Strategic Management Theory and Holden Car: A Practical Analysis

This report delves into the strategic management issues faced by Holden Car, an Australian automobile company, highlighting its strategic failures. It explores the theoretical underpinnings of strategic management, including the Resource Based View (RBV), Agency Theory, and the Ansoff Matri...Read More

Running head: MANAGEMENT THEORY AND PRACTICE
Management Theory and Practice
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Introduction
The current competitiveness in the business world is persuading the business marketers to
participate in a challenging scenario. The unique values of the products and services are the
major focus of the business marketers to ensuring the sustainable position (Hill, Jones &
Schilling, 2014). Each of the companies tries to develop the strategic ideas for managing the
entire organisational functionalities. However, in current business world, it has been observed
that the customers’ demands are changing drastically (Peppard & Ward, 2016). The
advancements of the technicalities and business functions are the major reason behind such
changing demands. In order to remain competitive, the business marketers are concentrating on
developing more effective strategic approaches. With the evaluation of such strategic
movements, it becomes easy to reach the target market and fulfill the expectation level of the
customers.
The study would follow the strategic management issues faced by Holden Car, the
renowned automobile company located in Australia. The company has been facing the negative
consequences due to strategic failure. The study would develop the insightful ideas about the
theoretical background of the strategic management. The observation of the strategic
management theoretical concept, the study would present some of the preferable
recommendation for the future sustainability of the company.
Discussion
The top executives of the organisation ponder the strategic missions and objectives.
Holden Car is the renowned brand of General Motors that has been operating business much
successfully. However, in current state, the company has been facing some of the significant

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issues due to the mismanagement of the strategic functionalities. The company used the TV
commercials for communicating the post-announcement. This move was quite insignificant in
this volatile business market (Themotorreport.com.au., 2017). However, the announcement
through the advertisement was not revealing the higher quality of the car, rather focused on the
ranges of customers, sportspeople, individuals, and employees. In this competitive scenario, the
companies are trying to gather the attention of the customers with high quality products and
services. In fact, it is even necessary to keep focus on the customers’ demands to improve brand
position (Epubs.scu.edu.au, 2017). Therefore, such issues with the promotional advertising
process were the determinant in establishing the strategic position in this competitive market. It
was necessary to derive the adequate knowledge about the strategic positioning process. The
further study would focus on the theoretical concept of thee strategic management. The obtained
ideas would present the suitable recommendation for the future progress.
The continuous and increasing pressure of the competitive business markets is persuading
the companies to improve the management system and organisational functionalities. However,
such pressures from the external market competitiveness are making these functionalities more
complicated (Barney, 2014). However, the development of the theoretical concept is quite
necessary for organizing the business functionalities and strengthening the competitive position.
One of the most effective strategic theories is Resource Based View. This strategic approach
focuses on the competitive position of the firm. It is notable that the resources are the major asset
of structuring the strategic functionalities. The resource based view is focusing on achieving the
competitive advantage by supporting the core competency skills of the company (Wheelen &
Hunger, 2017). The RBV model specifies the proponents that are much feasible in availing the
opportunities from the external market. However, the model concentrates on developing the

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innovative ways of using the existing resources rather than focusing on the new skills for
different opportunities. According to Rothaermel (2015), the resource management of the
company plays the most significant role in increasing the competency level. There are two
different types of the resources found, such as tangible and intangible. The physical resources,
such as, lands, buildings, equipment, machinery, and capitals are the tangible resources. It is to
be indicated that the resources can be brought to the market for conferring advantage for a firm.
Similarly, Holden car has the automobile technologies and the manufacturing location where the
business can become more productive (Peteraf, Gamble & Thompson Jr (2014). Quality is one of
the most demanding factors that influence the purchasing decisions of the customers. Holden car
requires adopting more advanced technologies that can eventually improve the production house
activities. Moreover, implementation of these technological tools can be more helpful in
improving the distribution channels as well as the logistic process (Lin & Wu, 2014). Moreover,
the company requires focusing on the advertising technologies for promoting the business with
more efficiency. However, the rivals keep focus on the identical assets and often try to imitate
the same. ‘
On the other hand, the intangible resources do not have the physical presence but are
owned by the company. For example, the reputation of the brand, intellectual property, and
trademarks are all considered as the intangible factors or assets of the company. It has been
observed that the automobile industry usually offer the similar kind of products (Kull, Mena &
Korschun, 2016). These companies generally focus on manufacturing cars and automobile
services. It would be helpful for the company to earn profit if the company can introduce more
product variations. It is to be mentioned that along with the tangible resources, the intangible
resources also determine the long term sustainability of the firm. Holden Car is the brand of

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General Motors that has captured the remarkable position in the global automotive industry. The
brand reputation influences the perceptions of the customers. Hence, it is necessary to keep the
focus on the intangible assets for remaining more competitive in the market. Kozlenkova Samaha
and Palmatier (2014) implied that the intangible resources are the long term assets, which are the
major source of the competitive advantage. There are two critical assumptions can be made
about the resource based approaches. It is stated that the resources are needed to be immobile
and heterogeneous. According to Bahli and Rivard (2017), the heterogeneous assumption
depends on the capabilities, and unique resources of a company. For instance, if one organisation
has the same amount of resources like the competitor; it would be difficult to implement the
different strategic approaches. Similarly, the management of Holden Car requires keeping focus
on the unique values of the resources that are different to the rivals.
The immobile is the second assumption associated with the RBV tool. It determines that
resources do not have the mobility power and therefore these resources cannot be moved from
one company to another (Hussain et al., 2013). Especially, it is impossible to transmit the
resources from one company to another for a short run. It is important to mention that due to
such immobility, the companies often cannot replicate the resources of the rivals (Pepper &
Gore, 2015). Therefore, there is the lesser chance of implementing the similar strategies. In
setting the example, the brand equity, knowledge, process or the intellectual properties can be
mentioned. These intangible resources cannot be removed from the company. RBV model
involves the VRIO framework that leads the company towards enabling the competency for
achieving the competitive advantage (Lin & Wu, 2014). Along with the intangible and tangible
resources, it is necessary for the company to keep the focus on the more improved strategic
functions that can create sustainability for long run. VRIO framework suggests that the resources

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are needed to be measured by focusing on four major questions. For instance, questions about
value, questions about rarity, questions of replication (imitability), and questions of
organisations are the major concerns.
It is necessary to judge the resource value to understand the capability of earning more
profits. Resources can be considered valuable if these become much helpful in adding more
value to the services and products offered to the potential customers. The brand reputation
influences the perceptions of the customers. Hence, it is necessary to keep the focus on the
intangible assets for remaining more competitive in the market. Westphal and Zajac, (2013)
implied that the intangible resources are the long term assets, which are the major source of the
competitive advantage. There are two critical assumptions can be made about the resource based
approaches. By increasing differentiation and decreasing the costs of the production, the
company can ensure the value added purposes (Hussain et al., 2013). The resources are needed to
be rare for enabling the competitive capabilities. If many of the organisations have the similar
resources, it would result in the competitive parity (Lin & Wu, 2014). It is to be noted that the
rare value of the resources helps in achieving the temporary competitive advantage at the least.
In some of the cases, the resources become much costly to imitate. Hence, this process is quite
beneficial in acquiring the secure competitive position in the business market. It is notable that
the resources are not the only factor to be considered. It is essential for the organisations to
capture value by developing the unique capabilities. The firm, which is capable of exploiting the
rare, valuable and imitable resources, can sustain in the competitive scenario.
Another most significant theoretical approach of strategic management is the Agency
Theory. According to Bridoux & Stoelhorst (2014), agency theory is the recognizable branch of
the financial economics that identifies the conflicts of interests between the organisations with

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different interests. These conflicts are mainly found between either shareholders or managers of
the companies or between the bond holders and shareholders of the company. The theory
illustrates the clear linking between the shareholders, principals, and agents or the managers.
There are two specific problems associated with the theory. First, the company requires
identifying the method of linking goals and management to prevent conflicting scenario (Kotler,
Berger & Bickhoff, 2016). The other factor is thee reconciliation between the principals and
agents. Both the agent and the principal have the different risk tolerance capability that is needed
to be taken into account. Tassabehji and Isherwood (2014) pointed out that every individual act
differently in accordance to their self-interests and benefits. The self-motivation provides
platform for identifying the conflict of interests.
Another most significant issue addressed by the Agency Theory is the utilization of the
principal’s resources by the agent. Even though the agent is the decision maker of the company,
the resources use would be a considerable burden for the principal (Vignali, 2015). The agency
theory suggests the involvement of two parties in specific case. However, the third party is often
involved to represent the transaction process between the principals and the agent. The third
party often appears in time of hiring the agent on behalf of the principal for performing any
function. However, maintaining the sequential procedure to prevent the conflicts between the
associated parties is quite necessary (Hussain et al., 2013). The strategic management procedure
often deals with such conflicting scenario in which the proper management of the sequential
activities is necessary.
Another most effective strategic management tool is Ansoff Matrix that is also
considered as the ‘strategy of diversification’. The ansoff matrix is structured for ensuring the
business growth in a competitive scenario. This strategic tool suggests that the business requires

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focusing on concentrating on the market development process whether it is an existing or new
market. The ansoff matrix has the four different components that provide the insightful ideas
about the business focus (Grünig & Morschett, 2017). The first component is market
penetration, which is synonym for growth strategy. In this strategic development, the business
often focuses on selling the existing products in the existing market. There are four major
objectives associated with the market penetration strategy. It focuses on maintaining or
increasing the market share of the products that exist in current scenario (Lin & Wu, 2014). This
parameter can be achieved through combining the advertising, competitive pricing strategy and
sales promotions. In fact, in some of the cases, the business can invest more resources that are
dedicated to the personal selling (Vignali, 2015). The next objective of this market penetration
strategy is to secure the dominance of the market growth capabilities. It is even restructuring the
marketing by defeating the competitors. However, in order to drive the competitors out of the
business scenario, it might require the aggressive promotional campaign that is supported by the
unique pricing strategy. This unique pricing strategy can draw the customers’ attention that
eventually become unattractive for the competitors. The final objective of this strategy is to
increase the usage of the products or services by the existing customers (Bamford et al., 2015).
The company can introduce the loyalty scheme for increasing this use of the products or services
offered by the company. Therefore, it can be implied that the market penetration strategy is
generally focusing on the customers’ needs and structuring the business functions accordingly.
The next component of ansoff matrix is market development. The market development
suggests the growth strategy of the business by selling the existing products into new markets.
The market development process depends on the fruitful approaches. For example, the business
can pay the attention towards the geographical markets by expanding the business in a new

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country (Simmonds, 2015). The customers would be new but the products or services would be
same. On the other hand, the business can develop the unique product packaging strategy or
dimensions to gather the attention of the potential customers. Developing the new distribution
channel would also be much helpful for selling the products and services to the customers. In
addition to this, structuring the different and pricing policies can be attractive enough to gather
the supports of the customers (Belleflamme & Paolini, 2015). However, it is necessary to
mention that the market development is quite difficult and risky process, but ensure growth of
the business in a competitive market.
The next component is product development, which introduces the new products into
the existing markets. It is essential for the company to develop the competency and capabilities
to develop the modified products. These products need to be attractive enough to draw the
attention of the customers. The most appealing features and the benefits received from the
consumptions of such products would be more fruitful for the company to generate revenues
(Grünig & Morschett, 2017). The product development strategy is much preferable in a market
where the product differentiation is essentially required. The business requires investing more
time in research, development, and the innovation purposes. The clear ideas about the customers’
needs and the changing scenario are necessary for developing the products in the existing
market. It is important to be the first one in the company to promote the products since there is
the high chance of replicating by the competitors.
The final component of the ansoff matrix is the product diversification. The product
diversification determines the emergence of the new products in a new market. This
diversification process is quite risky since the business usually does not get the adequate idea
about the market or the customers. The business companies often require deriving the clear and

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insightful ideas about the market demands to bring or introduce new product (Hussain et al.,
2013). However, maintaining balance between the rewards and risks would be much beneficial
for the company at the end. Moreover, the product diversification ensures the development of the
new products. In such case, the company can easily add more unique value while offering any
product or service to the potential customers. Hence, the diversification strategy is quite fruitful
for ensuring growth in a competitive ground.
Recommendation
The above scenario describes that the maintenance of the relevant strategic management
procedure is effective enough in ensuring growth of the business. Considering such aspects some
of the preferable recommendations can be provided to the company Holden Car. Being a part of
the giant automobile industry, it is essential for the company to use the brand reputation in a
promising way. The focus on the market demands is the basic approach for managing the
strategic functions of the business. It is profitable for the company if it can pay focus on
improving the quality of thee automobile services. Quality is one of the most demanding factors
that influence the purchasing decisions of the customers. Holden car requires adopting more
advanced technologies that can eventually improve the production house activities. Moreover,
implementation of these technological tools can be more helpful in improving the distribution
channels as well as the logistic process. It is also to be suggested that the company requires using
the tangible and the intangible resources in a strategic way. Most importantly, while developing
the promotional activities through broadcasting media, it is essential for the company to develop
the resources in a significant manner.

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The continuous and increasing pressure of the competitive business markets is persuading
the companies to improve the management system and organisational functionalities. However,
such pressures from the external market competitiveness are making these functionalities more
complicated. The company requires identifying the method of linking goals and management to
prevent conflicting scenario. Another recommendation can be suitable for the company that is
the development of the product diversification strategy. It has been observed that the automobile
industry usually offer the similar kind of products. These companies generally focus on
manufacturing cars and automobile services. It would be helpful for the company to earn profit if
the company can introduce more product variations. The diversification strategy can result a
good profitable amount along with the assurance of the sustainable business position.
Conclusion
To conclude the scenario, it can be implied that the product quality and the market
demands are the basic focus of the business to secure the competitive ground. It is notable that
the majority of the competitors are adding the unique values while offering the products or the
services to the potential customers. On the other hand, Holden Car has been facing trouble due
to the announcements made on the TV media. It was observed that the company failed to
maintain a proper strategic approach and the customers complained about the poor quality of the
products. In keeping focus on the development process, it is required for the company to follow
the suggestions of improving activities and quality parameter of the offered products and
services. Accordingly, this initiative would secure the competitive ground of the company.

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