Category: Competition

Quality Function Deployment first originated in Japan. There was a need among the manufacturers to produce products that would meet customers’ needs. There was strong competition from other international firms in the manufacturing industry, especially the American firms. As such, Fifield (2007, p. 98) explains that the manufacturing industry, through research, realized that this model was the best way through which they could manage the market competition.

Quality function deployment has a close relation to Total Quality Management. It is meant to ensure customer satisfaction by ensuring quality from the production stage. Quality Function Deployment has four phases. The first phase is product planning. This is essentially taking into consideration the customers’ requirements. These Japanese firms had realized that it would be important to define the products according to the specifications of the customer (Ahmed & Rafiq 2002, p. 46). It would require some form of research in order to determine the requirements of the customers. Using the gathered information from the customers, the production unit can then plan on the production process.

The second phase is the product design. In this phase, the production unit would use information from the customers to design a product that best meets the specifications of the customers. In manufacturing plants, Slack, Chambers, and Johnson (2010, p. 54) state that it would involve a laboratory process where different products would be designed and tested for their suitability to the expected quality.

The third phase is the process planning which is basically the manufacturing phase. Having tested and confirmed the desired quality in the second stage, the production unit would embark on the product that best met the expectation of customers’ specifications.

The fourth and last stage is the process control, also known as the delivery phase. The manufactured products would be accumulated in the warehouses of the firm and then delivered to the customers in the best way possible.

Through the above four phases, this model aims to achieve maximum customer satisfaction.

Relevance of Quality Function Deployment to the Modern Commerce

Although this model was originally meant to help the Japanese manufacturers in their production process, it has become a relevant tool in modern commerce. Fawzy (2000) explains that Quality Function Deployment lays a lot of emphasis on customers’ satisfaction. This model insists on customer involvement at every stage of production. This would make these selected target markets identify with the product. The product would not only meet the expected customer value but will also have a bonding experience with the customers. Customers would identify with the product as they would feel they were part of its inception (Charantimath 2003, p. 123). As such, this model would be very important for any firm in the market that wishes to manage market competition

Quality Function Deployment and the House of Quality

The House of Quality is the main tool for Quality Function Deployment. It is a series of six matrices with each matrix having its specific function. As Fawzy (1999, p. 69) states, while Quality Function Deployment spells out what should be done to ensure superior customer satisfaction, the House of Quality explains how the specified function can best be accomplished. The six matrices (Customer Requirements, Planning Matrix, Technical Requirements, Inter-Relationships, Roof, and Targets) specify how the four phases of Quality Function Deployment can best be achieved.

List of References

Ahmed, K & Rafiq, M 2002, Internal Marketing tools and concepts for customer-focused management, Oxford University Press, Oxford.

Charantimath, P 2003, Total Quality Management, Pearson Education, Delhi.

Fawzy, S 1999, Manufacturing Management with Enterprise Resource Planning Systems, University of Sydney, Sydney.

Fawzy, S 2000, Management of Business Processes, University of Sydney, Sydney.

Fifield, P 2007, Marketing Strategy: The Difference between Marketing and Markets, Oxford University Press, Oxford.

Slack, N, Chambers, S & Johnson, R 2010, Operations Management, Prentice-Hall, London.

Introduction

According to Engelbeck (2002), the Federal Acquisition Regulation (FAR) is a law that establishes several methods and procedures for contractual acquisition supposed to be handled by a federal asset regardless of the form; that is, either tangible or intangible. Such rules and processes have several differences but are similar in the sense that they endorse ultimate competition, which is usually referred to as full and open competition. Although the FAR plays a crucial role in the federal acquisition process, it has various shortcomings that must be addressed in order to improve the selection process. This paper, therefore, seeks to establish various ways of improving some of the existing competition requirements in the acquisition process.

Main body

The government acquisition process is comprehensive because it dedicates the entire competitive process to sealed bidding, negotiations, as well as alternative contracting methods. For instance, competitive procurement has different contracting techniques that are characterized by distinct levels of competition as established in the following paragraphs (TechnologyEvaluation, 2012):

• Sealed bidding: This depends on competitive bids known as sealed bids, and are usually provided in response to an invitation for bids (IFB).
• Contracting by negotiation: This depends on the competitive proposals, and is normally issued in response to a request for proposals (RFP).
• Simplified acquisitions: These depend on quotations and are normally issued in response to a request for quotation (RFQ).

Simplified acquisitions are reserved for small acquisitions that are limited to $100,000 while contracting negotiation is reserved for acquisitions that are related to the overall value other than price (TechnologyEvaluation, 2012). Finally, sealed bidding is linked with the selection of the offeror with the least assessed financial value. The following elements describe the bidding procedure for sealed bidding.

Preparing the invitation for bids.
Making public the invitation for bids.
Receipt of bids.
The public opening of the bids.
Evaluation and comparison of received bids.
Selection of the lowest-priced bids.
Contract Award to the lowest bidder.

Similarly, the FAR Part 15 Process Model is another section of the acquisition process that needs to be looked into because it is ineffective in several ways (Edwards, 2003). This section deals with the solicitation of finalized proposals from the offeror and creates a platform for negotiation with several competitors. The first key characteristic of this process model is that all competitors are expected to provide a full proposal at the start of the completion, which must cover all the evaluation factors necessary for the award of the contract. The second characteristic is that an agency carries out negotiations with more than one organization.

Implementation of Change

Edwards (2003) asserts that the FAR Part 15 process model is extremely cumbersome, time-consuming, as well as costly for use where there are several competitors. For that reason, I would propose that the current acquisition procedure be simplified further so that offerors can have a better chance of being considered in complex contracts. In my opinion, it is quite irrelevant that all competitors must provide complete proposal information, or that agencies must evaluate all competitors in accordance with all evaluation factors. Instead, it is more realistic where competitors are evaluated in phases that gradually reduce the competitive field because much less information would be needed from the competitors. As a result, the procedure will be much simpler than before due to the elimination of voluminous information that was needed from the competitors. Some key changes that should be implemented are explained in the following paragraphs.

Reduction of Evaluation Factors

The number of evaluation factors is crucial in setting the intensity of information required by the government so as to make an informed decision (Engelbeck, 2002). Several evaluation factors require excessive information from the competitors; thereby, making the selection process long, time-consuming, and tedious. As a way of eliminating this problem, I will ensure that only relevant evaluation factors are retained in order to have a smooth and simplified process. This decision will allow for a faster selection process than before because all the unnecessary requirements will be eliminated.

Reduction of Proposal Information

Similarly, the intensity of proposal information expected from competitors play a central role in slowing the acquisition process; therefore, it is essential that such information is reduced (Engelbeck, 2002). As such, I will eliminate the need for accessing unnecessary information from competitors such as the writing of technical or management narratives, which are technically irrelevant. Instead of using written management proposals, I propose that agency personnel allow oral presentations where prove of competitors’ job performance is needed. This will save a lot of time that would otherwise be lost during the assessment of long management proposals.

Conclusion

As established, the acquisition process is considered ineffective because of the long and tedious process that must be followed in order to complete the selection process. Apart from wasting a lot of time, some competitors usually become victims of unfair selection. For that matter, proper change initiatives such as the ones proposed should be implemented in order to improve the situation. In conclusion, the acquisition process can be improved by implementing the proposed changes that include the reduction of evaluation factors, as well as required proposal information.

References

Edwards, V. J. (2003). Competitive Processes in Government Contracting: The FAR Part 15

Process Model and Process Inefficiency. 2012. Web.

Engelbeck, R. M. (2002). Acquisition Management. Vienna, Virginia: Management Concepts,Inc.

TechnologyEvaluation: Sealed Bids (FAR Part 14). (2012). Web.

This paper will look at the concept of quality management and how it helps businesses compete in the domestic and global market by improving the product or service, and the assurance of quality. It will provide an in depth look at how it affects the position of the companies at the global and domestic level by comparing and contrasting the execution of this concept in the domestic and the global level.

Quality management can be defined as:

“The objectives and processes of a company designed to focus the company toward quality and customer satisfaction” (Pletneva, 2007).

Quality management can be said to utilize quality assurance and control of processes as well as the actual products to achieve added consistency in quality” (Pletneva, 2007).

There are3 components to the quality control concept. These are:

• Quality improvement, which is defined as the process of enhancing a product so as to up the chances of obtaining reliability in the said products.
• Quality Control is the sustained effort of upholding the consistency and reliability of the product.
• Quality Assurance is the planned actions that are necessary to ensure the satisfaction of particular requirements.

The main tenets of the QM procedure are to ensure that the company meets certain ISO 9000 standards (International Organization for Standardization). ISO 9000 is:

“an internationally recognized standard of quality, and includes guidelines to accomplish the ISO 9000 quality standard” (ISO, n.d.).

These major tenets include:

• Bench marking is defined as the process by which companies grade themselves against certain standards based on comparison of their activities and those of other companies in order to get insight into their own organizational performance.
• Continuous improvement which stems from the Japanese word kaizen to mean a progressive process of maintaining customer satisfaction through incremental changes to the company activities including discarding unnecessary or obsolete functions.
• Failure mode and effects analysis is an approach to anticipate future equipment and process failures i.e. system malfunctions.
• Total Quality Improvement (TQM), which are all the management practices and policies geared at consistent satisfaction of the customers needs.
• Six Stigma is a statistical &methodological approach to doing away with defective elements in the company structure so as “to achieve the six standards of deviation from the desired target” (Tooling, n.d). The six standards of deviation means 3.4 defects per million.

QM also consists of functions such a outsourcing and standardization

QM involves not only product improvements but also in the work force. It involves maintaining a stress-free working environment fostering a feeling of free expression of their concerns and their impediments to performing better.

Take for example the Russian automobile industry, which is largely domestic. It has four major automobile makers who deal mostly in passenger vehicles, trucks, vans, limousines and heavy-duty vehicles. It cannot compete very well in the international market because of the lack of certain QM principles such as outsourcing, benchmarking, TQM, six stigma and continuous improvement. Most of the cars manufactured are mainly for the Russian market with little being done to venture out into the global market. Most of the cars are also the same as they were when the AVTOVAZ, ZIL, GAZ and the KAMAZ automobile manufacturing companies were established in the post war periods of the late 1940s. This shows a lack of innovation in continuous improvement or kaizen (Pletneva, 2007).

There is also very little marketing done to inform potential customers of the benefits of the cars and building brand recognition.

In comparison with the international brand that is General Motors of which GM is considered part of the Big 3 comprising of Chrysler ,Toyota and the aforementioned GM, principles of QM have worked in the company’s favor through outsourcing of most of its spare part manufacturing to Mercedes and looking into new innovate and cheap cars. All the four tenets have been put into practice so as to bring the ailing GM back into global recognition status.

The point of similarity in the QM procedures of The Russian companies and that of GM is the element of failure mode and effects analysis.

QM affects the level of competition in domestic and global markets in that it allows for GM to continuously assess its performance in relation to other companies and help it compete through sustained efforts in customer satisfaction. On the domestic level the upgrading of equipment at Russian plants and anticipation of equipment failure and maintaining its Russian originality is an important element in positioning its place in the domestic market. Sometimes it is better not to make any improvements at all (Tooling, n.d).

Lastly, it is important to note the contributions of Walter Shewhart and Edwards Deming in championing the adoption of the QM procedures in a bid to improve quality in products and services for the customer and for helping companies to get a platform where they can compete better in the market with the ISO 9000 standards. If these standards are meet through certification by the International Organization for Standardization which promotes an equal playing field in the market and ensure s the highest standards of production are meet for maximum utility of the product and enhanced performance, companies can be able to work more efficiently and effectively in supplying products and services to meet consumer needs (Tooling, n.d).

In conclusion, this paper has researched into the subjects of QM and its three basic components: quality control, quality assurance and quality improvement. Under these components are the tenets of TQM, six stigma, failure mode and effects analysis, and continuous improvement. It touches on other factors such as outsourcing and standardization. It is has given a comparison of the domestic automobile industry and the international automobile industry (Tooling, n.d).

It has tried to show the advantages of QM in positioning a company in the domestic and global market. It has also explored the subject of how QM procedures help in producing a competitive product in the domestic and global market in reference to the automobile industry.

The following quotes by Deming and Shewhart put forth the ideas they envisioned in the concept of QM that was ignored largely by the American business community, but was adopted by the Japanese market, which made gains and is still making gains through its Toyota manufacturing unit by using these basic principles of QM.

In the words of the founders of the QM concept who are Walter Deming and Walter Shewhart:

No one… can put in his best performance unless he feels secure. Secure means without fear…become more open and honest about discussing barriers to performing their jobs… workers cooperate to ensure the long-term survival of the company (Hasan, n.d.).

Reference

Hasan, S. (n.d.). Quality Assurance Management in Automobile Industry. 2010. Web.

ISO. (2010). About ISO. Web.

Pletneva, O. (2007). Russian Car Manufacturers. Web.

Tooling, U. (n.d). Quality Training. 2010. Web.

Article Summary

The article describes the current situation in the grocery market, with a particular focus on the activities of Kroger. In 2015, the company bought Milwaukee-based Roundy’s that had been uncompetitive with other national and local enterprises (Taschler, 2019). With the investment of $350 million in Roundy’s stores, Kroger halted this company’s market share loss. However, according to Kroger’s CEO Rodney McMullen, “standing still in Wisconsin was not an option” (Taschler, 2019, para. 11). He announced the investment of $55 million in an automated fulfillment warehouse in Kenosha County and the building of 20 same facilities across the United States that can assemble online grocery orders in five minutes (Taschler, 2019). However, the other two largest retailers, Amazon and Walmart, joined the competition in the grocery business.

Economic Concept

The article refers to the concept of perfect competition that implies the existence of an extensive number of sellers that offer relatively the same products. According to the author, Amazon and Walmart followed Kroger in the competition in online grocer retailing to achieve supremacy in this new business area (Taschler, 2019). All companies are moving aggressively to adopt innovative technologies to capture customers’ attention. At the same time, the increasing number of the same stores in one area surprise business consultants.

Opinion

First of all, it was curious to know that Wisconsin is a state where the largest retailers of the United States compete in the grocery business. Although McMullen states that “he relishes the competition,” rivals experience substantial tension due to constant efforts to gain more significant market shares. However, from a personal perspective, perfect competition brings considerable benefits to consumers who will be offered high-quality and time-sensitive services in online and physical stores.

Reference

Taschler, J. (2019). Kroger ‘playing some offense’ as fierce competition, technology remake grocery business. Milwaukee Journal Sentinel. Web.

The two major global competitors that the company faces include Steelcase Inc. and Herman Miller Inc. Steelcase is an office furniture provider that has specialized in manufacturing and selling furnishing products for workplaces. A SWOT analysis can be performed to understand the position of the dominant global companies, hence, the nature of the global furniture industry. Below is Steelcase’s SWOT analysis.

Similarly, Herman Miller Inc. is a furniture manufacturing company dominating the global landscape. It is headquartered in Zeeland, Michigan (Herman Miller, 2019).

Herman Miller and Steelcase are regarded as direct competitors since they compete with our company in the global furniture industry targeting workplaces. With regards to the SWOT analyses conducted above, overall, the global furniture industry is competitive as there are many furniture dealers at the local, regional and national levels manufacturing similar products. However, Herman Miller and Steelcase have dominated the global market because of their depth of knowledge, innovative product designs, quality, functionality, and a strong network of distribution partners, which differentiate them. Furthermore, they have an established customer base and brand loyalty as they have been operational since the early 1900s.

The company can form a cooperative strategy in terms of a joint venture, with either of the competitors. With the strategic alliances, our company and either Herman Miller or Steelcase can penetrate markets that they could not consider without investing significant resources. For instance, our company intends to venture into designing and manufacturing customized furniture, which is becoming increasingly preferable among customers and expand into global markets. On the other hand, Herman Miller and Steelcase already have an established global presence; however, they are not dealers of customized furniture. Therefore, both companies will benefit from the joint venture.

The demand for workplace furniture is driven by commercial construction and vacancy rates and corporate spending. The profitability of distinct companies is strongly connected with volume, as several costs are fixed. Therefore, big companies, such as Herman Miller and Steelcase, enjoy the economies of scale in manufacturing and distribution. However, for the small ones like ours, competitive advantage can be established by manufacturing specialty products or those made with high-quality artistry selling for a premium price. A balanced scorecard, a strategic management framework model, can be used to facilitate better strategic planning and improved strategy execution (Baldegger, 2012).

References

Baldegger, R. (2012). Management in a dynamic environment: Concepts, methods and tools. Springer Gabler.

Herman Miller. Notice of annual meeting of shareholders proxy statement: 2019. Web.

Steelcase. (2020). 2019 Annual report. Web.

Introduction

The media associated with the Russian authorities are conducting an information campaign against the coronavirus vaccines created by the American companies Pfizer and Moderna. The New York Times reports about this with reference to analysts, sources in the US government, and a representative of the State Department (Frenkel et al., 2021). According to the NY Times’ sources, the campaign is primarily aimed at Latin America and Eastern European countries.

The misinformation process is hosted by the local editorial offices of the RT channel and the Sputnik agency. They select news to highlight the benefits of the Russian drug Sputnik-V and instill distrust of Pfizer and Moderna drugs. Their techniques include decontextualization of reports and misinterpretation of scientific findings. For instance, they write about deaths of people who received American vaccines ignoring subsequent reports that these deaths most likely were not related to vaccinations. Misinformation about the AstraZeneca vaccine included speculation that the drug would turn humans into monkeys because it was developed using the chimpanzee adenovirus.

In the first months, the anti-propaganda was directed, among other things, against the vaccine of the Swedish-British company AstraZeneca. However, since AstraZeneca agreed to cooperate with the creators of Sputnik-V in December, the pro-Kremlin media began to write positively about the drug. The US State Department’s press service considers the actions of Russian propaganda as undermining global efforts to end the pandemic.

Connection to International Business

This event shows the new difficulties of entering foreign markets in the era of the high role of Internet technologies in any business. First of all, competition is moving to the online environment and brings new risks to all traders. When entering a foreign market, careful preliminary groundwork is required in the field of online reputation management. The discussed story of vaccines shows that evidence about the product, its production methods, and scientific research regarding its properties become insufficient to successfully convey the information about the product to its new consumers. Competitors trying to simultaneously enter the same market can engage in unfair competition, which consists primarily of misinformation about the product. An important point here is that opponents target specific audiences in a sophisticated way using their knowledge of the culture of the locations they aim to enter.

How Others Learn from Situation

In some situations, the specificity of the product determines the need for competent work not only on the part of the business but also on the part of the buyers themselves. In the field of biomedicine and pharmacology, patients must become reflexive consumers able to advisedly separate truth from fiction. Thus, a long-term strategy for avoiding unfair competition in online reputation management would be to develop and increase scientific literacy among consumers.

The vaccine manufacturers are global first movers in the global market. Whereas it is possible for first movers to “erect significant entry barriers for late entrants,” this situation demonstrates that current forms of unfair competition aim at developing obstructions for their competitors to enter the same market (Arnason, 2019). At the same time, the demand is already existing, and there is no need in shaping consumers’ need for the product. Apparently, in such situations, a competitor’s strategy to undermine the product’s reliability and safety are common and expectable. Based on this assumption, the focus should be on co-marketing with the stakeholders in the foreign market.

References

Arnason, M. (2019). International business in a new age of global disruption. Published online on TopHat.

Frenkel, S., Abi-habib, M., & Barnes, J. (2021). Russian campaign promotes homegrown vaccine and undercuts rivals. Web.

On store shelves, the most frequently competing products are those that belong to the same product category. For example, on the shelves you can find many toothbrushes that are similar to each other, but slightly different. This instant of monopolistic competition which implies that many companies produce and market similar products that differ only in some features (Mankiw, 2020). All of them are located close to each other on the same shelf or section. Products with simpler packaging are aimed at cost conscious consumers and are placed either on the top or bottom of the shelves, so not gain much attention. Products aimed at higher end consumers usually have a brighter and higher quality packaging and are placed on the shelves in the eye of the consumer.

The concept of brand loyalty allows manufacturers in monopolistic competition to gain more control over product prices. Companies make consumers less concerned with price of the product through “increasing the perception of product differentiation and fostering brand loyalty” (Mankiw, 2020, p. 327). Products such as chips or soda of popular brands have extensive advertising, which makes them more visible among other similar goods. Good with better advertising and larger marketing spending have a narrower market and command brand loyalty. While there are a few big and recognizable brands on the shelves, the stores are also filled with smaller firms that spend less on marketing. This is the difference between monopolistic competition and oligopoly, where a few big players set the rules (Mankiw, 2020). In monopolistic competition, large firms are forced to compete with smaller ones, which make advertising the main tool for attracting customers.

As part of this activity, I learned that within the framework of monopolistic competition, there are many products that are slightly different. However, under these conditions, companies are forced to regulate the demand for their product and target audience through prices and advertising in order to occupy a certain market niche. Under these conditions, companies do not need to have complete information about many competitors, but rather focus on building brand loyalty and a strong brand image.

Reference

Mankiw, N. G. (2020). Principles of economics (9th ed.). Cengage Learning.

Kellogg’s is a well-known brand that produces consumer foods for the market of the United States, as well as for export. The portfolio of the company is considerably large, comprising an array of recognized brands that vary from ready-to-eat breakfasts to quick snacks. These affordable and easily made meals have gained strong popularity in the markets where Kellogg’s maintains its presence. One of the additions to this portfolio is called Kellogg’s Brans cereals, which use a zip-lock bag to keep the meal fresh at a longer distance. This is a promising addition to the brand, as the cereal becoming dry is the main problem encountered by consumers.

At the same time, in spite of the solid level of recognition seen by Kellogg’s, the marketplace retains its intense competitiveness as several prominent brands continue to develop their portfolios of breakfast meals and cereals. In terms of direct competition, Kellogg’s is matched against other leading companies in its niche. More specifically, one of the most serious rivals of the brand is called General Mills. This company was founded in the 1920s and has acquired an equally strong level of public recognition over the past century. Both Kellogg’s and General Mills are widely popular brands of breakfast meals of comparable size and history.

In addition, the direct competition for Brans cereals also includes newer additions to the marketplace, such as Mondelez and Kraft Heinz. On a wider scale, zip-lock cereals by Kellogg’s also compete with other types of breakfast meals and snacks. For example, the recent trends of ‘eating healthy’ have led to a more prominent role of packed fruit and vegetable producers in the marketplace, such as Seneca Foods. Overall, Kellogg’s competes with all traditional and healthier alternatives to breakfast meals, ranging from dry cereals to natural foods. The introduction of zip-lock packaging is an important step toward building a stronger advantage in this rivalry.

References

Ardito, L., Petruzzelli, A. M., Panniello, U., & Garavelli, A. C. (2021). Towards Industry 4.0: Mapping digital technologies for supply chain management-marketing integration. Business Process Management Journal, 25(2), 323–346. Web.

Ul Haq, M. Z., Gu, M., & Huo, B. (2021). Enhancing supply chain learning and innovation performance through human resource management. Journal of Business & Industrial Marketing, 36(3), 552–568. Web.

This study will start by exploring risks within the manufacturing industry, and the chosen company is Philip Morris Inc. Philip Morris is a key player in this industry and occupies a leading position among its competitors. Over the past few years, the organization has experienced tremendous growth because they supply quality products. The main objective of Philip Morris is to limit the harmful impacts of smoke on the environment and people. Innovation in this industry has offered various useful tools for manufacturers. However, it has subsequently ushered in new forms of competition. This study will take a closer look at Philip’s competition to explore any potential risks for the organization. Additionally, the paper will focus on collaboration endeavors in this industry to develop opportunities for Philip Morris. Over the past decades, tobacco use has declined in several developed countries due to its detrimental effects and strict policies. The action plan will lay emphasis on this risk and offer solutions for Philip Morris.

Analysis

Risk

Studies have concluded that tobacco use causes various diseases and has been linked to multiple deaths all over the globe. Tobacco smoking has been linked to lung diseases, multiple cancers, and heart disease, among others. According to CDC, secondhand smoke exposure can result in asthma attacks, ear infections, and stroke. Studies indicate that cigarette smoking imposes a huge financial burden on society, with over $133 billion lost in direct expenses, $170 billion in productivity, and resulting in 480,000 premature deaths every year in the United States (CDC, 2020). Due to its harmful effects, the government has imposed strict policies against tobacco production. For that reason, this has posed a significant threat to tobacco manufacturers.

According to World Health Organization, tobacco trends report that there are currently 1.30 billion tobacco consumers worldwide compared to 1.32 billion in 2015. The World Health Organization expects this number to decline to about 1.37 billion by 2025 (WHO, 2021). According to the WHO (2021) tobacco trends report, the rate of tobacco use has declined to 16% compared to 21% in 2010. Studies indicate that tobacco sales have declined by approximately 20m a month after tougher taxes and plain packaging rules were introduced (Davies, 2020). According to Davies 2020, the number of cigarettes sold in the United Kingdom was declining by approximately 12 a month. Tobacco sales started falling much more steeply after the legislation took effect. In May 2015, monthly sales of tobacco were about 3.29bn. However, the sales declined in April 2018 to 3.16bn due to the implemented measures (Davies, 2020).

In addition, the government has implemented a number of local, state, and federal anti-smoking regulations and laws. These policies include the ACA of 2010, the Tobacco Control Act of 2009, and the Family Smoking Prevention. Philip Morris has recently experienced tremendous growth because it acts according to these policies. The organization has transitioned from cigarettes to tobacco-free devices, which are less harmless to individuals. Philip Morris has greatly benefited from technological innovation in the tobacco industry. The net revenue of this company exceeded 77 billion U.S. dollars in 2019.

Competition

Imperial Brands Plc. is a worldwide consumer company, and it is among the largest tobacco organization in the globe. Imperial Brands Plc. operates across about 120 markets in the world; hence it is a major competitor of Philip Morris Inc. The net revenue of the company in 2021 was approximately 32.8 billion British pounds (Our Strategy, n.d.). Imperial Brands covers markets including Poland, Italy, France, Germany, and United Kingdom. The company provides a range of cigarettes to its consumers, for instance, smokeless and fine-cut tobaccos. Imperial Brands is committed to maintaining high standards of governance and eliminating their environmental effect. The company comprehends the concerns of society concerning smoking risks. Similar to Philip Morris, Imperial Brands understands its role in assisting in eliminating the harm resulting from tobacco merchandise.

Imperial Brands Plc. generated about two-thirds of its worldwide net revenues in 2020 from the sale of its main brands such as Davidoff, John Player Special, and Winston (Our Strategy, n.d.). This company poses a great threat as a competitor because it as well operates in the logistics industry. This organization has changed how they operate to promote its culture and embrace new ways of working. Imperial Brands Plc. has embedded a performance-based culture to promote collaboration, teamwork, and accountability (Our Strategy, n.d.). Therefore, these strategic actions assist the organization in maintaining its position in the market.

Japan Tobacco Inc. is among the main competitors in the tobacco industry. The company engages in the sale and manufacture of processed food, pharmaceuticals, and tobacco (“About Us,” n.d.). Japan Tobacco Inc. operates through various segments such as International Tobacco and Japanese Domestic Tobacco. The Japanese Domestic is a segment that deals with the marketing and production of tobacco merchandise in domestic regions. On the other hand, the International Tobacco segment produces and sells tobacco merchandise globally. The organization controls about 60% of Japan’s tobacco market. Its main brand includes Seven Stars, Winston, and MEVIUS (“About Us,” n.d.). Furthermore, the company operates in more than 70 countries; hence it has a larger market for its products.

Japan Tobacco Inc. is a company that focuses on sustainability and innovation when developing its products. Its main innovations include vape systems designed to minimize risk and harm to the environment. Its main objective is to meet consumer expectations, and most of its application is focused on combustibles. E-cigarettes are among the company’s recent innovations. This is a significant indicator of the effective implementation of innovations in the tobacco industry. The company has developed a technology partnership with Sauber Engineering, which is a prominent player in innovations. Japan Tobacco Inc. partnered with plug-and-play, which is a California-based leader in technology innovations. The reason behind the partnership is to bring data experts and innovators together to explore and create customer-relevant features.

British America Tobacco and Philip Morris have been rivals for several years. British America is regarded as one of Philip’s top competitors. British American Tobacco focuses mainly on creating a better tomorrow by minimizing the health effect of its business by offering less risky and enjoyable products for its customers (“Assessing risk reduction,” 2019). The company operates across six continents, and its regions include the Middle East and Asia-Pacific, Sub-Saharan Africa, and the United States. Another main advantage of this business is that it operates in R&D centers, tech hubs, factories, and offices. The company spend most of its time on the road, guiding and assisting tobacco farmers, including retailer who distributes their merchandise. The main objective of the company is to have 50 million customers of their non-combustible products by 2030. In 2021, the organization had already made good progress, and it had attained 18.3 million customers of non-combustible brands.

Alongside their traditional cigarette merchandise, the company’s broad portfolio of non-combustible products comprises reduced-risk alternatives like modern oral nicotine pouches and tobacco heating products, including vapor products. The objective of the company is to deliver sustainable returns to its shareholders and to develop a purposeful and dynamic place for its employees to work. A significant role in growing a business is responsible marketing. British American Tobacco directs its marketing at adult customers only. Another key objective of this business is making agriculture more sustainable. The company is assisting contracted farmers and leaf suppliers with matters like the use of agrochemicals, including soil and water management. The company works with more than 75,000 farmers and invests millions of pounds in leaf R&D each year. As such, it assists the company in creating innovative and new farming techniques and technologies.

Collaboration

Philip Morris Inc. and Wiredelta have partnered to develop new forms of innovation to meet the World Health Organization guidelines. In today’s fast-paced world, organizations have to take opportunities to adopt partnership as the optimum measure by thinking outside the box to come up with better solutions to the predominant problems experienced earlier. For instance, the merger and partnership between Philip Morris Inc. and Wiredelta have enabled tapping into the previously untapped business elements (Wiredelta, 2022). Firstly, the collaborative approach has enabled companies to actively incorporate the customer’s desire by adopting highly competitive products. As a result of collaboration, the partnership has highly focused on product improvement it the desire to satisfy the needs of the customers. This collaborative approach has initiated the mechanism of customer reviews on the products. Collaboration has actively driven the formulation of a conclusive board of the organization tasked with the role of implementing review and implementation of desired quality. Further, collaboration has driven a customer-focused business strategy. Arguably, the partnership has engaged in customer satisfaction as a tool to attain optimum profit. As a result of collaboration, the focus has mainly been on the value delivered. The desire to attain desirable customer relationships has stimulated the adoption of customer-centered strategies.

Furthermore, the company boasts an opportunity for customer-centric processes and adoption. The success of the business is mainly associated with the internal operations, which are part of the business deliverables. A focus on the customer plays an instrumental role which is the major determinant often profitability. Additionally, the partnership has provided the company with an opportunity for quality improvement, particularly on the improved technical process due to collaboration. As a result of collaboration, the two companies merge their processing mechanism hence developing the most competitive product development strategy such catapults the production process resulting in highly competitive products. As an opportunity, the highly integrated business processes result in the production of highly competitive and better-quality products, which further stimulate the business profitability to extreme levels.

Additionally, the company’s partnership has resulted in the merging of expertise from both Philip Morris Inc. and Wiredelta companies. Arguably, expertise due to partnership provides the business with adequate human expertise, which acts as a major factor of production in both improving the quality of product and the production processes within the business. The excellent team enhances decision-making as a result providing the business with an opportunity for highly competitive production-related decisions. Such contribute to a variety of internal process improvements.

Moreover, collaboration has resulted in growth opportunities for the business. Before the collaboration, each company engaged in a different line of production processes and quality products. However, the collaboration results in a direct improvement in the business’s ability to exploit a wider range of the company’s strengths and abilities. As a result of the collaboration, the business is now able to actively engage in unilateral research, which has a positive implication for the environment. For instance, collaboration has highly improved the business’s capability to engage in diverging lines of production to meet environmental needs. Further, collaboration has improved the ability of the company to channel its strengths into innovation as a mechanism of product improvement. Due to innovation, the growth opportunities have rapidly increased forth the company.

Secondly, direct opportunities, particularly in cost reduction, have erupted as a result of collaboration. The partners enjoy a comparative ability to formulate cost-effective business storage. Collaborative strategy development is a major benefit for the company. For instance, through collaboration, the company is now able to develop highly effective cost decisions. Such decisions play an instrumental role in pivoting the growth of the business to global leadership levels. Moreover, highly cost-effective decision enables the business to rapidly improve their production efficiency as a result of enjoying a wider profit.

Nevertheless, the business enjoys enhancement of the employee’s morale as an opportunity due to collaboration. In this, the partnership offers the employees ability to work together in the new environment. Arguably, the employees were previously working differently, but due to patronship, the employees stand a chance to work together. This acts as a major boost to their morale. For instance, numerous employees interacting in a highly competitive environment directly improves their ability to deliver high-quality services. As a result, the partnership stands to gain on high production as a major opportunity.

The pantherid between Philip Morris Inc. and Wiredelta plays a major role in increasing the reputation of the business, which directly provides the merger with an opportunity to attain global recognition. The merger has been instrumental in enabling the companies to be recognized globally. The companies operate a relatively large scope of the market, and the collaboration has further accounted for 186 markets globally (Wiredelta, 2022). As a result of its global reputation, the collaboration has resulted in Philip Morris being ranked at position six among the global top 15 brands. Global rankings play an important role in driving investors and customers. As a result, the partnership further enjoys the opportunities to develop and increase its market globally due to potential investors and customers.

The collaboration was majorly driven by the desire to have development partners since Wiredelata was a probable solution. The collaboration closed the gap that was a major threat to the successful operation of Phillip Company. The result was a highly competitive and reliable solution for the customers. The merger decision stimulated Philip’s ability to optimize their area of weakness. As an opportunity, Philip Morris positively improved its operation, thus directly expanding its market capabilities.

KT&G is a South Korean tobacco company, and it partnered with Philip Morris Inc. in January 2020. The two companies collaborated to market a range of ‘smoke-free” merchandise worldwide. KT&G is an organization that distributes electronic cigarettes that comprise hybrids and e-vapor products. The deal between the two organizations covered KT&G’s HTPs, including e-cigarettes. In 2020, Philips Morris made clear the significance of having KT&G’s merchandise in its product portfolio when stating its financial results. In October 2020, Philip Morris launched KT&G’s device in Japan. The equipment launched can be utilized by the consumers as a form of e-liquid and tobacco leaf. Philip Morris referred to these products as nicotine-free liquid cartridges and mixed consumables.

Philip Morris believed that the partnership could benefit adult smokers by offering greater choice and enhancing the adoption of smoke-free merchandise globally. The partnership could enable adult smokers to abandon traditional cigarettes and switch to better alternatives. The deal between the two companies allows Philip Morris to market the products of its partner on an exclusive basis. Under the agreement, the products distributed will be subjected to strict evaluation to ensure they meet the World Health Organization guidelines. KT&G and Philip Morris agreed to seek any needed regulatory approvals that may be needed.

E2open is an organization that has partnered with Philip Morris to establish the digital supply chain for smoke-free products. E2open is an organization that provides its products across a variety of industries such as consumer electronics, telecommunications, and industrial manufacturing. It focuses on developing a digital supply chain application. The digital application can sense and respond to supply constraints and real-time demand. The digital supply chain application created by the company has the ability to collect data from partners, contract manufacturers, suppliers, channels, and consumers. As such, Philip Morris has the advantage of utilizing this data to enhance its business.

Philip Morris is dedicated to attaining its supply chain objective by controlling the power of data, artificial intelligence, and machine learning to promote its trade. Moreover, the company is committed to its shareholders, personnel, and to the world to develop products that are harmless to the environment. PMI is thrilled to expand its corporation with E2open to bring best-in-class digital services and innovation to the market. The collaboration will play a crucial role in transforming the supply chain further in order to enhance the efficient and timely delivery of the best products worldwide. E2open provides a suite of trusted and secure cloud solutions in supply chain incorporation that enable organizations to minimize IT complexity and their cost of proprietorship. In addition, the application allows booth partners to engage in deal-based incentives, request exclusivity, and register sales opportunities. This practice minimizes conflict, increases partner trust, and enhances pipeline visibility. Additionally, the digital application provided by E2open has the ability to detect and correct errors in the obtained data. AI-powered algorithms eradicate the need for manual efforts. Sophisticated APIs provided offer brands access to merchant data easily for use in their business intelligence tools and downstream applications. The collaboration has greatly assisted Philip Morris in promoting its business.

Action Plan

Inquiring about the data from the analysis offered helpful opportunities that would assist Philip Morris’s objective of enhancing innovation, creativity, and value. Upon examining the data in the assessment, the plan focused deeply on the impacts the policies are having on Philips occupancy and growth rate since it is currently a major risk. The aims included examining how government and health policies have greatly affected the financial growth of the company. The study as well aimed to examine the reason for sales decline and the preferences of consumers.

Understanding the Challenge

In this paper, the action plan will start by comprehending the difficulties, and selecting input data was the first step. Three main tasks were selected, and they were a mix of potential opportunities and risks: strict policies, sales growth decline, competitors, and collaboration opportunities.

Processing the inputs was the second step when creating the action plan. WIBNI technique was utilized to construct opportunities in this action plan. When starting to examine the data, the 5WH tool was utilized to induce various types of data and show gaps that were inhibiting the business from achieving a resolution. Who? Consumers, Competitors, Philips leadership. What? Consumers do not feel safe consuming traditional tobacco. Where? Research and analysis of what makes consumers feel unsafe. When? While the policies still have operational restrictions for Philip. Why? Product consumption is low, and sales growth is reducing. How? Consulting with experts and Company staff.

Creating output data was the third step in order to frame the difficulties which could be utilized during the generating ideas stage. In the third step, the queries were framed, linked directly to opportunities, and provided the questions to consider. How can partnership help the company? How can the company gain a competitive advantage? How can the company satisfy consumers? How can leadership assist the business? During the processing phase, focusing on how the opportunities could be fulfilled offered the business a clearer path to comprehending the real challenge.

Generating Ideas

Since solving the challenge was the main concern, the generating ideas phase was integrated by entering the final problem statement: Competition and strict policies have impacted tobacco consumption rates and reduced the sales growth for Philip Morris. The company will need to offer solutions to make customers feel safe when consuming tobacco products. In addition, the SCAMPER tool was utilized to evoke the flow of concepts. Several interesting goals were considered during this phase, for instance, Reverse? Rather than Philips offering cheap products, they will provide quality products that are safe for consumers and the environment. Eliminate? The aim of elimination is to enhance overall growth for Philips rather than establish a competitive advantage. Modify? The company should consider changing their merchandises to smoke-free products. Collaborate? The business should associate with professional services to implement measures that are safe. Adapt? The organization should identify what is working well for rivals.

The problem statement was referred to in order to finalize the generating ideas stage. The scamper options were re-evaluated to identify those that would bring the company close to resolving the challenge. The final ideas in this phase included: Associating with professional services to ensure safety measures are followed and Modifying existing productions to meet the needs of consumers.

Preparing for Action

Placing the ideas into actionable items was the next step in this plan. In this stage, the two ideas were utilized that were output from the generating phase. The ALUo tool was utilized to create and strengthen the concepts since the generating phase provided only two ideas. The advantages identified included: increased product quality, customer loyalty, and sales growth. The questions asked in this phase included: will the venture be safe? Is it possible to meet consumer needs?

Visual Representation Action Plan

References

About us. (n.d.). JTI. Web.

Assessing risk reduction. (2019). Philip Morris International. Web.

CDC. Tobacco control interventions. (2020). Centers for Disease Control and Prevention. Web.

Davies. (2020).UK tobacco sales fell faster after plain packaging rules came into force. The Guardian. Web.

Our Strategy. (n.d.). Imperial Brands. Web.

Philip Morris International competitors. (n.d.). Craft. Web.

WHO. (2021). Tobacco use falling: WHO urges countries to invest in helping more people to quit tobacco. WHO | World Health Organization. Web.

Wiredelta. (2022). Wiredelta & Philip Morris – From collaboration to an exclusive partnership – Wiredelta. Web.

In a market economy, the commercial success of any company largely depends on the correctly chosen strategy and pricing tactics for products and services. Today, the basis for the successful functioning of a hotel business is the income obtained from the primary and additional activities of its divisions. A flexible pricing policy allows the hotel business to take into account the specifics of the customer base to a greater extent, and the variety of tariff rates helps to receive additional income, which is formed by attracting client groups from various market segments.

Industry

The hotel business, as a structural element of the hospitality industry, is a component of the paid services market. It has a number of special features that directly affect the formation of prices. It should be noted that prices for hotel services have high elasticity since they are formed on a heterogeneous product market. This elasticity of demand is transformed under the influence of the following factors: consumer income, the degree of market saturation, traditions in consumption, the level of culture, etc. (Manning et al., 2018). In the hospitality industry, the development of a pricing strategy is intertwined with the overall marketing strategy due to the fact that a price is a powerful tool of direct influence on the market.

When it comes to the hotel industry, competition is a crucial aspect that directly impacts the tactics that will be implemented. Every travel company must examine its rivals’ strategies on a regular basis and develop plans for businesses in the same strategic group, keeping track of the variables that influence them. Variables such as the size, type of the firm, culture, history, members, operational processes, and financial resources impact each competitor’s goals (Manning et al., 2018). By gathering information on each rival independently, the tourist industry must be able to determine the resources of the competitors, as well as their opportunities and weaknesses.

Industry Markups and Contribution Margins

Competition and its analysis will always be a feature of the tourist industry’s strategic management and strategic planning, resulting in high performance and competitive advantage. The contemporary tourist industry requires the formation of a competitive business network to ensure the growth of connections with consumers and other stakeholders. Tourism enterprise management must understand the tourism products they offer, as well as their competition, keep abreast of changes in their competitive environment that will have a decisive impact on them (Baek et al., 2019). Moreover, they have to ensure that they are well acquainted with the characteristics of their competitors using modern methods, all of which are articulated through a clearly articulated vision, mission, and specific values.

The hotel business sells a perishable, intangible, time-sensitive commodity (namely, the use of a room and facilities for a set period of time). Furthermore, there is no direct cost per unit because the hotel complex’s running expenditures are mostly one hour (wages) and one facility (construction and maintenance costs) (Manning et al., 2018). As a result, in the hospitality sector, using operational income and profit as a business dimension makes more sense.

The cost-plus method of goods and services is the most common in the hotel industry. Selling prices are established at the level of reimbursement of all expenses, including direct and indirect costs, when utilizing cost-plus pricing methods (retained costs) (Baek et al., 2019). The bonus element is a set markup that usually contains a profit component to ensure that the owners get their money back (investment). The markup can be calculated as a percentage of the cost base. A markup percent may be utilized to recover costs that are present in the business but cannot be defined for a priced item, in addition to profit margins. Cost-plus pricing may be broken down into three categories – full cost-plus pricing, direct cost-plus pricing, and gross margin pricing (Manning et al., 2018). The direct cost-plus approach is widely used in the hotel industry. It entails determining the item’s cost (direct materials, labor, and costs) and applying a percentage markup adequate to recoup indirect costs and create profits.

Other important factors influencing markups are economical conditions and marketing strategy. For example, most products and services are in demand as an economy expands because customers must spend money. As a result, purchases are made in large quantities, resulting in higher markups. A well-executed advertising campaign may boost demand for a product or service. This means that consumers will buy or look for the goods in big quantities, boosting profit margins. Advertising in daily newspapers or on television may help leading logistics firms boost their profit margins. Due to the lack of promotion, the service becomes less recognizable, lowering demand.

Supporting Prices and Margins

One of the marketing strategies in the hotel sector is package deals. Rather than merely selling rooms, unique packages with additional offers/services are offered at an affordable rate. This implies that customers are getting more for their money. For instance, Breakfast Packages (which can include a sophisticated breakfast buffet for a much lower price than what it would cost a guest if they chose it separately) or something more personalized, which can include a variety of activities and services for couples (Honeymoon occasion, for instance) at a good price. There are many ways to create packages, as well as a variety of elements that influence them.

Revenue management determines how much different categories of consumers are prepared to spend. When properly executed, revenue management may efficiently manage the complete business strategy. The adoption of a revenue management plan that adjusts to the current environment, such as dynamic price advertising, is critical (Kalotra, 2017). Based on real-time market data, dynamic pricing entails altering room prices daily or even throughout the day. Prices must change on a frequent basis to preserve margins due to supply and demand.

The Hotel Loyalty Program is similar to the airline ticket reward program, in that it rewards regular travelers with incentives. This is a marketing technique used by hotel chains (and occasionally independent hotels) to attract and retain customers by giving discounts and other advantages (Kalotra, 2017). Hotel loyalty programs are a practical and efficient way to keep guests coming back. These initiatives foster long-term connections and satisfied consumers, lowering expenses and increasing profit margins. They must also be personified in certain ways, based on societal distinctions (income, marital status, etc.). A business guest, for example, could be searching for a free shuttle, while a family might be looking for inexpensive theme park tickets. These segment distinctions should eventually be reflected in a loyalty incentive scheme.

Conclusion

The pricing and margin processes that take place in the hospitality industry have a number of specific characteristics. This is due to the high elasticity of prices in different segments of the tourist market, the time gap between the moment the price is set and the moment of purchase and sale of the product, as well as seasonal differentiation. The formation of a pricing policy in a hotel is a component of a unified marketing policy and is always influenced by competing enterprises. In the hotel business, the cost-plus strategy for products and services is the most prevalent, and it may be increased using a variety of marketing methods, such as revenue management.

References

Baek, U., Sim, Y., & Lee, S. (2019). Analysis of hierarchical competition structure and pricing strategy in the hotel industry. The Journal of Asian Finance, Economics, and Business, 6(4), 179-187.

Kalotra, A. (2017). An analysis of awareness of marketing mix strategies of hospitality industry: A Study of Delhi. Johar, 12(2), 1.

Manning, C., deRoos, J., O’Neill, J. W., Barry A N Bloom, Agarwal, A., & Roulac, S. (2018). Hotel/lodging Real Estate Industry Trends and Innovations. Journal of Real Estate Literature, 26(1), 13-41.