Thursday, December 12, 2019
Competitive Strategy Business Organisation
Question: Discuss about theCompetitive Strategy for Business Organisation. Answer: Introduction: Business Strategy The material given in the video highlights the importance of strategy for a business organisation to achieve its goals and objectives. Strategy of a business organisation is different from its tactics and objectives and aims to provide answers to the following four questions: Where do we compete? What unique value do we bring? What resources and capabilities do we utilise? How do we sustain unique value? A good strategy provides clear answer to the above questions. The first question emphasises on the trend present in the competitive market where a business aims to provide its products and services (Kryscynski, 2015). The next question focuses on differentiating product or service offered by a firm that is difficult for competitors to imitate. The third question emphasises on resources utilised such as superior technology, competent workforce or good brand image of an organisation and capabilities refers to its ability to use the resources in an appropriate way. The last question addresses on the need of adopting tactics that help an organisation to sustain its competitive position in the market. The video has presented the example of IKEA competitive strategy that has helped it to achieve a distinctive position in the furniture market internationally. IKEA provides affordable furniture products in a fun and low pressure showroom that helps it to gain customer satisfaction. In additi on to this, the video also reflected the boundaries that businesses need to determine in advance that they should not implement in their business strategy (Kryscynski, 2015). Ashley Furniture is recognised to be the largest manufacturer of furniture in the world. However, IKEA is gaining competitive advantage through its unique competitive strategy and as such is outperforming major players such as Ashley Furniture in the furniture industry. It is able to offer low-priced furniture products through emphasizing on mass production that helps it to minimise its operational cost (Lutz, 2015). On other hand, the price of furniture of Ashley is high-priced as it does not incorporate the strategy of mass production. IKEA retail stores attract customers as it focuses on providing fun and relaxed environment to the customers. Also, the products are shipped in flat boxes as the final assembly of products is done by the customers that help it to minimise the shipping cost. Ashley also needs to devise a unique competitive strategy as that of IKEA that will help it to reduce its operational cost and thus achieve high profitability. It can be done by introducing major changes in the strategic direction of the company. It needs to implement changes in its business model that help it to gain customer satisfaction. For example, the online website of Ashley does not incorporate the pricing of the products and also does not provide buying option to the customers. Customers have to visit the companys retail store only for buying the furniture product. However, the online website of IKEA provides you an option of ordering the product through its website (Montana, 2015). Ashley Furniture needs to devise a good strategy addressing all the four questions in context for developing its competitive strategy that is difficult to imitate by the competitors as in case of IKEA. Business Innovation The given material in the video demonstrates the importance of business model innovation for achieving competitive advantage for organisations. For example, IKEA has acquired competitive advantage by re-inventing its business model. Business model innovation is not about carrying out extensive Research Development and technological development but simply refers to successfully learning and adapting to successful business models of other similar industries (Business Model Innovation, 2013). This can be achieved through the following four steps: Initiation: It refers to analysing current business model of an organisation for identifying the improvements to be done. Ideation: It refers to developing new business model through recombining the ideas and concepts from successful business model of other similar industries. Integration: It refers to examine the consistency of business model devised to be adopted. Implementation: It refers to monitoring and reviewing the business model adopted and identifying the improvements that need to be done. The organisations need to overcome from the misconception that extensive resources and creative ideas are necessary for innovating their business model. The organisations can re-invent their business model by developing answer to the following questions: Who are your target customers? What you offer to the customer? How do you create customer value proposition? How do you generate revenue? However, organisations need to consider the following points during re-inventing their business model. This include implementing only one business model at a time, giving proper time to develop a business model, gaining commitment from top management and overcoming resistance from the employees. Innovation in business model is necessary for organisations to gain competitive advantage through providing high value to the customers and reducing the operational cost (Business Model Innovation, 2013). For example, Billabong International Limited is an international clothing retailer but is presently experiencing a downturn in its sales due to lack of innovation in its business model. The company needs to incorporate the latest trends and styles updates in its apparels for meeting the changing needs and expectations of the customer. For example, Billabong products are not in accordance with the expectations of youths thus dropping its sales (Jackson, 2013). Thus, Billabong need to successfully learn and recombine the strategies obtained from the successful business model of other similar industries such as supermarket that will help it to innovate in its products and services. The company need to follow and adopt the steps of business model innovation that are, initiation, ideation, integration and implementation for adopting the changes in its present business model. In addition to this, it also need to identify its target customer segment, types of products and services to be off ered to them, generating high value products to the customers and focusing on increased revenue generation. This all is necessary for re-inventing the business model of Billabong so that it is able to achieve a sustainable competitive advantage globally (Business Model Innovation, 2013). References Business Model Innovation. 2013. [Online]. Available at: https://www.youtube.com/watch?v=B4ZSGQW0UMI [Accessed on: 16 August 2016]. Jackson. R. 2013. Billabongs Downfall May Signal The Death Of The Entire Surfwear Industry. [Online]. Available at: https://www.businessinsider.com/billabong-demise-surfwear-2013-11?IR=T [Accessed on: 16 August 2016]. Kryscynski, D. 2015. What is Strategy? [Online]. Available at: https://www.youtube.com/watch?v=TD7WSLeQtVw [Accessed on: 16 August 2016]. Lutz, A. 2015. Ikea's Strategy For Becoming The World's Most Successful Retailer. [Online]. Available at: https://www.businessinsider.in/Ikeas-Strategy-For-Becoming-The-Worlds-Most-Successful-Retailer/articleshow/45904642.cms [Accessed on: 16 August 2016]. Montana, S. 2015. Ikea vs Target vs Ashley Furniture: Quality, Value Shipping Compared. [Online]. Available at: https://homeaccessories.knoji.com/ikea-vs-target-vs-ashley-furniture-quality-value-shipping-compared/ [Accessed on: 16 August 2016].