Discuss about the Competitive Strategy for Marketing Capabilities.
Competitive strategy refers the long-term plan of the organisations, which will be helpful to achieve the competitive advantage over the competitors within the same industry. With the help of this competitive strategy, an organization will be able to hold a defensive position within the organisation as well as can generate a greater return on investment. There are three major components of competitive strategy such as adaptation, aggregation and arbitrage.
According to Jayawardhana and Weerawardena (2014), it can be mentioned that adaptation is an organisational behavioural traits, which has reflected the core competence of the organisation. With the help of adaptation strategy, an organisation can increase their revenue earning as well as their market share. On the other hand, an aggregation strategy is benefitted to achieve the economies of scale by increasing the efficiency of the business. Lastly, arbitrage is helpful to exploit economic differences in the market.
It is known that Ghemawat AAA framework consists three generic approaches to create the global value. In this context, this study has made a comparison between the pharmaceutical industry and tourism industry of Australia. Moreover, the pharmaceutical organisations are such as Abbott Australasia Pty Ltd and Alcon laboratories Pty Ltd whereas the food and beverage organisations are such as Intrepid Travel and Tourism Travel.
According to Morgan and Strong (2015), Ghemawat emphasises that organisations can increase their performance based on these three dimensions. As a result, the companies will be able to make strategic choices. In the following this study has discussed how the above mentioned organisations used these three AAA frameworks.
Figure 1: AAA framework
(Source: Acquaah, Amoako-Gyampah and Jayaram 2016)
Pharmaceutical industry of Australia:
As per the statement of Block et al. (2015), an organisation tries to adapt new technique or strategy, which can increase the revenue of the company. It is known that Abbott Pty Ltd has the specialisation in the operation of Abbott informatics, Abbott diabetes care, Abbott vascular. Now, in order to improve the revenue earning, Abbott Pty Ltd has adapted new and innovative technique, so that the company has provides the treatment of asthma. As a result, the organisation has purchased new medicines and required machines. Shimamoto (2016) mentioned that as the level of pollution has been increasing within the country, therefore, most of the people of this country have been suffering from asthma or lungs diseases. Hence, this new adaptation by this company has increased the profitability of the organisation.
In the words of Mahfud et al. (2016), aggregation aimed to create the economies of scale of the organisation. The objective of the organisation is to expand their business into global market from the local market. Mr. Ghemawat stated that by expanding the business or with the concept of business aggregation, an organisation could exchange the approaches of the operations. In this context, Abbott Australia Pty Ltd has expanded it’s business in India. As a result, this pharmaceutical company of Australia has come to know the treatment process of this country. They can also apply this technique in Australia.
In order to increase the profitability statement, Abbott Australia Pty Ltd has focused to exploit differences among the regions. This organisation used to purchase the useful tools and medicines from the domestic market and then sale these products in the global market (Mitra 2016). With the help of CAGE model, it can be mentioned that the organisation has determined the price based on the country’s economy and on the standard of living of the people.
In the opinion of Wu (2015), adaptation strategy of Alcon Laboratories Pty Ltd has aimed to the cost of labour and capital. It is noted that the cost of labour of this organisation is comparatively lower. On the other hand, the workers associated with this organisation, received another advantages. If the employees or their family member suffers from any diseases, they would be able to get free treatment in this organisation. Therefore, Songbo et al. (2015) stated that these workers received remuneration in terms of kind rather than in terms of cash. Hence, it can be inferred that the revenue earning of Alcon has increased by adapting this innovative technique.
In the words of Acquaah and Agyapong (2015), it can be mentioned that Alcon laboratories has followed semi globalisation technique, which will be benefitted from the from investment and also from the communication pattern of trade. On the other hand, this organisation has aimed to the cultural aggregation. In this context, Alcon laboratories seek to market new drugs in the market of EU. As a result, it can be inferred that the increment in the corporate branding of this company over the global product branding is a powerful aggregation strategy of Alcon laboratories.
Alcon laboratories Pty Ltd has focused to the cultural arbitrage. In the points of Santos et al. (2017), this pharmaceutical organisation tried to move their machineries, which are required to transfer the elements from one culture to the other culture. It is known that Australia is a multi cultural nation. With the help of the concept of cultural arbitraging, the techniques and organisational approaches of Alcon would be transferred. As a result, it can be mentioned that the organisation would get the competitive advantage in this case.
In order to increase the revenue earning by the organisation, this company has followed variation strategies. With the help of this strategy, the company has tried to adapt new policies. They have adapted fair price policy in their business. In this context, it can be mentioned that this tourism organisation does not discriminate the consumers based on their standard of living. They treat their clients equally. Therefore, no one feel deprived and the organisation charge affordable prices of the package of the tour. In this essence, Agyapong, Ellis and Domeher (2016) inferred that variation strategy such as the adaptation strategy is helpful to increase the revenue of the business.
It is known that with the help of this strategy an organisation can increase the economies of scale. In case of expanding their business in the market of EU, the organisation has focused to consider the taste and preferences of the consumers. However, Gould and Power (2015) stated that before expand the business, the organisation needs to take the permission of the government of that country. In addition, it can be stated that Intrepid travel agency has the specialisation in the taste and quality of the foods. Therefore, this organisation has made collaboration with the Golden chippy restaurant of EU. This is a renowned restaurant of this country. In case of organising local tours within EU, Intrepid provides the food of this restaurant to the consumers as the foods of this restaurant is highly acceptable by the consumers. Therefore, the business in the global market would be successfully expanded.
As per the statement of Rashidirad, Soltani and Syed (2013), this organization has followed economic arbitrage strategy in their business. In this context, the organisation has recruited employees from the local market of EU. As a result, the unemployment rate of the country has reduced. The cost of these labours in the domestic is comparatively lower than hiring labours from the outside of the country. They charge higher salary as their remuneration. Therefore, the cost structure would be effectively reduced.
Tourism travel agency of Australia has provided medicines to their clients during long tours. It can be observed that in case of long duration holiday trip, sometimes the visitors suffer from several diseases. Therefore, the management of this travelling agency has also provided the tourists free heath check up every after 5 days. In addition, the required medicines are also provided in free of cost to the service takers. As a result, Jayawardhana and Weerawardena (2014) opined that the satisfaction level of the tourists has been increased. They will like to travel with this travel agency further. Therefore, it can be mentioned that the performance of the organisation will also increase in the future.
It is known that to survive in the competitive market of tourism, each of the organisations require to follow creative and innovative technique in order to achieve their own competitive advantage. In this respect, Morgan and Strong (2015) mentioned that tourism travel has the sustainable competitive advantage. In addition, the business strategy of this organisation is unique, which is only evaluated by a specific group of consumers and buyers. On the other hand, it can be added that during conducting the tours, the management of the organisation has allowed the visitors higher level of comfort. This has improved the sales of services of tourism travel. As a result, the positioning of the organisation would be improved.
According to Shimamoto (2016), this travel agency of Australia has followed administrative arbitrage. Ghemawat showed that this action was initially followed by Rupert Murdoch’s News organisation in the year of 1990. With the help of this strategy, tourism travel would be able to reduce the interest payments on the debts. This would in turn help to the finance section of the company. The finance section can deal against the profitability statement of the company. With this definite action, tourism travel would be capable to lowering down the tax liabilities at the rate of 10 per cent (Wu 2015). Therefore, in a synopsis, it can be mentioned that arbitrager strategy is helpful to highlight the disparity between the organisations within the regional or domestic market. This will in turn improve the corporate bargaining capacity with the suppliers. In addition, the supply chain of the organisation has decreased.
Conclusion
The major concern of this study is to describe the how an organisation would globalise with the help of AAA framework. In order to globalise in the foreign market, the organisations require to adapt different strategies. They also require to follow business innovations and variations to expand a business successfully. With the help of the adaptation strategy, an organisation can increase the revenue earnings. As a result, the market share of the organisation will also be improved. On the other hand, aggregation strategy is benefitted to increase the economies of scale of an organisation. Lastly, arbitrage strategy helps an organisation to create the global valuation by increasing the profitability of the differences of several supply chain of different parts of the regions.
References
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Acquaah, M., Amoako-Gyampah, K. and Jayaram, J., 2016. human resource Management and Market Orientation Strategies in Family and Non-family Firms in Ghana: how Do they relate to Competitive Strategy and Firm performance?. In Family Businesses in Sub-Saharan Africa (pp. 123-153). Palgrave Macmillan US.
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