Selected Strategy and Justification
Discuss about the Business Strategy for Delta Signal Corp.
This paper will look to focus on strategies implemented to better the situation of Delta Signal Corp through the process of simulation. The company is facing problem, as is case with many of the companies across the globe. Certain strategies are not working and the new CEO wants to implement a strategy that would put things on track. There are a lot of strategies that a management can implement to make things right, but a perfect strategy can overturn the crisis into a situational benefit for the organization. Delta Signal was in dire need of one as its stock pricews dropped, market situation was worsening and competitors were edging past it, grabbing important market share.
The strategy that has been selected in the simulation is the strategy targeting the segment of luxury, which is ‘customer integration’. The way forward for Delta Signal Corporation is through creating trust and confidence that is possible at all levels. Customers do need to be confident and have belief on the organization from which they are purchasing the product. Moreover, under similar circumstances, the employees too need to show a bit of trust and have confidence in their managers and their actions. Close integration of processes is required starting from the research and development section through to manufacturing, shipping and sales (Verbeke, 2013). The ‘Blue Ocean’ strategy simulation (BOSS) can be effective in this scenario, which can allow the organization to test out new methods in accordance to respecting marketing realities. This business strategy takes into consideration participants working in teams to manage goods having fixed prices over a period of six years. The simulation structure permits them in creating a blue ocean of new market freedom for their company and stay away or break free from competition. The blue ocean strategy stands on six principles which can be effective for Delta Signal Corp which includes, reaching beyond the existing demand, focusing on the bigger picture that lies ahead and not merely on numbers, getting the strategic sequence right, overcoming the hurdles of organizations, reconstructing boundaries of market and building executions in accordance with strategies.
The luxury segment generally sees a few, but key customers who are always ready to pay the premium price for the company’s superior or best service. These key customers are seen as the mode of profitability for the organization, helping the organization to stay in shape in times of fluctuating demand. Businesses that are involved in customer integration work and communicate with a customer-centric mindset. It is letting the customers know how important and valuable a part they are to the organization and the organization makes all the decisions and strategies keeping their interests in mind (Edvardsson et al., 2012). It creates goodwill for the company at the marketplace, thus maintaining a positive image.
Evaluation of Selected Strategy
Brian Nelson, the new CEO stated that despite the company investing heavily on things like product performance and quality, the company is not a market leader in any of the segments which is a matter of concern. According to him the company lacked a clear value proposition that might attract a lot of traffic to the company. It’s letting the consumers know how the company’s product solve customer’s problem or develops or enhances their situation. Even the managers in the company did not have clear goals to work on, a demotivational factor that does not go well with the organization’s work process.
Further research and development is required for Delta Signal Corporation, and the company cannot compromise on the quality while it may look on other integration factors like low lifetime cost. The company has taken into consideration in improving the internal factors like investing in new machineries, providing training to the employees and reducing cost where it is necessary (Chavez et al., 2015). The company’s product image is inconsistent enough for it to lose out on important market share to its competitors. The economic factors have been growing dramatically in some developing countries which have increased the cost of raw materials and suppliers are in constant pressure to cut down the price and increase profitability.
This strategy of customer integration has worked quite well with the organization. The quality of the products has increased which in turn has increased the satisfaction level of the customers. There is high chance that the existing customers are satisfied at that level where they can recommend Delta Signal’s products to other people who can be the company’s prospective buyers. This recommendation can work as a word-of-mouth advertisement, where these consumers advertise the company’s products without the company incurring any expenses.
No matter what strategy company implies on, budget plays a huge factor in deciding which path to be taken in order to achieve the desired results. While preparing budgets it has often been found out that companies do not take much into consideration, whereas the balance scorecard simulation does measure a company’s performance based on three key areas which are:
-The internal process
-Customer’s relationship with company
-Growth and learning activities
The internal process should need to function in a proper way; otherwise an organization should not be able to perform in a market where there is high level of competition. The stocks of the Delta Signal were downward inclining, with it losing important market share to its customers. The company has to implement things in a new way, a way which should provide them with a better chance to be the market leader and attract a lot of customers. The company is planning to hit the luxury segment of the market, where it states that the company will have opportunities much better than the other segments. It has recently expanded in the Asian market where it will face tough competition from other companies who are implementing the same strategy of targeting the economic segment car makers (Van Dongen, Dijkman & Mendling, 2013).. The best strategy thus is focusing its whole attention into the luxury segment that is less competitive as the others are busy in grabbing the Asian Market share. Moreover, the company’s traditional expertise is in the Research and Development, so the company can quickly act and react to the market conditions, making the necessary changes that can firm its position in the market.
Effectiveness of Strategy Implementation
The cost leadership strategy should be put in use where optimal efficiency and spreading the cost across the company in whole. The cost leadership strategy avoids the risk of productivity slowdown and the operational cost to grow substantially. Cost leadership helps in weathering unexpected sales and maintaining a good level of cash flow where the extra money can be used for development of product, advertising purposes and selecting the best employees in the sector to have the best results. Expansion does not come easy; it has its own complexities. The growth of a company should be controlled one, because uncontrolled growth often lands the management in problem (Mahr, Lievens & Blazevic, 2014). Cost projections can go out of the window, if the growth is not controlled (Gabrielsson, Gabrielsson & Seppälä, 2012).
Workers should be kept motivated, because if the company loses out on workers who have the required skill to perform, then productivity drops and company incurs more cost to select and train the new workers. If productivity is less then there is high chance of company losing out on it valuable customers. Moreover, it is trying to focus on the luxury segment, which has relatively less buyers than the economy segment, so every consumer becomes important. Losing out on even one can be a huge loss for the company. Moreover, their goodwill may be hampered. So the company cannot take risk in this kind of situations.
The value chain can also be modified as per the business needs. Internet can play a big factor too, like the company can shift to e-business technology which is much for faster and reliable than the traditional processes (Fearne, Garcia Martinez & Dent, 2012).. Moreover, direct marketing can be implemented which reduces the cost of channels. Moreover, the designs which are produced in a simplified manner can reduce the cost by shortening the value chain. Value Innovation is effective as it puts same kind of emphasis on innovation as well as value. It helps in execution of strategies and resulting in creation of blue ocean strategy which reduces the driving costs effectively whie increasing the driving value of buyers by raising and creating new elements.
The implementation of the Blue Ocean Strategy will be beneficial for the company.
The strategies that would be recommended for the Delta Signal Corporation going forward are based on four segments which are financial, customer, internal process and learning and growth.
Financial: the main focus will be on financial activities with the strategy being maintaining a high quality of the products so as to attract more customers and have the lion’s share in the market. However, reducing the cost of the company is also a factor which needs to be focused on. The company needs to manage a good relationship with the customers and should invest in things where necessary to gain control of the market and gain customer’s attraction (Gerth, 2013).. The company should take the necessary steps in maintain a good internal and external environment.
However, the main focus of the company should be to reduce cost in order to gain the competitive advantage in the market. The organization needs to give the shareholders and the stakeholders their due importance in order to survive in the market (Grönroos, & Voima, 2013).
Customers: Delta Signal Corporation’s strategy has been based on customer integration which means their primary focus should be on the consumer. The company should focus on doing promotional activities and put a spotlight on protection activities of the customers. The prices of the products should be competitive in nature, so that the customers keep attracted to its products (Moeller et al.2013) . As the company has been spending heavily in maintaining the quality of the product, it should not be compromised at any cost. A proper trust and belief should exist among the customers and the company should not do anything that might break the trust of consumers. The simple reason the word-of-mouth advertisement or the recommendation of customers that they do to other people about the company’s product works like magic. Customer satisfaction should be an on-going process.
Internal process: the company has invested heavily in implementing the most updated technologies for maintaining the best quality products. The company should maintain a low administrative cost and can look for outsourcing if maintaining an in-house admin becomes expensive for it. Investment in driving costs should be kept down too at least for the next two to three years. Productivity should be the primary objective of the company, because in case of low productivity the company profit will also be low, and might end up in losing valuable customers to its competitors (He et al., 2014). The defect rate of the products should be kept at bare minimum, which keeps a continuous flow of goods to the markets for the customers to have it as and when required. A good productivity has its own advantages with enhancement in quality of products. Customers will have nothing to complain about and sales return will drop dramatically and with it will decline the repair and service calls (Sharma, Garg & Mittal, 2016). Such scenario will give rise to a situation where accounts receivable will diminish as customers are satisfied and are likely to pay off their due bills, costs are going to decrease too and the management is going to have enough capital for the maintenance of equipment in a proper way.
The focus should be on the strategy in hand, where every member of the organization should be made clear about the goals which was lacking in Delta Signal Corporation as stated in the case study (Hollensen, 2015). Until and unless the organizational goals are clearly mentioned people do not find the motivation to work.
Learning and Growth: the company should not be stagnant in case of keeping people who are not performing. Company should invest in recruiting new people and provide them with adequate training, so that they become competent enough and perform according to the desires of the company in achieving the desired results (Bentley, Omer & Sharp, 2013). Moreover, the existing employees should be also provided training in order to upgrade their present knowledge and skill. Last time, the company had to put off these training sessions due to cut down in budget which affected heavily the organization’s people, which cannot be repeated again. Investments should be done in research and development of the products and market so as to stay ahead of the competition (Pitani, 2012).
As stated earlier too, the focus of Delta Corp should be on the bigger things lying ahead and not on the numbers.
Awakening: Comparison should be done with competitors based on the ‘As Is’ strategy and focus should be on where the strategy needs to change.
Exploration: Observing the advantages of working with alternative products and services is important. Delta wants to hit the luxury segment, it is important for the company to take into consideration the products it is going to make available for that segment. It is about considering the factors that need to be changed and eliminated.
Strategy Fair: Getting feedback on alternative strategies is important from various customers, competitors and other non customers. The feedback should be used to build the ‘to be’ best strategy.
Communication: only those projects and operational moves are to be supported which allows Delta Signal Corp to close in the gaps in actualizing the new strategy.
These are few of the recommendations that should hold good for the company.
Bentley, K. A., Omer, T. C., & Sharp, N. Y. (2013). Business strategy, financial reporting irregularities, and audit effort. Contemporary Accounting Research, 30(2), 780-817.
Chavez, R., Yu, W., Gimenez, C., Fynes, B., & Wiengarten, F. (2015). Customer integration and operational performance: The mediating role of information quality. Decision Support Systems, 80, 83-95.
Edvardsson, B., Kristensson, P., Magnusson, P., & Sundström, E. (2012). Customer integration within service development—A review of methods and an analysis of insitu and exsitu contributions. Technovation, 32(7), 419-429.
Fearne, A., Garcia Martinez, M., & Dent, B. (2012). Dimensions of sustainable value chains: implications for value chain analysis. Supply Chain Management: An International Journal, 17(6), 575-581.
Gabrielsson, P., Gabrielsson, M., & Seppälä, T. (2012). Marketing strategies for foreign expansion of companies originating in small and open economies: the consequences of strategic fit and performance. Journal of International Marketing, 20(2), 25-48.
Gerth, C. (2013). Introduction. In Business Process Models. Change Management (pp. 1-12). Springer Berlin Heidelberg.
Grönroos, C., & Voima, P. (2013). Critical service logic: making sense of value creation and co-creation. Journal of the Academy of Marketing Science, 41(2), 133-150.
He, Y., Lai, K. K., Sun, H., & Chen, Y. (2014). The impact of supplier integration on customer integration and new product performance: the mediating role of manufacturing flexibility under trust theory. International Journal of Production Economics, 147, 260-270.
Hollensen, S. (2015). Marketing management: A relationship approach. Pearson Education.
Mahr, D., Lievens, A., & Blazevic, V. (2014). The value of customer cocreated knowledge during the innovation process. Journal of Product Innovation Management, 31(3), 599-615.
Moeller, S., Ciuchita, R., Mahr, D., Odekerken-Schröder, G., & Fassnacht, M. (2013). Uncovering collaborative value creation patterns and establishing corresponding customer roles. Journal of Service Research, 16(4), 471-487.
Pitani, M. (2012). Training Virtual Employees.
Savino, M. M., Manzini, R., & Mazza, A. (2015). Environmental and economic assessment of fresh fruit supply chain through value chain analysis. A case study in chestnuts industry. Production Planning & Control,26(1), 1-18.
Sharma, S., Garg, S., & Mittal, S. K. (2016). Importance, Role and Impact of E-Training on Employees in Workplace. SGBED wishes to recognize the following sponsors, 474.
Van Dongen, B., Dijkman, R., & Mendling, J. (2013). Measuring similarity between business process models. In Seminal Contributions to Information Systems Engineering (pp. 405-419). Springer Berlin Heidelberg
Verbeke, A. (2013). International business strategy. Cambridge University Press.
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