...Neulijan (Julian) Kore MAN 4720 Prof. Ping Zhang Is the corporate social responsibility conflicting with Wal-Mart’s cost leadership strategy? Is Wal-Mart good for America? Before analyzing Wal-Mart’s corporate strategy, it is important to identify what business it is in. For example, Wal-Mart is in the business of selling consumer goods such as TV’s, sheets, clothes, then it is pursuing a concentric strategy by entering in the food business. However, this changes depending on how you analyze what business Wal-Mart is in. Wal-Mart is in the business of selling everything customers need in their everyday lives. This includes the consumer goods listed above as well as food-service items. Wal-Mart definitely has the business strategy of Low Cost Leadership. They do nothing to really differentiate themselves from competitors and provide no-frills self-service stores that always provide the lowest prices. Wal-Mart has built enough purchasing power with suppliers that they can dictate the prices and go in and change suppliers manufacturing processes in order to wring out more and more savings for the consumer. Everything that Wal-Mart does from calling suppliers collect to having execs double up in hotel rooms, is to save the customer money. While they do try to provide good customer service on top of low prices, Wal-Mart’s strength is low-prices. No one has such a supplier and distribution network like Wal-Mart that allows such low prices. But in the past several...
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...The type of strategy that these companies follow is differentiation because they are not the cheapest option within their industry. These companies are effective with this strategy because in their industry they have a focused market of people who don’t mind spending more money for an item that functions practically the same. Their items do offer unique features thought that can justify the higher prices. They also offer the buyer the higher status because they can afford the higher priced items. They are differentiating because they also offer their lower priced items in the $30,000 price range but is still a higher priced car compared to others. This helps open their market share up because almost all of their other cars are priced over $50,000. I think this will work for these companies because they will gain more sales from people who want the car but can’t afford the top line items. 1-49...
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...OF PORTER’S COST LEADERSHIP AND DIFFERENTIATION STRATEGIES Y. Datta Ph.D., State University of New York at Buffalo Professor Emeritus College of Business Northern Kentucky University Highland Heights, KY 41099 (USA) 7539, Tiki Av. Cincinnati, OH 45243 USA Tel: (513) 984-1032 [Home] Fax: (513) 984-1032 E-Mail: datta@nku.edu A paper accepted for presentation at the 9th Oxford Business & Economics Conference to be held in Oxford, England, June 22-24. Table of Contents A Critique of Porter’s Cost Leadership and Differentiation Strategies 4 ABSTRACT 4 Key Words 4 INTRODUCTION 5 COST LEADERSHIP STRATEGY 5 Major Reliance on Modern Capital Equipment 7 Relying on the Experience Curve to Underprice Competition Risky 7 A Cost Leader Cannot Ignore Differentiation 8 No Such Thing as a "Commodity": Everything Can Be Differentiated 9 High Market Share a Prior Condition for Cost Leadership? 10 Porter Identifies High Market Share with Cost Leadership Strategy 10 Differentiation--Not Cost Leadership Alone--Behind GM’s and Whirlpool’s Success 11 “Low-Cost” or “Low-Price” Strategy? 12 Thompson and Strickland’s Low-cost Provider Strategy 14 Internal Orientation of Cost Leadership Strategy 14 DIFFERENTIATION STRATEGY 15 Superiority of Differentiation over Cost Leadership Strategy 16 Porter: Differentiation and High Market Share Incompatible 17 Differentiation Compatible with High Market Share--and Low Cost 18 Even higher...
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...implement the following competitive strategy for the reasons given: a. Mountain Bank should follow the Cost leadership strategy and the differentiation strategy. (See pages 47—51) i. Mountain Bank should follow these strategies because a point has been made that competitive business strategy and human resource strategies must work together to ensure high organizational effectiveness (Stewart & Brown, 2009). We must examine more closely the competitive business strategies, which encompass various types of strategies for Mountain Bank. Mountain Bank has chosen the business level strategy, which allows them to compete with other banks that offer the same four areas: corporate banking, retail banking, real estate and mortgage banking, and consumer lending. Within the business level strategy, Mountain Bank can elect to compete with their competitors by implementing these two strategies with certain human resource approaches. ii. Another reason that Mountain Bank should follow this strategy is in order to achieve this competitive advantage in the marketplace, Mountain Bank must utilize both the cost and differentiation strategies, which are known for the positional advantages that describe an organization’s position as a leader. Although differentiation strategy seeks to produce goods and services that are in some manner superior to what is produced by competitors (Stewart & Brown, 2009), and cost leadership strategy seeks to become low-cost producers of those same goods and services...
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...Identify the goal of the company and describe the strategy that was adopted to achieve it. Explain with full reference to available information and data how successful, or otherwise, this strategy turned out to be in practice. Company overview Bunge Company was found in 1818 by a German merchant, Johann Peter Bunge in Amsterdam, Holland. It was to merchandise grains and imports from the Dutch colonies. The company has since grown to become one of the leading agribusiness and food company in the world. (Slack & Lewis, 2008, pg. 338) Bunge’s products include: soy-protein meal to poultry feeders in Asia; edible vegetable oil to food manufacturers in the Middle East; and corn and wheat to millers in the Mediterranean. These products are marketed worldwide. The company was listed on the New York Stock Exchange in August 2001 after more than 180 years as a private company, doing business in many countries in world across continents. It operates in the US, Europe, Asia and South America. (Slack & Lewis, 2008, pg. 335) Bunge’s operate in three main business segments namely – Agribusiness, Fertilisers and Food Products. It involves in the various level of the agribusiness from the interaction with the farmers at the raw material stage through processing of the raw materials to marketing of the final products. Up until the 1980s, Bunge had non-core businesses such as the manufacture of textiles, paint, chemicals, cement, banking, insurance and real estate. (Slack & Lewis...
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...TEAM CASE 1: OPERATION STRATEGY AT GALANZ 1. What were the order winners/qualifiers for Galanz in the microwave oven business during the early stage of its development? Order winners are "those competitive characteristics that cause a firm's customers to choose that firm's goods and services over those of its competitors. Order winners can be considered to be competitive advantages for the firm” (APICS Dictionary, 2008). Order qualifiers are "those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace" (APICS Dictionary, 2008). In the case of Galanz, the large production scale and cost-leadership strategy are considered to be the order winners for the company; the qualified products with affordable price are the order qualifiers. This classification of winner and order qualifiers is on the basis of development that had been done in the company during the early stage of development. During the early stage, due to lack of technology and technicians at the home market, the company “did not have any competitive edge in production technology but only an abundant supply of cheap labor and land. Offering a low price thus was the only way to compete in the market” (4). To deal with winning orders, the company previously implemented the low-price strategy that was based on selling products at low cost in comparison with the competitors. As a result, the company had successfully achieved cost reduction that led them to achieve the large...
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...Strategies BUS499 Business Admin. Capstone Aug 10, 2012 Strayer University Introduction When a company chooses what type of business or corporate level strategy they want to use, this decision is important because it will set the tone for success or failure. Many companies will hire a manager to determine what type of strategy is best for the corporation. Other companies will already have something in place that just needs improvement. In order for a company to be successful with theses strategies they need to know what kind of competition is out there. A corporation’s competitor can usually dictate what strategy fits the corporation best. Once a corporation has figured out what strategies to use then they can move forward with building a successful firm. 1. Analyze the business-level strategies for the corporation you chose to determine the business-level strategy you think is most important to the long-term success of the firm and whether or not you judge this to be a good choice. Justify your opinion. The company that was chosen to be researched is IKEA. IKEA is a well known furniture retailer. IKEA was founded by Ingvar Kamprad in 1943 (ikea.com). Ingvar, at the age of five began selling matches to the local community. He then found out that he was able to buy matches from Stockholm in bulk at a cheaper price and sell it back at a lower price and still make a good profit. Ingvar’s entrepreneurial style brought him to the furniture business...
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...Advantage 2 Low Cost Leadership 2 Differentiation 3 Focus on Niche 3 Resources required to execute these strategies 4 Competitive Advantage Objectives Measurement 4 References: 5 Competitive Advantage Businesses always look for a competitive advantage to look different and to offer something right for a selected target audience. Competitive advantage is to indentify customer’s needs, to develop a high quality product with a decent price and to deliver it better than the others. As stated by Cole Ehmke & M.S. a competitive advantage is to answer this question “Why should the customer purchase from this operation rather than the competition? (Cole Ehmke, M.S: 5-01)”. The key point is that a brand has loyal customers for a reason. These loyal customers are often the cause of a successful growing business that builds upon a strong competitive edge than the competitors as stated by Michael E. Porter, a “Competitive advantage is at the heart of a firm's performance in competitive markets (J Collins, Michael E. Porter: 102)”. A competitive advantage can be sourced through many factors such as a high quality product, a superior customer service, less price then rivals, better location, more reliable product than the competitor, better design and providing a better value for money. According to Porter these factors can be categorized into three generic types: 1. Low Cost Leadership Strategy 2. Differentiation Strategy 3. Focus on Niche Strategy We will now...
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...“Organization Plan & Management Team” The company that I have been working on opening in my hometown is called Little Rascal’s Resale. Although it is a large dream of mine to grow the company into a nationally recognized franchise; it is understood that the company will start with just one location. The one company will have simple make up that will only need five to seven employees. The employees will consist of a president and CEO, a general manager, a team manager, and two to four entry level store employees. The amount of employees is a small number but, as the store grows the number of employees that the store will need will grow as well. With a small amount of employees it is vital that all the employees must always complete what is expected of them. The employee’s responsibilities and duties are listed below in a table. Employees Title and Responsibility | President and CEO | This is myself. Will handle the financial aspects of the business. In addition to this I will manage inventory that comes in and out of the store. | General Manager | General manager is in charge of the keep up of the store. Ensuring that all employees are doing their jobs correctly and in a timely manner. | Team Manager | Will run shifts when the general manager is not available. Will have authority to do price over rides and make offers on products that consumers are bringing into the store. | Floor Associate | Main duty is to ensure great customer service for...
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...CASE ANALYSIS ON OPERATIONS STRATEGY AT GALANZ 1. Rank the importance of Galanz’s operations objective of cost, quality, flexibility, delivery, service and innovations. How has the importance changed over years? Ans: The operation objectives are based on its competitive advantage, customers’ needs, business environment and opportunity. Galanz’s most important objective was cost as it only had abundant supply of land and labor. Since it used cost leadership, it helped to lead the market by eliminating its competitors during the early stages of business. It helped not only to capture Chinese domestic market but also helped to attract foreign market as well. Galanz expanded their business in overseas market through OEM so they prioritized delivery as they had to provide various equipments and components efficiently. They also focused on quality because in order to capture foreign market and develop a long term relation with foreign companies, quality was very important. As they expanded their business through OEM, OBM and ODM, it further facilitated them to operate with more ease in the market. They didn’t have to rely on other companies for various designs and components. A micro oven’s major component was magnetron so they had to rely on it through its suppliers. The suppliers decided to reduce the supply of magnetron which prompted Galanz to initiate a major investment in magnetron R&D in 1997. Then they transformed into ODM which was very successful. They focused...
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...1. Strategy and Planning: their product, their business strategy, their planning process, their competitive advantage, do they fit together? Zara is a Spanish clothing and accessories retailer. Zara belongs to Inditex’s apparel retailer; the fashion group simultaneously owns brands, such as Massimo Dutti, Pull&Bear, Stradivarious, Bershka and Uterque, which operated 507 stores in many countries in 2001. Product Zara stores have men's clothing and women's clothing, as well as children's clothing (Zara Kids). Designers of the brand work on two basic collections each year that are phased in through the fall/winter and spring/summer seasons. Zara offers fashionable clothes at very competitive prices and reasonable quality. Customers choose products of Zara because they pay less for good, stylish products with good quality. Business strategy As I understood, managers of the company focus on cost leadership strategy. Zara is a vertically integrated retailer and controls most of the steps on the supply-chain, designing, manufacturing, and distributing its products. It has succeeded on account of minimizing its variable and fixed costs, its ability to capture the latest catwalk trends and quick reaction to changes in market demand. According to the case Zara made investment in manufacturing logistics and IT, including a just-in-time (JIT) system. Every two weeks Zara provides its stores with new products. The company follows zero advertising strategy. Mostly Zara invests...
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...CHAPTER 2 OPERATION STRATEGIES IN A GLOBAL ECONOMY INTRODUCTION In order for today’s companies to survive in the global economy condition, the companies have to set the strategies in their daily operations. TODAY’S GLOBAL BUSINESS CONDITION There are six factors that affect today’s global business condition and therefore had major impacts on the Operation Management: 1. Reality of global competition 2. Quality, customer service and cost challenges 3. Rapid expansion of advanced technologies 4. Continued growth of the service sector 5. Scarcity of operation resources 6. Social-responsibility issues REALITY OF GLOBAL COMPETITION Changing Nature of World Business Mostly every country in this world today is not only doing the internal domestic trading, but the scope of business has expanded to overseas. One particular country can export their products to overseas, and it can also import the products from other countries. International Companies Many of the international companies, whose operations span the globe as they buy, produce and sell in world markets. Strategic Alliances and Production Sharing Strategic Alliances are joint cooperations among international companies to exploit global business opportunities. Ex: General Motors Corp has created a strategic alliance with KIA Motor in order for them to sell their cars in South Korea. Production sharing, means that a product may be designed and financed by one country, raw materials...
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...prospects that lie in front of the company because of the good partnership with the two companies that secure a large portion of the company’s revenue. In order to meet the demand in a cost-effective and timely manner, the company is expanding its production, imported inputs, and suppliers. Although the undisputable benefit of having the giant Wal-Mart as a partner, a question arises: will this dependability on one major source for revenue at some point become a disadvantage and threaten the business’ existence? This concern was raised by one of the brothers, Peter, who “wondered if it was good for Megatoys to become increasingly dependent on the retail giant.” Are the Giants Saviors or Destroyers? According to Michael Porter’s theory for generic strategy, the Woos are employing a mix of cost leadership strategy for a broad market, differentiation strategy for a broad market and a niche market (costumes). On one hand they rely on cost-cutting in order to satisfy Wal-Mart’s needs for cheap offerings for their product line. On the other hand they use differentiation by offering seasonable products and costumes. The major problem is that Wal-Mart’s positioning to deliver products at a lowest price to its end-consumers and the power given by the volume allows them to force all their suppliers to cut costs and sell at tight profit-margins. If the brothers successfully close the new deal for Easter baskets, the generated revenue of the deal would represent more than a half of the annual...
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...CASE STUDY 10 | SHRM Table of Contents EXECUTIVE SUMMARY ........................................................................................................................ 2 ANNEXURE ............................................................................................................................................ 3 INTRODUCTION ................................................................................................................................... 9 INTRODUCTION TO THE COMPANY ................................................................................................. 9 QUESTIONS ......................................................................................................................................... 10 QUESTION 01: ................................................................................................................................... 10 QUESTION 02 ................................................................................................................................... 12 QUESTION 03 ................................................................................................................................... 14 QUESTION 04 ................................................................................................................................... 16 CONCLUSION.....................................................................................................................................
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...| Case 3 Critique | 21 July 2014 | | Pt 1 Strategy Formulation 1. Business and Corporate-level strategies a. Business-level strategies Cost leadership strategy is utilized by Tata Motors, producing their goods in India at a low cost. The low costs of the Nano allowed consumers to own a vehicle when there was no way prior. b. Corporate-level strategies Tata Motors possess over 90 establishments in 80 countries. The globally owned organization allows for a large amount of diversification. 4 P’s framework-product, price, place, promotion a. Position: The mission is to provide vehicles that will appeal to the global consumer. Values of Tata Motors are customer satisfaction, innovation and integrity, while the vision is to have a valued product and provide excellent service. b. Priority: Priorities include low cost, quality vehicle, expand the product line to include a luxury vehicle, and to increase capacity globally. c. Payment: Investment of a Spain organization to gain shares and technology as well as merge with Jaguar/Land Rover to produce a luxury vehicle. d. Performance: Improve image of the organization and to increase profits as expansions continue to grow globally. Key Questions Key Questions | Option | Decision Criteria | Pros | Cons | Purchase of HCPurchase of JLR | Purchase shares, brand rights and technologyTo add a luxury line to the products | Market/competitionCost/benefitsMarket/competitionCost/benefits | Increase product...
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