Strategic Marketing Management: Doc

STRATEGIC MARKETING MANAGEMENT
STUDENT NAME
NAME OF THE INSTITUTE

STRATEGIC MARKETING MANAGEMENT
Assignment 1
Porter’s generic strategies
Michael porter has developed generic strategies stating the 3 ways in which an organization can
compete with its competitors to provide customer satisfaction. These 3 ways are cost leadership,
product differentiation and Focus.
 Examples of companies using cost leadership are Walmart, South west Airlines, IKEA,
Tesco. These companies have achieved highly efficient internal business processes, uses
economies of scale and thus able to sell the material at a lower cost than the market and
still able to make decent profit margins as they has reduced the costs of running business
 Some of the organizations that have adopted differentiation approach are Zara, Google,
Facebook, Apple as their products and services are quite unique in the market (Haley, &
Boke, 2014). These organizations have the products that looks superior to competitors
and also deliver more value. For instance, there are large number of search engines but
undoubtedly Google retrieves the most accurate results. Apple mobile phones have
different look and feel and thus they look more attractive as compared to Samsung’s
mobile phones
 Some of the organizations that are focus are McDonald’s, Boeing, Pepsi co, High end
hotels like four seasons. These organizations have identified very niche markets and fully
concentrate their resources to fulfill the needs of that market and thus are quite focused
Bowman’s strategy clock model
This model is the successful adaptation of the porter’s generic strategies model after the porter
model was criticized for its non-flexibility and non-explanation about stuck in the middle
approach followed by the organizations. This model was also used by the organization while
defining their business strategy and compare its position with those of competitors in terms of
the products and services. As per porter, organizations can be either follow cost leadership
strategy or differentiation however there are different combinations of cost leadership and
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differentiation that different organization can follow (Hodgkinson, 2015). Bowman added more
details into porter model and defined 8 strategic options that organizations can follow. They are
as follows:
Position 1: Low price and Low perceived value
Companies do not want to operate in this segment however some products have become
commodities and consumers do not care about any other attributes of the product except the
price. Companies in this segment sustain by keeping their volumes high without giving any
though to differentiation and customer loyalty.
Position 2: Low price
Organizations that operate in this category are cost leaders like Walmart and South west Airlines.
These companies exploit economies of scale and thus able to thrive even when their margins per
products are very low. Such companies needs to have large volumes to sustain. Some new
comers also enters in this area which triggers a price war but as volume is not large, they
eventually shut down (Ceptureanu, 2016).
Position 3: Hybrid (Moderate price and Moderate perceived value)
Organizations that operate in this area offers products and services at a low price but their
products have higher perceived value that other low cost competitors. IKEA follows this
strategy. Costco supermarket also follow this strategy where you will find only few brands of the
particular product as against products but all those brands have high turnover.
Position 4: Differentiation
Organizations in this segment offers unique products and services to the consumers and thus
commands a high price because their perceived value is much higher. Zara, United Colors of
Benetton, Nike, Adidas operate in this segment.
Position 5: Focused Differentiation
Organizations in this segment offers products and services for very niche groups Like Armani,
Rolls Royce and thus commands high price due to high perceived value of the products and
services.
Position 6: Risky High margins
This strategy of high margins without much perceived value is not sustainable because it will
soon be discovered in competitive market and customers will no longer buy the products with
similar perceived value as low cost products but much higher price.
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Position 7: High Price and low value (Monopolistic pricing)
This strategy is adopted by the monopoly companies or oligopoly forming cartels. Though they
do not offer high differentiation or perceived value but still charges high price as the consumers
do not have other options. They do not last longer unless they are owned by the State or
government authorities.
Position 8: Low value standard price
Organizations that are using this strategy will gradually decline because it became difficult for
the company to sell the low perceived value to the customers at a standard price.
Figure 1: Bowman's strategy clock
Similarities between Bowman’ strategic clock and Porter’s generic strategies
The purpose of both the strategies is similar to help the organizations to understand their relative
position and derive appropriate marketing strategy. Also, porter generic strategies are subset of
Bowman’s strategic clock as Bowman clock has additional options of strategy while porter has
strict extreme combinations.
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Differences between Bowman’ strategic clock and Porter’s generic strategies
The organizations which are using different combination of differentiation and cost leadership
are difficult to map in the porter’s models but Bowman’ strategic clock has clear cut
combination. For instance, IKEA has cost leadership as well the percevi4ed value of its products
is much higher. It is difficult to map this using Porter’s model but it can be easily mapped to
Hybrid model using Bowman’s clock.
Generic strategies focuses on broad market at a very high level while the Bowman’s strategic
clock is much more detailed and thus accurate (Panwar, et al., 2016).
Conclusion
Both the models have their own relevance. Though Bowman’s strategic clock is much more
useful and practical than generic strategic model but the important point is that the Bowman
model is the refinement and excellent adaption of generic strategies model by making it more
flexible and practical in real life situations.
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References:
Ceptureanu, E. G. (2016). Competitive Intensity and Its Implication on Strategic Position of
Companies. Journal Of Applied Quantitative Methods, 11(1), 57-62.
Haley, U. C., & Boje, D. M. (2014). Storytelling the internationalization of the multinational
enterprise. Journal of International Business Studies, 45(9), 1115-1132.
Hodgkinson, G. P. (2015). 10 The Behavioural Strategy Perspective. Advanced Strategic
Management: A Multi-Perspective Approach, 201.
Panwar, R., Nybakk, E., Hansen, E., & Pinkse, J. (2016). The effect of small firms' competitive
strategies on their community and environ
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Assignment 2
Role of the resources based view (RBV) in sustaining competitive advantage
Every organization is made of various resources. Resources acts as inputs to firm production
process or help in generating the output that commands a price in the market. These resources
can be tangible resources like People, machinery, assets, capital, buildings as well as intangible
resources like brand value, reputation, credibility. Unlike tangible resources, intangible resources
generally associated with a company and built over a long period of time and cannot be
purchased from outside. It is important to identify the key resources for each organization so that
they can be exploited and leveraged to achieve as well as sustain the competitive advantage. The
RBV (Resource based view) is the framework that help the organizations to determine their key
resources so as to achieve the sustainable competitive advantage by developing capabilities and
competencies using the resources (Madhani, 2010). This framework can be used with other
strategic management tools Like SWOT analysis, PESTEL analysis, BCG Matrix, Value chain
analysis. While PESTEL analysis is used for assessing the external environment and applicable
for the entire industry, Resource based view is internal to organization and is applicable for that
particular organization.
The 2 main assumptions of the Resource based view are that resources must be heterogeneous
and immobile. As far as Heterogeneous assumption is concerned, it says that the different
organization possess different resources and this is the reason of their competition (Lin, & Wu,
2014). For instance, consider if 2 organizations have exactly same set of resources, then no
matter what the one organization, it is easy to adapt to that by other organization but in reality
each organization has difference in resources at least to some extent. Consider, there are so many
automobile companies exists like Volkswagen, Toyota, Suzuki, Ford and at high level, it looks
like each has access to same set of resources like people from top universities, similar suppliers,
production capabilities but still there is huge difference in their results when they compete in
similar external environment. The reason being that each organization some superior key
resources and compete on that. Some have access to good suppliers, some have brand value
advantage, some have very efficient business processes that makes a difference and set each
company apart. Another example is of Apple and Samsung. These 2 companies operate in same
external market, target similar customers, and have similar suppliers and distribution centers but
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still there is differences in performances of both. The simple reason is Apple has a huge brand
reputation which is established over a period of time and thus it is a key resource that Samsung
do not possess as of now.
Immobile As per this assumption, resources of the organizations cannot move from 1
organization to another in a short run and thus it is not possible to copy the strategy of any
organization by its competitors at an immediate basis. For example, if any company has very
good leaders and managers to guide the direction of the organization, they will not be easily
available to competitors. Changing the company will take some time for them and also they need
to understand the ecosystem, policies and cultures of the other organization, before they can take
some key decisions for the organization (Ketokivi, 2016).
The resource based view also proposes a guidelines that help the organization to categorize its
resources in various buckets. In the same area, there is a popular VRIN (Valuable, Rare,
Inimitable and Non substitutable) analysis developed by Barney in 1991 that is commonly used
by the organizations to categorize its resources among Valuable, Rare, Inimitable and Non
substitutable aspects. If there are resources that satisfy all the 4 criteria’s, then those are
resources that will help the organizations in sustaining competitive advantage (Butler, et al.,
2016). This framework was later on changed from VRIN to VRIO where ‘O’ stands for if
organization existing environment supports the resources and if it is possible for the organization
to use it effectively. Below are the dimensions of VRIO framework:
 Valuable - It is the valuableness of the resource and if the resource adds any value to the
services and operations of the company or not. It is important to apply this dimension
continuous basis because resources may become valuable or lose their valuableness by
the external business environment. Such resources help in increasing the differentiation
factor. Also, if the resource is not valuable, it can be outsourced to specialists.
 Rare - it refers to how easily the resource is available or the supply of the resource with
respect to its demand. If the resource it not easily available and only few organizations
have those resources, those are rare resources. And if those rare resources are central to
customer experience/needs, they become the core competency of the company.
 Inimitable - Some resources can be easily copied and offers temporary competitive
advantage but some resources are very difficult to be copied and thus can generate a long
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term value. Resources that are difficult to copied are like legacy of the organization,
history of the organization, causal ambiguity as well as culture and values of the
company. Also, if the resource is valuable and rare but easy to imitate, then it will add
little value for temporary period only.
 Non-Substitutable - When the substitute of the product or service or resource is not
available at the same or lower cost, then the resource offers non – substitutable
advantage.
The resources which fulfils all the 4 criteria are actually the source of sustained competitive
advantage and organization must protect them as well as exploit them to gain the competitive
advantage.
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References:
Butler, T. D., Armstrong, C., Ellinger, A., & Franke, G. (2016). Employer trustworthiness,
worker pride, and camaraderie as a source of competitive advantage: Evidence from great places
to work. Journal of Strategy and Management, 9(3), 322-343.
Ketokivi, M. (2016). Point–counterpoint: Resource heterogeneity, performance, and competitive
advantage. Journal of Operations Management, 41, 75-76.
Lin, Y., & Wu, L. Y. (2014). Exploring the role of dynamic capabilities in firm performance
under the resource-based view framework. Journal of business research, 67(3), 407-413.
Madhani, P. M. (2010). Resource based view (RBV) of competitive advantage: an overview.
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