In the recent time, it is becoming more important for the business organizations to determine the intensity of the competitiveness of the industry apart from just identifying the close substitutes. This is due to the reason intensity of competitiveness will have impacts on the potentiality of the organizations (Singh et al., 2014). In this case, six forces model of Porter are being used for determination of the industry competitiveness. However, it should also be noted that this model is having its advantages and disadvantages. In this paper, the major merits and demerits of using six forces model will be discussed.
Advantages of six forces model
One of the major advantages of this model is its simplicity. This is due to the reason that the six dimensions being discussed in this model are based on generalized assumptions. Thus, the business organizations will not face any difficulties in using this modal and can use this in different situational scenarios (E. Dobbs, 2014). Another major advantage of this model is coverage of all the major elements from suppliers to consumers. Thus the entire supply chain is being covered, which is further helping the business organizations in having the understanding about the competitiveness of different business aspects.
Disadvantages of six forces model
However, on the other hand, there are number of disadvantages also being identified. One of the major disadvantages is less alignment with the changing external forces. It is identified that industrial environment can get changed at any point of time but this model has not considered changing environmental factors. Another major disadvantage is the limitation of the model for the small enterprises. This is due to the reason that small enterprises will not all the relevant factors discussed in this model. The effectiveness and utility of the six forces will be identified if it is applied in a real world organization.
Six forces model of Walmart
· Competitive rivalry in the retail industry is high with the present of good number of competitors.
· Industry growth is slow as retail market is already becoming stagnant (Dan et al., 2013).
· Cost leadership plays an important role in attracting new customers over other competitors.
· Threat of new entrants for Walmart is low.
· It is difficult for the new entrants to match the brand value of Walmart.
· New entrants will also not gain the economies of scale as Walmart.
· Thus, there are number of barriers present for the new entrants.
· Bargaining power of the buyers is high for Walmart.
· There are number of competitors already operating in the market and thus the customers are having more options.
· Switching cost is also low for the customers.
· Thus, the market determined price is being followed by majority of the retailers.
· Bargaining power of the suppliers is low due to the presence of large number of suppliers in the industry.
· These suppliers are not having the brand identity of Walmart. Thus, they are more depended on the end retailers.
· However, the pricing of the suppliers will affect the end pricing of Walmart and this will determine the flow of the customers.
· Threat of substitutes is more for Walmart due to the similar offerings by their competitors.
· Almost all the retailers are reselling the same manufactured products to the customers.
· Thus, the differentiation is less among the competitors.
· Number of consumer goods of Walmart is depended on the complementary products.
· Thus, the level of impact of complementary product is high for Walmart.
· Availability of the finance with the customers will determine the extent of potentiality for Walmart.
Thus it can be concluded that six forced model is one of most effective tools for determination of the industry level competitiveness. In this paper, different merits and demerits of the six forces model are being discussed. The model is also being applied on Walmart to identify the key utilities. It is identified that Walmart is having several high and low level of impact of competitive forces being faced in their global business organizations. In accordance to these impacts, they can initiate new business strategies in the long term.
Dan, Z., Yu, X., Yin, J., Bai, Y., Song, D., & Duan, N. (2013). An analysis of the original driving forces behind the promotion of compulsory cleaner production assessment in key enterprises of China. Journal of cleaner production, 46, 8-14.
- Dobbs, M. (2014). Guidelines for applying Porter's five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), 32-45.
Singh, S., Köpke, U. G., Howard, C. Q., & Petersen, D. (2014). Analyses of contact forces and vibration response for a defective rolling element bearing using an explicit dynamics finite element model. Journal of Sound and Vibration, 333(21), 5356-5377.
Core competencies of an organization are mainly based on the effective combination of the skills and resources which are required in order to distinguish their operations from others operating in the same industry. Three major criteria are fulfilled with the help of core competencies which include, access to a variety of markets, significant levels of contribution which are provided to customer benefits based on end products. Core competencies are thereby based on the production based techniques and the skills which are a part of the organizational operations. The access which an organization has in different markets or areas is considered to be a major core competency (Bryson, 2018).
Discussion based on core competencies
Advantages of core competencies
The major advantages of core competencies are based on the features or qualities which are inherited by an organization and it is provided with specialized levels of expertise which are not available for the competitors. The core competencies are also considered to be a major part of the competitive advantage which is developed by an organization within the industry of operations. The core competencies are thereby able to provide the organization with an effective position in the industry. The modern organizations are able to develop the products and services with the help of proper core competencies which have been gained in terms of its effective operations in the industry (Bustinza et al., 2015).
Disadvantages of core competencies
The core competencies which have been developed by an organization in the industry are however not always unique and can be imitated easily by the competitors sometimes. The levels of misidentification are considered to be a major drawback which has been provided by the core competencies. The unsustainability is also a major disadvantage of the organizational operations in different industries. The core competencies are not effective for a long term in the industry and can fail to develop a different position of the organization as well (Espinoza & Ukleja, 2016).
Core competency analysis of Google
The major core competency which has been developed by Google in the industry is considered to be the powerful levels of algorithms which are based on providing effective information to the users. The core competencies are mainly used by Google in order to develop effective products and services that are offered to the customers. Core competencies of Google have improved over the period of time. The organization has further developed new core competencies with the aim to operate effectively in the industry. The strong core products which have been developed by Google Inc. are based on the different core competencies (Rosemann & vom Brocke, 2015).
The effective survival of Google is considered to be based on the core competencies which have been developed by the organization. The quality of core products has been improved by Google by using the core competencies in different organizational activities. The core competencies of Google have been mapped with the strategy and core products of the organization. However, some of the core competencies of the organization have not been able to provide effective levels of sustainability to Google in the technology based industry. The competitive advantages which have been developed by the organization are based on the core competencies which have not been retained by Google (Espinoza & Ukleja, 2016).
The analysis can be concluded by stating that the core competencies play a major role in the effective operations of the organizations. The development of core products of modern organizations is considered to be a major part of the effectiveness of the operations. The organization which has been considered as an example, namely, Google has been able to use the core competencies effectively in order to operate profitably in the industry. The core competencies have played a key role in the development of various products and services of the organization. However, the core competencies have failed to show high levels of sustainability which is provided to the operations of Google.
Bryson, J. M. (2018). Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. John Wiley & Sons.
Bustinza, O. F., Bigdeli, A. Z., Baines, T., & Elliot, C. (2015). Servitization and competitive advantage: the importance of organizational structure and value chain position. Research-Technology Management, 58(5), 53-60.
Espinoza, C., & Ukleja, M. (2016). Managing the Millennials: Discover the core competencies for managing today's workforce. John Wiley & Sons.
Rosemann, M., & vom Brocke, J. (2015). The six core elements of business process management. In Handbook on business process management 1 (pp. 105-122). Springer, Berlin, Heidelberg.
Business strategy is always considered to be the road map which helps an organization to attain the place where it seeks to reach. Any typical strategy of a firm covers a plan for the next two to five years. It depicts how to attain the organizational goal and whether the goal is doubling the sales or is decreasing it or simply keeping it the same (De Clercq & Zhou, 2014). It is the strategic posture of the business that helps in choosing and shaping the organizational strategies. This report is going to elaborate on examiningthe notion that “Strategic Posture is a valuable tool for making strategy in hard to predict environments”.
Discussion based on the strategic posture of organizations
Montiel Campos, Haces Atondo & Ruiseñor Quintero (2014) have defined Strategic posture as “a consistent pattern or combination of managerial controllable or decision components are presenting scope, resource deployment and competitive advantages; and the direction in which these components are shifting overtime, which characterize the way businesses tend to compete”. The strategic posture of the organization is considered to be an important tool which is used by the leaders in order to apply the strengths of the business and fulfill the long term based needs. Formulation of Strategic posture is one of the significant parts of the process of strategic planning of an organization when the company managers collaboratively develop the goals, the strategies and a specific vision for the business in the near future.
The nature of strategic posture needs to be analyzed effectively by the organizations and also lead them in a proper manner (Etemad, 2015). The strategy which is implemented by the organizations is considered to be a road map which is able to provide an effective direction to the operations. The strategic posture of the business is thereby helpful in providing opportunities to shape the strategies and prepare the future operations as well. This process is considered to be helpful for the future operations and development of leadership based position in the industry. The changes which take place in the industry are considered by the strategic postures that are developed by the organizations (Madison, Runyan & Swinney, 2014). The strategic posture is developed by the organizations with the help of proper analysis of the market and development of best posture as well. The opportunities which are provided by the industry are considered by the modern organizations in order to form the strategic posture. It is also to mention that recognition of the nature of the organizational strategic posture, one could lead the company more strategically and effectively.
The strategic posture which has been formed by Apple is considered to be an effective tool for its operations in the technology based industry. The organization has been able to provide high levels of commitment towards the personal computing based experiences and the musical experiences which are offered to customers. The highly profitable performance which has been shown by Apple has been provided with effective back-up by the strategic posture of the organization. The organization thereby has a unique ability of designing and developing the software and hardware. The strategic posture of Apple is based on levels of operations and position which has been developed by the organization in the technology industry. The proper integration of new technology by the organization is considered to be a major part of the strategic posture of Apple. The environment or industry in which Apple operates is highly unpredictable in nature and the strategic posture is an important factor which is helpful for the organization.
Hence, from the above analysis it is to conclude that Strategic posture is truly a very important tool that helps in making the strategy in hard for predicting the business environment for a firm. It has the potential to provide a company with significant means of attaining competitive edge over its competitors by achieving superior performance in the business market.
De Clercq, D., & Zhou, L. (2014). Entrepreneurial strategic posture and performance in foreign markets: the critical role of international learning effort. Journal of international Marketing, 22(2), 47-67.
Etemad, H. (2015). Entrepreneurial orientation-performance relationship in the international context. Journal of International Entrepreneurship, 13(1), 1-6.
Madison, K., Runyan, R. C., & Swinney, J. L. (2014). Strategic posture and performance: Revealing differences between family and nonfamily firms. Journal of Family Business Strategy, 5(3), 239-251.
Montiel Campos, H., Haces Atondo, G., & Ruiseñor Quintero, M. (2014). Towards a theory for strategic posture in new technology based firms. Journal of technology management & innovation, 9(2), 77-85.
Shared value has always been considered to be an important component for most of the public and private organizations (Bryson, 2018). Creation and implementation of it in every organizations is very) important. It provides a guidance for the decision making process of organization. However, this report is going to elaborate on defining what is shared value and how it helps the companies in making strategy in a sustainable and societally beneficial manner.
As per Annderson (2016), shared values refers to the organizational values that are basically developed by the leadership of the organization and then, is adopted by the other members of the organization. These values are being shared among all the members and are thereafter followed by them while acting on the behalf of the company. They are also known as core values. The mutual dependence of society and corporations suggests that both the social practices and the business decisions need to follow the organizational shared value.
It is to note that Shared Value is not only a social responsibility or sustainability, but it is also a new way of achieving economic success for the parts of the companies (Schlesinger, Cervera & Perez-Cabanero, 2017). It is a management strategy by means of which firms find the business opportunities in the social problems. While the Corporate Social Responsibility and the philanthropy efforts focus on minimizing the harmful effects that the business have laid on the society, the shared values lay emphasis on increasing the competitive edge for solving the social issues among the new markets and customers. There are several firms who are building or rebuilding the business models that are revolving around the social good. They sets them different from that of the competition and at the same time, augment their organizational success. One of the best example of company to consider in this context is that of Nestle.
Nestle is regarded to be one of the shared value pioneers who is leading the way in the development of the concept from the earliest stages along with a conviction which says that the firm could do the business in different ways which deliver long term benefit society and shareholder value. It is an approach that starts with the understanding that in order to ensure long term prosperity of the business, it is very important to ensure that the communities that the business is serving is also prospering (Harris, James & Harris, 2018). Being the leading nutrition, wellness and health brand in the world, Nestle is positioned for creating shared value in three different areas and they are nutrition, rural development and water. The company is providing nutritious and healthy products which deliver actual health benefits to the customers. It is also making its products affordable and easily accessible by means of engaging into partnerships and innovation. Moreover, Nestle is also advocating for protection scarce water resources and by making use of the water more effectively in the sourcing and manufacturing processes in different ways which could benefit the others within the supply chain. Furthermore, it is also to note that Nestle is supporting the development of the farmers in the rural areas and securing continuous access of the quality inputs. It is also helping them in strengthening their customer base as well.
Hence, from the above analysis it is to state that Shared Value is very crucial for any company to consider in its business operation. For the parts of Nestle, the shared values are built on its commitment to sustainability and compliance and these both are very important process for mitigating the risks to their business. It is also to mention that creation of the shared value is all about ensuring commercial success and competitiveness in long term ways. Also, the companies who are starting their business journey or are at their initial stage of business and the ones who have been creating the shared values for long years need different support and resources.
Anderson, D. L. (2016). Organization development: The process of leading organizational change. Sage Publications.
Bryson, J. M. (2018). Strategic planning for public and nonprofit organizations: A guide to strengthening and sustaining organizational achievement. John Wiley & Sons.
Harris, K. D., James, H. S., & Harris, A. (2017). Cooperating to compete: Turning toward a community of practice. Journal of Business Strategy, 38(4), 30-37.
Schlesinger, W., Cervera, A., & Pérez-Cabañero, C. (2017). Sticking with your university: the importance of satisfaction, trust, image, and shared values. Studies in Higher Education, 42(12), 2178-2194.
Innovation has always considered to be the key of creating, maintaining and improving economic and organization competitiveness. It is also a very important of aspect for securing the sustainability growth of the organizations. According Tortoriello (2015), “Innovation is driven by the ability to see connections, to spot opportunities and to take advantage of them”. There are several companies that face a rapidly changing technology and external environments. These changes have pushed the economic growth of the organizations. However, for change to result in organizational success, innovation is very essential to take into consideration. This report shall elaborate on comparing and contrasting different types of strategic innovation of different companies.
Innovation is often regarded to be the most important component in a sustainable competitive advantage of a firm. As stated by Bocken et al. (2014), the only sustainable competitive advantage is the potential of a company of creating new source of competitive advantage and this could only be done by means of innovation. Strategic innovation refers to the process by means of which an organization reinvent and redesign its corporate strategy for driving the growth of the business as well as for generating value for the firm and its potential customers. The innovation strategies could be classified into active, proactive, passive and reactive.
Active- The active innovation strategies defends the prevailing markets and technologies while being prepared for responding fast once the technologies and the markets are proven (Nagle & Muller, 2017). Dell is one among them to use the active innovation strategy. It have a broad sources of knowledge and at the same time, have medium to low exposure to risk. It tends to hedge its bets as well. It mainly uses incremental innovation along with in-house applied R&D.
Proactive- The firms that use proactive innovation strategies have the tendency to be highly research orientation. With the same, they also tend to be a technology market leader. Some of the best example to mention in this context is that of Singapore Airlines and Apple. They have accessed the knowledge from a large range of different sources and have taken high risks to prosper in the business market. They have used radical and incremental technological innovation strategies in their business and these have led to their advanced and improved service and product performance. With the same, it is also to mention that Apple is regarded to be synonymous with the strategic innovation. It has even topped the list of Fortune America’s Most Admired Companies in the year 2008 (Landry, Bernadi & Bosco, 2016).
Passive- it is the innovation strategy that is used by the automobile companies. In this strategy they wait for the demands made by the customers in order to modify or manufacture their new products. By means of this they get a clear idea about what their customers are seeking from them. They ten changes their product specification before their implementation or launch into the market.
Reactive- This strategy is mainly used by the companies that are followers and have high focus on their business operations. One of the examples is that of Ryanair, one of the notable budget airline companies that have successfully copied no-frills service model from the SouthWest Airlines (Francis, 2017). This company has used the wait-to-see approach and looked forward for low-risk opportunities.
All the companies that are mentioned above are highly successful in their business operations and all of them approaches the R&D in diverse way. Innovation is very important in strategy planning. It encompasses the ideas which are very new to the world as well as to the industry. It is also to note that innovation could be the key for prevention of strategic drift for a company and it is very crucial aspect for securing the sustainability growth of the organisations. Successful implementation of new ideas is what make the companies succeed in their respective business fields.
Bocken, N. M., Short, S. W., Rana, P., & Evans, S. (2014). A literature and practice review to develop sustainable business model archetypes. Journal of cleaner production, 65, 42-56.
Francis, G. (2017). A spatial and temporal comparative study Graham Francis", Ian Humphreys", Stephen Ison*, Michelle Aicken. Low Cost Carriers: Emergence, Expansion and Evolution, 113.
Landry, E. E., Bernardi, R. A., & Bosco, S. M. (2016). Recognition for sustained corporate social responsibility: Female directors make a difference. Corporate Social Responsibility and Environmental Management, 23(1), 27-36.
Nagle, T. T., & Müller, G. (2017). The strategy and tactics of pricing: A guide to growing more profitably. Routledge.
Tortoriello, M. (2015). The social underpinnings of absorptive capacity: The moderating effects of structural holes on innovation generation based on external knowledge. Strategic Management Journal, 36(4), 586-597.
The competitive advantage which is developed by an organization is based on the ways by which it is able to operate in the industry. The levels of competitive advantage are considered to be important for the effective operations of the organization in its industry. The business organization is thereby able to outperform the competitors with the help of competitive advantage which is developed with the help of products and services. The different types of competitive advantages which have been developed by the organizations are related to the access which they have to the natural resources and low costs of operations as well (Albrecht et al., 2015).
The two generic strategies which are used by the organizations in order to develop competitive advantage mainly include, cost leadership strategy and differentiation strategy. Cost leadership is based on the low cost based operations and products that are offered by the organizations. On the other hand, differentiation based strategy are based on the ways by which the organizations offer high quality products in order differentiate themselves from others (Lee et al., 2016).
Discussion based on the use of competitive advantage
Cost leadership strategy is based on the ways by which the organization is able to develop a competitive advantage in the industry with the help of low cost based operations in the industry. The cost leadership based activities of an organization are thereby based on the scale, size, scope and efficiency levels in the industry. The organizations thereby aim at developing a position in the industry with the help of products that are offered to them at low costs. The low cost based products are however sometimes considered to be of low quality by the customers (Rothaermel, 2016).
A broad differentiation strategy is implemented by an organization in order to develop a major position in the industry. The products which are developed by organizations following the broad differentiation strategy are able to offer different attributes which are required by the customers and are viewed as superior to the other organizations. The organizations in an industry is able to appeal to a huge number of customers or shoppers need to implement effective strategies based on broad differentiation in order to operate profitably and maintain their positions as well (Eldor, 2018).
Walmart had implemented the cost leadership based strategy first in order to develop an effective customer base in the retail industry. The customers have been attracted towards the organization with the help of discounted or low-cost based products. The revenues and profitability of the organization has also increased with the help of discounted products which are offered to the customers all over the world. The organization has gained the topmost position in the retail industry worldwide with the help of its revenues (Lee et al., 2016).
On the other hand, Walmart had to later improve the quality of products in order to maintain the effective operations and the customer base as well. The quality of the products has been able to play a key role in the ways by which Walmart has operated in the industry. The modern organizations can implement cost leadership based strategy initially in order to operate effectively in the industry. However, the development of broad differentiation is highly important for the purpose of increasing the levels of operations and maintaining the customer base as well (Albrecht et al., 2015).
The analysis can be concluded by stating that the modern organizations need to implement differentiation based strategies in order to operate successfully in the industry. The cost leadership strategy can be initially helpful in providing the organizations with an effective position in the industry. However, the implementation of differentiation is considered to be an effective method which is helpful in creating the position in the industry. The maintenance of competitive advantage is thereby possible with the help of proper maintenance of an effective differentiation in the industry.
Albrecht, S. L., Bakker, A. B., Gruman, J. A., Macey, W. H., & Saks, A. M. (2015). Employee engagement, human resource management practices and competitive advantage: An integrated approach. Journal of Organizational Effectiveness: People and Performance, 2(1), 7-35.
Eldor, L. (2018, July). How Collective Engagement Creates Competitive Advantage for Organizations. In Academy of Management Proceedings (Vol. 2018, No. 1, p. 10764). Briarcliff Manor, NY 10510: Academy of Management.
Lee, V. H., Foo, A. T. L., Leong, L. Y., & Ooi, K. B. (2016). Can competitive advantage be achieved through knowledge management? A case study on SMEs. Expert Systems with Applications, 65, 136-151.
Rothaermel, F. T. (2016). Competitive advantage in technology intensive industries. In Technological innovation: Generating economic results (pp. 233-256). Emerald Group Publishing Limited.