PGBM135 – Global Strategy and Foresight Assignment Sample
Module code and Title: PGBM135 – Global Strategy and Foresight Assignment Sample
Introduction
competitive advantage refers to a factor that allows a management to produce goods and services at a better price that may be in the form of cheaper means than of other businesses in the existing market. These factors can help the management in terms of generating more sales compared to their other competitions in the market.
A competitive advantage involves a variety of factors like the branding, structure, quality of the product, their distribution network, customer services etc. Thus, it can be understood that competitive advantage is a particular company’s ability to produce a product in the most skilled and efficient manner so as to make profits by a greater margins than its rival companies. It helps a management to generate higher value for themselves as well as the shareholders (Anning-Dorson,2019).
Evaluation
While the competitive advantage allows the company to differentiate themselves from various other competitions in the market it is quite difficult to reproduce thus identification of competitive advantages is needed in the strategic planning of a company. They are extremely necessary so that they make products in a solid manner and for this they may require and invest in a lot of time and money. By doing so, they will be able to achieve what they imagined and get things in the same way. During the identification of competitive advantage process it is necessary to give more attention and focus on the following-
- Technologies: As the use of technology keeps changing in this competitive world, it is necessary that the management use technologies based on customer relation to improve relationship between a buyer and the seller. One example is the Lufa farms where they have exceptional technologies to manage customer relation in taking the order from the customer as well as management.
- Brand awareness: Brand awareness is another important factor during the competitive advantage process as it can help the company to give an edge in the branding process. For instance IKEA has always been able to distinguish themselves from other same type of business in terms of their concept, design and shape. There were also other companies trying to copy the same but failed because IKEA has already made a name for itself in the market and due to their popularity it becomes hard to catch up.
- Customer services: A Customer service plays a massive role in the competitive advantage process because of the fact that customer services are fully supported by efficient technologies. It is vital for any company’s success as it ensures the intercommunication between the customer and business and also builds positive thoughts on the specific brand. Providing high grade customer services can help the management to gain loyal consumers and by doing that they can make an impact in the market. Therefore, to maintain a name in the market, the company must have a customer service team where they perform to give full services and also being respected by the customers (Haseeb2019).
Following sections focuses on the theories of competitive advantages:
- The SCP framework: In the structured Conduct Performance framework, it states that an organization’s act is determined by the external forces in the industry. This theory argues that the structure of an organization will determine the conduct which in turn will determine the organization’s performance. It includes the market structure relating to the concentration, differentiation, barriers of exit and entry and diversification and the conduct relating to the strategies, goals, practices, research, innovation, advertisements initiated by the organization as well as performance in terms of output growth, sales, profitability, employment, efficiency etc.
The structure of an industry is key parameter for formulation of strategy as not all strategies can be appropriate for all types of industries. In some cases even the successful strategies can fail if applied in different environment. When the manager of a specific organization applies this theory, it may respond to the external forces. Therefore it can be understood how strategies change the settings of an environment by shaping it to the needs of the particular industry.
- Five forces and generic strategies: According to his approach there are two factors that determine the choices of competitive strategies such as industry attractiveness and the factors that determine it and the determinants of competition within an industry. While analyzing the industry attractiveness, porter developed five forces model where it states that any industry competition is influenced by five forces such as entry of new competitions, the substitutes, bargaining by buyers, bargaining by suppliers and rivalry among the competitors. The five forces model has helped the organization to analyze the current situation in an organization but it also has its limitations to it. Porter model assumes that a perfect market is a static market which is unlikely to be found in the present day market. In addition to it, there are also various industries that are complex with inter- relationships that are difficult to analyze by using the five theories given by porter. On the contrary to porter’s model, Penrose (1959) and others have emphasized more importance on primary source of competitive advantages.
Porter also introduced three generic competitive strategies to achieve good performance by an organization-
- Cost leadership where the organization tries to become the operator of an industry. There are certain risks that are associated with this such as technological changes and margins falling when costs rise etc (Jones2018).
- Differentiation where an organization seeks to be different from other industries by providing high quality products, more function and specification. If an organization is able to achieve success then they are rewarded for their uniqueness but there are also risk involved in this strategy such as consumers choosing products that are relatively cheaper or consumers choosing a product that have already marked a benchmark in the market.
- Focusing on the scope in an organization to achieve optimization. While a company may focus on low cost they may achieve maximum target customers but there are also risk involved related to it such as target segment becoming unattractive or barriers that gives the competitors advantage as they dominate the market (Abdel-Baset,2019)
Organization that usually tends to change strategies may fail. They are in a disadvantage situation and they do not have the competitive advantage therefore it may be suggested to only focus on a better planning and stay relevant to one. Though porter’s framework has been in the industry for more than twenty years it is argued that it has no creative thoughts in the sense that the strategies implemented do not think outside the box which relatively leads to minimizing of strategic thoughts.
- Resource based view: The resource based view model assumes that resources of the strategic management can be heterogeneous and these resources includes all the assets, processes, attributes, information, knowledge, capabilities etc which are monitored by the organization that helps in implementation of strategies that improves efficiency. There are four attributes in the resource based view model-
- It must exploit opportunities and neutralize threats.
- It must be unique among its competitions. (Papadas,2019)
- It must be imitable so that competitors are not able to obtain them.
- It must have different strategic substitutes.
It is argued that research base view ignores the important aspect such as market demand and rather only focuses on internal resources of an organization.
- Core competencies: According to this theory, the most common mistakes that an organization makes are doing outsourcing and losing its core competencies. It states that competitive product may result but competencies cannot be surrendered as the competitions cannot sustain. It argues that in the long run competitive advantages depend on the competencies that are able to build low cost and speed. Therefore, management must be able to implement corporate wide technologies and production skills so that businesses are able to adapt to the new changes in the environment.
- Knowledge based view: The knowledge based theory is considered to be most strategic and significant resource for a firm as knowledge based resources is difficult to imitate and it has sustained competitive advantage and higher performance for an organization. Though the resource based model focuses on the importance of knowledge in a firm, the knowledge based view model argues that resources that are obtained cannot always go far because the research based model treats knowledge a generic resources and not a special characteristics. It is argues that information technologies can play a vital role in the knowledge based view model in terms of expanding large scale businesses, enhance inter and intra management etc. The knowledge based view model can also be applied to various areas of strategy and decision making in an organization because of the fact that it is a distinctive from other approach.
- Relational view of strategy: The relational view of strategy is given by Jeffrey H. Dyer and Harbir Singh. It is a theory that considers the network and units of analysis to explain superior performances that are generated within a network. Dyer and Singh proposed four sources of relational strategy such as relation- specific assets, knowledge sharing routine, capabilities and effective governance (Mody, 2019).
Topic two: Organizational structures, innovation and globalization:
An organizational structure is a process in which the work in an organization flows where it allows a group of people to work together to undertake the task and achieve its goals. In a traditional organization, it structures people to be more formal where employees are grouped by functions, region or product in line. Whereas modern organization in comparison to traditional are more flexible and have the ability to respond quickly to any changes in the organization.
It can be said that the organizational structures have been evolved over the years. During the industrial revolution, employees were organized in such a way that the employees add parts of the products manufactured. Frederick Taylor’s scientific management theory improvised the theory for workers to perform efficiently. But today’s structures of an organization are changing and are usually more flexible.
As organizations continue to achieve great success in terms of global and future organizations trying to learn lessons from their idols, it is important that leaders of an organization understand the characteristics, benefits and limitations that are related during strategic process.
It is important to align the organizational structure with its strategy in the following elements-
- Leadership: it is important for the leaders of an organization to align with the business strategies to monitor the employees and make them feel responsible for developing the strategies that are necessary to be implemented.
- Organization: the structure of an organization, their processes and operations by which the strategies are to be implemented to be used for further performance of an organization.
- People: the skills of the people as well as their experience and competencies are necessary to execute the strategies to develop smooth functioning of an organization.
Some of the problems that creates problems of an organizational structure-
- Disorganization of a company can cause cost structure, cash flow and ability to deliver proper goods and services as improper staffing in an organization is a con to the workers working in the same workforce.
- Less engagement in a job can create decrease customer loyalty and focus on a company and affect the value of the stakeholders.
- Huge gaps in work process and half information can cause disfunctioning of an organization as employees may tend to shift focus on a particular work.
- Capability or inefficient skills of an employee can cause lower focus in other employee therefore efficient trainings are required to be given before joining their work.
Therefore an organizational structure is focused on certain activities that are mainly focused to achieve its goals and includes rules and responsibilities as well as roles of each individual in an organization. The structure of an organization not only defines the hierarchy of a company but allows the management to layout the pay structure for the employees.
The pay structure of an organization may depend on the sizes of the businesses. The operations in a firm includes being more productive by being more efficient and effective. In addition to that, the organizational structure allows the employees to get its job done in the most effective ways. The employees also needs to be more creative as well as well informed on issues that might create problems in the organization and possess certain set of skills to improve the overall performance.
INNOVATION:
In today’s competitive world and even more increasing competition in the market, it is necessary that a firm must try to produce products in the most innovative ways. While there are products in the market that maybe known for their product, services, and various other factors, it is essential that the business try to concentrate more on producing quality product with keeping in mind the cost factor as certain group of consumers are focused only on lower cost products while there are also customers who don’t mind spending some more penny by giving or paying a little extra in return for a more quality or luxurious good.
Innovation may be defined as a concept where an individual or an organization undertakes and performs to produce process or implement strategies and ideas in new ways so that they are able to make a name for themselves and differentiates themselves from several other brands. In the business world there are different types of innovation that a company might be interested in pursuing. These are often directed towards some business models or individual products.
The increasingly need for change and growth in the markets allows the business to thrive and giving opportunities to meet the needs of the consumers. It is found out that half of Americans agree that the growth in technology has been the biggest change to bring improvements in life as in the past there were not many technologies to meet such needs that today’s technology provides. Here are three important factors for innovation in an organization:
- It improves growth: Though it might be a slow process and may involve hurdles to achieve goals, innovation can help in the overall success and profitability of a company. It is proven that companies who try to go ahead for innovating new products are likely to achieve and grow more because they value the positive impact of innovation.
- It keeps the organization relevant: The world is constantly changing and in order to remain relevant in the organization, it is important to make products that are currently in trend and so that the company is able to achieve its target consumers. It will eventually help the company to adapt to new realities. Since technologies have proven to be the most effective tools in terms of change, it is necessary that innovation with technology are important to maintain a niche for the company in terms of staying relevant in the market.
GLOBALIZATION:
The term globalization literally means the process that a business adopts to develop international influence or starting their operations on an international scale. It also refers to the flow of information, technology or goods among various countries and consumers.
Though globalization makes our lives better it can be argued that it has more challenges involved for companies to start and grow as well as expanding their business on a large scale. It cannot be denied of the factors of the differences of cultures around the world and these are factors of challenges for businesses to grow as it can create hurdles for business to enter into foreign markets and include in the overall operations be it employment of workers or communication involved to produce new audience. Some of the factors of globalization are-
- New culture access: Globalization makes everything easier and convenient in terms of offering foreign cultures in a wide scale including music, food, movies, art etc. The function and access of globalization is the reason why we can have any culture food’s while listening to a particular music/ watching movie in any part of the world.
- Technology and innovation: The spread of technology and innovation in the global market makes the world connected in terms of knowledge; technological advances etc. an innovation created in America can also be used in Asia because of the technological transfer in the market at a large scale that makes it accessible to the customers quickly.
- Lower cost of products: Globalization allows the companies to find lower cost for any products to produce. This lower cost in products can help the company in innovation process in terms of development of products to the developing and developed countries at a lower cost which in turn will help the company to increase productivity and achieve success by making profits.
- Higher standard of living: Globalization helps improving the standard of living all across the globe as there are various advantages of globalization and according to a study by the World Bank it is proved that the poverty has decreased by 35% since 1990, all thanks to globalization.
- Access to new markets: Businesses gains a lot from globalization by including new customers and revenue streams. Companies who are interested in any benefits looks for innovate ways to grow its business in a global scale by being flexible.
- Access to new talents: Globalization allows the companies to bring out new talents in various markets. Globalization gives opportunities to new talents by proving their talents and being efficient. Thus, making the selection process of an organization easier.
Challenges of globalization-
- Recruiting members of an organization in an international scale is harder because while ensuring they hire a successful candidate, the HR will look into cultural differences, language barriers etc which might not always turn out to be relevant in global scale.
- Employee immigration can cause a lot of hurdles as the laws regarding them keeps changing and it is hard to secure visas in some countries.
- Challenges in incurring tariffs and export fees as it can expensive in overseas markets.
- Obstacles to manage overseas payroll.
- Globalization can lead to loss of cultural identity when cultures of certain kind lose distinctive features.
- Search for low labor sources that lead to exploitation of workers.
- Difficulties to expand globally as well as missteps that may lead to legal and financial consequences.
Conclusion
It helps to differentiate themselves from others: Innovation is the only factor that helps the company to differentiate themselves from various other competitions in the markets. Innovation can help a company to stay focus by implementation of various strategies. If the goals of an organization are to develop goods, it is usually to save time, money, other resources by giving competitive advantage over several other companies that exists in a market.
References
Anning-Dorson, T., 2018. Innovation and competitive advantage creation: The role of organisational leadership in service firms from emerging markets. International Marketing Review.
Chen, C.J., 2018. Developing a model for supply chain agility and innovativeness to enhance firms’ competitive advantage. Management Decision.
Ferreira, J., Coelho, A. and Moutinho, L., 2020. Dynamic capabilities, creativity and innovation capability and their impact on competitive advantage and firm performance: The moderating role of entrepreneurial orientation. Technovation, 92, p.102061.
Haseeb, M., Hussain, H.I., Kot, S., Androniceanu, A. and Jermsittiparsert, K., 2019. Role of social and technological challenges in achieving a sustainable competitive advantage and sustainable business performance. Sustainability, 11(14), p.3811.
Jones, T.M., Harrison, J.S. and Felps, W., 2018. How applying instrumental stakeholder theory can provide sustainable competitive advantage. Academy of Management Review, 43(3), pp.371-391.
Mahdi, O.R., Nassar, I.A. and Almsafir, M.K., 2019. Knowledge management processes and sustainable competitive advantage: An empirical examination in private universities. Journal of Business Research, 94, pp.320-334.
Mody, M., Suess, C. and Lehto, X., 2019. Going back to its roots: can hospitableness provide hotels competitive advantage over the sharing economy?. International Journal of Hospitality Management, 76, pp.286-298.
Papadas, K.K., Avlonitis, G.J., Carrigan, M. and Piha, L., 2019. The interplay of strategic and internal green marketing orientation on competitive advantage. Journal of Business Research, 104, pp.632-643.
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