Questions Dealing with Business Strategy - Assignment Example

Short essay questions dealing with business strategy List two ways that supply chain management can increase a customer’s willingness to pay The supply chain management can increase a customer’s willingness to pay through a focus on smart supply chain design and execution. In order to improve customer’s willingness to pay, it is important for the supply chain management to work closely with supply chain partners. In this sense, businesses are in a position to deliver quality services to customers. In today’s business world, customers are attracted to convenience and this brings to focus supply chain management’s ability to deliver goods and services to customers in an efficient manner. In essence, meeting customers’ needs is critical in maintaining competitive advantage. Customers need quality service in order to maintain their loyalty in a particular product or services. The supply management can increase customer’s willing mess to pay by providing unique and valued set of satisfaction to the customer. In this sense, organizations need to focus on providing superior products and services that enable loyal customers to enhance their competitiveness. As such, an important step for the supply chain management to increase a customer’s willingness to pay involves delivering value added services (Prahalad and Hamel 4). On the other hand, the supply chain needs to improve customer service as a strategy of increasing their willingness to pay. Customers are often attracted to better services and supply chain management’s focus on improving customer experience plays a role in enhancing customer’s willingness to pay. In the current global business environment consumer awareness has heightened and it is necessary for the supply chain management to improve the quality goods and services offered to customers. On another note, due to technological advancement, customer services need to be more flexible and adaptable to constant changes in the business environment. In this sense, the supply chain can increase a customer’s willingness to pay by streamlining the daily product flow as a way of enhancing quick delivery of goods and services to customers. As such, embracing a customer satisfaction orientation is important in enhancing their purchasing power for a particular product or services (Prahalad and Hamel 5). 2. List two potential pitfalls of employing the strategic management approach described in the competing on the edge of chaos article by Eisenhardt and Brown In today’s business environment, it is increasingly becoming necessary to establish more dynamic models of strategy. For instance, businesses experiencing high levels of instability are exploiting strategies to develop a competitive advantage. However, a push to adapt to constant changes in the business environment tends to make organizations relatively inflexible and thus implementing new changes becomes a challenge. According to the Eisenhardt and Brown , firms are viewed as a growing and learning organizations; however, the models of strategy that they advance does not reflect on a bold and clear vision to move an organization forward in a constantly changing business environment (787). Further, the vision that successful firms must start out quite broadly in order to be shaped in part by subsequent events may not help firms to survive. This is because it is not clear how such a vision of an incrementally evolving can allow organizations to attain a substantial lead over the competition. Most organizations appear successful because of gambling on a vision of the future and pushing for such vision to materialize. In regard to Eisenhardt and Brown article, the formation of strategy is viewed as a process that is more emergent and not intended; however, such an incremental approach may not lead organizations to realize any significant investment. On the same note, high levels of commitment from the organization may be necessary to develop more sustainable advantages. Conversely, it is not clear whether avoiding such commitments would improve an organization’s position significantly, and relative to the competition. In addition, it is a challenge for organizations to undertake radical changes and established firms often carry out limited changes separated by periods of substantial change. Consequently the various links between an organizations environment and strategy can only be taken to a certain limit. Further, it is unclear how organizations can always respond in an incremental manner if they cannot manage the rate at which changes take place within a competitive business environment. In addition, while it is possible to anticipate some form of change, it is also difficult to predict the exact form of change during certain stages on an industry’s evolution (Eisenhardt and Brown 789). The approach in the competing on the edge of chaos advanced by Eisenhardt and Brown may apply differently to various organizations in a relatively fast changing business environment. For instance, an organization that has a relatively stable position within the market may be less willing to take risks compared to an organization that is in a weaker position. It is also unrealistic to assume that strategy involves making choices that in some cases can be risky since the outcome cannot be clearly anticipated at the time of decision making process. While organizations can minimize the risks, there is also the need to consider the limits and costs of leaving an organization’s option open. In essence, there is a need of a tradeoff between the anticipated risks and potential benefits in the process of establishing an organization’s overall strategy (Eisenhardt and Brown 789). 3. List one potential substitute for credit cards and the credit card industry. Describe the switching costs involved in credit card users switching to this substitute. A potential substitute for credit cards and credit card industry is the phone and mobile payments. Due to technological advancement, new modes of payment have been invented to improve alternative payments other than cash, checks or credit cards. The cellular electronic payment allows individuals to save money electronically and in turn, can transfer payments for goods and services. In addition, mobile services provide have developed services where subscribers can borrow loans and pay later at an interest. As such, the mobile payment services offer an alternative to credit cards and in particular for individuals who cannot afford to the credit card charges. This service is particularly beneficial for low income earners who are not in a position to maintain the minimum balance required for credit cards. In addition, the mobile payment services also allow users to directly withdraw money from their bank accounts to use in paying for goods and services (Prahalad and Hamel 11). 4. McDonalds has been struggling to deliver profit growth for the first time in many years a. List one important development in the external environment that they face that is currently challenging them. The firm is currently facing millennial challenges in the sense that, customers aged between 20s and 30s are shifting to the fast casual sector. The sales in the firm’s restaurants have been falling in the recent times. This has led to the company changing the top management in its U.S division for the second time in the past two years. The change is meant to revive McDonald’s fortunes domestically due to stiff competition from the fast casual sector. Due to the declining sales created by the millennial challenges, the firm’s stocks have also traded in a relatively narrow range while the shares of rival companies continue to soar. In order to counter competition from the fast casual restaurants, McDonalds has introduced new items in its menu that include vegetables rolled in tortillas, for instance, to attract millennial consumers aged between 20 to 30 years old (Prahalad and Hamel 8). b. List one core competence of McDonalds and why it is difficult to imitate or substitute for. The company boasts of outstanding functional capabilities that it can integrate to ensure consistency of products and services in its restaurants spread around the globe. Through its functional capabilities the company is in a position to gain competitive advantage over rivals as a result of exploiting economies of scale. In addition, functional capabilities of the firm also allow it to mitigate the risks that face the fast food industry. In this sense, it is not easy to imitate McDonald’s functional capabilities because it has already established itself in the market, and with a substantial customer loyalty. In addition, they also have adequate resources needed to adapt to the challenges experienced in the fast food industry (Prahalad and Hamel 8). c. Give one NEW strategic recommendation that addresses the challenge you listed in (a) and leverages the core competence you described in (b) In order to counter the competition from the fast casual sector, McDonald can introduce new items in its menu that attracts the millennial customers. Through its functional capabilities, the company is in a position to improve dining experience for its customers by focusing on process innovation to make its products unique compared to rival companies, for instance. As part of the company’s functional capabilities, market research can play a role in understanding consumer preferences and thus ensuring that McDonalds adapt to such needs. Functional capability such as efficient human resource management also can allow McDonalds to improve service delivery to customers since most of the people attracted to fast food restaurant are the working class, for instance, and convenience is essential (Prahalad and Hamel 11). 5. The core competencies of Wal-Mart The following core competencies provide Wal-Mart with a sustainable competitive advantage over rival companies. The various core competencies also make it difficult for the competition to identify the core competency that is vital for Wal-Mart’s success (Prahalad and Hamel 12). Works Cited Eisenhardt, Kathleen and Shona, Brown. Competing on the Edge: Strategy as Structured Chaos. Long Range Planning 31.5(1998): pp. 786-789. Print. Prahalad, Coimbatore and Hamel, Gary. The Core Competencies of the Corporation. Boston, MA: Harvard Business Review, 2014.Print. Read More