Describe about the Competitive Strategy for International Value Creation.
It can be stated that Ghemawat’s AAA structure offers three general approaches towards international value creation. It can be stated that adaptation strategies seek to enhance the revenues as well as marketplace share by tailoring one or more apparatus of an organization’s trade model to suit all the neighboring requirements or predilections. Baines et al. (2012) have stated that aggregation strategies generally concentrates on attaining economies of scale or span by producing local and worldwide efficiencies. They generally take into account standardizing an important segment of the value proposition and grouping jointly through development and production procedure. Arbitrage is all about exploiting economic or other dissimilarities between local and provincial marketplaces, generally by locating disconnect portions of the supply chain in several other areas (Jha, Dhanaraj and Krishnan 2014).
This particular research work has tried to shed light on these three major perspectives of four companies of two different industries. To carry on this research work, Tesla and BMW have been selected under the segment of car industry and V2 Wine group and E&J Gallo has been taken into consideration under Wine industry. However, it can be stated that all the organizations have focused highly on these three components and thus they have achieved a notable position in this industry (Jovanović, Todorović and Komazec 2014).
Adaptation
Initially, focus would be shed on adaptation of four companies of two different industries. In case of Tesla, it can be seen that the corporation has adopted some global strategies to be at the leading position in the existing industry. In case of adaptation, the company’s strategy is to exploit CAGE differences between the nations. Tesla can easily adjust to differences between regional and Chinese markets, starting production in China that would reduce its prices by a third, moving assembly and customization to China in order to enhance efficiency and capacity planning procedure. Apart from that, the company has built strong relationship with some other Chinese local organizations that has already built the basic infrastructure (tesla.com 2016). Tesla is one of the leading global electric car manufacturing organizations that focus highly on the creation of global value through changing some elements that the corporation offers to meet the local as well as international preferences. However, it is required to mention to mention that adaptation is the most widely used global strategy and thus most of the organizations focus on this part sincerely to gain a strong and prominent market position (Margulescu 2015).
Mauri and de Figueiredo (2012) have stated that adaptation is the storage of parameters required by the control module for operating within the present operating circumstances. In case of adaptation, it can be seen that most BMW engine control modules are adaptive in nature. This particular adaptation values consider several operating parameters of the vehicle (bmw.in 2016). It can be seen that when a fault condition takes place, the control module considers this concern critically and adopts to continue operating with the fault condition. However, it can be stated that some control modules would automatically reset adaptation values at the time any fault codes are erased. Therefore, it can be stated that BMW has designed their engines in such a way that it can easily adapt and this is the strong example of adaptation in case of BMW (Miles, Miles and Cannon 2012).
Besides discussing adaptation in the car manufacturing industry, now it is important to shed light on wine industry and discuss the same in case of V2 Wine Group and E&J Gallo. From the reports, it can be seen that V2 Wine Group has announced a long-term conformity between the two corporations that would be effectual instantly. Under the terms of conformity, V2 Wine Group has the limited rights in order to distribute Chile’s Vina Morande Wines in the United States. For adaptation purpose, V2 Wine Group is importing the Pionero, Reserva and Gran Reserva tiers of the Vina Morancde Portfolio. The marketing and the management team of this wine company declared that they are highly thrilled to reach a prominent milestone by representing their first South American Winery in collaboration with the Yarur family (Pedersen et al. 2014).
The President of V2 Wine Group stated that after a comprehensive three year investigation for the ideal Chilean winery and depending on the amalgamation of their commitment to superiority, marketing speculation as well as the long-term value of the trade, they have found that best partner once can ever have (v2winegroup.com 2016). Apart from that, it can be stated that the Vina Morande had an exceptional track record and achievement and is highly acknowledged for their world class wines across the globe. Through adaptation, the objective of the company is to deliver the truest expression of Chile in each single bottle that they manufacture (Rosli 2012).
From the market reports, it can be seen that E&J Gallo was the country’s largest winery with the significant market share of American wine market. After that, the corporation found that in order to stay competitive in the global market, the company has expanded its business presence in different parts of the globe like United States, Canada, China, Germany, Japan, Mexico, Poland and the United Kingdom. It can be found that during the last 3 years, E&J Gallo has been operating its contract management operation on Autonomy ECM throughout different departments on the daily basis (gallo.com 2016). The principle enhancements demands sophisticated flow of works to be implemented with high standard security as well as assignment in dynamic surroundings. Therefore, it can be seen that this organization is highly concerned with adaptation and thus they have been able to hold on this market position carefully. Through adaptation, the company has been able to increase overall business procedure efficiency by 70%. In this procedure, it can be found that historical business information and contents generated from previous implementation were gathered and merged into the present solution (Rothaermel 2015).
Reports have revealed a fact that Tesla unveils US$3000 home battery with Solar City’s aggregated virtual power plants in the mind. In general, it can be stated that strategies under aggregation seek to achieve economies of the scale by generally creating global efficiencies. Therefore, it can be stated that these generally takes into account standardization of the portion of the value proposition that could further lead to the assemblage of production as well as the development procedure. The company in order to create substantial cost advantage by centralizing purchasing of the raw materials, producing end products and some more in those places where the relative cost incurred in labor and other resources are less (Russo and Minto 2012).
However, it is required to mention that some organizations although globalized, tend to use aggregation strategies instead of adaption. The corporation believes that only revenue is not geographic aggregation for generation of economies of scale and scope. Santos-Vijande et al. (2012) have stated that Tesla focuses on non-geographic parameters as well, as these are the important dimensions also. The management and the marketing team of this leading car manufacturing company believe that adaptation is the most obvious strategic response to dissimilarities and variation is the most obvious lever for achieving it.
Reports have stated that BMW launched the Electronaut effect, a new digital took that gives the customers easy access to key aggregated data regarding the range, cost savings and positive environmental impact that BMW Active-E drivers. The streamline data of BMW is represented in the three major categories and these are range (most miles driven in one day), savings (entire amount of saved money) and environment (this is the gallons of gas not used). The marketing team of the corporation is well aware of these components and thus they focus on these parts sincerely (Walker and Madsen 2016).
Arbitrage is the third elements of AAA model that includes three aspects which are performance enhance, cost reduction and risk reduction. BMW normally puts more emphasis on its engineering excellence allied to leading-edge design. It has helped the company to drive successful and profitable expansion. They have also introduced new IT options in order to upgrade the driving experience of the customers. One example of such option is BMW connectedDrive which is now available in most of the cars and is adding greater functionality. Tesla on the other hand, is a unique vehicle manufacturing organization that is devoted to produce electric vehicles. They are enhancing their organizational performances by using the environmental awareness of the customers which is rising rapidly nowadays (Walker and Madsen 2016).
Their vehicles are 100% eco-friendly and not different from conventional vehicles in terms of performance. The management of the organization is however trying to improve the performance of the further so those cars can run as fast as the diesel cars. Besides, they are installing more stations from where Tesla cars can be charged. As for cost cutting strategy, BMW CEO Norbert Reithofer has hired professional and experienced consultants from McKinsey. The main goal of this recruitment is to develop a cost cutting strategy. It is expected that the recent cost cutting strategy of the organization will save the company between $4 billion and $5.5 billion annually. Now the question is, within this competitive market, how BMW can cut costs. According to Rosli (2012), they will reduce the number of workers in the organization and in order to reduce total amount of cost.
They will also reduce engineering and development costs by using upgraded technologies. The management of BMW is also communication with Diamler and other car manufacturing organizations in order to gain cooperation from them over sharing several vehicle components such as engines. On the other hand, Tesla is continuously focusing on upgrading its electric vehicles and adopting strategies to cut cost. Electronics and software used by Tesla is their biggest strategy to minimize overall cost of the organization. According to Rosli (2012), through this software it will be easy to update current vehicles over the air. This software is also capable of battery voltage management, diagnostics and traction and stability control.
E & J Gallo has adopted upgraded water management to reduce costs. By monitoring the amount of water that is pumped, the management is able to track exactly how much water is located to each block. This allows the management to establish a water management plan and an extremely controlled growing environment. The organization has the ability to make sure that there is no unnecessary water is pumped. This helps the organization to use energy and water in an efficient manner. On the other hand, the biggest cost saving strategy used by V2 winery is to conduct partnership with Family of Wines. This is a sales and marketing partnership where V2 wine will provide sales and marketing services to the organization. They will also handle distribution network of MFW. This will help V2 wines to reduce their operation cost. While improving performance, E & J is following a clear set of principles which is to respect the land, respect the community where they are conducting their business. The company is strictly committed to enhance their energy efficiency and reduce their carbon and water footprint. However, both of companies are following almost same paths in order to reduce overall organizational cost and to improve their overall performance (Rosli 2012).
V2 wine group is most popular for its significant change process concerning its enormous expansion in this contemporary global environment. In order to manage the risk factors in the market the company has created three direct positions associated with the retail chain sector. In addition to that, the company has been also focused on enhancing their sales team. On the other hand, E & J Gallo wine group intensely focus on leadership management capabilities. In this context, it has been observed that unlike V2 winery group the company does not distribute its management decisions to multiple departments. It is solely a family owned business and the strategic decisions are made by prime CEO of the company (Jha, Dhanaraj and Krishnan 2014).
Conclusion
In the end, it can be concluded that in different industry such as car industry and wine production industry, all the chosen organizations are properly maintaining AAA models in their business strategies. Especially Tesla management has significantly adopted new strategies and technologies to ensure the success of their organization. Currently, environmental awareness is increasing among the customers and they were looking for eco-friendly vehicles. At that time, some famous car manufacturing companies were thinking to launch electric vehicles but Tesla did it. Both the wine companies are also unique in their own ways and are using dissimilar strategies to maintain all the aspects of AAA model. However, only BMW is facing some minor issues as the stakeholders do not like their current cost reduction strategy. Therefore, it is the high time for them to bring changes in their strategies if they want to hold their leading position in the vehicle manufacturing industry. After completion of comparative analysis of four different companies of two different industries, it has been found that the when the managers of the global organization hear about the strategies of global context, they plan to incorporate this AAA framework all together. Therefore, it can be stated that after a close look at this framework, it has been revealed the core differences and tensions among them. Business leaders must figure out which elements would meet the need of the organization and would prioritize accordingly.
References
Baines, T., Brown, S., Benedettini, O. and Ball, P., 2012. Examining green production and its role within the competitive strategy of manufacturers.Journal of Industrial Engineering and Management, 5(1), p.53.
bmw.in, 2016. Home. [online] Bmw.in. Available at: https://www.bmw.in/en/index.html [Accessed 6 Sep. 2016].
gallo.com, 2016. E. & J. Gallo Winery. [online] Gallo.com. Available at: https://www.gallo.com/ [Accessed 6 Sep. 2016].
Jha, S., Dhanaraj, C. and Krishnan, R., 2014, January. MNE R&D in Emerging Markets: Arbitrage, Adaptation & Aggregation in Global Innovation Networks. In Academy of Management Proceedings (Vol. 2014, No. 1, p. 17650). Academy of Management.
Jovanović, M., Todorović, I. and Komazec, S., (2014). THE NEED FOR A MULTIDISCIPLINARY APPROACH IN DEVELOPING AND IMPLEMENTING A GLOBAL STRATEGY. Econophysics, Sociophysics & Other Multidisciplinary Sciences Journal (ESMSJ) Staff, p.26.
Margulescu, E., 2015. OLD AND NEW ECONOMIC GLOBALIZATION.Challenges of the Knowledge Society, p.739.
Mauri, A.J. and de Figueiredo, J.N., 2012. Strategic patterns of internationalization and performance variability: effects of US-based MNC cross-border dispersion, integration, and outsourcing. Journal of International Management, 18(1), pp.38-51.
Miles, P., Miles, G. and Cannon, A., 2012. Linking servicescape to customer satisfaction: exploring the role of competitive strategy. International Journal Of Operations & Production Management, 32(7), pp.772-795.
Pedersen, T., Venzin, M., Devinney, T.M. and Tihanyi, L., 2014. Introduction to Part II: Orchestration of the Global Network Organization. Orchestration of the Global Network Organization (Advances in International Management, Volume 27) Emerald Group Publishing Limited, 27, pp.37-41.
Rosli, M.M., 2012. Competitive strategy of Malaysian small and medium enterprises: an exploratory investigation. American International Journal of Contemporary Research, 2(1), pp.93-105.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill.
Russo, M.V. and Minto, A., 2012. Competitive strategy and the environment: A field of inquiry emerges.
Santos-Vijande, M.L., López-Sánchez, J.Á. and Trespalacios, J.A., 2012. How organizational learning affects a firm’s flexibility, competitive strategy, and performance. Journal of Business Research, 65(8), pp.1079-1089.
tesla.com, 2016. Tesla. [online] Tesla.com. Available at: https://www.tesla.com/ [Accessed 6 Sep. 2016].
v2winegroup.com, 2016. V2 Wine Group – 584 First Street East, Sonoma, CA, 95476 – Phone 707-938-7624. [online] V2winegroup.com. Available at: https://www.v2winegroup.com/ [Accessed 6 Sep. 2016].
Walker, G. and Madsen, T.L., 2016. Modern competitive strategy. McGraw-Hill Education.
Essay Writing Service Features
Our Experience
No matter how complex your assignment is, we can find the right professional for your specific task. Contact Essay is an essay writing company that hires only the smartest minds to help you with your projects. Our expertise allows us to provide students with high-quality academic writing, editing & proofreading services.
Free Features
Free revision policy
$10Free bibliography & reference
$8Free title page
$8Free formatting
$8How Our Essay Writing Service Works
First, you will need to complete an order form. It's not difficult but, in case there is anything you find not to be clear, you may always call us so that we can guide you through it. On the order form, you will need to include some basic information concerning your order: subject, topic, number of pages, etc. We also encourage our clients to upload any relevant information or sources that will help.
Complete the order form
Once we have all the information and instructions that we need, we select the most suitable writer for your assignment. While everything seems to be clear, the writer, who has complete knowledge of the subject, may need clarification from you. It is at that point that you would receive a call or email from us.
Writer’s assignment
As soon as the writer has finished, it will be delivered both to the website and to your email address so that you will not miss it. If your deadline is close at hand, we will place a call to you to make sure that you receive the paper on time.
Completing the order and download