Discuss About The Competitive Strategies And Firm Performance?
This report explains the competitive strategy of the different industry that is food industry (Mcdonald’s and Coco-cola) and car industry (Ford and Honda). The report analyzes the competitive strategy of these industries on the basis of global strategy as business model change and targets markets and modes of entry.
It is a technique used as strategy by a producer to build up a solid personality in a particular marketing. It is also called as segmentation strategy. Utilizing this procedure, a producer will present distinctive products of a similar product under a similar name into a specific product classification and along these lines covering the scope of items accessible in that classification (Killing, 2012). There are a few ways a firm can differentiate its items. Differentiation strategy is a strategy which has supported Coco-cola’s globalization vision. Coco-cola’s has been tailoring its product line continuously to meet individual demands. For example Coco-cola offers different products to its worldwide products like powerade and flavoured coke, cherry and vanilla coke, diet coke, zero fat coke and many more. Moreover the Coco-cola is introducing globally more health conscious products for its customer. For example products like Odwalla, vitamin water and many more for its old age customer. Coco-cola is investing its huge budget and time into researching for developing new market and advertise its product. Packaging differentiation also became a key important factor in success of Coco-cola as a global brand. It also shows adaptability of Coco-cola in various market segments (Howes, Skea, & Whelan, 2013). Functional packaging is used to make the availability of products in various sizes and forms, inclusive of gas, aluminium cans, plastic bottle and many more. The Coco-cola reflects different forms and dimensions of the containers and jars to guarantee simple stacking and vending machines. To advertise the organization’s sense of duty regarding environmental sustainability, all packing materials are intended to be recyclable and are labelled according to characteristics for convenience to customer.
Another strategy utilized by Coca Cola is that of cost leadership. This is a technique utilized by a few major brands by global companies in the market. Cost leadership is very powerful methodology that helps in marking rapid increment in market share and gaining popularity amongst customer. Generally, the working class want to spend less on daily need items, which frames a substantial part of Coca Cola’s customer base. Coca Cola has kept the costs of its items low to attract all types of customers. There are reasonable price products and accessible conveniently in every part of the world (Grewal, et al., 2013). Coca Cola has guaranteed both affordability as well as availability which have prompted higher deals and popularity. This strategy turned out to be a competitive advantage for Coco-cola in accepting sustainable approaches. While cost leadership as the main generic strategy used by Coco-cola, it also adopts product differentiation to create competitive advantage over competitors. It has brought number of products which are healthy including juices and healthcare drinks and aiming towards health of customer. So, Coca Cola has a combination of cost leadership and differentiation to advance competitive advantage and building customer loyalty (Aharoni, Tihanyi & Connelly, 2011).
McDonald’s might appear like it’s already universally, but it hasn’t reasonably saturated in the world yet. In the previous years, McDonald’s has brought substantial force towards emergent markets (Frynas & Mellahi, 2015). And not only fashionable marketplaces like China and India, but also places before lacking of the Excellent Arches, like African countries. Sales are increasing every year in comparison to previous year in Asia/Pacific, Africa and the Middle East.
McDonald’ is refining its physical stores creating them further to attract consumers and it appears to be functioning. In China, it’s exploring out a “Less is more” notion design, which drives with brighter decoration and cushioned chairs. And also approximately more than 90% of McDonald’s locations have stretched their time now and it has numerous stores which are kept open 24/7. An unrestricted Wi-Fi is now accessible in McDonald’ cafeteria across all the stores in the world and lately it has made a large drive to get flat display TVs in all its stores. It is also planning to opening up its individual TV station with original programming, named McTV.
The most important instance of this is the McRib, making an extraordinary additional nation-wide appearance in two years. It took front and was extremely prosperous, bringing a good gain in store sales (Nielsen & Nielsen, 2011). Distinctive version McFlurries also have been added out of menus too, alongside with restricted time smoothies.
McDonald’s cannot transfer its product but it can select between various approaches of operations in foreign marketplace, certain of which may include a greater degree of obligation of assets than others. In specific, it can start a subsidiary that licenses straight, or come in into a joint venture with a local business, or begin a master licensing preparation whereby the master franchisee owns and functions all the outlets in territory or discover franchisees to do the equivalent (Gupta & Malhotra, 2013). The level of outlay that McDonald’ promises to these marketplaces varies across these diverse methods but in every case McDonald’ put on important control over the amount of outlets and the development in outlets in every market.
The report explains the competitive strategy of car industries adopted by Honda and Ford organization. The report also describes the competitive strategies of these companies on the basis of target market structure and modes of entry (Perrigot, López?Fernández & Eroglu, 2013).
Honda is multinational automobile manufacturing organization which manufactures Automobiles, electric vehicle, motorcycles, and many more. In short, the company is serving to majority part of requirement of vehicles that is passenger cars, bikes, power vehicles, and sports vehicles (Ray & Ray, 2011). Currently Honda is listed on Tokyo stock exchange. It is the world’s biggest inside combustion motor producer by volume. It started producing new products at a faster rate in several markets. In the present scenario, company 36th position in world in terms of revenue in automobile manufacturer with expanding presence in North America, Japan, South East Asia, Africa, Australia and the centre East with an 40% share of motorcycles (McGrath, 2013). The Honda new target market will providing luxury cars to Australia which got huge success recently in US market. Thus to enhance its growth more Honda will be entering to new market by launching CRZ sports hybrid model to Australia. The reasons for selecting Australia are best availability of designs and develop huge market with little efforts. Honda is a huge group with having presence over all parts in world with various products.
According to Ortega (2010), the automobile industry is of vital significance to the Australian economy as the automobile is the biggest manufacturing industry in Australia. This industry supports many different businesses such as aluminium, steel, glass, and elastic, plastic and also adds to the exports of the country (Brouthers, 2013). Besides, this market is developing and encounters extreme level of competitive pressure. The modes of entry in Australia market is exporting.
There are direct and indirect methodologies to exporting in different nations. Honda can adopt indirect export method to enter to Australia market as it is easy and convenient. The Honda makes a promise to marketplace overseas on its individual behalf. This provides Honda a tighter control over its brand and processes in abroad. For accomplishing this Honda employs a home country intervention means a company which is handling Honda operations on its behalf in new market (Sun & Lee, 2013). This gets the product into an abroad market easily then it would be exporting ultimately. Examples of indirect exporting include:
Ford Motor Company is the very old and well-known for automobile industrialists in the world. The business was started in 1903 by Henry Ford. Ford has its headquartered in Dearborn, Michigan. The starting capital invested was only $28,000 with 1,000 shares and less than 15 investors.
Before founding Ford Motor Company, Henry Ford had made two ineffective trials to go into the automobile manufacturing industry (Zeschky, Widenmayer & Gassmann, 2011). The company concentrates on the improving manufacturing, enhance capacity, and build innovative products at continuous periods so as to meet to all the divisions of the Indian commuter car market and responsibility into other related dealings like car finance, insurance and purchasing and selling used vehicles
According to Zott et al. (2011), China is significant geographical area for Ford Motor Company as China is innovating to introduce pollution less vehicle. AS China is having trouble due to shocking pollution levels in all major cities. This factor is aggressively forcing car companies to innovate their vehicles to plug-in vehicles. Ford should invest set its new target market to china with millions of investment, research and subsidies. Ford sees China as the quickest developing business sector on the planet for new vitality vehicles (NEV) and estimations that portion to develop to six million vehicles for each year by 2025, of which roughly four million would be all-electric (Keller, Parameswaran & Jacob, 2011). The expanding buyer power and administrative prerequisites for vehicles that deliver a littler carbon impression has impelled the improvement of new fuel innovation, lighter materials and fuel effectiveness arrangements. Progressively, organizations are teaming up with their providers and rivals to accomplish efficiencies that enable them to convey creative innovations to the market at the most minimal conceivable cost. The potential JV with Zotye Auto would speak to an extending of responsibility regarding electric vehicles in China. In April, it sketched out plans to offer by 2025 cross breed or completely electric adaptations of all models worked in China.
The modes of entry Ford can adopt are joint venture. The main advantage firm like Ford can grant a license to China to avoid setting up costs, but due to this it will typically lose some control over its technology usage with quality control as well. This mode of entry allows the companies to divide the risk and resource required to enter into the foreign markets.
Joint venture is an enterprises contracted and entered into by two or more corporate entity for the purpose of a definite venture or some special corporate activity. It the joint venture generates a distinct corporate entity in which the proprietors contribute assets share equity and decide on ways of managing the business. The new business may be a corporation, limited liability company, or partnership.
The joint ventures employ a distinct industry entity which can be employed by Ford to conduct the identified business activities. The use of a distinct entity allows the partners to limit the liabilities associated with the relationship. More precisely, a joint venture is required by Ford in order to avail incentives and allowances provided under any local foreign investment programmers (Bock, et al., 2012). In core, a joint venture organization involves of an agreement between two or more business entities to combine, in a precise way, a certain amount of their capitals in order to manufacture, produce or sell a product or to render a facility and share in a specified way the profits that result and the risks that occur.
Conclusion:
From this report, it has been concluded that the strategies adopted by Food industries (Mcdonald’s and Coco-cola) and car industries (Honda and Ford) are exclusive and attractive. Their customer retention is comparatively high in comparison to others. Mcdonald’s and Coco-cola offer several useful features to make beverage consumption as management as possible which includes home delivery, variety, exclusive services, and much more which makes its products and services more attractive. On the other side, Honda and Ford is already creating a superior brand image for all products it sells to the customer and solves queries for each customer by remaining available all time.
References
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Bock, A.J., Opsahl, T., George, G. & Gann, D.M., 2012. The effects of culture and structure on strategic flexibility during business model innovation. Journal of Management Studies, 49(2), pp.279-305.
Brouthers, K.D., 2013. A retrospective on: Institutional, cultural and transaction cost influences on entry mode choice and performance. Journal of International Business Studies, 44(1), pp.14-22.
Frynas, J.G. and Mellahi, K., 2015. Global strategic management. Oxford University Press, USA.
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Howes, R., Skea, J. & Whelan, B., 2013. Clean and competitive: motivating environmental performance in industry. Routledge
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Killing, P., 2012. Strategies for joint venture success (RLE international business) (Vol. 22). Routledge.
McGrath, R.G., 2013. The end of competitive advantage: How to keep your strategy moving as fast as your business. Harvard Business Review Press.
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Ortega, M.J.R., 2010. Competitive strategies and firm performance: Technological capabilities’ moderating roles. Journal of Business Research, 63(12), pp.1273-1281.
Perrigot, R., López?Fernández, B. and Eroglu, S., 2013. Intangible Resources and Plural Form as Drivers of Franchise Internationalization: Examination within a Two?Country Perspective. Journal of Small Business Management, 51(4), pp.557-577.
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