Discuss about the Strategic Model of Innovation Clusters.
Australia is a land of opportunities for investors, the government, the society, the economy and the technology that is available in the Australian business environment encourages investors in new and innovation driven ventures. This in turn makes the industry in which existing organisations operate crowded with competition. There is intense competition in every industry, therefore it is important for each company to make a mark for itself, which will help the target market to identify the brand and own the brand the way it is presented by the company. In this assignment the industries and organisations that are going to be discussed are:
The models of management that is going to be used to base the arguments upon are Ansoff matrix, Blue ocean strategy and Porter’s five forces.
Agriculture industry in Australia is regarded as one of the most significant contributor to the economy of the country. The value of the industry recorded in 2017 is around $63.8 billion, majority of which is the export value of the Australian produce agricultural products ($48.7 billion) (Vidot, 2017). The Australian Bureau of Agricultural and Resource Economics and Sciences is the authoritative body in the country that regulates and manages the industry, they are responsible for setting out safety and other measurable parameters which the organisations in the industry has to maintain as well as predicts the future of the industry. Fertilizers are a large part of the Agro industry six million tonnes of fertiliser is approximately sold in Australia every year. Locally manufactured fertilizers are popular in the farms of Australia. Agrow is one of the consistent forerunners in the industry; the company has both B2B as well as B2C clients(Agrow.com.au 2018). The company is proud to keep changing with the dynamics of the industry in order to keep up with the changes in the business environment and the requirements of the customers (Agrow.com.au 2018). The company uses its experience and knowledge to maintain an edge over the other competitors in the industry (Agrow.com.au 2018). Some of the direct competitors of the company in the industry are: Wengfu, Fertpro etc.
The competitive advantage of a company can be analysed with the help of the Ansoff matrix, it is a strategic management tools which allows the company to understand the potential and recognise the opportunities they have in terms of the product that is being sold in the market. These are analysed on the basis of what is new and what is existing. Following is a figure that shows the Ansoff matrix.
The diagram shows the strategies that the organisation can incorporate in order to maintain an edge over the other companies that are operating in the same organisation.
Market penetration: selling the same product to the same people, in this case the company has to have a strong marketing department to develop new marketing strategies in order to keep the people engaged in the brand (Hussain et al. 2013).
Product development: Creating new products in the same market this is extending the line of products in the same market for example if Agrow represent pesticides. The market would remain the same where as the product would change (Zeschky et al. 2014).
Market development: venturing into a new market is the strategy with similar products is the strategy here. For example if the Agrow decides to represent organic fertilizers. The target market of the product would change.
Diversification: this is when a company decides to change the course completely and invest in a new product in a new market (Zeschky et al. 2014).
As a matured organisation the company uses market penetration strategy in order to keep up with the competitive advantage in the industry (Hussain et al. 2013). As the service that the company provides in unique as they are not manufacturers of fertilizers rather they represent a group of manufacturers. Some of the services that the company offer are fertilizer marketing, shipping and logistics as well as consulting and auditing (Agrow.com.au 2018).
Tourism industry is rising unlike the agriculture industry in Australia; the industry has a lot of employments as well as revenue options directly or indirectly. There is significant amount domestic tourism as well as international tourists in Australia each year and the numbers are constantly increasing (Farr 2018). A wide demographic of travellers visit the country based on the choice of vacation they are looking for the purpose of travel, budget etc. The organisation that is going to be analysed in the assignment is called The Tailor. As the tag line of the company suggests it is catering to the niche elite target market as it is ensures luxury and extravaganza for the customers. The name of the company suggests the personalised and tailors made experiences that the company offers the customers (Thetailor.com.au 2018). With the help of porter’s five forces the luxury tourism industry in Australia can be analysed
This framework helps the company analyse the intensity of competition in the market and in turn provides supports in understanding and strategising in order to gain competitive advantage for the company. Michael Porter coined this framework in 1979 (Cheng 2013).
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Threat of new entry |
Depending upon the rules and regulation and the flexibility of operation in the industry new organisations or new entrepreneurs invest in the industry. The government of Australia supports and encourages tourism which makes the industry lucrative and the success stories of the start ups in the industry are also motivating for people to invest in the industry therefore, it can be said that the threat of new entry is high (Dobbs 2014). |
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Bargaining power of buyers |
The switching cost of the customers of the industry is low therefore it can be said that the bargaining power of the buyers is high. This is also because there is tough competition in the industry (Dobbs 2014). |
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Bargaining power of suppliers |
The bargaining power of the suppliers are low as there is an element of relationship building in the industry |
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There are hardly any substitute in the tourism industry but luxury tourism has a number of substitute like adventure tourism, budget tourism, specialised tourism( cruise, e-commerce) (Cheng 2013) |
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Competition in the market |
There is intense competition in the market as aforementioned, this is due to the availability of resources, flexibility of the funds as well as support from the government some of the direct competitors are: Cox & Kings, Abercrombie & Kent, The Luxury Travel Company etc (Dobbs 2014) |
The child care industry is unlike the two industries that has been discussed above it is an industry that is not driven by profit or finance objectives, organisations that operate in the industry are non-profit seeking and have one common objective of improving the lives of the children of Australia. Therefore competition is a rather secondary factor for the industry, the companies have to stand out in terms of the work that they do and the service that they provide to the society in order to get funds. Australian Childcare Alliance is an organisation that operates in the child care industry, the objective of the company is to ensure families and their children have an opportunity to access early childhood education and care (Australianchildcarealliance.org.au 2018).The company specialises in providing long day care services to families, there are a number of centres throughout Australia and the organisation works closely the authoritative bodies and government in order to support the families in nurturing the best future for the children. The organisation has employees who are skilled in early childhood care, education, training and management (Australianchildcarealliance.org.au 2018).
If an organisation is operating in an industry where there is little or no competition then it is said to be undertaking the Blue ocean strategy in order to create competitive advantage. It is the process of establishing the business in a market that is less crowded with other companies, where the competition is less and there is no pressure of pricing the products and services. When there is possibility for earning higher profits it is said to that blue ocean strategy exists. The concept was introduced by W. Chan Kim and Renée Mauborgne (Kim and Mauborgne 2014). The features of the service or products are focused; innovation plays an important role in the strategy instead of the price of the products or services. But as there is hardly competition in the market the company can hike the price if they want to as there is no one else offering the same product or service (Bourletidis 2014).
However, in the case of an organisation like Australian Childcare Alliance, where profit is not the objective of the organisation the strategy still remains the same. The type of service that the company provides in the Child Care industry is one of a kind and this makes it a perfect example of a blue ocean strategy. The quality of the service and the networking of the organisation make it unique and trustworthy (Bourletidis 2014). As no one would want to chance choose the next best option for their children.
Conclusion
It can be concluded form the above discussion that competitive advantage of a company is the one aspect of a company that is different from the other companies operating in the same industry. One of the major roles of the strategic management process is to come up with a competitive advantage strategy that will help the company stand out from the crowd, through the strategies applied by the companies are different based on the micro and the macro environment and the objectives.
Reference:
Agrow.com.au., 2018. About Us. [online] agrow.com.au. Available at: https://www.agrow.com.au/about-us/ [Accessed 17 Apr. 2018].
Australianchildcarealliance.org.au., 2018. Who We Are?. [online] australianchildcarealliance.org.au. Available at: https://australianchildcarealliance.org.au/about-us/who-are-we [Accessed 17 Apr. 2018].
Bourletidis, D., 2014. The strategic model of innovation clusters: Implementation of blue ocean strategy in a typical Greek region. Procedia-Social and Behavioral Sciences, 148, pp.645-652.
Cheng, D.S., 2013. Analyze the hotel industry in porter five competitive forces. Journal of Global Business Management, 9(3), p.52.
Dobbs, M., 2014. Guidelines for applying Porter’s five forces framework: a set of industry analysis templates. Competitiveness Review, 24(1), pp.32-45.
Farr, M., 2018. Tourism industry is booming for Australia. [online] news.com.au. Available at: https://www.news.com.au/finance/economy/australian-economy/tourism-industry-is-booming-for-australia/news-story/871de337e8c89d7c8f289a23822f60ae [Accessed 17 Apr. 2018].
Hussain, S., Khattak, J., Rizwan, A. and Latif, M.A., 2013. ANSOFF matrix, environment, and growth-an interactive triangle. Management and Administrative Sciences Review, 2(2), pp.196-206.
Kim, W.C. and Mauborgne, R.A., 2014. Blue ocean strategy, expanded edition: How to create uncontested market space and make the competition irrelevant. Harvard business review Press.
Thetailor.com.au., 2018. Home Page. [online] thetailor.com.au. Available at: https://www.thetailor.com.au/ [Accessed 17 Apr. 2018].
Vidot, A., 2017. ABARES Outlook: Value of Australia’s agriculture sector to peak after three years of strong growth. [online] abc.net.au. Available at: https://www.abc.net.au/news/rural/2017-03-07/abares-wrap-2017/8328922 [Accessed 17 Apr. 2018].
Zeschky, M.B., Winterhalter, S. and Gassmann, O., 2014. From cost to frugal and reverse innovation: Mapping the field and implications for global competitiveness. Research-Technology Management, 57(4), pp.20-27.
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