Apply theoretical and practical knowledge of strategy in the diagnosis of strategy issues and the formulation of strategies.
Examine the key challenges companies face and have and contextualise the major approaches companies employ as they formulate strategy.
Critically analyse the relationship between an organisation’s strategy and its structure.
- Paragraph 1: the key ideas from the materials – not a summary – you must select the key ideas (most important) and talk about them.
- Paragraph 2: identify an organisation which would benefit from the application of these ideas and explain how the ideas should be applied.
ONLY Soft copy to be uploaded on Blackboard
Use the Theory relating to Adaptation, Aggregation and Arbitrage to explain how companies from the following industries have used this theory for the pursuit of their businesses:
- White Goods
- Tourism / Hotel Industry
- Pharmaceutical industry
- Beverage industry
- Agricultural industry
- Meat Industry
- Car industry
- Airline Industry
You do not need to define the concepts. Descriptive material has negligible value and should be avoided. We are seeking analysis, discussion and recommendation, enriched by ideas found in journal articles. In business you will be expected to produce short well-argued reports. This is where you demonstrate that skill.
Demonstrated knowledge of the Model ‘AAA’
Capacity to apply this model to the companies/industries of your choice
The quality of the discussion and evaluation of the issues identified
The analysis and integration of ideas from journal articles and research materials
Written Report The correct use of Harvard Referencing throughout the report (the source of all ideas must be identified)
Oral Presentation Overall flow of presentation, eye contact etc.
Competitive strategy is one of the integral parts of the organizational structure. In this competitive era, every business organization is looking for opportunities so they can survive in the race. Competitive strategy refers to the policies and strategies that are implemented by the business organizations to battle against other rival companies. Business organizations from various industries are facing various challenges due to the rise numerous competitors. They are including various innovative strategies every now and then to strengthen their inner qualities and establish a bright future for the organization. When the companies plan to move in to global market they need evolve their business according to the regions or geographies in which they operate.
Pfzer is the largest manufacturer and marketer of medicines in the world which has its headquarters in America. The pharmaceutical giant in order to adapt to the market conditions uses modern technology to manufacture more sustainable medicines. The company continuously partners with other pharmaceutical companies in the world to make its medicine available in the whole world at more affordable rates. The company in order to adapt to the ever changing patterns of diseases and cater to the ailing people carries on continuous research to briong about more sustainable medicines which can benefit the society. The pharmaceutical giant adapts to various political, economical and legal frameworks by complying with rules and regulations in the home country (the United States of America) and the host countries (Pfizercareers.com 2017).
Pfizer is the world’s most premium biochemical manufactures in the world which follows aggregation to sustain in the market. The company assimilates health IT, medical technologies and services to carry out innovation in its products. The pharmaceutical giant acquires market data, open innovation platforms and develop products and solutions for the customers, suppliers and patients. The multinational company partners with several other companies both of national and international stature to bring about innovation and diversify its investment. The company positions and places its products strategically and promotes them aggressively to retain its market leadership (Pfizer.com 2017).
Pfizer applies arbitrage to expand its business and acquire new companies and merge with existing companies. Arbitrage helps Pfizer to expand its capital base by taking over new companies which allow it to control the operations of its competitors. Investing in the shares of smaller pharmaceutical companies allows the multinational pharmaceutical manufacturer and marketer to invest its capital over in huge asset class and diversify its risks. The company can diversify its risks and earn huge return on investment which empowers the competitive strength of it. The company arbitrages in foreign companies which allow it to take advantage of the differences in currency exchange rates and take advantage of the currency differences. The management of Pfizer arbitrages in several host countries and acquire companies which allows the pharmaceutical giant to control its competitors.
As a global pharmaceutical company, second only to Pfizer in the world ranking and headquartered in the United States adapts to the business environment. The company is concentrating on making medicines, vaccines and treatments more accessible to people ball over the world. The company adapts to the diverse political, economical, cultural and other external environment factors to operate globally. The company is high adaptable to the ever changing types of diseases in the world and carries out research in the areas. Johnson & Johnson is carrying out massive research to aid the patients suffering from AIDS and tuberculosis. The multinational company is known to bring about innovative products to adapt to the local needs and to the ever changing customer demands (jnj.com 2017).
Johnson & Johnson is a multinational company who aggregates operations to ensure market leadership. Iris Software, an information technology manufacturer has made a software for J&J which will allow it to acquire, process and integrate data from execution systems, softwares and accessory devices. The pharmaceutical giant is following an aggregation strategy to integrate Iris Software with SAP to make it more aligned with the business of the company (Irissoftware.com 2017). The software integration will allow the company to supervise pilferage and counterfeiting. Thus, it will help the company to better its products and confirm more strictly with the quality parameters set by the different host countries.
Danzon, Mulcahy and Towse(2015) point out that the multinational pharmaceutical companies use the discrimination price strategies and arbitrage to earn higher profits. J&J arbitrage by using the price difference and exchange rate difference between countries to invest and earn high profit. The pharmaceutical giant invests in the shares of several companies to gain stronger control over the market. Christophers(2014) points out this arbitrage by J&J and other multinational pharmaceutical companies are impeded by the intellectual property right protection and presence of the large number of competitors. J&J is the master of arbitrage who uses arbitrage even in form of knowledge to gain competitive advantage in the market (Morschett, Schramm-Klein and Zentes 2015)..
In the present era of risk and instability, adaptation strategy becomes a very important for any company, businesses they strive hard to beat the harsh competition, they adapt a new ways for the growth of their business, in the car industry where there is too much competition has forced the companies to take adaptation strategy. Companies that are operational in international market needs to take the adaptation strategy because of the there are differences in culture of different countries, and in order to survive the competition from the local and other international companies, adaptation is very important. In Europe the company owned three different brands (Morschett, Schramm-Klein and Zentes 2015). Toyata is expanding its market in the emerging markets like India and China and holding tightly its American and European markets to adapt to competition.
Toyota Motor is the second global car manufacturer, the company when planned to diversify their business to the European market, because they believed this particular move will help their business a global leader. Toyota over years have evolved during the years to adapt to the needs and requirements of the European market because it knew that they can create a significant amount of customer base in Europe and continued their operation in Europe (Morschett, Schramm-Klein and Zentes 2015)..
Aggregation strategy involves the use of various grouping devices that will create greater economies of scale, much more than the adaptation strategy. The idea behind the aggregation strategy is to find ways to group things with an aim to minimize the differences within the groups are less compared to the differences between groups. There are many bases on which the aggregation can be done. Toyota motor regionalization or semi globalization were the strategies that were applied by Toyota as the aggregation strategy, it just not just remain a common car rather it adopted this strategy to satisfy customers within the regional differences, Toyota makes every production plant a common production plant, like the plant in Guanajuato, Mexico will make corollas, the Cambridge, Ontario makes mid-sized vehicles of higher cost.
In the arbitrage strategy companies use the differences rather than adapting to those strategy or grouping those strategy. In Australia Toyota became the first company which used mass production which was powered by hybrid system (Morschett, Schramm-Klein and Zentes 2015).
Making partnerships with new dealers and taking part in currency hedging are arbitrage tactics of the company.
Ford in order to adapt well in the international market, the company decided to diversify according to the different market, they had separate R&D for the different markets they were operating, earlier, company operates in many countries across the world and have adapted to the market of each and every country as per the market. In countries like USA and UK, Japan and China they offer cars that are priced very high and in countries where they feel that people would not be able to afford the cars, the company manufactures that are less expensive, all these things the company does to adapt to the specific market (Motohashi 2015).
Later ford changed its strategy for global market from Adaptation to standardization, as its aggregation strategies ford standardizing a part of its value proposition, which was a strategy with an aim to improve the economies of scale, through creating regional and global efficiencies. Ford’s main strategies in regional markets of America was cost leadership and hence their main focus was standardization, they operated for a particular segment and their focus was more and more on the development of the features of its cars, so that they can set a customer base on these countries. They focused on the distribution channel because automotive industry’s one of the main elements happens to be the distribution channel (Steenkamp 2017).
Ford fiesta, which is a global car brand, the company, sourced and assembled in almost 24 countries and sold the cars in almost half the number of the countries. In Germany and Spain most of the design and engineering work is done. Most of the electronics of ford fiesta come from Japan. The company has its assembly plants in countries like Brazil, China, Germany, India, Mexico, South Africa, Thailand and United Kingdom (Chau and Tankov 2015).
INDUSRTY 1: PHARMACEUTICAL
INDUSTRY 2: AUTOMOBILE
Use modern technology and manufacture sustainable medicine
Diversify market, intensify R&D
Assimilates health IT, medical technologies and services
Software to align research with business needs
Integration of regional and international business strategies
Cost leadership and standardization
Acquisition and currency arbitrage
Discrimination price strategies
Acquisition and currency hedging
Using regional advantages like engineering power of Japan and material resources of Africa to operate:
In order to survive the harsh competition in the global market companies need to formulate such strategies that would help the companies to create value in the global market, adaptation strategy is one of the most used strategy globally, which aims at meeting the local requirements, when the company operates in a global market, aggregation strategy believes in using the similarities within the countries for competitive advantage, it is more a regional approach. Arbitrage is the global strategy that uses the differences among the various regions or geographies to enhance the performance. Ford and Toyota are two such companies that operate globally and they adopt the adaptation, aggregation and arbitrage strategy. These two companies they evolved and adapted to the market they operated, Ford mainly focused on standardization, cost leadership for which they believed that the distribution channel, the more efficient the opinion dealers will be the more customers will find it easier to trust on the company.
Griffith, D., S. Lee, H., Seob Yeo, C. and Calantone, R., 2014. Marketing process adaptation: Antecedent factors and new product performance implications in export markets.International Marketing Review,31(3), pp.308-334.
Cavusgil, S.T., Knight, G., Riesenberger, J.R., Rammal, H.G. and Rose, E.L., 2014. International business. Pearson Australia.
Chau, H.N. and Tankov, P., 2015. Market models with optimal arbitrage. SIAM Journal on Financial Mathematics, 6(1), pp.66-85.
Christophers, B., 2014. On the performativity of pill pricing: Theory and reality in the economics of global pharmaceuticalization. Antipode, 46(4), pp.1054-1071.
Crane, D., Kawashima, N. and Kawasaki, K.I. eds., 2016. Global culture: Media, arts, policy, and globalization. Routledge.
Cross, J.C., Belich, T.J. and Rudelius, W., 2015. How marketing managers use market segmentation: An exploratory study. In Proceedings of the 1990 Academy of Marketing Science (AMS) Annual Conference (pp. 531-536). Springer International Publishing.
Danzon, P.M., Mulcahy, A.W. and Towse, A.K., 2015. Pharmaceutical pricing in emerging markets: effects of income, competition, and procurement. Health economics, 24(2), pp.238-252.
De Mooij, M., 2013. Global marketing and advertising: Understanding cultural paradoxes. Sage Publications.
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Irissoftware.com. 2017. Iris Develops Unique Data Aggregation Software for Johnson & Johnson to Meet New Regulations. [online] Available at: https://www.irissoftware.com/news-and-events/article/iris-develops-unique-data-aggregation-software-for-johnson-and-johnson-to-meet-new-regulations-QgPULJ0ylsQ= [Accessed 2 Jun. 2017].
jnj.com. 2017. CARING & GIVING. [online] Available at: https://www.jnj.com/caring/citizenship-sustainability/access-strategies-programs [Accessed 2 Jun. 2017].
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. The Integration/Responsiveness-and the AAA-Frameworks. In Strategic International Management (pp. 25-49). Springer Fachmedien Wiesbaden.
Motohashi, K., 2015. Management Strategies for Global Businesses. In Global Business Strategy (pp. 21-40). Springer Japan.
Pfizer.com. 2017. Innovation | Pfizer: One of the world's premier biopharmaceutical companies. [online] Available at: https://www.pfizer.com/partners/innovation [Accessed 2 Jun. 2017].
Pfizercareers.com. 2017. Making A Difference | Pfizer: the world's largest research-based pharmaceutical company. [online] Available at: https://pfizercareers.com/making-a-difference [Accessed 2 Jun. 2017].
Steenkamp, J.B., 2017. Global Marketing Mix Decisions: Global Integration, Not Standardization. In Global Brand Strategy (pp. 75-109). Palgrave Macmillan UK.
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