Competitive Strategy For AAA Strategies

The AAA Strategies

Discuss about the competitive Strategy for AAA Strategies.

The paper focuses on generating an empirical discussion of the AAA strategies that are undertaken by business institutions for enhancing their level of competitive advantage in the related industry. The paper subsequently aims at applying the AAA strategies relating to 4 firms belonging to two different industries for understanding the effectiveness of the AAA Model.

The AAA Strategies stand an acronym for three different types of strategies like adaptation, aggregation and finally arbitrage that are undertaken by business institutions in a combined and synergistic fashion for developing and sustaining competitive advantage both along the short and long term periods. Adaption strategies undertaken by firms are essentially linked to the different strategies employed by it for developing an effective presence along a specific region  (Zhang & Dong, 2015). Aggregation strategies are identified and characterised to be such that contribute in helping the firm form potential agreements with other firms operating in the like sector such that the same contributes in developing the presence of the company in the international markets. Finally, the employment of the arbitrage strategy gains justification based on the restructuring of the existing organisational structure for generation of needed competitive advantage  (Ghemawat P. , 2011).  

The adaptation strategy undertaken by the business institutions effectively contribute in generating customised product offerings and solutions to the prospective customers. The generation of customised products that contribute in meeting the consumer demands and expectations potentially help in enhancing and sustaining revenue growth for the organisation in the long run while also helping in maximising the existing market shares of the company in the related industry. Different types of adaptation strategies are exercised by the business institutions like differentiation, externalisation, focused strategy and also the generation of new product and service designs that in turn help in enhancing the leadership and growth potential of the company in the specific industry  (Motohashi, 2015).

Aggregation strategies are undertaken by the business institutions along two main categories like economies of scale and economies of scope. The business institutions continually focus on enhancing the economies of scale through maximising the level of product generation and development which in turn tends to reduce the level of production cost related to such. Similarly, the enhancement of the value generation and propositions by the company based on incorporating effective distribution, supplier and sales and marketing networks further contributes in enhancing the scope of the company in developing its market leadership in the related industry  (Lee, Jeon, & Kim, 2011).

Adaptation Strategy

In terms of the arbitrage strategy the firms continually focus on reducing the operational, manpower and business costs such that the reduction in the mentioned costs contribute in generation of effective savings for the business institution and thereby also help in enhancing the level of firm’s performance and productivity in the long run. Similarly, different types of performance enhancement strategies are also undertaken by the business institutions in that the same helps in enhancing the firm’s operational efficiency and productivity  (Jha, Dhanaraj, & Krishnan, 2015).

	Food/Beverage Industry (McDonald’s, Starbucks)	Pharmaceutical Industry (GlaxoSmithKline, Novartis)
Adaptation	McDonald’s Variation as an adaptation strategy is prominent in the case of McDonald’s such that the food retail chain focuses on generation of customized food offerings for its diverse customer force spanning across geographical boundaries. The generation of the ‘Glocal’ strategy by McDonald’s has enabled the company for generation of different recipes that would meet regional needs and expectations (Sinclair, 2012). McDonald’s continually focuses on the generation of needed innovation in terms of generation of burger that would be made of fresh patties. Apart from innovation rendered in product offerings, McDonald’s also aims at digitalizing marketing and promotional campaigns through the use of Smartphones and tablets (Forbes, 2016). Starbucks Starbucks is widely recognized for the employment of a broader differentiation strategy. The beverage retail chain focuses on the generation of coffee drinks in a highly customized fashion for effectively suiting the needs of different coffee drinkers located both along the regional and international markets. The coffee retail chain adequately aims in meeting the detailed needs of its coffee drinkers visiting its restaurants in diverse markets (Laasch & Conaway, 2014). In a significant move during 2012, Starbucks is observed to have formed a joint venture with Tata Global Beverages for developing an effective presence in the Indian subcontinent. The joint venture between Starbucks and Tata is taken to gain effective success owing to the sharing of commitments and responsibilities for serving fresh and quality coffee drinks to its customer groups (Tata Global Beverages, 2012). Starbucks is also widely known for its innovative brewing activities and other in-store innovative conducts that contribute in attracting potential customers to its diverse retail outlets both along United States and other international regions. Different types of innovative brewing ideas are implemented in the retail outlets of Starbucks that serves in generating a competitive advantage for the company (Lorenzetti, 2014).	GSK GlaxoSmithKline largely focuses on the generation of innovative offerings related to healthcare and also value-added drugs for meeting the diversified and emergent needs of patients. The pharmaceutical company potentially aims at generation of variegated and diversified product offerings associated with categories like Wellness, Nutrition, Skin and Oral Health Care. GSK is observed to generate significant investments contributing in the promotion of its research and development wing that help in the generation of innovative products. Incorporation of innovation strategies in a continual and sustained fashion ideally contributes in generating increased competitive advantage for GSK (GSK, 2016). Novartis Novartis like GSK also focuses on the generation of potential investments for contributing in the development of the innovating potential such that the same helps in the generation of innovative ophthalmic solutions  (Novartis , 2015). Similarly, Novartis also operates in the generation of effective drugs and healthcare solutions for addressing the needs of its oncology division. Novartis also works based on a focused differentiation strategy such that it aims at generation of potential products for catering to the needs of a growing global aging population  (Lorenzetti, 2014). It also focuses on participating with the physicians to understand the needs and expectations of the patient groups and thereby in generating effective healthcare solutions  (Laasch & Conaway, 2014).
Aggregation	McDonald’s                                                                                   McDonald’s tends to gain the benefit of economies of scale from the conducting of production and business operations. The food retail chain based on the generation of large scale product offerings tends to gain the advantage of reduction in production costs. Similarly, the endeavor of the company management of McDonald’s to continually communicate and govern the activities and decision making of the supplier group potentially contributes in managing and aptly reducing the sourcing cost of different types of raw materials. The above activity in turn tends to enhance the profit margins for the company (Gurufocus, 2012). Starbucks Starbucks tends to gain on economies of scale based on the production of brewed coffee drinks in large amounts that help in reducing the prices for the coffee products and other raw materials. The company is known for its aggressive hedging policies associated with reducing the cost of its coffee products, dairy and fuel materials (Stock, 2013). Starbucks also gain on economies of scope based on the generation and offering of different food products along with the serving of hot coffee drinks. Starbucks acquiring of La Boulange bakery during 2012 has further helped Starbucks gain on needed economies of scope based on gaining access to potential equipments, infrastructures and storage facilities (Chen, 2014).	GSK GlaxoSmithKline (GSK) has entered into a strategic alliance with Novartis such that the same enhances the potential of GSK through helping it gain an effective access to potential distribution networks, access to large number of product patents and also in terms of gaining effective access to different product divisions and formats of Novartis  (Conover, 2013). Again the Joint Venture entered into by GSK with Novartis also helps the former gain needed potential for developing its leadership potential in the ‘Over the Counter’ or OTC category. The companies thus potentially focus on the generation of different healthcare brands that would contribute in developing and sustaining a leadership potential in the OTC market. The joint venture of GSK with Novartis potentially contributes in generation of effective synergies that help the pharmaceutical companies to develop their strategic potential in developing and sustaining market leadership in the global pharmaceutical market. Economies of Scale gained by GSK owing to its joint venture with Novartis ideally contribute in helping the pharmaceutical company compete with consumer product companies like Unilever and Procter and Gamble (Staton, 2014).   Novartis The formation of a joint venture agreement between Novartis and GSK is evaluated to help Novartis continually develop its potential in generating and sustaining increased revenues and profits in the long run  (Chen, 2014). The above fact would thereby help the management of Novartis in generating effective returns to the shareholders of the company. The joint venture formed between Novartis and GSK also contributes in helping Novartis develop on its innovative portfolio of vaccines for addressing the emergent needs of the consumers  (Stock, 2013)..
Arbitrage	McDonald’s McDonald’s focuses on cost reduction initiatives through promotion and growth of franchisees. The development and growth of a number of franchisees and also the restructuring of the international operations is taken to help McDonald’s generate savings of around $300 million relating to the annual cost expended by the company. The food retail chain aims to franchisee around 90 percent of its restaurant business by the close of 2018 which is taken to help in the savings of potential business costs and enhancement of revenue (Gasparro, 2015). Starbucks The arbitrage strategy undertaken by Starbucks reflect that corresponding to a reduction in the prices of coffee beans in the commodity market, the beverage retailer has focused on enhancing the price of its coffee offerings in diverse markets. The reduction in the level of commodity prices for coffee beans has contributed in lowering the operating costs of Starbucks. The company in turn tends to enhance the prices of the product offerings for help in the generation of increased revenues, market share and potential dividends to its shareholders (SOMMER, 2015).	GSK The management of GlaxoSmithKline focused on reducing its manpower cost through the development of a simpler and small organizational structure. The restructuring program enabled by the company potentially helped GSK in gaining potential savings of around GBP 0.4 billion currently during 2016 (Hirschler, 2014). Similarly, the restructuring of the organisation also contributed in enhancing revenue margins relating to the pharmaceutical, health care and also for its vaccine departments  (Stephens, 2016). Novartis The joint venture formed with GSK has also motivated the management of Novartis in restructuring the organisation for contributing in reducing its business and operational costs  (SOMMER, 2015). Similarly, the joint venture formed with GSK also helps in increasing the innovating potential of Novartis  (Ward, 2015).

Conclusions

The analysis carried out in the paper ideally reflects the employment of the AAA strategies by two companies each like McDonald’s and Starbucks and GSK and Novartis belonging to the fast food/beverage and pharmaceutical industry in a respective fashion. The use of the AAA strategies ideally reflects the manner the different strategies are used by the four different firms in cultivating and enhancing on the dimensions of competitive advantage along their related industries.

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