Strategic Management 2 Running Head: Strategic Management 2 Running Head: Strategic Management 2 Running Head: Strategic Management 2 Running Head: Strategic Management 2 Running Head: Strategic Manag

Running Head: STRATEGIC MANAGEMENT 1
Strategic Management

Strategic Management 2
Answer 1)
The latest issue of Wall Street Journal has presented a News Article about Tesla building a
factory in China. The electric-car maker Tesla has agreed to set up a factory in shanghai which is
a strategic decision of the organization. The present deal is a strategic decision for the
organization as it will give access to the company to the growing electric vehicle market of
China. The present arrangement will be focused to build a wholly owned subsidiary which will
slash the production cost of the organization. However, China will lose the import tariff by 25%.
The organization will get benefit from the largest electric vehicle market of the world. The
Chinese government will target the sales of seven million electric vehicle cars by 2025. The
strategic move of the company will reduce the production cost of the company by 33% as it can
avoid the shipping cost and the import duties. Currently, the company is serving the niche market
of luxury vehicles; however, the prices will be strategically reduced with the action. As a result,
the company can move beyond the luxury niche market in the country.
This move has also strategically propelled the market value of the shares of Tesla by more than
50%. It has become the rival of General Motors Co., one of the largest automaker in the world.
Last year, China circulated a proposal which will assist the electric-car makers to operate in the
country without the need of the local partners. In this regard, the country has planned to
introduce about ten free trading zones in the country. Till now, the foreign auto makers of the
company have to make joint ventures with the local partners (Varbanova, 2013). The foreign
companies can avoid 25% tariff on automobiles; however, they will split the profits and sharing

Strategic Management 3
of technology. The free-trade agreement will be able to leverage better access to Chinese market
in the future.
It is a strategic decision of the organization as it will expand the business operations of
the organization in one of the major markets for the electric vehicle. It will reduce the excise
duty of the organization and the company can reduce the production cost be 33%. Entering into
the free trade zone in Chins will also establish cordial relationships with the Chinese government
which will be beneficial for the organization while operating in the Chinese market. It is a
strategic move at the functional level of the organization as the company will shift its
manufacturing plant at a different location. The organization will be able to reduce the
production cost as well as increase export tariff in the country.
It can be assessed that the decision will be able to increase the demand of the product. The
company can strategically reduce the cost of the product which will be beneficial for
manufacturing the product at a large scale (Jeffs, 2008). The organization can reduce the cost of
the product by 33% which will allow it to target the niche non-luxury market of the country. The
proportion of middle-class customer segment is very high in comparison to the luxury market.
Therefore, the sales of the product can be increased drastically by reducing the product price.
Answer 2)
Johnson & Johnson is a medical devices, pharmaceutical and consumer packaged goods
manufacturing company. The company was at the fourth position in the fortune’s world’s most
admired brands in 2010. The company dropped to number 13 at the fortune’s list of 2017. There

Strategic Management 4
were a number of reasons which led to the decline of the organization in these years. The
company suffered from a number of controversies, regarding the baby powder and vaginal mesh
implants. It resulted in numerous law suits from the customers (Freeman, 2010). Other than that,
creating an extremely diversified portfolio has also increased declined the image of the
organization as several of the products of the organization are not at par in quality.
Other than that, there are a large number of organizations which are present in both the list of
2010 as well as 2017. Some of the common names are Apple, Google (Alphabet) and Berkshire
Hathaway. These organizations have remained among the top ten brands from 2010 to 2017.
Apple has been a renowned brand from 2010 to 2017. It has sustained the top position due to its
unique brand image. The organization has created a very strong brand identity and focuses a lot
on the brand marketing. As a result, the craze for iPhones is same today as it was in the past
years.
Facebook is on the ninth number in the list of the most admired companies in 2017.
Undoubtedly, the company has made a distinguished place for itself in the last year (Haberberg
& Reiple, 2008). Today, it has become a common household name and almost every person has
a Facebook account. The company has given birth to the social media and used an innovative
idea to build the world’s leading business. The organization was founded in 2004 and in a few
years, it became the leading business organization across in the social media industry. Today, it
ranks 2 in the social media industry. These selected companies operate in different domains;
however, they are the most popular brands in the organization (Hiriyappa, 2013).