the beer is brewed with the latest equipment that provides the highest quality of the beer.

Another positioning contradiction is the emphasis of the preservatives, while the beer without preservatives may be stored no longer than 24-36 hours. The brewed beer is supposed to have the keeping time at least for a month.

However, these are just the marketing tricks, that marketers got used to retort to in order to increase the sales volumes. The fact is that, the same tricks are used by the other companies, so InBev may also use them free hearted, especially, taking into account the fact, that InBev is the sales leader, and people select this production as the high quality.

The contemporary design of the bottles is another marketing trick. The manufacturers aim to use the innovative shapes, that correspond the spirit of the current times. Actually, nothing changes in the taste of the beer when the shape of the bottle changes, however, the consumers are glad to know, that their preferred brand has not stopped in developing, and the manufacturer aims to improve not only the quality, but also the appearance of the bottle.

Thus, UK department of InBev launched the new-look bottle of Stella-Artois that is aimed to raise the brand’s profile, and increase the sales opportunities for retailers.

Corporate Culture

The issues of Corporate Culture are generally associated with the management level and experience of the executive departments and their teams. It is the only criteria of the organization that can not be estimated precisely without the manager. Corporate culture is the gathering of all the subtlety, particularities and features of managing the human resources, sales, marketing, advertising etc. The InBev culture is mainly focused on the HR management. Carlos Brito stated the following: While some businesses prefer to hire mid-career employees who have cut their teeth elsewhere, InBev seeks out recent graduates and molds them into leaders embracing InBev’s hard-driving, no-frills, results-focused culture. Leaders can be formed, they can be trained, they can enhance their skills,” (InBev Practices No-Frills Approach to Corporate Leadership, 2007)

Taking into account the features of the HR policy and the corporate culture, associated with the policies and regulations within the teams, it is necessary to emphasize, that the manner, in which business is lead, depends on the corporate culture, and the people. These people are employed with taking into account the future of the company, and plans, which are aimed to be implemented. “We say the leaner the business, the more money we will have at the end of the year to share,” said Brito. This aggressive manner of leading business often disappoints the employees, as some of them got used to perform the business more gently. However, if a person is unable to lead the aggressive business, he or she will not be satisfied with the aggressive HR policy: the workers do not get corporate cars, surely, they do not get free beer, and they have the wide range of responsibilities that should be fulfilled. Nevertheless, their jobs are highly paid, as the company aims to have the best workers in the teams.

“We don’t have corporate jets. I don’t have an office. I share my table with my vice presidents. I sit with my marketing guy to my left, my sales guy to my right, my finance guy in front of me,” the better to hold a steady stream of impromptu meetings, Brito said. High achievers thrive in the no-holds-barred atmosphere. “They like to be where the action is. They like to be exposed,” Brito explained. “Most talented people want to be connected with winning teams.” This emphasizes the fact, that everyone is equal in the company, and the responsibilities and obligations are of the highest priority, but not the privileges and personal ambitions.

“To attract and retain the best workers, Brito said, the brewer rewards its highest achievers, not necessarily those with longevity. We have 85,000 people, but 250 are really the ones who make a difference. Those people are managed in a different way, because we want to make sure they are excited and are not going to leave the company.” (InBev Practices No-Frills Approach to Corporate Leadership, 2007)

Stakeholders Mapping

The stakeholders, who are generally involved into the business sphere are divided into four categories:

Sponsors – the owners of the projects, that are aimed to be developed and implemented for the development of the company. They often initiate the mobilization of the resources, and they direct the projects accordingly.

Change teams. These are responsible for the performance of the projects, and coming up with the solutions to the change requirement.

Reference Group. Change teams refer them in taking the solutions. The reference groups ensure, that the changes will take place, and will be performed properly.

Users are the group of people, who benefit from the changes.

The principle, that is used to manage the stakeholders is included in the following table:

• High power, interested people: these are the people the company must fully engage with, and make the greatest efforts to satisfy.
• High power, less interested people: the company puts enough work in with these people to keep them satisfied.
• Low power, interested people: these people should be adequately informed. They can often be very helpful with the detail of your project.
• Low power, less interested people: these people are monitored, but not bored with excessive communication.

Conclusion

In conclusion it is necessary to mention, that InBev brewery is regarded to be the largest Trans National Corporation, that performs the business activity in the most aggressive manner. The criteria that were aimed to be analyzed (the historical perspective, Strategic Business Unit identification that classifies the whole corporation as the world Corporation, Relative Positioning, Corporate Culture, and Stakeholder Mapping) revealed, that the model of the successful transnational business activity is applied by Carlos Brito. This aggressive manner is resulted in the immense net incomes and rapid development and the unification of the companies, inclused into the brewery sphere. As it has been emphasized in the SBU identification chapter, this industry involves numerous spheres and departments, which require to be perfectly arranged and managed. The management tools reveal the fact that this aggressive HR, Marketing, Advertising and other policies act the best, as the consumers and employees require leader, that will give the rhythm of production, manufacturing and management.

References

1. “Lager Going Flat as Beer Thirst Declines; Brewing.” The Birmingham Post (England) 2007: 24.
2. “Sales of Cider Rise as Lager Loses Its Appeal.” Western Mail (Cardiff, Wales) 2006: 33
3. “Tesco’s Blind Taste Gives Top Marks to Welsh Brewer’s Magic Lagyr.” Western Mail (Cardiff, Wales) 2007: 12.
4. “Your MONEY: Trouble Brews; JOBS FEAR AS RIVALS BUY NEWKY BROWN FIRM.” The Mirror (London, England) 2008: 40.
5. Brito, C. Who’s Who. Inbev.com. 2008. Web.
6. “InBev Practices No-Frills Approach to Corporate Leadership” Stanford Graduate School of Business. 2007. Web.

Introduction

Saudi Arabia plays a major role not only in the Middle East but also across the globe. The manner in which it relates with other countries makes it a significant kingdom in the world. Among other resources, Saudi Arabia is endowed with oil, and its reserves are ranked fifth in the world. Oil exports have immensely contributed to infrastructural development in the country and the region. Besides oil, Saudi Arabia has the leading cement industry in the Arabian Peninsula, with an estimated capacity of fifty metric tons per year (Alawi, 2011). Saudi Arabia is also a major consumer of cement in the region because of its high population and high rate of cement consumption.

Cement industry

The cement market in Saudi Arabia derives its stability from domestic conditions, which favor it. Additionally, it is argued that the government’s support for the industry equally plays a major role in strengthening the market. In essence, the government has largely invested in infrastructural development, which is anchored on the industry. Its growing population is also considered to be a favorable factor as the demand for cement is always increasing. Furthermore, there is an exponential rate of urbanization in the country, which has led to significant growth in the industry as investors advance small towns into cities.

Saudi Arabia has numerous cement companies, which play crucial roles in maintaining the stability and advancement of the market. They include Yamama Cement, Saudi Cement, Qassim Cement, Yanbu Cement, and Riyadh Cement among others (Alawi, 2011). Like in any other business market that involves different players, Saudi Arabia’s cement industry experiences competition among key players. This competition is important in improving the standards of the market as every player aims at outshining the other. This is to say that Saudi Arabia’s cement companies have strategies, which they employ to ensure that they increase their market share.

For instance, Saudi Cement focuses on the quality of its products. The company produces two main products, which are Ordinary Portland and Sulphate Resisting Cement, based on American, European, British, and Saudi Arabia production standards. This ensures that its cement meets international requirements thus winning the loyalty of its customers and increasing its market share (Al-Nagadi, 2012).

To establish a competitive advantage, Saudi Cement and other players focus on market segmentation where they mainly focus on various needs of customers based on certain categories. These categories include but are not limited to pre-cast factories, ready-mix factories, builders, block factories, Saudi Aramco, and the Saudi government. This segmentation is important as it seeks to address the needs of individual consumers of cement.

Yamama Saudi Cement is also a leading manufacturer and a competitive player in the market. The company mainly focuses on type 1 and type 5, which are commonly known as Ordinary Portland Cement and Sulphate Resistant Cement respectively. It also produces other products like paper bags, which are used for cement packaging and clinkers. It is one of the oldest cement industries, having been founded in 1961. Its systems and products are also ISO certified, thus winning customers across the country (Al-Nagadi, 2012). Yamama Saudi Cement is also favored by its central location in the kingdom as customers can easily access it.

Conclusion

In general, Saudi Arabia’s cement industry is characterized by a host of competitive strategies. However, most players focus on the quality of products through the standardization of systems. As a result, the market has remained competitive, with players fighting for dominance.

References

Alawi, A. (2011). Saudi Cement Sector. Aljazira Capital. Web.

Al-Nagadi, M. (2012). Saudi Arabia Concrete construction industry. Saudi Building Code National Committee. Web.