Dhaha Company - Competitive Strategy - Case Study Example

SIMULATION EXERCISE (DHAHA) By Students Name Course Professor University State Date Table of Contents Introduction 3 Competitive Strategy 4 External Overview/Analyses 5 Pestel 5 Political 5 Economic 6 Social 7 Technological 8 Environmental 8 Legal 9 Internal Overview/Analyses 9 Porter’s forces 9 The Tool 9 Company decision 12 The company operations 16 Final results 17 Underlying Strategic Principles 17 Key Learning Points About strategy 18 Conclusion 19 Reference List 20 Appendices 21 Dhaha Company Introduction The aim of the strategic move in managing Dhaha involves assisting it in come up with a path that will lead it towards development and profitability amidst antagonism and constant change. This is all about gathering, analyzing and organizing information. In the context of competitive trends and track industry DHAHA has developed forecast models strategic performance examination, forecast models development, emerging market opportunities taking note of the company threats, searching for new strategic solutions and creative action plans (May, 2000). The task involved analyzing and evaluating the internal company plans that comprised of financial forecast competitive intelligence and market analysis, and then feasibility analysis. Logistics and supply chain aspects as well as geographical expansions are not left out. Strategic experience in the company is the most desired discipline because it helps in providing clear access to the entire image, vision and major aspects that determines the company value (Gundling, & Cvitkovich, 2011). There are numerous disciplines that the company strategic aspects are drawn from. These includes finance in particular the budgeting procedures, customers, technologies and markets with an aim of developing new strategies that capitalize on the development opportunities that are ahead of the company operations. These strategic processes discussed above were geared by the company responsiveness towards a competitive market. The above strategic procedure presents the main aim of this report that is to present an experience of strategically managing DHAHA Company Competitive Strategy A competitive advantage alludes to leeway that is increased over DHAHA contenders through a greater value offered to its clients. This can be essentially attained to through low costs. In specialty advertising, discovering and sustaining a competitive advantage implies that the organization has expanded benefit and a speculation that is economical and triumphant over the long term. Critical endeavors must be made with a specific end goal to make competitive advantage win. More than a time of time the edge may pound down as competitor’s endeavors to copy a triumphant preference for themselves and because of business changes. The fight is about creating a focused edge and afterward looking after it (Chatterjee, 2002 ). DHAHA repeated analysis of the venture’s merchandise management and offering will help the company to remain with the situation. Marketplace Competitive Efforts, from-time-to-time the company improves its footwear with new approach and recital features that alters the number of approaches within its product lineup(Peteraf, & Maritan, 2011).. In addition, the company strives to improve its sales volume and status in the marketplace through attractive pricing, advertising, astringent with celebrities to as a way of endorsing its brand, convincing footwear retailers to distribute its brand, providing its products and advertising shore up to retailers, and online purchases promotion through its Web site. External Overview/Analyses Pestel Political Politics has a key role in any business. The reason behind it is that a balance exists between free markets and system control. Companies should put various threat s and opportunities into consideration as global economics takes over from domestic economies, ahead of expanding into new markets. Political aspects can help in the determination of a corporate headquarters location. DHAHA operates in four key geographical areas which are Europe Africa, Asia Pacific, Latin America and North America. There is a high likelihood that political influences are to be experienced by the company (Campbell, & Craig, 2005 ). Some of these factors include; taxation policy, government stability, mode of market entry regulations, import duties, social policies and trade regulations. Import tariffs differ in the four geographical regions that DHAHA operates. The hedge against this kind of risk results from operations from different regions. Economic Economic issues are health measure metrics in an economic region. During a company’s life time the economic status of changes several times. The current levels of, unemployment, inflation, economic growth and international trade must be compared. Value of money issues and level surplus income are likely to influence branded footwear products. In most case these products are purchased by a specific group of customers. The major economic factors includes aspects such as disposable income between buyers, accessibility to credit sources, interest rates, inflation and unemployment rates within the four regions that DHAHA products are found. The point on high reliance on outsourcing processes and overseas production cannot be assumed. Apart from the above negative factors there are several opportunities will affect the company’s profitability, outfitted activities and establish the strategy for the company in correlation with the economic aspects such as economic recovery, a strong brand equity, and development of the performance shoe industry. These national related economic factors are likely to influence the value and demand of the foot wares products. This is in relation to the currencies being used in the region that affects the exchange rate and ultimate success of the company. Exchange rates fluctuations should be taken into consideration when the company embarks on making key decisions. However, in line with the company sales forecast, sales are projected to increase by 0.1-0.3 % in North America and Pacific Asia regions. The factors are also seen to vary down words in Europe America and Latin America by 0.4 % in the internet sales segment. The company sections affected by these kinds of element uncertainties are production, financial aspects. Social The assessment of these factors is based on the individual customers mentality of the within a certain market. They are also the demographic factors and social indicators such as GDP, exchange rates and inflation. DHAHA can focus on the following factors; wealth distribution, education levels, population demographics, lifestyle and trend changes. Foot wares especially in sport has been a popular product especially the branded products in sports. Technology has advanced greatly and the production of these footwear products has improved greatly(Campbell, & Craig, 2005 ). Lifestyle changes have also contributed to increased demand of these products, love for games, and other convenient aspects behind these foot ware products. The most note bale aspect is that in the developed and developing countries where DHAH markets for its footwear products are based have been growing, thus increasing the purchasing power of consumers to spend on things other than just major survival necessities. Technological Recognizing the available technologies in is the main step here. Technological advancements can help in optimizing the internal efficiency prevents a service or product from becoming technologically absolute. Taking note of the emerging technology is a great management asset in internal efficiency optimization. However, there are several threats that the company is prone to disruptive innovations. The demand and market of most foot wares has been created by technology. Footwear especially sport shoes ids produced from a wide range of numerous materials selected upon customer properties. Products that are less dense with an extra cushioning have resulted from technology advancements the sales through the internet account for the second largest proportion of all sales, including the entry level and multi feature of footwear. In addition, due to the increasing digital technology advancements the strong competition between these companies is incessantly pressured to modernize and innovate their products, which are depicted by the development aspect. Environmental Causing adverse effects on the environment leads into penalties to both consumers and governments. Therefore are huge levy fines from the government on company pollution practices. On the other hand, companies receive rewards for having a positive effect on the environment. Consumers are likely to switch brands once they find out that a company does not take environment duties seriously. Environmental effects sis a rising concern and comprises of the following common factors. Laws on waste disposal, production of footwear products involves high use of chemicals that requires proper disposal measures in line with the set laws. Environmental laws are another common factor, regulations in energy consumption, and the altitude people have towards the environment. People are likely to abide to the set laws on environment issues if they develop a positive attitude towards the well being of the environment. It is note able that environmental issues are having a great influence on companies. Companies are susceptible to corporate social responsibility initiatives. These programs among other aspects also consist of the company’s efforts to ecological sustainability. Legal This step is all about being conversant with the laws and regulations I the operating region in order to avoid all legal actions that are not necessary. The company can be affected by legal issues if it is not responsible and may incur extra costs. The common legal aspects include; Employment, health and safety, competitive regulations antitrust law, copyright infringement. Internal Overview/Analyses Porter’s forces These can be analyzed through the five porter’s forces. These forces are applied in frequent occasions to indentify the company structure with an aim of determining the corporate strategy. DHAHA has both segmentation based on markets for instance internet and wholesale segmentation ( Porter, 1980. ). Therefore, the porter’s model can be used to any segment in order to search for attractiveness and profitability. The model also determines where power lies in the company. The Tool According to these forces it is assumed that there are five key forces that determine the competitive power in the company. These include; Supplier Power: The assessment in this case is done to determine the capability that suppliers have to drive the prices up. The driving power is the number of suppliers in existence for each major input and the product uniqueness, strength and control, cost switch, among others. Suppliers are powerful once they are only a few choices and the increased need for them. Buyer Power: The biggest concern that the company has here is to determine how easily the buyers can drive the prices down. Again the drivers are; the number of solitary buyers cost of switching from switching form the company products, among others (Chatterjee, 2002 ). Therefore, in case the company deals with few powerful buyers it is possible for them to dictate terms to the company. Competitive Rivalry: The number of competitors and their capability is important. In case the number of competitors is high and the kind of products is equally attractive then there is a high possibility of having little power because buyers and suppliers will move in another place if the company fails to offer a good deal to them ( Roy, 2009). Threat of Substitution: The major impacts in this case are the customer’s ability to indentify a different idea about the company that is different from competitors. For instance, in case the company introduces unique software that automates a major process in its operations, there may be substitutes of undertaking the process manually. Therefore, once the substitution is easy to achieve and viable then the company power weakens. Threat of New Entry: Market power is also impacted on by the ability of other companies to enter the market. New competitors are able to enter the market and compete effectively and eventually weaken the company position incase key measures on protection on major technologies, and few economies of scale. Therefore, having strong and durable barriers to market entry it becomes easy to preserve a constructive position and have a fair advantage of it. Figure 1:Porter's Five Forces Company decision Year 11 Objective (Reason for doing it) Strategic Action(what was done) Outcome() To use green footwear materials Using of environmental friendly materials in the production of athletics footwear in all the plants Cost of materials goes up by 0. 5% to 1.0% for standard and superior respectively. To Engage into charitable contributions Involvement into pre tax donations or charities Reduction in pre-tax profits. Improved company image to the society Ethics training and enforcement Enforcement for a code of ethics, employees training and development Increased administrative expenses. Employee’s skills and competence improves as well. Embark on diversity workforce programs Plans to achieve and maintain workforce diversity concerns on sex age , ethnicity among others An increased operational cost on hiring and screening. Availability of new blood in the company operations Energy efficiency initiatives Application of renewable resources to improve on energy efficiency Deprecation in capital investment Corporate social responsibility Year 12 Objective (Reason for doing it) Strategic Action(what was done) Outcome() Market Penetration Pricing The company set low prices on its products in order to increase market share and sales Once this is captured the company increases the price. Increased product sales and a large market share within a short time. Increased customer loyalty is enhanced To Practice of skimming prices strategy The company sets an original high price and lowers it gradually over a period of 5 years. The products become available to a wide market. Increased sales, and customer satisfaction. The profits are skimmed of the market layer by layer. To maintain a Competition Pricing This involved Setting a price in contrast with competitors. The company products remains competitive with a wide market share Cost plus pricing The company appends a percentage to product costs as profit margin to come to their ultimate pricing decisions. Sales increase and profits To have a Cost Based Pricing The cost of production and distribution are taken into consideration and then decision on a markup is made in order to make sure that profit to come to the company’s final pricing decision. Maximum profits are received with a reduced cost of production and distribution. Marketing and pricing strategies Year 13 Objective (Reason for doing it) Strategic Action(what was done) Outcome() To ensure that online marketing and sales is reliable as part of technological advancement The company created and maintains a website that is customer friendly .This means that customers can easily navigate through the company site to make a purchase. The check out procedure is easy and fast Sales increases as well as market promotion processes To set up the company the industry professional and contemplation leaders. This was done by obtaining speaking engagements at trade shows, and expansion of the company's expert network. The company earns a good reputation as a footwear expert that results into getting increased business than its competitors To apply low inventory point and prices to produce faster sales low prices and value basis. Maintaining low inventory to allow the company maintain low prices for their customers, and substitute products with new objects once inventory is not available. The demand increases demand. In addition sales increase because High demand pooled with low prices leads to increased sales. The financing of company operations Year 14 Objective (Reason for doing it) Strategic Action(what was done) Outcome() To set performance goals around the quality of design and the resources applied in the company products. Monitoring quality around several stages of the production process from the quality of input ensuring the production process, If the quality of the final product is not well regarded by customers, they will not buy the product. Year 15 Objective (Reason for doing it) Strategic Action(what was done) Outcome() To improve and maximize the operating profits increasing the branded products price slightly operating profit will improve significantly The company operations In year 11 the company strategy was directed towards earn an increased corporate social responsibility. A large number of resources were directed towards achieving the set goals in CSR due to a number of reasons. This was to ensure that the product and services are good and satisfies the customer. Environmental regulations have been highlighted as potential barriers to the growth of the company operations, and with that in mind the company involvement in CSR ensured that their operations are not harmful to the environment. The company has to build its operations on a strong ethical base and improve on its overall image. Employees like working along with a company that has a good public image and it’s constantly featured by the media for positive reasons. After basing a strong corporate image in year12, the company strategy and major concern is on pricing its products to make sure it charges its customers fair prices and profitable with a key aim of remaining competitive. The strategy was set with profit margins and sales volume as the driving power. The products price set affects the company profit margin and may either decrease or increase the sales because the company overhead cost on unit basis increases with few unit sales. The company operations strategy dominated in Year 13 the company aimed at making sure that there is reliability in online marketing and sales as part of technological advancement, this ensured that the company does not drug behind and eventually lose to its competitors. The overall goal or outcome was on sales and profits maximization. Year 14 strategy can not go unnoticed as a more emphasis on company operations together with year 15 strategy, the company has managed to earn a competitive edge, customer loyalty, and the next step is to keep up with the pace by perfecting more on its company operations to make sure that the customer receives the best quality footwear products. Final results According to the performance chart on Image rating, the corporate image of the company has shown significant improvement from year 11 where more on CSR were invested in the company. The image rating as improved significantly over the 5 years increasing the investor expectations. The unit sales have also shown significant positive growth from year 11.These includes internet, wholesales and private label sales. This shows that the pricing strategy whose key goal was to increase on sales and improve customer’s loyalty has shown tremendous results. This may have also been contributed to by the increased market share that the company has managed to earn. Again this was part of the company operations strategy. Underlying Strategic Principles The learning focuses and perspectives about the strategies adopted by the company rose up out of the key standards attempted during this simulation procedure were the significance of having a general technique or key strategic direction (Henderson, & Nelson, 2006). The company for the initial point has remained focused on and clear on what it wants to achieve. This is evident because of the way it has organized its strategies in a chronological sequence. Keeping up the capacity to adjust and contemplate the outside impacts, which may emerge out of the blue (Johnson, Scholes, & Whittington, 2008). This process may have its advantages and downturns. However the company encountered a benefit slack amid the first working year since it needed to hold up and break down the best technique in view of what its competitors were doing. Key Learning Points About strategy A strategy is referred to as a long lasting direction to a company that takes into account the varying external environment by configuration of its resources and competences and fulfillment of its stakeholder expectations. As a result in order to have a strategy work out the following points have shown to work out .turning the normal aspects to something, price justification, ensuring that the strategy is communicated in a familiar language t the target audience among others. Strategy is the highest level of management responsibility .The strategy implications are very important and are shown through an alignment of attaining high levels of strategic line up and consistency that is relative to both the internal and external business environment. As it has been seen in the above simulation the strategy adopted has managed to enable the company maximize its internal effectiveness by capturing the highest possible opportunities within the external environment .The other major point to note on strategy is that it has an initial task of disseminating and compiling the mission and vision statement of the company. Therefore, with clear and organized strategies a company activates can remain coordinated and integrated into its numerous functional areas in order to enable it achieve the long term objectives. Conclusion The simulation from the start showed a clear picture of what the company intend to achieve. The major areas of the strategy have been on corporate social responsibility, company operations, and marketing and pricing. All these were directed towards ensuring that customer’s remains satisfied all through .Different pricing and marketing strategies have a common theme of improving sales, maximizing profits and retaining customers. Company image to the surrounding community is not assumed. Through chartable associations and contributions the society will eventually accept the goodwill of the company and choose it over its competitors. Finally it’s the environmental concerns, key steps has been adopted to ensure that all the environmental regulations set are adhered to accordingly. Reference List Campbell, D. J., & Craig, T. 2005. Organisations and the business environment. Amsterdam, Elsevier Butterworth-Heinemann. http://site.ebrary.com/id/10138485. Chatterjee, S. 2002. Competitive strategy. Boston, Mass, HBS Pub. Gundling, E., Hogan, T., & Cvitkovich, K. 2011. What is global leadership? 10 key behaviors that define great global leaders. Boston, MA, Intercultural Press/Nicholas Brealey Pub. http://www.books24x7.com/marc.asp?bookid=42489. Henderson, S. G., & Nelson, B. L. 2006. Simulation. Amsterdam, Elsevier. Johnson, G., Scholes, K., & Whittington, R. 2008. Exploring corporate strategy: text and cases. Harlow, Financial Times Prentice Hall. May, P. 2000. The business of ecommerce from corporate strategy to technology. Cambridge, Cambridge University Press. Peteraf, M. A., & Maritan, C. A. 2011. Competitive strategy. Mass, HBS Pub. Porter, M. E. 1980. Competitive strategy: techniques for analyzing industries and competitors. New York, Free Press. Roy, D. 2009. Strategic foresight and Porter's five forces: towards a synthesis. München, GRIN. Appendices Figure 1Net Revenues Figure 2:Earning per share Figure 3: Global market share Figure 4: Earning Unit sales Figure 5: Image Rating Figure 6:Credit Rating Figure 7: Stock price Figure 8:Return of Equity Read More