Business Strategy
Contents
Source of Competitive Advantage of Leading Company
(Mercury):
Internal analysis of Venus Mobile
SWOT analysis for Venus Mobile
Strategic recommendation-Goals, Business, Marketing,
Manufacturing
Part 1
Introduction: I have been appointed as a strategic
advisor to new chief executive officer of Venus Mobile Company. Here I discuss
about the all issues on the basis of case study, which includes, external
analysis of Venus Company, internal analysis, SWOT analysis, strategic options
evaluation, strategic recommendations and stakeholder’s power and influence on
the Venus Mobile Company.
External analysis
External analysis helps the organization to understand
top trends and events which have great impact on the organization. But
organization cannot control the external forces. By research, an organization
can take decision and implement decision and move forward and become more
competitive. Here I choose Porter’s fiver model to describe the external environment
of Venus Mobile:
Figure:
External analysis
Source:
(Porter, 2008)
Above forces determine the industry structure and different
level of competition. Most competitive forces give fewer profits. A market
which is less entry barriers and few buyers and sellers but many substitute
products which gives more competition. For the mobile industry, it is most
competitive industry because it depends on technology advancement (Porter,
2008). Here I discuss about the different elements of five forces and relate
with Venus Mobile.
Treat
of new entrants: It describes how difficult or easy to
enter in an industry, when an industry is less entry barriers and more
profitable then competitor increase rapidly, there are some threat of new
entrants is high when:
·
Small amount of capital is required to
enter a market;
·
Existing companies give less pressure to
enter;
·
Existing companies do not have strong
brand and reputation;
·
Less government regulations;
·
Switching cost is low;
·
Low consumers loyalty
·
Easy to achieved economies of scale
For the mobile company it is difficult to enter a new
company because brand image is most important here.
Bargaining
Power of Suppliers: It means when suppliers have power to
sell raw material with higher price or low quality products. It directly
affects the organizational profits because its it relates to cost of goods
sold. Suppler power strong when;
·
Few suppliers but many buyers
·
Suppliers made forward integration
·
Raw material shortage
·
Suppliers obtain scare resources
·
Switching cost is high
Bargaining
power of buyers: Buyers can purchase with lower price and
higher quality product when a market has many product but few numbers of buyers
or intense competition exisit inth market. Bargaining power arises when;
·
Buying large amount of quantities
·
Few numbers of buyers
·
Switching cost is low
·
Buyer makes backward integrate
·
Buyers are price sensitive
In the mobile industry, there is no intense bargaining
power of buyers, but switching cisot important here, because of technological
advancement, company produce high quality product and customers moves one to
another company.
Threat
of Substitutes: It makes threat when buyers can easily
move from one company to another company, because attraction to price or
quality buyers switch from one product to another product. Mobile industry is
great threat of substitute’s product because of technological advancement
(Porter, 2008).
Rivalry
among existing competitors: In the competitive market
competitors compete with the compactor aggressively for profit and market
share, it happens when;
·
Many competitors in the industry
·
Exist barriers high
·
Growth of industry is negative or slow
·
Most competitor are equal size
Mobile industry is the great example of rivalry among
existing competitors. In the mobile industry each competitor compete with
unique segment, they also compete in small thing such as a feature or
applications
From the case study, market leader of USA mobile
market is Mercury at the end of 6 round. Market growth in after end of 6
rounds, USA 20% and 30% in Asia, demand has been increased in last 2 years,
such as, Asia, 35%, Europe 30% and USA 16%.
Source of Competitive Advantage of
Leading Company (Mercury):
Production Plant: Mercury has been established their
most of production plants in USA 912) and outside Asia (4), they manage it
proper way.
Research and development cost: In beginning of company (round 1, 2) their
cost is high but they can reduce this cost frequently.
Global Production Capacity: They have enough global
production capacity
Global Demand Meet: For their production capacity they
enable to meet global demand.
Outsourcing: They enable to recue cost by significant
amount of outsourcing
Global Supply Chain: They enable to manager global
supply chain.
Internal analysis of Venus Mobile
Internal analysis is important for every organization
to sustain in the competitive industry. There are some ways to internal
analysis such as, resources, capabilities and competencies, the value chain,
competitive advantage, value creation cycle.
Resource,
Capabilities and Competencies
Venus Mobile has tangible and intangible assets such
as, physical entities, land bundling, inventory money, manager and employees
and brand names. Venus Mobile Company should make strong competitive position
in the industry by research and investigation and case study shows that Venus
Mobile growth in round 5th and 6th their market position
is so bad so that they need to take immediate actions to market capture. Venus
Mobile should evaluate the customer’s demands and meet their demands by
providing different good quality products. They can identify the own resources
among them which are key to success to monitor and utilize them, identify most
efficient capabilities and competencies and apply those to capture markets,
(Porter, 1979). They also recruit more employees in the organization because
licensing technology is very expensive.
Value
Chain
Value chain is process of adding value in every stage
into final consumers. Venus Mobile can use value chain to create value by
acquiring raw materials and using them to make something useful, retailers
bring together a range of products and present this product to final customers.
Figure:
Porter’s value chain
Source:
Porter’s value chain include two types of activities
such primary activities and support activities. Here primary activities
includes, inbound logistics, operations, outbound logistics, marketing and
sales and after sales services. On the other and support activities involve
procurement, human resource management, technological development,
infrastructure.
Venus Mobile can use Porter’s value chain by
identifying sub-activities for each primary activity such as, direct
activities, indirect activities and quality assurance and then identify the
sub-activities for each support activities and last look for opportunities to
enhance value.
Competitive
Advantage
Competitive advantage is unique thing it exist when a
company profitability higher than the average profitability of all companies in
its industry. Porter, (1979) identified three basic thing for competitive
advantage such as, benefit: Organization produces quality product that help to
get the competitive advantage from industry. Target market: in this case
organization must identify the target customers and their demand and produce
customized product to attract and meet the customer demands. Venus Mobile
should take a research to identify the customer’s needs and produce these type
of mobile to meet their demand and to gain competitive advantage.
Value
Creation Cycle:
Venus Mobile should follow the value creation cycle.
Every organization wants to create value and keep up it continuously, (Porter,
1979). Value creation cycle is important for every organization if wants to
survive in the competitive goal. They require sustainable value creation this
value creation cycle helps the organization to create sustainable value.
Figure: Value Creation Cycle
Source: (Heeks, 2009).
SWOT analysis for Venus Mobile
SWOT analysis is the process of identify
organizational strengths with weakness and opportunities with threats. It is important for the organizational when
develop marketing and other corporate strategy. Now I discuss about the SWOT
analysis of Venus Mobile.
Strength of Venus Mobile: These are the internal
factors which help the organization to be success, such as, assets and products
and other things which contribute to success of company. There are some
specific strengths of Venus Mobile are, strong brand, good reputation,
expertise and skill (Heeks, 2009).
Weaknesses of Venus Mobil: These are the internal
factors which stop or slow down the organizational operation and success such
as, employees, procedures, business assets, products and other things (Boehlje &Langemeier,
2017). There are some specific weaknesses of Venus Mobile such as, high
production costs, low market share, high licensing technology costs and
inefficient process and procedures.
Opportunities for Venus Mobile: These are actors outside
the business organization. Organization can use these factors to help it grow
business. There are some specific opportunities for Venus Mobile such as,
growing Asia market, global market, increasing consumer spending, legal change
in abroad demographic change such increase the birth rate, (Adas, 1989).
Threats for Venus Mobile: Those are the outside
factors on which company has no control and which make the business conditions
more vulnerable and challenging. This threat faced by Venus Mobile such are, competitors,
Government policy, raising tax rate and changes consumer’s behaviors. Here consumer’s
behavior change is more critical factor because they move very swiftly.
Strategic options evaluation
There are some strategic options for Venus Mobile Company
such, strong competitive position in the
industry, more research and development, new plant construction, extend amount
of outsourcing, these options are available for Venus Mobile Company.
Make
Strong Competitive Position in the Industry
Venus Mobile Company can make strong competitive
position in the industry by proper market research, proper investigation of
market profile, size, competitors and stage of growth, in round 5th
and 6th their market position is lower place, it is difficult to
make competitive position in the market. They can properly evaluate the
customer’s wants and meet their wants by providing different types of mobile
features, (Harrison & Frank, 1999). They can take a research on the
competitor, identify their strengths and compare with own strengths and
weakness so that they can easily identify their problems and can take proper
actions.
Research
and Development
Venus Mobile uses internal research and development as
well as licensing technology. Here licensing technology is highly expensive
(from case study, Venus Mobile curve is second highest level), so that Venus
can internally recruit the employees who will be more efficient and give up or
reduce the amount of licensing technology.
New
Plan Construction
Venus Mobile can transferred the production plants
from USA to Asia or set up new production plants in the Asia, until now their
only 9 plants are in Asia if we compare with Mars Mobile their production
plants in Asia is 22. Most of the mobile companies are moving to Asia for
production plant because labor costs are low in the Asia. They can take a
mission to set up new plant in Asia to reduce overall cost and compete with
competitor and survive in the industry.
Outsourcing
Venus Mobile Company can reduce their costs by expands
the outsourcing. By outsourcing Venus Mobile can share risk, reduce operational
and recruitment costs, speedy process and expertise, increase efficiency, give
emphasis on the core areas, save infrastructure and technology, access skilled
resources, time zone advantage 24 hour working facilities, faster and better
services.
Strategic recommendation-Goals,
Business, Marketing, Manufacturing
In this case, I discuss about the different types of
strategies which influence the Venus Mobile Company, goals, business, marketing
and manufacturing. Venus Mobile should expand or move their production from USA
to Asia because case study shows market growth in USA is 16% but in Asia 35%.
If there is conflict between China mobile company and USA mobile companies so,
extra tariff is major issue here. European market is more complex, more
expensive for USA mobile company than Asian company. Phone manufactures cannot
sell mobile direct to customers, they use different types of distribution
channels, and in market dominator distribution channel is Amazon they control
more than 53%. Venus Mobile Company should appropriate distributor for selling
mobile.
Corporate
level strategy
Corporate level strategy is high level of strategy
which includes evaluation of horizontal integration, vertical integration,
diversification, concepts of unrelated diversification, contrast method of new
industries, (Porter, 1985). If Venus Mobile Company in loss they can merge with
efficient company or acquire another efficient company for better performance.
Strategic outsourcing of primary value creation: In
the case study, total outsource 185 of Venus Mobile where other competitor
Mercury Mobile outsource 690. So that Venus Mobile Company should more
outsources. The benefits of outsourcing are less cost. Permanent employees give
more facilities than compared to outsourcing. They can save money by
outsourcing. They can also reduce cost by transferring production plants USA to
Asia because here labor cost is very low.
Business
Level Strategy
Business level strategy includes, market segments,
generic strategies, blue ocean strategies, market development, rivalry in
industry, declining industry and fragmented industries. Venus Mobile should
target the Asia market because (Porter, 1980); here market growth is high and
capture market by providing middle level pricing.
Functional
Level Strategy
Functional level strategy includes firm and
competitor’s analysis, competitive advantage, learning effect, competitive
performance and experience curve. Venus Mobile Company can enhance market share
by providing better quality product, reducing cost, lower price of mobile and
more investment in research and development sectors, (Porter, 1980). They can
gain the economies of scale by less cost production in this case they can
produce mobile by outsourcing and transferring production plants from USA to
other places where labor cost is significantly low like Asia region.
Part 2
Stakeholder Summary
Stakeholders means group of people who has stake on
the organization. Stakeholders are directly or indirectly influence the
organization. In generally there are two types of stakeholders such internal
and external. External stakeholders are more impact and influence on the
organization such as, Government, strategic partners, subcontractors,
cooperation partners, networking labor etc.
Option 2: Stakeholders of Venus
Company using a range of sources and then map their power and influence using
an appropriate model
Stakeholder analysis is process of effective eliciting
stakeholder’s views on the relationship with company, (Fletcher, et. al, 2003).
Stakeholders management is important for success of an organization, here I
discuss about the process of stakeholder analysis and stakeholder management.
ü At
first identify and map the external and internal stakeholders
ü Assess
the influence and importance of each stakeholder
ü Make
a matrix to identify influence and importance
ü Properly
manage and monitor stakeholders relationships
Venus Mobile should follow the engagement process of stakeholder
mapping and then collect information from them as much as possible, such as
external or external stakeholders. Here external stakeholders are those groups
who contributing their views and experiences and it are important to them.
Internal stakeholders are those groups who participate in the co-ordination,
funding, resourcing etc, (Tuner, 2008). In this stage Venus Mobile Company can
make some questions to identify how much impact and influence of stakeholders.
·
Who will be affected positively or negatively
what organization doing?
·
Who hold position relation to what
organization doing?
·
Who operates organization with relevant
interests?
·
Who was involved in any situation in the
past?
·
Which name comes first in time of
discussing subject matter
Assess the nature of stakeholder influence and
importance
Venus Mobile Company should understand that
individuals and groups behave differently and different situations that has
impact on organizational policy, strategy etc. They direct and indirect impact
and influence. Direct influences are, legal hierarchy, authority of leadership,
control of strategic resources, specialists knowledge and negotiation position.
Indirect influences are social, economic, political status, varying degree of
company, influence the control of strategic resources and informal influence
through links with other groups, (Savage et, al. 1991.
Now I identify the source of internal and external
sources of stakeholders
|
Internal
Stakeholders Influence |
External
Stakeholders Influence |
|
Director of Venus Mobile Company :
Exercise formal power of position |
Investors: Rate of return and
interest rates |
|
Distributor channels: Continue of
distribution |
Customers: Decision to purchase |
|
Director of program: Running
program |
Suppliers: Price of raw materials |
|
Research scientist: Switch to other
organization |
Funders: Rate of return |
|
Trustees: Legal formalities |
Local authority: Product acceptance
|
|
Board Committee Members: Any formal
decision |
Government: Different types rules
and regulations |
|
Sales managers: Sales targets |
|
Now I discuss about the Matrix of stakeholder
influence and importance
When make strategy about the stakeholder’s management
give emphasis on the influence and importance of each stakeholder.
Figure:
Matrix
Source: (Friedman & Miles, 2006).
Explanation above Matrix:
Quadrant One: High influence and high importance are
key stakeholders for the organization needed engage in strategy/project
(Friedman & Miles, 2006).
Quadrant two: Highly important but low influence,
these types of stakeholders need to keep informed through education and
communication.
Quadrant three: Low influence and low important care
should be taken to avoid the dangers.
Quadrant four: High potentially influence but low
important should be kept satisfied.
Principles
of Stakeholder Management:
I.
Managers should properly monitor the concern
all legitimate stakeholders
II.
Managers should openly communicate and
listen to stakeholder perspectives
III.
Managers should adopt process and
strategies to cop up with stakeholders expectations
IV.
Managers should recognize the
interdependence and reward among stakeholders
V.
Managers should work co-operate with other
entities
VI.
Managers should those works which are
against human rights
VII.
Manager should identify potential problems
and try to remove these
Conclusion
Venus Mobile should follow the above discussed
strategies. They can use Porter’s five forces model for external analysis, for
reduction of organizational cost they can transfer their production plants to
Asia. They can outsource to reduce procurement. They can analysis their
stakeholders, evaluate stakeholders influence and impact and take proper
strategy to manage stakeholders.
References:
I.
Adas, M. (1989). Machines as the Measure
of Men. Ithaca, NY: Cornell University Press.
II.
Boehlje, M., and M. Langemeier. 2017"Assessing and
Managing Strategic Risk." farmdoc
daily (7):83, Department of Agricultural and Consumer Economics,
University of Illinois at Urbana-Champaign
III.
Eden, C. and Ackermann, F. (1998) Making Strategy: The
Journey of Strategic Management, London: Sage Publications
IV.
Fletcher, A., et al. (2003). "Mapping stakeholder
perceptions for a third sector organization." in: Journal of
Intellectual Capital 4(4): 505 – 527
V.
Friedman, L. and Miles, S. (2006) Stakeholders
Theory and Practice
Oxford University Press
VI.
Harrison, E. Frank (1999). The Managerial Decision-Making Process
(5th ed.). Boston: Houghton Mifflin.
VII.
Heeks, R. (2009). Emerging markets: IT and
the world’s “bottom billion”. Communications of the ACM 52: 22-24.
VIII.
Michael E. Porter, "How Competitive Forces Shape
Strategy," May 1979 (Vol. 59, No. 2), pp. 137-145
IX.
Porter, M.E. (2008). The Five Competitive Forces That Shape Strategy.
Harvard Business Review
X. Porter,
Michael E. (1980). Competitive
Strategy: Techniques for analyzing industries and competitors. New York:
Free Press.
XI.
Porter, Michael E. (1985). Competitive advantage: Creating and
sustaining superior performance. New York:
Free Press.
XII.
Savage, G. T., T. W. Nix, Whitehead and Blair. (1991).
"Strategies for assessing and managing organizational stakeholders."
In: Academy of Management Executive 5(2): 61 – 75
XIII.
Turner, R (2008). Gower Handbook of Project Management ,
Gower. Latest edition Gower Handbook of Project Management