Strategic Management and Innovation: Big Brakes - Case Study Example

Running Head: STRATEGIC MANAGEMENT Name Course Instructor Date Big Brakes Company description Big Brakes is a manufacturing company that provides brakes to the automobile industry worldwide. It has around 5% of the world market for small car brakes, and has built its market on being an innovator of new materials and systems that provide a better product. Big Brakes has developed a new braking material that meets all environmental requirements and is virtually indestructible. Big Brake for the past three decades has ever since been providing high quality automobile brake replacement parts for the heavy commercial and light commercial automotive aftermarket. Our firm provides braking system upgrades and from the direct bolt to the on stock rotor replacements and complete upgrades of braking systems. The braking parts are innovatively designed based on the firm’s extensive experience and technological knowhow that has grown over a long period of time. Our professional, knowledgeable and friendly staff is ready to help educate, inspire and solve arising problems for our valued customers. The customers are completely assured for the value of their money for our products (Krattenmaker, 2002). Mission statement A process centered, market focused firm that quests to develop and provide innovative braking system solutions to our esteemed customers, consistently outperforming our peers, producing earnings that are predictable for our investors and provide a challenging and dynamic working setting for our workers (Bart, 2001). Strategy statement To become the leading and innovative manufacture and distributors of effective and reliable auto mobile braking systems in the Globe. Goal To provide all the automobile enthusiasts with brake part upgrades that is affordable, long lasting and efficient Motto Great brakes at great prices Global trends report Global business trends reflect that the manufacturing firms will face an impact on the financial crisis. The global financial system in the whole globe has remained to be fragile and is expected to impact heavily on the automobile braking system manufacturing companies. The emerging companies and those introducing new products into the market are expected to have an uphill task in marketing their products considering the limited finances. Big Brakes will have to focus in the six expansive long term developments that are expected to shape the global market trends. These include: An increase in the global power by the emerging markets Competitive advantage by innovative clean technology Recovery by the global financial institutions through transformation Increased innovative technologies Enhanced ties between the government and the private sector Transformation of the workforce through the demographic shifts The future automobile accessories markets are projected to form collaborations and partnerships that will be aimed at cushioning them from the harsh global financial crisis. The partnerships will have them grab market shares and maintain competitive advantages by the interconnections between the six global trends and the 3 vital shapers of change which include; the demographic shifts, the global reshaping of the structures of power and the disruptive innovations (Gerhart, 2003). Emerging markets The emerging markets are expected to increase their power globally by the introduction of novel and effective braking systems for the newly invented auto machines. The innovated products are expected to win the hearts of the consumers based on their attractiveness and value for their prices. The rise of the new emerging companies is expected to rely heavily on the emerging rising markets that want to try new products and innovations estimated at 70%. This will disrupt the global business as the old try to find their grip and trust in the new competitive market. The firm is to invent new marketing strategies that are expected to tap into the rising population as well as the propensity and drive the new growth in consumers and urbanization (Gerhart, 2003). Competitive analysis report Case problem Big Brakes is listed on the stock market about 2 years ago and the Board is concerned that the company is vulnerable to a takeover from one of the major players. Such a takeover could be aimed at suppressing the new product so as to protect and maintain the current market balance. The major shareholders (the original owning family) have built the company with a strong ethical and loyalty focus. They are concerned that the current workforce will be made redundant by any takeover. They need to decide if, how, and when to release the new product and how to protect the company position in the process (Grant, 2002). List of competitors The firm faces stiff competition from three newly created brake manufacturers that have been depending highly on their young and innovative staff to gain a fast growing competitive advantage. The companies include: Power Break Cruiser break manufacturers Leverage Braking system manufacturer An analysis of the competitors The competitors have strength in the young and dynamic staff that are skillful and possess immense innovative skills. The working environment is favorable as the human resource management is supportive and welcoming to new ideas that are in line with the firm’s objectives. The firms have an existing knowledge and information system that allows the efficient flow of information and communication from all the organs. The financial budget allocated to the marketing strategies is sufficient as the firms are able to utilize a variety of marketing strategies to appeal to their expanding market. The product range produced is effective and has earned the trust of many customers. The firm invests a lot in the customers as it has a well established mechanism that evaluates the performance of the newly and old products in the market and provide feedback that enables them to manufacture the products that meet the customer’s needs (Grant, 2002). Despite the wide variety of strengths the firms have, they lack in the formation of strategic partnerships with the major car manufacturers in the market. The firms prefer going it alone and aim at maintaining the high profit levels in the market (Grant, 2002). Competitor objectives and strategies The firms utilize the internet and audio visuals as well as automobile magazines that have high influences on the public. The firms have also positioned themselves by organizing a variety of motor sporting events in collaboration with the local jurisdiction governments. The customers mainly targeted by the firms are the young who are new in the automobile industry. The firms mostly target many sporting and racing companies to have their stocks bought (Christensen, 2001). The firms have similar objectives as they strive to register a wide market and maintain the competitive advantage through the manufacturing of quality and durable braking system products. Their strategies are innovativeness and teamwork among the employees. The firms have controlled their prices and have lower prices as compared to the other competitors in the market. The packaging of their products is also unique as they produce a whole package of the braking system and not in parts (Argote, 2000). Sales analysis During the 2009 and 2010 financial year, Big Brake was able to sell parts to its consumers worth $225.14 billion. The firm maintained a pretax profit of $408 million and an after tax profit of $302.4. This was a rise in profits of 36% as compared to the 2008 after tax profit. The rise was due to the firm’s partnership with the major car companies to have it manufacture and distribute the Braking systems for them as they manufacture the auto mobiles. The firm also ventured in to providing braking systems for the high commercial vehicles that are normally used in the mining, building and construction industry (Argote, 2000). Projected joint ventures The firm is to approach the formula one racing companies to secure a contract to manufacture braking systems for the racing period of ten years. The contract has been left open after the signing out of Power Breaks System Company which opted to manufacture their products for the construction and military sections. The firm is also to possibly pursue a joint venture with the giant GMC and CMC companies to have it manufacture and supply them with the newly invented braking system for the newly manufactured auto mobiles of all sections. This is expected to have the firm’s pretax profit shoot to a projected 75% on the partnership sales (Walters, 2004). Strategic direction report For Big Brake to adopt a plan that would see effective introduction of the newly innovated product in to the market, it is vital to realize that the approach will involve the development of an effective strategic plan, adoption of an implementation process and evaluating the implementation process. To identify the current state of the firm, the top management at Big Brake will have to conduct an identification of their mission, identify the past and the present strategies. The management will do an analysis of the past and present level of performance and set clear objectives that the firm will adopt for the new operations. The analysis of the designed objectives will give a direction of the existence of the firm and what it is expected to achieve thus ensuring a common purpose within the elements of the firm. The identification of the present and the past strategies that the firm has employed will be able to identify the strengths and weaknesses of the firm and have it adopt new strategies that will have it gain a competitive advantage over its competitors. In addition, the identification of the present and past strategies will go a long way in the appreciation of the firm’s corporate history (Carpenter, 2006). Strategic management and innovation In a competitive and dynamic environment there is need for a sound and effective leadership that values innovativeness and provides room for its growth. The leadership in such companies is to identify the appropriate strategies that should be adopted to be able to compete with already established competitors and Big Brakes is not an exception. The leadership that will be able to have the company introduces the new product into the market and still maintains its competitive advantage should have the organization aim at innovating products that are to reduce the operational costs (Carpenter, 2006). The management should be able to create a new market for the newly developed product and be able to adapt to the changes in format and scale. In addition the products should be able to surpass the needs of the customer thus have the ability to have a competitive advantage over the other products. It is also vital for Big Brakes to employ a strategic management that will value technology management. This will involve the identification of practices and policies that leverage technologies to create, maintain as well as enhance the firm’s competitive advantage through the proprietary knowledge (Carpenter, 2006). Market and stakeholder analysis A market and shareholders analysis of the firm will be able to determine the target market and the adoption of the appropriate strategies. The appreciation of a marketing analysis will form a basis on which the marketing plan is to be developed. The development of a marketing plan based on the findings of the marketing analysis will have the firm adopt save on costs that would have otherwise been used inappropriately. The effective adoption of strategies will lay plans that will avail the products to the customers and have them appreciate its introduction. The analysis could assume either to assess the market trends, size or have an investment decision or analyzing the target market and determine the best action course to be adopted to have an improvement in sales and gain profitability. In addition, the market analysis will involve the determination of the existing policies and their effects on the company to capture the existing market share and gain more profits. The market analysis will also gear towards the identification of the marketing strategies that are employed by the competitors and the prices in addition to their ability to have newly innovated products in the market. The market analysis is to ensure the range of products they introduce into the market is not consecutive as this will have negative effects in achieving customer satisfaction and thus opening the door for the other competing parties. The share of the firm in the market is also to be analyzed while having an aim of identifying strategies to acquire a larger share in the market. The analysis of the shares of the firm will be able to determine the ability of the customers to purchase the new product and their loyalty levels as well as the perception of the brands in addition to its overall competitive edge. This will have the firm adopt a strategy aimed at drawing the market share away from their competitors thus increasing Big Break’s market share. A PEST analysis tool is effective in the analyzing of the market by assessing its growth as well as decline thus giving the direction for the business to assume. The PEST tool is able to assess the business in relation to the political, economic, social as well as the technological factors. The tool will be vital in giving guidance on the appropriate strategy for the business should adopt. While performing the PEST analysis, the management should have the following in mind: A company with emphasis on the market The product with emphasis on its market The brand and its benefit to the market The local unit of business The strategic options Potential partners Potential acquisitions Investment opportunities The marketing process will adopt six steps which include: The defining of the problem The examination of the condition Collection of data in relation to the identified problem Analysis and interpretation of the collected data Generation of ideas to eliminate the problem Drafting a strategic plan Marketing strategies An effective marketing strategy for Big Break will include the identification of the product benefit to the consumers, its appropriate price, market and the promotion strategies. The firm needs to identify the right price to introduce into the market while not compromising on its quality. It is vital to note the best mode through which the product is to be advertised as this will be a determinant factor in assessing its performance in the market. The choice of the marketing strategy will highly depend on the target market and their preferences. The firm will thus choose the right location for the product. Based on the competitive nature the firm is in, Big Breaks will rely on the market size assessment it conducted to find a base for its products. The firm is to engage in vigorous promotional activities which include offering of free services with every purchase of the products that will go a long way in marketing its products. Big break are to adopt a marketing analysis that is ongoing thus being able to show how the new products to be introduced into the market will be performing over a period of time. The analysis should address how the product line sales are to be tracked for a smooth evaluation process. Any product lines to be introduced into the market are to be outlined and reviewed in order to draft new goals aimed at positioning the firm at a better competitive level. The development of market analysis for Big Break should be able to give it a selling proposition that is unique of any other company in the same field. The determination of the firms driving force in the business will provide it with ability to figure out the functions that drive the customer’s behavior. Thus the firm will acquire knowledge of the consumer’s needs and develop strategies to meet the needs of the target market. The analysis is to communicate the market forecast thus the firm will be at an upper level to plan well in advance as it anticipates new innovations (Shiba, 2001). Market entry strategies For Big Break to avert the uncertainties to be experienced by new entrants, it is vital for the firm to assess the time constraints, resource limitations and the financial pressure it is to face from the introduction of the product into the market. The firm is to assess the effect the product is to have on its identified competitors and the disruptive plans they are to have as the firm introduces the product. An internal comprehensive analysis to determine the market dynamics, competitive landscape, macroeconomic outlook, the regulatory frameworks and the internal technology of the firm. This could be achieved by conducting an internal SWOT analysis that will highlight the valid disadvantages and advantages and provide an input into the position of the entry as well as the proposition value. The entry strategies for the firm will highly depend on the pricing, communication, brand, product benefits, launch, sales and distribution. The identification of the areas of risk will form the basis for the adoption of mitigation actions before entry into the market (Whetten, 2007). References Argote, L., and Ingram, P. (2000). Knowledge transfer: A basis for competitive advantage in firms. Organizational Behavior and Human Decision Processes, 82, 150–169. Bart, C. K., Bontis, N., and Taggar, S. (2001). A model of the impact of mission statements on firm performance. Management Decision, 39(1), 19–35. Carpenter, M. A., and Sanders, W. G. (2006). Strategic management: A dynamic perspective. (1st ed.). Upper Saddle River, NJ: Pearson/Prentice-Hall. Christensen, C. M. (2001). The past and future of competitive advantage. Sloan Management Review, 42(2), 105–109. Gerhart, B. A., and Rynes, S. L. (2003). Compensation: Theory, Evidence, and Strategic Implications. Thousand Oaks, CA, Sage. Grant, R. M. (2002). Contemporary strategy analysis (4th ed., pp. 25–26). New York: Blackwell. Krattenmaker, T. (2002). 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