Generic Strategies free essay sample

?Analysis Of Sector Matrix For Ford Motor Company Marketing Essay Three tools are largely popular and relevant for analysing as well as prescribing remedies pertaining to the improvement of organisational performance. These are the Value Chain – propounded by Michael Porter, the Global Commodities Chain (GCC) Framework – put forward by Gary Gereffi and Miguel Korzeniewicz, and the Sector Matrix Theory – conceptualised by Julie Froud. This essay will aim at critically examining whether the sector matrix framework, gives a better strategic understanding of product markets than the concepts of product or commodity chains. Literature review and discussions will be centred on the Ford Motor Company which is, apart from being one of the Detroit Three (Sperling Gordon, 2009, P. 55), also a significant player in the global automotive industry. The essay will also try to discuss the significance of the said tools at firm level as well as sectoral level by taking into consideration the changes in organisational activities at the firm level and their impacts on the intermediate as well as the macro levels. We will write a custom essay sample on Generic Strategies or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page Propounded by Michael E. Porter (1985), the Value Chain model is centred on organisational processes. Generally the manufacturing facility is categorised into subsystems – each having its own inputs, throughputs and outputs. The efficiency of activities aligned through value chain determines the cost of production and hence influences the profitability of the organisation. The activities are grouped into primary activities and secondary/support activities (Needle, 2010, P. 275). Figure 1: Porters Value Chain The five main primary activities are inbound logistics, operations, outbound logistics, marketing and sales, and after-sales service, while the secondary activities comprise procurement, human resource management, technological development and infrastructure. It has been observed that Ford Motor Company (Ford) being a foremost player in the global automobile industry, its business activities have extensive influence on almost all aspects of its environment. Figure 2: Value Chain of Ford (Source: Ford-website-a, n. d. ) The figure appended above represents the interconnectivity of the main phases of Ford’s value chain. The management of Ford has recognised the fact that â€Å"these issues are interconnected at each stage and that positive and negative effects in one part of the chain can reverberate in the other parts† (Ford-website-a, n. d. ), and hence, is trying to infuse the different phases with sustainability issues. Ford is aiming at improving its manufacturing efficiency and simultaneously reducing emissions. Moreover the company is also using recycled materials and is trying to enhance the reusability of its vehicles as part of its environment-friendly operations. The automobile behemoth is augmenting its activities related to corporate social responsibilities (CSR) in order to improve its relationships all through its value chain. Keeping in mind the fact that all business operations boil down to profitability, the company is trying to enhance its capacity so that it may respond spontaneously to the challenges as well as opportunities meet the changing trends of customers’ requirements and fulfil the expectations of its stakeholders. According to Gary Gereffi (1999) â€Å"a commodity chain refers to the whole range of activities involved in the design, production, and marketing of a product† (Gereffi, 1999, P. 1). Commodity chains can generally be classified into two groups, viz. producer-driven and buyer-driven. In producer-driven chains large, multinational manufacturers play pivotal roles in the coordination of complex production networks. Such commodity chains can be observed in capital as well as technology intensive industries. The automobile industry, on account of compliance with both these parameters, serves as a typical example of producer-driven chain that is characterised by multifaceted production systems and the involvement of numerous firms. As Gereffi (1994) had previously opined, the three major dimensions of Global Commodity Chains are a well defined input-output structure, territoriality and corporate governance (Pietrobelli Sverrisson, 2004, P. 18). The input-output structure comprises a group of products as well as services that are interlinked through a sequence of activities and add to the value of the organisation. The organisations need well defined spatial dispersion networks pertaining to production as well as marketing and should employ various enterprises for this purpose. Territoriality plays an important role in determining the volumes of sales that an organisation may achieve through its marketing and sales activities. Finally, the corporate governance activities that are adopted by the company shape the authority as well as distribution of power within the organisational hierarchy and in turn â€Å"determine how financial, material, and human resources are allocated and flow within a chain† (Pietrobelli Sverrisson, 2004, P. 18). The automobile industry is highly fragmented and consists of numerous suppliers. The segment pertaining to auto parts is divided between OEMs (original equipment manufacturers) and replacement market. OEMs are firms that manufacture components that are used by automakers in order to assemble new vehicles. Players in replacement markets manufacture components in order to substitute items incorporated in original assemblies. Distributors and suppliers of both OEMs as well as replacement components may be autonomous organisations or auxiliary business units of larger organisations. Producer-driven chains are directed largely by brand owners, and the same phenomenon is exhibited by Ford as well, as it owns Volvo (Pietrobelli Sverrisson, 2004, P. 19). Firms are generally seen as linear supply chains, whereas industries are conceptualised as groups of firms that often share common technological platforms in order to produce similar outputs. This basic premise forms the foundation of Porter’s Value Chain. It has been observed that â€Å"within the value chain firms are constantly struggling to enhance cost recovery and reduce costs of manufacture† (Haslam, Neale Johal, 2000, P. 87). In order to achieve these objectives companies often try to expand their markets and search for cheaper sources of labour. In the course of such activities it has been experienced that â€Å"analysis is constrained within a linear supply chain and industry-centred view of the world of business and so strategic choices are also limited by the value chain model constructed by Porter† (Haslam, Neale Johal, 2000, P. 87). Figure 3: Sector Matrix for Motor Industry (Source: Haslam, Neale Johal, 2000, P. 102) As can be understood from the figure above, the primary objective of such a matrix form is to comprehend the interactions between demand and supply and their role in shaping business policies. This type of analysis gives rise to â€Å"a matrix of horizontal and vertical relations† (Haslam, Neale Johal, 2000, P. 103). Ford being an automobile behemoth, exhibits the Chandlerian model of industrial administration dominates the entire value chain (Bromberg, 2004, P. 5). Like its peers, Ford is highly diversified as well as vertically integrated, and hence it consumes a significant portion of overall value chain. Owing to this fact the internal dynamics of the company play a major role in shaping the value chain as well as commodity chain and sector matrix. For companies of Ford’s stature that manufacture standardised products aimed at mass markets, production is obviously considered to be the core competency and manifestation of economies of scale serves as a basic competitive factor. As can be observed from the figure, the sets of activities, viz. durable as well as services are necessary to strike a balance between the demand and supply that are existent in the market. While the Value Chain model emphasises on the excellence of production and the Global Commodity Chain stresses mainly upon creating an effective marketing network, the Sector Matrix incorporates the fundamental tenets of both these frameworks and conceptualises an integrative model that is centred on demand substitution and a complementary supply interaction that is strategised through organisational activities that are analogous to the primary activities of Porter’s Value Chain. It is a more focussed as well as balanced framework that helps in efficiently scanning the business environment and align primary organisational activities with the aim to achieve growth as well profitability. As has been observed through the course of this essay, the primary aim of this research was to critically examine whether the Sector Matrix framework, gives a better strategic understanding of product markets than the concepts of product or commodity chains. Substantial efforts were put in to discuss the relative significance of this tool in analysing the strategic understanding of product markets at the firm level as well as the sectoral level. It has been seen that the basic objective of the Sector Matrix framework is to analyse the complex interactions between demand and supply prevalent in the market and the roles that they play in shaping business policies. It was found that this type of analysis gives rise to a template of horizontal as well as vertical relations between demand substitution and subsequent supply interaction. From the literature review undertaken to analyse Sector Matrix with respect to the automobile industry in general and the Ford Motor Company as the type organisation, it was found that for a capital as well as technology intensive industry like automobiles the concept of linear supply chain is highly prominent and hence the companies in this industry require continual alignment of organisational processes to meet the customers’ requirements through high volumes of production and simultaneously achieve profitability through economies of scale. Unlike Porter’s Value Chain and Global Commodity Chain, Sector Matrix has been found to be a more efficient tool for evaluating the business environment and aligning the overall business operations in order to reduce the costs of production and meet demands optimally. Generic Strategies free essay sample Strategies Tony Bennett Ashford University BUS620 Managerial Marketing July 9, 2012 Abstract This paper will summarize the generic marketing activities of a retail establishment with the purposes of assessing their market and segmentation strategies. After the assessment a strategy will be developed to improve the marketing of the product. The example used for the analysis will be a company located in the Philippines called CDR King. CDR King provides the latest technologies in computer related products and accessories at affordable prices by bypassing middlemen, bringing the product direct to the customer which greatly reduces cost. Generic Strategies CDR King is a retail chain located exclusively in the Philippines who initially sold media products but has now increased their product line becoming a full blown technology provider. CDR King is now selling the latest computer related products and accessories with over 100 branches across the Philippines. According to (cdrking. com) the company’s vision â€Å"is to provide every Filipino with the latest technology at an affordable price† and the mission is â€Å"to be the No. We will write a custom essay sample on Generic Strategies or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page 1 top media technology provider in the Philippines that could provide the latest technology at an affordable price without extra cost and also to be able to deliver up-to-date technologies to the Philippine market with the latest computer related products as well as computer accessories. CDR King Marketing Strategy CDR King’s generic marketing strategy places an emphasis on low cost and affordable products. The cost leadership strategy involves a company winning market share by focusing on cost-conscious or price-sensitive customers. This is accomplished by having the lowest prices in the target market, or the lowest price to value ratio (Muller and Walker 2010). For this approach to be successful the company must have lower operating cost than its competitors. CDR King accomplishes this by: †¢ Not selling ther branded products †¢ They do not participate in heavy advertising †¢ Warranties are kept short so they are not factored into the price CDR King operates very similar to a franchise model. All of its products are sold with a CDR King logo, all employees wear uniforms and every CDR King store has the same color scheme. The model of the company is molded after McDonalds except they sell cd’s and technology gadgets and not hamburgers. CDR King collects all payment s manually and manage inventory in the same manner. The strategy is to penetrate the technology market through customers they consider the regular Joe. The current target market of CDR king is the C and D market across the Philippines, this market would be the equivalent to the middle to lower class in the United States. After much success in the technology gadget market the company has decided to expand on its business model by venturing into the vending machine market, selling items like blank disks, optical mouse, Bluetooth dongles, card readers, memory cards and usb drives. The company currently has one located in Quezon City at its Technohub and plans to roll out more in the next several weeks (gmanetwork. com). CDR King Weaknesses No matter how successful a company is they’re prone to make mistakes and have weakness; CDR King is no exception. The retail stores are big, stocked full with inexpensive products which can make navigating through inventory a challenge sometimes. When you combine that with the manual processing of purchases, it creates long lines at the checkout counter. Upon entering the CDR king store you are given a number and sometimes the wait to see a salesperson can be extremely long. I have no idea of what the hiring requirements are for store employees but customers often complain about the interaction with the salespeople; they are perceived as rude and impersonal. The other big complaint about the company is the quality of the actual products. The products are manufactured in China and have a very short life span normally lasting just long enough to make the week long warranty expiration date. I would have to agree with this assessment of the product because of my own personal experience with the company. In the past I’ve purchased at least 5 notebook chargers each lasting about 1 month at a time. Each cord cost around 600 pesos which is equivalent to 12 U. S. dollars. The last time I needed a cord I did not purchase it from CDR King but from one of its competitors. The cord is clearly made with a much better quality and I have not had any problems with it at all. Improved Strategy As the saying goes â€Å"if it’s not broke then don’t fix it†. The CDR King cost approach has been a very effective strategy for the company and leads in the market place on low price; I would recommend keeping that strategy the same. I would suggest the company focus their efforts in a few different places. 1. Eliminate the manual ordering process – by converting the manual order taking process into a computerized system the company could greatly decrease the amount of time it spends with each customer, improve and speed up the inventory process, and generate reports on inventory gaining insight into which products sell the most or the least and which products have the most defects. This would allow them to make much needed adjustments to defective products costing the company the most money. The company could also use the system to obtain demographics, geographies, and psychographics to greatly improve the cost associated with marketing activities. 2. Improve customer service – re-train the employees with the overall goal of becoming more personal and sincere. The HR department should be the first step in the new superior quality service campaign, encouraging them to only hire individuals with a strong track record in customer service. . Discontinue the vending machine business – if the company already has problems with a combination of customer service, cheap products and warranties the vending machine business would only increase the dissatisfaction among customers. Attempting this line of business is going to make the existing problems with the company much worse. Conclusion In conclusion, the CDR King has started a great business but like all entities the need to evolve is always a part of the life process. The company now has the lead on a niche market, selling low priced computer related parts and accessories to a specific class of people located in the Philippines. However competition will eventually arise, a company can always figure out how to do something bigger and better. In order for the company to move into the right direction and to the next level, the changes I suggested should be implemented as soon as possible. The more the company delays, the more it increases its chances of losing the dominance they currently hold in the marketplace. References Mullins, J. W. , Walker, Jr. O. C. (2010). Marketing management: A strategic decision making approach (7th  Ed. ). Boston: McGraw-Hill Irwin http://www. cdrking. com/? mod=faqs http://www. gmanetwork. com/news/story/264015/scitech/technology/cdrking-vending-machines-anyone