Week 15

1.      Why has this artist been so successful? What are her key sources of sustainable competitive advantage?

·         Think about her unique resources and core competencies, think about how she has responded to changes in the external environment, why is she difficult to imitate?

Madonna is a very famous American singer, writer, actress, dancer and entrepreneur. She is one of the biggest and most successful artist and literally no one can be compared with her. She has been ruling the music industry for more than 30 years, and it’s not an easy thing to do. The only reason she has been able to do so is simply because of her strategy. She has been changing her strategy with the change in time, this has helped her to survive and sustain successfully in the industry.

    Image Source: http://shaunproulxmedia.com/himbo/wp-content/uploads/2012/01/madonna-20photo-202009-small.jpg

Madonna’s early image:

·         Punk-Pop image

·         Highly featured on MTV

·         A very remarkable performance at the MTV VMAs of 1984

Strategy of high fashion look is what Madonna was following in the 90s. Gay club scene and emancipated women were the main target groups of Madonna during that time. And, she was also awarded for her critically acclaimed role in the movie “Evita”.

Madonna’s key sources of sustainable competitive advantage are as follows:-

·         Good Vision

She has always been considered as an artist with good vision. She was always in the spotlight for her music, acting, and fashion. She knew what kind of music people loves to hear and accordingly makes them.

·         Better understanding of customers and industry

Madonna knew about “what it takes to become successful in the industry and with customers”. Madonna knew about the taste and preference of music lovers and made her music accordingly. Glamour, fashion and nudity were an important element of her music and particularly in her music videos and concerts, and she was very famous for all of this.

·         Continuous renewal

As the time changes, she also changed her strategy in order to sustain in the industry. This tendency of her continuous renewal is also a key source of her sustainable competitive advantage.

·         Leveraging competencies and addressing weaknesses

Leveraging her competencies and addressing her weakness were a very major factors of Madonna’s sustainable competitive advantage.

·         Consistent implementation

Consistent implementation of her strategies, vision, and goals made her the greatest and most successful music artist as she is now.

Other:

·         Ability to be a step ahead of others

·         Ability to take chances

·         Self-confident

·         Independence

·         Ability to create fabulous shows on scene and in life

·         Performer talent

·         Recklessness

 Image Source: http://kevinestrada.files.wordpress.com/2008/11/madonna_then_now.jpg

Competences for competitive advantages

Resources/Capabilities:

·         Singing capabilities (Voice) and her looks.

·         Sex appeal and glamour (appearances, music video and concerts)

·         Style (fashion) and dancing.

Strategies from 1893-2010 by which Madonna has responded to change

·         No Frills (1983 A.D.)

Low added value/Low Price:

Being a new entrant in the industry, having something more innovative and unique was very much important for Madonna to establish in the industry. It was her voice, singing and dancing style, her looks, style and glamour which became the unique resources for her.

·         Differentiation (1984 A.D.)

The product/services which Madonna was offering to the audiences were providing the audiences with benefits which were very widely valued by the audiences and were different from those of her competitors.

“Blue Ocean strategy” – “Creating or searching for wide open spaces, free from existing competition, and fill strategic gaps in the market, opportunities that are not being fully exploited by competitors”

•      Focused differentiation (1985-2013 A.D.)

Madonna as an image and a brand herself was very difficult to imitate. Her songs are regarded as a premium products and are very heavily branded. Her high perceived benefits justifying a sustained price premium usually to a selected market segment helped her to be sustainable in the market.

What strategy directions could the artist pursue over the next ten years to continue her commercial success?

·         Consider each of the four boxes from the Ansoff matrix. What new products or markets could she enter? How might she diversify or continue to penetrate her existing market? Try to think logically but also creatively and innovatively

 Following could be the strategic direction that the artist could pursue over the next ten years to continue her commercial success which I have tried to show through Ansoff Matrix:-

Market Penetration Target different groups of people: ·         Different age groups and genders ·         Different demographic profiles from normal customers. ·         Do musical tours in foreign countries so that the audience can increase for her music.

New products and services ·         Encourage and help other people to come to music industry, this can help in building goodwill and public trust. ·         Involve in charity and other social activities. ·         She can become music producer for other established and upcoming artist.

Market Development ·         Promotions. ·         Advertise, to encourage more people introduce a loyalty scheme. ·         Buy a competitor company (reputed music company or production house) ·         Encourage and develop new talents. ·         Collaborate her music with all sorts of artists from Rap and Hip-Hop to RNB, Rock, Metal, etc. It can help her expand her audience reach and extend her career too.

Conglomerate Diversification ·         Launch music in foreign language for foreign audience. ·         Expand concerts and stage shows in foreign countries. ·         Collaborate with foreign artists, music directors, producers so that she can reach to world-wide music audiences.

Reference:

MADONNA - THE SPICY DESSERT (11 February, 2010)  [Online] Available from: http://flavor-of-success.com/success-stories-madonna-the-spicy-dessert/   [Accessed on 2 March, 2013]

MADONNA - AN UNLIKELY SUCCESS STORY (2010/2011) [Online] Available from: http://bornpowerful.com/2010/11/madonna-an-unlikely-success-story/  [Accessed on 2 March, 2013]

MADONNA'S REAL LIFE (28 April, 2003)  [Online] Available from: http://www.people.com/people/archive/article/0,,20139887,00.html  [Accessed on 3 March, 2013]

MADONNA BIOGRAPHY [Online] Available from: http://www.biography.com/people/madonna-9394994   [Accessed on 3 March, 2013]

Week 14

1. In your own words and using referenced quotes describe the difference between ‘business unit level’ strategy and ‘corporate level’ strategy

However, it could be a difficult task to understand if there is a difference between Business unit level strategy and corporate level strategy, but as a matter of fact there is a difference. For the accomplishment of best strategy implementation and avoiding communication problems, it is really very important for the strategy makers and managers to clearly understand the difference between business unit level strategy and corporate strategy.

Business Unit Level Strategy

The way a business competes in a particular business sector is business strategy. Marketing and manufacturing efficiency, pricing etc. are the matters that concerns the business unit level strategy during strategic decision making. Gaining a competitive advantage in the market is the primary objective that the business strategy is concerned about.

Corporate Strategy

The decisions that are made regarding the direction of an organization as a whole is what the corporate strategy is involved in. The matters that affect the overall firm such as deciding the size and composition of its business portfolio are the concerns of corporate strategy.

And,

The Difference

“Scope of Strategy” is the main difference between business unit level strategy and corporate strategy. Business unit level strategy is concerned with tangible problems and is narrowly focused on specific business unit. While, corporate strategy is broadly focused on issues that will affect the entire company. Generally, business unit level strategy are and can be formed by individual line managers, while corporate strategy is developed at a senior level by board of directors.

Reference:

EHOW ARTICLE (2013) Wendel Clark [Online] Available from: http://www.ehow.com/info_7904252_difference-corporate-strategy-business-strategy.html  [Accessed on 1 March, 2013]

2. Discuss the corporate parenting style of Virgin group.

Image source: http://blogs.ubc.ca/cindywenyicui/files/2010/11/virgin-logos-1.jpg

By practicing the corporate parenting style, Virgin Group has been able to add value to its business. Any advantages that accrue to the brand as a whole are equally enjoyed and benefited by each and every business that are operating under the Virgin company’s umbrella. Virgin company as a parent company has been able to win the confidence of more consumers and investors, because as a group it doesn’t have to depend on just one industry or area for its economic health and profitability. Each company shares in those benefits in more than one way.

Economies of scale in another area where the Virgin companies that are similar in nature benefits from. Purchasing of the resources such as raw materials can be done in large quantities that helps in reducing the marginal cost and hence allows each company to increase revenue. The corporate parenting style of Virgin group has benefitted them in many ways.

Use of the “VIRGIN” brand name is another area in which a company could benefit from being affiliated with the Virgin group. The consumers and investors that already have a trust and confidence in the brand are likely to have the same confidence and trust in a new company that have the Virgin name. This helps the company to reduce the time and money it could have taken the new companies to establish their brands and names with the consumers. Hence, the new Virgin-affiliated company starts out with a name that is already known to and trusted by the consumers.

Virgin brand and reputation has become a synonym to Richard Branson, its founder. Realizing public image and views of the organization and Branson became the most important company’s advertising and promotion force. The success of Virgin group is based on the corporate parenting strategy, i.e. every new business units inherits company’s brand name, support, management style, values and access to resources not expending resources to create them. 

Reference:

Virgin Group. (2012). “Virgin Corporate History.” London: Virgin Management, Ltd. Online]  Available

from http://www.virgin.com [Accessed on 1 March, 2013]

Mightystudents (2013) "Does the Virgin Group, as a corporate parent add value to its business? If so how" [Online] Available from: http://www.mightystudents.com/essay/Virgin.Group.corporate.18924 [Accessed on 1 March, 2013]

Mariah Bond (2012) "A Company Profile: Virgin" [Online] Available from:http://www.examiner.com/article/a-company-profile-virgin [Accessed on 1 March, 2013]

Group Video (Youtube) Task

The link for our group video uploaded in Youtube:

http://www.youtube.com/watch?v=92yhVGLaMgQ&feature=youtu.be

Thank You.

Week 10

1. In your own words and using referenced quotes describe what is meant in strategy by 'Organizational Purpose' and describe what is meant by 'Corporate Social Responsibility'

 Organizational Purpose

Organizational purpose is very important for every firm and business organizations. Without organizational purpose, your business will surely fail because organizational purpose is the foundational bedrock that every great businesses must have.

Reasons for the existence of the business is given by the organizational purpose. For every strategy formulation and decision makings organizational purpose serves as a guiding force for them.Hence, we can say that organizational purpose has a significant influence and effect on strategy. It is basically a bedrock for the successful strategy formulation and implementation.

Corporate Social Responsibility

Corporate social responsibility refers to the overall positive impact that the business manages to produce on the society. It can also be describes as the organization's responsibility towards the community & environment where they are operating. This can be achieved by providing employment opportunities to the locals, doing contribution on educational and social programmes, minimizing the waste and pollution by doing proper waste management and also by organizing various campaigns to provide knowledge regarding cleaning and proper waste management, etc.

2.  Should organisations focus more on profit and shareholder satisfaction or responsibility and stakeholder satisfaction? Discuss your own thoughts but try to support your ideas with theory or examples 

 If we choose to focus more on profit and shareholders satisfaction then this will highlight that we care more about profitability over responsibility. Meanwhile, if we decided to choose responsibility and stakeholders satisfaction then this will highlight that we care more about our responsibilities over profitability.

It is very familiar with all of us about the fact that maximization of profit is the primary goal of all the business organizations. But that doesn’t mean that focusing on profit maximization is the best option for us. Earning long run goodwill is far more important for the business organizations than the wealth and profit. Its not easy for business organizations to create goodwill in the market, it takes long time and serious commitment and dedicated hard work to gain goodwill. There are various factors upon which goodwill depends, and contribution towards the community / society is one of them.
 

Business organization might get profit if they focus on profit and shareholder satisfaction, but this will not be a sustainable option for them because, it cannot survive for long time if the business organization only focuses on the profit and shareholder satisfaction. A business organization that focuses on responsibility and stakeholder satisfaction will have a very good chance of survival & sustainability in the long run because, it is the public who buys the products and services from the business organization and a business organization that has goodwill in mind of the public, and will ultimately have a good future. This will ultimately result in profit gain too in a long run.

Therefore, in my opinion business organizations shouldn't focus on profit and shareholder satisfaction.. They should be focusing on responsibility and shareholder satisfaction. Earning goodwill and brand is also considered as profit. If a business organization does contributions towards the community and society and, also completes its responsibilities towards the society and community then it will be able to earn goodwill and brand loyalty from  people. However, the business may not see huge amount of profit at the early period but in the long-run it will do very well. For example: Choudhary Group, which is the leading FMCG and Electronic manufacturing Industry of  Nepal contributes towards the society and community in different ways. It has established its own schools where it provides scholarships to poor, needy and  talented students, organizes and promotes various cultural  programs and activities all over the country, cleaning campaigns and many more. These all activities has helped Choudhary Group to earn goodwill and establish itself as a brand in Nepal and in south-east Asia, and people are very loyal towards this brand, which has helped it to become a leading industry in Nepal as well as south-east Asia too.

For all of these reasons, business organizations should focus on responsibility and stakeholders’ satisfaction rather than profit and shareholder’s satisfaction.

3. Write about your experience with today‘s case study. What answers did you give to the questions? What did you think of the CEO?

The overall experience with today’s case study was very good. It was a really great and fun experience learning about PepsiCo, its aspiring chairman & CEO Ms. Indra Nooyi. It was a learning experience because i got the chance to know about the success story of PepsiCo, its century long rivalry with Coca-Cola and  its current struggling phase to regain the market share.

 

(The answers that i have given to the questions are listed in another page with the questions.)

I think the CEO of PepsiCo, Ms Indra Nooyi, is a very talented and skillful personnel. We can justify this statement by listing the honors and recognitions that she has received from many reputed institutions, & magazines.

  ·   Forbes magazine ranked her #3 most powerful women in 2008, &  6^th  most powerful women in the world on 7th  October 2010.

  ·   Fortune named her the #1 most powerful women in business in 2009 & 2010.

   ·       Time listed her in 100 most influential people in the world in 2007 & 2008.

   ·    Wallstreet Journal put her in the list of 50 women to watch in 2007 & 2008.

After she started to work in PepsiCo as the CFO in 2000, the annual revenue of PepsiCo had rised to 72%, and the net profit were more than doubled (to $5.6 billion) in 2006, which is very remarkable. Since her joining with the PepsiCo, the Soda makers which were only recognized by Pepsi brand has progressed very well. Nooyi was the one who took the lead in Tropicana acquisition in 1998, and merger with Quaker Oats Company, which also lead to the inclusion of Gatorade to PepsiCo. Now, PepsiCo has got 19 different product fleets which amounts for more than $1 billion in annual retail sales, which is huge.

This all justifies that she is one of the great CEO at present.

Image Source : http://www.southdreamz.com/wp-content/uploads/2010/09/Indra-Nooyi.jpg

 

 

 Case Study (Indra Nooyi - PepsiCo)

What are Pepsico‘s strategic objectives? Why does the firm exist?

PepsiCo is a huge multinational company that produces beverages and snack foods, some of the strategic objectives of PepsiCo are as follows:-

1. International expansion
2. Achieve synergies
3. Strategic acquisition
4. Product reformation

·  Making beverages and snack foods that are less unhealthy

·  Producing better-for-you (BFY), and good-for-you (GFY) products, that can help in creating growth opportunities.

            5.  Maintaining close relationships with distribution allies.

            6.  Maintaining efficient distribution system.

·         By applying Direct store delivery

·         Broker warehouse

The firm exists because of its Mission, Vision and Values.          

      Mission:

Mission can be described as the factor which help the employees and stakeholders to know clearly about the organization’s over-riding purpose. It aims to give them the idea about:-

“what business are we in?”

“how do we make a difference?”

“why do we do this?”

      Vision:

Vision majorly concerns with the organization’s desired future state. It is simply an aspiration that helps to stretch performance, gain commitment & enthuse. It provides the firm with the idea concerning “what do we want to achieve?”

      Value :

Some of the examples of how values are developed in firms are as follows:-

“how customers & stakeholders will be treated?”

“how employees will be treated and how they will treat each other?”

“how the values will relate to organizational success?”

“which values people will use to govern how they work?”, etc

These all are the reasons why firm’s exist.

What are the possible strengths and benefits of the strategy? Do you think the organisation has the right balance between profitability and responsibility?

Being a global and huge industry has its benefits too. PepsiCo is a globalized and internationally expanding organization which has a market in over 200 countries worldwide. Since PepsiCo manages 19 different product fleets, therefore it has a very large number of consumers / customers and market share. This is the possible strength and benefit of the strategy to the PepsiCo.

What are the possible weaknesses and disadvantages of the strategy?

Existence of all the products under the same brand can be considered as the main weakness for PepsiCo. Although, PepsiCo has got 19 different product fleets under its management but, the consumer sometimes don’t even know that the products that they are consuming are from PepsiCo. And also, because it has a wide range of product lines which doesn’t belong to same brand, it faces challenges from several competitors which is not good for the organization.

After observing the case study, i think that PepsiCo doesn’t believe in making profits only, but it also cares about its customers. PepsiCo has tried its level best to perform its responsibilities towards its customers / community in different ways. PepsiCo is taking it very seriously to make snacks and beverages more healthier, it is also trying to contribute towards the environment by investing in recycling programs in developing countries in Africa.

PepsiCo does a very huge soda advertisements during super bowl, but In 2010, it decided to skip the soda advertisement at the super bowl and rather use that money for other social causes by helping orphanages and homeless shelters.

This shows that the organization has a perfect balance between profitability and responsibility.

Week 9

1. In your own words and using referenced quotes describe what is meant in strategy by the ‘Resource-Based View’?

Resource-based view is a way of viewing the firm and in turn of approaching strategy. This theory believes that a firm is a bundle of resources. All these resources and their way of combination makes each firms different from another. The internal environment is the starting point of the analysis, because it considers taking an inside-out approach while analyzing the firm.

Resources of a firm includes all the assets, information and knowledge, firm attributes, organizational processes, and capabilities. All the inputs that helps the firm to operate its activities can be considered as resources.
 A resource should have the following important features to be strategically important:

i)  Valuable - a resource will become a source of competitive advantage only if it is able to bring value to the firm.
ii) Rare - a resource should also be rare and provide unique strategy to be able to give competitive advantages to firms.
iii) Inimitable - resources should be inimitable for competing firms to obtain so that the firm can sustain competitive advantage.
iv)  Non-substitutable - a resource should be non-substitutable because if it is substitutable and can be replaced by another alternative & equivalent resource then it will be very difficult for the firms to sustain competitive advantage.

"The resource-based view (RBV) as a basis for a competitive advantage of a firm lies primarily in the application of the bundle of valuable interchangable and intangible tangible resources at the firm's disposal" - (Mwailu & Mercer, 1983 p142, Wernerfelt, 1984, p172; Rumelt, 1984, p557-558; Penrose, 1959[1]). 

2. How might you undertake ‘Internal Strategic Analysis’? What models would you apply and why? Where would you go to find the information you need? 

Internal analysis is done by first evaluating the organization's capabilities and resources. I would undertake 'Internal strategic analysis' by first collecting all the necessary data and information regarding the company's resources ( as people, intellectual property & assets), the capabilities (functions) of the company and, knowing what is the best our company does? Only after getting all of these data and information, I would undertake 'Internal strategic analysis'.

There are many models available to do the 'Internal strategic analysis' and, we can apply them according to our requirement and convenience. We can apply VRIN model, Financial analysis, McKinsey Seven S analysis, Value chain analysis, and resource & competence analysis because we can get a detailed information about the organization from all of these models.

              VRIN gives us all the required information regarding increasing / improving the competitive advantages by taking advantages of opportunities  and also it helps in threat reduction because it helps us to develop inimitable and unique characteristics.

·                     All the finance-related activities like evaluating budgets, projects and businesses for determining their suitability for investment, these all activities are referred as Financial analysis. It helps a company to find out whether an entity is profitable enough to be invested in, or is it liquid, solvent or stable.

·                     Meanwhile, Mckinsey seven S model provides us with the detailed information regarding the structure, skills, system, staff, strategy, style and shared values. It helps in improving the performance of a company. It also helps us to evaluate the potential effects of future changes to the company and within it. And, it helps us in determining the best way to implement strategies within the company.

·                     Value chain analysis provides us the information regarding various value-adding activities that are superior to that of their competitors which can be used to gain competitive advantage over the competitors.

·                     Resource and competence analysis, as the name suggests, it gives us the detailed information about the resources that the company possesses and also shows us the best way they should be implemented, so that competitive advantage can be gained over the competitors.

All the information can be found from the related department / individuals or we can use the experts that are within the organization to get the required informations. For example: to get any information regarding the staffs, we should contact the Human Resource Management  (HRM) department / personnel.

  
3. Talk about your group video work. How is it going so far? Do you have a plan? What are you most worried about at the moment? What is going well?! 

Actually, it is going well. Our group has decided to do a comparative analysis between two of the leading global names in electronics, Apple & Samsung. We are 5 members in our group, and each individual is assigned to do a particular task, this will help to do the work more effectively and efficiently too. We are using many analytical tools like SWOT analysis, PESTLE analysis, Financial analysis and various other tools to evaluate the competitive advantages for each of them.

The only thing that we are most worried about is the video shoot and its deadline for submission and upload. We are assigned to do a lot of analysis using various tools,  which needs a lot research and consumes a lot of time too. So, the challenge to do a good research and complete it on time is the main problem that we all are worried about at the moment.

Since, both of these companies are very big and global companies, the only thing that is going well is the availability of data and informations related to these companies in internet and journals. This is helping us to minimize the time-duration required for the research.

REFERENCE

About Strategy, [Online] http://www.mindtools.com/pages/article/newSTR_91.htm Accessed on 2013/01/04

About Financial analysis, [Online] http://www.investopedia.com/terms/f/financial-analysis.asp#axzz2Hqwf9n7L Accessed on 2013/01/04