Question

In 650 words or more, identify an organization of your choice (public or private) for the project.

• What are the competitive forces the organization you selected faces and what is their position in the market?
• What resources and capabilities do they possess that make them strategically competitive?
• What is their approach to strategic innovation?
• What is their "make or buy strategy" if applicable?
• What strategic alliances have they undertaken, if any?

Answer 1

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Understanding the competitive forces, and their underlying causes, reveals the roots of an industry's current profitability while providing a framework for anticipating and influencing competition over time.

Competitive forces are

i) Competitive rivalry

This force examines how intense the competition is in the marketplace. It considers the number of existing competitors and what each one can do.

ii) The bargaining power of suppliers

This force analyzes how much power a business's supplier has and how much control it has over the potential to raise its prices, which, in turn, lowers a business's profitability.

III) The bargaining power of customers

This force examines the power of the consumer, and their effect on pricing and quality.

iv) The threat of new entrants

Barriers to entry include absolute cost advantages, access to inputs, economies of scale and strong brand identity.

v) The threat of substitute products or services

This force studies how easy it is for consumers to switch from a business's product or service to that of a competitor.

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However, to make the best use of their available resources, organisations require capabilities. Such capabilities also come in many different forms. They may, for example, be the command of a particular material technology, high-level marketing skills, effective product development processes, an able treasury function or an aptitude in introducing new production processes. They also, critically, include management capabilities.

But capabilities are also much more than this. They are in themselves unique resources, available to managers, to be deployed in different ways.

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Strategic innovation is an organization's process of reinventing or redesigning its corporate strategy to drive business growth, generate value for the company and its customers, and create competitive advantage. This type of innovation is essential for organizations to adapt to the speed of technology change.

Companies employing strategic innovation do not necessarily need to make changes to the goods and services they sell to their customers, nor to the technologies that support these products, to be successful. Strategic innovation often refers to innovation projects that occur at the executive level.

The extent of organization's emphasis on either the internal or external knowledge has been credited to have an influence on the innovation performance of manufacturing organizations. Consequently, organizations have the option of pursuing either the technology push or market pull innovation strategy in their new product generation and development process

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A make-or-buy decision is an act of choosing between manufacturing a product in-house or purchasing it from an external supplier.

Also referred to as an outsourcing decision, a make-or-buy decision compares the costs and benefits associated with producing a necessary good or service internally to the costs and benefits involved in hiring an outside supplier for the resources in question. To compare costs accurately, a company must consider all aspects regarding the acquisition and storage of the items versus creating the items in-house.

The buy side of the decision also is referred to as outsourcing. Make-or-buy decisions usually arise when a firm that has developed a product or part—or significantly modified a product or part—is having trouble with current suppliers, or has diminishing capacity or changing demand.

Make-or-buy analysis is conducted at the strategic and operational level. Obviously, the strategic level is the more long-range of the two. Variables considered at the strategic level include analysis of the future, as well as the current environment. Issues like government regulation, competing firms, and market trends all have a strategic impact on the make-or-buy decision. Of course, firms should make items that reinforce or are in-line with their core competencies. These are areas in which the firm is strongest and which give the firm a competitive advantage.

The increased existence of firms that utilize the concept of lean manufacturing has prompted an increase in outsourcing. Manufacturers are tending to purchase subassemblies rather than piece parts, and are outsourcing activities ranging from logistics to administrative services.

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Companies decide to form strategic global business alliances for many reasons. One of the most important reasons is to gain access to another company’s knowledge or resources.Strategic alliances are an effective way to provide diversity of resources and gain entry to new knowledge and markets. There are three types of strategic alliances Joint venture, equity strategic alliances and non equity strategic alliances.

• A joint venture is a child company of two parent companies. It’s maintained by sharing resources and equity with a binding agreement. Whether it’s formed for a specific purpose or an ongoing strategy, a joint venture has a clear objective, and profits are split between the two companies.

• An equity strategic alliance occurs when one company purchases equity in another business (partial acquisition), or each business purchases equity in each other (cross-equity transactions)

• In a non-equity strategic alliance, organizations create an agreement to share resources without creating a separate entity or sharing equity. Non-equity alliances are often more loose and informal than a partnership involving equity. These make up the vast majority of business alliances.