Global Value Creation Strategies: A Comparative Analysis

This assignment content discusses the application of adaptation, aggregation, and arbitrage strategies by different companies from various industries. Coca-Cola Amatil and Haigh's Chocolates from the Food and Beverage Industry used adaptation and aggregation to produce products tailored to local preferences and tastes. Technology One and Iress from the Computer Software Industry employed adaptation and arbitrage to provide customized software solutions and services. The companies' ability to adapt, aggregate, or arbitrage their offerings enabled them to create global value, expand their market share, and cater to diverse customer needs.

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Contents
Introduction.................................................................................................................................................2
AAA Model..................................................................................................................................................3
Industry 1: Food and Beverage................................................................................................................3
Industry 2: Computer Software...............................................................................................................5
Conclusion...................................................................................................................................................8
References.................................................................................................................................................10
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Introduction
Pankaj Ghemawat gave a framework for the global strategy which is known as the AAA theory
or strategy i.e. Adaptation, Aggregation, and Arbitrage strategies. These are the generic
approaches that enable the companies in creating a global value. The theory of adaptation says
that when the company changes its few elements and meets the requirements of the people in the
market, then it is able to create a global value for itself (Ghemawat, 2013). Most of the
companies use this global strategy for creating value as they earn more profits and acquire
greater market share. Adaptation strategies are of five types: focus, variation, design, innovation
and externalization strategies. The theory of aggregation says that when the companies exploit
the geographical similarities, and they do not adapt to the differences, they create global value
for themselves by achieving economies of scale and economies of scope. But in these strategies,
the local responsiveness is not compromised (Ghemawat, 2013). Unlike aggregation, the
arbitrage theory says that when the companies exploit the differences, they create global value.
In this, the companies do not adapt to the differences, but they exploit them. Arbitrage can be
cultural, administrative, geographic or economic.
In this report, the strategies related to adaptation, aggregation and arbitrage will be used to
explain that how the different companies i.e. Coca-Cola Amatil and Haigh’s Chocolates from
Food and Beverage Industry and Technology One and Iress from Computer Software industry
use this theory for the pursuit of their business.
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AAA Model
Industry 1: Food and Beverage
Company A: Coca-Cola Amatil Company B: Haigh’s Chocolates
Adaptation The company sells its products in
many countries apart from Australia
like Europe, USA, etc. But it tastes
different in different countries. The
taste of this drink is different in
Europe and the USA. The quality
and the sugar that is being added are
as per the preferences and liking of
the people in these countries. This
means that the company has
produced the product as per the local
preferences of the people in these
countries. It has used the variation
adaptation strategy as it has made
changes in the product as per the
markers of the countries in which it
serves (Metzger, 2014). This made
the company acquire the market
share many countries and them
company is also earning huge
amount of money in terms of
The chocolates were sold in the country
for consumption, but they could not be
gifted because the packaging and the price
were such that the people did not find it
worth gifting to their friends or the loved
ones. So, Haigh’s introduced the hand-
made chocolates for the young people and
the couples for both purposes i.e. gifting
and consumption. The chocolates had the
premium price that met the gifting
requirements of the people (Chan, 2012).
So, the company adapted to the local
gifting requirements of the people and
hence its sales increased in the market.
Since them the market for these chocolates
in Australia is unbeatable and it is sold
everywhere that shows that the company
has acquired a major share of the market.
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revenues.
Aggregation The company has not used this
strategy as such, but it has tried to
exploit the similarity among regions
in the way that all the people in all
the regions like to drink some soft
drink (Bender, 2014). So, the
company has delivered the best that
it could to these regions. By selling
in large quantities and serving to all
the sections of the society in
different regions, the company is
able to make use of similarities of
the customers in terms of their
preference for the soft drinks, and
thus, they created economies of
scale. But, the company has used
arbitrage in a much better way than
the aggregation strategy.
The products of this company are present
in many regions like South Australia, New
South Wales, and Victoria. The company
has standardized its products, and it serves
many regional markets. Thus, it has
exploited the similarities among the people
in different markets rather than adapting to
the differences of the market. The
company has many varieties in its products
and the products i.e. the chocolates are
also sold in the attractive packages, but
they are similar across the regions
(Birchall, 2013). Thus, by producing in
bulk, and by selling in various regions, the
company is able to achieve economies of
scale as well as economies of scope.
Arbitrage The company exploited the
differences in the taste of people in
different areas. There are places
where the water quality is different,
The company has not used this theory as
such because the products that it sells
indifferent regions are similar to each
other. They tastes, packaging, etc., are all
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and the people like to have a
different amount of sugar. So, the
company respected these
differences, and it made the product
as per the differences among the
regions. If in some country, the
people preferred to intake less sugar,
then the company modified the
product accordingly (Setyawati,
2016), even if the taste of the
product got changed. So, in a way
the company made use of the
cultural arbitrage. This enabled the
company to expand its business to
many of the foreign markets.
similar and hence the company did not
identify the differences in the taste and
preferences of the people. It has not
exploited the difference (Birchall, 2013).
Thus, the company did not use any of the
arbitrage strategies in this case. It was
able to create the global value only by
using the adaptation strategy and the
aggregation strategy. It had the
opportunity to create economic arbitrage
by outsourcing the processes, but the
company did not do this. It manufactured
all the products at one place but sold them
in different areas.
Industry 2: Computer Software
Company A: Technology One Company B: Iress
Adaptation This company has a diversified
range of software services. There are
almost 800 customers of this
company. The company gives the
services to the customers as per their
The companies were finding it difficult to
manage their wealth, and the financial
markets were also not able to work
properly because they did not have a proper
software system in place to solve their
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requirements and preferences. By
using the services of the company,
its customers are able to transform
their businesses, and they achieve
success. Basically, the company
provides enterprise software to its
clients and makes the life of its
customers easy. Thus, the company
has adapted its service delivery as
per the needs of its customers. By
adapting to the requirements of the
clients, the company is able to
empower almost 1000 departments
of the government, statutory
authorities and leading
corporations by its software
(Davenport, 2013). Thus, the
company has acquired market share
and has also earned large profits too.
problems of doing business. So, Iress
helped the companies as well as the
financial markets in fulfilling their
demands by providing them the services
related to research analytics, developing the
software systems, services related to wealth
management, etc. (Efrat, 2014). Thus, the
company was able to meet the local
demand of the people. The people accepted
the software systems and the services of the
company and thus the company was able to
generate huge revenues for itself and
acquire the market share.
Aggregation The company develops the software
for the business- to- business model
and for the various industries like
education, health, government
Since every company and the customers in
the IT industry has different requirements
for their business problems, so Iress could
not use the similarities across regions. It
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companies, utilities, etc. But, the
company cannot exploit the
similarities due to differences in the
requirements of different companies
in different regions. Thus, a
company did not use this strategy.
had to serve the customers and the
companies in different ways that suited
their requirements. Thus, the company has
to make the product as per the needs of its
clients. So, aggregation theory is not used
by Iress. The company’s business is not
such that it can exploit the similarities
among various regions. Though, some of
its products are standardized to solve the
specific problems of the customers but
majorly, the products are tailor-made to suit
the requirements of the clients in various
regions.
Arbitrage The company utilized the economic
arbitrage by making the products as
per the different requirements of the
clients. The company exploited the
differences; they created global
value. Since the customers of the
company are spread in six different
locations, so this means that the
company has also utilized the
geographical arbitrage. Apart from
The companies and the customers in the IT
industry have different requirements for
their business problems, so Iress exploited
the differences across regions. It had to
serve the customers and the companies in
different ways that suited their
requirements. Thus, the company has to
make the product as per the needs of its
clients. So, arbitrage theory is used by
Iress (Mayne, 2013). The company’s
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providing the software development
solutions (Mayer, 2012), the
company also gave other services to
the clients like the support and the
consulting services. Thus, arbitrage
was created by the company as it
met the different requirements of the
clients and the differences were
exploited in the correct manner.
business is not such that it can exploit the
similarities among various regions. The
products are different, and the company
uses cultural, economic arbitrage for
carrying out its business and for creating a
global value for itself.
Conclusion
From the above discussion it can be said that the strategies related to adaptation, aggregation and
arbitrage have been used to explain that how the different companies i.e. Coca-Cola Amatil and
Haigh’s Chocolates from Food and Beverage Industry and Technology One and Iress from
Computer Software industry use this theory for the pursuit of their business. All the companies
from different industries have made use of theirs theories for creating global value for
themselves and to a great extent, they have been successful in doing that. The company, Haigh's
chocolate, has utilized adaptation and aggregation in a very effective manner, but it has not been
able to use the theory of arbitrage as such because of the products that it sells indifferent regions
are similar to each other. They tastes, packaging, etc., are all similar and hence the company did
not identify the differences in the taste and preferences of the people. The Company Coca-Cola
Amatil has used all the three theories very nicely, but it has particularly used the adaptation
theory and the arbitrage theory in the very effective manner as it has modified the product as per
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the preferences of people in different regions. The company Technology One has used adaptation
and arbitrage but not aggregation because the company cannot exploit the similarities due to
differences in the requirements of different companies in different regions. The company Iress
has also used adaptation and arbitrage but not aggregation because the company's business is not
such that it can exploit the similarities among various regions. Though, some of its products are
standardized to solve the specific problems of the customers but majorly, the products are tailor-
made to suit the requirements of the clients in various regions.
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References
Bender, A., 2014. Taking matters into their own hands. CIO, (Summer 2014), p.32.
Birchall, A., 2013. Niche was working a treat. Management Today, (July 2013), p.30.
Chan, E.K., Quach, J., Mensah, F.K., Sung, V., Cheung, M. and Wake, M., 2012. Dark chocolate
for children's blood pressure: randomised trial.Archives of disease in childhood, 97(7), pp.637-
640.
Davenport, T.H., 2013. Process innovation: reengineering work through information technology.
Harvard Business Press.
Ghemawat, P., 2013. Redefining global strategy: Crossing borders in a world where differences
still matter. Harvard Business Press.
Efrat, Z., 2014. Testing the need for change. Governance Directions, 66(11), p.660.
Mayer, J.R. and Mitchell, J.C., 2012, May. Third-party web tracking: Policy and technology.
In 2012 IEEE Symposium on Security and Privacy (pp. 413-427). IEEE.
Mayne, S. and Currie, C., 2013. Policy paper open for internal submissions.Equity, 27(5), p.16.
Metzger, K., 2014. The Import of Culture? The Coca Cola Company in America and Australia.
Setyawati, D.R. and Santoso, I., 2016. Value Chain Analysis on the Logistics Management as the
Basis for Strategy Formulation to Increase Customer Satisfaction (Case Study in PT. Coca-Cola
Amatil Indonesia-Plant East Java). AGROINDUSTRIAL JOURNAL, 1(1).
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