Competitive advantage in mobile phone industry

STRATEGY TABLE OF CONTENT INTRODUCTION 1 MARKET ANALYSIS 1 Competitors 1 Geography and technology 1 Buyers preferences and market segmentation2 Sub strategic groups in mobile phone industry2 Market shares 4 Porter five forces model 4 PESTEL analysis 6 Deep dive on varied economic factors greatly affecting busienss 8 Industry life cycle 9 Product life cycle 11 Industry size 12 Global capacity usage 13 2010). 14 Sources 14 Value chain analysis |15 Cost per unit 16 Critical analysis of investment in R&D 18 Industry analysis

STRATEGY

TABLE OF CONTENT
INTRODUCTION...........................................................................................................................1
MARKET ANALYSIS....................................................................................................................1
Competitors.................................................................................................................................1
Geography and technology.........................................................................................................1
Buyers preferences and market segmentation.............................................................................2
Sub strategic groups in mobile phone industry...........................................................................2
Market shares..............................................................................................................................4
Porter five forces model..............................................................................................................4
PESTEL analysis.........................................................................................................................6
Deep dive on varied economic factors greatly affecting busienss..............................................8
Industry life cycle........................................................................................................................9
Product life cycle......................................................................................................................11
Industry size..............................................................................................................................12
Global capacity usage...............................................................................................................13
Sources of competitive advantage.................................................................................................14
Sources......................................................................................................................................14
Value chain analysis..................................................................................................................15
Cost per unit..............................................................................................................................16
Critical analysis of investment in R&D.........................................................................................18
Definition and benefits of R&D................................................................................................18
Industry analysis.......................................................................................................................18
Stakeholder analysis and recommendations as well as stakeholder management.........................19
Stakeholders needed due attention by firm...............................................................................21
Stakeholder management..........................................................................................................21
CONCLUSION..............................................................................................................................22
REFERENCES..............................................................................................................................23

Figure 1Global demand of product..................................................................................................1
Figure 2R&D expenses across firms for years................................................................................2
Figure 3Market share of firms for different years...........................................................................3
Figure 4Porter five force model.......................................................................................................5
Figure 5Business environment........................................................................................................6
Figure 6BOE base rate.....................................................................................................................8
Figure 7Use of mobile phones by people of UK.............................................................................9
Figure 8Product life cycle..............................................................................................................10
Figure 9Industry size.....................................................................................................................11
Figure 10Percentage change in industry size across years............................................................12
Figure 11Capacity use across Asia and Europe.............................................................................13
Figure 12Variable production cost for the firms...........................................................................14
Figure 13Contract manufacturing cost..........................................................................................15
Figure 14Transportation cost for the firms....................................................................................15
Figure 15Average cost of the product.......................................................................................................16
Table 1R&D expenses across firms for years..................................................................................3
Table 2Market share of firms for different years.............................................................................4
Table 3Global capacity use............................................................................................................12
Table 4Cost per unit for the firms across years.............................................................................16

INTRODUCTION
Red is taken as company for analysis in CEISM simulation. Mentioned company operate in
the telecommunication industry and manufacture mobile of all generations from 2G to 4G. In
comparison to rival’s firm is in better position because of its R&D projects and innovation that it
made in its operations. However, on front of cost firm lagged behind its rivals. Dependency on
contractors for production of additional units is one main reason behind high cost of product.
This is the front where Red need to work to improve its performance. Thus, on analysis of
performance it can be said that firm need to make hard efforts to control cost of production.
Management is good and able to retain suppliers which lead to less fluctuation in cost of
products obtained from contractors. However, within premises cost of production is high which
make firm less competitive to rivals. Investment in R&D is made almost equally, if economic
condition become stable and demand of smartphones plunged then in that case firm may failed to
make available technology updated mobiles to people relative to rivals. Such kind of scenario
will make firm less competitive in the market. Thus, it can be said that firm position in front of
rivals to moderately is competitive.
MARKET ANALYSIS
Competitors
In CEISM simulation there are some competitors namely Blue, Leaders, grey, Ochre, Pink,
Navy and Yellow. All these firms operate in the mobile industry and have core competency in
multiple fronts like innovation and cost control etc.
Geography and technology
In CEISM simulation there is one nation USA and two continents namely Asia and
Europe. Markets are very different from each other. In Europe and Asia people prefer to use
products that are different in front of price (Giachetti and Marchi, 2010). Specially, people prefer
cheaper products. Hence, firms need to serve both continent and USA people in different
manner. This create main challenge for the firms and make competition more tough for them.
1

Figure 1Global demand of product
Buyers preferences and market segmentation
Consumer behaviour across country’s is different and due to this reason, it become very
important for the firms to segment market in many ways so that product can be served to people
at right place. All firms invested in tech but in different manner. Some of companies make right
decision while some make wrong decisions. Fast mover advantage is the one of the factor that
lead to achievement of huge success in the business (Liu and Li, 2010). Firms are segmenting
market on basis of tech 1, tech 2, tech 3 and tech 4. Some companies do technology advancement
late and due to this reason, they face loss in the business. Thus, it is very important to ensure that
according to requirement product is offered to the customers on time and in proper manner so
that their satisfaction level can be maintained. Thus, it can be said that there is huge significance
of the market segmentation approaches for the firms in the market.
Sub strategic groups in mobile phone industry
It refers to the way in which positioning of product is done in the market. Positioning
refers to the creating specific image of the firm among customers and motivating them by using
that image to buy a product. Red company is focus on research and development so as to position
its product as innovative product in the market.
2

Figure 2R&D expenses across firms for years
Table 1R&D expenses across firms for years
THE
INNOVATOR'S Red Blue Leaders Grey Ochre Pink Navy
Yello
w
Year
1 295,250 230,000 25,000 0 215,000 0 0 0 0
Year
2 614,223 0 0 282,858 0 0 0 48,598 0
Year
3 254,356 0 0 0 0 0 0 51,000 0
Year
4 827,339 403,500 195,000 0 0 0 0 49,000 0
Year
5 226,122 7,400
2,330,00
0 0 0 0 0 0 0
Year
6 300,000 145,000 351,000
1,279,17
9 0
1,230,00
0 0
1,255,81
2 0
Year
7 149,593 701,821 24,000 846,700 775,000 354,000 0 51,785 0
Year
8 94,593 150,000 0 133,000 334,000 347,160
927,30
0 52,700 0
Total 2,761,476
1,637,72
1
2,925,00
0
2,541,73
7
1,324,00
0
1,931,16
0
927,30
0
1,508,89
5 0
3

Not only Red, its rivals are also spending lots of amount on R&D. from table given above it can
be observed that most of firms are making heavy investment on R&D only in specific year.
However, Red is making balanced investment on R&D each year which make it competitive
towards its competitors.
Market shares
Figure 3Market share of firms for different years
Table 2Market share of firms for different years
THE
INNOVATOR'S Red Blue Leaders Grey Ochre Pink Navy Yellow
year 1 12.68 11.42 10.16 13.85 13.28 13.28 12.68 12.68 0.00
year 2 17.50 9.78 8.60 17.83 11.48 11.48 11.36 11.97 0.00
year 3 18.59 8.56 9.22 17.74 9.58 9.58 9.54 10.05 7.15
year 4 16.88 17.90 4.90 18.98 8.26 8.26 8.25 8.83 7.74
year 5 15.91 18.29 3.76 17.97 8.73 8.73 8.73 9.29 8.60
year 6 15.21 25.80 4.76 16.55 7.57 7.57 7.29 7.95 7.29
year 7 11.37 29.48 12.36 11.10 7.26 7.15 6.89 7.48 6.89
year 8 25.63 22.02 17.13 11.28 7.15 0.22 4.91 5.05 6.62
Facts clearly indicate that globally Red market share increased consistently over past few
years. In line to this market share also increased but at less rate then Red. Other than these two
firms market share all companies decline to large extent. It can be said that Red and Blue are
leading the global market.
4

Porter five forces model
Mobile manufacturing industry is capital intensive industry and due to this reason, there are
less firms in the domain. After opening a business, it is difficult to survive in the market as
technology advancement take place at fast pace. In order to remain in competition company,
need innovate their products at fast rate so as to give stiff competition to rivals. Industry analysis
of mobile manufacturing is given below by using porter five forces model. Threat of new entry: Industry is highly competitive and require huge investment which
lead to less threat of entry of new players. New entrants do not have sufficient fund to
carry out R&D activities (Hilton and Platt, 2013). Due to all these factors there is less
threat of new entrant. However, interesting fact is that if market is lucrative then MNC
can enter in the industry.
Figure 4Porter five force model
(Source: Michael Porter’s five forces – Model template Excel., 2019) Buyer power: Buyers power is high because company’s operating in industry make
available phone at competitive price with advance features. Thus, customer is on win-win
situation in both sides as if not get product at appropriate price the it can go for rival’s
mobile phone. Threat of substitution: There are multiple players in the market which provide wide
variety of smartphones (Chavis, Klapper and Love, 2011). Thus, multiple alternatives are
available to customers which means threat of substitution is high in the market.
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 Supplier power: There is medium power of suppliers because mobile phone producers
trust only on those suppliers which make available quality of components to them at
competitive prices. Complementary forces: Bargaining power of complementary forces is moderate because
firm specifically rely only on few one to get prepared chargers and batteries as well as ear
phones.
PESTEL analysis Political factor: Political environment of the country play a crucial role in boosting
growth rate of economy. Business policy is one of factors that have significant impact on
the firm. UK government in past couple of years improve its relations with developing
nations like India and China which also are higher markets. Improvement in relationship
will generate lots of business opportunities for these firms. Business policy of the nation
is liberal and economy is on track which ensure that firms will not fact any sort of
problem on this front.
Figure 5Business environment
(Source: Understanding the Business Environment., 2019)
 Social factor: Social factor greatly affect demand of the product in the market. Social
mix need to be analysed before entering in to new marketing or offering new product in
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the existing market (Teece, 2010). If in any nation there are large majority of educated
people demand of high priced items related to leisure and tourism increased at rapid pace.
People in larger markets prefer low priced high-quality mobiles. Mobile manufacturers
need to understand such kind of behaviour of people. Thus, firms need to evaluate social
structure or mix and accordingly must offer product to the people. In UK most of people
belong to middle class and are highly educated. Hence, demand of product will certainly
have increased with passage of time period.
 Economic factor: This factor has huge impact on the firms that manufacture mobiles.
This is because if economy is not in better condition then in that case inflation remain
high which lead to fast increase in price of raw items. Mobile manufacturers can not pass
pressure of elevation of cost to the customers and due to this reason with slight increase
in cost profitability decline. In current time period economic condition of UK is good and
due to this reason, it is expected that cost will remain in control and will lead to instant
solution of the problem,
 Technological factor: It is another factor where by attention is paid on the technology
used by the firm in its business operation. Every year huge investment is made on mobile
technology which lead to cut throat competition among business firms (Hillary, 2017).
Hence, it can be said that it is another where huge risk is present. Hence, firms need to be
very careful on this front.
 Legal factor: Time to time government make amendments in their rules and regulations
and firms need to be aware about same. In case of violation of rules and regulations
penalty is charged by the court on the firm which heavily affect financial condition of the
firm and image in the market. Hence, mangers need to ensure that all rules and
regulations are followed in proper manner at the workplace.
 Environmental factor: It is another factor on which firms pay due attention specially
those engaged in manufacturing of products. This is because waste generated in the
business if properly not treated then in that case it harms natural environment. In such
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kind of situation government take strict action against the firm which sometimes lead to
closing of business operations. Thus, on this front also attention need to be paid by the
managers.
Deep dive on varied economic factors greatly affecting busienss
There are number of factors in economic environment which are greatly affecting
business firms. Some of them are given below. Interest rates: Interest rate is the one of the important components of the economic
environment. This is because banks major source of income is deposits and lending of
same to people (Cantwell, Dunning and Lundan, 2010). Many times, there are less
deposits which affect bank lending capacity. In such situations banks take loan from
central bank at specific rate. Central bank in order to control cash flows usually change
interest rates which directly affect banks and ultimately country economy.
If central bank of UK will keep interest low then banks will be able to make
available business loan at cheaper rate to the mobile manufacturers which will ultimately
lead to heavy investment in R&D projects. All these things lead to elevation in
profitability of the business.
Figure 6BOE base rate
(Source: New historic low for interest rate 0.25%., 2016)
8

 Inflation rate: It is another important term that buzz specially after 2008 recession across
the market. More inflation rate is high product price increased and lead to less demand of
the product in the market. In current time period in the domestic market there is low
inflation rate and in developing nations or larger markets also (Ullah and Lai, 2011). This
situation is positive for mobile manufacturers and they can expect strong boost in sales
revenue. GDP: GDP is also known as economic growth rate of the nation. Economic growth rate
indicate increase in production of goods and services and trade in the nation. All these
things ultimately lead to increase in job opportunities and income level of individual. All
these things boost demand in the economy and ultimately lead to increase in profitability
of the business firms. In current time period GDP of the UK is increasing which reflects
that in future time period demand for mobile hand sets will increase consistently. Thus,
there are good earning prospects for mobile manufacturers in the UK. Current account deficit: It is another important term that is used in economic analysis by
experts. Current account deficit refers to the situation where government made more
expenses then it receives as income (Cohen and Kietzmann, 2014). In such kind of
situation infrastructure building reduce which affect nation growth rate. It can be said that
current account deficit must be kept in control in the nation. Trade deficit: Term refers to the situation where import of the nation is higher than
export. Thus, domestic currency gets devaluated and import become dearer. Hence, if
such kind of situation comes in existence then UK mobile manufacturers have to pay
higher amount to purchase raw material from foreign nation. All these things lead to
increase in cost of production. Thus, exchange rates have huge impact on the business.
Industry life cycle
Industry life cycle is the concept which reflect the current state of the industry. It can be
observed that industry have three life cycle stage namely growth, maturity and decline.
9

Figure 7Use of mobile phones by people of UK
(Source: Percentage of households with mobile phones in the United Kingdom (UK) from 1996
to 2018., 2019)
Currently, UK smartphone industry on its maturity phase. This is because mobile manufacturers
already make lots of innovation and currently any big innovating features are not coming in the
mobile phones which is clearly indicating that industry is on mature stage. On an average
individual in UK keep their mobile for 18 months which is long time period. Hence, in such a
situation if people do not see any new feature then they will not like to purchase new mobile
(Zeng, Li and Duan, 2012). If such kind of thing happened then in that case industry may enter in
to decline stage. This is because in absence of innovation people will not have any motivating
factor to buy mobile.
Chart given above is clearly indicating that in today time period most of people have
mobile phones with them. Now, demand can only rise when there will be innovative feature in
mobile or its life comes to end (Percentage of households with mobile phones in the United
Kingdom (UK) from 1996 to 2018., 2019). This is the warning signal for the mobile
manufacturers and they need to think out of box so that market share can be retained. They need
to do extensive research on unserved needs of the people. Only by serving needs and making
available something new and different people can be motivated to replace then handsets in few
months or years.
10

Product life cycle
Figure 8Product life cycle
(Source: Product life cycle: How to prolong your product market presence., 2019)
It is the one of most important concept which is very popular in marketing. In the product
life cycle there are four stages namely introduction, growth, maturity, decline stage. In the
introduction stage product is new in the market and people are not much aware about it. With
passage of time people receive information about product through advertisement. Along with
this, technology advancement also happened at workplace. All these things lead to origination of
growth stage whereby demand of the company product increased at rapid rate as it is now able to
satisfy needs and wants of the people (Hillary, 2017). For many years growth stage remain in
existence as more and more people come to know about product and start its consumption. After
few years if innovation does not happen and life of product is long then in that case maturity
stage comes to existence and demand become stable. Further after some time period due to
origination of any alternative product demand reduced to great extent and it enter in to decline
stage in product life cycle model.
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Industry size
Figure 9Industry size
Figure 10Percentage change in industry size across years
Facts are indicating that year over year industry size increase at rapid rate. However, this growth
rate was consistent fluctuations were very high. YOY growth rate increased from 13% to 36%
from year 5 to 6 but same also decline from 17% to 13% from year 4 to 5. This reflect that
consumer demand keeps on fluctuating consistently.
12

Global capacity usage
Table 3Global capacity use
THE
INNOVATOR'S Red Blue Leaders Grey Ochre Pink Navy Yellow
Year 1 19 57 49 26 15 15 19 19 100
Year 2 14 65 56 0 24 24 24 20 100
Year 3 10 184 77 0 36 36 36 33 52
Year 4 24 139 100 23 38 38 38 102 42
Year 5 14 105 100 8 22 22 22 96 24
Year 6 0 84 100 12 16 16 19 90 19
Year 7 40 90 129 104 18 16 19 90 19
Year 8 0 132 102 126 15 198 40 124 19
Figure 11Capacity use across Asia and Europe
13

Face is revealing that Red make effective use of its capacity as its capacity percentage is very
high relative to its competitors. Chart given above is clearly indicating that in case of Red bar is
very high followed by Blue which consistently increase use of its capacity. Other rivals in any
specific year make full use of their capacity. Hence, it can be said that global capacity is high but
most of firms are not making proficient use of same.
Sources of competitive advantage
Competitive advantage refers to the point where one firm have edge over its rivals in terms
of cost control, effective use of resources and technology advancement etc (Eisele-Dyrli, 2011).
Red have lots of strong points which provide it edge over its rivals. Some of these strong points
are given below.
Sources
 Distinctive competencies: Red is one of the firm that is making effective use of its
capacity and due to this reason, it can be said that it is its one of core competency. Apart
from this, heavy and consistent investment in R&D is another factor that is helping to
remain ahead of its competitors. It can be said that these are firm major core competency.
 Resource capability: Red have sufficient human resources and due to this reason, it is
able to make effective use of its capacity.
 Capability: Red have effective and large size team where team members have better
coordination with each other which lead to maximization of output.
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Value chain analysis
Figure 12Variable production cost for the firms
Figure 13Contract manufacturing cost
15

Figure 14Transportation cost for the firms
On value chain analysis it is observed that in case of Red cost variable production is very high
relative to rivals. This may happen because firm make substantial use of its capacity relative to
rivals. Contract manufacturing cost is high in case of Red, Blue, Leaders and The Innovators
relative to remaining firms. This is indicating that firm is not only make effective use of its
capacity but it is making efficient use of its contract manufacturers in order to meet demand of
market. On front of transportation, Red give remarkable performance and control its
transportation cost relative to competitors. However, in year 7 cost rose sharply but management
team take corrective action which lead to reduction in cost substantially in year 8 from Red.
Cost per unit
Table 4Cost per unit for the firms across years
THE INNOVATOR'S Red Blue Leaders Grey Ochre Pink Navy Yellow
year 1 183.9014 246.2413 0 132.0682 167.6933 129.2936 122.4036 122.4036 0
year 2 344.5176 190.8618 0 231.4343 124.7874 124.7874 122.8433 131.5711 0
year 3 291.0669 248.9327 152.7025 176.7676 132.7631 132.7631 131.0701 140.8945 167.0582
year 4 474.0937 1078.328 269.3593 262.0937 130.1831 130.1831 128.5041 135.1045 146.0723
year 5 226.5853 591.0186 1347.114 206.8543 117.6036 117.6036 115.4289 113.8313 125.1716
year 6 225.3924 0 353.8771 431.8607 114.7945 336.6447 110.228 327.0535 117.046
year 7 175.9559 0 603.778 0 263.9933 186.578 119.0033 129.3583 124.0436
year 8 293.6319 0 0 0 164.3973 91.40566 239.2835 132.1484 97.96194
Average 276.8931 294.4227 340.8538 180.1349 152.0269 156.1574 136.0956 154.0457 97.16919
16

Figure 15Average cost of the product
Chart is clearly indicating that cost of product manufacture and supply for Red is high
and it comes on second rank after Blue. Other rival firms have very low cost of product which
indicate that cost of production is very high in case of Red which it need to control.
Strength
 Major strength of Red is that its transportation cost is low relative to competitors in first
five years. This reflect that firm have good control on its logistics cost. On other hand, in
case of rival firms like logistics cost is already high and increasing regularly which
provide competitive advantage to Red over its rivals on this front.
 Contract manufacturing cost is moderate in case of Red relative to rivals but stability is
also observed in that cost. On other hand, in case of rivals in initial years cost is low but
same is increasing consistently. Facts revealed that management of Red is able to
purchase products from contractors at almost same price which reflect its management
capability. Thus, it is another point where firm have competitive advantage over its rivals.
Weakness
 Main weakness of Red is that its cost per unit is high relative to rivals. If contract
manufacturing and cost of product produced in premises is compared then it can be said
that from contractor’s firm at almost same cost purchase items but it has no control on
expenses incurred at workplace. This lead to cost elevation and it is firm major
competitive weakness.
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Critical analysis of investment in R&D
Definition and benefits of R&D
R&D refers to the research and development activity that is carried out by the business
firm. In research and development projects attempt is made to develop new features in the
product. Thus, those firms that make huge expenditure on R&D remain ahead of their
competitors (Xia, 2012). Red is making moderate investment in its R&D projects and is inline to
the average investments made by its rivals. Thus, it can be said that firm is in position from
where it can give good amount of competition to its rivals. However, average value is not giving
true picture because competitors on specific year is making heavy investment and on remaining
years they are making less amount of investment. On other hand, Red is making balanced
amount of investment in most of years which reflect that management under proper planning is
increasing or reducing investment on R&D project. Spend on R&D also reflect that Red is
committed towards innovating its product at fast pace and regularly involved in it. Thus, this
provide competitive edge to Red over its rivals.
Industry analysis
On evaluation of mobile phone industry at global level it can be observed that most of
mobile phone manufacturers are making huge investment in their R&D project. Oppo make 10-
billion-yuan investment in its R&D project and intend to launch first 5G mobile phone across
globe. Like Oppo many other players like MI, Samsung and Xiomi are making huge spending on
relevant project (Chinese mobile phone maker Oppo’s grand R&D plan; will invest this much
in 2019., 2018). Firms are classifying their investment amount in multiple categories like
artificial intelligence and IOT etc. On comparison of trend observed in CEISM simulation with
industry trends it can be said that firms are making investment in line to industry trends whether
it is Red or any other player. However, Red is taking clever step and in balanced manner make
investment. Global demand keeps on changing and due to recession people may purchase less
mobile (Smartphones record strong sales despite decline., 2019). However, in current time
period smartphones record strong sales despite slowdown. If further economic turmoil happened
demand may decline. In that case if heavy investment and less revenue earned cash make block
in R&D project. Thus, Red is following right approach relative to rivals.
Advantage of current position to Red
18

 Advantage is that if economic turmoil happened less cash will be blocked in R&D
project.
Disadvantage of current position to Red
 Disadvantage is that if economic turmoil happened less cash will be available to meet
working capital requirement and long-term investments.
Stakeholder analysis and recommendations as well as stakeholder
management
Stakeholder analysis refers to the approach under which key stakeholders are identified and they
are grouped in terms of level of participation and interest in the business. Employees are the one
of the main stakeholders and they can be divided into two parts namely managers and
subordinates. Planning about recommendation given below will be made by the managers which
are key stakeholders and subordinates which are other stakeholder will look after effective
implementation of below given recommendations at ground level (Peng and et.al., 2014.
Stakeholder management refers to planning and implementation of actions designed to
engage with stakeholders. Internal and external stakeholders are given below.
Internal stakeholder Manager: Managers are one of the important stakeholders as they need company
information to make business decisions. CEO, CFO, CMO: Relevant entities also required firm information to determine strategic
direction for the firm.
External stakeholders Shareholders: They provide capital to the firm for making investment. Hence,
shareholders are taken into consideration. Creditors: They provide debt to the firm to meet its working capital or long term
financial needs. Hence, creditors taken into consideration.
Some of the actions that need to implemented from stakeholder side is give below as
recommendation.
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 Research and development: Red is making consistent investment but it need to increase
scope of its R&D project wherein it must make an attempt to identify ways by using
which cost of production can be reduced to maximum possible extent. In case scope dos
not increase it may leg behind rival in competition. Thus, market share may decline. In
current time period it is observed that cost of production is high which is matter of
concern.
 Cost control: Cost of production is high for Red. However, revenue amount is also high
which means that both variables value is high which indicate that if firm control its cost
then in that case it can enhance its profitability. In order to control cost company can use
total quality management approaches. Apart from this, it can also use business process
reengineering method by using which every business process will be evaluated deeply
and steps will be identified whose cost is very high. All these things will lead to strong
cost control in the business. In case cost remain out of control profitability will decline
which will affect firm competitiveness and its efficiency to operate business.
 Management: Facts are indicating that firm is consistently make substantial use of its
current capacity which include both in house and contract basis capacity. It is possible
that cost of production may be high because of high cost of production on contractual
basis (Eisele-Dyrli, 2011). Thus, it is recommended that management must make an
attempt to reduce its dependency on contractor for meeting demand. By doing so firm
will be able to maintain control on cost of production.
 Building of plants in Asia: Lack of cost control is the major problem that Red is
currently facing in its business. Asian nations are known for better quality products at
low price in the market. Thus, by outsourcing more and more production activities to
Asian nations like India and China will lead to decline in cost of production sharply and
receipt of good quality of product. Due to low cost of production firm can sale its product
at low price in the market. All these things lead to retaining and creating new customers
in the market at rapid pace. Ultimately, market share will increase at rapid pace. Thus, it
will be better for the firm to outsource its operations in Asia. However, higher
dependency of Asian suppliers may prove harmful for the firm as if its relations
deteriorate with suppliers then in that case it may face problem and lack of efficiency
may further elevate problem. Thus, on this front care need to be taken.
20

Figure 16Power grid chart
(Source: What is power interest grid., 2019)
Table 5Power interest analysis of stakeholders
Stakeholders Power Interest Matric box
Manager High High Regularly engage
CEO, CFO and CMO High High Regularly engage
Shareholders High High Regularly engage
Creditors Low High Maintain interest
Stakeholders needed due attention by firm
All stakeholders given above need to be taken in to attention by the firm because for R&D
project cash is required which is made available by the shareholders and creditors. These entities
need to be taken in to confidence so that in future more cash can be obtained from them.
Manager, CEO, CMO CFO are internal stakeholders and play key role in making decisions.
Hence, all stakeholders need to be taken in to account for smooth business function.
Stakeholder management
In order to manage stakeholders time to time board meeting will be organized where updates
will be given to the stakeholders about way in which business must be managed. Shareholders
and creditors will be provided with relevant information through interim reports whereby they
will get entire information about way in which business operate during half year. If major
shareholders and creditors require board meeting can be organized to take them in confidence. In
this way, stakeholders will be managed in the business.
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CONCLUSION
On basis of above discussion, it is concluded that Red is performing well in comparison to
its rivals. Still there are some of areas like cost control where it need to do lot more in order to
remain in competition. Some of approaches of total quality management and process
reengineering can be used to curb cost in the business.
22

REFERENCES
Books and journals
Cantwell, J., Dunning, J.H. and Lundan, S.M., 2010. An evolutionary approach to understanding
international business activity: The co-evolution of MNEs and the institutional
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