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:
1. Tourism / hospitality industry
2. Food / Beverage industry
This research assignment is an investigative analysis into the market philosophy of AAA as promulgated by management experts. AAA encompasses adaptation, aggregation and arbitration factors which affect or impacts a firm’s performance in the dynamics of marketing. The respective business environment offers a diverse range of complexities and paraphernalia which is aligned to that of AAA model. It is a crucial factor in the light of marketing perspective; that organization are cognizant of a range of marketing ethos and perspectives which eventually influence the outlook of a firm by and large. The detailed discourse underlines the fact of firm’s operational perspective in separate business domains and how it affects overall performance.
The main objective of any global strategy is to manage efficiently the variations or differences that stem up in the international markets. In this report, a new framework named AAA model or adaptation, arbitration, and aggregation have been devised to decipher the nuances of adaptation, aggregation and arbitrage. Through the means of adaptation, organizations aim to improve the revenues and market share through maximization of local relevance. While aggregation attempts to deliver economies of scale by the creation of global, regional operations, arbitrage aims to exploit the disparities which exist in the national and regional market spectrums. Since most companies should draw from all the three A’s to a large extent, the same framework may be utilized for the development of scorecard of summary which would indicate as to how the companies are functioning in the global parlance (Azar and Drogendijk 2016). As a matter of fact, in keeping with the given case, strategic choice calls for a substantial degree of prioritization, which the framework may be of immense assistance as well. Though it is possible to make progress on various strategies, organizations usually focus on specific ones to build competitive advantage in the market place. The following account explains the implementation of models of adaptation, aggregation and arbitrage thereby defining how firms may utilize the theory for the attainment of organizational objectives and goals (Fraj et al. 2015).
AAA global strategy framework has been promulgated by Ghemawat, which approaches for three generic approaches aiming for global value creation. Adaptation strategies seek for increasing revenues and market share if the organization by tailoring more than one component of a business model which fits the bill as far as local preference and requirements are concerned. Aggregation refers to the achievement of economies of scale or scope by the creation of global and local efficiencies which further involves in the standardization of significant portion of value creation and grouping of production and development processes. Finally, arbitrage is construed as a tool or medium for exploitation of economic and other divergences which exists in national and regional markets typically by locating separate parts of the supply chain in various places (Kaján and Saarinen 2013).
The tourism/ hospitality industry is being recognized as a sensitive domain which entails over both supplies in the form of tourism operators, and demand related stakeholders in tourists which directly impact an array of concerns that has direct bearings to tourism. The domain entails over rather complex elements and echelons which make it tough for firms like Overseas Adventure Travel and Kensington Tours to operate globally as well within the domestic market. OAT aims to be a world leader in the tourism industry by providing impactful and intercultural experiences to the consumers. The firms are to a great extent dependent on the macroeconomic cycles of the industry in keeping with customer trends (Bova 2015). Here, it is important to learn that parallel sectors also exert an important role regarding performance of the tourism industry. The product innovation, development as well as seasonality of demand are important factor impacts the industry in a differing ways. To adjust with the changes the hotel industries initiates different tactics. OAT envisages providing an environment which involves open and courageous communications, quality and change, subscribing to a latest form of tourism and acceptance of global standards in the industry (Manzardo et al. 2016). Kensington Tours tailor-made schemes are crafted to adapt to the emerging changes in the market and deliver an unparalleled personalized experience to the consumers. Both the firms involves in the integrated business model, partnership and flexibility as the adaptation strategy to meet the demands of the industry (Comas Martí and Seifert 2013).
The food and beverage industry in Australia is experiencing different paraphernalia of varied proportions. The market conditions and complexities attribute to the functioning of the entities operating in the specified industry. Coca-Cola Amatil aims to initiate strategies regarding packaging and offering health conscious products in keeping with changing trends as far as customer centricity is concerned (Jopp et al. 2013). The company has launched Coke Life in Australia, which is a version of Coca-Cola bearing fewer calories and natural in flavor. The top management is expecting to rake up company profits over 100 million AUD regarding cost saving measure which will continue for over next few years. Having said that, the firm is hoping to make inroads in to the market of New Zealand and other territories of the Australasia region which in turn will boost the sales of the firm in near future (Chopra et al. 2016).
The Beer market in Australia is on a growth slide. However, in the light of globalization and economic slowdown, consumers are altering their lifestyles including drinking habits. Hence, the firm is aiming to target groups by the introduction of Carlton light which would boost the firm’s chances in the entire market (Lim-Camacho et al. 2016). This particular product has concentrated on the segments wherein the prospective consumers include women, corporate executives, and youngsters. The firm is striving to expand itself by the acquisition of New South Wales Company thereby assuming the role of being a market share. Furthermore, it had acquired more than five entities across Australia by being number one producer of beer regarding volume in the region (Pröbstl-Haider and Haider 2013).
Implementation of adaptation strategy in Tourism Industry
At the outset, aggregation technique is associated with overcoming differences by implementing cross-border means. The objective of such technique is to evaluate and exploit similarities for the creation of economies of scale (Porter and Ronit 2015). The Australian tourism industry is dependent on aggregation strategy in the existing business environment. Australia’s tourism industry in fragmented of small and medium scale organizations which fulfills In the existing context, Overseas Adventure Travel is focusing on engaging in operations by introduction of package touring schemes along the suburban islands of Australia which include exotic destinations in Mackay, Queensland, Great Barrier Reef, Magnetic Island to name a few (Radlo 2016).
As far as, Kensington Tours is concerned, it aims to introduce cost effective tourism packages in low scale in neighboring areas of Ayers Rock, Cairns, Sydney and Auckland, Rotorua in New Zealand for fortnight thereby generating revenue worth 4941 AUD. This should help the corporation to spawn profit regardless of the differences of country preferences. Furthermore, OAT Company uses global and corporate branding in its services. These strategies enable them for the creation of necessary economies of scale (Schlegelmilch 2016).
The designing products are greatly regionalized in the different geographic boundaries according to their demand. The segregation of the design largely depends on the cultural as well as economic aspects of the respective regions. Furthermore, the company deals with the regulatory requirements of several countries to gain the competitive advantage in their surrounding locations. This is a prime example of the aggregation strategy of the hospitality industry (Sharp et al. 2013).
The beverage industry is largely dependent on aggregation strategy of the environment. The Coca-Cola Amt company in Australia needs to execute the strategies which will reap the benefits in the long run. The firm is contemplating to join hands with Coca-Cola Company for the development of carbonated products through advancement. It is aiming to tap the internal market by introducing items and solutions which fit the bill for regional consumers. However, the same cannot be applied to other regions outside Australia. The firm envisages providing consumer diversification and real competitive advantage (Surminski 2013).
Fosters being a major entity of Australia caters to a large number of consumers of varying age and economic background. The firm aims to target market within a specific territory of Australia wherein it should strive to cater to regional consumers through the range of beverages on offer. However, it is to be noted that all the marketing economies and ploys, the likes of advertisement strategies and marketing tools are aimed to fulfill the organization’s goals in a specified market target. The same would differ with alteration of target market thereby creating basic economies of scope and scale.
Implementation of adaptation strategy in Beverage Industry
The hospitality or tourism industry has a reliance on the arbitrary strategies that are prevalent in the tourism or hospitality industry. Hence, the entire success of the firm is dependent on arbitrage strategies. In the given context, Overseas Adventure Travel efficiently would aim to exploit the market by providing services at an exorbitant price to high net worth clients thereby generating substantial revenue in the organization (Caiazza and Ferrara 2016).
Similarly, Kensington Tours aspires to manipulate the shortcomings of the regional players and offer its premium service to the premier consumers thereby generating funds for the organization. The firm would tap the most exotic and popular destinations of the region and would design the tourism plans and schemes based on popular culture which would be appealing for the consumers’ by and large. This ploy would empower the firm with the competitive advantage which will see the organization in good stead in future (Rothlin and McCann 2016).
The food and beverage industry are on the verge of globalization which entails over a range of factors. Coca-Cola Amatil aims to introduce high quality products and items in the market target where other regional as well global players are not that effective. Products like Diet Coke, Powerade, and Pump intend to make inroads in the areas and regions where there is a lack of opportunity and business prospects of other firms are bleak. The firm is focused to leverage differences in cost of capital and labor. It seeks to exploit the cultural aspects of Australia by introducing cost effective products and items which not only would be enticing for the consumers but also viable health wise.
The total alcohol market in Australia is estimated around 20 billion, which is made up of beer which amounts to around 10 billion USD, wine at 4 billion USD and spirits that of USD 3 billion (Snyman 2015). For firms like Foster, this is an ample opportunity to rake up the numbers as far as marketing are concerned. Fosters aspires to utilize the shortcomings of other beverages entities by selection of market target and manipulate the areas or regions which is devoid of the market of beers and alcoholic beverages. As a matter of fact, the firm intends to pitch its products and items to geographical locations where demand for other brands is diminutive in nature. In other words, it plans to make its presence felt in the realms where no entity of the same environment has been able to gain an advantage.
Elements of discussion
Tourism Industry (Overseas Adventure Travel and Kensington Tours)
Beverage Industry (Coca-Cola Amatil and Fosters Group)
OAT or Overseas Adventure Travel looks to invest in areas of the business for regaining and accomplishment of core business competence.
Kensington Tours aims to offer its clients and consumer premier and luxurious services (Snyman 2015).
Coca-Cola Amatil group is focused to instigate strategies concerning packaging and offering of health conscious products in keeping with changing trends as far as customer centricity is concerned. The firm is hoping to make inroads in to the market of New Zealand and other territories of the Australasia region which in turn will boost the sales of the firm in near future (Caiazza and Ferrara 2016).
Overseas Adventure Travel, as well as Kensington Tours organizations, aim to exploit the regional aspect of the state regarding geographical, administrative and economical perspective.
Coca-Cola Amt strives for the development of carbonated products. The firm envisages providing consumer diversification and real competitive advantage (Fraj et al. 2015).
Fosters Group aspires to ploy various means of strategies and marketing tools that are aimed for the fulfillment of the organization’s goals in a specified market target. The same would differ with alteration of target market thereby creating basic economies of scope and scale.
Both OAT and Kensington Tours aim to take advantage of market variations regarding cultural, economic, and administrative perspectives.
Coca-Cola Amatil pursues its operations by manipulating the market target which is devoid of regional players.
On the other hand, Fosters aspires to utilize the shortcomings of other entities by selection of market target and manipulate the areas or regions which are devoid of the market of beers and alcoholic beverages (Surminski 2013).
Implementation of aggregation strategy in Tourism Industry
The above discourse carefully analyses the key marketing aspects of triple-A model or AAA in the context of tourism and beverage industries. It is clear from the analysis above that both food and beverage along with tourism industry are on the verge of acceptance of globalization and with the emergence of various elements in is rather complex for the entities to pursue a business interest in the respective domains. The aspiration of both OAT and Kensington Tours is the accomplishment of core business competence on a regional parlance. The fact of the matter is, both the entities rely on innovative practices for customer acquisition and centricity. On the other hand, the beverage industry is mainly dependent on offering its client base with cost-effective items and service and also penetration of new market realms less utilized by the players. The tourism industry is fragmented in different segments which delve in offering services to targeted markets based on the regional efficacies. The beverage domain exploits the differences for establishing its competitive advantage. In fine, it may be deduced that both then industries in consideration look to consolidate its stake and position thereby thriving on the path of growth, profitability, and development.
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