The report discusses about the competitive strategy of BMW and Hilton Hotels in global branding. In the report discusses how the two companies successfully apply the application of the theory. There is also a critical evaluation done which is mentioned in the report. The report also mentions the reason for the success of the company and necessary arguments provided. There is a mention of the competitive strategy of Compaq and Nestle in target market and modes of entry. Here also the report discusses how the two companies successfully apply the application of the theory. There is also a critical evaluation in the report. The reason for the success of the company with necessary arguments is also provided in the report.
Bayerische Motoren Werke (BMW) is a world renowned automobile brand headquartered in Munich, Germany. The company manufactures automobiles, motorcycles, aircraft engines and also some premium product that includes BMW mini and Rolls Royce. The fame of the company lies in providing luxury cars to international clients. The business strategy of BMW is characterized by differentiation of products with primary focus on digitization and design (Baines et.al 2012). In this context, this can be said that electro mobility is the latest technology adopted by the company in differentiation of products. Based on the technology the company introduced a fully electric and a plug in hybrid model. The competitive strategy of the company also focuses on individual mobility that is combined with high end mobility services. The company also believes in aligning its high profit levels in perspective of short term by increasing the longevity of the company in times of change. The four strategic areas that the company believes in includes growth, profitability, access to technology and customers and shaping the future.
BMW happens to rank among top 5 companies in the German Corporate Index. Even the company is ahead of its competitors Volkswagen and Daimler in terms of customer satisfaction and market share (Rao 2017.) The Company believes in following a production strategy that is local and at the same time is committed towards a long term strategy of market penetration. BMW also makes use of completely knocked down process (CKD) where the company imports various parts and components from various international and local assemblers.
The company also puts forward a slogan which is ‘sheer driving pleasure’ that defines a great driving experience. Thus, it can be said that BMW has obtained a competitive position in the market where the company can be ruled by a team who not only raise the price but can gain a market position which is strong (Nagle, Hogan and Zale 2016). The strengths of the company lie in its high potential for growth, profitability, customer loyalty professional management team and excellence in service. The company has maintained high speed growth through constant innovation technologically and also through constant product mix optimization.
Thus, the competitive advantage of the company is based on various factors that is mentioned as follows (Booth 2014):
- Achievement and Status Representation: BMW is a premium car brand and therefore possessing BMW model considered not only as a sign of achievement but also a symbol of social status.
- Integration of effective features and design into each car model. The effective features and design includes sophisticated style, attractive aesthetics, rounded radiator grille and Hofmeister kink where the counter curve in the window outlines the base of rear roof pillar.
- Maintains Competitive Post Sales Service: The Company received an acclaim for out of the box after sales customer service.
However, research and development also plays a vital role in the sustenance of the competitive advantage of the company. Therefore, in 2015, the investments in research and development were raised by EUR 136 million. Nevertheless, it has to be noted that the competitive advantage of BMW might face challenges for sustenance in long run because competitive advantage sustainability is dependent on the ability of the company for introduction of innovative products, capabilities and features on a regular basis.
The Hilton Hotels believes in service differentiation to gain competitive advantage. Therefore the company tries to differentiate its service based on quality, maintenance of highest standards and also integrate with information technology (IT) in various aspects of service provision(Alon, Ni and Wang 2012). The company also believes in gaining competitive advantage by paying attention to their clients and thereby adopting the right way of treating them consistently.
The Hotels also believes in following digital hospitality that is considered as one of the main reasons for them to gain competitive advantage (Luck and Lancaster 2013). The digitization efforts of the company is applied to mobile services, booking channels, data driven and loyalty personalization, privacy and guest experience. In addition to this the effective integration of the digitalization points leads to creation of additional synergetic business impact. The Hilton hotels also have high performance benefits that combine access, power of scale, innovation and reputation.
The competitive strategy of the company also lies in the fact that the company believes in extensive expansion internationally. This strategy has enabled Hilton Hotels to add more than 100,000 rooms in its portfolio itself in the year 2015 including 14500 rooms to be converted from independent hotels and competitor brand.
However, the competitive strategy of expanding internationally and service differentiation has resulted in a debt accumulation of USD10.5 billion that included USD726 million non recourse debts by the end of the year 2015. Thus, in order to sustain its business strategy it is required by the company to make financial investments from time to time in spite of the volatility of the revenues that is caused by the cyclical and seasonal nature of the business(Xiao, Neil and Mattila, 2012). However, the company might find it quite challenging to sustain its competitive advantage in short term and long term perspectives since competitors can follow the same and eat on its market share. Corruption is another factor that tries to hamper business environment by increasing its cost. The corruption factor also threatens the consumers since the higher cost gets converted to higher price.
For better sustainability of the competitive advantage the company must allow its customers to put across queries and orders online (Verhoef and Lemon, 2013). The company should also diversify portfolio in order to avoid any risk that associates with higher real estate cost. These portfolios include risk free financial assets such as treasury bills. Thus, the company should use opportunities in wisely so that they do not become future threats for the company.
Target Market and Modes of Entry
Compaq has been one of the leaders in computer hardware industry during 1980s. The name remained synonymous with producing high quality and cutting edge products (Brondoni 2014). The premium pricing of the company’s product allowed most of its competitors to outspend on research and development so that the target market benefits from its products. The target industry of Compaq is the computer hardware market.
However, with the advancement of technology and marketplace, the company found it increasingly difficult to quote a premium price for its offered products. Moreover, the increasing computer literacy also made people aware that it was unnecessary to pay such high prices for the products offered in an era of hardware and software advances. Moreover, economic crisis also posed as a hindrance as most clients were looking out for ways to get products that were high end at pocket friendly prices (Rao 2017). The organizational culture of the company also posed as a hindrance due to lack of communication between various departments.
Nevertheless Compaq is a research and development driven company that has not only left behind its rivals but is also responsible for making state of the art computers for its customers (Constantinides, 2014). The company is considered a high quality producer of portable computers and desktops. However, for Compaq products, demand still remains greater than the supply of products
The offerings of Compaq are based on psychographic factors and geographic factors. The company mainly targets people who are mainly tech savvy like the executives and professionals. The company also makes the channel of customer engagement strong so that it can remain ahead of other companies (Chernev, 2015). The company also tries to create a strong customer connection and after sales service that differentiates the company from its competitors. The position of the company is based on price and positioning strategies of the user.
The company operates and undertake sale of its products in more than 170 countries thereby creating a global presence. The company not only provides worldwide services related to information technology and devices for computation with a support of a huge work force. Moreover, the company also provides a diverse portfolio for both the retail and enterprise customers that consist of not only computers but also printers. However, the software development, network, data analytics and information technology related infrastructure that company does for the enterprises also helps it to generate an enviable revenue compared to its competitors.
The company follows the Boston Consulting Group (BCG) matrix and operates in two business verticals one that is for customers and second that is for commercial purpose. The product categories of the company under these verticals include printing products and personal computing imaging technologies and enterprise solution. The personal computing receives a commendable score in the BCG matrix whereas the products for printing and imaging as well as the solutions for enterprises remain a question in the BCG matrix.
The distribution strategy of the Compaq is based on business modalities to have an effective global presence in increasing number of countries. The company also believes in brand equity but the after becoming one of the sub brands of Hewlett and Packard (HP) it has somewhat lost its individual identity of one of the largest manufacturers of personal computers. Therefore, the products of the company is under HP and therefore lost its essence
Nestle is synonymous with not only providing food and nutrition but also ensuring health and wellness. The company recently created Nestle Nutrition for strengthening its focus on the business of core nutrition provided by its products (Sethi, 2012). The company also believes in becoming one of the leaders in the market which they also treat as one of the primary elements of the corporate strategy. Nestle operates in a market where the primary motivation for the customers depends on the claims made on the nutritional aspect of a product.
Thus, the newly created Nestle Nutrition has been empowered with acting as an autonomous global unit that undertakes profit loss and operational responsibilities of claim based business like Health care Nutrition, Infant Nutrition and Performance Nutrition. The unit is also responsible for delivering high end business performance through science based and trusted services and products to its clients.
On the other hand, The Corporate Wellness Unit is designed for integrating nutritional value that is added in their beverage and food business (Babatunde and Adebisi, 2012). This needs driving the nutrition, wellness and health across all their food and beverage businesses of the company. Therefore, the unit helps in horizontal coordination, address current customer problems and also anticipate future trends of consumers.
Nestle is a global organization therefore their competitive focus remains in adopting an international strategy. The competitive strategies of the company are associated with foreign direct investment in other food and dairy business. The company also targets in balancing sales that has low risk in countries with low growth and high risk in markets that have potential high growth (Finster and Hernke 2014). The company also seeks to find out ways for profit in the high risk countries but does not take chances that involve risk factors just for the sake of growth. The process of hedging adopted by Nestle not only keeps its growth steady but also makes share holders happy.
However, while operating in developed market the company ensures growth and gain in economies of scale by the use of foreign direct investment in bigger companies. Thus, in the developing countries the company also strives to get a market share through manipulation of either processing technology for local conditions or ingredients.
Nestle also follows another strategy that has proved to be quite successful. This involves getting into a striking strategy partnership with one of the bigger and renowned corporate giants. Thus, the company entered in an alliance with Coca Cola in the year 1990 for capturing market for its ready to drink coffee and tea (Payaud 2014). This will not only help Nestle to benefit from Coca Cola’s bottling system but also gain expertise in preparing beverages. The company however considers the Americana and European food markets as competitive and flat therefore the company is in search for better and newer markets that will ensure better growth.
Nestle also have a comfortable debt equity ratio and stronger cash flow that allows it to undertake take over. The company therefore, acquired Indonesia’s largest noodle producer known as Indofood. The company did so with the focus of expanding the sales in market of Indonesia and will also ensure measures for exporting Indonesian food products.
The company also applies a wide range of strategies for Asia that includes production of different products in a particular country in order to ensure sufficient supply of the products manufactured.
The report ends by discussing the competitive strategy of Nestle in target market and modes of entry. Similar discussion is done for Compaq along with a critical evaluation, reason for the success and necessary arguments. Further, there is also discussion on the competitive strategy of BMW and Hilton Hotels in global branding. Here also there is critical evaluation done along with reasons for the success mentioned and necessary arguments.
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