Question

explain the following in 2 paragraphs :

1.Offensive Strategic Moves
Offensive strategic moves are proactive moves made by an organization to get/stay ahead in an industry, rather than a defensive strategy that reacts to competition. These strategic actions involve a company being proactive in attempts to increase revenue, market share, hedge from competition in the industry, and to mitigate risks of competitors getting ahead. This strategy is significant due to the potential to help stand apart from competition (or eliminate it completely). The ability for an organization to successfully implement an offensive strategy can yield vast benefits and can result in a company being perceived as a trend-setter/innovator in an industry. Despite the positive results that could occur, implementing offensive strategic moves typically involves investing a lot of capitol, which can be a major barrier for some companies to be able to attempt this strategy. Such seems to be the case for K-mart, and Sears Holdings, based on the continued struggles of the organization to compete and remain viable. Plenty of strides are being made to increase revenue and decrease global operating costs, such as merging some upper management job functions while merging various corporate locations, but, K-mart may not be at a point where it could implement an offensive strategic plan. It seems more plausible that K-mart could attempt to implement an offensive competitive strategy in a few years if it is able to leverage more savings in its costs to operate, which will likely result in more store closings and a resurgence in brand interests before that occurs to a point that would enable K-mart to invest in plans such as improving the networking infrastructure to facilitate implementing the latest technological advances to increase revenue, for example.

2. First Mover Advantage

The first mover advantage is achieved by an organization being able to be one of the first on the market with an innovative product or service. This is significant for a company because it can allow the establishment of brand recognition in an industry tied to a potentially revolutionary product/service, and brand loyalty can be established early in a product/service phase before competitors even have a chance to enter this market. Companies that are first movers also enjoy a lot of freedom in terms of pricing the products/services, while also having the time to modify and perfect the item/service that yielded the competitive advantage. In an industry that is replete with dozens, perhaps hundreds of other companies nationwide offering an identical variety of products, from groceries, to clothes, to tools, and much more, it seems like it would be hard for an organization that is struggling to maintain its market share while remaining economically viable to find ways to take advantage of being a first mover. K-mart has had little investment in the way of research and development for innovative ways to market and sell its products, and it does not seem like K-mart is in a position to utilize this type of advantage at this time.

3. Defensive Strategic Moves

Defensive strategic moves are management tools that can be used to fend off an attack from a potential competitor. It is like a battleground. Companies must protect their market share to keep their profits stable. They must hold on to what they have by using their competitive advantage.There are two approaches to defensive strategy. The first approach is aimed at blocking competitors who are attempting to take over part of a company’s market share. They can block competitors by adding incentives or discounts to their products to encourage customers to buy. A company can also increase advertising and marketing campaigns. The second approach is a company can announce new product innovations, plan a company expansion, or reconnect with old customers. This approach is not as aggressive as the first one and is done in a more relaxed manner.Kmart has used some of these moves before. They have added discounts to some of their Kmart brand products and have an incentive program, ShopYourWay, where shoppers earn points for purchases. Shoppers can redeem the points for merchandise. Kmart’s leadership should also protect its market share by increasing advertising, so customers will be aware that Kmart stores are still in business and striving to reclaim its place in the market. They should also reconnect with old customers by offering them an additional incentive to shop with them again and try to regain their loyalty.

4. Strategic Alliances
Strategic alliances are agreements among firms in which each commits resources to achieve a common set of objectives. Companies can form strategic alliances with competitors, schools, suppliers and customers. Strategic alliances allow companies to improve competitive positioning, share the risk or cost of major projects, and gain entry to new markets. I think Kmart should merge with or be acquired by Amazon. Amazon advertising Kmart’s products can give Kmart the boost that it needs. It would allow them to have their products exposed to millions of customers that would not even consider looking at Kmart’s website. Kmart merging with or being acquired by Amazon would also give Kmart the financial backing it needs to create more innovative products.

5. Horizontal Integration
Horizontal integration is the range of product and service segments that a firm serves within its market. A company who wants to expand its horizontal scope has an opportunity to do that through mergers and acquisitions. A merger is combining two or more companies into a single corporate entity, with the newly created company often taking on a new name. An acquisition is a combination in which one company, the acquirer, purchases and absorbs the operations of another, the acquired. Horizontal mergers and acquisitions usually involve combining the operations of firms within the same general industry (Thompson, 2012). Horizontal mergers and

acquisitions provide an effective means for firms to rapidly increase the scale and horizontal scope of their core business. Combining two or more companies is an attractive strategic option for strengthening the company’s competitiveness and it also opens avenues for new market opportunities. Increasing a company’s horizontal cope can strengthen the business and increase its profitability in five ways: (1) by improving the efficiency of its operations, (2) by heightening its product differentiation, (3) by reducing market rivalry, (4) by increasing the company’s bargaining power over suppliers and buyers, and (5) by enhancing its flexibility and dynamic capabilities. In order to achieve the benefits of a horizontal integration, companies must be able to aim their strategies to one of the following outcomes: by increasing the company’s scale of operations and market share; by expanding a company’s geographic coverage; extending the company’s business into new product categories; by gaining quick access to new technologies or complementary resources and capabilities; and/or by leading the convergence of industries whose boundaries are being blurred by changing technologies and new market opportunities.For Kmart, they were able to accomplish a horizontal integration back in 2004 when they merged with Sears, Roebuck Co. Kmart and Sears are very similar companies, offering very similar types of products. Up until the past 5 years or so, this has worked really well for both companies. With the rise of Amazon, other major companies like Walmart and Target executing the same strategy as Kmart, they are driving business away from them. Like stated above, there have been 225 locations closed down just in 2017 with another 60 estimated to close in 2018. With such a decline in revenues over the years, it is not economical for them to keep stores open that are not making money. If not for the merger in 2004, Kmart would not still be around today because other companies are doing the same thing better, cheaper, and more cost effective.

6. Company Value Chain
A company’s value chain identifies the primary activities that create customer value and the related support activities. The value chain is the underlying intent of a company’s activities to do things that ultimately create value for buyers (Thompson, 2012).To be successful, a company must think about what choices it will make now and in the future. Once a company focuses on the value-creating activities, the value chain is an ideal tool for examining how a company delivers on its customer value proposition. This allows the company to look at its cost structure and ability to offer lower prices. This allows them to look at what emphasis is placed on activities that enhance differentiation.Kmart is continually making improvements to their value chain because if not, they will fall behind to the likes of their competitors. With the popularity of online shopping taking over, Kmart offers all of their products sold in store on their website. Doing this helps ensure the customer has the best experience and can access any product whether it is online or in-store. This also allows Kmart more “shelf space” because they can sell some products strictly online and keep the more popular items in store. Kmart also offers a layaway program for customers to put items on hold, make payments, and receive the item once it is paid off. Many of their competitors do not offer layaway anymore due to credit cards being readily available. Lastly, Kmart, along with Sears, offers customer a rewards program called Shop Your Way. Shop Your Way allows customers to earn 10 points for every $1.00 spent, 1,000 points equals $1 in value, and they can earn points at any of the participating locations

(“About Points”). Rewards programs are great values to customers because they can earn back money they spent, which in turn will incentivize them to shop more at Kmart

7. Outsourcing
Outsourcing, is business practice used by companies to cut costs and increase profit over the long term by sending nonessential functions on work to third parties. These third parties are usually able to specialize in that specific function better than the main company can. This makes it possibly cheaper for a business to pay a third party to perform an activity rather than performing the activity themselves. Outsourcing is important to do because it allows a business to spend more time and money on the more important functions of the business.

In Kmart’s case, they outsource much of their IT infrastructure to a third party called CSC. The Kmart help desk is also currently handled mostly by Indian workers. Although outsourcing preserves the resources that Kmart has, it has also taken jobs away from Kmart employees in America. Since Kmart is currently closing down stores in order to salvage the little “good reputation” it has left, it may need to think about outsourcing other nonessential functions in order to focus on saving the rest of its stores.

Answer 1

Offensive Strategic Moves is a kind of corporate strategy which encourages the company to be a trend setter in the industry. Companies using this strategy spend lot of money in research and development and technology to stay ahead of its competitors. It also focus on increased market share and profitability by beating the competition in the market. These are proactive often aggressive sometimes. First mover advantage is achieved when the company is the first in industry to innovate a product or service. Such companies being the innovator enjoys flexible pricing and strong brand recognition. However, products get copied after some time but the innovator is always known for its invention. Defensive Strategic Moves are the actions taken by the companies against the competitors to get market share. It is kind of a battle game. Company adopts different strategies like discounts, offers different types of advertising and marketing campaigns to beat the competitor’s product.

Strategic Alliances are the partnerships among two or more firms to work with committed resources to achieve the common goals. It can be used to avoid competition or share the risk. Like K-Mart should come up with alliance with Amazon to build a strong marketing base and secure platform for its sales and revenues. Firms which don’t have high brand recognition can use such platforms as alliance. Horizontal integration can be merger or acquision where companies with same product line merge with or acquired by other company for expand its horizontal scope. It is a good strategic option to improve operations efficiency, increasing product differentiation and most important to reduce market rivalry in the same line. Like K-mart successfully merged with Sears, Roebuck Co. in 2004which offer similar type of products. It has resulted in increased revenues.

Company’s value chain describes the primary and supported activities that create customer value. Thus, to deliver best to the customer it is important to work for good value chain and this improves company cost culture and effect prices. Like K-Mart increases their value chain by coming up online. K-Mart puts several products strictly online and some common which saves the shelf space and also give customers the option to shop online at their convenience. Rewards program help k-Mart to gain more value as customers feel that they are saving even after spending. This has hugely impacted the value chain and sales of K-mart. Outsourcing is used companies to save and time by giving some work to 3^rd parties who have expertize in it. In this way it saves the money and time. K-Mart mostly outsource their IT infrastructure to CSC which is mostly handled by Indian workers. Though it has effected the jobs of American employees of K-Mart, but overall K-Mart is looking to save money on non-essential work to spend more on its stores expansion.