Category: Corporate Strategy

Introduction and Meaning of Business Ethics

The term ethics means inquiry into the state and basis of morality. Primarily, morality refers to right decisions, principles, and rules of demeanor. In some cases, ethics has been termed as the discipline that deals with the human behavior, with an emphasis of verifying right and wrong.

The distinction between a normal choice and an ethical one is that the latter requires one to exercise the duty of weighing virtues and arriving at a judgment in a case that is unique from the others that he or she has encountered prior to this. Another distinction relates to the amount of accent placed by decision makers on their own principles and accepted ways of doing things in their own company.

Accordingly, values and principles play a significant part when people or organizations have to make decisions that are ethical in nature. It is an agreeable fact that elevated ethical standards is determined by the ability of both persons and businesses to ascribe to sound moral values. Nonetheless, some things must be put into consideration when using ethics in the business setting.

First, businesses must make profits to continue surviving. If profits have to be made through ways that are morally questionable, then the survival of such businesses is jeopardized. For example, companies like Enron and WorldCom went bankrupt after making scandalous headlines regarding their business transactions. Secondly, businesses must hold an equilibrium perspective between their gains and the societal demands.

To address this challenging feature of the business community, the society has devised both legal and implicit regulations to direct businesses in their attempts to make gains in ways that do not adversely affect other people and the society.

Building on this on this fundamental understanding of ethics, business ethics may therefore be defined as the values and standards that direct demeanor in the business world. Investors, workers, clients, the legal framework and the society normally dictate whether a certain action is acceptable or not based on certain agreeable ethical perspectives.

Although these parties may not necessarily be correct, their decisions affect the way in which the society accepts or refuses a business and its dealings (Ferrell, Fraedrich, and Ferrell 6). This paper aims at critically comparing and assessing Adam Smith and Albert Carr’s standpoints on their defense of the narrow pursuit of self-interest (regarded by businesses as profit maximization) as the sole goal that should direct business strategy.

The objective of business with respect to standpoints of Adam Smith and Albert Carr

Business was regarded as unprincipled in some settings mainly due to its single purpose of maximizing profits. Adam Smith’s opinion in the 18^th century is often regarded as support for this assertion. Smith emphasized the positive responsibility that personal initiative and the aspiration for gains in economic growth.

He candidly opined that in an economically independent and competitive community, the exceeding personal interest of an individual would be put in control by other people’s self-interests. Smith’s stand is seen to have been embraced to show that businesses were independent and free from ethics.

He also pointed out that the geocentricism and insatiability that capitalism advocates would ultimately devastate the system itself (Anon. 30). In a modern debate, Albert Carr brought forth his perspective of the fact that business has its own ethics and he gave the analogy of the poker. He argued that just like the rules and informal guidelines of demeanor that surround poker, it could not be played in church.

In the same vein, business has its own lawful regulations and standards of playing that encourage fairness among the operations of all rivals. Apparently, Albert’s analogy holds water.

However, when business-based choices cause serious damage to third parties, who are not cognizances of the fact that they are participants in a different business game, the analogy cannot stand. Many customers who depend on the information presented through adverts regarding the quality, value and safety, are not participants in the game (Anon. 30).

Socialresponsibility

The focus of most business organizations is profit maximization and it has been disputed that the focus on any other aspect is bound to not only distort but also misguide its transactions (Anon. 30). Conventionally, such activities interfere with a business organization’s economic growth. Most neo-classical economists agree with the fact that making high profits is the enterprise’s only ethical responsibility and social commitment.

Albert Carr terms this responsibility as ‘playing by the rules of the game’. He argues that there is a clear demarcation between business and religious ethics and it is in order for the businesses to engage in sham ventures so as to win.

The neo-classical economists’ perspective in this regard indicates that economics and ethics are not connected in any way because whereas the former is a technical aspect, the latter is result oriented. The ethical standing of persons and the society have an impact on the demeanor and attitude of all stakeholders (Anon. 30).

These stakeholders have affected business transactions in turn. In this perspective, ethics cannot be separated from the fiscal efficacy of a business. Studies reveal that the focus of most business people can lead to their obvious trend to underestimate the social costs obliged on other people.

A breach always exists between the businessperson and the customer’s knowledge with regard to the commodity being offered in order to meet the societal demand. This requires that the respective government interject to rectify the alterations and imbalances in the performance of the organization’s economic activities (Anon 30).

The government does this in several ways that include control of rivalry, consumer protection, protection of the surrounding, enhancement of equity and security. However, the upcoming tendency is in the preference of self-regulation by corporations in form of volitional code of ethics and self-governing regulations.

At the same period, queries have been put forth with regard to the efficiency in applying these volitional codes to real life situation. The regulations being purely volitional, can easily allow for the clash between the interests of customers and those of the business that may become hard to resolve.

In practice, the interests of the consumers are forfeited, neglected, or subordinated in the pursuit of increasing profits. At this point also, government rules have shortcomings in either avoiding or paying the penalty in the view of when they anticipate resulting gains are bound to be of profit to the business.

Social and fiscal dimensions require that business organizations add to the ethical aspects while aiming at profit maximization. Apart from having both straightforward and implementable self-regulations, it is the key role of the government to arbitrate in ensuring the enacted laws have been effectively enforced to ensure that the interests of both consumers and the society as a whole have been met (Anon 31).

A critical assessment of Adam Smith and Albert Carr’s standpoints

Profit maximization and self-interest are not sold in the same package. The inability to draw a clear demarcation between the two concepts is recipe for immense confusion. Business ethics as a discipline is chiefly concerned with the moral roles of individuals who manage businesses.

Managers often find themselves positioned in a state where the aspiration to balance between raising the gains of decision makers is at conflict with their self-interest (Hodgson 70). Due to this rudimentary confusion, there has been a noticeable trend in the business ethics literature to disregard suggestions that enhance profit motive seriously.

The more outspoken effect of this confusion is the popular notion that for business ethics to be truly meaningful, it must be able to let groups assume managerial duty rather than shareholders. Profit maximization seen as an obligation rather than an extension of self-interest, provides a viable foundation for the establishment of a full-bodied ethical code.

Yet, if profit maximization is an obligation, a question of the source of this obligation arises. It is in our efforts to substantiate the profit motive that we realize that the most suitable duty of managers is not to maximize gains from any strategy at hand, but rather to capitalize on given opportunities for profits (Hodgson 70).

Some studies reveal that traditional business ethics is not applicable to managers because of its inadequacy to present the managers with practical counsel. It is also argued that moral philosophy enables one to do well for the sake of making other people benefit rather than individually benefiting from it.

Consequently, proponents of business ethics have had regarding the most likely conflict between morals and interests, and more so, how managers are supposed to deal with such conflicts when they come up (Hodgson 72).

To understand the concept, we can replace managers with doctors, and picture critiquing medical ethics on grounds that they do not provide doctors with guidelines on what to do incase their interests are at conflict with those of patients.

For example, one can imagine the case way a patient does not require a surgery but the medical doctor would really want to perform it. The action taken by the physician in such a case is what ought to be considered.

Conventional wisdom dictates that whenever there is a disagreement between one’s self-interest and their moral commitments, the latter will win that is from the moral perspective. The issue of when is supposed to be forgiven for dismissing their moral responsibilities that is behaving in an immoral way, is a detached one and is unspecific with regard to the realm of business ethics.

It is vivid that the professional behavior of medical practitioners is mainly determined by their responsibilities to the patients, and as such, they are not allowed to let aspects of self-interest interfere.

In a similar way, profit maximization would affect managers; for instance, the mangers of the failed companies like Enron and WorldCom have never had anyone defending them just because their demeanor was influenced by their self-interest.

Well, if the incentive mechanisms have been properly constructed, managers will be very much interested in maximizing the value of the organization’s main decision makers (like it the way physicians will find interesting to attend to their patients). However, this is inadvertent and immaterial in the in the moral dimension. In a situation where a conflict arises, the professional requirements supersede over the couple of interests.

Where matters may be unique is where asset of professional responsibilities conflict for instance, a situation where a health provider can better the life of a patient by disclosing incorrect information to them or of a business manager who manages to please investors by putting an exaggeratedly stern downsizing (Hodgson 72).

The attitude to business ethics that makes profit maximization as the principal focus is normally perceived with doubt because it has been conventionally used often in defense for unbecoming demeanor rather than a foundation for a heart-felt attempt to come up with a code of moral values.

As earlier on elaborated, the profit maximization tactic to business ethics cannot be integrated with the concept of self-interest on the part of managers. Therefore, Milton Friedman’s assertion that the social obligation of a business is to maximize gains is on the trust-based association between managers and shareholders. The relationship between a manager and a shareholder can be compared to that between a lawyer and his client.

The manager is expected to fulfill the needs of the shareholder, not his personal interests. This calls for trust and hence ethical obligation between the two parties. It should not be forgotten that there are numerous ways through which the lawyer can take advantage of this association for personal gain, as the manager can do (Hodgson 77).

Conclusion

Business ethics refer to the values and standards that guide behavior in the business world. Neo-classical economists like Albert Carr not only regard profit maximization as the main obligation of a business, but also attribute ethics to religion while arguing that ethics cannot be married with business.

This assertion is discounted by the fact that the behavior of stakeholders is affected by the ethical standing of people in the society.

This in turn causes stakeholders to influence business activities. Additionally, profit maximization and personal interest are very different aspects and studies show that profit maximization can only be a central focus in business ethics in the presence of other ethical and morally ingredients such as trust and moral commitments between managers and stakeholders.

Works cited

Anon. Business Ethics. Mumbai: Nirali Prakashan. 2007. Web.

Ferrell, O, C., Fraedrich, John and Ferrell, Linda. Business Ethics: Ethical Decision Making and Cases. OH: Cengage Learning. 2009. Web.

Hodgson, Bernard. The invisible hand and the common good, Volume 2002. NY: Springer. 2004. Web.

Introduction

Globalisation has resulted to an increase in international trade; despite the collapse of Doha negotiations in 2008, trade among countries is increasing. Countries trade through economic policies of absolute and comparative advantage. For effectiveness and efficiency in the trade, transport and communication are important. There are international companies which have invested in global logistic service provision.

United Parcel Service is an international logistic company which has been in the business for over a century. To venture in international market and remain competitive, there are strategic management decisions made by the company (Joshi, 2005).

This paper looks into the company’s global business strategy, it will undertake a PESTLE analysis, use Michael Porters Five Forces and Three Generic Strategies to evaluate the current strategies of the company.

Aim of the report

The report aims at using management tools to evaluate the effectiveness of current strategies adopted by United Parcel Services Company. It will evaluate internal and external conditions facing the company.

Brief history of UPS

UPS was founded as a messenger company in United States of America in 1907. Initially, it only targeted local markets. However the company has grown to a multi-billion company facilitating trade across the globe. Currently it enjoys a strong brand name with presence in all continents. It is respected for its efficiency. It focuses on two services; packaging and logistics services.

Daily, the company is able to facilitate businesses in over 200 destinations daily. It uses the e-Commerce, supply chain management and frontiers of logistics to facilitate the transfer of technology, goods and funds (UPS corporate Website, 2010).

Depending with the type of goods/services the company is transacting, it chooses the mode of transport to adopt. It ranges from sea, road, electronic transfer and air transport.

The name UPS was rebranded in 2003 with the aim of showing the world its intentions to be the world largest and most efficient supply logistic service provider in the world. Currently the company employs approximately 4,606 employees distributed in different countries.

According to a report by Zemanta on July 26th, 2008, Ups is facing systematic problems. This causes unreasonable delay in delivery of services which lead to un-satisfied customers. The failure has been occasioned by system failures resulting to un-updated system.

With such a system, there have been times that goods were thought to have been un-transported from their country/destination of origin but after a thorough check, they are found in UPS warehouses in the intended destination or other destinations. This has caused unreasonable delay and customers lose confidence with the company.

The company maintains alliances with companies situated in different parts of the world where parcels can be dropped or collected by a customer. There are some dropping points which results to loss to the company because of their low flow of customers.

Despite this, the company have maintained the outlets. The company has also been facing situations of lost packages. This may be from theft, or ignorance from the staffs (UPS corporate Website, 2010).

UPS PESTEL analysis

PESTEL is the stands of Political, economic, social, technological, environmental and legal analysis. It is a management tool that is used to analyse the external environment that a company is operation in. UPS is operating as an international company and thus its external environment goes further than an analysis of a single countries external environment. The world is facing a rapid increase in international trade.

This has been facilitated by globalisation and interdependency that countries have developed. When one part of the world having an absolute /comparative advantage over another, there is a tendency to concentrate on production of such goods and importing those goods and services which it cannot produce efficiently.

An increase in international trade is an increase in business for UPS as it facilitated the flow of goods and services (Kermally, 2003).

Political factors

The world is recovering from world economic crisis which started in 2007. It is believed that the crisis started in United States of America after a collapse of financial institutions. It is in the same country that UPS has a strong market. The effects of the crisis are reduced international trade where countries have placed trade barrier, tariffs and non tariffs, to protect their economies from effects of the crisis.

This has resulted to reduced business in UPS. World countries were specifically more careful when trading with United States and this affected the company sales.

In 2008, there was the collapse of Doha negotiations which were aimed at facilitating international trade without trade barriers (free trade). This could have been a good political decision to the company as it would have seen an increase in trade and thus a demand for supply logistic services from the company (Kotler &Lane, 2009).

Economic factors

The world is recovering from world financial crisis. The crisis had affected international business negatively as trade among countries reduced. This acted to the disadvantage of UPS. One of the ways that the world has used to recover from the crisis is increasing consumer consumption preferences. This is through reducing lending rate of interests.

UPS has benefited in such policies and is using the low cost loans to invest in different countries. For example in 2003, UPS acquired Purchasing Menlo Worldwide Forwarding, a company that increased the company’s capacity in air cargo handling. The next year, 2005, the company acquired Overnite company to increase the company’s access in Northern America.

During the period, the company also made other acquisition in United Kingdom and Poland. These acquisitions were made possible by deteriorated businesses in these companies which lead to their disposal and availability of affordable capital financing loans. The trend in international business thus has negative effects on UPS but comes with opportunities that the company has utilized for its benefit (Nersesian, 2000)

Technological factors

The world is facing an increased technology improvement. There are new systems developed to facilitate international trade among countries. Other than trade facilitation, there have an increase in technological transfer where UPS services are contracted. To align its services with the new trend, the company have also adopted technology.

For example it has introduced cargo tracking systems where it can trace the direction of its tracks or other modes of transport. Technological development has also posed some challenges to the company. This is mostly in electronic money transfer, mobile money transfer and internet fund transfers. This has resulted to reduced business.

For example, Safaricom, a Kenyan mobile service provider invented mobile transfer service via phone, in April 2010, the services were exported to United Kingdom and are proving to be more efficient than UPS fund transfer services. UPS has embarked on technological improvement.

It has gained a number of awards as the best in technology. For example in 2009, it was given a present by InformationWeek in 500 Most Innovative Business Technology Organizations. The company has a centralised information and technology department. The chief execute officer of IS/IT department is called David Barnes

Social factors

The world is increasing in population and literacy level. Increased population has lead to demand for better ways of resource management which is facilitated by international trade. From thing angle the company is benefiting as it transport goods and services across borders. There are campaigns urging people , governments and international bodies to respect human rights.

With such advocacy, people are moving from one country to another for education, settlement and leisure. This has facilitated the need for service and goods transfers across borders. For example there have been an increased number of students from Africa studying in Australia.

This number has created an increase in transfer of funds from home country to Australia and forth. With such changes in social trends business in the country have increased (Neumann, Ringbeck & Schwegmann, 2000)

Environmental factors

There is an increase in environmental conservation campaigns all over the world. Different countries are taking different measures to ensure that they protect their environment.

International bodies are also playing an important part in ensuring that the different countries adopt different policies aimed at conserving the environment. on 11 December 1997, 37 industrialised countries and the European Union, signed the Kyoto protocol in Japan. The protocol was target to have been fully implemented by 16 February 2005. It was developed by United Nations Framework Convention on Climate Change.

The main aim of the protocol was to ensure that emission of green house gasses was reduced by 5% below their level in 1990 by the end of 2010. The protocol targeted the major greenhouse emitters and developed measures to be implemented. The protocol has though not been fully honoured but has offered some guidelines on how governments should reduce green house emission.

Of late in 2010, there were talks in Copenhagen aimed at devising measures to protect the environment. The talks failed as countries took strong stands against the recommended ways of conservation (Roberts, 2008).

UPS does not ignore environmental conservations. It protects the environment by adopting technological measures that reduces pollution. Right from its incorporation it has continuously improved its process. In 1930s, the company was depending on electric vehicles to transport products in new York, at the time, this was a high environmental friendly means of transport instead of using vehicles which used fossil fuel.

The company’s vehicles commonly known as “brown cars” are well serviced to ensure that there is minimal emission from them. The company enjoys as the world’s largest company with vehicles operating under compressed natural gas (CNG). These vehicles are highly fuel efficient and emit minimal green house gasses to the environment.

The company whether in United States or abroad recognises the need to conserve the environment. It is a signatory of responsible business models which gives a mechanism that a company should adopt when undertaking its business (UPS corporate Website, 2010).

Legal factors

Different countries have different business laws which it requires followed in their country. When UPS gets into a company, it seeks legal advice from legal experts in the country to ensure that it abides by the laws of the country. Where there are international laws, then it abides to them accordingly.

UPS Current strategy

To evaluate the company’s current strategy, this report will take use porters five forces and three genetic strategies.

Porters five forces

Porter in 1985, came up with five forces that can be used in analysis current position in a company. They are;

Suppliers power

The company’s suppliers have an influence on the market share that a company is likely to enjoy. If an industry has limited suppliers but a high demand of supplies, then goods are likely to be expensive. To have product differentiation, a company need to have reliable suppliers. UPS being in the service industry has its inputs more skewed to services.

Customers requesting for services from the company are seen as the suppliers of to the company. There other supporting materials like packaging bags, vehicles and airplanes.

The company has attained a differentiation of its vehicles by their colour. Customers, in this case doubles as suppliers, they supply the company with parcels, cash, and goods of various nature to transport. Companies doing the same business include FedEx, DHL and United States Postal Service.

Barriers to entry

Companies in an industry place certain barriers to entry in the market. These barriers include economies of scales, low production cost and input access strategy. UPS has been favoured by its strong brand name in the world. It is able to venture into a market and through the strength of its brand able to successfully launch and enter in that country.

Access to raw materials is not a problem since the main materials are from customers which the company has entertained through its strong brand name. Because of its size, it enjoys economies of scale and this is can venture into a country and produce at a reduced cost.

One of the main strategies that UPS uses to venture in international markets is acquisitions. In 2001, when it wanted to venture in retail mail delivery service business, it acquired Mail Boxes Etc. The company has tapped into the fast growing Asian market and it deepened it service in 2005 when it started a direct route of transfer between U.S. and Guangzhou, China.

Threats of substitutes

The company is threatened by companies in the same industries and technology. The major companies which threaten the company are FedEx and DHL. They are doing the same business and have a wide customer base. Mobile and internet use has created a threat to the company. This is because the number of letters that were previously sent through the company has been largely replaced by telephone and email communication.

Mobile and internet fund transfer has offered a different route to customers to transfer money across borders, this was a business that UPS had invested in. Such seems include PayPal, wire transfer and Mpesa.

Buyer power

The company targets customers placed in different parts of the world. It offers services that a customer contracts form the company using the internet, sales offices and authorised dealers. The industry is highly competitive and these customers have a choice among similar providers to use.

The choice of a company to the other is dependent on how reliable a company is. UPS benefits from a strong brand name and its reliability. This has made the company enjoy increased customer royalty.

Rivalry

International supply logistic business is highly competitive. to maintain competitive in such an industry, the company require offering consumer oriented services. It should be offer reliable services and aims at developing customer royalty (Hitt, Hoskisson & Ireland, 2003).

Three Generic Strategies

Differentiation

UPS has two kind of service that it offers; packaging services and transporting services. To serve its customer right, the company ensures that it makes it packages affordable and available to all classes of people. Those people who are using freight have their special package and those parcels on road have a different rate.

Those using water has their package, small and large scale customers are incorporated. To remain competitive the company aims at improving its service to attain more customer satisfaction and loyalty. Lately it invented computer cargo tracking system which is one such development (Hitt, Hoskisson & Ireland, 2003).

Overall cost leadership

The company’s prices are dictated by the bulkiness and the weight that a customer products has. This ensure that there is equality and those customers who are transporting small portions of goods are charged proportionately to these products. The payment system which is electronic facilitate for quick payment for service given.

Focus

The company has concentrated in one area and dominated. The company has physical station is some countries however in those countries that it does not have offices there are brokers or the website assists customers to get services from the company. When venturing other countries, it tends to follow the trend in the market. Where there are increased business is where the company is investing (Harris, & Dennis, 2008).

Urgent issues in UPS that need to be addressed

Modern service industry is drastically changing. There is a move to a more customer focuses services. customers on the other hand have learnt and understood their rights. UPS has evolved over time and its offering consumer satisfactory services however there has been incidences where some cargo already transported or those which have arrived in UPS offices are not recorded.

This is ignorance which should be addressed by the management. Where there is ignorance, there is customer dissatisfaction. Thus the company should invest in its human resources management. If there are inadequate staffs, then they should recruit and put on effective motivational measures.

System failures are also other issues of urgency in the company. The company should ensure that its computers are working well so as they can serve their customers well. If a customer want to know how far his cargo is, the system should be able to tell (Dann & Dann, 2004).

Recommendations to improve the services of UPS

UPS can be applauded for adopting an E-marketing strategy but more need to be done to ensure that it remains competitive in the changing logistics industry. Some of the areas that it needs to improve are in online businesses.

UPS’s website has limited information this discouraging since customer has to wait for a long period of time before he gets a response from customer care desk. The reason for this is that the call centres are only in the head office. What the company need to do is to decentralize this service and make it available to its brokers and local offices.

This improve customer’s satisfaction and increasing loyalty. Computers are not always reliable and sometimes they have failed the company. This is when servers are down or under repair. This has hindered the delivery of services by the company. An upgraded technology should be adopted to ensure that there is a backup when a case of system failure occurs (Bocij, 2005).

There is a customer care service method that DHL has adopted but UPS has not attained it yet; this is door to door delivery. The company’s service mostly ends up at warehouses or at the port of destination.

To ensure more customer satisfaction, there is need to adopt a door to door strategy where it can deliver products right to the consumers. This will assist the company command a more customer base and be the preferred choice of Logistics’ Company.

Although it has adopted a cargo tracking system, the system has taken long to mature. It is faced with technological failure and is inefficient to certain countries. The system is monitored from the head office and faces challenges of adequate monitoring. It should be decentralized and customers assured that they will get information about their cargo with precision.

Today’s marketing strategy has taken a different approach, this is where alongside computerized marketing, customer-company relation are developed to ensure that it benefits from repeat customers. Although the company has a strong brand name, strategies to retain customers should be put in place (Champy & Wang, 2000)

Conclusion

UPS is an internationally recognised logistic company with its headquarters in United States. It has been in logistic and supply chain management business for more than a century and enjoys a strong brand name. UPS Business is affected by the environment it’s operating in.

There has been a reduced business resulting from global financial crisis, technological innovations and globalisation. To remain competitive in the changing global market, the company has invested in giving its customer good services although it is failed sometimes by computer systems and ignorance of employees and products handlers.

References

Bocij, Ch.et al. 2005. Business Information Systems: Technology, Development and Management for the E-business. Harlow. Prentice Hall.

Champy, J. & Wang, A. 2000 Accelerated Logistics: Streamlining the Army’s Supply Chain. Santa Monica. CA.

Dann, S. & Dann, S. 2004. “Strategic Internet Marketing 2.0”. New York. John Wiley & Sons.

Harris, L. & Dennis, C. 2008. “Marketing the e-Business”, 2nd edition. New York. Routledge.

Hitt, M, Hoskisson, R & Ireland. 2003. Strategic Management: Competitiveness and Globalization. South Western. Thomson Learning.

Joshi, R. 2005. International Marketing. New delhi. Oxford University Press.

Kermally, S. 2003. Gurus on Marketing. London. Thorogood.

Kotler, P &Lane K.2009. A Framework for Marketing Management (4th ed.). New Jersey. Pearson Prentice Hall.

Nersesian, R. 2000. Trends and Tools for Operations Management: An Updated Guide for Executives and Managers. Westport. Quorum Books.

Neumann, C, Ringbeck, J & Schwegmann, V.2000. “Best Practice in Logistics”, The McKinsey Quarterly, p. 19.

Roberts, M.L. 2008. Internet Marketing: Integrating online and offline strategies. Melbourne. Thomson.

UPS corporate Website. 2010. Web.

Zemanta, Z. 2008. “Does UPS have Deep Systematic Problem?” Web.

General Electric (GE) is one of the most successful American corporations. The firm has five unique businesses. The firm has “a five-initiative strategy that improves its profitability” (Inkpen 2). This essay gives a detailed analysis of GE’s corporate strategy.

VRIO Framework

General Electric’s corporate strategy is sustainable. The firm addresses the changing needs of different customers using modern technologies. The company supports every successful segment. GE’s strategy is also rare. The firm’s core businesses are managed using appropriate financial initiatives. Every business part collaborates with the other segments in order to deliver the best results (Owen 3). It is costly to imitate GE’s strategy. GE uses modern technologies and ideas in order to offer quality services. The firm’s culture focuses on continued improvement in order to get good results. The firm is also organized to exploit its strategy.

SWOT Analysis

PESTEL Analysis

Political

GE deals with numerous political issues because it operates in many nations. Government intervention is high in nations such as China. The political climate experienced in the US supports its goals.

Economic

Global exchange rates and inflations affect the firm’s financial performance (Lane 49). Economic policies affect the company’s profitability in different countries.

Social Factors

GE must adapt to various cultural aspects in different nations. For instance, GE has “unique working hours, procedures, and employment patterns in every nation” (Lane 82).

Technological Factors

The firm embraces new technologies depending on the needs of its customers. GE uses such technologies in order to remain competitive (O’Boyle 87).

Environmental

GE embraces modern practices in order to conserve the natural environment. It also embraces the use of renewable sources of energy (Jacques 82). It uses modern technologies to improve its drilling practices.

Legal

GE complies with numerous legal provisions across the globe (Jacques 61). The firm operates in 120 nations. It also complies with various international policies in order to remain successful.

Porter’s Five Forces Model

New Entrants

General Electric is a sustainable company. It operates in many segments thus discouraging more companies from joining the industry. The threat of new entrants is also low.

Threat of substitute services/products

GE’s business segments are characterized by different goods. However, it uses modern technologies in order to deliver quality products. This strategy reduces the threat of new goods.

Bargaining power of suppliers

GE collaborates with many suppliers. Such suppliers determine the success of GE’s business functions (Heller 54). GE is also a leading supplier.

Bargaining power of buyers

GE does not market its products to customers directly. This strategy reduces the bargaining power of its customers.

Competitive rivalry

The level of competition is moderate. GE uses new strategies and technologies in order to manufacture competitive products. The strategy makes it a leading player in the industry.

Works Cited

Heller, Robert. Jack Welch, New York: Dorling Kindersley Publishers, 2001. Print.

Inkpen, Andrew. “General Electric’s Corporate Strategy.” Thunderbird: School of Global Management 1.1 (2014): 1-16. Print.

Jacques, Vincent. International outsourcing strategy and competitiveness, New York: Editions Publibook, 2012. Print.

Lane, Bill. Jacked Up: The Inside Story of How Jack Welch Talked GE Into Becoming the World’s Greatest Company, New York: McGraw Hill, 2008. Print.

O’Boyle, Thomas. At Any Cost: Jack Welch, General Electric, and the Pursuit of Profit, New York: Knopf Doubleday Publishing Group, 2011. Print.

Owen, Brandon 2014, The Rise of Distributed Power. Web.

Organisations that wish to gain a competitive advantage in terms of changing their operational environment must apply effective strategies to remain relevant and/or break even. The objective of any company is to deliver value to its owners. This value is normally expressed in terms of returns on investments. Business management executives require skills in decision-making processes to arrive at strategic decisions that enhance the performance of their organisations.

According to Grant (2013), arriving at the most effective decisions implies that the concerned parties will ignore other possible decisions, which they find inappropriate when conducting an evaluation of different business strategies. Evaluation of the repercussion of decisions that are left out in the development of the main strategy helps to eliminate cases of failure. This observation implies that success or failure for all organisations is a function of their ability to select appropriate strategies.

The term strategy is coined from the Greek word, strategia, which means command or ‘generalship’. It constitutes plans that are aimed at attaining specific goals and objectives while experiencing conditions of uncertainty (Menon 1999). From the paradigms of generalship, the term includes various subsets such as logistics, siegecraft, and tactics. In the 20^th century, the term strategy denoted a detailed mechanism of attempting to pursue various political ends. Such mechanisms included the use of force, threats, coercion, and even engagement in military conflicts.

From a military context, strategies are important since resources to achieve the intended goals and objectives are limited in supply (Grant 2013). In a business setting, strategy entails a plan and/or methods that are selected to create a desired necessary change (Vladimir 2009). It also involves achieving certain solutions to specific problems. Freedman (2013, p. 11) defines it as ‘the art and science of planning and marshalling resources for their most effective and efficient use’.

In this extent, a strategy comprises methods for determining actions and/or mobilisation of the available resources to implement some resolutions. Thus, a strategy sets the foundation for achieving a well-calculated goal through the deployment of various means or resources. Strategies form a crucial tool for decision-making processes. On the other hand, decision-making is a fundamental concept in strategic processes that are adopted by organisations. Strategic processes are important since they help business people in terms of sharing the goal and destiny of their respective nations’ economic status.

Over the last five decades, scholarly research has recognised the importance of strategies in achieving organisational success. Strategies comprise decisions, which are ‘important in terms of the taken actions, the committed resources, or the set precedents’ (Eisenhardt & Zbaracki 1992, p.17).

This claim suggests that the best strategies encompass decisions or actions, which directly influence the organisation’s health and survival both in the short and long-term. The capacity of strategies to influence the survival of an organisation is reflected by JP Morgan, which is the financial institution, which marks the origin of the global financial crunch (Tett 2010). Credit derivative strategies that were meant to enhance the performance of financial institutions resulted in a negative impact on the health and survival of many financial institutions. They almost collapsed.

In conclusion, although strategies that were adopted by JP Morgan led to the emergence of the global financial crisis, the main objective of strategy developers entails enhancing positive organisational performance. Freedman (2013) supports this assertion by adding that strategies focus on shaping the future of organisations in the effort to achieve the desired positive ends using the available means. Hence, a strategy acts as a system for determining, formulating, and developing doctrines, which ensure short-term and long-term success when followed in a faithful manner.

References

Eisenhardt, K & Zbaracki, M 1992, ‘Strategic decision making’, Strategic Management Journal, vol. 13 no. 3, pp. 17-37.

Freedman, L 2013, Strategy: A History, Oxford University Press, Oxford.

Grant, R 2013, Contemporary Strategy Analysis Text Only, Wiley, New York, NY.

Menon, A 1999, ‘Antecedents and Consequences of Marketing Strategy Making,’ Journal of Marketing, vol. 63 no. 2, pp. 18-40.

Tett, G 2010, Fool’s Gold: The Inside Story of J.P. Morgan and How Wall St. Greed Corrupted Its Bold Dream and Created a Financial Catastrophe, Free Press, New York, NY.

Vladimir, K 2009, The Global Emerging Market; Strategic Management and Economics, Routledge, London.

Introduction

A CEO’s philosophy and strategies that it informs plays a critical role in the promotion of change at the corporate level. In the case under analysis, the CEO’s decision to focus on the changes in the emergent economies, as well as the adjustment to the macroeconomic setting, has allowed the organisation to succeed in the target market. The focus on the expansion into the global market and the introduction of new items into the company’s portfolio as a part of Rosenfeld’s vision of global economic growth and sensible investments has allowed Mondelēz International to become a world-renowned brand.

Analysis

The CEO of Mondelēz International has managed not only to introduce a positive change to the corporate setting but also to cement the specified alterations with the help of her global vision and the philosophy of the unceasing improvement. The willingness to expand into new markets and the diversity of corporate products can be regarded as the key areas of Rosenfeld’s concern (see Fig. 1). The CEO of Mondelēz International transformed the organisation by integrating her vision and philosophy into the company’s framework and altering the very principle of its functioning in the selected economic environment.

The change that Rosenfeld managed to implement in the setting of the Mondelēz International Company becomes all the more noteworthy when considering the circumstances under which they were made. Specifically, one should bear in mind that Mondelēz International was experiencing significant pressure from investors, which we’re expecting the organisation to have started returning profits by that point.

In addition, Rosenfeld had very little time to adjust to the rapid alterations in the global market and build relationships with possible partners in trade and merging. The flexibility and expeditiousness with which she approached the management of investments and the allocation of the corporate resources have shown that Rosenfeld’s initial strategy was sensible and effective. Thus, the CEO’s vision and behaviour have made it possible to transform Mondelēz International within a very short amount of time and under significant pressure from investors.

Rosenfeld’s ability to adjust to the high levels of market rivalry and help Mondelēz International to build its competitive advantage should also be seen as the direct outcomes of the CEO’s vision and behaviour. Rosenfeld initially showed that she was eager to introduce the idea of flexibility into the organisational system. The specified approach has proven to be exceptionally important in the setting of the global economy, where rapid changes and disruptive innovations affect the progress of organisations to a considerable extent.

Rosenfeld, in turn, has not hesitated to diversity the company’s products to align them with the globalisation trends and the need to embrace a wider range of customers. Similarly, the CEO has sought opportunities for expansion in merging with other entities. Therefore, one has to admit that Rosenfeld’s vision and especially her expansion-driven choices have helped Mondelēz International to become successful in the global market.

Learning Outcomes

The case study has shown that it is critical for a CEO to introduce the corporate vision that will prompt immediate change within the corporate context. Rosenfeld has integrated her concept of corporate progress into the setting of Mondelēz International, thus causing a rapid increase in the firm’s profits. With the focus on expansion and exploration of new markets, the outcomes of the case study can be interpreted as the importance of pushing the boundaries of one’s capabilities in order to excel in one’s performance.

Furthermore, the case of Mondelēz International can be seen as the prime example of a situation in which a CEO manages to introduce the concept of innovative thinking and effective change management into the context of an organisation. Indeed, a closer look at the way in which Mondelēz International used to function before Rosenfeld became the CEO of the firm will reveal that the company used to pay little attention to the idea of innovative thinking.

However, as Rosenfeld took charge of the organisation, innovative thinking and the application of the latest tools for managing corporate assets were introduced into Mondelēz International’s environment. Given the exponential rise in the organisation’s performance and an increase in its profit margins, one has to admit that the specified approach should be advised as the tool for addressing the issues associated with resource management. Thus, the significance of innovation as an integral part of corporate progress is another important learning outcome.

Conclusion

Due to Rosenfeld’s vision being oriented toward the global expansion, as well as her behaviour aimed at diversifying the company’s brand, Mondelēz International has managed to embrace new opportunities and advance in the target market. The case under analysis can be regarded as the prime example of an organisation being driven toward progress owing to the innovative thinking of its CEO. Rosenfeld has managed to capture the nature of global change by studying the demand in emergent markets and seeking the ways to cater to the requirements of new audiences. As a result, Mondelēz International has advanced significantly and currently takes a rather high position in the global ranking.

Work Cited

Collis, David J., et al. Irene Rosenfeld at Mondelēz International: Creating a Corporate Strategy. Harvard Business School, 2018.

Executive Summary

The purpose of this report is to discuss of various business scenarios, strategic options, business strategy, aims and objectives, strengths, weaknesses, opportunities and threats of Majid Al Futtaim Properties LLC (MAFP Group). In addition, this report focuses more on market sizes, company sales and market shares of MAFP Group for a period of 3 years, customer preference analysis, core competencies, ethics and corporate social responsibility, future outlook to provide recommendation and implementation process of different strategies.

Introduction

Majid Al Futtaim Properties is one of the foremost fastest-growing real estate groups that started its journey in 1992 in the MENA region and came into operation through the City Centre mall in Dubai. Beside the real estate, hotels, malls, and property management, the company diversified its business in the entertainment, fashion, consumer financing, healthcare, food and beverage, energy management and even in the retail market with 33,000 workforces in fifteen (15) locations of Asia, Africa and MEENA. The Majid Al Futtaim Properties along with its subsidiaries are well known as MAFP Group that aimed to expand its business in the global market in the leading edges of the shopping malls, hospitality, asset management as well as project management with fee of cost advisory service for any upcoming venture.

National, Regional or Global Market Analysis

At present, this Group operates four business segments in 13 countries with three major operating subsidiaries; however, it owns nineteen shopping malls in the MENA region, operates twelve hotels adjacent to shopping malls in the UAE (ten) and Bahrain (two); furthermore, it controls Ski Dubai, an indoor ski resort with 22500 m² of area. In addition, it has cinema business with more than 180 screens across the MENA region; it generates the highest profit from the operation of the national market; at the same time, Egypt, Bahrain, and Qatar are profitable market to this company; however, the following figure gives more details in this regard-

Industry Analysis

The real estate industry in the MENA region is saturated with a number of market players. As a result of the growing customer base, the industry in this region is becoming more and more competitive. However, in comparison with the global trend, the real estate industry in the MENA region lack considerable maturity and expansion, mainly because the relevant businesses are potentially vulnerable to unstable fiscal conditions and poor support from the governments. According to the reports of PwC (7), the overall size and growth rate of the real estate industry in the MENA region is higher than the relevant industry in Latin America and Sub Saharan Africa, but it still falls short in contrast with Developing Asia Pacific and Commonwealth of Independent States & Central and Eastern Europe. In contrast, the best possible industry situation is in North America, while the conditions in the Euro Area and Asia Pacific are also way better than that of the MENA region. The following figure illustrates this point elaborately:

Company Analysis

Majid Al Futtaim Properties LLC makes the highest 81% sales revenue from retail segment; however, the following figure gives more details in this regard-

According to the annual report 2015 of MAFP Group, profit before tax was AED 1,274.638 million against AED 1,233.552 million in 2015, total cash earned from operating activities was AED 1,765.186 million against AED 2,182.118 million in 2015; in addition, total sales revenue and management net income increased by 4% and 18% accordingly. Shopping malls business segment and Hotels business unit are most two profitable sectors of this company while it generates more than AED 4040 million from these two units; however, the following figure gives more information about company’s financial position-

Customer Analysis

Due to the rising purchasing power parity, per capita income, and gross domestic product in the economy, the customer base of the real estate industry is growing. People now have more capacity to buy properties, and this in turn promises a very prospective market for Majid Al Futtaim. It is important to state that Majid Al Futtaim already has a loyal customer base, which makes sure that the company keeps running smoothly even during recessionary periods. On the other hand, the company is aware of the fact that due to the presence of numerous competitors, the bargaining power of the customer are very high, which means that it must present better services and lucrative offers to retain them.

SWOT analysis of MAFP Group

Strengths

• Brand awareness: MAFP Group has established track record, reputation & brand awareness in the MENA region
• Diversified business strategy: According to the annual report, this company is leading diversified real estate and property services provider and it capable to develop and sustain as market leader in the sector of shopping malls operations and asset management, land, residential and commercial properties;
• Customers: 171 million customer visits last year;
• Strong operational performance: financial income is increasing from shopping malls ; however, the subsequent table shows key performance of this company –

Table 1: Financial performance. Source: Self generated from (“Majid Al Futtaim Group Overview” 5).

• Others: Other success factors of this company include experience, adaptation of technology, stakeholders, alliances and partnerships with key retailers, corporate governance system, In-House expertise, customer relationship management, reduced labor costs, existing distribution and sales networks and business strategies.

Weaknesses

Future productivity and market size: This group has faced many other problems.

Opportunities

• Market expansion: This company constantly seeks new opportunities for expansion of its core businesses into countries across the MENA region and adjacent places (“Majid Al Futtaim Properties LLC Consolidated Financial Statements” 15);
• Market share: It has opportunity to increase market share with unique leisure offers
• Others: Prime locations secured for business, proper use of resources, growing demand, venture capital and so on;

Threats

• Competitors: Financial position of the relevant companies, such as, Al Futtaim Private Company LLC, Jumeirah, Emaar Properties PJSC, Nakheel PJSC, Mubadala Development Company, Al Baddad International and Meydan Group LLC and Nakheel PJSC are the main threat of this company; however, the subsequent table demonstrates direct competitor comparison-

Table 2: Direct Competitor Comparison. Source: Self generated.

• Visa Policy: At present, the government of this country introduces some hard visa rules, which makes it more difficult to attract expert workforce from the Asian market;
• Other: Majid Al Futtaim Properties needs to consider external financial risks such as global financial crisis, High operating cash flow, product liquidity management, financial capacity, government regulations and tax changes and so on.

Strategy Objectives and Goals

The company introduced its new skyscraping strategy bannered as “sustainability strategy” in 2013 with long research and study that driven the company to incorporate the stakeholders within the decision making process to ensure validity and reliability and to diminishing the most burning financial risk factors. Such strategy aimed to the sustainability has resulted remarkable outcomes with better performance both in business performance and risk minimization and lead the company to setup its goals those have been treated as part of core business and must attained by 2018 and the goals are pointed as –

• The first goal has developed to formulate cooperation and collaboration with the analogous projects and business entities through initiatives like community based interaction, negotiate with them to migrate workforces of construction sites in order to exchange views, option, and understanding at the ground level; (MAFP Group,20014, 2-6)
• The second goal was designed to introduce new labor policy with the cooperation and collaboration among the national, regional and global labor organizations, financial organizations, trade bodies, along with the other stake holders in order to standardize the new labor policies in this region;
• The third and foremost aim has been drawn to workout standard presentation and offerings to the valued customers and tenants with most flexible terms and conditions that ultimately generate long lasting business relationships with them without hampering financial gains.
• The fourth significant aim was designed to improve workforce skills and capabilities by introducing sustainability training in order to motivate them to attain the long-term goals of the company;
• The final goal of the sustainability strategy was introduced to explore the labor standard and to take quality assurance measures of the company for the contractors as well as workers (“Real Estate 2020 Building the future” 4);

Business Strategy

This report concentrates on sustainability strategy, pro-active funding strategy, business level and growth strategies of Majid Al Futtaim Properties.

Business level and growth strategy

From the competitive analysis, it founds that Majid Al Futtaim is the market leader of the real estate, retail, and leisure industry in the MENA region; however, it works to expand significantly its presence in Egypt and KSA; however, main policy of MAFP Group is to maintain its leading position by satisfying customers with unique offers and reasonable price structure. The management team of Majid Al Futtaim Properties LLC has long-term business plan to make better forecasts in the future even in the worst and unfavorable financial environment in the global market. Furthermore, this group tries to build foundation in the African nations, primarily with Carrefour; however, the following table gives more information about growth strategy of Majid Al Futtaim Properties LLC-

Table 3: Growth strategy of Majid Al Futtaim Properties LLC. Source: Self-generated.

Pro-Active Funding Strategy

The following figure gives detail information about this strategy-

Sustainability strategy

Ethics and Corporate Social Responsibility

Majid Al Futtaim maintains a strict ethical code in order to make sure that its employees and directors maintain a vigilant and sound approach towards the stakeholders, environment, business departments, and corporate governance policies. On the other hand, according to Sustainability Report (10), the company is very much conscious to make sure that it upholds strong corporate social responsibility towards the environment, by, for example, reduction of pollutant emission and use of recycled items. In addition, to provide a healthier internal atmosphere for the employees, the company has taken pioneering steps to attain safer working conditions; for instance, as the company has diminished heat reflection impact by using high quality organic substance on about seventy-five percent of the roof, and ensured better management of air quality within the workplace (Renewable energy white paper for Majid Al Futtaim 15). In addition, to significantly reduce the amount of waste released on the atmosphere, the company has undertaken a strategy to reroute fifty percent of waste from the landfills, and use at least ten percent of the recycled materials; conversely, the business has also included solar panels at its site that have helped to lessen at least twelve percent energy consumption per year (“Sustainability Report” 10).

Future Outlook and Recommendations

Recommendation-1: Joint Venture and Acquisition strategy

As this report suggests international expansion with new and existing product line, it should concentrate on the mergers and acquisition strategies; its interest in the fair value of the particular assets and liabilities; however, according to the annual report 2015, Payment of liability for acquisition of intangible asset was AED (28,564) million and share of post acquisition loss accounted AED (73,384) million.

Thus, Majid Al Futtaim Properties LLC should design its pathway to reach competitive advantages; however, Majid Al Futtaim Food & Beverages LLC, ENOVA by VEOLIA were two successful joint venture projects of this company; however, the following table provides judgment criterion for this strategic programs-

Table 4: Recommendation 1. Source: Self-generated.

Recommendation-2: Promotional plans & marketing strategies

The marketers of Majid Al Futtaim Properties LLC should acknowledge that customers could switch off the company if they get available stores and shopping mall in the nearest place; therefore, they should require addressing the inconveniences and should take immediate action to remove any kinds of dilemmas. Majid Al Futtaim Properties LLC should focus more on promotional campaigns as well as marketing strategies to gain a large customer base; however, the next table gives judgment criterion for this strategy-

Table 5: Recommendation 2. Source: Self-generated.

Implementation

Timetable

It should require more time to take decision regarding mergers and acquisition; however, it should provide at least 3 months to implement joint venture strategy and it should organize meeting, assess market demand before starting initial activities. On the other hand, the markets should continually design new promotional strategies; thus, it is continues process;

Budgets

The management should increase budget for promotional activities; however, this report suggests 10% increase of budget for implementation of marketing strategies by next year; in addition, it should provide more suitable offers like lucky coupons, get one buy one facilities, and so on;

Evaluation and Control

Majid Al Futtaim Properties LLC should focus on evaluation process to assess success of the plans;

Conclusion

From the above discussion, it can be said that Majid Al Futtaim Properties LLC has strong brand image and reputation in the MENA region, outstanding financial position and track record in the industry; in addition, it has eagerness to expand business in the national market and adjacent countries with four segments. In the era of globalization, this report recommends expansion plans to the management of MAFP Group to enter international market with huge success, and financial capability; however, it also suggests implementation of marketing strategies.

Works Cited

Al-Zu’bi, Ibrahim. Our sustainability strategy. 2015. Web.

“Majid Al Futtaim Group Overview.” Majid Al Futtaim Group, 2015. Web.

“Majid Al Futtaim Properties LLC Consolidated Financial Statements.” Majid Al Futtaim Properties LLC, 2015. Web.

“Real Estate 2020 Building the future.”PWC Real Estate, 2015. Web.

“Renewable energy white paper for Majid Al Futtaim”. Majid Al Futtaim Group, 2015. Web.

“Sustainability Report”. Majid Al Futtaim Group, 2015. Web.

Introduction

There has been an increased level of business competition in the business environment as a result of the highly dynamic nature of the current world, as well as the rapidly changing customer needs. The advancement in technology has also been a factor that has contributed to the increase in the level of competition.

Organizations find themselves under pressure because they need to maintain their high performance, despite the stiff competition facing them (Hill and Jones 10). They strive to emerge the most competitive or get the highest share of the market to maximize their sales and profitability.

A business organization that needs to be in a position to compete favorably is required to have a strategic plan that is usually developed by the strategic managers. Strategic management usually constitutes the formulation of the primary objectives that a company wants to achieve in a specified period (Hill and Jones 11).

The plan outlines how the objectives are to be achieved, given the available resources, internal, as well as the external environment in which the business is operating. Strategic management typically provides direction on how the organizational goals will be achieved.

It also generates policies and guidelines on how the available resources should be allocated to maximize the company’s potential.

In business, there could be business level strategies that generally guide the operations of that specific company. This essay will focus on the business level strategies of Alibaba. Alibaba is a company that is based in China, and it provides online business services to its clients.

E-commerce has become increasingly common in organizations following the current advancements in technology. Technology has led to the establishment of organizations like Alibaba, whose core business is e-commerce. The company has adopted a generic strategy, as well as a grand strategy that has been guiding its business activities.

Alibaba’s Generic Strategy

The generic strategy that the company has adopted is cost leadership. It is a strategy whereby the company sells its goods at a low price. It is also a strategy that normally targets the mass market. Most customers are willing to buy goods at the lowest possible price, but they want quality products at the same time (Kozami 32).

Alibaba has been able to lower its costs of operation through the use of technology. As mentioned earlier, the company’s core business is based on e-commerce. It means that technology is the major factor towards the success of Alibaba’s business.

It is imperative to note that technology has been essential in the cost reduction of many organizations across the world. Alibaba is a company that sells goods at a relatively small price. First, it has been able to reduce its operations costs because the costs that are related to stock are either not incurred, or they are very low.

The company does not need to have warehouses for storing finished goods. Instead, the goods are displayed on the website, whereby the customers can view them online and make the purchases through the online purchase methods that have been provided on the Internet by Alibaba.

Operating as an online business contributes to huge reductions in the cost of holding stock, ordering costs, and other stock related costs. Secondly, the company does not have physical shops or outlet stores. It means that Alibaba does not incur costs like rent for the stores or lease costs.

Therefore, Alibaba can cut down its operation costs significantly, as well as other expenses that the company is either able to eradicate or reduce significantly by virtue of being an online business. The benefits are reflected in the selling price of goods and services that the company offers.

One important point that should be noted is that the primary objective of the company is to provide a basis through which the Chinese manufacturers can link up with customers from overseas. It means that Alibaba does not actually have its stock, which reduces the operational costs.

The buyers from the international market can search for goods manufactured in China through the help of the shopping search engine that is provided by Alibaba. They also can make orders online from the Alibaba website. From the other end, the manufacturers can see the orders and organize deliveries.

However, Alibaba charges a small fee for the service.

Alibaba enables the manufacturers’ goods to be viewed by many people, thereby increasing the chances of making high sales for the manufacturers. The costs are, therefore, low on the side of the customer.

It should be noted that the customers of Alibaba are the manufacturers or companies whose goods are available on the website, as well as the overseas buyers. The international customer does not have to travel all the way to China to make a purchase or view the goods.

Therefore, the buyer can reduce costs significantly. On the other hand, the manufacturer does not have to open stores overseas for displaying goods. Therefore, the manufacturer can reduce the operations costs because they are not necessarily required to open stores.

The reduction of costs reflects on the selling price of the company’s goods because they are relatively low-priced. Alibaba’s strategy is based on cost leadership; therefore, it aims to lower the operating costs as much as possible. It also targets the mass market where many people can access the website.

Alibaba’s Grand Strategy

The grand strategy is more or less the same as the corporate strategy of a business. It is a strategy that guides the operations of an enterprise organization and shapes the business, in general. Grand strategies help a business to achieve its long-term goals and objectives.

Therefore, in its grand strategy, a business organization should plan all its operations right from its product design and development to liquidation. Different business organizations have different grand strategies, based on the nature of the business and their surrounding situations.

The major factors that are notable in grand strategic planning are market growth, product development, strategic alliances, organization development, and turnaround strategies, among others (Kozami 169).

The grand strategy of Alibaba is market growth. The company looks into a future whereby it will have more people seeking its services. It wants to expand its services such that users will be in a position to find whatever they want in the website.

According to Mr. Joe Tsai, who is the executive vice chairman of the organization, Alibaba wishes to stretch its services to banking, entertainment, education, and travel, among other areas of operations (Carsten and Miller par. 3).

The company also wishes to develop a mobile application whereby customers will be able to purchase mutual funds from Alibaba using their phones. In addition, the company aims to offer insurance services whereby customers will be able to safeguard their homes using insurance cover that will be referred to as the Alibaba Insurance.

It will also create an Alibaba credit card that will facilitate the ordering process and speed up delivery of the ordered goods.

Alibaba wishes to reach as many customers as possible in the future. It wants to expand its market in any area that will be effective in increasing the number of users that will be visiting the website in the search for various services.

Once the company can expand its market, it will be in a position to increase the sales and revenue it gets from the services it offers. There are a number of advantages that are associated with the grand strategy that Alibaba has sought to adapt.

The market growth strategy is a strategy whereby the company bears a very low risk in relation to other grand strategies. The company can decide to expand its market through expanding the market niche of its products.

It means that Alibaba will not have to invest in research and development or create new products; this lowers risks significantly. On the other hand, the company can decide to develop new products with the aim of expanding its market.

Expansion should come after a comprehensive market feasibility study to determine what the market needs. If the company conducts the market feasibility study, then it lowers the risks as it is sure of what the market needs before developing or producing the same.

In the case of Alibaba, it does not need to establish links with various manufacturing and service companies. Consequently, it will be able to provide the various services to the different customers and expand its market growth. The company will face very small or no risks in executing this strategy.

How Well Alibaba’s Current Strategy is working and the Major Strategic Issues that Management Needs to Address

Having been established in the year 1999 and grown to become one of the largest e-commerce companies in the world, it is an indication that Alibaba’s strategy is working in its favor. It is an approach that has enabled Alibaba to achieve its objectives, both in the short-run and in the long-run.

The cost-leadership generic strategy has helped Alibaba acquire many customers, thereby maximizing its sales and revenues. Alibaba helps in simplifying the process of buying goods sold through its website without compromising the quality.

The simple process of purchasing items on the website could, probably, be the major factor that has led to the company achieving the success it has acquired today. It is expected that pursuing this strategy will lead to more success in the future.

On the other hand, the grand strategy of Alibaba is to expand its market in the future and get as many users as it can. It is also a strategy that is highly viable. It puts Alibaba in a prime position for success in the future by the virtue of it being a low-risk strategy.

It is important to note that managers of organizations are always looking for ways that can increase the business performance, but maintain as little risk as possible at the same time. Managers aim to maximize returns at the lowest risk possible (Kozami 34).

Through its current grand strategy, Alibaba will be able to reduce the risk and at the same time increase its users and its performance. The strategy is working for the company, as Alibaba has been engaged in various additional services, such as the venture into the entertainment industry, among others.

The only major strategic issue that the management of Alibaba should, probably, address is the market growth strategy. In the growth strategy, Alibaba’s management might need to invest in more research and development.

The company may need to understand the current market trends, the changing needs of customers, and the varying demands of goods and services. In doing so, it will be in a position to offer products and services that the market needs, rather than offering many services that may not be required by the customers.

The market research should consider the fact that the needs of clients are changing rapidly, thereby calling for organizations to be highly dynamic. Organizations that fail to evolve with the needs of the clients stand a high chance of being rivaled.

Strategic Options that Seem Viable for Alibaba

First, it should be noted that the current generic strategy best fits Alibaba. Moreover, it may not be feasible to adopt other generic strategies. For instance, it might be difficult to adopt the differentiation strategy, given the fact that Alibaba does not produce goods on its own. Moreover, it would be difficult to influence the quality of products.

In addition, it would not be easy to limit the availability of the website to specific classes of customers. Therefore, the cost-leadership strategy could be the only viable generic strategy for Alibaba to adopt.

On the other hand, Alibaba has a viable option in its grand strategy. It can opt to adopt strategic alliances as a grand strategy. This is a strategy that will more or less serve a similar purpose as the current market growth strategy.

In the strategic alliance strategy, the company will seek to collaborate with other organizations that have goods or services that will boost its operations.

Strategic Recommendation(s)/Conclusion

Alibaba has been able to achieve great success in its operations over the years. It is an indication that Alibaba has a strategy that has been working well. The cost leadership strategy has been highly successful for the company.

In fact, this could be the only viable generic strategy that the company has because the others, differentiation and focus strategies, might difficult to even integrate or establish in its operations.

The grand strategy has also been successful and helped the company achieve its objectives. However, I would recommend that the company should combine its market growth strategy with the strategic alliance strategy.

Although either of the two strategies would achieve good results, a combination of the two would increase the magnitude of success because the company would be able to expand its market growth. At the same time, it would also be able to create alliances with other business organizations that would boost it in its strategizing activities.

Alibaba would collaborate with organizations that would complement its operations. This would have an enormous impact in terms of organizational growth and development, as well as goal achievement.

Alibaba, therefore, does not need to change its current strategy, but it may opt to combine the two strategies, which are market growth strategy and strategic alliances for better results.

Works Cited

Carsten, Paul, and Matthew Miller. Alibaba’s Grand Vision for E-Commerce Empire Includes Insurance. Wells Media Group, 2014. Web.

Hill, Charles W. L., and Gareth R. Jones. Strategic Management. Mason: Cengage Learning, 2012. Print.

Kozami, Azhar. Business Policy and Strategic Management. New-Delhi: McGraw-Hill Published, 2005. Print.

Alibaba is a profitable, e-commerce company that has transformed China’s Internet economy.

Generic Strategy

Competitive advantage

Alibaba strives to achieve competitive advantage in the Internet economy through various differentiation strategies such as the use of technology, low-cost or no listing fees for some business units.

Alibaba has relied on technology to differentiate itself and create competitive advantage in the market. Being an Internet-based company in the world’s largest Internet market, Alibaba has used technology to enhance customers’ purchasing power of products from different parts of the world. Therefore, consumers have a wide variety of choices because of Alibaba’s technology.

Alibaba has also created a network of dealers. For Alibaba, the expanding network of both sellers and buyers create a significant competitive advantage for the company. A large network of customers and buyers creates valuable opportunities for different parties involved. This is a form of a ‘collective entrepreneurship’ between Alibaba and suppliers in its network. The platform to market and sell products from different suppliers is important for the company’s relationship with external parties.

Technology has helped Alibaba to locate several suppliers and customers throughout the world. Today, many small suppliers rely on Alibaba’s platforms to find market.

The company’s market scope

Alibaba pursues a broad market strategy through its business model. The largest network created by the Internet has ensured that the company can focus on different suppliers, customers and diverse market segments.

For instance, Alibaba provides different platforms such as Alipay (e-commerce transaction), Alibaba International (international trade community), Alibaba China (domestic market), Taobao and (consumer-to-consumer) among others to meet needs of its customers. This broad strategy creates economies of scope and scale for Alibaba. The company saves costs because it can provide a platform for sales of different products. In addition, larger volumes of sales generate huge incomes for the company.

Strategic Issues

Currently, Alibaba’s strategic approach has worked so well. In fact, the company’s IPO showed that it was the best e-commerce company in China. Alibaba has gained a reputation of success and growth for the past few years. The revenue sharing model rather than listing fees allows many suppliers to join Alibaba. A large network of merchants ensures that suppliers and customers benefit from immense traffic.

Although the strategy has worked, many critics say that it cannot be sustained in the end because of market and regulation dynamics. First, the model has no listing fees and warehouses, which makes it susceptible to replication by other companies. Second, it relies on the Chinese government goodwill. Third, the Chinese Internet economy has become extremely competitive because of emerging competition and ease of entry. These factors will erode the company’s operating margins.

Current performance problems based on internal analysis

The current strategy has not driven Alibaba beyond China despite its global recognition. For instance, Alibaba is rarely used in the world’s largest economy. In addition, it is difficult to understand Alibaba’s profitability from all its several affiliates. Alibaba must also use technology to reduce costs of running its operations.

External analysis

How the strategy helps or hinders the company in addressing the strong forces in its industry:

Currently, China’s Internet economy has become highly competitive. The company is unable to control new entrants because of ease of entry in the e-commerce industry. As a result, its operating margins will continue to decline.

The government regulations on the Internet, and Alibaba’s reliance on both the government and the Internet could affect its operations. In fact, Alibaba can hardly influence these external factors.

The threats and opportunities relevant to Alibaba’s future

The growth of China’s e-commerce industry will definitely affect the company’s future. This is a major threat for Alibaba. In addition, low barriers for new entrants have created opportunities for other e-commerce companies.

On the other hand, the company also has opportunities to explore new markets. Globally, there are new emerging markets. At the same time, Alibaba can explore opportunities in the US Internet economy.

Environmental trends or changes that may affect the future success

Alibaba has low brand recognition outside China. This is a serious weakness, which could affect the company’s future expansion strategies. Moreover, its e-commerce technology is highly fragmented under several platforms.

It is not clear how Alibaba will compete in the future as the rate of competition increases from new entrants. Moreover, changes in technological environments have exposed the company to other external threats. The company’s future and vision could be unsustainable if the government goes against it.

The major strategic issues that are facing the company

• It is not clear how Alibaba will face the threats from new entrants and competitors
• The company’s has low levels of technology
• It has extremely high operational costs because of well compensated thousands of employees
• The future potential and profitability of Alibaba remains unknown
• The company’s sustainability could be difficult to ascertain because of its free listing model and reliance on the government.
• Overall, the company’s sources of current competitive advantage may not be sustainable in the future

Strategic Options

Viable strategic options for Alibaba

Many viable strategic options are available for the company to implement. Alibaba must focus on the US market share. It can only do this by acquiring a strong company in the US.

Alibaba must also strive to acquire technology companies that can strengthen its IT departments and operations.

The company must also improve its differentiation strategies.

Alibaba has remained unknown in other global markets other than China. As a result, it is imperative for the company to focus on global marketing initiatives.

One major drawback notable in these strategic options for Alibaba is that some of them could be expensive for the company. These may include acquiring new technology companies, global promotion and marketing in new markets and developing differentiation strategies. These options would allow Alibaba to grow in the global market and maintain its competitive advantage.

Strategic Recommendation

• To enter the US market, Alibaba should acquire a strong US company. This would be effective mode of entry into the US market.
• The company should buy technology companies to boost its IT operations. This strategy would ensure that Alibaba acquires IT resources and technical expertise from the purchased company.
• Brand recognition must be strengthened globally. Alibaba must improve its marketing and promotional efforts. Effective marketing campaign will create awareness and drive the company’s profitability significantly. The company must pursue this strategy if it wishes to be recognized as a global brand.
• Alibaba requires massive financial and IT resources to support its future operations as new challenges and external threats emerge.

Implementation – Functional Policies and Processes

Production/Operations

Alibaba should revamp its operations with new IT technologies. The company’s operation would remain redundant if it cannot acquire new technologies and expertise to create competitive edge in the e-commerce industry. As previously mentioned, the company can acquire small technology companies to support these efforts.

Marketing

Alibaba lacks global brand recognition. Therefore, the company’s processes should focus on promotional and marketing activities. A good marketing strategy would expose the company to global suppliers and customers. This could be an important step in improving Alibaba’s profitability and brand recognition.

Accounting and Finance

The department should provide and demonstrate how profitable Alibaba is. The company has several small affiliates that contribute to its growth. The department should provide financial projections to indicate the future of the company and the required resources to meet some growth objectives. In addition, shareholders should also understand Alibaba’s dividend policies on long-term basis.

Research and Development

R&D constitutes a critical part of the company’s future operations. The IT department should be highly innovative in terms of robust IT platform developments and service improvement. As new threats emerge from competition, Alibaba must focus on improving its current model, services and business platforms. Otherwise, it will not survive due to threats from the e-commerce industry.

Human Resource Management

Alibaba must introduce a policy to support acquisition and retention of talented employees from any parts of the world. In addition, human resource management policies should aim to create competitive advantage for the company.

Acquisition

For any IT company with financial resources, acquisition of small emerging technology companies has become the latest practice. Alibaba must develop its acquisition policies. Such strategies should be strategic with the aim of supporting the current business model and resources required. For instance, acquiring other small e-commerce companies in China would promote Alibaba’s presence.

Implementation – Structure

The company has many divisions such as B2B, C2C, search engine, advertisement and online payment among others within its e-commerce platform. These subsidiaries show how Alibaba’s internal structure is fragmented under various divisions. The structure should create synergy and provide economies of scale and scope for the company to save costs and maximize revenue generation.

How the current structure supports the implementation of the recommended strategy

Given these several divisions of Alibaba, it would be difficult to find a single solution that meets all unique needs of various subsidiary companies. Nevertheless, Alibaba can use its current structure to implement cost-saving strategies and promote all its subsidiaries under one brand.

How the current structure hinders the implementation of the recommended strategy

The current structure is highly fragmented because of several subsidiary companies. Alibaba may not run effective promotional campaigns or find a solution that meets all diverse needs of these subsidiaries. In addition, its free listing model may not sustain revenue growth as required in a competitive e-commerce market.

Recommended changes in the company’s structure to facilitate the implementation of the recommended strategy

Alibaba should review its acquisition and global promotional strategies to support highly fragmented subsidiaries. This approach would allow the company to leverage on resources, acquire strategic subsidiaries and partnership and gain global recognition, which would create competitive advantage and drive profitability.

Implementation – Culture

Alibaba’s business strategic culture has focused on achieving enormous growth within the e-commerce industry in China. Specifically, it strives to comprehend, exploit opportunities and lead the trend in e-commerce opportunities. As a result, the company has grown in the last decade significantly.

How the current culture supports the implementation of the recommended strategy

Alibaba has continued to identify areas of potential growth in the Chinese market and other regions. The company’s focuses on expansion, particularly after its biggest IPO. It is believed that Alibaba will continue to grow its e-commerce business by exploiting new opportunities.

How the current culture hinders the implementation of the recommended strategy

The company has not been able to maximize its revenue and profit potential because of its free listing approach. Alibaba must review this culture in order to implement a new business model that is competitive and profit-oriented as the industry becomes highly competitive.

Changes in the company’s culture to facilitate the implementation of the recommended strategy

Alibaba should review its profit strategy culture against operation expenses. The company needs a profit-oriented culture. Alibaba is now a publicly traded company with many shareholders, who will demand for returns from their investments.

Implementation Issues

Any changes to be implemented in Alibaba must be evaluated and their potential impacts identified. These changes must be implemented over time.

Processes

Improving business processes will be critical for the survival of the company. IT solutions should be used to improve processes and any difficulties must be noted and solved.

Structure

The company’s fragmented structures should be made linear to facilitate acquisition and investment in poorly performing areas. Any changes to the current structure will require massive resources, which could affect operations and returns.

Culture

Culture change in the company could be challenging, specifically adopting a more profit-oriented culture. For a long period, Alibaba has promoted free listing rather than a fee-based approach to support revenue growth.

Introduction

Marketing is dynamic and has been evolving since 1960s with the beginning of marketing orientation; this was during the initial stage of capitalism business whereby, initially, firms were concerned with only production and manufacturing of goods i.e. the focus was on producing effective products to meet the demands of the consumers. However, in the 70s companies realized that the needs and wants consumers were the one directing selling of products produced. Therefore, marketers and strategists expanded their knowledge too and came up with plans for there businesses in order to meet such challenges; this witnessed the drafting of marketing guidelines in the form of business strategies, marketing plan and marketing strategies. Marketing plans forms the basis of drawing marketing strategies for firms including BAT Company. Marketing plan mainly entails crafting a business mission and vision that aids in guiding a business to achieve its goals. (British American Tobacco profile, 2008).

Therefore a good mission statement should consist some of the following features; the targeted clients, customer’s needs and wants, customer’s characteristics, the products, particular requirements of customers to be targeted and client’s attitudes among other factors. Also the marketing plan should clearly spell out the firm’s objectives, i.e. in what is referred to as SMART criterion; SMART stands for specific, measurable, attainable, realistic and time bound objectives. This paper will therefore focus on BAT Company and how it has responded to the various challenges brought about by the changing business world.

Description of the Organization

British American Tobacco (BAT) Company is the second largest listed producer of tobacco products in the world and it is categorized to be in the tobacco industry. BAT Company is said to be among the top market leaders in the tobacco industry. BAT Company is also reported to be employing over fifty five thousand employees and its annual revenue is estimated to be ₤9,762 million from each subsidiary. The company’s workforce is diverse and multicultural in nature. The objectives of the company include increase of its products that is its brands, building worth of its dealing, enhance efficiency in production, and to implant the main beliefs of corporate social responsibility in all the branches of the company. The vision of the company is to be the leader of the worldwide tobacco industry. The company has Board of Directors who has played the role of ensuring that the company is directed to a success. Further the management of the company is considered to be effective and efficient in carrying out their expected duties. (British American Tobacco profile, 2008).

The subsidiaries of the company in the different countries have the autonomy to make their decisions so long as it is in line with the company’s overall main objectives. This has enabled decision making processes to involve all the shareholders of the company in the respective subsidiaries. The company’s management is aware of the risks caused by the tobacco products that they produce and it has formulated an effective operating responsibility that guides the consumers of the products. The company’s interest lies mainly in tobacco leaf planting and the company work hand in hand with farmers globally. The company does this by giving the farmers agronomy support that wraps all dimensions of crop production and environmental best practice as set by international standards. This aspect enabled the company to buy over four fifty thousand tones of tobacco leaves from two hundred thousand farmers around the globe.

Competitive Strategies of BAT Company

John Tomlinson in globalization and culture notes that, globalization lies at the heart of modern culture and cultural practices lies at the heart of globalization. He further argues that the current business globalization has led firms that operate and invest in a global scale to transform patterns of trade and shape the interactions between them for example through mergers. Business environment analysis is very crucial to businesses and marketing managers have the duty to formulate good policies that help the organizations to withstand competition. With particular regard to BAT Company environmental analysis, it is evident that the company has had some competitive strategies that have enabled the company to perform well in the tobacco industry. (British American Tobacco profile, 2008).

The company has adopted competitive generic strategies that have enhanced the company’s competitive advantage over its rivals like the Marlboro Company. These competitive strategies have enabled the company to create and sustain a justifiable position in the tobacco industry. BAT Company has formulated competitive strategies that have enabled the company to compete across the entire market of tobacco industry which is evident in the way it has diversified to various countries.

Because of such strategy, BAT Company has a strong brand name which helps the organization to have a competitive advantage over the other tobacco producing companies like the Marlboro Company which is the BAT main competitor. According to latest research, the company has investments nearly all over the world, which has led to the success of the company. Customers of tobacco products purchase mostly those products like cigarettes associated with BAT Company. The company is said to be an overall low cost producer in the industry and it has competed well by gaining a large market share by lowering the prices of tobacco product.

The company is also accredited with the best marketing network that have made the company to do well globally. BAT Company has opened many subsidiaries in many countries for example; it has one hundred and eighty markets all over the world which sells it brands. Research shows that this tobacco company is quite global in nature. It operates branches in Africa, Australia, Asia, Australia, Latin America and the Middle East among other countries. The company has the best distribution channels in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. The other competitive strategy associated with BAT Company is it has utilized its ability to identify the market segments and hence the competitive position of the company is considered to be high than that of its competitors and has in the process developed workable marketing strategies BAT is the second largest tobacco company in the world and it has got many assets that help it to serve a wide range of customers. (British American Tobacco profile, 2008).

This company has got core operating units that have helped it to have a very firm structure. Because of this well build financial base, the company has embarked on product differentiation process where the products of the company have been viewed to be unique and that is the main reason why there has been constant increase in sales. The growth strategies of the company include market penetration whereby the company has sold existing cigarette products in existing markets. The company has also embarked on market development whereby the company has formulated strategies of expanding to new markets with existing products for example in Africa. It has also formulated new cigarettes products for new markets in those places.

BAT Competencies and Capabilities (the environment it operates in)

In order to assess BAT Company competencies and capabilities the company’s effectiveness in terms of production and ability to sustain any competition from its rivals is considered. BAT Company in regard to competencies and capabilities have embarked on a number of activities which has contributed to the success of the company not only in the company’s main centre in London but also globally including; recruiting competent, motivated and qualified employees in order to achieve good results, good communication system in the company, BAT Company has developed unambiguous policies, decisions and regulations, a conducive environment for working, good management, have built a system with ability to adapt to any changes, have an efficient board of directors and have build a viable and strong culture and mission among others.

Strength can be defined as a particular skill or distinctive competence that a company can do relatively better than other companies especially its competitors and which the organizations have and contributes to the achievements of the stated goals or objectives. BAT Company has a strong brand name which helps the organization to have a competitive advantage over the other tobacco producing companies like the Marlboro Company which is the BAT main competitor. According to latest research, the company has investments nearly all over the world, which has led to the success of the company. Customers of tobacco products purchase mostly those products like cigarettes associated with BAT Company.

Research shows that this tobacco company is quite global in nature. It operates branches in Africa, Australia, Asia, Australia, Latin America and the Middle East among other countries. The company has the best distribution channels in the industry which has been a strength that has significantly helped the company to dominate the market for a long time. The other strength associated with BAT Company is it has the ability to identify the market segments and hence the competitive position of the company and has in the process developed workable marketing strategies BAT is the second largest tobacco company in the world and it has got many assets that help it to serve a wide range of customers. This company has got core operating units that have helped it to have a very firm structure. (British American Tobacco profile, 2008).

An opportunity in this aspect can be defined as any event, development, or a feature of the external environment which creates conditions that are favourable or advantageous to the business in relation to a particular objective or set of goals to be attained. It is an attractive venture for a company’s operations which if exploited will lead to a significant upward change with desired results such as increase in profits margins and growth.

There are many opportunities that exist for BAT Company in relation to emerging markets all over the world. There are great emerging markets in Africa, Asia, and Australia among other countries. There is great investment demand in these places that BAT Company can maximize on it. There is significant increase in the consumption of tobacco products which creates a great opportunity for BAT Company to expand their investments. BAT Company has an excellent developed financial base as compared to their rivals implying that they don’t have financial problems in opening branches in potential markets outside the UK. (Cullen and Parboteeah, 2005).

The technological innovation, for example, that of e-commerce has been utilized and has resulted to expansion of the market share of the company thus increasing their profits and enhancing growth. Since BAT Company is the second largest producer of tobacco products, its competitive advantage allows the company to penetrate to more new markets than its rivals. If the company can fully utilize this it will have the upper hand in terms of competition and explore new markets and profit margins will shoot up thus gaining more power to compete globally. (British American Tobacco profile, 2008).

A threat can be referred to as an environmental development or event which will present problems or challenges likely to hinder the achievement of organizational objectives, for example, competition, high interest rates, government legislations, declining real income among others. BAT Company is now facing stiff competition from its main rivals like the Marlboro Company, thus there has been a drop in the market share thus a reduction of their profits. The marketing strategies of BAT need to be reviewed in order to cope with the increasing competition. For it to continue succeeding globally the marketing managers have to incorporate recent technological developments like doing business online.

There are times when government regulations may hinder the operation of the organization. This can also be termed as a threat. Under this BAT Company over the last few years in some countries have been experiencing challenging times whereby these countries have passed laws that do not favour using tobacco products. A good example is in Africa particularly Kenya whereby recently advertising of cigarettes to the public through media were banned. Also the country has banned smoking in public places, a habit which was common among the citizens of that country. Such development have threaten the success of the BAT Company in that sales of tobacco products have reduced significantly in the countries affected thus leading to reduction of overall profits. (British American Tobacco profile, 2008).

A weakness can be defined as any aspect of the company which may hinder the company from attaining its objectives or goals. Usually, it covers the firm’s assets, resources, and capabilities. Latest research indicates that BAT company is faced with few weaknesses which if not taken care of it may hinder the company’s success. The company’s rules, procedures, and policies are said to be weak as in some markets they have started to perform poorly. Also the human resources, that is, the workers and the management have been performing poorly of late in their respective responsibilities.

Laxity on the side of the marketing managers has been pointed out and reports suggest that they have not come up with suitable marketing strategies to cope with the ever increasing competition in the industry. The organization culture of doing things and reputation has been questioned by many people globally. There has been an argument that the products that the company is producing are harmful to human health, a development which has reduced their market share. The systems of production, controls, and work methods have been under scrutiny in the past few years. There have been fears that the work methods used are not convenient in the company if they need to cope with change and the ever increasing competition. (Cullen and Parboteeah, 2005).

BAT and Corporate Social Responsibility

Recent survey indicates that in the contemporary world of business where perfect economies prevail, any business organization including BAT Company is anticipated to behave in the best way possible in order to attain its corporate goals. The main objective of the set marketing objectives in BAT Company is to augment competitive advantage of the firm over its rivals like the Marlboro Company. Research further reveals that BAT Company has attained its competitive advantage in the tobacco industry over its rivals because it produces cigarettes that meet the needs of its customers. Also further surveys indicates that BAT Company has utilized excellent marketing practices that are considered ethically good and that is the main reason why it has achieved a large market share in the tobacco industry because the external public have trust on the company and positive perception of the tobacco products that the company offers; this implies that the company’s clients are always happy of the products since they are aware on all the features of the products (Barnett, Bass, Brown and Hebert, 1998).

It is evident that BAT Company over the recent past have been subjected to what is termed as social or administration pressures particularly government pressure on its tobacco products; for instance, the ban on smoking in public places and the strict rules on advertising in the media. Governments play a key role in ensuring that good marketing practices are followed for instance in some situations firms that don’t follow required ethical norms may end up being blacklisted thus making customers not to use the firm’s products. For instance the frequent calls for observing social responsibility context have contributed immensely to BAT Company to follow good ethical marketing practices that are meant to protect consumer rights. (British American Tobacco profile, 2008).

Business ethics as defined is the norms or standards of behavior that guide moral choices about the conduct of the personnel in a business organization and the relationship with its publics. The goal of business ethics is to ensure the safety of the employees, management, and the external publics from suffering the consequences from the business activities of the particular organization (Murphy, 1998). Business ethics along with social responsibility defines what the organization ought to do in the management of the business. The social responsibility of BAT Company towards the society merits considerations in all the faces of strategic management, whereby the organization must exercise strategic planning through environmental and organizational appraisal in order to provide answers to what the company might do and what it can do with regards to production of tobacco products.

The span of business ethics is extensive and can be measured from different perspectives. In this case the BAT Company’s management should ensure that several ethical considerations must be balanced for the business to be successful in its operations and relations with its employees and the surroundings of its business (Berman, and Evans, 1998).

It is not ethically good for business firms to engage in deceptive behavior for instance; by BAT Company producing cigarettes that make the clients to believe that they will be satisfied but in the real sense they will not be satisfied. Such marketing activities are considered misleading since the clients will not reap the benefits that they were earlier meant to get when they first heard of the product. In business context deception by business firms may be through distortion of information regarding the product, exclusion of certain features as well as practices of marketing that are regarded to be deceptive or confusing among other deceptive actions. However, it can be deduced that BAT Company is not engaging in deceptive conducts since it gives out clear information of cigarettes to customers for instance; in BAT Company’s advertisement they usually indicates that excessive smoking is harmful to your health which is true as per say.

In other instances firms engage in offering products to customers at misleading prices; this scenario is considered unethical in the business industry since the customer has a right to know the real value of the product and buy its at its genuine price. By firms pricing their products in such a manner that consumers will suppose that they are actually purchasing the products at a cheaper value than it is meant while just that is a gimmick of attracting customers is considered unethical. However, up to now there is no clear indication that BAT Company is offering its tobacco products in a misleading manner (Kotler and Armstrong, 1999).

Further, businesses should not engage themselves in advertising practices that makes the customers think otherwise of the products i.e. features or needs that the customers cannot derive from the products when they purchase the products as advertised. Further BAT Company to a larger extent markets products i.e. cigarettes that are considered harmful to the consumers’ and therefore to some extent breaks the rule of good ethical marketing values that guides good marketing practices in a competitive market place (American Marketing Association, 1998).

Another ethical issue Company is the social reaction of the organization that is the manager should create a positive work place that will have its employees engage and encouraged to attain high performances. He may do this by setting the right expectations from each department of the company. He should encourage the workers into productive work by rewarding the best performance through increment of the payment by recognition of the workforce applied by the employee. For BAT Company to maximize the individual performance the managers responsible should have job security concerns for his employees, under which when an employee is confident of his or her job security at the workplace, his performance is far much better than a case where he or she is not sure of being retained in the next year.

Another ethical concern in marketing activities is adverts to young children or adverts that may not be good for children to listen or view them when it is being aired in different media channels. Although children in the modern world forms close to sixty percent of the target markets in terms of products that are being marketed, it is prudent for BAT Company marketers to consider ethical considerations before reaching to the targeted market. It should not be noted that children are not mature like adults and therefore it is more likely that they will react to different adverts advocated by BAT Company in very unique ways considering their psychological conditions. For instance, children are more vulnerable to adverts of cigarettes than adults since they may want to practice what is being aired in order to enjoy the particular cigarette product being promoted (Murphy, 1998).

Business ethics is crucial to BAT Company and therefore the management should give much attention in ensuring that the business is conducted in a fair and an objective manner. This means the needs of the community should be met while the BAT Company’s goals are achieved without much difficulty. It is evident that the world economic order is ever changing and BAT Company ought to change tactics by strictly following ethical ideals that is recommended in the tobacco industry instead of only concentrating with merely the tobacco products that it offers to the market. (Anthony, 1998).

It should be noted that in this competitive business world, BAT Company should conduct itself in a good manner which in the long run will lead to its clients being happy with their products thus reaching out to a larger market share. In essence, if BAT Company wishes to succeed in its undertakings it ought to provide tobacco products that are of good quality, generally acceptable to the members of the public as well as meeting the set standards set by the local bureau of standards body.

Recommended Strategies to the Company

Generally the board of directors should define the company’s mission statement which will involve clarifying and analyzing this mission statement to meet the present challenges of the organization. This will offer guidelines to management of the company when considering how business should develop and in what direction, for example how it will increase its current market share to greater levels. The strategies adopted by the company should clearly direct efforts towards accomplishing the organizations basic mission or objective. As reported earlier that the BAT Company vision is to become a leader in tobacco industry the company’s board of directors has to embark on a five year plan that includes the following:

The company needs to improve on in its response to globalization. For instance BAT has responded to globalization by opening up some branches around the globe but this have not been enough as it still faces competition from other tobacco products producers. BAT Company should explore more new markets and try to be the dominant market leader in order cope with change and competition in the industry. This company requires restructuring of the entire company structure such that it is able to withstand the pace of growth in the industry.

Organization structures of BAT Company should be clearly outlined such that the employees will know what they are expected from them in the course of their duties. This will lead to reduction of conflicts between management and the workers because there will be no vague policies. The BAT Company structures should be in such a way that it fits the modern world and should be adaptable by the employees. Groups’ dynamics should also be encouraged in order to enhance cooperation among the workforce. Workers should be left to join groups of their choice to avoid conflicts that may arise. (Berman and Evans, 1998).

In order to improve the organization effectiveness BAT Company, the management concerned should always avoid poor managerial leadership through doing away with authoritarian style of leading and instead encourage democracy to prevail in decision making that is, an all inclusive decision making structure. Also motivation of employees should be encouraged and offering of fringe benefits, house, medical, hardship allowances and other social services for example swimming pools, televisions sets will make the employees feel respected and recognized in the work place.

Research also indicates that group decision making need to be emphasized because it yields good returns as compared to that of individual decision making. A good communication channel should be identified by BAT Company in order to boost organizational effectiveness. Any barriers to effective communication that may be encountered e.g. selective perception, language barrier among others should be dealt with in order to pave way for efficient passing of messages in the workplace. The company should immediately implement the strategies that will counter competition as a result of globalization from other firms and thus the company should continue to explore new markets around the globe. (Maund, 2001).

Conclusion

Research indicates that there are many things a company does but it should always concentrates on what it can produce best. The internal analysis facilitates the formulation of strategic plan which requires a clear understanding of the internal strengths acquired over time and any weakness that adversely impact on performance. Distinctive competencies are things that give a firm an advantage over similar businesses. Research also indicates that no matter how attractive an opportunity may be the business must have the competencies to capitalize on it. An opportunity without the competence to capture it is no really an opportunity to the business.

Due to invention of highly developed technology the current world has more and more become an integrated community and as a consequence global business is the present form of trade in this 21st century.

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Introduction

The current competitive business world has presented many opportunities and challenges to different companies. This is as far as globalization is concerned. Different companies have been enhancing their operations to reach a wide market through globalization. The main aim of this report is to asses Cisco Systems Inc in relation to its strategic positioning in the market.

In this case, the report will analyze and evaluate various strategic challenges that the company is facing. As a matter of fact, these strategic challenges will be looked at after a clear assessment of the company has been done. This is because every global or multinational company like Cisco Systems Inc is expected to encounter such challenges in the course of doing business.

The report will also carry out a PESTEL analysis. This will be done to evaluate the current external environmental conditions that the company is facing in its operations. It should be known that every company is exposed to different external environmental conditions that can end up affecting its operations and business.

In a broad perspective, the report will evaluate if Cisco Systems Inc is strategically positioned in the market to exploit its strengths and on the other hand defend itself against its own weaknesses. In this case, the report will evaluate if the company’s current strategy is in deed sustainable. This will be done using Michael Porters Five Forces and Three Generic Strategies.

As a matter of fact, the current competitive business world offers many opportunities to Cisco Systems Inc. In this case, there are some common urgent issues that the company needs to deal with as far as its global strategy is concerned.

Therefore, the report will recommend a good course of action that can be undertaken by the company to deal with such issues. Wholesomely, the report will give various recommendations that can be used by the company to enhance its global competitive as far as strategic positioning is concerned.

History

Cisco Systems Inc is an American global company. The company develops and sells different consumer electronics in various countries. In addition, the company is a big player in communications technology and networking. As a matter of act, it offers different services as far as these aspects are concerned. The company’s headquarters are located at San Jose in California (Bunnell 2000, p. 14).

The company has more than 70, 714 employees. In 2010, it is estimated that the company will receive revenues of more than $40 billion (Cisco 2010, p. 16). As a matter of fact, it is rated as one of the world’s largest technological corporations. In addition, the company trades its stocks on the Dow Jones stock exchange market. It should be known that the company was founded in 1984.

As a matter of fact, the company’s name was derived from the name San Francisco (Cisco 2010, p. 6). In a broad perspective, Cisco Systems Inc was one of the first companies to sell good routers that had the capacity deal with a large number of network protocols.

Currently, its routers are widely used in different countries to enhance the delivery of IP packets. The company has been acquiring other companies to enhance its product base and bring in new talent that can help it to advance its operations.

An example of these companies is Stratacom that was acquired to bring in new products. In 2000, the Cisco Systems Inc was the most valuable company around the world (Cisco 2010, p. 12). This was as far as its market capitalization was concerned.

Strategic challenges

Like every other technological company, Cisco Systems Inc is facing various challenges that need to be looked at. These challenges have been increasing as time goes by in relation to various and distinct prevailing market conditions (Paulson 2001, p. 17).

As much as the company has faced different strategic challenges, it is the market leader in switches and routers. This can be evaluated from an enterprise and service provider point of view.

One of the major strategic challenges that the company is facing is the fact that sales in the USA market are declining as time goes by. In this case, the company has a challenge to look for other markets to enhance its growth (Cisco 2010, p. 16).

Another strategic challenge that Cisco Systems Inc is facing can be seen in the erosion of margins in its existing markets. This has been brought about by increased competition in the global technological industry.

Such issues have ended up affecting the company’s sales and revenue projections in a broad way. The company has to face new- low cost competitors in the market and this is a very big strategic challenge (Cisco 2010, p. 19). Low cost competitors have emerged because of various advancements in technology. This ends up giving them an advantage in the market.

Cisco Systems Inc’s core technologies have been commoditized in the market and this is a strategic challenge that needs to be looked at. As much as USA accounts for 13% of Cisco Systems Inc’s market share, total sales have been declining because the market is saturated (Cisco 2010, p. 10).

As a matter of fact, demand is softening in this market and the company needs to be creative and innovative to increase its overall demand and sales.

PESTEL Analysis

A PESTEL analysis is very important in assessing the current environmental conditions that Cisco Systems Inc is facing in the market. In this case, it is done to analyze various economic, social, political, environmental, legal and technological issues that affect the company and its operations (Traverso 2000, p. 21).

Cisco Systems Inc is a global company and is therefore exposed to various macro environmental issues that define the way it conducts its business and operations.

Cisco Systems Inc has to contend with various economic factors that it is facing in the market. Recently, there was the global financial crisis that had its effects on different businesses.

This means that various economies have not recovered as expected and the company needs to come up with good mitigation measures (Soederbaum 2008, p. 18). As a matter of fact, sales have been adversely affected in countries that were seriously hit by the global financial crisis.

Because the company is a global player, it has been affected by exchange rate variations. This is because it sells its products in different countries with diverse and distinct currencies. It should be known that exchange rate variations keep on changing as time goes by.

This is in relation to prevailing market conditions and scenarios (Moore 1995, p.9). Therefore, for the company to return to profitability, it has to trade carefully as far as the global financial crisis is concerned. This is because there has been a gradual return to normalcy in relation to the global financial crisis.

In this case, economic uncertainty has affected the company’s profits in different markets. This is because there is a slow growth in GDP in other developing countries. There are other political factors that have ended up affecting the company’s operations.

Different countries have had networking restrictions as far as the company’s business is concerned (Cisco 2010, p. 29). This has reduced its growth momentum in such countries. In most occasions, such countries have strict rules that are supposed to be adhered to.

Cisco Systems Inc has to deal with various legal issues when it is establishing its operations in different countries. Some of these legal issues can either favor the company or work against the company. In this case, the company has been at the mercy of different legislations from various countries. Such legislations have political inclinations and can therefore be done with vested interests.

In extreme cases, the company has been accused of being involved in China’s censorship issues. As a matter of fact, the company has been blamed for supplying China with the equipment that it used to block internet sites (Slater 2003, p. 17).

Such political issues have affected the company’s image in the global market. In this case, the company argued that it did not specifically supply China with the equipments that it used to block internet sites but it was doing business with no vested interests.

Different countries have their own tax systems that are supposed to be adhered to. Some of this tax systems and policies might have serious implications for the company in different markets (Wright 2004, p. 14). This is because some countries levy large tariffs and quotas with an aim of protecting their home industries. In 2007, the company was accused for tax fraud in Brazil.

Technology has been advancing as time goes by (Stauffer 2001, p. 23). As a matter of fact, Cisco Systems Inc is a technological firm with global operations. This means that it has to face various technological issues in enhancing its operations.

The growth rate of technological advancements has been very high in recent years. This means that other technologies have been wiped out and made obsolete. In this case, Cisco Systems Inc has been forced to invest in research and development to come up with new products as far as technological advancements are concerned.

It should be known that new technology has created new products in the global market. To remain competitive, the company has been coming up with new products in relation to existing market trends and dynamics. This therefore explains why the company has been acquiring other technological companies as time goes by (Waters 2002, p. 21).

As far as technological forces are concerned, companies can effectively enhance their technological processes to reduce operational costs. This helps to improve on the quality of products through vibrant innovation activities.

The company is currently exposed to a lot of social issues that need to be dealt with. Technology moves with existing market trends and dynamics (Wright 2004, p. 19).

This means that the current consumer is very demanding and needs new products every now and then. In a broad perspective, there are various social trends in the market. These forces have an impact on the overall demand that a given company will have in the market.

Markets like the UK have an ageing population that needs a lot of investment in pension payments. When announcing its Q4 results, the company implied that it has conservative customers (Cisco 2010, p. 29). This means that such customers are very cautious about the economy and will therefore limit their spending and investments.

The technological industry has one of the most unpredictable social trends. This implies that customers want new experiences every now and then. In this case, the company has been forced to source for new talent to enhance its operations and market presence.

The company has not been exposed to a lot of environmental issues. This is because most of its products do not need a lot of environmental assessment (Young 2001, p. 18). The only issue has been the company’s ability to comply with various environmental requirements and expectations.

In this case, the company has to look at all environmental issues when it is designing its products. This is because technology has an impact on the environment and should be evaluated for sustainability.

All this factors are very important in coming up with a strategic management plan. Because Cisco is a global player in the technological industry, it needs to assess such aspects for its own sustainability (Young 2001, p. 18). This is because such macro environmental issues influence a business and its operations. Economic indicators will continue to play an important role in a company’s growth plans and future prospects.

Current strategy and positioning

Cisco Systems Inc is currently the world largest company in networking for the internet (Cisco 2010, p. 9). The company has been growing because of its ability to handle various external and internal business factors.

All along, the company has focused on its core business by engaging in effective strategic partnering. To remain competitive, the company has maintained a positive cash flow as time goes by. This has enabled it to compete well with other competitors in the market.

In a broad perspective, the company has built its core strategy by being customer centered. This means that its current business strategy is very competitive and sustainable (Cisco 2010, p. 15). In this case, all technological companies should continue being customer centered to enhance their market share.

This is because customers can shift their attention and loyalty depending on their tastes and preferences. In this case, a company should occasionally consult customers to understand their needs.

Porters’ five forces help to analyze an industry and enhance the development of a given company’s strategy. The bargaining power of customers has been increasing as time goes by (Porter 2008, p. 17). This is because the current consumer is more informed and demanding.

As a matter of fact, e-business has been affected by distinct customer preferences. This is because customers want more personalized products. In extreme cases, they want such products to be delivered at their own convenience.

To remain competitive, the company has come up with customer centered products to satisfy their individual needs and preferences. As a matter of fact, the company offers highly responsive services to its customers. Since its creation, the company has been moving products to customers (Cisco 2010, p. 16). As a matter of fact, the company has a lot of business processes to the internet as time goes by.

The global technological industry has a lot of competitive rivalry. This has enhanced the emergence of various low cost companies. Such companies are threatening the existence of established companies like Cisco Systems Inc. In extreme cases, technological advancements have brought in new companies in the market.

Therefore, the company has been forced to come up with new ways of doing business to remain competitive. In this case, the company has occasionally developed new products to keep off competition.

Government policies have been encouraging technological advancements and that is why many companies have taken advantage of such provisions to establish their presence in the market (Slater 2003, p. 14).

Competitive rivalry has also been intensified through various innovations that have taken place in the industry. The company’s strategy is very sustainable because it has been attracting new talent to enhance product development.

There is a high threat of substitute products and services in the global technology industry. The existence of substitute products has increased buyers’ ability to switch products according to their needs. As a matter of fact, there are a lot of substitute products in the market (Waters 2002, p. 16).

To remain sustainable, the company has built a good relationship with customers. This has been done by occasionally coming up with new products in relation to their needs at a particular time.

The company relies on proper utilization of the internet to enhance its operations. Such aspects have seen it become one of the most successful technological companies in the world. As a matter of fact, the company has driven e-business to customers to enhance its performance.

The bargaining power of suppliers for technological companies has been increasing in recent years. This is because technological companies have come up with better ways of doing business.

In this case, suppliers can switch to different companies in relation to the prevailing market switching costs (Soederbaum 2008, p. 14). All this withstanding, the company has an effective distribution channel that it has used to enhance its operations and activities in the market.

This has been done through good strategic partnerships and relationships with different suppliers in the market. Although this has been improving as time goes by, the company has projected that it will experience different supply chain constraints that are expected to affect its 2010 financial performance (Cisco 2010, p. 18).

The number of new competitors in the industry has also been increasing in relation to market needs and trends. This has always threatened the company’s core business. For sustainability, the company has come up with better ways of doing business. This revolves around new approaches to strategic management. In extreme case, the company has occasionally developed new products to remain competitive.

Cisco Systems Inc’s success and continued profitability can be attributed to proper enforcement of porters’ three generic strategies. The company’s segmentation strategy has been very effective in penetrating new markets (Cisco 2010, p. 12).

In this case, it has identified different market segments that need to be attended to. As a matter of fact, the company has differentiated its products to compete well with other market players and companies. This is because customers want new and effective products in the market.

The company’s cost leadership strategy has enabled it to appeal to different price sensitive consumers. As a matter of fact, the company has always come up with good prices to suit its target market. This is because its serves different clients with distinct needs.

In a broad perspective, the company was able to save $ 1.5 billion dollars in 2009. This was done through effective cost avoidance and increased operational efficiency in its operations around the world.

Cisco Systems Inc has a good strategic scope that has focused on effective customers’ needs delivery. In this case, the company competes in all market segments. Globalization has come up as a new way and approach of doing business (Cisco 2010, p. 14).

To show how strategic the company is, it provides internet protocol to all businesses around the world. This means that the company has strategically positioned itself in the market to serve various market needs and interests.

Urgent issues

Cisco Systems Inc has to deal with various issues as far as its global strategy is concerned. The company has been receiving criticisms in relation to its global activities. Such criticisms include the China censorship issue that gave the company a bad image.

To solve such issues, the company should be open about its business activities and operations (Cisco 2010, p. 26). This is because customers might not want to associate themselves with a company that colludes with other governments to infringe on the rights of internet consumers.

The company has also been facing legal lawsuits in different countries. These lawsuits have been advanced by various organizations and companies in relation to its activities and operations. An example of such a lawsuit is the shareholder class issue where the company ended up paying $ 91.75 million (Cisco 2010, p. 11). In this case, the company should review it’s cooperate practices to avoid any controversies.

It should be known that the company is experiencing supply chain constraints that need to be attended to for sustainability. This is because the global market is vey competitive and such incompetency’s can end up being costly to the company.

Such an aspect can be looked at by evaluating the company’s component lead time that is supposed to be improved as time goes by (Cisco 2010, p. 13). The company should ensure that it reduces its supply chain constraints to remain competitive.

The company needs to review its strategy to reflect the current global financial crisis’s real market situation. This is because there is a market uncertainty that has seen many countries experience slow GDP growth rates (Cisco 2010, p. 9). Such an aspect is expected to affect the company’s revenue projections. In this case, the company should come up with better ways of enhancing its sales and revenues.

Another urgent issue is the slow recovery from the global financial crisis than it had been projected. As a matter of fact, the company’s customers have ended up being cautious in their spending. Because these customers are re-evaluating their spending, the company should come up with a new approach to marketing to enhance its sales and operations.

The company should also deal with an unfavorable product mix. This is because it has been introducing new products in the market every now and then. As a matter of fact, sales of its core products; switches and routers have dropped by 1.4% in the third quarter of 2010 (Cisco 2010, p. 23).

There is also an impact of different government regulations. This has affected its sales margins in different ways. In this case, it should clearly evaluate markets before launching its operations.

Conclusion and recommendation

Like every other technological company, Cisco Systems Inc is facing various challenges that need to be looked at. These challenges have been increasing as time goes by in relation to the prevailing market conditions.

One of the major strategic challenges that the company is facing is the fact that sales in the USA market are declining as time goes by. In this case, the company has a challenge to look for other markets to enhance its growth.

Therefore, it is recommendable for the company to enhance product development to remain competitive. The company should also exploit other emerging markets for sustainability.

It will also be advisable for the company to engage in strategic alliances to increase its market share. In a broad perspective, Cisco Systems Inc should enhance its relationship with customers to know what they want in the market. This will enhance the company’s competitive advantage as time goes by.

Reference list

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Paulson, E., 2001. Inside Cisco: The Real Story of Sustained M&A Growth. New York: Wiley.

Porter, M.E., 2008. The Five Competitive Forces That Shape Strategy. Harvard: Harvard business Review.

Reichheld, F., 1996. The Loyalty Effect. Boston: Harvard Business School Press.

Slater, R., 2003. The Eye of the Storm: How John Chambers Steered Cisco Through the Technology Collapse. New York: HarperCollins.

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