2

Generic Business Strategies

Capella University

FPX5006

Professor: Katherine Hyatt

January 29, 2022

Generic Business Strategies

Generic business strategies are the methods that a company employs to ensure they are competitive within the market scope they are operating within. The company achieves the strategies through cost leadership on the products they offer to their customers, focus, or differentiation. Notably, the generic business strategies effectively ensure that the company achieves its mandate since they encompass the internal and external factors that impact the organization (Serrano et al., 2021). After analyzing the factors, the strategies are applied to ensure that the company can maintain its competitive nature within the market scope it is targeting and operating within. The generic business strategies that the company employs include cost, differentiation, and focus or hybrid information. The company's costs should allow the organization to gain and sustain the competitiveness of the market scope they are operating within. The company needs to establish the importance of being the market leader in pricing to influence the ongoing prices to favor its operations (Islami et al., 2020). The cost that the company will set will allow it to manage the strategy process since they influence the market scope they are operating within.

Generic business strategies for the company encompass the differentiation approach the organization employs. The differentiation allows the company to deal with external factors that may hinder it from being competitive relative to other competing companies. Differentiation is undertaken after evaluating the industry structure and the missing links that the company can target to maintain its competitiveness, competitive forces that it has to overcome, and the strategic groups that will allow it to meet the objective of its differentiation (Serrano et al., 2021). Further, the company will undertake its differentiation by establishing the necessary resources that will allow it to achieve the strategy, capabilities, and core competencies that give it competitiveness on the market scope. The firm performance and business model also inform the differentiation strategy. The hybrid information that the company obtains is necessary for ensuring that the organization can make decisions that will allow the firm to be competitive within the market scope of its operations. The hybrid information will allow the company to focus on factors that will sustain competition (Islami et al., 2020). Hence, generic business strategies for a company are approaches that will allow the organization to have the most effective operations model to take advantage of the opportunities in a given market scope and be competitive.

Analysis of Business Strategy a Company Use in its Marketplace Approach

The business strategy a company use in its marketplace approach will be determined with the characteristics of the market scope and the organization's existing products. If the company aims to increase its competitiveness in the same market with the same product lines, the firm will aim to undertake market penetration. Market penetration will allow the company to increase its market share, enabling it to become more profitable and dominant in the market scope. Market penetration is done by the company when the firm has noticed that its competitiveness is being eroded and it is not involved in the production that will increase the attractiveness of the organization (Alva & Bhat, 2018). Hence, a market penetration business strategy is used in the marketplace approach to ensure that the company can attract more customers who will develop their loyalty to the products that the firm produces to sustain the competition that exists in the market. However, after establishing dominance in the market scope in which the company operates, cost leadership offers the firm the ability to influence purchasing decisions in the marketplace. Therefore, cost leadership is an effective marketplace approach that allows the company to maintain its competitiveness by determining the price that other competing organizations need to attract customers.

Differentiation strategy is a business strategy that the company uses to ensure that it offers various products in the marketplace, allowing it to be competitive. The differentiation approach allows the company to set lower prices and develop unique products that attract consumers' preferences. The uniqueness of the products is developed after undertaking a cost-benefit analysis based on the company's resources, the core competencies it has in its operations, and the market competition the firm seeks to offset. Moreover, the company explores the focused cost leadership approach in new markets that it encroaches on to ensure that they can penetrate the market by offering unique and specific products that people will relate to and develop their taste and loyalty to them (Alva & Bhat, 2018). Focused cost leadership enables the company to sell the flagship products at predetermined prices that allow the organization's brand to grow and maintain competition when new entrants get to the marketplace. The marketplace approach ensures that the company establishes dominance and that entry to the market be regulated. A focused differentiation business approach allows the company to have the ability to sell the same line of products by diversifying the uniqueness that will attract the consumer. The business approach is effective in the marketplace since it allows the company to boost its sales and keep up with the market competition.

Analysis of Company Business Model

The Core Products

The resources determine a company's core products that the organization has at its disposal. The core products must align with the company's brand idea that they seek to build that the consumers can identify easily with when they interact with at the marketplace. The core products that the company produce is developed based on the core competencies that the organization enjoys since it allows it to employ minimum resources while maximizing the returns. The core competencies allow the company to develop unique products that the firm can use for market penetration in marketplaces it has not encroached upon (Alva & Bhat, 2018). Further, the core products produced by the company are based on the capabilities of the organization to mobilize the necessary resources at a low cost employ the necessary factors that will allow it to attract more customers than its competitors. Therefore, the business model relies on internal factors to develop its products. In contrast, the external factors inform the decisions; they decide what approach they need to take to introduce the products in the market scope.

Organization Streams of Revenue

A company makes money based on the value, rareness, imitability, and the business strategy the organization has put in place to ensure that its products perform best in the marketplace. The company uses its internal factors, for instance, the core competencies that it applies for competitive advantage, to develop valuable products that cannot be imitated with other firms serving the same market scope the institution is operating within. Their rareness determines the value of the products in the market, which allows the company to fix prices that allow it to generate revenues as a source of money. The imitability of the company's products gives it the competitive advantage to temporarily attract high sales by offering products that other organizations can copy and, in the long run, introduce a new product line that will counter the products that most firms have circulated market (Alva & Bhat, 2018). The imitability ability allows the company to influence other companies to produce similar products. It uses its capabilities and resources to develop other valuable products to offset the flooded ones in the market scope. Hence, the company can make money from its operations based on the business strategies.

Customer Value Proposition

A company's products have a potential value designed based on the business strategy. The business' products deliver value to its customers, and it is the sole reason customers engage with the business allowing it to derive revenues from its operations. The products that the customers get from the company need to offer them a functional and emotional value which is gauged by the ability of the firm to sustain its competitive advantage (Alva & Bhat, 2018). Customers need to derive utility from every unit of the products they consume from the company because it offers them economic value. The symbolic and end customer value proposition needs to inform the company of its brand's prominence in the market scope, which allows it to maintain its competitive advantage over other companies' operations within the marketplace service.

Company Profit Proposition

A company needs to establish its strategy formulation to ensure that it incurs minimal costs on its production while attracting more profits from its operations. When the company is profitable, it can make business decisions that will integrate and diversify its operations and production processes vertically. The integration and diversification will allow the company to keep up with the evolving market scope and retain its dominance, enabling it to have a competitive advantage over other firms (Alva & Bhat, 2018). The company profit proposition needs to be based on the resources that the firm has and can employ in its production, the core competencies that will allow it to be effective in its operations and engagement with customers, and the institution's capabilities to cope with the changing market trends. Therefore, the company's profit proposition should enable it to minimize cost while maximizing the revenues to ensure it is profitable in the short and long run to sustain the competition in the market scope.

Analysis of Corporate Strategy of the Company

A company's corporate strategy should comprise of vertical integration concepts and diversification. The corporate strategy will enable the company to expand from its original product lines to offer variety to its customers to have a competitive advantage over other firms that operate within the same market scope it undertakes its operations. The product lines can be expanded through product and price differentiation through diversification (Craypo & Nissen, 2019). Moreover, product differentiation should be done by offering unique products of the same brand that meet the different consumers' needs in the targeted markets. Price differentiation can be achieved by developing products of different qualities which attract varied value to the consumers. The value of the different products will command varied prices, which will be within the consumers' ability to undertake the opportunity cost to have the items which meet their needs. The approach will enable the company to attract customers at various consumption levels.

Consequently, a corporate strategy should entail the geographical expansion of the company. The geographical expansion will offer the company an opportunity to increase its field of operation, which will allow it to meet a vast number of customers with its products. The geographical expansion will allow the company to increase its market scope to emerging markets that are attractive for investment and sales of its products. The company will experience high revenues relative to costs incurred in production (Craypo & Nissen, 2019). It is capital exhibits diminishing returns relative to the revenues. Hence, geographical expansion to new fields will allow the company to grow its brand and sustain its competitive advantage relative to other firms. The company's vertical integration is related to activities along the value chain for its products since it improves the quality of its products to meet the demand of its customers, which keeps increasing as the firm grows. The company's vertical integration is undertaken through reinvestment of the profits the company has attracted and strategic alliances to be competitive in its market scope.

Analysis of Overall Corporate Structure and Key Management Systems

A company that seeks to grow and develop a sustainable competitive advantage over its competitors needs to diversify its operations and products vertical integration in terms of its advancement and globalization. Diversification will allow the company to have the ability to meet the diverse consumer needs in various locations. The operation strategy will enable the company to expand its portfolio from the profits and revenues it attracts from the business activities. Vertical integration will allow a company to grow its operations beyond its current capacity and acquire other companies that are not sustainable within the market scope. Vertical integration will enable the company to establish market dominance, offering it a competitive advantage (Craypo & Nissen, 2019). Further, a company should undertake globalization as a corporate strategy since it will keep up with the international business trends to ensure it remains relevant and competitive among its peers. Hence, global alliances are part of the corporate strategy because it offers a company the front to interact with other organizations, allowing it to expand its scope of operations at a global level.

Analysis of Strategic Fit Between the Business and Corporate Strategies of a Company

The strategic fit between a company's business and corporate strategies is the strategy implementation programs. A company's business strategies consider organizational design, which will allow the firm to have a competitive advantage over other companies. The business strategy implementation considers the company's structures, control mechanisms, and culture. The aspects will allow the company to undertake measures within the organization's vision and mission. On the other hand, the corporate strategy implementation considers corporate governance and control issues that allow the firm to undertake its operations in a manner that allows it to remain sustainable in the short and long run (Craypo & Nissen, 2019). Sustainability is attained by attracting revenues to the company and offering its customers products that satisfy their needs.

References

Alva, H., & Bhat, S. (2018). Accenture–Understanding Sustainable Business Strategies. International Journal of Case Studies in Business, IT and Education (IJCSBE), 2(1), 54-63.

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3186118

Craypo, C., & Nissen, B. (2019). The impact of corporate strategies. In Grand Designs (pp. 224-250). Cornell University Press.

https://www.degruyter.com/document/doi/10.7591/9781501733864-014/html

Islami, X., Mustafa, N., & Latkovikj, M. T. (2020). Linking Porter’s generic strategies to firm performance. Future Business Journal, 6(1), 1-15.

https://link.springer.com/article/10.1186/s43093-020-0009-1

Serrano, T., Aparcana, S., Bakhtiari, F., & Laurent, A. (2021). Contribution of circular economy strategies to climate change mitigation: Generic assessment methodology with focus on developing countries. Journal of Industrial Ecology, 25(6), 1382-1397.

https://onlinelibrary.wiley.com/doi/abs/10.1111/jiec.13178

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10

Strategic Process and Analysis

Capella University

FPX5006

Professor: Katherine Hyatt

January 14, 2022

Contents External and Internal Factors Affecting Businesses 3 Introduction 3 AFI Strategic Planning Framework 3 Internal Environment of the Organization 4 VRIO Analysis 4 Leveraging Strengths to Execute the Strategy 4 External Environmental Factors 5 PESTEL Analysis 5 Five Force Analysis 6 Role of Leadership in the Strategic Planning 7 Recommendation 7 References 8

External and Internal Factors Affecting Businesses

Introduction

Both internal and external factors tend to influence business success significantly. A business's success highly depends on identifying internal and external environmental factors affecting the business. Internal environmental factors are those that tend to affect the business from within. They involve components of the business environment comprising various elements that affect or get affected by the decisions, activities, and choices the organization management takes. Essentially, the internal environment is the organization's events, factors, culture, and members capable of influencing its overall decisions (Sherman, 2019). In particular, the most affected element is typically the human resource which plays a crucial role in the organization's internal factors. On the other hand, external factors include aspects that are beyond a business's control (Sherman, 2019). It is the environmental factors found within the business's surroundings and those that demand the business to work around rather than striving to change them. The paper will be focusing on both internal and external environmental factors and how they influence and shape organizational strategies.

AFI Strategic Planning Framework

               The framework of AFI strategic planning is a model that connects three interdependent tasks of strategic management. These include analysis, formulation, and implementation. In essence, the organization should be in the position of working or combining the three tasks to improve the company's performance and result in its competitive advantage in the long term. The analysis will help the company understand its performance status under external environmental factors such as macro-level environment, industry environment, and competitive environment (Nonthanathorn, 2021). Besides, it will enable the company leadership through VRIO analysis to understand its internal analysis, including identification of capabilities, competencies, and resources and identification of value chain primary and support activities.  

Internal Environment of the Organization

VRIO Analysis

               Based on the analysis value, the organization has adequate and potential resources to win its competitive advantage over a long-term perspective. The company maintains quality production of its products and services, thereby enhancing customer satisfaction and numbers to its stores. However, its products are not rare since competitors produce or sell similar items. It has a strong brand name that increases its sales regardless of having stiff competition from its major rivals. Moreover, the company's products are imitable, meaning other organizations can easily imitate them to make similar sales to the same customers (Nonthanathorn, 2021). In essence, this can hurt the organization's sales in the future due to the shared number of customers across the market. The organization management is subdivided into three levels: top-level managers, middle-level managers, and low-level managers. This is essential as it allows efficiency and effectiveness in the flow of information and directives from the top senior executives to their subordinates and vice-versa.

Leveraging Strengths to Execute the Strategy

               The organization effectively leverages its strengths in executing the AFI strategy framework. It differentiates its products from its competitors through a differentiation strategy by collecting adequate data from its potential markets. With its recognized brand, the company's differentiation strategy helps it win premium customers with the preference of quality over price. It heavily invests in its research and development to ensure it achieves accuracy, which is essential for the decision-making process (Goggin, 2021). It takes loans from banking institutions to finance the process of research and development as well as for financing its assets. Furthermore, the organization structure is designed in such a way that each employee is allocated to their respective responsibilities following their specialization. Besides, its management system is based on democratic whereby all stakeholders, including the employees, are often involved in the decision-making processes. This makes the employees satisfied, thus improving their performance and productivity level.     

External Environmental Factors

PESTEL Analysis

               Political: this is one of the significant external factors that significantly affect the organization's operations and activities. Some of these factors include leadership, internal political issues and trends, government policies and regulations, and tax policy. Changes in state business regulations and policies, for instance, tend to influence the pricing strategy of its products.

               Economic Factors: Current and projected economic growth, interest rates, and inflation also affect the organization's business operations and activities. Unemployment and job growth also tend to impact the company's labor cost. Globalization also affects the organization's sales by determining the consumers' disposable income and spending power.

               Social Factors: factors such as population demography influence the location of its business settings. For instance, it tends to target the middle-class age because most of its products are designed to fit the desire of people between the ages of 18 – 35 years old. Also, it focuses its marketing strategy on high-class living standards who prefer quality over price.

               Technology: the company is driven by advanced technology in its operations. Particularly in the production sector, the organization has invested significantly in advanced equipment, thereby increasing its production rate while maintaining the desired quality.

               Legal: the company ensures it abides by the employer and employee laws and regulations to avoid lawsuits and other factors that may result in significant losses. For instance, it offers equal opportunities to all its employees regardless of their race, ethnicity, and gender. It also ensures that its workforce members are paid appropriate wages and benefits allowance as stated by the state or federal laws and regulations.

Five Force Analysis

               Supplier Power: the company has good communication with its suppliers. This is essential because it enables the company to control the cost of raw materials by negotiating prices.

               Buyer Power: the company tends to control its buyers' prices for its products by improving their quality. This, in turn, helps it to meet the premium customers' demands to satisfaction.

               Competitive Rivalry: the market in which the company operates is highly competitive since it shares similar products and customers. However, its differentiation strategy can distinguish its products and services to a certain group of potential customers.

               The Threat of Substitution: the company also experiences the challenges of dealing with alternative products from other related industries. This makes it possible for customers to switch to alternative items in response to high prices, thereby reducing its customers' number.

               The threat of New Entry: profitable markets are typically attractive to new entrants. The organization market is highly profitable, attracting more new entities to join the industry. As a result, the rate of competition increases, which reduces the number of employees visiting its stores.

To respond to the forces, the company can continue improving its differentiation approach to ensure its products remain to be distinctive from its major rivals. It should also improve its quality products to keep and increase its premium customers.

Role of Leadership in the Strategic Planning

               Effective leaders perform the primary assignments in strategic making and execution. They have a role in developing strategic vision and mission, setting objectives, and the overall organizational goal. Moreover, they play the role of crafting and executing the strategies and evaluating the process performance over the long term (Jabbar, 2015). They are responsible for ensuring the organization's plan focuses not only on its interests but also on the interest of all stakeholders involved. They are also responsible for involving the organization workforce in the decision-making processes, especially those that entail their workplace improvement (Rothaermel, 2021). This is to ensure the organization's processes and communication are conducted transparently.  

Recommendation

               Organizational leadership should engage its followers in all decision-making processes to engage them with the strategic plan. This will enhance the efficiency of operations and implementation of the strategic plan to completion. It should also invest more in its differentiation strategy to continue winning a competitive advantage in its market that is becoming more competitive. The organization leaders should also improve the entity's relationship with its suppliers to negotiate the cost of obtaining materials effectively. This will help to reduce the production cost, thereby increasing the profitability margin.

References

Goggin M. (2021). Explaining The VRIO Framework (With A Real-Life Example). Retrieved from;

Jabbar A A, Hussein A M. (2015). Role of leadership in the strategic planning process. Retrieved from;

http://granthaalayah.com/Articles/Vol5Iss5/10_IJRG17_A05_279.pdf

Nonthanathorn, P. (2021). Influences of Strategic Leadership and Strategic Communication on Effectiveness of Strategic Management. Psychology and Education Journal, 58(3), 2112-2118.

Rothaermel, F. (2021). Strategic management (5th ed.). New York, NY: McGraw-Hill.

Sherman F. (2019). What Are Internal & External Environmental Factors That Affect Business? Retrieved from;

https://smallbusiness.chron.com/internal-external-environmental-factors-affect-business-69474.html

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