Some Questions on Strategic Management

Question 1: Drawback and risk of generic strategy, focused business strategy

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Cost leadership and differentiation are the generic strategies firms adopt. The major disadvantage of cost leadership is that it requires companies to assume certain tradeoffs. A company pursuing cost leadership will have to take trade-off related to value creation because value and costs have a positive correlation. On the other hand, the significant risk of the differentiation strategy is that it exposes the organization only to a small segment of the market. Such an organization such will have a limited chance of growing. The organization has to change its entire strategy if it decides to penetrate a new market (Rothaermel, 2014).

A Focused strategy is one whereby an organization targets a narrow market. Focus cost leadership strategy and focused differentiation strategy are the two main types of focused strategy. The significant risk of focused cost leadership strategy is that the organization not only target small market but also it has to compete with other firms adopting cost leadership strategy. An organization may, therefore, have to reduce further its cost thus putting the value of its products at risk. Similarly, in focused differentiation, an organization further reduces the size of the market it targets. It targets a narrower niche. The ability of an organization to expand its market is limited. Besides, the organization has to understand precisely the needs of the market. Any misunderstanding can lead to catastrophic result since the business is not diversified (Rothaermel, 2014).

Questions 2: Value Chains

Low-Cost Company

Support Activities

Information System

IT system that will simplify planning and reduce costs

IT system help manage work and reduce the number of workers

Human resources

Training to improve employees output

Ensure all employee works efficiently to avoid hiring new employees

Accounting & Finance

Adopt financial system that utilization finances

Track costs with the intention of identifying areas of efficiency.

Firm Infrastructure

Low tech stores

Deposit on trolley to ensure their returned

Supply Chain Management Operations Distribution Marketing & Sales After-sale Services

Identify the cheapest supplier Outsource non-core activities Do not offer or charge a fee Rely on affordable media such internet Charge or eliminate

Differentiation Company

Support Activities

Research and Development

Extensive research to develop exactly what customer wants

Information System

Advance systems to track the preferences, needs, and wants of the customers

Human resources

Training geared toward understanding the needs of customers on understanding customer preferences

Accounting & Finance

Invest in areas that emphasize the uniqueness of the company's products and services as well meet the needs of customers

Firm Infrastructure

Unique infrastructures and stores, Customers pay a premium for the uniqueness offered.

Supply Chain Management Operations Distribution Marketing & Sales After-sale Services

Select small supplier that meet organization specification Operation conducted in-house to meet set standards Free distribution Intensive and unique promotional activities Continuous after-sale support

Integration Company

Support Activities

Research and Development

Moderate research and development budget

Information System

Tracks the preferences, needs and wants of the customers

Human resources

Reward and encourage performance and innovation to enable the serving of customer in cost-efficient manner

Accounting & Finance

Establish investment options that enable effective serving of customer at competitive prices

Firm Infrastructure

Moderate maintenance costs

Supply Chain Management Operations Distribution Marketing & Sales After-sale Services

Encourage competitive bidding of supplier Obtain strategic partners Free and premium distribution Moderate marketing and sales budget, encourage pay based on performance Premium and free after sale services

Question 3: Industry Lifecycle

The mobile phone industry has enjoyed rapid growth over the year. The introduction stage of the mobile phone industry occurred in 1973. Motorola Company developed the first phone. This company's core competitive advantage was its research and development capabilities. More models were developed around 1985 and 1997. During that period, companies engage in generic strategies. They target a niche market that was able to afford the expensive phones (Tejvan, 2017; Rothaermel, 2014).

The growth stage occurred between 1998 and 2000. Mobile phones were quickly replacing landline phones, and first-time buyers were eager to acquire the new gadget. Manufacturers still mostly applied differentiation strategy. However, they engage in product and process innovation to gain a larger share of the growing market. Shakeout stage occurred in the new millennium. A Larger part of consumers had proved that they were willing to pay a reasonable amount of money to acquire advanced phones. Firms that were able to engage in high-level innovation in a rapid manner, therefore, dominate the market. Companies such as Nokia and Motorola were not able to keep the pace and hence were pushed out of the market. Due to innovation and advancement, the mobile phone industry is yet to reach maturity and decline stages. Market participants are currently differentiating themselves using cost leadership and differentiation strategy. Firms that can provide enhanced innovations can compete using differentiation strategy (Tejvan, 2017; Rothaermel, 2014).

Question 4: Types of innovation

Google is a highly innovative company. Through innovation, it can run different types of business. Google success is attributed to its disruptive innovation approach. Google has redefined not only traditional business models but also the way people run their lives. Google has for instance disrupted the media industry. People can easily access newspaper from different sources online. They can also view videos on YouTube. It has disrupted the education and related industry. Online library and knowledge sources are now readily available, courtesy of Google. Google also engaged in architectural innovation because it did not invent the search algorithms. It learned from search engine pioneers to design better and faster algorithm. Google also applies incremental innovation at least annually by redesigning it algorithms (Jarvis; Rothaermel, 2014).

Question 5: Low Technology Innovation: Eva the Elephant

Ava, the elephant, is low-technology innovation first introduced in the popular Television Show known as Shark Tank. The founder, Tiffany Krumins, realized that children have a fear of taking medicine. She decided to use commonly available tools to design a toy elephant that would make taking medicine fun. The elephant does not use any algorithm, any automation, or advanced technological material. It is made up of a simple syringe and safe plastic material. Nonetheless, the product has become widely successful. It is currently the single product of the entire Ava, the elephant, company. Pharmaceuticals have also formed strategic alliances with the business because this product enhances their competitive advantage (Khan, 2017).

Question 6: Walmart Strategy

Walmart decision to establish grocery stores in identified location thus creating supercenters is a corporate strategy. The decision contains elements that define the typical character of corporate strategy. The first element is the stage of the industry value chain an organization intends to participate. Walmart operates supercentres. The second element is the choice of products and services the firm plans to offer. Walmart plan is to provide grocery. Finally, the last element is the location where the firm will compete. Walmart intends to compete in different geographic locations (Rothaermel, 2014).

Question 7: Horizontal Integration

Live Nation and Ticket Master acquisition were a horizontal acquisition because the two companies were in the same stage of events industry value chain. A reduction in the intensity of the competition, reduced costs, and enhance differentiation are some of the advantage offered by horizontal integration. Ticket master dominated the ticket sale industry. By acquiring it, Live Nation not only eliminates competition but also access the market enjoyed by Ticket master. Besides, the acquirer removes the possibility of a low-cost competitor and hence live nation may adopt a differentiation strategy and enhance it. Economies of scale will also enable live nation to reduce cost. The downside of this approach is that the incentive to engage in innovation is eliminated (Rothaermel, 2014; David, 2017).

References

David, B. (2017). The Ticketmaster-Live Nation Merger: What Does It Mean for Consumers and the Future of the Concert Business? Center for American Progress Action Fund. Americanprogressaction.org. Retrieved 16 January 2017, from https://www.americanprogressaction.org/issues/economy/reports/2009/02/24/5531/the-ticketmaster-live-nation-merger-what-does-it-mean-for-consumers-and-the-future-of-the-concert-business/

Jarvis, J. (2009). What would Google do? (1st ed.). New York, NY: Collins Business.

http://gazettereview.com/2015/07/ava-the-elephant-update-see-what-happened-after-shark-tank/

Khan, M. (2017). Ava the Elephant Update See What Happened After Shark Tank - The Gazette Review. The Gazette Review. Retrieved 16 January 2017, from http://gazettereview.com/2015/07/ava-the-elephant-update-see-what-happened-after-shark-tank/

Rothaermel, F. (2014). Loose Leaf Direct Strategic Management: Concepts (2nd ed): New York, NY McGraw-Hill Education.

Tejvan, P. (2017). Mobile Phone Product Life Cycle | Economics Help. Economicshelp.org. Retrieved 16 January 2017, from http://www.economicshelp.org/blog/6101/economics/mobile-phone-product-life-cycle/