Strategic Business Analysis
Discuss how market-led strategies can help businesses to drive growth and sustain competitive advantage, use examples from US, European and/or Far Eastern businesses. Market-led strategies are utilized by the organizations which are coming into the business and which have not got many assets and resources to be used. Most of the time market led strategies are used by young or service corporations. The market led- strategies function on the market or client requirements. Businesses attempt to offer the particular service appropriately to the customer’s needs and become a part of the arket.
According to Kotler (2008), the product/market expansion grid ( Figure 1) is a very essential device for the companies when following the market-led strategies. A very widespread opportunity for starting companies is the fact to penetrate the market by putting the current product to the current market segments. Another essential strategy for the company growth is the fact to put the customized product to the existing market known as a product development. Company can use the market development to grow the company or diversity by starting the new product and the market.
It is very important for the company to choose what strategy the company should go after. The market segmentation is an important concept that every organization have to understand and which offers the variability of the products.
There are various ways to segment the market and this is the reason that the company should choose the most useful way to achieve the success. The marketers consider that the segmentation of the market can increase the sales. Michael Porter (1980) introduced the model of sustaining competitive advantage by market-led strategies.
According to his model, there are three strategies such: cost eadership, differentiation or focus this is probable to sustain the competitive advantage (Graph 2,). On the other hand, some say that these strategies are doubtful.
As with Porter’s Generic Strategies, Bowman (1996) think about the competitive advantage in the relation to cost advantage or differentiation advantage . The ‘Strategy Clock’ is the other way to consider the companys competitive place to compare to the competitors. The ‘Strategy Clock model shows eight options which the company has got when observing cost management and service or product value.
When the necessities of market are changing the ‘Strategy Clock model is the suitable model to be examined. The companies have various options when using market led strategies to sustain the competitive advantage. An organisation might develop price-based advantage and it is essential to take into the consideration the segments where the low price is needed.
It is very important to work with the lower limits than the competitors do, while it is quite simple that everything can be copied by competitors and it might lead to the price war.
What is more, this strategy might ead to the situation when the company cannot follow the differentiation strategy in the further development. EasyJet (2007) is the example of the company which effectively used a positioning strategy by proposing the lower costs on a diversity areas of the business. EasyJet use the Internet as a way to communicate with customers and make particular deals which can save costs ot the call centres, the papers and the other extra services. EasyJet buy fuel indirectly by hedging investments. Most of destinations are made to Europe.
These actions make that EasyJet is one of the unbeaten company among different airlines. It is crucial that a company is aware of the changes in the market and be able to come across with its needs. Other issue is the fact that when using the price base strategy the prices have to be adaptable to the competition. A hybrid strategy has been implemented by Ikea (IKEA website). The IKEA’s positioning statement declares: “Your partner in better living.
We do our part, you do yours. Together we save money”. The IKEA concept shows that they build a very strong relation with the customers.
What is more, IKEA wants their customers to be fully satisfied by low prices, being istinguished and exclusively designed furniture. By using the cheaper materials, cutting the production, distribution and retail costs the customers are ready for the prices which they have to pay for a product.
A growth of the company and sustain the competitive advantage due to the market-led les strategies is achievable, however it will depend on business environment and the companies will use different strategies from other companies.
Explain the arguments for and against the multiple forms of acquisition (as stated in the article) which can be used as the basis for a company’s strategy for entering merging markets. An emerging market economy offers large market for the consumer goods with a high growth potential. Moreover there are defined as high growth potential economies where the institutional framework is not clearly developed yet. One of the greatest ways of entering emerging markets are mergers and acquisitions. The purpose of this way is to enhance capacity fast, provides a direct access to networks and distribution channels etc.