Understanding Business Strategy: A Reflection on Adnam Company
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This article reflects on the importance of business strategy in achieving a competitive advantage, with a focus on Adnam Company. It discusses the relevance of Porter's five forces analysis, the impact of supplier power, industry rivalry, barriers to entry, and the availability of substitutes.
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Business Strategy Business strategy refers to the working plan of a firm for preforming objectives, achieving its vision, competing successfully and using its business model to optimize financial performance (Spender, 2014). In this regard, I have been developing the interest in the field of business with the main focus being the advancement of knowledge in business competitiveness. Therefore, I find theAdnam Company reflective paper resourceful because it will expound my perception on the subject. I intend to develop a profound understanding of the Porter’s five forces analysis in the context of Adnam Company. Proper integration of the five forces analysis into a company’s framework of operations is likely to earn it a competitive advantage over the other firms in the same industry(Magretta, 2012). I have always thought that business strategy is not as important as it would appear in the Adnam- reflective paper. I believed that identifying a readily available market is the only key aspect in building a successful business. However, the notion of bargaining power of the buyers and suppliers, barriers to entry, existing rivalry and the availability of substitutes in a particular industry has never been so clear to me before I read the Adnam Company reflective paper.I have always had my own doubts about the applicability and importance of the mentioned aspects of business strategy hence making the subject worthwhile in the long-run. Well-established companies are perceived as the strongest competitors in their respective industries(James & Merchant, 2013). The mostobvious aspect that I discovered in the paper is the advantage of upholding the values of the company which could be reflected through efficient business conducts in serving the customers. However, it requires the company to ensure the best quality and taste of its products as compared to its competitors’ products. I learned that good values of a company could reflect the firm’s mission and vision therefore, putting the company in a competitive advantage in the particular industry as observed in Adnam’s Company case. I 2
Business Strategy would not have been able to make this connection prior to going through the Adnam-reflective paper. This is because I used to believe that the values, mission and vision of a company are as good as just being stated other than the practical part of it. The quality of products and services areconsideredtobecriticalinrunningasuccessfulbusinessthroughcustomer-oriented practices. The bargaining power of buyers would possibly be determined on the basis of five force analysis of Porter(Biase, 2014). For instance, in the brewing industry, the bargaining power of the buyers is very high owing to the availability of othersubstitutes for its brands of alcoholic drinks in the market. It would not have occurred to me that the availability of close substitute for a particular service or product would present a great challenge to businesses in capturing market shares. However, as it would be suggested, I realized that such mitigations could be alleviated through diversification of the company’s products and services. For instance, Adnam Company would begin to manufacture soft drinks and fruit juices. The supplier power is the pressure that suppliers exert on businesses by lowering quantity, raising prices or minimizing availability of their products(Froeb, et al., 2015). I could see the reality of the way increased taxes and growing number of competitors in the market affected the profit margin of suppliers.However, I could not have related the importance of these two aspects of suppliers in preventing possible increase in the prices because the customer’s existing in the market may decide to shift. Therefore, Adnam Company is able to enjoy the controlled power of bargaining of the suppliers in the market. Industry rivalry tend to advance in intensity when firms either see an opportunity to enhance their position or feel competitive pressure. I never knew that very high rivalry among companies in the particular industry could possibly impose stiff competition over the new entrants. For 3
Business Strategy instance, Adnam firm together with other companies in the brewery industry continue to thrive under the pretext of low profit margin which has also barred the entry of other potential competitors. Barriers to entry are defined as the obstacles which make it hard for a company to venture q new market(Geroski & Jacquemin, 2013). My understanding of the aspect of entry barrier has always been limited. Idiscovered that even the least aspect of barriers to entry could contribute significantly to a competitive advantage for a business. I learnt that it is always advantageous when the entry barriers are high as presented in the case of Adnam Company. The barriers could be higher taxes imposed in the industry and government regulations which tend to favor the already existing firms in the particular industry. The availability of substitutes directly affects the demand and supply of a company’s products and services(Bond & Hughes, 2013). As there the need to maintain and even grow the company’s market share, I realized the importance of dealing with close and distant substitutes through product and service diversification with an objective of ensuring high market share. I observed thatAdnam Company is already engaging in the diversification of its products ranges by producing gin and spirits. Therefore, expansion and diversification form the key business strategies of many successful businesses(Hiriyappa, 2013). Conclusively, the Adnam-reflective paper has helped me to re-examine the subject of business strategy and improve my understanding of the same. I have been able to compare and evaluate my preconceived ideas about the subject to the findings spelled out in Adnam-reflective paper. 4
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