1.How is strategic management illustrated by this case study?
2.What competitive advantage has carsales.com.au achieved? How can it maintain that competitive advantage as other companies try to imitate and replicate its success?
3.Do you think the success of carsales.com.au is due to external or internal factors or both? Explain.
4.How might SWOT analysis be helpful to Greg Roebuck as carsales.com.au continues to grow?
1.Strategic management refers to the process of identifying and implementing the goals and objectives of an organization by the senior management on behalf of the actual owners while keeping into consideration the available resources and the organizational environment. The given case study mentions the success story of carsales.com.au. The case study mentions the development of the goals and objectives of the organization by Greg Roebuck, the CEO of carsales.com.au,in its initial days.
The major strategic management decisions taken by Roebuck included developing a superior business model as compared to the rival organizations. For this purpose, the organization emphasized upon offering the sellers free online advertisement till the time their cars were sold. This made the organization’s activities different from the traditional newspaper advertisements as the newspapers took money from the sellers for placing their advertisements without bothering whether the sellers would obtain benefits from the advertisements or not (Hill, Jones and Schilling 2014).
The second major strategic management decision taken by Roebuck included utilizing special technology for creating quick and more affective advertisements for the sellers. The organization aimed at providing detailed and appropriate information to the customers, which they were unable to obtain through newspaper advertisements (Wheelen et al. 2017). This was the boldest strategic management decision taken by Roebuck as internet was not much popular back in those days and building up a business entirely based upon internet was very risky in the late 1990 s.
The third major strategic management decision taken by Roebuck was utilizing innovation for constant improvement of the business along with enhancing the customer experience. The innovations mainly involved enabling the customers to view carsales.com.au on their mobile phones and using the internet for communicating with the customers. The organization aimed at utilizing the best technologies in order to stay ahead of the competitors. The long- term strategic management plan of the organization was to emphasize upon the automotive products while considering the scope for diversification into new products, markets and locations (Rothaermel 2015).
The above mentioned goals and objectives of the organization were a part of strategic management of the organization as the goals and objectives were set by the CEO of carsales.com.au, Greg Roebuck on behalf of the owners of the organization, which provided the necessary direction to the organization. The objectives were formulated and the strategies were formed to achieve those objectives along with the proper allocation of the resources for achieving those objectives (Barney and Hesterly 2015). The strategic management decision was taken in a highly complex environment as the business model was based upon internet, which was not popular in those days.
2.The major competitive advantage, which carsales.com.au has achieved is objectives and has been successful in becoming the market leader. The organization has been successful in crushing its competitors and creating its strong market presence. More than 80% of the customers, who search for cars online visit carsales.com.au. The organization has created a positive feedback loop, which has enabled the organization to reach greater heights. The organization was the first mover in online car sales industry and has created its own goodwill. The website not only enables the trading of cars but also enables trading of boats, bikes, trucks, and machineries. Initially, the organization did not charge any amount from the sellers until their cars were sold (Peteraf, Gamble and Thompson 2014). This was one of the major strategies to attract the sellers to list their cars on the website of carsales.com.au instead of placing advertisements in newspapers, which involved incurrence of huge costs. However, later on the organization charged a very minimal amount from the sellers for listing and advertising their cars on the website.
The organization has divided its online advertisement offerings into two parts namely display advertisement and classified advertisement. The major revenue generated by the organization comes from the classified advertising wherein the seller places an advertisement on the website for a particular vehicle. This advertisement appears on the organization’s website and the buyers can easily view them (Baker and Saren 2016). On the other hand, the display advertising involves customers such as importers, automobile manufacturers, insurance organizations and financers. These advertisements are aimed towards providing vehicle promotional deals for a specific period of time.
Carsales can maintain its competitive advantage while others attempt to imitate its success by emphasizing more upon innovation. Innovation can help the organization to differentiate itself from the rival organizations. Establishing proper communication with the customers enables the organizations to create a long- term positive brand image. Therefore, Carsales must also ensure that there is proper communication with the customers and it must also carefully handle all the complaints and grievances of the buyers and the sellers. The organization must become customer centric in order to sustain in the long- run. It is necessary for the organization to ensure a positive organizational culture in order to ascertain that the employees of the organization are satisfied and aim towards increasing the customer satisfaction along with increasing the overall efficiency of the organization (Kumar and Pansari 2016).
An organization can obtain competitive advantage in two ways namely cost advantage and differentiation advantage. Cost advantage refers to the situation wherein the organization is able to reduce its expenses and provide its products and services at a lower cost as compared to the other similar organizations. On the other hand, differentiation advantage refers to the situation wherein the organizations provide better products and services as compared to the rival organizations (Marcus and Cohen 2017). Therefore, Carsales shall have to maintain both cost and differentiation advantage in order to remain ahead of the competitors in the long- run.
3.Internal factors refer to the factors within an organization that affect the business operations and the organizations have control over those factors. On the contrary, external factors refer to those factors that are present outside an organization and the organizations do not have much control on those factors (Armstrong et al. 2015). In case of carsales.com.au, both the internal and external factors resulted in the success of the organization. However, the internal factors played a more vital role in the success of the organization.
The innovative business idea and the special offerings provided by the organization led to the success of the organization. The organization was the first in the market to provide the sellers and buyers of the cars to buy and sell and buy cars online. The organization changed the views of the people and made online sale and purchase of cars popular. However, the organization took a great risk as internet was not that popular during those days and not much people knew how to access internet. Therefore, the organization provided attractive offers to the sellers in order to post an advertisement of their cars on the portal of carsales.com.au. Initially, the internal strategies of the organization made the way to success and later on the positive external environment resulted in the success of the organization (Child 2015).
Initially, as a part of its internal strategy, the organization offered the sellers the opportunity to list their cars free of cost on the website until the cars were sold. The organization charged a minimal amount from the sellers only after their cars were sold. Later on, when the organization gained popularity, it began charging some amount from the sellers for placing advertisements for their cars and listing them. The organization always charged lower costs for placing advertisements as compared to the newspapers and magazines and provided a wider reach. The major external factor that led to the success of the organization was that internet started gaining popularity and with the passing years, a large number of populations across Australia had an access to the internet. Internet provided a massive opportunity to the organization to flourish in the upcoming years (Walker 2014). Within the span of a few years, the organization became the best online site for selling and purchasing cars and other vehicles.
The business decisions taken by the management of the organization and the strategies formulated by the top management helped the organization to become successful. The positive socio- economical and technological changes especially the rise in the trend of using internet helped the organization to become successful. Initially, the organization faced several issues as the business was entirely based upon internet and internet was not popular in those days. However, with the sudden increase in the popularity of internet after the year 2001, the organization was able to successfully establish itself as the best organization in its field (Burke 2017). Therefore, it can be stated that both the internal and external factors led to the success of carsales.com.au.
4.SWOT analysis refers to the analysis of the strengths, weaknesses, opportunities and threats of an organization, which enables strategic planning. SWOT analysis is an extremely useful tool when an organization aims at taking advantage of a new opportunity or implementing a different or new technology. SWOT analysis also enables the organizations to respond appropriately to the new trends and deal with the competitors. SWOT analysis enables the organizations to determine the areas in which it has been performing well so that it can further improve its strengths. This also involves determining the weaknesses of an organization such that it can take appropriate measures to minimize the weaknesses. SWOT analysis enables the organizations to determine the business opportunities such as changes in the consumer trends or changes in the market. Additionally, SWOT analysis also enables the organizations to determine the threats present in the external environment such that they become aware about the potential threats and prevent them. Therefore, SWOT analysis enables the organizations to evaluate their internal strengths and weaknesses along with external threats and opportunities (Shabanova et al. 2015).
SWOT analysis might be useful to Greg Roebuck as carsales.com.au continues to grow because the organization has already reached its maturity and the growth rate has declined. The organization is a well- established and well- known brand in the market. However, the entry of several similar organizations that offer more or less similar services has increased the threats for the organization. SWOT analysis shall enable the organization to determine its competitors and evaluate their strategies in order to form a better strategy. SWOT analysis shall enable Greg Roebuck to determine the major strengths of the organization, which have contributed in the success of the organization along with the major weaknesses, which have been the major challenge for the organization. This shall enable the organization to formulate the strategies while keeping into consideration its strengths and minimizing its weaknesses. SWOT analysis shall help the organization to identify the changes in the consumer needs, market trends, technological changes and other changes so that it can determine both opportunities and threats. Exploring the opportunities shall enable the organization to grow further and expand its business operations while identifying the threats shall enable the organization to prevent them (Phadermrod, Crowder and Wills 2016).
Therefore, SWOT analysis shall help carsales.com.au to maintain its position in the market while simultaneously maintaining its growth pace. This shall enable the organization to emphasize more upon its internal strengths and minimize its weaknesses. SWOT analysis shall help the organization to identify its competitors and analyze their business strategies in order to remain ahead of them (Wheelen et al. 2017). This shall also help the organization to determine the external factors that might be useful in expanding the business operations and possible threats that might act as a barrier in the organization’s success.
References:
Armstrong, G., Kotler, P., Harker, M. and Brennan, R., 2015. Marketing: an introduction. Pearson Education.
Baker, M.J. and Saren, M. eds., 2016. Marketing theory: a student text. Sage.
Barney, J.B. and Hesterly, W., 2015. Strategic management and competitive advantage concepts and cases. Pearson.
Burke, W.W., 2017. Organization change: Theory and practice. Sage Publications.
Child, J., 2015. Organization: contemporary principles and practice. John Wiley & Sons.
Hill, C.W., Jones, G.R. and Schilling, M.A., 2014. Strategic management: theory: an integrated approach. Cengage Learning.
Kumar, V. and Pansari, A., 2016. Competitive advantage through engagement. Journal of Marketing Research, 53(4), pp.497-514.
Marcus, A.A. and Cohen, A.N., 2017. Management strategy: Achieving sustained competitive advantage. McGraw-Hill.
Peteraf, M., Gamble, J. and Thompson Jr, A., 2014. Essentials of strategic management: The quest for competitive advantage. McGraw-Hill Education.
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Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Shabanova, L.B., Ismagilova, G.N., Salimov, L.N. and Akhmadeev, M.G., 2015. PEST-Analysis and SWOT-Analysis as the most important tools to strengthen the competitive advantages of commercial enterprises. Mediterranean Journal of Social Sciences, 6(3), p.705.
Walker, R.M., 2014. Internal and External Antecedents of Process Innovation: A review and extension. Public Management Review, 16(1), pp.21-44.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. pearson.
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