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Question:

Use the Theory relating to Adaptation, Aggregation and Arbitrage to explain the success of Lenovo/Motorola in India.
 
 

Answer:

Introduction

Motorola is a well known mobile company in Indian as well as Chinese mobility market. The marketing strategies of the company are adaptation, aggregation and arbitrage. Company uses these strategies according to the requirement of the particular country’s market. Like for Indian market the company Motorola first adopted the Arbitrage strategy by which they identified the gap between different markets in which its product is on sale and the requirement of the new market in which they are going to enter. Then they adapted the adaptation theory by which they changed their product according to the requirement of the Indian market. To increase the market share the company has to understand their competitors marketing strategy as well as the market requirements. The company always has to update its product according to the market requirements. The main focus of the company should always be on making their product different from the competitors present in Indian market.

 

Adaptation, Aggregation, Arbitrage

Adaption, aggregation and arbitrage are a marketing strategy. It is also known as AAA frame work which offers three generic approaches[i] to global chain value (Bowden, Lane and Martin, 2001).

Adaptation involves adjusting parts of a company’s business model to be suitable for the markets and this is necessary for all virtual products. Adaptation approach may include focus, externalization, innovation design and variation. Variation involves making changes in products and services while focus involves contracting on particular stages of the value chain or market segment to reduce impact across regions (Zeng and Wu, 2012). Externalization involves accommodating local requirements, lowering cost or reducing risk by transferring responsibility. Redesigning of product could be done. Innovation of the product could be done to produce cheaper quality products and better quality products at the same price. To enter in Indian market the company redesigned it product and done innovation or changes in their product according to the demand of the Indian market. Before making changes in their product the company has to study their competitor’s strategy present in the market.

Aggregation involves creating economies of scale by creating products in mass quantities. Aggregation could be done on the basis of geography, culture and administration. Geographic implication may include focusing competitive interaction on a global or regional level. Example of cultural aggregation could be publishers publishing their bestselling books only in few languages assuming readers are willing to read a book in their second language or English (Zeng and Wu, 2012). In India company used aggregation theory also so that they can understand the demand of the product according to geography, culture of the region in which they are going to launch product.

 

Arbitrage involves exploitation of differences between markets instead of trying to adapt to them. Example of arbitrage would be to buy low in a market and sell high in another market. Arbitrage can of various types like geographic, cultural, administrative and economic. Example of economic arbitrage is outsourcing and off sourcing (Mueller, Mirea and Tassan-Got. L., 2004). Geographic arbitrage involves us doctors taking x rays during the day and send them to Indian doctors for interpretation overnight and so the report is available in the us the following day. Example of administrative arbitrage would be placing acquisition into holding companies in countries where there is lees tax to reduce tax liability.

The strategy which a company might use may depend upon the financial statement and globalization strategy. In spite of that most companies at different point of time have adopted all the strategies (Savitz and Weber, 2006).

Combination of all three strategies in Indian market can cause a company to widen its managerial ability. Combination of the three also causes a firm to be forced to operate with multiple corporate cultures and gives competitors opportunities to undercut the firm’s competitiveness. However the strategies have its disadvantage also. These strategies have inherent tensions between them making them hard to mix

 

Implementation of Adaptation, Aggregation and Arbitrage

Aggregation, adaptation, arbitrage are the strategies adopted by the company Motorola to create their value in global market. These are the competitive strategy by using which the company makes it product different from other competitors of it. These are also known as AAA strategy (Albrecht et al., n.d.).

Aggregation in simple words means collecting things of different group as a single group.  Motorola adopted this aggregation strategy to make its different product, similar by any particular quality under a single group. For example Motorola one of the products is cell phone so gathering all the cell phones similar by any quality in a single group so that the adoption of marketing strategy gets easier. By implementing aggregation strategy the Motorola make easier in adoption of the marketing strategy. Aggregation is adopted to assemble all the products of similar nature under a single group by which adopting the correct and proper strategy for the group will be easy. Aggregation is done taking into consideration the economy, culture, geographical requirements. The main factor for aggregation is the region in which the company is launching the product or the company has already the product (Watson, 2008).

Adaptation is the strategy in which the company Motorola adapts the new strategies for the group of the product or the single product to increase their market production. Adaptation is also done for improving the product quality as per the customers’ requirements. The Adaptation strategy help in increasing the market sales of the product as the product has to be improved by adopting the different strategies or the Motorola has adopt the new marketing strategy for distribution and etc. Adaptation is the strategy which helps in increasing the market share of the Motorola by adjusting its parts of business model with the local markets. Adaptation is the strategy which is necessary for all the products of the company. Adaptation strategy is adapted by Motorola so that they can make variation in there in existing or under developing product, whether in design. Adaptation is used for making innovations in the existing products by researching the requirements of the customers. Adaptation also means that the Motorola can externalize its product or product chain  (Paley, 2005).

Arbitrage is the strategy by which Motorola exploits the gap between the different markets in which its product is on sale. Arbitrage is the strategy by which the Motorola fill the gap between the market of low sales and high sales. Arbitrage is adopted by considering the economic, cultural, demand and many other factors of the area in which the product is launched or the product is on sale. Arbitrage is also known as the cross- border strategy (Hooley, Saunders and Piercy, 2004).

Arbitrages, Adaptation, Aggregation are the strategies which can never be used together as whenever combined it would increase the stretch of the managerial ability and the company has to use multiple corporate cultures. Motorola can use one or two strategies as per the requirement of the product and market (Chatterjee, 2002).

To return in Chinese mobility market the company adopted different strategies step by step like first they adopted the arbitrage theory so that the understand the reason of lacking behind in the market in comparison of other competitors. Once the company understands the reason then they used the adaptation theory so that they can redesign there product according to the Chinese market of mobility. To enter in Chinese market the company redesigned its hardware and software whichever is to be updated according to the current market requirements.

 

Conclusion

Motorola is one of the global communication leaders in mobility products, broadband and etc. The major products of Motorola are mobile phones, accessories, Bluetooth devices, portable energy and many others. There are three competitive strategies like aggregation, adaptation, and arbitrage. (Giachetti, 2013) The company Motorola can use any one or two strategies together, but if all three are used together it would be hard task for the manger to maintain it. Every strategy has its own advantage and disadvantage and the area on which they are focusing is also different so managing all three together will be a risk.

 

References

Albrecht, E., Schmidt, M., Mißler-Behr, M. and Spyra, S. (n.d.). Implementing adaptation strategies by legal, economic and planning instruments on climate change.

Chatterjee, S. (2002). Competitive strategy. Boston, Mass.: HBS Pub.

Giachetti, C. (2013). Competitive dynamics in the mobile phone industry. [Basingstoke]: Palgrave Macmillan.

Hooley, G., Saunders, J. and Piercy, N. (2004). Marketing strategy and competitive positioning. Harlow, England: Prentice Hall Financial Times.

Paley, N. (2005). The manager's guide to competitive marketing strategies. London: Thorogood.

Watson, J. (2008). Strategy. New York: W.W. Norton.

Farrant, B., & Zubrick, S. (2011). Early vocabulary development: The importance of joint attention and parent-child book reading. First Language32(3), 343-364. doi:10.1177/0142723711422626

HOFF, E., CORE, C., PLACE, S., RUMICHE, R., SEÑOR, M., & PARRA, M. (2011). Dual language exposure and early bilingual development. J. Child Lang.39(01), 1-27. doi:10.1017/s0305000910000759

Ploog, B., Scharf, A., Nelson, D., & Brooks, P. (2012). Use of Computer-Assisted Technologies (CAT) to Enhance Social, Communicative, and Language Development in Children with Autism Spectrum Disorders. J Autism Dev Disord43(2), 301-322. doi:10.1007/s10803-012-1571-3

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