Strategy
Today increasing numbers of businesses are entering in various forms of strategic alliances with various parties in order to increase their efficiency and market share in one way or the other. It has been stated that “strategic alliances are cooperative agreements between firms that go beyond normal company to company dealings. Alliances and/or cooperative agreements can involve joint another’s products or joining forces to manufacture components or assemble finished products” (Aswathappa, 2011, p.383) It is clear that parties engage in strategic alliances because they expect to get substantial benefits from the partnership. However, the actual success of the partnership depends on many factors, including aims and objectives of the parties, the nature of their alliances, the culture between the companies entering in alliances and others (Das, 2010). This article represents a critical discussion of the viewpoint according to which strategic alliances, in all forms are beneficial to the parties involved. The article starts with discussing the essence of strategic alliances making distinctions between its various forms. Then the benefits of strategic alliances are described by referring to the real life examples in the global marketplace and discussing the issue in a greater detail. Moreover, the article also includes analysis downsizes of strategic alliances exploring the reasons for these downsizes, as well as formulating recommendations about how negative effects of strategic alliances can be avoided. Essence and Forms of Strategic Alliances Hitt et al (2009) state that the reasons why companies form strategic alliances include reducing the level of competition, enhancing the level of competitiveness, obtaining access to resources, taking advantage of competitive edge of strategic partners, and promote innovation. Reuer (2004), on the other hand, adopts simplistic approach when explaining the essence of strategic partnerships comparing alliances to the marriage between two people. This comparison may not fully reflect…
Marks & Spencer (M&S) is a UK based clothing and luxury food retail company that has been founded in 1884 by Michael Marks and Thomas Spencer. The company has over 76,000 employees in a global level, and deals with over 2000 suppliers (Annual Report and Financial Statement, 2010). “The global influence of the company stretches from Europe to Russia, the Middle East, India and Asia at present – taking advantage of 3 of 4 BRIC nation markets” (Bunston, 2008, p.3). M&S homeware and clothing products account for 49% of its total business, whereas the remaining 51% account for food products. With more than 600 stores throughout the UK, the flagship M&S store is located at London’s Marble Arch and possesses the selling space of around 170,000 square feet (Marks and Spencer Group PLC, 2008, online). From the date it was formed M&S was steadily growing, focusing on the quality of its products and offering value for money. The profitability of the company had peaked in the financial year of 1997/98, shortly after which the company found itself into deep financial troubles. The reasons were the increasing level of profit margin, the refusal of the company to accept credit cards, the principle of the company to deal only with British suppliers etc. Then the company went through massive changes that included the introduction of new ‘Per Una’ ranges of clothing, acceptance of credit cards, more focus on customer services, etc, as a result of which the company was able to recover some of its market share. The company has engaged in a range of Corporate Social Responsibility (CSR) initiatives as well, and ‘Plan A’ initiative can be highlighted separately as the most notable one. The project has been assigned a budget of 200 million GBP and has a range of ambitious objectives to be…
The future geographical presence strategy of Lidl includes expansions into the new markets such as Brazil, Mexico, Russia and USA. This is an effective market expansion strategy that promises to increase Lidl’s global presence, and at the same time boost the revenues of the company significantly. However, further recommendations related to international market expansion can be made for Lidl, that if implemented would contribute to achieving global aims and objectives of the company. Specifically, Lidl should also enter into Chinese and Indian markets as well, because the great number of potential customers living in these countries may ensure the greater level of profitability compared to the markets of Brazil, Mexico, Russia and USA. If the amount of financial resources possessed by Lidl allows the expansion to all of the above named countries than the relevant plans should be devised and implemented. However, if the choice needs to be done between Brazil, Mexico and Russia in one hand, and India and China on the other hand, in terms of international expansion, the preference should be given to the latter group of countries due to the following reasons: Firstly, the total amount of population living in China and India exceed several times the total amount of population living in Brazil, Mexico and Russia. Moreover, Chinese and Indian population have a similar mindset as German people in terms of associating cheap price of the product with the value, and therefore there are reasons to believe that Lidl’s core strategy of offering low priced products will prove successful in these countries. Secondly, even though China and India are developing in fast paces, still the average standard of life in these countries are considered to be poorer than the average standard of life in Brazil, Mexico and Russia, and therefore people in China and India…
The classical business concept of Aldi that had proved to be successful in Germany and many other countries had to be altered in UK and Switzerland due to a set of reasons. As we know the main business model Aldi practiced consisted of offering low priced limited range of products that was achieved by compromising the quality of customer service and shop premises. However, this strategy did not prove to be successful in UK and Switzerland and Aldi management had to change its strategy in these countries by increasing the prices of their products and invest extra financial resources that were created in this way in increasing the number of product range, improving the quality of the customer services, and increasing the spending on marketing communication mix. Taylor and Lee (2007) stress the importance of cultural differences in international buyer behaviour. Culture itself, can be defined as shared values and mindsets and methods of doing things within a specific group (Holden, 2002). Therefore, local cultural differences in UK and Switzerland were the main reasons behind the change of strategy practiced by Aldi. To be more specific, in Germany and many other countries value of the product is usually associated with cheap price of the product. In other words, if the product is cheap it is perceived as value by customers in Germany and a range of other countries. And this fact has ensured the success of traditional strategy of low pricing practiced by Aldi in Germany and many other countries. However, culture in UK and Switzerland is different in a way that if the price of the product is very cheap, consumers tend to form low opinions about the quality of these products. Value in UK and Switzerland is mainly associated with the quality of the product, not necessarily with…
Outline the main principles of human resource planning. Human Resource Planning also called Manpower planning deals with the identifying the needs of the company for skills, knowledge and labour, and initiating programs and actions to satisfy those needs. It is the process of planning and implementing the movement of employees into, within or out of the company in order to achieve the correct number of workers with relevant skills needed for the company to achieve its objectives. In other words, the human resources planning has to ensure that the required amount of employees with required skills are available whenever needed by the company. The objectives of Human Resource Planning are the following: • Deciding Goals: Human Resource Planning helps to achieve individual and organizational goals • Evaluating future organizational structure and human resource requirements • Auditing Human Resources on a constant basis in order to prevent overstaffing and understaffing • Undertaking Job Analysis through analysing the descriptions and responsibilities of specific jobs in order to hire the most suitable candidate for the position The Human Resource Planning is essential for a company for following reasons: • To use the human resources of the company in a most efficient manner to gain maximum benefits. This task would be easier if information regarding the various aspects of human resources are collected and arranged in an organised manner by HR • To forecast future requirements for human resources numbers and skills. This is especially important for companies that are planning expansion of operations. • To help the companies to better adjust to changes in political, economic, social, and technological environment, where HR plays an important part in mergers, relocation of plants, downsizing, closing of some operations, etc. • To determine the levels and standards of recruitment and induction. • To devise training and…
By John Dudovskiy
Category: HRM
The history of the global fast food company started with two brothers Richard and Maurice McDonald opening the very first McDonald’s restaurant in California, USA in 1940. Franchising began for McDonald’s in 1953, and four restaurants were opened in the same year. The joining of Ray Kroc in 1954 proved to be a turning point for the company and McDonald’s began franchising their restaurant outside of their hometown as well. The sale of 100 millionth hamburger for McDonald’s in 1958 was followed by the opening of 100th restaurant the year after. Ray Kroc buys McDonald’s from founding brothers in 1961 and after two years the company sells its billionth hamburger and opens its 500th franchise in Ohio. Initial overseas McDonald’s opened in Canada and Puerto Rico in 1970. In 1971 McDonald’s expanded to Japan, Netherlands, Germany and Australia. McDonald’s revenues reached $1 billion and 2000th restaurant opened in 1972. And it was followed by the invention of Quarter Pounder and Egg McMuffin and opening franchise in Stockholm. The years of 1974 and 1975 witnessed the expansion of McDonald’s to the United Kingdom, opening of the first Ronald McDonald House and introduction of Drive-Thru. Also, the company expanded to Japan and Singapore and Happy Meal was introduced during the remaining part of the 1970’s. During 1980’s McChicken sandwich and Chicken McNuggets were introduced and restaurants were opened in Philippines, Malaysia, Italy, Mexico, Belgrade, Yugoslavia, Budapest and Hungary. McDonald’s continued worldwide expansion during 1990’s opening shops in Moscow, China, Africa, Morocco, Saudi Arabia, South Africa, Belarus, Peru, India and Georgia. Difficult time began for McDonald’s in 2000’s starting with the launch of a book called Fast Food Nation written in 2001 by Eric Schlosser which criticised McDonald’s for selling unhealthy food. It partially resulted in the first quarterly loss in company’s…
HTC Corporation (formerly known as High Tech Computer Corp.) is a Taiwan-based smartphone manufacturing company engaged in design, development, manufacturing and sales of mobile computers, personal digital assistant phones, touch phones and smart phones and offers its products in Europe, Asia pacific, North and Latin America, Africa and Middle East (Bloomberg, 2010). The company has gained a reputation in terms of innovation related to the features of their products as well as their design The Evolution of HTC HTC was founded in 1997 by three business people and technology enthusiasts Cher Wang, HT Cho and Peter Chou. The founders took the roles of Chairwoman, Director of Board and Chairman of HTC Foundation, and President and CEO respectively. At the initial period of business HTC was mainly involved in partnerships with companies like Compaq, Dell and HP designing and building PDAs (personal digital assistants) for them. The most innovative and acclaimed products of these brands HTC was closely involved in include Compaq iPAQ, Treo 650, O2 XDA, and Orange SPV (Hi, we’re HTC, 2010) The company was introduced to the public as an independent brand starting from June 2006, and manufactured its first own brand product HTC Touch, which is claimed to be by the company a first finger-friendly touch-screen smartphone in June 2007. Today HTC boasts with its popular products as Touch Diamond, Hero, HD2, HD Legend, and Desire, and has been ranked by Business Week as the second best performing technology company in Asia in 2007, and third place in Business Week Global listing in 2006. Internal and External Factors that Affected the Evolution of HTC There are set of internal and external factors that have affected to the evolution of HTC. One of the main internal factors that have affected the evolution of HTC does relate to…
Regardless of type of the business the strategy of running it has changed dramatically in a way that nowadays, the increasing role and impact of internal and external factors to the business have to be taken into account. This fact produces extra challenges for strategic level managers, because they need to focus on creating competitive edge for the business, at the same time when globalization affects all aspects of the business including its strategic direction, supply-chain, value-chain, competitive advantage etc. While this new business environment is seen as challenging by some business executives, others have transformed challenges globalisation offers into competitive advantages of their businesses.
Samsung Electronics is based in Seoul, South Korea and operates in 65 countries worldwide with 157,000 people working for the company. Samsung Electronics products include semiconductors, hard drives, digital displays, home electronics, mobile phones, and others. All Samsung products have the same tone when the device is turned on, so that customers can easily get used to them and this tone is mentioned when Samsung products are being advertised as well. The business strategy of Samsung Electronics presents an interesting case due to the fact that the company has an experience of pursuing both, cost leadership as well as product differentiation strategies during its lifetime. Specifically, Mitchell (2010) informs that business strategy of the company was mainly cost efficiency prior to Asian Financial Crisis of 1997, as a result of which the company came on the verge of bankruptcy, and the situation was changed with Eric Kim becoming chief marketing officer of the company, who brought dramatic changes to the strategy of the company pursuing product differentiation strategy. “Smarter Life” theme was introduced recently in Samsung that is based on the innovative approach in improving the company’s current products, and introducing new products to the market. For instance, Android-based Samsung Galaxy Player 50 is to be introduced soon, containing a range of innovative features the product is expected to change the current media players’ market condition significantly. As a part of the massive initiatives aimed at pursuing product differentiation strategy efficiently Samsung design staff has been tripled to 400 globally (Singhania, 2006), along with numerous other measures. Dramatic change in the strategy of the company has allowed Samsung Electronics to emerge as one of the main players in all of the markets the company operates in. For instance, Galaxy Tab produced by Samsung is currently considered to be the only substantial…
Sony Corporation is an international electronics and media company with headquarters in Tokyo, Japan. Employing 167,900 people worldwide the company produces audio and video products, televisions, information and communications products, semiconductors and a wide range of other electronic components (Sony Corp, 2010). The main business strategy Sony pursues is product differentiation. “Sony has always distinguished itself from competitors by claiming to give better products worldwide…thus Sony is able to charge a premium price in its market” (Vashisht, 2005, p.99). The main parameters of product differentiation are specified by Vashisht as features, technological advancements, and quality. Accordingly, Sony enjoys a high level of customer loyalty among some people who use and appreciate advanced technology products and devices due to the fact that products offered by Sony always stand out because of their quality, extra features and design. Most of the Sony products are among the popular in their relevant markets, and sell for premium prices due to their numerous advantages. For instance, in game console market PlayStation launched in 1994 effectively competed with Nintendo 64 that used to be a market leader even though PlayStation was offered in considerably higher prices. PlayStation 2 and PlayStation 3 that followed in later years were equally successful for above reasons. Similarly, VIAO branded laptops and Bravia television sets were hugely successful in their respective computer and television markets despite being offered in much higer prices compared to most other brands. All these indicate to the fact that Sony Corporation is successfully undertaking its product differentiation strategy by offering high quality products for premium prices. References Sony Corporation, Hoover’s Profiles, Available at: http://www.hoovers.com/company/Sony_Corporation/crxxhi-1.html, Accessed January 3, 2011 Vashisht, K, 2005, A Practical Approach to Marketing Management,