In the ever changing business environments, organizations must have suitable strategies in place in order to stay above its competitors. To achieve this, the business organization must critically assess its operation in light of three business dimensions that is; generic business strategy, its organizational culture and how its formal organization structure. These three dimensions must be linked in order to have sustained competitive advantage and stay in the market.
An organization that targets gaining competitive benefit over their competitors should apply three fundamental business approaches as describes by porter in 1985 under generic business strategy. These strategies include; focus strategy, cost leadership strategy, differentiation leadership strategy (Porter, p. 3). The company should have reasonable advantage over others and should produce and sustain greater performance in order to charm and retain their customers thereby remaining in business (Venu, p. 1).
The cost leadership strategy involves increasing profits by lowering costs and increasing market segment through charging lesser prices, they still make a sensible profit on sales since they have reduced costs. Companies that are prosperous in attaining cost leadership commonly have access to the money needed to finance in expertise that brings expenses down, very competent logistics, a cheap labor, resources, facilities and a technique of sustainably lowering costs below those their competitors (Allen and Helms, p. 435).
To exercise cost leadership, companies contest for the leading number of customers through variation in prices. This strategy is efficient when products and amenities are homogenized (Akan et al., p. 47). The business can sell basic suitable goods at prices that are the lowest in the market. The business can reduce overheads in the corporation so as to decrease prices for the clients but the profits are not reduced. The business can trade its merchandises at the normal manufacturing charges to make more incomes compared to the opponents or trades at costs below the industry expenditure, making profit by attaining having a share in the market. Cost leadership strategy can be faced by the risk of other competitors copying cost reduction strategy, therefore it would be wise to always advance the amenities you provide to your consumers so as to remain on top of others.
Differentiation strategy entails making your goods or services dissimilar from and more striking than those of your challengers. This is be influenced by the nature of your business and of the goods and facilities themselves, but will characteristically involve structures, functionality, stability, sustenance, and brand image valued by your customers. To succeed in differentiation strategy, companies need: Worthy research, growth and invention. The capacity to distribute high-quality goods or services and efficient sales and advertising, so that the market realizes the profits accessible by the distinguished contributions.
In this strategy, the company is supposed to services or products that the customers will love because of having unique qualities. Customers will be attracted to you since you have established yourself in a unique way from your opposition (Porter, p. 50). To prosper with the differentiation strategy, your industry must have entree to top technical, very experienced and innovative product improvement staff; a solid advertising and sales staff; and a business status for excellence and innovativeness (Maher, p. 4).
Competitive benefit is attained above challengers in presenting clients superior worth. The value is raised by dropping prices or gaining profits and services to validate the high rate. While the cost leadership and differentiation strategies explore for competitive benefit on a comprehensive measure, the focus strategies target a slim market. Occasionally, industries try to find a mixture of strategies in order to delight clients searching for value, style, accessibility and charge of the product.
Focus strategies focus on specific work by considering the changing aspects of the market and the exclusive needs of clients within it, advance exceptionally cheaper services it offers to their clients. They serve clients in their market exclusively well thus building strong trustworthiness amongst their clients. This brands their specific market section unattractive to their competitors.
Culture is what a people acquire over a period of time as they solves their difficulties of survival in an external situation and its difficulties of internal combination. Such learning is concurrently a behavioral, intellectual, and an emotional course (Martins and Terblanche, p. 68). The sincere level of culture is the intellectual in that the views, language, and believes processes that people share is the vital causal factor of feelings, approaches, sustained values, and obvious behavior.
The three major levels at which culture displays itself include recognizable artifacts, morals and simple underlying assumptions. When people enter an organization they see and feel its relics. This category includes physical design, the dress code, the way in which people talk to each other, the scent and impression of the place, its emotive intensity, and additional phenomena, to the eternal archival appearances such as company chronicles, products, declarations of philosophy, and yearly reports. A company’s principle is its basic nature, the way its people interrelate and work. Company’s culture is compound entity that endures and evolves commonly through gradual changes in management, policy and additional circumstances. Deeply rooted cultures cannot be substituted with simple improvements, or with most important overhaul hard work. When companies identify a new kind of inner authority, it has tapped a great emotional cause in place, and stimulated a new significant performance in its sales power (Kaplan and Norton, p. 19).
To emphasis on enlightening teaming, client outcomes and the skill to realize cooperation, the leaders board on a culture-led development program. They aim at achieving 3 critical conducts: making clients happy, appreciating performance over superiority, helping and giving support to one another (Verbeeten, p. 434). They transformed these three overall behaviors into essentials for each portion of the business. Appreciating customers, was interpreted into forefront staff work together with other coworkers to solve customer problems that affected client outcomes (Parker, p. 405).
Each company should have an organizational structure which is a communication flowcharts that efficiently communicate and deliver information to people.Well-made organizational structures will produce effective communication channels that boost fast and clean conclusions (Loewe and Dominiquini, p. 27). The aim of having an organizational structure is to uphold communication and to reduce level of redundancies to zero. There are several forms of formal organizational structures and the common ones include functional, product, customer and regional (Mantere, p. 312). The functional structure is normally used by most organizations. It is a topmost flowchart with ranking administrative at the top, several middle administrators such as, marketing, human resources, finance and accounting and engineering department managers all reporting to the topmost directors.
Product structure is intended for larger corporations. This flowchart is made up of a group of the uppermost executives at the top, whereas diverse products are divided into mini-companies. Customer structure is basically a deviation of the product structure, where the diverse business sections at the bottommost are each divided into a specific client. Regional is also a modified functional structure, putting the top managers based in your state at the uppermost, the reporting sections is made up of regional directors. This ensures that your demands in diverse markets are met in a local fashion.
I run a bus company that operates between a rural town and a coastal town, my buses are 62 seaters (carries 62 passengers) and takes average of four hours to reach its destination. I have gained a competitive advantage over my competitors by apply the 2 basic business strategies: Cost leadership and differentiation strategy. I value and understand what my customers need, therefore I decided to have to sets of buses that serves two sets of customers who have different interest when it comes to the services provided. My customer’s interest in my services focus on the bus fare price, quality of the services provided including cleanliness of the seats and the environment inside the bus, the style provided and conveniences. The first set of my buses carry passengers who are careful at spending and thus prefer services that are of good quality but lower prices (Malburg, p. 31). They include ambitious savers, business men who travel daily and aim to save as much as possible and low class group that due to their low income cannot afford highly priced bus fare. The bus fare here is low but I have managed to get as many passengers as possible, in fact the number of customers I get are overwhelming forcing me to buy more buses in order to make my services available to all the customers. In addition to providing a low cost services I have learnt that maintaining cleanliness inside the bus, providing customers with clean bottled water, punctuality in terms of keeping both departure and arrival time, making the bus tickets easily accessible through making online booking available has made me to maintain many customers. In case of vehicle breakdown before my passengers reach their destinations, I make sure that there is a stand by vehicle at the nearest stop over to avoid delaying my customers reaching their destination on time. To make my business more profitable, I have reduced costs of expenses I incur by hiring well trained and less expensive staffs. I market my services online thus many customers can get to know the services we provide and can choose our buses when they want to travel.
The other set of my customers include people who love luxury, very spacious seats, and high quality services. The type of the bus they travel in have television sets, headphones, Wi-Fi and internet services, air conditioners, drinks, snacks, spacious sets with pillows and blankets to make the customers as comfortable as possible because these are the services they are interested to have. The bus fare is highly priced and is affordable to the target customers (McCracken, p. 1). I have built loyalty with my customers through providing the quality services they need and improving this services continuously by accessing top scientific exploration (Kralj and Marki?, p. 100). I have a highly trained and creative service development crew and tough sales and marketing crew.
Organizational Culture is the self-sustaining design of behavior which governs the manner in which things are carried out in an organization. To achieve strong, hardworking team, I have learnt to value the opinions of my employees than those of experts who don’t work within my company. I have arranged programs in which workers were recognized and rewarded by their colleagues for working extra hard to support the need of our customers (Davidson, p. 32). I have observed that the consequence of having a poor team is a poor customer service, to avoid this, I started a strategy that inspires a better and very effective team work within my company by setting up systematic design sessions that improves teams performs. This made the employees to feel that they are members of a cheerful team, they recognized a great support given by their colleagues and they started treating their clients better. I value things my employee’s do that positively affects business performances, for example how they talk to the passengers that board my buses. The employees who politely handle the customers, serve customers in most humble way and they delight customers, positively affect the business. Other employees within my company are encouraged to practice those critical behaviors (Schein, p. 5). I make sure that those groups of employees who are well-informed of these few behaviors are selected to implement and spread this good conducts. Critical behaviors that include taking steps in making my clients happy and my team members giving one another support at work improves team work and the outcome of my customers. The best way to spread this critical behaviors amongst my employees is through social media such as WhatsApp, Facebook, LinkedIn posts, blogs, and tweets. I understand that creating an atmosphere that puts its workers first above clients and owners can nurture a sense of emotional obligation and pride that provides exceptional customer service. I motivate my employees by rewarding them for outstanding performance, increasing their salary and holding end of year parties where they can celebrate and interact with one another.
Most business use functional structure, it is a flowchart with a high level administrative at the top and with many middle administrators (Loermans and Fink, p. 129). They include: The human resources, accounting, engineering and marketing department heads who are directly answerable to the topmost executive. These divisions are managed independently from each other by the division heads and they answer to the uppermost manager. The system is easy to know, and retains businesses precisely classified. In my bus company I have used the functional structure where at the top most is the CEO (chief executive officer) and that’s me, followed by several managers, they include: sales manager, marketing manager, accounting manager, human resources manager and customer care. Under human resource departments we have staffs comprising of bus drivers, bus conductors and mechanics. This structure has advantages that include high level of knowledge, exclusive organization of jobs in the similar function and little overhead costs.
Conclusion
It is wise to use more than one generic business strategy when starting one’s own company because, things you want to do to in order to make each category of strategy to be successful appeal to different types of customers you are targeting. Cost Leadership entails a very comprehensive internal emphasis on processes. Differentiation strategy requires an outward-facing, extremely creative method. When choosing which of the three generic strategies is good for you, it is important to take your company’s competencies and strong points into considerations (Powers and Hahn, p. 47). It is important to have highly motivated team that cares about customer’s happiness because this can increase customer outcome and the profit made by companies (Miklav?i? et al., p. 110). As you design opening your own industry, the first choices you must make is the recognized business structure you need to adopt. The structure you select is governed by your business, growth objectives, and the number of people you proposal to involve in your industry.
References
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