Discuss about the Enterprise Development in Competitive Environments.
The latest issue of Wall Street Journal has presented a News Article about Tesla building a factory in China. The electric-car maker Tesla has agreed to set up a factory in shanghai which is a strategic decision of the organization. The present deal is a strategic decision for the organization as it will give access to the company to the growing electric vehicle market of China. The present arrangement will be focused to build a wholly owned subsidiary which will slash the production cost of the organization. However, China will lose the import tariff by 25%. The organization will get benefit from the largest electric vehicle market of the world. The Chinese government will target the sales of seven million electric vehicle cars by 2025. The strategic move of the company will reduce the production cost of the company by 33% as it can avoid the shipping cost and the import duties. Currently, the company is serving the niche market of luxury vehicles; however, the prices will be strategically reduced with the action. As a result, the company can move beyond the luxury niche market in the country.
This move has also strategically propelled the market value of the shares of Tesla by more than 50%. It has become the rival of General Motors Co., one of the largest automaker in the world.
Last year, China circulated a proposal which will assist the electric-car makers to operate in the country without the need of the local partners. In this regard, the country has planned to introduce about ten free trading zones in the country. Till now, the foreign auto makers of the company have to make joint ventures with the local partners (Varbanova, 2013). The foreign companies can avoid 25% tariff on automobiles; however, they will split the profits and sharing of technology. The free-trade agreement will be able to leverage better access to Chinese market in the future.
It is a strategic decision of the organization as it will expand the business operations of the organization in one of the major markets for the electric vehicle. It will reduce the excise duty of the organization and the company can reduce the production cost be 33%. Entering into the free trade zone in Chins will also establish cordial relationships with the Chinese government which will be beneficial for the organization while operating in the Chinese market. It is a strategic move at the functional level of the organization as the company will shift its manufacturing plant at a different location. The organization will be able to reduce the production cost as well as increase export tariff in the country.
It can be assessed that the decision will be able to increase the demand of the product. The company can strategically reduce the cost of the product which will be beneficial for manufacturing the product at a large scale (Jeffs, 2008). The organization can reduce the cost of the product by 33% which will allow it to target the niche non-luxury market of the country. The proportion of middle-class customer segment is very high in comparison to the luxury market. Therefore, the sales of the product can be increased drastically by reducing the product price.
Johnson & Johnson is a medical devices, pharmaceutical and consumer packaged goods manufacturing company. The company was at the fourth position in the fortune’s world’s most admired brands in 2010. The company dropped to number 13 at the fortune’s list of 2017. There were a number of reasons which led to the decline of the organization in these years. The company suffered from a number of controversies, regarding the baby powder and vaginal mesh implants. It resulted in numerous law suits from the customers (Freeman, 2010). Other than that, creating an extremely diversified portfolio has also increased declined the image of the organization as several of the products of the organization are not at par in quality.
Other than that, there are a large number of organizations which are present in both the list of 2010 as well as 2017. Some of the common names are Apple, Google (Alphabet) and Berkshire Hathaway. These organizations have remained among the top ten brands from 2010 to 2017. Apple has been a renowned brand from 2010 to 2017. It has sustained the top position due to its unique brand image. The organization has created a very strong brand identity and focuses a lot on the brand marketing. As a result, the craze for iPhones is same today as it was in the past years.
Facebook is on the ninth number in the list of the most admired companies in 2017. Undoubtedly, the company has made a distinguished place for itself in the last year (Haberberg & Reiple, 2008). Today, it has become a common household name and almost every person has a Facebook account. The company has given birth to the social media and used an innovative idea to build the world’s leading business. The organization was founded in 2004 and in a few years, it became the leading business organization across in the social media industry. Today, it ranks 2 in the social media industry. These selected companies operate in different domains; however, they are the most popular brands in the organization (Hiriyappa, 2013).
Johnson & Johnson is the leading and one of the largest business organization in the pharmaceuticals and the consumer product market. The core competency of the company is its brand image. Johnson & Johnson is famous all across the globe for its innovative and unique consumer products. Other than that, the organization also has significant resources in financial and natural resources (Teece, 2008). The organization has an extensive research and development facility which has assisted the organization in creating innovative and unique products. These core competencies distinguish the company from its competitors. Firstly, the company has a very strong brand presence and global brand image. The business model of the organization is unique as it has achieved economy of scale with the help of its production facility. The marketing of the company is also unique and the company has created a unique marketing strategy which has assisted it in securing the top position in the market.
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Strengths · Strong brand name · Presence in more than 100 countries · Loyal customer following |
Weakness · Recent scandals · Reduced customer trust |
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Opportunities · Market penetration as a large number of customers are avoiding the company’s product due to a recent controversy · The organization can also explore other industrial avenues as it has ample resources to enter into diversified fields |
Threats · New competitors in the developing and the developed markets (Ginter, 2013) · Competition from generic drugs manufactured by different companies. These drugs are comparatively cheaper in rate. |
Apple is the leading business organization in the smart-phone and other technical device manufacturing. The company has a combination of several core competencies. It is a very robust brand and the imitation of the products is very difficult. Another core competency is the capability of the organization to innovate constantly. It is considered as the most innovative company across the globe. It also has abundant financial resources which can be used for attaining the service of highly skilled persons. The company is also very consistent in its product portfolio development which has assisted in keeping its customers loyal.
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Strength · Advertising skills which can increase the brand awareness and demand for the products of the company · Extensive network of distribution channels · Brand reputation · Strong financial assets |
Weakness · Dependence on a single product · Incompatibility of the product with other operating systems |
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Opportunities · Adoption of new technologies such as virtual technology or Internet of Things · Diversification to other products, such as health-related wearable (Swayne, Duncan &, Ginter, 2012) |
Threats · Intensification of the competition which has reduced the market share, revenue and the profits of the organization · Lawsuits regarding intellectual property theft and patent infringement (Pynes & Lombardi, 2011) |
Facebook is a social media networking site and one of the most common websites in the social media. It is the largest social media website and has over one billion users. The organization has over one million users and it is its core competency. No other organization would be able to shift this level of customer base to other social media website. Other than that ease of use, flexibility in the use of website and low-cost operations is the core competency of the organization. Over the years, the organization has built a strong brand image and customer base (Kotler, Shalowitz & Stevens, 2011). It is really difficult for the any other organization to break the strong image of the organization. In the following section, SWOT analysis is conducted on the organization to examine the strengths and weaknesses of the organization.
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Strengths · It can be easily integrated with other websites and applications. · It has more than one billion active users · Excellent user experience |
Weaknesses · Only one primary source of income · Lack of concern for the user privacy · Issue of website customization |
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Opportunities · Market penetration by increasing the number of users who access the device with the help of mobile phones · Diversification of the revenue stream · Expansion to other countries and markets (Wilson & Gilligan, 2012) |
Threats · Increasing the number of mobile internet users (Proctor, 2014) · Users can other extensions. · Slow revenue income from online advertising · Identity issues |
In the present section, a hypothetical organization has been created which will sell smart phones to the customers. The organization will sell competitive smartphones which can compete with other leading business organizations in the same industry. The name of the organization will be Cherry Inc. and all the mobile phones will be named as Cherry phones.
The company will be dedicated to sell low cost phones to different customers so that people from all income backgrounds can use smartphones with the advanced features. The mission of the organization is to make smartphones available to all people across the globe. The objectives of the organization is to inspire the world to create a better place for the future (Drummond, Ensor &, Ashford, 2010).
This vision of the organization will reflect the commitment of the organization to inspire the communities and use the key strength of the company such as technology, innovation capabilities and creative solutions to create new values for the organization. It will create new value for the different stakeholders such as industry, partners and employees of the organization and create a better world with rich experience (Ranchod, & Marandi, 2007).
The external environment has a strong impact on the operations and the functioning of the organization. The external environment of the organization is scanned with the help of PEST analysis. It evaluates that the political, economic, social and technological aspects of the external environment. There are regulations related to intellectual property and patent in the telecommunication industry. Other than that, there are certain other regulations related to bandwidth usage and allocation. It impacts on the overall performance of the telecommunication network. The smartphones must be designed such that it is compatible for different users of the organization.
The economic factors also impact on the business operations of the organization. If the purchasing power of the customers is high than they will be able to purchase smart phones with best features. The organization can also attract investment from other companies if the financial conditions of the organization is good.
Social factors impact significantly on the business operations of an organization. The interest of the customers and their preference is influenced by the social factors. The latest trends and the lifestyle factors influences on the choice of the customers. The preference of the customers influences on the choice of product and the brand. Therefore, it is important to identify the latest trends and choice of the customers and design products according to these factors. The technology is another factor which impacts on the manufacturing and the infrastructural development of the organization. The manufacturing facility of the organization is influenced by the transportation system and other technological infrastructure of the country (Egen & Thomas, 2010). If the location has proper technology and infrastructure then the manufacturing process of the organization eases.
The internal corporate environment plays a critical role in achieving the objectives of the organization as well as adapting to the future requirements of the organization. The strengths of the organization is its cost leadership and qualitative products. The organization is offering products at a comparatively low price to the customers.
However, the quality of the product is not compromised. The organization produces smartphones which are high-quality in nature and are equipped with all the essential features. However, there are certain weaknesses of the organization too. Such as it is a new organization; therefore, the organization is not that much popular. It is important that the organization should focus on building the brand image of the organization. The business organization should focus on each of its customer so that the organization can build a strong reputation in a small duration.
There are several opportunities for the organization in the developing countries, wherein the organization can expand its customer base. There are a large number of customers who want to switch to high-feature mobile phones or are eager to buy a new one. The company should target all these customers for expanding its market share.
It can be identified that the organization has opportunity to expand the unexplored market and the price-sensitive customer segment. The organization can adopt cost leadership management strategy to attract the target customers towards the business organization.
It can be concluded that the strategic management is important for the business organization for effective management of business. The strategic management is the process of designing the strategies for the future management of the organization. The management of the organization requires effective long-term strategies which can assure that the organization will operate properly in the future. In the present report, the top brands of the in 2010 and 2017 have been evaluated. In the report, the decline of the major brand Johnson & Johnson has been examined. Other than that, the report has examined the sudden rise of the social networking site Facebook as one of the top ten brands in the world.
References
Fortune. (2010). Most Admired Brands 2010. Retrieved 25 October 2017 from https://archive.fort/une.com/magazines/fortune/mostadmired/2010/
Higgins, T., & Moss, T. (2017). Tesla Strikes Deal With Shanghai to Build Factory in China. The Wall Street Journal. Retrieved 25 October 2017 from https://www.wsj.com/articles/tesla-strikes-deal-with-shanghai-to-build-factory-in-china-1508670181
Fortune. (2017). The world’s most admired brands 2017. Retrieved 25 October 2017 from https://fortune.com/worlds-most-admired-companies/list/
Varbanova, L. (2013). Strategic Management in the Arts. Routledge.
Jeffs, C. (2008). Strategic Management. SAGE.
Freeman, R.E. (2010). Strategic Management: A Stakeholder Approach. Cambridge University Press.
Haberberg, A., & Reiple, A. (2008). Strategic Management: Theory and Application. OUP Oxford.
Hiriyappa, B. (2013). Strategic Management and Business Policy. Booktango.
Teece, D.J. (2008). Technological Know-How, Organizational Capabilities, and Strategic Management: Business Strategy and Enterprise Development in Competitive Environments. World Scientific.
Ginter, P.M. (2013). The Strategic Management of Health Care Organizations. John Wiley & Sons.
Swayne, L.E., Duncan, W.J., &, Ginter, P.M. (2012). Strategic Management of Health Care Organizations. John Wiley & Sons.
Pynes, J.E., & Lombardi, D.N. (2011). Human Resources Management for Health Care Organizations: A Strategic Approach. John Wiley & Sons.
Kotler, P., Shalowitz, J., & Stevens, R.J. (2011). Strategic Marketing for Health Care Organizations: Building A Customer-Driven Health System. John Wiley & Sons.
Proctor, T. (2014). Strategic Marketing: An Introduction. Routledge.
Wilson, R.M.S., & Gilligan, C. (2012). Strategic Marketing Management. Routledge.
Drummond, G, Ensor, J., &, Ashford, R. (2010). Strategic Marketing. Routledge.
Ranchod, A, & Marandi, E. (2007). Strategic Marketing in Practice 2007-2008 CIM coursebook. Routledge.
Egen, C., & Thomas, M. (2010). CIM Handbook of Strategic Marketing. Taylor & Francis.
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