HI6006 Competitive Strategy: Business Growth and Innovation Analysis

This essay explores competitive strategies for business growth and innovation, drawing upon examples from companies like IKEA and Apple. It discusses the role of innovation in achieving a competitive advantage and analyzes frameworks such as the AAA Global Strategy and the Value Proposition Globalization matrix. The essay also examines value disciplines, core competencies, and the strategic use of outsourcing. The document is available on Desklib, a platform offering study tools and solved assignments for students.

Competitive Strategy
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Section 1
Question 1 (a)
Strategies are the activities that an organization engages in to bring about change. Change
that makes it better than the competitor to a level where competitive advantage can be obtained
(Clay, 2013). With this, not all activities in an organization are strategic sine an organization may
be having activities that maintain the status quo rather than bring change. Some activities may
also bring about change that may lead to an organization failing in the future.
Innovation on the other hand is the particular activities that bring about change in the
organization. These activities are not necessarily new ideas. Innovation could therefore mean
activities that put an organization ahead of time and producing of products and services that have
not been seen before.
Question 1 (b)
IKEA has strategies that enable the firm to increase sales and to remain relevant in the
present and future markets. The strategies in place allow the firm to change with the changing
tune of its target markets.
Apple is not the first company to produce mobile devices. Apple used existing
technology innovatively to meet the needs of their target clients. Apple is continually developing
their products innovatively to meet the needs of their customers. The company is also using this
innovation as a way of remaining relevant in the market. The iPod, iTunes, iPhone,
AppExchange and Apple store are some of Apple’s game changing innovations.

Section II
Question 1
AAA Global Strategy
Adaptation Aggregation Arbitrage
Variation
Focus: Reduced
necessary for adaptation
Externalization:
Reduce load of adaption
Design: Decrease cost
of adaptation
Innovation: Progress
the current adaptation
Economies of scale
Economies of scope
Performance
improvement
Cost decrease
Risk reduction
Figure 1: AAA Global Strategy framework by Pankaj Ghemawat (Source: Alegre, 2010)

Phillips, a company in the white goods industry created a global competitive advantage
for the Noretco Shaver brand through concentrating overall manufacture to a small number of
advantageously positioned factories. Then Phillips went ahead to used more of global branding
as opposed to product branding. This global branding is was a way of creating more economies
of scale and scope.
The process of making a car involves sourcing and putting many different parts together.
A company like Toyota will decide where to .have an certain assembly for these parts depending
on the demands and needs of that particular region. This helps in reducing cost of distribution in
the finished product. It also makes sure that the company meets the unique needs of the market.
Question 2

Figure 2: The Value Proposition Globalization matrix (Source: Houseman, 2015)
The Value Proposition Globalization matrix has four approaches. One is the pure
aggregation strategy also known as global mix within which the proposal and whatever
communication the product caries are equivalent. Second is the strategy which contains an
identical offer of product and service aggregation but varying placement worldwide. This is the
global offer strategy. Third is the strategy whereby the offer may vary in other places of the
world but where the message is the same also known as the message approach. Lastly is the
global change approach whereby both the offer and the message are modified to local
environment.
Global mix strategies are rare because not all companies are fully global. However there
are favorable examples within industrial product groups like the common electronic components.
Global offer approaches are applicable when the same offer can be profitably placed various
places of the world for example the hotel industry. The global message strategy uses the same
message throughout the world but allow for local version of the offer for example KFC’s main
message is chicken throughout the world. The global change approach outlines a best fit
approach and is the most common approach. For example banking services targeting Muslim
clients.
Question 3
Value Disciplines by Treacy and Wiersema
Operational excellence gives a firm an opportunity to organize its activities if a sound and
efficient way. Companies that pursue operational excellence are able to manage their cost

continuously and they enhance business activities through functional and organizational limits.
Examples of operational excellence companies are Zara and McDonalds.
Customer intimacy operating model allows companies to divide and target markets
accurately and to constantly create goods and services to meet the needs of those markets
examples include Singapore Airlines and Châteauform.
Product leadership is an operational model through which firms attract clients with
customized goods and services. A company will find the opportunities available for creativity
within the organization. These firms also have great marketing capabilities which they use to
convince the customers of the superiority of their products and services. Examples of such firms
are Apple and Pixar
Question 5
Core competencies are the combined knowledge within a firm that differentiates it from
other firms and are useful in creating competitive advantage.
Outsourcing benefits and organization by enabling is to sell more products, support those
products and provide services in more locations. It also allows firms to provide goods and
services around the clock, and in more languages (Deering, 2015). Outsourcing creates and
increases revenue while adding capabilities.
The risks of knowledge based outsourcing include a more limited highly skilled talent
pool, the requirements of higher quality standards, higher infrastructure investments, increased
process control and enhanced risk management.

References
Alegre, J & Pla-Barber, J 2010, Reshaping the Boundaries of the Firm in an Era of Global
Interdependence, vol 1st ed, Progress in International Business Research, Emerald Group
Publishing Limited, Bingley.
Clay, J & Clay, M 2013, Sales Strategy for Business Growth, Thorogood Publishing Ltd,
London.
Deering, A 2015, Outsourcing : Strategies, Challenges and Effects on Organizations, Business
Issues, Competition and Entrepreneurship, Nova Science Publishers, Inc, [Hauppauge],
NY].
Houseman, SN & Mandel, MJ 2015, Measuring Globalization : Better Trade Statistics for Better
Policy, W.E. Upjohn Institute, Kalamazoo.