HI6006 Competitive strategy Sample assignment
Table of Contents
Adaptation theory applied in pharmaceutical industries. 2
Adaptation theory applied in Car industries. 3
Aggregation theory applied in pharmaceutical industries. 4
Aggregation theory applied in Car industries. 5
Arbitrage theory applied in pharmaceutical industries. 6
Arbitrage theory applied in car industries. 6
AAA frameworks offer three standard approaches to the creation of the global value. Adoption strategies are focused on the various business models which go well with local market preference or requirement. Thefocus of the aggregation strategies is generally towards for the achieving economies scale as well as also creating global or regional efficiencies whereas Arbitrage means about the utilising various economic or the differences between the regional as well as national market, generally by finding different parts supply chain.
Adaptation is the global strategy which is most widely used. Adaptation is creating value which is globally accepted by changing various elements of offer given by the company to fulfil local preferences or requirements(Salunke, et al., 2011). The reason of this adaptation is clearly apparent as because to some extent the requirements of the adaptation is become unavoidable or is become essential generally for all the products throughout the world. The example can understand that the taste of the Coca-Cola is different in various countries which show the differences in the quality of the water and the type and the quantity of the sugar added to it (Block, et al., 2015).
Adaptation is fatherly subdivided into five parts, focus, variation, innovation, externalisation, and design(Sharabati, et al., 2013). Adaptation strategies use to focus on the product type, geographic position, division of market towards the reducing the effect of dissimilarity across the region. The focus on the product gives advantages that the large differences can exist among the large product type and the requirement of the variation to compete effectively in the local market(Jha, et al., 2014).
Variation strategies not only focus on the making changes in service as well as the product but also focus towards the adjustment of the situation of business, policies and also focusing towards the success expectation from the business (Salunke, et al., 2011).
Adaptation also focuses on the design for reducing the cost which is required for variation. Manufacturing cost can mostly achieve by introducing flexibility of the design towards meet the supply differences (Claver-Cortés, et al., 2012).
Innovation is also one of the main approaches to the Adaptation which give rise to the cross-cultural effect. This can be characterised for improving the effect of the adaptation attempt (Salunke, et al., 2011).
Pfizer is the company who is always expanding the innovation to all the dimension and innovation is one of the main and the important approach of the adaptation. Pfizer is concentrating on expanding the innovation in seizing marketplace opportunities and also towards the changing the main business practices(Jha, et al., 2014).
Pfizer has focused on the making changes in service as well as the product but also focus towards the adjustment of the situation of business, policies so that Pfizer will be able to improve its process which enables togenerate greater value in every step of the business(Mauri & Figueiredo, 2012). This improvement of policy took time, but finally, the work environmenthas translated into improved customer services at a lower cost.
GlaxoSmithKline is a UK based pharmaceutical company which is founded in the year 2000. This main company role is to developing medicine and various health care products. GlaxoSmithKline committed for the adaptation approach which needs to deal with the impact of climate change on healthcare so that it can help the government to tackle the diesel which is impacted due to the climate change (Santos-Vijande, et al., 2012). GlaxoSmithKline continuous investments in R&D are importantly a key factor for an adaptation policy. Moreover, it is also observed the restructuring of public health system is one of the most important, cost-effective as well as immediately required for adaptation strategy.
The main element of the adaptation is innovation and also to focus on the improvement of product type according to the requirements of the local area.
Honda is one of the leading car manufacturersin the UK.Honda has established a unit for the research and the development. This unit has a duty for commercialising the new and the innovative value into their car such as artificial intelligence, connected mobility system, robotic and energy management more over this unit have particularly concentrating on the developing of the new product according to the requirement of the area(Claver-Cortés, et al., 2012).Since Honda establishment, Honda has taken the continuous steps to improve its products which include automobiles, power products and also a motorcycle. Honda has the view that business expansion possibility will be increased by incorporating the new and the rapidly proceed technology in its product.
Toyota has followed the adaptation strategy in its product by making continuous improvement and also by incorporating innovation by changing various elements or offer given by the company to fulfil local preferences and the requirements.Toyota is acknowledged as a top 10 car industries in the UK(Block, et al., 2015). The engineering teams of the Toyota are continuously incorporating the innovation into their products so that the product of the car will suit the local requirement and also fulfils all the latest technology in their car.
Toyota focuses on the geographic position, product type division of market towards the reducing the effect of dissimilarity across the region. This type of focus on the product gives advantages to the Toyota(Sharabati, et al., 2013). Moreover, due to this large differences can exist among the product type and the requirement of the variation to compete effectively in the local market.
Aggregation is the scopeof dealing with the differences. The main objective of the aggregation is to utilise similarities along with geography rather than become accustomed with the differences and stopping the short of the total consistency; this would destroy the coexistingapproach of adaptation. The important key is to find out the system for introducing size and scope of the economy into the business model without negotiation with local reaction (Jha, et al., 2014). Geographic Aggregation is noted a sole opportunity for creating scale or scope economically. There is various another non-geographic scope of CAGE structure is introduced. The Geographic, Economic, administrative and cultural also lend themselves to aggregation strategies.
The pharmaceutical company who are looking for promoting of new drugs in the market must fulfil the regulatory requirements to get the license for distributing the drugs throughout the market; this is an administrative aggregation.
Pfizer is promoting aggregation for dealing with the differencesof new drugs in the market. Moreover, Pfizer also fulfils all the regulatory requirements to get the license for distributing the new drugs throughout the market.This can be understoodas the activity of the Global Innovative Pharma(GIP) which is thecommercial operation of the Pfizer. IT focused on the developing, commercialising and registering medicines where this medicine impacts patient lives significantly(Salunke, et al., 2011).
Pfizer is maintaining regulatory requirements to get the license for distributing the drugs throughout the market, which is also the important theory of administrative aggregation.
GlaxoSmithKline successfully refocused on the various key functions to its universal approach. Procurement is the 1st and the important function for every company to go worldwide. The portfolio of the GlaxoSmithKline ranges from global brands to regional brands by maintaining all the regulatory by introducing size and scope of the economy into the business model without negotiation with the local reaction which is the key factor of the aggregation(Mauri & Figueiredo, 2012).
As discussed above the aggregation theory is of the creating/generating economies scale or scope. Honda is one of the leading car industries of the UK and therefore, the company has followed the aggregation theory in its business model without negotiation with the local reaction.
Honda increasing self-reliance makes it growing rapidly in the UK and also worldwide its commitment to the natural environment, and the Geographic, Economic; administrative and cultural also lend themselves to aggregation strategies.
Toyota as a top 10 car industries illustrates its multiple challenges associated with the business model. Toyota manufactures luxury car and the market of the Toyotapresent in all the major countries including the UK. This isconsidering the most recognised brand in the car industry of the world. Some of the advantages taken by the Toyota are easily identified by connecting the regional organisation with the Toyota’s common system and also with the global procedure; the company can speed product development by utilising similarities along with geography rather than become accustomed to the differences and also stopping the short of the total consistency.
The third basic strategy for generating advantages globally is arbitrage. Arbitrage is the system of exploiting the difference rather than the excepting them or associating with them and also to define the global strategy originally, such as buy in lesser amount in one market and sell in another market with the higher rate(Jha, et al., 2014).The arbitrage focuses on the extracting the differences between the various region. Hence, the CAGE system described with the particular significance and also helps to define the sub-strategies for the global value approach.
The Favourable effect of the arbitrage which is related to the country or the starting place has a main basis for the cultural arbitrage. This can be illustrated with an example that the culture of the French has internationally successful for the items connected with the fashion such as Wines, Perfumes and foods(Sharabati, et al., 2013). Likewise, the fast food restaurants are usually associated with U.S culture.
The differences among the countries or the region related to the political and institutional are created opportunities for the administrative arbitrage.
All the arbitrage strategies which create value are “economic” The economic arbitrage describes the strategies which directly do not connect with the administrative cultural or geographic differences, but they are concentrating on the profit differences on the labour costs and the capital(Block, et al., 2015). Extracting differences in the labour costs by doing outsourcing, and also offshoring is one of the most common forms of the arbitrage. This kind of strategy widely used in labour-intensive industries and in also used in the high technology industries such as garments and flat screen manufacturing industries respectively.
The economic arbitrage is not only limited to the labour cost differences, but also it considers the capital cost differences can also be one of the main sources of the opportunity.
Pfizer is the biggest multinational pharmaceutical company in the UK it is revenue earned from the Global establishedpharmacy products. Pfizer is committed to provide remedy and cure the diseases which impact the lives of the local area(Sharabati, et al., 2013).This shows that the Pfizer established arbitrage in its business model as because arbitrage focuses on exploiting and establishing the system in the different regions as per the requirements of that area which ultimately creates profits for the business.
GlaxoSmithKline has delivered a good level of growth and has increased contribution from the Healthcare and Vaccine divisions of the consumer GlaxoSmithKline’s sensible strategy helps to support the overall profitability of the company. This shows the application of the arbitrage theory in their business as because the arbitrage strategies which directly do not connect with the administrative cultural or geographic differences but they are concentrating on the profit differences on the labour costs and the capital(Claver-Cortés, et al., 2012).
The key strategy of the Honda is to build a stable product portfolio by maintaining various arbitrage factor of the economy so that the company can be able to maximise its profitability and also exploring the growth opportunities(Claver-Cortés, et al., 2012). For this Honda continuously maintaining operational efficiency and also aggressively expand the customer reach services.
Toyota is the largest car company which focuses on the innovation as per the present technology requirement of the customer by improving efficiency in its business model. Toyota implemented Arbitrage theory in its business strategy for the future growth(Block, et al., 2015).
The Financial statement of the company is considered as one of the useful guides for indicating which “A” strategies will have the highest potential for creating value globally. Firms which greatly have faith on the branding and for that do huge advertisement such as industries related to the car, mostly required to engage adaptation to the local market
Likewise, pharmaceutical firms who do a huge R& D may requireimproving the scale of economic as because many R & D expenditure are fixed in nature. The exact strategy of “A”, chosen by the company, will emphasise will depend upon the history of globalisation.
As discussed above AAA framework propose three broad concepts for the global value creation. Adaptation strategies look forward to increasing revenue and market share by cutting one or more element of a business model of the company which go withrequirements and the preference of the local. Aggregationapproach is concentrating onachieving thescale of economies or scope by regional creating or global efficiencies;they usually involve for standardising animportant portion of the value proposal and grouping together development and production processes. Arbitrageis about extracting economic or dissimilarity between regional or national markets, generally by establishingvariouselements of the supply sequence in variousplaces.Pharmaceutical industries, as well as the car industries,are taking consideration of all these strategies of the “AAA” framework according to their type and the requirement of the industries.
Block, J. H., Kohn, K., Miller, D. & Ullrich, K., 2015. Necessity entrepreneurship and competitive strategy. Small Business Economics, 44(1), pp. 37-54.
Claver-Cortés, E., Pertusa-Ortega, E. M. & Molina-Azorín, J. F., 2012. Characteristics of organizational structure relating to hybrid competitive strategy: Implications for performance. Journal of Business Research, 65(7), pp. 993-1002.
Jha, S., Dhanaraj, C. & Krishnan, R., 2014. MNE R&D in Emerging Markets: Arbitrage, Adaptation & Aggregation in Global Innovation Networks. New York, Academy of Management.
Mauri, A. J. & Figueiredo, J. N. d., 2012. Strategic Patterns of Internationalization and Performance Variability: Effects of US-Based MNC Cross-Border Dispersion, Integration, and Outsourcing. Journal of International Management, 18(1), pp. 38-51.
Salunke, S., Weerawardena, J. & McColl-Kennedy, J. R., 2011. Towards a model of dynamic capabilities in innovation-based competitive strategy: Insights from project-oriented service firms. Industrial Marketing Management, 40(8), pp. 1251-1263.
Santos-Vijande, M. L., Sánchez, J. Á. L. & Trespalacios, J. A., 2012. How organizational learning affects a firm’s flexibility, competitive strategy, and performance. Journal of Business Research, 65(8), pp. 1079-1089.
Sharabati, A. A.-A., Nour, I. A.-N. & Shamari, S. N., 2013. The Impact of Intellectual Capital on Jordanian Telecommunication Companies’ Business Performance. American Academic & Scholarly Research Journal, 5(3), pp. 32-46.
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