Competitive Strategy Assignment Analyzing Different Business Cases
Questions to be answered in the competitive strategy assignment are:
Week 2 - German luxury cars
Q2. Apply a PESTEL analysis to BMW, Mercedes Benz or Audi (note: the same opportunities and threats will apply to each of them)
Week 3 – Zara case
Q1. Examine the Zara mini-case and identify their Tangible and Intangible resources.
Week 4 - Apple vs Samsung mini-case
Q2. Using Apple, demonstrate how the differentiation strategy can be well implemented.
Week 5 - TESCO PLC
Q3. Identify the competitive behaviour responses of Tesco to build or defend its competitive advantages and to improve its market position.)
Week 6 - LVMH
Q2. What do you think was the reasons why LVMH diversified?
Week 2 - German luxury cars
Herein competitive strategy assignment, the pestle analysis of three giant organisations named as BMW, Mercedes and Audi can be defined as follows:
Political Factors: The automobile sector at the international level suffers from a number of political implications between the developed and developing organisations. The advanced machinery and tools are imported from China by Audi, Mercedes and BMW. Thus, the trade relations between the home countries of these companies with the Chinese economy can leave a huge impact in the form of increased import and export taxes. This may lead to higher prices of the final products which may leave a direct impact on the pockets of the potential customers.
Economic Factors: There is economic instability that can be seen at the international level in automobile industry. The natural disasters and recent break out in Corona may leave a bad impact on the international economy (Hoffman, 2019). It can result into pulling back the entire developed and developing country to almost 50 years low. This may have an adverse impact on the per capita income of the customers, and they are not willing to invest in the luxury’s things.
Social factors: The increased living standards of the people around the world have impacted their preferences and choices in almost all areas. Most of the medium to high level customers prefer luxurious cars. But the present situations resulted from Corona can also leave a great impact on the social lives of the potential customers as there will be decrease in the social meetings. This can impact the demand for the cars and thus may leave a great impact on the profitability of the organisation.
Technological Factors: All three organisations including Audi, Mercedes and BMW are providing their services with the help of using advanced and developed technologies. The automation technology adopted by the BMW can help driver in case of any emergency. Acquisition of new technology need investment at large level due to the increased cost of products and services. In addition to this, the additional and innovative dashboard systems and designs of the cars are result of the technological innovation.
Legal Factors: While adopting any new technology, the organisations working in the automobile sector may need to match the standards level and legal compliance associated with the same. In addition to this, the legislations related to age limit for driving and the government rules related to the well-functioning of automobile industry largely impact the organisations (Rawlinson and Wells, 2016).
Environmental Factors: As all organisations are manufacturing at large level, thus environmental sustainability becomes one of the most important considerations. The organisations have started using renewable energy sources along with introducing some processes to manage the waste generated from the manufacturing processes.
Week 3 – Zara case
Tangible and Intangible Assets of Zara
The main assets of a firm include its tangible and intangible resources. Resources and capabilities are used to maintain good relationship with the customers by providing quality goods and services. The Tangible assets of Zara may include its warehouses, outlets and stores in the market, its financial business model and other physical properties. These resources can easily be touched due to having strong physical presence. The organisation has designed its outlets in such way that it can attract the customers and given them a strong feeling unique quality and sober products. Other tangible resources may include professional designers who are able to develop fashion apparels on the basis of results provided by the research and marketing team. The organisation is also committed to hire large, skilled and professional team who are able to advertise its products and services more effectively and efficiently (Shaari and Hong, 2018). The efforts made through tangible resources helps the management and operations department to take full advantages of the intangible resources and thus to increase the production quality, quantity, profitability and sustainability in the long run.
Zara is also comprised with a number of intangible resources which are not existed physically but plays an important role in the success of the organisation. These resources may include, goodwill of the firm, brand awareness among the customers, availability of the financial resources and strong support from the parent company. The brand awareness and goodwill of Zara helps in creating competitive advantages to deal with the competitors. In addition to this, it also helps in attracting the customers to make purchase from the brand. The great and sustainable chain of suppliers, retailers and partners are also work as an important intangible resource. The pricing and business policy of the organisation is also very different and unique to other competitors available in the market. The brand loyal customers help in providing trustworthy products and services and thus to meet the business objectives (Muhwati and Salisbury, 2017). The capability to integrate innovative and advanced technologies, understanding the fashion need and credibility can also be discussed as one of the most important intangible resource for the organisation.
Week 4- Apple vs Samsung mini-case
By Differentiation strategy, it means the plan adopted by the companies for marketing their offerings in a way which draws the consideration of the customers. It means adopting an approach which makes the products of one company from another and attracts customers to purchase the products instead of other similar products. Differentiation can be made in terms of quality, image, design, usage or customer services. Differentiation can also be made on the basis of prices of products (Cardoso, 2017).
Looking into the case, it becomes clear that the companies like Samsung and Apple leaves no chance to bring differentiation in their products so that their products can become more successful than other products in the industry. The products of apple have been always designed better than its competitors. The company, Apple has utilised this strategy in its well-known products like Macintosh Line computers and iPod. The company has also brought the innovative software system like Mac operating system, iTunes media browser and others for better facilities and services to the customers.
The product differentiation used by Apple focussed on providing best customer experience to the premium customers. The company bought features in its products which were not seen in any of the company’s products like the high-quality camera, Fingerprint sensors and retina sensors (Johnson, et. al., 2012).
The company has always kept its prices higher because people are ready to pau higher for Apple products and so, the image of Apple products are quite exclusive in the market. The company also showed differentiation at the retail marketplace. Like the company has opened exclusive Apple stores which is the only place from where people can purchase iPhone or the online marketplace. It provides only limited quantities to other retailers to sell its products. Also, it has minimum advertised price policy which prevent the outlets like Walmart to undercut prices with more charged at Apple Stores (Johnson, et. al., 2012).
The company has brand loyalty which means that the loyal customer of Apple purchases Apple products only and they also wait for Apple to launch new products. They use iTunes, download Apple music and use Apple TV for their favourite TV shows. This shows that Appel has differentiated itself from its competitors like Samsung in various areas. It has created differentiation in brand image and loyalty.
Week 5- Tesco case
Tesco PLC is known as the third largest retailer in the world and it is competing successfully in its home country UK and with other countries at global level. Earlier in the initial stage company did faced many struggles both at domestic and global level and these struggles come again and again for the company to make through it. The company has managed through its competitive behavior responses opposite to issues which has appeared in past in the global dynamic environment. Tesco have always looked out for sustainable growth and kept funds from development finances. There are many strategies build by the company to maintain its stability and gain competitive advantage at a global level (Fatricia, 2017).
Tesco diversifying its foreign businesses is one of the solid strategies in response to provide a greater stability in the parts of business at the time of difficulties. The online shopping has raised the bars for the company and the use of technology in its operations. Tesco is the third largest international grocer but initially the company provide non-food products to moderate and high edge income holders to catch a maximum amount of market segment. The other significant strategy of Tesco was increasing its brand value and brand management in UK base and later at the global level (Fatricia, 2017).
The company has gained competitive advantage and sustainability and to build that the company took brand risks. The company expand its business in new areas and new product lines by investing in other small companies and later gained some positions in those companies to cover a largest segment in the market and maintain stabilization (Grundy, 2017).
Tesco reorganize their product lines and prices for the products according to the requirement of customers they are building their focus on and identify the services for their customer base. They gained loyalty among their stakeholders while building its competitive advantage not only in the home country but globally. The company has also been using brand management strategies by adopting diverse approach in markets, acting local in different countries, uphold their focus on few countries, different range of formats of products, develop skills and abilities in processes and build brand while creating relationships with customers. They are also maintaining a healthy relation with their stakeholders as they are the ones who reflect best strategies adopted by the company.
Tesco improved its market position at domestic and global level together in the recent years of development (Martínez-Ruiz et al., 2016). The fundamental strategy of Tesco was to widen the range of products and diversified business for the purpose of building sustainability for long term therefore grow into larger growing markets such as non-food, financial services, telecoms and other markets globally (Wood, Wrigley and Coe, 2017). Diversifying the trade helps Tesco to reach new levels of sustainability and provide a competitive advantage as a result company holds a larger market position currently. The shifts into digital marketing and competing with other small companies at a time in order to attract more customers which helped company improve its market position at global level.
Week 6- LVMH Diversification Case
The slowdown growth and sales at global level was the basic and significant need to diversification of the company to affect the outlook of the organization at global level. LVMH has made some acquisitions and mergers to gain some new growth prospects to respond to economic slowdown which has happened in the US (Shi et al., 2018, pp.147-167). There are few strong reasons for the company for diversification and value creation.
To reach some efficiency gains LVMH kept its companies of human size with separate business branches and groups. This way it allows brands to coordinate and develop strategies with mutual interests in areas like logistics, purchasing, distribution at international level and research. The collaboration will also allow companies to share departments in the organization namely research and development, financial and administration. These sharing of departments and combining strategies will allow LVMH to reach and experience efficiency in economies of scale which was needed at the point of time.
The reason of diversification was to stretch out parenting capabilities of the company where it has a wide range covering fashion, leather, wine and perfumes while parenting with financial media and create value by adding competencies and skills to these range of products. It was done for the purpose of nurturing the creative spectrum of the company at the time of slowdown (Mayer et al., 2017).
To increase the market power of LVMH, a diverse range of products of business by acquiring and investing in new and medium sized companies for a longer-term picture. The investments allowed LVMH to fund in new development and strengthen the cash liquidity in order to balance the corporate portfolio of the company and further in a diverse portfolio. The group expansion and developing new subsidiaries of the company allow it to increase the market power around the world. The company has facilitated interrelationship among core business activities and future related diversification to handle a failing structure and slowdown (Mayer et al., 2017).
Restructuring and portfolio management has enhanced company image and match with the current trend of personalized products and services while complementing existing lines. Reorganization or restructuring the lines and portfolios were done to match the current global scenario of businesses and changed customer preferences about their products (Siddiqui, 2004). When a high-end product cannot meet the requirements of a consumer then company needs to rethink of its product selling strategies and with proper research, they must come up with products that matches with the new era in the industry. Company made huge investments to obtain a strategic position in the market and have a significant impact on their revenues and the performance overall.
LVMH has traditional approach of selling products to customers whereas other high-end companies are manufacturing products matching the requirements of consumers in the current era the era of personalized products. When consumer is paying a big amount of money over a product and wanting them to be customized then it must be done to make them a permanent consumer. So as to cover a larger segment of market LVMH made deals with other companies and get into personalized product making (Ajay and Hess, 2019).
Ajay, S. and Hess, P., 2019. Deal Logic LVMH/Belmond.
Cardoso, E.A.R.P., 2017. Examining the differences of the internationalization strategies of two of the major brands in the smartphone industry-Apple inc. versus Samsung electronics (Doctoral dissertation).
Fatricia, R.S., 2017. STRATEGIC ANALYSIS OF TESCO SUPERMARKET. Jurnal Manajemen Terapan dan Keuangan, 6(02), pp.69-86.
Grundy, T.D., 2017. Dynamic competitive strategy: Turning strategy upside down. Routledge.
Hoffman, K. (2019). Driving force: the global restructuring of technology, labour, and investment in the automobile and components industry. Routledge.
Johnson, K., Li, Y., Phan, H., Singer, J. and Trinh, H., 2012. The Innovative Success that is Apple, Inc. Marshall Digital Scholar.
Martínez-Ruiz, M.P., González-González, I., Jiménez-Zarco, A.I. and Izquierdo-Yusta, A., 2016. Private labels at the service of retailers' image and competitive positioning: The case of Tesco. In Handbook of research on strategic retailing of private label products in a recovering economy (pp. 104-125). IGI Global.
Mayer, M., Hautz, J., Stadler, C. and Whittington, R., 2017. Diversification and internationalization in the European single market: the British exception. Business history review, 91(2), pp.279-299.
Muhwati, C. and Salisbury, R.H. (2017). Agility in a South African fashion industry supply chain. Competitive strategy assignmentJournal of Contemporary Management, 14(1), pp.864-892.
Rawlinson, M. and Wells, P. (2016). The new European automobile industry. Springer.
Shaari, A. and Hong, T.T. (2018). Evolution in Fashion Retail: Comparing Fashion Specialty Store and Department Store in Malaysia. INTERNATIONAL JOURNAL OF ACADEMIC RESEARCH IN BUSINESS AND SOCIAL SCIENCES, 8(9).
Shi, Y., Lim, J.M., Weitz, B.A. and France, S.L., 2018. The impact of retail format diversification on retailers’ financial performance. Journal of the Academy of Marketing Science, 46(1), pp.147-167.
Siddiqui, N., 2004. Re-engineering Portfolio Theory: Optimiziing the Diversification of Moet Hennessy-Louis Vuitton (LVMH).
Wood, S., Wrigley, N. and Coe, N.M., 2017. Capital discipline and financial market relations in retail globalization: insights from the case of Tesco plc. Journal of Economic Geography, 17(1), pp.31-57.