Cisco is a business leader in the provision of networking services. It offers internet solutions to individuals, corporations, and countries to enable them access information easily.
The idea of these services was borrowed from a couple, Leonard Bosack and Sandy Lerner, who wanted to link their computer systems together. Through their innovation, they formed a multi-protocol router. This opened potential for the world to link computer networks together, just like the telephone networks. A group of scientists from Stanford University founded Cisco in 1984.
They renovated and developed routers and switches, storage networking, wireless LAN among others to form a wide range of products and service. They began competing in the Local Area Networks. Today, they have advanced to become a global leader internet and intranet services (Graduate School of Business Stanford University, 2000). The following is an analysis of Cisco Company and the contributing factors towards its excellent performance in business.
An Analysis of Cisco
The companys mission statement is to always communicate with transparency and Integrity (Cisco Systems Inc, 2012, para 1). The vision is to be the Best in Class for Ciscos Investors and Analysts and to be the Strategic Partners for Management (Cisco Systems Inc, 2012, para 1).
The core company values are corporate citizenship and a dedicated customer focus. It has endeavored to help the communities to prosper by meeting the needs of the society. As part of its corporate social responsibility, the company has established Cisco Networking Academies in more than 128 countries. This also includes programs to promote environmental conservation and charity. Students are taught on designing, building, and maintaining computer networks (Cisco Systems Inc, 2012).
The modern customer requires a value added product or service. Thus, the company focuses on technical expertise to promote customer satisfaction. Customers delight in the superior products provided with a warranty range of limited lifetimes. It also offers financing and leasing opportunities to its customers and partners to give them the ability to acquire new technologies or update the existing ones through programs that are flexible and easy to use (Cisco Systems, 2003).
Ciscos corporate strategy was based on client attention in which the company sought to surpass the anticipations of the clients. The company worked closely with the enterprises, service providers, and small and medium businesses to grow its markets. Customers have a perceived value that this brand offers products that are secure, and of a quality that is reliable and high performance (Graduate School of Business Stanford University, 2000).
Employee satisfaction is high because the company supports its employees to ensure that they are comfortable while working inside and outside the job environment. For instance, employees with young children do not have to worry about leaving their young kids at home.
They have been provided with an on-site day care and a flexible schedule that allows them to work from home for at least 2 days in a week. Their health is also improved by the provision of a pharmacy and free consultation services where minor ailments can be treated. The working experience is great and the company has a talented workforce with a learning culture. The younger employees are trained by the senior ones to improve on their competence (Glass door, 2007).
Conclusion
Cisco specialized in building a brand to become a market leader in networking products and services. Through its employees, the company has identified its market needs and has surpassed client expectations. It has the potential to grow continuously since skills and expertise are passed down from the senior employees to the junior ones. It has added value to the society by improving communication through its products and the general welfare through CSR projects. Cisco creates a positive impact in the society.
By analyzing the financial statements of competitors, a company is able to find new potential markets hence invest them. A company can determine the competitors weaknesses hence capitalizing on them. This gives it an upper hand in the market.
The financial statements provide financial benchmarks for the company. It becomes possible to make compare with successful competitors hence making appropriate strategies for success.
Financial statements give an insight into the output and operational costs of the competitors and it becomes possible to determine whether the production and operational costs are high or low when compared to the competitors. Adjustments are thereafter made where possible.
There are several ways to ensure sustainable cost advantage. This includes the raising of the prices so as to increase the profit margin, reducing the production and operation costs so as to minimize the expenses, including higher margin items in the sales mix, going for less costly yet quality raw materials and spending more on marketing so as to increase the sales.
The relative cost of goods and services is significant in determining the competitive advantage of the business. This is vital in determining the profitability of the business. A company can only supply its goods or provide services to the market if the prices are higher than the production cost.
Understanding the relative cost helps a company to compare its prices to the other competitors. It therefore becomes easy to predict the reactions of the competitors incase of an increase in prices. It also forms a basis for the prediction of price wars.
By understanding the relative cost, a business can know whether it has a competitive advantage in terms of cost and whether this is sustainable. It is possible to know how low to bid so as to win a contract against competitors. It also becomes easier for a business to make cost reductions without negatively impacting its profitability.
The cost structure constitutes the expenses that are incurred in ensuring that a product or service is available for consumption. By using cost structures, it is possible to prevent the product or service from being underpriced. The market trends are always changing hence the need to produce products and services that suit the changing market.
Through differentiation, it is possible to determine the quality of a product which is supposed to be proportional to its price. A high quality product might for instance have several features that low quality products lack. It is therefore highly priced.
The product differentiation strategy is not the best growth strategy because the differentiation does not always relate to the consumption of the product or use of a service as the perception of quality by the consumers might be biased. This could be attributed to advertisements and the need for social pleasure.
Market profitability analysis is important in determining the best markets. It helps in determining consumer behavior hence making decisions based on this. Through such analysis, it is possible to determine the most profitable markets. This determines the marketing strategies to be employed, the pricing and quality improvement.
Career Objectives
Period
Activity
First month
Take part-time classes in educational psychology and social work.
Second month
Get a certificate in career counseling,
Third month
Go for 60 hours of Masters degree coursework in professional counseling.
Fourth month
Register for an internship program in a Professional Counseling Firm.
Fifth month
Obtain a License for the professional counselor.
Sixth month
Start a professional counseling firm.
In the next 6-18 months, the main activity would involve starting a private professional counseling firm. This would help in the development of counseling skills and put whatever has been learned to practice. It also provides the required experience. It will also help in networking hence building a greater customer base.
One of the projects to be done at the current employment to meet the career goals would be to learn the day to day operations of this counseling center that is non-profit making. This involves understanding the counseling website which meets the counseling requirements of online clients who are not able to visit the firm.
The website is interactive hence enabling the clients to chat with the counselor online hence the right advice is given to the clients at the right time. This will help in the acquisition of the hands-on experience that is needed in professional counseling.
In the first stage, it would be necessary to determine the fees required for the classes. Such information can be found on the fees structure. It is also important to know the courses offered so as to select the right combination that would be required for the certification. This can be found from the time table.
While doing the masters coursework, it would be appropriate to find out whether there are any scholarship programs being offered. Such information might be difficult to find since scholarships are never guaranteed.. It would be important to note whether the place for the internship deals with professional counseling.
One has to know the fees charged before the license is issued. While setting up a private professional counseling center, the approximate cost for setting up the center should be calculated.
Such information can be obtained from the business plan of a similar project. It is also important to identify the registration processes to be undergone before setting up the center. Such information can be found from the offices of the relevant authorities.
References
Kumar, D. (2010). Enterprise Growth Strategy: Vision, Planning and Execution. London: Macmillan Publishers.
Meuleman, M. (2009). Sustainable development and the Governance of Long-term Decisions. Oxford: Oxfford University Press
Strategy refers to the direction and scope of a firm over the long run . It facilitates the creation of competitive advantages through configuration of the firms resources in a challenging business environment in order to meet the customers and stakeholders expectations. The strategy process begins with strategic analysis in which the internal and external environment of the firm is assessed.
This helps in identifying potential changes and the best responses to such changes. Having analyzed the environment, the firm must critically appraise all the strategic options at its disposal in order to choose the best strategy. The best strategy is usually implemented in order to overcome competition in the industry.
This paper will focus on the process of formulating and implementing business strategy. The first part of the paper focuses on the process of analyzing internal and external environment of the firm. In the second part, case studies will be used to illustrate the application of tools such as five forces in environmental analysis.
Steps in Environmental Analysis
The order in which environmental analyses are done is important. Analysis of the external environment should precede analysis of the internal environment. The importance of this order can be explained as follows. Analysis of the external environment serves three purposes. First, it facilitates understanding of the existing as well as potential changes in the business environment.
Second, it provides intelligence that informs strategic decisions of the firm. Finally, it facilitates strategic thinking within the firm. Internal environment analysis on the other hand, enables the firm to indentify its strengths and weaknesses.
Thus, it is apparent that external environment analysis serves as an early-warning system that enables the firm to predict opportunities and threats in its environment. This prediction enables the managers to formulate the best strategy to respond to the anticipated changes.
In order to respond to the expected changes, the firm must conduct an audit of its internal environment with the aim of identifying its capabilities or strengths and weaknesses. Consequently, the firm will be able to formulate the best strategy and utilize its resources as well as capabilities to exploit emerging opportunities. Additionally, the strategy will help the firm to mitigate the negative impacts of threats in the industry.
Thus, it is important to begin with external environment analysis in order to identify the factors that affect the competitive environment. The internal environment analysis should then be conducted in order to verify the firms ability to respond to the changes predicted by the external environment analysis.
Importance of Profits
As a manager of a large firm, I would focus on making superior profits due to the following reasons. To begin with, making profits is the main objective of every business. All other objectives of the business are meant to support the profit objective either directly or indirectly.
From the point of view of the stakeholders, profits represent returns on investments. All stakeholders invest their money in a company with the aim of realizing the highest possible returns. Non profitable businesses present a high opportunity cost to the investors. Thus, they are likely to channel their investments away from non-profitable firms, leading to the collapse of the business.
Profits are also fundamental for the sustenance of the business. They are used to finance implementation of strategies that improve the competitiveness of the firm. For example, a profitable firm will be able to hire the best talent in the industry in order to enhance its competitiveness.
High profits are also good for the employees. Hiring and retaining employees normally present high costs to the firm. Thus, when the firm is underperforming (financially), most cost-cutting measures are focused on reducing the number of employees or employees remuneration.
Thus, high profits represent some level of job security to the employees. A profitable firm will have the resources to invest in employee development in order to maintain its profitability.
For example, firms that make high profits are able to provide free staff training and mentorship programs. Besides, profitable firms tend to offer better pay in order to reduce staff turnover. Thus, it is in the interest of employees to work in profitable firms.
From the customers perspective, high profits reveals value received. In competitive industries, firms can only make superior profits if their products offer superior value to the customers. The high profits are normally used to enhance the firms marketing mix.
For instance, a profitable firm has the resources to produce high quality products and distribute them efficiently. Additionally, profitable firms are able to offer discounts and engage in promotional activities that offer valuable information to customers. Customers who receive value for their money are likely to be loyal to the firm.
High profit firms are good for the society. Good corporate citizenship requires firms to take care of the environment and societies in which they operate in. This objective is normally achieved through corporate social responsibility initiatives.
Such initiatives can only be undertaken if the firm makes high profits. Otherwise corporate social responsibility programs involve high costs that most firms can not afford. However, the corporate social responsibility programs are important since they enhance the image and acceptance of the firm in the society.
Five Forces Model
If several firms are aware of the threats associated with their competitive environment and make their strategic choices solely on this model, their performance is likely to be dismal. The low performance can be attributed to the following reasons. To begin with, the business environment can be categorized into three levels namely, the internal environment, the competitive environment and the external environment.
The five forces model provides only information about the competitive environment. In most cases, changes in the external environment usually affect the forces that shape competition in the industry. For example, regulation policies such as trade quotas can act as entry barriers to new firms.
In this context, it will be important to conduct an analysis of the external environment too in order to predict how the industry forces are likely to change in future. Additionally, the internal environment must be considered in order to formulate the best strategy, given the strengths and weaknesses of the firm.
Otherwise the information provided by the five forces model will be of little use if the managers are not aware of the firms ability to respond to industry threats.
As an analytical tool, the five forces model has its limitations which include the following. First, the model adopts an outside-in approach in strategy formulation. This means that analysis of the market dynamics precedes analysis of the firms capabilities. When several firms are using the five forces model, their strategies are likely to be more or less similar. Thus, they might not achieve competitive advantages.
In an industry with several firms, competitive advantage can only be achieved if strategy focuses on the core competencies of the firm. However, the five forces model does not allow firms to base their strategies on their core competence.
Second, the model focuses only on competition in the existing markets. It does not give firms the opportunity to develop blue ocean strategies. Blue ocean strategies are those that enable the firm to venture into markets that have not been exploited. Third, the five forces model assumes relatively static market structures . Consequently, the model can provide a framework for analyzing changes in the industry.
However, it does not provide valuable advice for preventive measures. In conclusion, the five forces model must be supported by other models such as the PESTEL and SWOT which analyses the external and internal environment respectively. This is because the external environmental factors affect the industry forces, while the internal environment determines the firms ability to respond to threats.
Consequently, different models must be used to obtain information from all levels of the business environment. Besides, the limitations of the five forces model can only be avoided by adopting supportive models.
Career Strategy
My career objective is to be a marketing director in the next five years. I particularly intend to work for a large firm within the fast moving consumer goods (FMCG) industry. The position of a marketing director is a challenging role, given the expected level of performance and the significance of the position.
The sales and marketing department of every company is very important since it determines the companys ability to realize stable revenue streams. However, the position also provides exciting and rewarding opportunities to the holder. For instance, being a marketing director not only attracts a high pay, but also provides opportunities for gaining experience in handling marketing challenges.
I intend to pursue the following objectives in order to achieve the goal of being a marketing director. First, I intend to acquire more skills and knowledge in sales and marketing. Consequently, the objective will be to complete a Masters degree in Businesses Administration (MBA) in the next three years.
Second, I intend to gain more experience in the field of sales and marketing, especially, at managerial level. In this case, the objective is to move up the corporate ladder through promotions in the next four years. Finally, I intend to become a member of a recognized professional marketing body in the next two years.
Pursuing these objectives will enable me to acquire the necessary skills, qualifications and experience required for the position of marketing director.
How the Strategy Fits within my Capabilities, and External Environment
The external environment in the labor industry, especially, in the marketing field, is characterized by the following threats. Economic factors such as regulation, low economic growth, and high competition have resulted into poor performance of most businesses.
Consequently, businesses are reluctant to recruit new employees. As the business environment change, businesses also change, and thus, some roles are normally eliminated. Technological factors such as the use of computers and electronic linking of business activities have resulted into elimination of some roles.
For example, the use of e-commerce has reduced the number of sales staff needed in any sales and marketing department of firms that sell their products online. Finally, legal factors such as economic liberalization have allowed employers to hire employees on short-term contracts. Thus, job security is no longer guaranteed.
The competition in the job market is high due to the large number of graduates looking for jobs. Besides, employers have a high bargaining power due to the limited job opportunities. The opportunity in the labor industry is that the incumbent firms are constantly looking for talent in order to remain competitive.
Currently, my weaknesses include; lack of sufficient experience in marketing management, limited skills in marketing research and lack of recognition by a professional marketing body. My strengths include graduate training in sales and marketing, track record in achieving sales targets and experience in product promotion.
Thus, the objective of pursuing an MBA course and joining a professional marketing body will enable me to overcome the weakness of insufficient skills and lack of professional recognition. Seeking for promotions will enable me to overcome the weakness of insufficient experience.
Most importantly, these objectives will enable me to counter the competition in the job market. Given the threats presented by the external environment, gaining more skills, experience and new positions will enable me to adapt to the changing business environment. Consequently, I will not only stay employed, but also serve in positions in which I derive the greatest satisfaction.
Importance of Scenarios: South Africa Case Study
Scenarios are a tool of analysis that improves the decision-making process, set against the background of a number of possible future environments . Scenarios facilitate strategic thinking within organizations. Hence, it helps managers and business leaders to recognize possible changes in the business environment. The scenarios for South Africa were developed for the following reasons.
First, the scenarios were developed to facilitate strategic decision making by the government and business community. The scenarios provided the big picture of what the countrys future would be. This means that the leaders were aware of the looming changes in their country. Consequently, they were able to indentify the right strategies for each scenario. Second, the scenarios acted as an early warning mechanism.
The scenarios were a strategy for identifying possible crises and planning for a timely solution. For example, the icarus scenario was associated with unsustainable development. In this case, the countrys leaders were able to predict failure in time. This gave them ample time to mobilize enough resources and formulate the right strategies to prevent the predicted failure.
Third, the scenarios enhanced institutional learning. Since scenarios are based on past and current information, they enable leaders to avoid repeating mistakes.
In conclusion, the South African scenarios were meant to provide a context for decision-making. Additionally, the process of developing the scenarios facilitated communication throughout the country by bringing together various stakeholders to participate in strategy formulation.
Importance of Scenario Planning to Managers
Scenarios are an important tool for decision making under uncertain situations or environments. Several different possibilities are normally expected in uncertain business environments. Due to the underlying difficulty in predicting future changes under uncertainty, it is better to list all the possible changes and indentify a suitable strategy for each.
Additionally, scenario planning is important when capital and resources are likely to be adversely affected by uncertain risks. In this case, scenarios help in indentifying potential changes or risks that can lead to losses.
Comparative Impact Matrix Analysis: US Airline Industry
The above matrix indicates the environmental changes and how their impact on Delta Airline and Southwest Airline. The economic factors included the financial meltdown in United States and increase in jet fuel prices. The financial crisis had the effect of reducing demand for both passenger and cargo flights.
The high fuel prices led to an increase in operating costs. Consequently, both airlines experienced a reduction in sales, and reduced their capacities. Unlike Southwest Airline, Delta Airline did not manage to remain profitable. Delta Airline made losses and struggled to remain in the industry.
Stiff competition was brought about by the large number of competitors, high fixed costs, exit barriers and new entrants. Consequently, both firms merged with other airlines. They also retired their old fleets in order to reduce fuel costs. Like other legacy airlines, Delta Airline focused on outsourcing in order to reduce operating costs.
Legal factors included labor contracts between airlines and labor unions, deregulation and bankruptcy laws. Deregulation led to high competition in the industry. Labor contacts and bankruptcy laws served as exit barriers, thereby increasing competition.
Thus, both firms experienced high labor costs and reduced market share as more firms joined the industry. Non profitable firms such as Delta Airline found it difficult to exit the industry due to the exit barriers.
Technological factors included the use of modern information and communication technology to provide entertainment and ticketing services. These enhanced customer loyalty and reduced operating costs respectively. The introduction of video conferencing reduced participation in face-to-face meetings. This translated into a reduction in demand for passenger flights, especially, among the business class.
Porters Five Forces Analysis for US Airline Industry
The five forces analysis framework enables managers to understand the dynamics of the competitive environment in which their businesses operate. It is an important tool for investigating the forces that determine the level of competition in a particular industry.
Consequently, it gives the managers information that forms the basis of strategic decision making. The industry forces that led to the mergers and acquisitions in the US airline industry include the following.
New Entrants
The USA airline industry is characterized with high levels of product differentiation. Differentiation was necessitated by the stiff competition that was experienced in the industry, following its deregulation in 1978. The deregulation allowed many firms to join the industry thereby, forcing the incumbents to compete on the basis of product differentiation. Joining the airline industry is also capital intensive.
A lot of financial resources are needed, especially, for the purchase of the aircrafts. Besides, the high levels of regulation in terms of safety and service quality present high costs to firms that intend to join the industry. Thus, the high costs acts as an entry barrier to new firms that intend to join the industry. The switching costs are high in the airline industry and this also discourages new firms from joining it.
After the deregulation of the industry in 1978, the incumbents control of routes reduced. This is because all firms were allowed to serve any route of their choice, thereby increasing competition. The incumbents also have vast propriety knowledge in the industry.
For instance, the United Airlines as well as American Airlines have been in operation since 1930s. Thus, they have the experience and expertise to counter any competition from new entrants. We can, thus, conclude that the threat attributed to new entrants is low in the US Airline industry.
Power of the Buyer
This refers to the bargaining power of the buyers, airline companies. There are very many airline companies (151 firms as at 2009) as compared to the suppliers such as aircraft manufacturers. However, the suppliers of products such as fuel are very many.
The switching costs are very high due to the contracts entered by the airlines and their suppliers. For instance, the purchase of aircrafts is based on contracts that last for several years. Some airlines also enter into contracts with fuel suppliers in order to reduce fuel costs. Thus, breaching of these contracts leads to high switching costs.
The suppliers products are highly differentiated. The US airline industry has two types of airlines namely; the low costs airlines and the legacy airlines. Since these two types of airlines have different capacity needs, the suppliers make aircrafts that meet the specific needs of their customers.
Since most airlines compete on the basis of differentiation, the suppliers have had to include additional features such as entertainment equipment in the aircrafts.
There is low threat of backward integration in the industry. Most airlines are relatively small compared to their suppliers. Besides, most of them are straggling to remain profitable, especially, after the 2008/ 2009 financial crisis. Consequently, the airlines can not afford to purchase their suppliers or invest in the production of their own aircrafts.
Finally, the suppliers inputs are very important to the quality of services rendered by the airlines. All aspects of the flight such as foodstuffs, entertainment and comfort within the aircraft directly affect the customers flight experience. Thus, all suppliers products must be of high quality in order to enhance all the aspects of every flight.
This leads to the conclusion that buyers have a low bargaining power in the industry. Low bargaining power means that airlines can not easily negotiate for low prices for their supplies. Thus, they can be exploited through high prices or low quality products.
Power of the Suppliers
The suppliers of aircrafts are very few as compared to the airline firms. In the last two decades, the number of manufacturers of large aircrafts reduced from four to only two. Additionally, there are only two leading suppliers of medium size aircrafts. This means that there is a potential constrain in the supply of aircrafts, especially, if there is a backlog of orders.
There are no substitutes for the suppliers products. For instance, jet fuel can not be substituted by any other form of energy. In this case, the airline companies are heavily dependent on their suppliers. As discussed earlier, the suppliers products are highly differentiated due to the capacity needs of airlines and the quality of service offered by the airlines.
Despite the high concentration of the aircraft industry relative to the airlines industry, the later remains very important to the former. This is because airlines are the main customers of the aircraft manufacturers. This is explained by the discounts and favorable terms of payment offered by the aircraft manufactures. However, the threat of forward integration is very high in the industry.
Most aircraft manufacturers are large in terms of capital and asset ownership. Thus, they can easily purchase the airlines or establish their own. Consequently, the suppliers have a high bargaining power in the industry. The implication of suppliers with a high bargaining power is that, the suppliers can exploit their clients through high prices.
Substitutes
Substitutes refer to other modes of transport that can be used as an alternative to air transport. These modes include buses, train and personal cars. The threat posed by the alternative modes of transport is relatively little. For instance, trains and buses accounted for only a small percentage of journeys that were more than one hundred miles.
This trend can perhaps be explained by the low differentiation and service quality associated with the train and bus transport industries. In most cases, buses and trains provide standardized services that do not meet the specific needs of their customers.
However, the trains and buses tend to be cheaper as compared to air transport. The low threat of substitute is an advantage to the airline industry since the level of competition will be low.
Competitive Rivalry
The US airline industry is characterized with cut-throat competition due to the following reasons. First, there are very many airlines competing in the industry. The increase in the number of airlines is mainly attributed to the liberalization of the industry.
Second, the growth rate of the industry is low. The low growth rate is attributed to poor economic performance of the US economy, especially, after the 2008/2009 financial crisis. Additionally, the industry is at its maturity stage and this limits potentials for faster growth.
Third, there are high fixed costs in the industry. Hiring labor presents the largest fixed costs to the airlines. The average pay for employees in the industry is about $ 55950, which is at least 40% more compared to labor costs in other private industries. Besides, the strong labor unions in the industry prevent airlines from reducing wages or the number of employees during periods of low demand.
As fixed costs rise, firms are left with little financial resources to enhance their competitiveness through expansion and introduction of new products. Besides, the high fixed costs directly impact profits negatively. As discussed earlier, switching costs are very high in the industry. Buyers can not easily change suppliers in order to achieve cost competitiveness.
Finally, the exit barriers in the industry also perpetuate stiff competition. The old airlines as well as the non profitable firms can not quit the industry due to the high exit costs. For example, the contracts between labor unions and airlines require the later to pay large sums of money to employees as terminal benefits.
This represents high costs of exit. Besides, firms that have filed for bankruptcy are expected to continue in operation as they service their depts. Thus, the competition in the industry presents a great threat to the survival of most airlines. The high competition, not only reduces profits, but also reduces market shares of the firms.
In conclusion, the forces that led to the mergers and acquisitions from 1981 to 2009 include the threat attributed to competitive rivalry, low power of the buyers and the high power of the buyers. These forces adversely affected the profitability of the airlines, thereby necessitating consolidation.
For example, a merge between two airlines helped to reduce competition. Additionally, the mergers enabled the firms to ensure economies of scale. Firms that were not able to withstand the effect of the aforementioned industry forces were acquired by their competitors.
The Forces likely to Drive Change
Competitive Rivalry
The threat associated with competitive rivalry is likely to drive change in the US airline industry due to the following reasons. First, the economy of the United States of America is expected to recover in the near future. Thus, there will be an increase in demand for air transport. As the demand rises, most airlines are likely to embark on product and process innovation to attract customers.
Product innovation will involve improving the quality of existing products in order to make them attractive to the customers. Besides, new products are likely to emerge as airlines compete for customers. Since competition in the industry has always been characterized by price wars between the low cost airlines and the legacy airlines, most firms are likely to focus on cost reduction.
Thus, most firms are likely to embark on innovative strategies for reducing operating costs. Such strategies can include outsourcing non core business activities. As the demand for air transport increase within America and other parts of the world, new routes are likely to be introduced. The airlines are likely to deploy capacity to routes with relatively low competition.
New Entrants
As the industry grows in the future, new firms are likely to join it. With reduced regulation on entry, international flights are likely to join the industry, thereby, increasing competition. Currently, airlines from emerging economies in Asia and Africa are recording high profits. Thus, they are expanding both their route network and feet.
The Dubai-based Emirates Airline for example, has an ambitious plan of acquiring 90 new A380 jets. The threat attributed to new entrants will result into changes in the industry in the following ways. First, the incumbent firms are likely to work with the new entrants, especially, foreign airlines through airline alliances.
Such arrangements will not only enable the airlines to reduce costs, but will also enable them to maximize their profits. Second, competition is set to intensify in the industry as new firms join it. This has the implication of reducing the profitability of most incumbents. Thus, the airlines which are not able to survive the competition will either be acquired or they will merge with other firms.
Power of the Suppliers
The suppliers are likely to maintain a high bargaining power in the US airline industry. The high cost of joining the aircraft manufacturing industry is likely to discourage new firms from investing in the manufacture of aircrafts, especially, in USA.
However, the suppliers bargaining power might not be as high as it is at the moment. Newly industrialized countries such as China and India are likely to invest in aircraft manufacture. Besides, these countries have access to cheap labor and raw materials. Consequently, they are likely to manufacture aircrafts at low costs which will reduce the prices of aircrafts.
In this case, the competition from the low cost manufacturers will reduce the power of suppliers of aircrafts in the US airline industry. The suppliers of jet fuel are likely to maintain their high bargaining power through unions such as OPEC. As the power of suppliers reduces, there will be changes in fleet size and fleet age as more airlines find it easier to acquire new aircrafts.
Works Cited
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Daraban, Ben and George Fournier. Incumbent Responses to low-cost airline entry and exit: a Special Autoregressive Panel Data Analysis. Research in Transport Economics 29.1(2008): 15-24. Print.
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Corporate social responsibility is one of the modern tools used by corporations to promote their inimitable characteristics and brand name. As a result, the firms sales, customer dependability, and profitability are improved. In addition, CSR has been applied in the human resources management as well as in enhancing business operations (Cavett-Goodwin, 2007).
Thus, CSR as a management tool remains to be a crucial tool that corporations use to enhance their competencies. The increased capabilities will ensure sustained growth in terms of profitability as well as value creation. This research report critically examines business strategies particularly, CSR and how it influences value creation.
Besides, the paper ascertains whether Banyan Trees CSR initiatives, which are part of its global expansion strategy, will be helpful in value creation as well as profit maximization.
Banyan Tree Hotels entry mode strategies
Based on study literature, firms seeking to enter into the foreign market should choose the most suitable entry mode for that particular market. International expansion requires firms to make critical decisions pertaining to entry mode strategies (Anders, 2008). The reason is that the verdicts on the selections of the entrance approach have enduring repercussions on businesses like Banyan tree that yearn to globalize operations.
In other words, entry mode strategies in most cases are huge, irreversible and affect the firms performance in the end (Root, 1994). For services, business entities such as Banyan tree hotels have assorted preferences on the entrance approach plans to pick from for instance licensing, turnkey ventures, chartering, mutual speculation, and utterly held auxiliaries.
Nonetheless, the entrance approaches into fresh souks are subjected to countless dynamics including the domestic and peripheral factors. In fact, such imperative dynamics are habitually unusual in all business aspects. Moreover, the level of influence each factor has also depended on the country the firm targets (Root, 1994).
Therefore, managers should critically analyze these factors and come up with the most suitable entry mode strategy that will ensure maximum benefit to the firm. For services enterprises such as Banyan tree resorts, the expansion strategies into the international market should be low risk. As Root (1994) indicated, involvement into the foreign markets comes with increased risks. Therefore companies particularly services firms should consider low risk entry modes in order to survive.
Franchising
Banyan tree hotels can utilize the business knowledge of other resorts acting as a franchisee in host countries to expand the companys business activities. Banyan tree hotels and resorts provide capital, technical skills, and business expertise. The firm can use this mode in countries where there is uncertainty in political and economic conditions (Chen & Mujtaba, 2007).
The uncertainty in the foreign markets makes this mode of entry more suitable for hotels and resorts. The major advantage of this mode is that the company does not need to bear the costs and risks related to development and entry into the new market (Chen & Mujtaba, 2007). The cutback in overheads and threats allied to charters enlarges the corporations efficacy in searching for the fresh bazaars.
However, the corporations hardly have any power over the trade dealings mostly where the bylaws call for the businesses to observe the eminence ideals. Moreover, in the circumstances that the franchisee does not strictly obey the agreed rules and regulations, the firm can easily collapse.
Joint ventures
This is the most commonly used entry mode by firms including hotels and resorts all over the world (Blomstermo et al., 2006). The entry mode requires that the Banyan tree hotels and resorts form an alliance with similar firm in the foreign country in order to attain the greater position in the market. In most cases, the joint venture involves equal share of costs and benefits (Arregle et al., 2006).
Nevertheless, the businesses functions of corporations are regularly detached bar the supervisory tasks are analogous and mutual by each corporation. In order to achieve stringent direction and have superior allocation entitlements, Banyan Tree must devote additional finance to the mutual schemes.
The advantage with this entry mode is that risks and costs are shared (Aulakh & Kotabe, 1997). In addition, Banyan tree hotels would gain market knowledge from the joint venture firm as well as explore the foreign market with the help of the other firm with political and economic issues put into consideration.
With little regard to the conflicts that might arise from the joint venture, Banyan tree can easily take advantage of the local firms capability of influencing the local government to allow the company to enter, establish, and dominate global markets.
Utterly held auxiliaries
From Arregle et al., (2006) report, these subsidiaries imply that Banyan Tree will have to cuddle a hundred percent allotment of the far-off units. For the firm to own a subsidiary, Banyan must establish a new entity with full operations into this market or fully acquire an existing firm (Arregle et al., 2006). The acquired firm must be well built within the industry.
Banyan tree stand to gain a lot from this mode as the company can easily promote the products and services. The reason is that the firm has tight control over business operations because of full ownership. In addition, compared with other modes, the firm can make and easily implement the own strategic plans and does not risk losing the competitive advantage as well as technical skills to other firms.
Apart from full control and reduced risks, the firm also enjoys full benefits of internationalization. However, there are increased costs associated with this mode of entry (Arregle et al., 2006). Compared with all other modes, fully owned subsidiary is the best entry mode for banyan hotels and resorts. This entry mode is in line with the company goals and ambition particularly as concerned with the conservation of the environment.
As indicated, the fully owned subsidiaries in the international markets will make the firm have control of enshrined competencies, pro-environment initiatives that forms the core of the business strategies. This mode of entry is in line with the expansion strategies of doubling resorts and spa worldwide. In addition, the strategy increases Banyans geographical diversity while reducing both political and economic risks associated with this expansion.
Cultural Influences on Managements Decisions
Doing business in a different culture particularly using the fully owned subsidiaries could be challenging to the firms expanding into the foreign markets. The diversity and variety of the foreign business practice or country culture is always an important issue for firms considering operating in foreign markets (Hofstede, 1980).
As the company plans to double the resorts, worldwide cultural diversity is a critical consideration in the management decisions. The reason is that the company resorts will be operating in diverse cultures and environments hence must be in a position to understand the significance of cultural diversity in the realization of the business goals and objectives.
Merging cultural diversity and environmental sustainability is key aspect of the firms social responsibility. Most important is how the culture in which the firm operates keeps and sustains environment, which is Banyans core corporate social responsibility. In essence, understanding cross-cultural issues is very important in the realization of the firms goals (Belin & Pham, 2007).
For instance, the manager of the firm should understand that the host country local employees require different organization structure as well as human resource management policies and procedures. In this case, however, where acquisitions of fully owned subsidiaries are recommended, attaining the expected synergies will depend on well-established structures that will encompass both cultures in a more balanced manner.
In other words, operating in foreign countries needs cultural compromise. Therefore, for the firm to sell the products and services to foreign customers, Banyan needs cultural sensitivity and adaptations concerning the products and services, marketing strategies, and operations (Brouthers, 2002).
The firm will also tend to have diverse organizational as well as decision-making practices according to the way Banyan has evolved and what kind of cultures and subcultures the company intends to encompass (Hofstede, 1980). This consideration will enable the firm to succeed in the expansion strategies particularly on attaining corporate social responsibilities initiatives.
Furthermore, for the firm to build successful partnerships, alliances and to be successful through this entry mode strategy, the managers must understand the organizational differences that exist (Belin & Pham, 2007). This will include all elements of the corporate strategies from the structures of decision-making, systems, and labor management relationships to the individual employees behaviors and attitudes particularly towards work.
Banyan tree management must consider the fact that culture influences the preferences and behaviors of the clients. For Banyan to sell successfully in the foreign country, the company needs to adapt these services and products to meet the cultural needs of the diverse group of clients.
Further, the company should not forget to put into consideration the core competency aligned to the corporate social responsibility (Hofstede, 1983). The corporate social responsibility strategies should be incorporated in the marketing, services and product features. These should also be partly guided by the cultural differences.
Analysis of CSR as a business strategy and the impact on profit maximization
Corporate social responsibility in any organization emerges to be amongst the topics, which consistently hit the corporate headlines in the modern competitive industrial world. In fact, the symbiotic correlation amid trade and humanity gives rise to the approval of CSR strategies adopted by every accomplice in the fiscal world.
Studies show that ample confirmations exists depicting that consumerist actions implemented by Banyan Tree Hotel and Resort could possibly endure market competition when there is sustenance and approval from societal members.
Besides, the marketplace triumph determinants for the company shareholders and communal approaches appear to be manipulated by various collective requests that have intimate correlations with such aspects (Warwick, 2008). In fact, factors having direct impacts on the hotel and resort souks that is, societal, ecological and money matters depict the vital pose of the main shareholders in the strategic CSR plans deadlock.
CSR strategies incorporate the organizational invariable compulsion to operate honorably in order to persistently advance cost-effectively whilst enhancing the welfare of various Banyan staffs, relatives and the surrounding communities. McWilliams et al. (2005) suggested that corporations ought to assume philanthropic initiatives found in the neighborhood where such organizations carrying out their business to be triumphant and lucrative.
Further imperative commitments that uphold Banyan Tree Hotel and Resort CSR strategies incorporate profitable, legitimate, and ethical liabilities (Eliza & Pauline, 2003). The useful errands in line with the corporate social responsibility strategies incorporate the ecological concerns that have connections with the natural ambiance, financial, and public matters that will ultimately head for the progress of the neighborhood and the administration.
Via approving a range of corporate social responsibility projects, Banyan Tree Hotel and Resort might influence the varying civic outlook, corporation icon, industrial assets, and permissible rules. To remain competitive and profitable in the current highly competitive market, companies must initiate and implement appropriate corporate social responsibility.
Many scholars have argued that the relationship the business has with its stakeholders depend on its output in all aspects whether social or economical. in addition, decisions normally being made by various stakeholders are majorly being influenced by CSR programs initiated by the company and how such programs contributes to the well being of the society (The Economist, 2005).
According to Warwick (2008), CSR remains to be critical ethical obligations in all aspects the societies expect in any business organization. CSR practices mirrors the relationship the corporation has with the societies. Further, better CSR practices enables the company to succeed in the global competitive market. In other words, good CSR practices enhance the firms globalized activities.
Firms have realized that CSR remains critical to their growth and sustainability. International corporations such as Banyan Tree Hotel and Resort have realized that they can only sustain substantial growth through the provision of morally oriented services. In other words, all its operations must be based on ethical considerations as well as initiatives that are beneficial to the society.
Regardless of the resources needed to attain such initiatives, corporations must thrive to put in place practices that satisfy all its stakeholders including clients and shareholders. In addition, CSR activities must be geared towards enhancing the company reputation, brand image and competitive advantage (Ethical Corporation magazine, 2005).
CSR provides a framework through which companies build their reputation and image. The reason is that most of the consumers will tend to identify themselves with such companies. Better ethical practices will enable the firm integrate good cultural values that will ensure increased and sustained customer growth and alignment to the company products.
Moreover, good reputation built on moral values will enable the firm recruit and retain quality employees that are critical in the development of the company products and services (Ludescher, 2009). Banyan Tree Hotel and Resort can only create products and services that are competitive in the market only if it adopts CSR practices that are acceptable to all stakeholders.
CSR practices that are environment oriented will enable the firm become a market leader in the industry. The reason is that such practices are acceptable by all stakeholders across the board. Such CSR also enables the firms to create effective and sustained supply chain management with other companies that are of similar ideologies. The result is the reduction in the production cost.
CSR should be programmed in such a way that it enables free information flow. Free information is critical for the improvement of the company. Through acceptable CSR programs, companies are capable of reaching areas that has not been exploited by other companies thus expanding its market (Hohnen, 2007).
Warwick (2008) argues that CSR initiatives are founded on five basic elements. These includes value addition, the improvement of the products, projections that are long-term, public awareness as well as being sensitive to the goals and strategies that have been put in place.
An initiative that enhances continuous introduction of new products in the market increases the customers satisfaction and at the same time enable, the company remains competitive. The company activities must also be legitimate, that is remaining sensitive to the needs of all stakeholders including consumers. That is product and services must be created in accordance with the societal expectations.
Adding value remains critical element of CSR. Adding value to the product increases, the company merit and trust among the company clients thereby enabling the company expand its place in the market. However, this trust is not limited to the clients but also to other stakeholders including suppliers, investors, customers, and employees (McWilliams et al., 2005).
Taking these elements into consideration, business organizations like Banyan Tree Hotel and Resort should generate value through incorporating CSR initiatives in various global operations. Indeed, this corporation is working more willingly to deliver community services and this will enable it generate maximum profit that will enhance global competitive advantage.
This is essential in determining Banyan global market endurance (Porter & Kramer, 2006). As indicated, business development and growth depends on Effective CSR programs. Since many corporations are going global, they need a strong foundation on which they can anchor their growth. Adoption and integrating appropriate CSR practices will enable sustained development in businesses.
This includes continuous production and sales that will ensure continuous profitability. In the contrary, firms that ignore incorporate CSR particularly while making decision-making will likely be faced with problems that can take them out of business (Hohnen, 2007). The current increasing risks involved in business activities can easily be managed by putting into consideration those programs and activities that take into consideration all the stakeholders views.
All businesses organizations including Banyan Tree Hotel and Resort must have control measures that guard them against any external and internal risks. The control measures must be in line with guiding principles set by the regulating bodies. Additionally, businesses are supposed adopt practices that take into consideration the needs and expectations and interest of all the stakeholders (Gray et al., 1987).
Recommendations
From the study, it can be observed that firms in all sectors are adopting and implementing CSR strategies in order to remain competitive in the current world market. Therefore, banyan tree should come up with sustainable CSR strategies that will enable it remain viable within the highly competitive global market. These strategies should be aimed at building good relationship with the communities as well as clients.
That is, the company should adopt practices that will enhance sustained value to its stakeholders. As the company continue to grow it should implement those practices that not only add value to the customers but also provide it with a rare competitive advantage. In essence, the company should adopt CSR practices and enhance competencies that will ensure sustained profitability.
Conclusion
Currently, CSR plays critical role in the business management. As indicated in the Banyan Tree Hotel and Resort, CSR becomes an important business management tool in spite of the firm magnitude. The reason is that CSR is responsible for benefit of the company products, which in turn increases the company brand image and profitability.
Therefore, larger corporations such as Banyan Tree Hotel and Resort should compensate the societies in which they operate through initiatives that add value to the lives of people in the societies. These include pro-environment initiatives. It is also true that corporations and societies in which they operate are interlinked. Therefore, strategies that are initiated by corporations must be beneficial to both the company and the societies.
References
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Arregle J. Hebert, L., & Beamish P. (2006). Mode of international entry: the advantages of multilevel methods. Management International Review, 46(5), 597-611.
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Warwick, M. (2008). The five dimensions of CSR. Web.
Lululemon is a company which specializes in yoga-oriented merchandise. Its initial designs displayed orientation at performance and functionality for serious yoga practitioners, a direction that later was expanded to cover other active sports fields such as running. However, over the recent years, the company shifted from specialized goods to form a more inclusive approach. As a result, the current merchandise offered by Lululemon includes casual merchandise such as dresses, bags, hats, and rain jackets. Most of these goods have little to no connection to yoga or other active sports and offer almost no advantage in terms of performance. Instead, the marketing strategy focuses on what can be described as selling the goals and ideas. In other words, the emphasis is made on associations with yoga and appeal of its concepts rather than the actual usability and utility of products.
This approach reportedly allowed Lululemon to significantly expand its customer base by including individuals who were reluctant to engage in physical exercise. On the downside, such strategy gained significant criticism from skeptical community and business ethics advocates. Some analysts also theorize that such reputation caters to the audience of posers who value their image over effort. Naturally, some portion of athletes are expected to be dissatisfied by the prospect of being associated with such audience and may stop using companys services. In addition, some of the claims made by marketers were perceived as attempts of deceptive marketing. To minimize adverse effects of the questionable strategy, the company alternated its practices by excluding explicitly unrealistic claims. However, such move may be insufficient for improving the situation. Thus, additional business strategies should be considered.
Identification/Description of Alternatives
Despite the fact that the company is subject to criticism, there is no data that allows us to conclusively identify its benefits and shortcomings. However, two conclusions can be made with certainty. First, the initial shift of emphasis from functionality to concept proved beneficial for the business. Second, at least some of the specific decisions made by the companys marketing department, such as its claim of seaweed fabric capable of exerting vitamins and minerals into the customers skin, can be clearly identified as examples of deceptive marketing. Since the latter is recognized as a violation and is subject to punitive actions, it is to be excluded from the preferred strategies.
Considering these facts, three options are possible to amend the situation. First, the company can abandon the newly chosen direction and roll back to its initial performance-centered strategy. In this way, the majority of reasons which sparked controversy would be eliminated. Specifically, the opportunity for introducing misleading claims, while still present, will narrow down enough to exclude the possibility of unintentional misrepresentation. More importantly, the brands image will distance from the poser audience which will retain a more seriously oriented segment. Naturally, while the brand will become less diluted and attain specific and solid characteristics, it will also lose a significant share of its customers.
Therefore, to retain the necessary customer base, marketing needs to be significantly reconsidered. One possible direction the company can choose as a target is the beginner segment the customers who find active sports and yoga an attractive field but are for some reason hesitant to begin training. Another possible segment is die-hard fans individuals who take sports activities seriously and are therefore the first to be repelled by Lululemons current yoga chick image. However, we must recognize the fact that the amount of potential customer that can be retained from these two groups combined does not necessarily supersede the audience lost due to the rollback. Besides, active sports have their share of controversy resulting from unrealistic claims, so the possibility of deceptive marketing cannot be discarded entirely.
The second option is to embrace the current strategies and pursue the chosen path. However, certain interventions are required to avoid potential hazards. First, marketing research needs to be conducted to determine potential benefits and drawbacks of the shift. In particular, the implications behind the most common criticisms need to be verified and, in case they are confirmed, appropriate measures should be considered. For instance, the potential loss of customers due to the changes in a brand image may appear negligible when compared to gains achieved by the coverage of previously unavailable population. Naturally, the unrealistic claims and unfair marketing strategies are still to be avoided in this course of actions, but on the overall, the company will still be idea- rather than functionality-oriented. This option is also preferable since it introduces the least alternations to status quo.
A third alternative is adjusting the existing approach to retain the potential customer base and minimize dissatisfaction of the initial target group. This option resembles a compromise between the former two since it incorporates features of both. However, it also introduces the most changes into the existing course of actions. While this may be considered a disadvantage, the third option offers the best opportunities for the company in the long run.
Rationale for Selection of Best Alternative
There are several reasons why the third alternative is preferred. Probably the biggest advantage is the opportunity to retain the new audience. While we do not have information which offers definitive evidence that this segment is lucrative, the intuitive suggestion is that it is sufficiently larger than a more serious but less numerous stratum of actual athletes. Besides, the previous experience of the company indirectly confirms that the new segment is large enough to provide the sufficient portion of sales. Finally, highly specialized businesses need to rely for the most part on the selective and exclusive distribution models, which necessitate higher pricing to profit from fewer sales. On the other hand, covering a wider audience (in our case less athletic individuals who are drawn to the ideas and messages of yoga and active sports) expand the market enough to allow the business to maintain prices within a competitive range.
This advantage becomes more obvious once we consider the priorities of the company. It is important to remember that running and other active sports are later additions to its initial production of yoga-related products. The latter is a lot less challenging for the audience than more traditional sports, which makes it attractive for a specific audience of the developed countries. While it would be incorrect to claim that yoga is entirely unchallenging athletically, it certainly is inherently more forgiving and newcomer-friendly. In most circumstances, the audience which chooses yoga is already predisposed to the concepts and ideas of holism, wellness, and spirituality rather than physical achievement and competition.
Therefore, it would be more logical to expect the same values and preferences from Lululemons customers. In such a setting, selling ideas is fundamentally more appropriate than expecting from the customers to appreciate practical characteristics of the goods such as sweat absorption. Besides, yoga practices are known to relieve stress, reduce tension, and otherwise benefit its practitioners psychologically. The companies which offer yoga services are well aware of that and modify their practices to cater to customers perceived rather than actual fulfillment of expectations. This approach eventually predisposes the customers to a specific mindset and prompts the search of recognizable values in supporting products not necessarily directly connected to their activities.
This leads us to another advantage of the selected alternative. It is already obvious that most of the newly obtained customers are interested in the created image more than in the actual value of the product. Importantly, a similar pattern can be traced in the behaviors of the deflecting customers. Specifically, according to the critics, the serious athletes and yoga practitioners are repelled by the new message the Lululemons merchandise is associated with that posing as an athlete rather than being one. An important takeaway here is that both parties are driven by the message associated with the product at least to some degree. This leads us to the conclusion that it is possible to retain the lost audience segment by amending the image of the brand (since neither the quality of goods nor the pricing policies are cited as reasons for dissatisfaction). Importantly, the chosen strategy allows us to readjust the reputation rather than gain favorability of one group by sacrificing the other. It should be noted that while these assumptions align with the existing experience of other businesses, at the current stage they are largely speculative and would require additional research before being addressed in implementation.
Next, the chosen path offers the long-term benefits for the company. First, it leads to covering the biggest audience without repelling the already established customer strata. Second, under the condition that the brand image does not become diluted and lose its appeal to both parties, covering larger part of the market will secure the growth of the company in the future and allow steady growth of sales. Admittedly, such result is only possible in the case where all the marketing decisions are appropriately selected and thoughtfully implemented. Finally, the diversification of markets presents better opportunities to safeguard the business against unpredictable occurrences in any given field. The company will also be able to maintain its knowledge base up to date, covering the quality and technological proficiency as well as design and marketing skills.
As was mentioned above, the chosen strategy also presents the greatest challenge in terms of the amount of introduced changes and allocated resources. On the one hand, it requires a significant alternation of the current marketing policy similar to the first option. On the other hand, it necessitates significant market research possibly superseding that of the second alternative. Nevertheless, upon obtaining a full picture and addressing criticism, the company is expected to get praise of the public, adding to its success.
Description of Implementation Plan
Since the suggested strategy requires significant resource allocation and, by extension, commitment of the company staff, the first stage of the implementation must be directed at sharing vision of the new strategy, communicating its mission, and securing commitment from the company employees. Once this is achieved, a research aimed at determining relevance and weight of the recent concerns (e.g. losing customers due to image backlash) must be launched. During the next stage, the results of the research can be used to construct the strategy addressing the most vulnerable points which also display the biggest threat to corporate image and lead to loss of customers.
Importantly, the development of the transformation model requires the development of the relevant metrics which would allow evaluating the execution of the plan, detecting deviations, and adjusting business practices in a timely manner. Appropriate communication channels are desirable to achieve synchronicity between departments and ensure integrity of operations. One possible way of doing this is establishing scheduled meetings where recent updates would be shared and discussed to review the course of actions and decide on alternatives whenever required. After this, the designed strategy may enter execution phase. All changes in customer behavior patterns must be assessed, logged, and brought up in subsequent meetings. To ensure the success of the process, a workplace culture should be built that can be aligned with the set goals and vision. One important aspect which should be addressed is the attention to marketing decisions that may qualify as deceptive and unethical. This may be achieved by additional employee training and promoting healthy corporate ethics. After this, the process is limited to monitoring, maintenance, and occasional interventions.
Conclusion
The direction chosen by Lululemon is an ultimately correct one since it aligns well with values of its customer base. However, it is coarsely conceived, does not account for important details, and uses deceptive marketing techniques, which led to criticisms and undesirable changes in brand image. The chosen solution allows the introduction of necessary amendments without disrupting the existing business model. If implemented appropriately, the suggested alternative leads to retention of two major customer segments, improved company image, and several long-term benefits. Despite being fairly demanding in terms of resources and staff commitment, the chosen solution is possible under the condition that the suggested plan is followed with proper diligence.
Establishing customer satisfaction as the top priority;
Introducing the principles of cooperation and information sharing between the companys affiliates.
New Vision
Expansion into the global economy and worldwide market;
Acquisition and mergers as the companys key policy;
Increasing the number of customers and the quality of services
Goals and Objectives
The key goal for the Emirates Group for 2014 is increasing the number of customers by 50% by 2015. the subsequent goal is raising customers awareness concerning the Emirates Group benefits.
Improving the audit system in order to attain better quality of services;
Expanding into the global market;
Increasing the quality of services provided during the flight;
Changing the leadership style to a mix of a transformational and a laissez-faire one (Chaundry & Javed 2012, p. 259);
Bringing the number of costs down in order to spend more on promotion campaign.
Means to Achieve Goals and Objectives
reconsidering the leadership strategy;
creating a promotion campaign.
Current issue: corporate governance model.
Solution: transformational (motivation) and laissez-faire (independence) LS. leadership styles.
Costs can be reduced by cutting the amount spent on inbound and outbound logistics;
Expansion will be successful once becoming partners with several influential U.S. and European airlines;
Mergers can be carried out by acquiring minor UAE companies providing flight related services.
8,000,000 passengers/year (Iran Air (Iran Air 2014, para. 1));
quality staff training (Iran Aseman Airlines 2014, para. 1).
Key weaknesses of the rivals:
Weak leadership;
Local influence.
Marketing strategy:
Putting emphasis on safety, comfort (e.g., cushions, smoke alarm, etc.) and fast travel;
Listing additional options for customers (free meals, e-booking, etc.);
Mentioning flexible pricing policy and pricing options , including discounts;
Stressing the companys intentions concerning expansion.
Putting Technological Advances to Use
Creating the opportunity for customers to check in via the cell phone;
Providing Internet-based applications for helping the customers keep the track of the companys information (flights, tickets available, pricing, etc.);
Using the aforementioned applications to keep the clients updated on the companys news;
Giving customers the option to unsubscribe.
Reference List
Chaundry, A Q & Javed, H 2012, Impact of transactional and laissez faire leadership style on motivation, International Journal of Business and Social Science, vol. 3, no. 7, pp. 258-264.
Complete annual report 2013. Web.
Financial annual report 2013. Web.
Iran Air 2014, Iran Air, 40 years of history, 55 years of experience. Web.
Express Scripts, Inc. is a pharmacy benefit management (PBM) company which offers drug plan management services mainly to government agencies, unions and corporations. Around April, 2010, Express Scripts was for the first time ranked by both Forbes magazine and Fortune, among the top five hundred companies in the United States. Moreover, the company also managed to be featured in the Forbes Platinum List where it was among twenty five companies which have, Platinum Profiles a great fete for a company that has been slowly, but surely growing to become a force to reckon with. We aim to find out how it incorporated its information systems and internet technology into its business processes so as to make these great achievements.
The important business processes of Express Scripts, Inc
Like most companies, Express Scripts has management, operational and supporting processes as its core business processes. All are important, but with respect to information systems, its supporting processes are the most important because they provide essential backing for the other core processes. Express Scripts have an advanced technical support team and have even gone to great lengths to offer resources such as PDFs on Tips for Using the Express Scripts Call Center and website to clients and customers. Given the dynamic nature of technology, this has been very instrumental in the companys operations and ultimately has a positive impact on its output.
Express Scripts business strategies
This company has used various business strategies that have seen its profitability rise almost exponentially. For instance, its acquisition strategy, which was founded on cross-selling whereby companies own contracts with drug stores were converted to contracts that those drug stores now have with Express Scripts. This ultimately brought down the clients cost of pharmaceutical programs thus giving the clients additional value. Further, their internet strategy entails marketing their services and delivering core services to their clients via the internet thus enhancing convenience.
Information systems that give Express Scripts competitive advantage
The actions that are taken to create an information system that solves an organizational problem are called system development (Laudon & Laudon, 2009). Express Scripts has heavily invested in information technology aimed at supporting its future profitability and growth. This resourcefulness is accounted for as capitalized software ranging from data warehouses (which enable effective communication with all parties involved in the prescription process), to e-Business initiatives which saw instantaneous benefits by virtue of increasing their connectivity to their clients, prescribing physicians and also their members. Express Script also enjoys competitive advantage by being among the first to introduce a mobile application which conveniently facilitates order refills, finding a pharmacy, etc. Electronic communication is the modern way of communication that includes electronics and latest technology for communicating such as teleconferencing e-mail, etc. (Bovee & Thill, 2009).
References
Bovee, C. L., & Thill, J. V. (2009). Business Communication Today. Ontario, ON: Pearson Education Canada.
Laudon, K. C., & Laudon, J. P. (2009). Essentials of management information systems. Upper Saddle River, NJ: Pearson Prentice Hall.
Du (previously Emirates Integrated Telecommunications Company) is one of the largest telecom operators in the United Arab Emirates. In 2006, the company entered the market dominated by Etisalat to prevent the telecom monopoly in the country ( Our story, n.d.). Du utilized a hybrid strategy that combined a competitive price offering and a broad range of provided services. In other words, the company achieved a substantial competitive advantage by implementing an intelligent business plan. Since 2006, Du has been actively increasing the quality and scope of its products, which has allowed the company to become one of the largest telecom providers in the UAE today.
Corporate Vision
A thorough understanding of the organizations vision and mission has allowed Du to attract a loyal group of customers by promoting endorsing values, such as transparency, honesty, and innovation. The companys executives have established clear objectives regarding profitability and sustainability, which is essential for attracting new investors ( Sustainability, n.d.). Ultimately, meticulous attention to corporate responsibility and ethics is a significant factor in the companys success.
Strategic Planning
Consequently, strategic planning plays an essential role in the effectiveness of the established business-level strategy. Namely, Du has applied the Blue Ocean strategy, implying the new demand generation and intelligent market segmentation (Kyrylov et al., 2020). Since Etisalat is the only major competitor, Du can utilize the Blue Ocean model to divide the market and take the specific niche in telecom operations. The company achieves this objective primarily by providing flexible options in mobile, internet, and TV plans.
Conclusion
In summary, the business-level strategy adopted by Du has been the most crucial factor in the companys success since 2006. The previous monopoly by Etisalat was a significant challenge for newcomers in the telecom industry. Nevertheless, the intelligent usage of market segmentation, broad product variety, and the application of the Blue Ocean strategy to divide the market have helped Du to create a competitive advantage. Ultimately, Dus chosen business-level strategy was paramount to the companys success, turning Du into one of the largest telecom providers in the UAE today.
References
Kyrylov, Y., Kyrychenko, N., Stukan, T., & Zhosan, H. (2020). Formation of enterprise management strategies and entrepreneurship training. International Journal of Management, 11(06), 793-800. Web.
In their 2008 article, David J. Collins and Michael G. Rukstad presented the concept of explaining the companys strategy in only thirty-five words. According to the authors, one of the fundamental problems in this discussion is that managers and executives frequently have a vague understanding of their respective companies strategic planning (Collins & Rukstad, 2008). The solution to this issue is to analyze the organizations strategy by breaking it down into manageable elements. To achieve this objective, Collins and Rukstad (2008) identified three critical areas to focus on in strategic statements objective, scope, and advantage. Ultimately, the intuitive understanding of how to apply strategy is by combining the mentioned factors and implementing a specific and time-bound development plan.
Consequently, it is essential to analyze each of the strategic elements in greater detail to understand how to apply the strategy. Objective generally refers to what the company wants to achieve, but, according to the authors, it should be specific, measurable, and time-bound (Collins & Rukstad, 2008, p. 6). In other words, it is essential to differentiate between vague visions, such as increase wealth, from strategic objectives, such as increase the market share by implementing service X in the next three months. Consequently, scope concerns the companys domain and emphasis on customers, geographic locations, and vertical integration (Collins & Rukstad, 2008). Managers should transparently analyze these three dimensions to determine the strategic plan for the organization and appropriately distribute available resources. Lastly, advantage is the most significant element in strategic planning that differentiates the company from its competitors. According to Collins and Rukstad (2008), it is critical that managers determine a specific competitive advantage since it is the primary means of achieving goals in business. In summary, all three strategic elements are essential since they enable a more thorough understanding of the organizations strategic development.
What Is the Importance of Strategy in Business? Essay Introduction
Corporations are founded by people as a means of achieving their goals as well as their visions of what the business ought to be. Thereafter, objectives and policies are set and put into practice. Combined, goals, visions and plans constitute strategies set forth to be achieved in the long or short term.
Strategic management process is based on the formulation, implementation and evaluation of an entire business organization (David, 2006). Strategy in business terms refers to the direction and scope which an organization has over a long-term period and which helps it in achieving the best using the available resources within a highly competitive environment (Lippmann & Rumelt, 2003). Strategies should be designed in such a way that the business meets the market needs as well as stakeholder satisfaction.
Different organizations develop and execute their strategies in unique ways motivated by the need to gain advantage over other businesses within the same environment. Applying mediocre strategy as well as the analysis of the industry environment by firms are definite preferences over ad-hoc or superb strategies and their evaluations. The essay seeks to provide an analysis of the application of strategy by different business organizations.
What Are the Strategies to Make a Business Successful?
The use of strategy can be found at different levels of any business organization which ranges from the business in general to particular individuals operating the business. Three levels where strategy operates have been identified (Lippmann & Rumelt, 2003). Corporate strategy seeks to meet the needs of all the stakeholders through the operations of the organization.
This level is central to the success of the business since it involves the great influence of investors. Corporate strategy serves to provide guidance in the decision-making process in the entire business. Most, if not all businesses have their corporate strategy clearly spelt out in the mission statement from which all other strategies emanate (Stalk & Evans, 2002).
The second is business unit strategy which is designed to guide how a given business survives the tough competition presented by similar operators within the same market environment (David, 2006). This strategy inspires important decisions ranging from the choice of appropriate products, customer satisfaction, overcoming competition, to the exploitation and creation of new business opportunities.
The last strategy employed in strategic management is the operational strategy which guides decisions on how the organization is structured in order to ensure that the business is operating at its maximum potential (Lippmann & Rumelt, 2003). The importance of this strategy is that it facilitates the implementation of the other two strategies mentioned earlier.
Operational strategy is concerned with decisions touching on the effective use of available resources, the various processes within the business, and human resource or labor. These three types of strategy are very beneficial to a business organization when it comes to making important decisions.
Many companies and organizations have realized the importance of formulating sound strategies. Strategies help organizations take key actions that facilitate the achievement of milestones and results which would not be easy to attain without strategy formulation (Stalk & Evans, 2002).
Strategic planning acts as a guide for all the stakeholders in the organization since it sets out clear vision of what the business seeks to achieve both in the short and long-term. Many theories have been used in the business sector to guide operations. For instance, the entrepreneurial decision process model describing opportunity recognition by organization managers has been very resourceful (Pech & Cameron, 2006).
Strategy formulation helps organizations to anticipate future business trends and to prepare adequately for the foreseeable market competition and opportunities. Guided by sound strategies, organizations will be able to invest their capital funds wisely and hence get maximum returns on investments (Stalk & Evans, 2002). It is evident, therefore, that an organization without strategy will not be able to withstand the challenge from its competitors causing a decline in their share of the market as well as in their sales.
Factors of an Effective Business Strategy
A sound strategy can be formulated by considering some key elements. The organization has to define the nature of the business that is to be pursued, state a clear mission of the business, set strategic goals and the expected performance, formulate a business strategy, implement the set strategy and finally evaluate the effectiveness of the strategy from time to time and making necessary improvements (Faulkner & Cliff, 2005).
Business Definition
Any business organization has to understand the type of customers being targeted and then defined from their perspective (Abell, 1980). Customers are the central pillars of all businesses since they are the source of revenue and hence determine how far the business would withstand the test of time (Rumelt, 1993).
The first step in designing a sound strategy is to put in place measures that will ensure a strong customer base. Developing products and enhancing their quality through efficient means of production may help some organizations to achieve success. However, maintaining a chain of committed customers is crucial in attaining prosperity since pricing may not be a major determinant of the number of customers (Porter, 2003).
Mission Statement
An organizations mission statement should contain the strategic mission which states clearly how the business will be in future. This step involves the formulation of strategic mission which guides the organization in making important decisions. The mission statement should contain the elements that define the organization as a whole (Porter, 2003).
Strategic Objectives
This is the third step that facilitates the design of a successful strategy by outlining a clear position in the market environment that an organization desires to take. It involves the formulation of specific performance rates that will help in achieving the set objectives (Faulkner & Cliff, 2005).
Some examples of strategic objectives include the placing of goods and services in a highly competitive market environment and the general structural organization of a business (Abell, 1980). Moreover, organizations should be keen on increasing profitability without hurting their customer base, value of return on investments made, promoting innovativeness, and diversification of the businesses and their products (Porter, 2003).
Competitive Strategy
Developing a workable strategy involves the formulation of ways of guiding one business unit or a specific product. The major objective of this strategy is to attain a competitive edge in the market environment even in the presence of similar products or services (Faulkner & Cliff, 2005). The business should well aware of its strengths and weaknesses and capitalize on the strengths it has relative to the competitors.
According to Porters strategy theory, understanding the size of the market as well its growth rate is crucial in setting business strategies (Rumelt, 1993). Other factors to consider include the profitability of the business, the uniqueness of the products or services, the challenges to the business that may hinder performance, and to ensure that the organization is operating at maximum capacity (Abell, 1980).
Competitive analysis is a study of companies competing with your companies products or services for a market share (Dobni, 2010). It is way of scanning the environment in order to acquire information about trends, events, and relationships that may affect the organization (Choo, 1999).
Both profitable and non-profit organizations can benefit from this study. It aims at achieving a better understanding of competitors performance and how to maintain your advantage over them. It is a strong factor contributing to strategy planning. It also aims at expanding the employees knowledge of the company by providing content and functionality information. It is likely that this process will benefit current as well as future projects.
Exploring competing firms will give you a chance to what is working well for them and what is commonly being offered which would eventually lead you to learn from their mistakes, not to reinvent what theyve got and find a better way to implement from where theyve left(Faulkner & Cliff, 2005).
Implementation of Strategies
Many business have failed to perform in the market not because they lack effective strategies but due to lack of or poor implementation strategies. An organization has to put in place meaningful tactics for implementing the strategies that have been formulated (Faulkner & Cliff, 2005). This element is crucial in that it informs the process of evaluating the strategies as well as the design of new ones.
Monitoring and Evaluation
Once the strategies have been implemented, it is advisable to monitor the progress and effectiveness of these strategies. This step is crucial and equally important since it ensures that necessary adjustments are made to the general running of the organization. Continued assessment of the progress ensures that the organization remains true to its mission statement and hence a successful future.
Application of Strategy
Having discussed what strategy is and the various components, it is also important to understand that different organizations have different ways of applying the strategies they formulate. Others would opt for mediocre strategies while some will seek to use specific or ad-hoc strategies with an aim of achieving the set goals.
It may not be of any significance to have great strategies which are poorly executed, instead, it would be more meaningful to an organization if it had mediocre strategies which are superbly implemented (Moreton, 2004). To illustrate, we will take a look at the Australian Telecommunication firm, Optus.
This corporation included the continuous need for innovation as part of its management strategy so that it remains ahead of its competitors. Its goals are incorporated into a strategy to be handled by its strategic personnel. These people would be responsible for analyzing and developing future profits and performance strategies.
What distinguishes Optus as a firm is that it has implemented strategies focused on specific goals, one of which is to achieving positive customer feedback. The focus was also on improving the management of its operations and on opting for growth opportunities in its sector while maintaining profits (Optus Annual Report, 2009).
Carrying out strategic analysis of the competing environment and emerging business opportunities are among other objectives that strategists work on.
They also work on emerging technologies and come up with other possible strategies to improve and achieve Optus sustainability. Thus by implementing correct strategies and expanding its share market, Optus was able to achieve a gradual growth reaching a net profit of $583 billion in 2009 and revenues of up to $8.321 billion.
Hence when one applies an efficient mediocre strategy and examines its implementation, then he would be choosing a really good strategy. Optus for instance has initialized and implemented strategies to achieve objectives and this has proved beneficial to the firm (Optus, 2009).
Many factors, according to the report, support the firms objectives. This include enhancing growth opportunities by driving operational performance (2009).It is my belief that a mediocre strategy is successful in terms of evaluation as you can review its objectives and make any alterations when necessary. Based on outcome evaluation, a strategy has to be a mediocre one rather than an ad-hoc one because it has proven its superiority.
For short-term deals, it would be better to look at a mediocre strategy beyond the obvious facts. Strategy evaluation is better conducted following successes or failures (Moreton, 2004).Selecting appropriate strategy and assessing how the business will perform accordingly and whether a given strategy will render higher profits or advantages are key missions for business managers as they contemplate strategies.
Rumelt (1993) thinks that a good strategy evaluation is more successful for short- term businesses rather than long- term ones; though mediocre strategies do not provide guarantees as to the success of the strategy. He also mentions four criteria to be kept in mind when applying the mediocre strategy which he believes would render the company profitable:
Remaining constant as an internal assessment tool
Applying consonance as external assessment tool
Using feasibility as an internal assessment tool
Making use of advantages as an external assessment tool
To select the proper strategy and assessment tool one faces a number of challenges and tough questions such as: Are the objectives really suitable for the firm? Are the plans suitable? Would the outcomes be achievable within the time limit?
It is important for managers to contemplate these questions to recognize the suitability and efficiency of the devised strategy. If the answers to the questions are positive then this means that the strategy is workable. But if it is negative, then alterations to the plan must be made in order to meet the objectives of the corporation (David, 2006).
Choosing either one of the strategies has proven to be tricky because of the unique nature of each of the strategies and the need to evaluate each.
Firms managers need to be aware of evaluation strategies (Moreton, 2004).For instance, it is a good idea for a firm to take into account the fact that strategies work differently in different situations. So, where a strategy fails and has negative impacts on a firm, it might be quite successful in another. Hence, efficient strategy relies on choosing the one that best caters for the firms circumstances and needs.
Conclusion: The Importance of Business Strategy
The essay has broadly discussed and analyzed the concept of strategy as used in business management. Strategy has been defined as the direction and scope which an organization has over a long-term period and which helps it in achieving the best using the available resources within a highly competitive environment without hurting its customer base.
The various levels in which strategy operates have been identified and they include corporate, business unit, and operational strategies. Six components of a successful strategy have also been explained.
The essay has further elaborated on the application of a given type of strategy, whether it is a mediocre or ad hoc strategy. It can be concluded that formulation of a successful strategy by an organization or company demands more than just having it in paper, instead superb implementation and evaluation determines the overall success of the strategy.
References
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