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Case Study On Strategic Management

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Question:

Case study on Strategic Management.
 
 

Answer:

1. Joint Venture how to stop it from being the competitor

The company needs to set goals and patters for the companies. These goals need to be one for both the company. They need to understand the profit that they can achieve through joint ventures. They need to merge their culture and develop ways for the development as a team rather than individual (Hill et al., 2014).

2. What entry mode the companies use

2.1. Advantages of Joint venture

  • Access to local partner’s knowledge- Joint venture helps to access the new market with its customer base. It also enables to gather knowledge on technology, capital and knowledge of the local market.
  • Shared development costs and risk- Joint ventures helps in growth and without borrow funds or looking for the outside investors.
  • Political dependency- It enables to operate when property risk is high as the contracts helps to control and monitor the unforeseen risk in local business (Eden & Ackermann, 2013).

2.2 Disadvantages of Joint venture

  • Inability to engage in global strategic coordination- The Company cannot focus on cost reduction which comes from the scale economics and the location economics.
  • Inability to realize location and experience-curve economies-
  • Lack of control over technology- It initiates a handling of technology gap between the two companies (Eden & Ackermann, 2013). 

3. Explain he risk associated with joint venture dealing with contender strategy

Contender Strategy aims to unguarded the niche segments and then upscales it. Contender Strategy in joint ventures enables to lack in quality and the productivity. It also acts as a risk in the service, packaging and delivery. The cost advantage that the country gets in contender strategy would undermine by the deficiencies in the area discussed (Eden & Ackermann, 2013).

4. What are the risks of acquisition? Also make recommendation

The greatest risk associated with acquisition is the poor and the inadequate communication. It creates complication on the communication strategy and the involvement of the department into it. The mergers need to make proper strategy and communication of all groups need to be there. Secondly, lack of transparency can affect among the stakeholders especially to the employees. All the plans need to be clear to the stakeholders. The mergers and acquisition can lead to mismatch between the plan on the branding, marketing and the sales activities. Again the recommendation regarding this is to make proper set of goals and plans about the marketing and distribution channels. The two companies have two different culture and service standards. So, it becomes tough for the stakeholders and the customers to adopt with the difference. The companies need to understand the culture and for that they need to take time and involve the employees among the companies (Hill et al., 2014).

5. Do they stay as retails or do other activities

The Vermont Teddy Bear Company dos not only stay in the retail. It has also involved in many activities. The company does not only retail but it sells it products through their own websites. IT uses various print media like magazines along with story book for children and television shows. The main sales come from the radio. The company is presently in the box of Dog in the BCG Matrix. As the company showing low growth rate with relatively low market share (Eden & Ackermann, 2013). 

 

6. Control System

6.1 Balance Scorecard

It is the performance matrix used to improve the internal functions of the business and resulting in external outcomes. It helps to turn the organization’s mission statement into its strategy (Eden & Ackermann, 2013).

6.2 BCG Matrix

The framework adopts that with increase in the market share the generation of cash will increase. The four categories are:

Dogs- It accounts that low growth arte with the low market share.

Question mark- It includes High market growth with the low market share.

Stars- It shows High market growth with high market share.

Cash Cows- it shows low market growth with high market share.

How the company might move from dodger to contender strategy and why this is a risk

The dodger strategy focus only on the link in the value chain which require only the local advantage. While the contender strategy concentrates on the gain of the capabilities top became the contender through global recognition. The organization need to confirm that competitive Products are transferable to the overseas and the industry is facing high pressure to globalize. Risk is that company can get strong competition from local competitors. Further it creates risk of financial loss (Hill et al., 2014).

8. Where should the place of the factory

The factory needs to be China.. The company needs to expand the market through distribution and export. They can sale their product through their online websites. China has the market with most effective technologies with low structure cost (Eden & Ackermann, 2013).

9. What are the strongest forces (Porter’s factors) and why

9.1 Advantages

Competitive Rivalry- Rivalries acts as a threat as the company has plentiful competitors. However the company has advantage over its competitors. It has the label of product manufacturing in USA. So, the materials use is from America which acts as an advantage over its competitors of other countries. The company can deliver the product within overnight.

Bargaining Power of suppliers- the company has a strong supplier base in America. The company has numerous options to supplies its products. It has its own websites to sell the products.

Bargaining power of customers- The company target customers with age of 1- 100. It enables diverse mediums to attract the customers. Diverse products are available like outfits and jewelry of Teddy bear. It produces the teddy bear with high quality and minimal cost.

9.2 Disadvantage

Threats of new entrants- Vermont Teddy Bear have a fear of new entrant in the market of America. The competitive advantage lies mostly in its using the label of USA along with the products of America.

Threats of Substitute products and Services- the company target segments are mainly on giving products on gifts and occasions. Now, the company has a threat that the customers can easily move from teddy bear segment to other gift item segments if something new or innovative comes in market. 

 

10. Advantages and Disadvantages of Vertical integration and outsourcing

10.1 Advantages of Vertical Integration

  • It reduce the transportation cost if common ownerships outcome in nearer geograophic possession.
  • Improve coordination of supply chain.
  • Capture the upstream and the downstream margin on profit.
  • Lead expansion on its competencies.

10.2 Disadvantages of Vertical Integration

  • Capacity of balance issue
  • High cost because of low efficiencies because of lack of competition among suppliers.
  • Development of new competencies can affect the existing ones.
  • Increase of bureaucratic cost.

 10.3 Advantages of outsourcing

  • Expertise cans compel in faster way giving quality output.
  • Concentrate on core process rather than the supporting one.
  • Outcome of it enables risk-analysis.
  • Reduction in operation and recruitment cost.

10.4 Disadvantages of outsourcing

  • Risk of expose the confidential data.
  • Problem with synchronizing the deliverables.
  • Involvement of hidden cost
  • Lack of customer focus.

Vermont Teddy Bear need to develop the outsourcing business process between the two. It would enable them to expand the business through providing expert labor. Moreover they can avail cheap labor without compromising the labor. Outsourcing would enable the company to concentrate on the other crucial business process. They would get expertise with efficiency in technical ability. 

 

11. Cost low profit margins leave risk of low cash flow with profit being primary goal then low cost strategies may be disastrous 

11.1 Advantages of low cost structure in industry

Economics of Scale- the company can increase its scale of operations in internal growth through organization growth. It initiates external growth through merging and acquiring with other firms.

Unique access to low cost input- The organization can get the inputs in much lower cost. It will enable to stimulate its demand through the gain of market share.

Learning curve- It enables to provide greater amount of output generation by each labor. It enables to improve the labor skills through job experience.

Experience Curve- It enables to initiate a competitive advantage over cost of the reveals. It makes difficult for the new entrant to challenge the existing firm (Hill et al., 2014).

11.2 Disadvantages

Coming second, third etc- the company with the involvement of high cost can initiates better operation in management. It makes the company to go far in the competition for its low cost strategy.

Technological Progress- the company cannot hire for implement technologically progress materials. It makes the company to adopt further developed ways of costly technologies.

Cost reduction focus can cause loss of valued aspects- It will enable the organization to curtail all the necessary adoption. It will enable the profit to gets down.

Competitor imitation- the competitors and even the new entrants can easily replicate the process and strategy that company use.

12. International strategy -transnational, international, globalised or standard “Are they following this type of strategy, if so in what way and what are the advantages & disadvantages

12.1 Advantages

  • It helps Vermont Teddy Bear Company to increase the sales.
  • It helps to increase the visibility.
  • It reduces the operational risk.

12.2 Disadvantage

  • Fragment distribution network in America.
  • Different needs and preferences of customers
  • The Issues in relation with emerge of economics.

Vermont Teddy Bear Company concentrates mostly to its American market because of low financial resources. Among the four types in global strategies, company used to follow the international strategy. They mostly concentrate on its domestic market and makes strategies according to it. However to gain the competitive advantage the company adopted the international strategy. 

 

13. Whether organization should diversify or standardize

13.1 Advantages

  • Diversification helps in risk reduction
  • Control the inputs which help to lead community and improve the quality.
  • Control the market through the promising sales and the distribution.
  • Increase in the market share through the introduction of the products in the new customers and market.

13.2 Disadvantages

  • Slow growth in core business.
  • Addition in the management cost.
  • It can cause the bureaucratic complexity.
  • It can reduce to quality as company has to focus on quantity than on quality.

Vermont Teddy Bear Company needs to diversify its product in the international market. The company has competitors like Stelff and Glund dwelling mostly in the foreign countries. Vermont Teddy Bear Company has the advantage of using the materials of United States. They can gather the market internationally through selling the product in their own online websites.

14. Diversification and Standardization

Diversification is the expansion in the foreign market while standardization refers to the consistency in the same market. The company which are in the initial stage is better to opt for standardization,. But, Vermont Teddy Bear Company has completive advantage in terms of price product place and promotion. Now they need to focus on the expansion in the international market (Hill et al., 2014).

15. Harvest or diverse

A harvest strategy is invested when the business is cash cow. It shows that business need to be matured and will grow if more investment added. However, the inclusion of the diverse strategy would lead to increase the people of different culture who want work for growth. Vermont Teddy Bear Company needs to adopt policy on harvest staetegy as it is a mature firm and can grow if invest more (Eden & Ackermann, 2013). 

 

16. Reference List

Eden, C., & Ackermann, F. (2013). Making strategy: The journey of strategic management. Sage.

Hill, C., Jones, G., & Schilling, M. (2014). Strategic management: theory: an integrated approach. Cengage Learning.

OR

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