MCR008: Corporate Strategy Assessment Answer

How can industry attractiveness be determined using a “five forces analysis”?

Industry attractiveness can be determined using Porters five forces analysis. It is essential to have a solid understanding of the level of competition that exists in the intended market in order to successfully sell a product or service. When looking at competitors, marketers are able to determine the most effective approach to position their own products in the market and discover competitive advantages that can have a significant impact on the audience they are trying to reach. The Porter's Five Forces model has a significant influence on the process through which businesses develop their business strategy. It is much simpler to examine the competitive landscape from the perspective of the customer when using this way of studying competitive strategy, since it allows one to do so more objectively. This technology was initially utilized in the industrial sector; however, it is currently utilized in a broad variety of industries, including, amongst others, the financial services sector and the high technology sector (Isabelle et al,. 2020)

For example, the industry attractiveness of the automobile industry is as follows:-

Bargaining Power of Buyers- The large number of customers in the automotive industry, which includes both dealers and specific consumers, has the power to push prices down or increase demand for higher-quality products.  Consumers can move quickly and cheaply from one car shop to another to find the best deal. When there are more competing vehicle businesses in the same field, buyers have more options to choose from, which gives them more negotiating power, especially with direct customers. Still, since dealerships buy a lot of cars straight from automakers, a drop in buying volume can have a big effect on automakers' stock and finances. This can be explained by the fact that retailers buy a lot of cars directly from automakers. Overall, it doesn't have much of an effect on how much customers can spend.

Bargaining power of Sellers:- The auto industry relies on so many small firms as suppliers that these suppliers have less leverage in contract negotiations. Only a small number of them can be considered major players. These characteristics of the first set of suppliers explain why forward integration poses no threat. These service providers must adhere to the guidelines set forth by the OEMs. BMW, Ford, Toyota, and Volkswagen are very influential due to the abundance of suppliers and raw materials available to them. As a result, the bargaining position of sellers is significantly weakened.

Threat of New competitors- Tesla has emerged as a prominent player in the automotive industry, and its pioneering strategies have significantly impacted the trajectory of the sector. The company emerged as a novel contender originating from the technology sector.

Rivalry from competitors- Having a lot of rivals who are about the same size and strength is a big factor that makes competition fiercer. Strategy is the main thing that drives corporate leaders to make the most money possible. Because competitors have different strategies and personalities, they often get into fights. Business leaders are determined to come up with new ideas that will help them fight and stay ahead of the competition (Thomas et al., 2021).

Threat of Substitutes- Even though there are other ways to get around, like buses and trains, none of them offer the same level of comfort, independence, speed, and cost-effectiveness as cars.

Assess the characteristics of strategic decisions when developing a global strategy in organisations.

Strategic management is predominantly concerned with the formulation and execution of strategic decisions. Not only is the process of making strategic decisions of the utmost significance, but it is also intrinsically difficult and intricate. Strategic decisions are primarily concerned with the scope of a business's operations. The nature of duties varies between businesses.

For example, Apple has worked on its strengths and opportunities and nullified its threats and weaknesses. Apple has worked for forty years to create a profitable market segment in the personal computing business by constantly changing and coming up with new ideas. They have set prices for their MacBook Airs and Pros that are much higher than those of their competitors. PESTLE model is an important criterion when developing a global strategy while entering into new markets. Apple has to ensure that it takes into consideration factors like political, economical, social, technological, legal and environmental while entering into new markets. When a business makes strategic decisions, its resources are placed at risk. These options may involve the acquisition of additional resources, the organization of others, or the repositioning of them. Strategic decisions necessitate the alignment of an organization's internal strengths and weaknesses with external threats and opportunities. There exist numerous advantages linked to the identification of a predetermined set of criteria that delineate the circumstances under which decisions are either advantageous or disadvantageous in the context of global strategy. One advantage is in the capacity to provide boundary constraints for particular theories. An inquiry might be made regarding the potential impact of variations in the global setting on the ideas pertaining to resource allocation, organization, and competitive advantage that have been formulated inside a singular local market. Another advantage is the enhanced capacity to test theoretical frameworks (Isabelle et al,. 2020) Another important model is VRIO Framework which can be used as an internal tool for the modern business organizations.

Apart from this, organizations are also required to implement BCG matrix before making any strategic decisions.  The main focus should be on the star products, which incur high market share and high growth. For example, in case of Apple, such product is their iphone and ipad. On the other hand, its cash cows are its I-watch. Certain businesses specialize in a single area of operation, while others engage in a variety of endeavors. When formulating strategic decisions, the scope of an organization's activities is considered. Aligning an organization's actions with its internal and external environments constitutes strategy. The firm's strategic decisions have significant implications for resource allocation.

Typically, a company's strategic approach should be based on maximizing its extant resources and competencies. Consequently, businesses look for opportunities within their immediate environment that align with their available resources. Strategic decision-makers' outlooks and goals, in addition to external factors and available resources, can shape the organization's overall approach. The managing director, general managers, and other strategists are all capable of formulating long-term strategies. The goals and scope of a strategy are heavily influenced by the ideals and expectations of its creators. The future of a company can be drastically altered by strategic choices. Making plans to carry out the company's stated goals and ensure the success of the business in the future.

Assess the Strategic Options that ABL have used to Achieve Growth

There are many strategic options which ABL have used to achieve growth. The options used for analysing a company's external environment in order to identify potential opportunities and threats are PESTEL analysis, and Porter's five forces analysis.  In order to perform a comprehensive internal analysis, it is imperative for a corporation to commence by conducting a Porters value chain analysis. Subsequently, the focus should shift towards scrutinizing the value chain.  Every component inside the value chain has the potential to either generate or diminish value. When an organization undertakes an internal analysis, its objective is to ascertain its areas of competence and identify areas that require improvement. This process enables the organization ABL to make more informed judgments regarding the strategic directions it should pursue.

Using the framework of Porter's Value Chain and VRIO Framework, businesses can determine which of their processes create value and which do not. In the value chain, there are two distinct types of activities: primary activities and support activities. An organization divides its internal processes into distinct tasks that can be evaluated based on how effectively they create value and give the business a competitive advantage in order to measure performance (Tien,2022). ABL has implemented its strategic options by using these frameworks.

Another strategic tool is BCG matrix. The BCG matrix is a conceptual framework that is used for the purpose of analysing a company's product portfolio in order to facilitate the formation of long-term strategic plans. This evaluation is carried out with the objective of improving overall business operations. The matrix makes it easier to pinpoint innovative paths for growth within companies and provides assistance in identifying the most effective investment plans for future initiatives. This makes the matrix an invaluable tool. A great number of companies offer a wide variety of products, however some of those things generate significantly bigger earnings than the others. This tactic has been utilized by the corporation ABL in their pursuit of the impacts that volume and experience have to offer. It makes predictions about the actions that an organization will do in the future. Consequently, the firm is in a position to decide the management strategy that is most suitable for it.

Evaluate the competitive environment of the organisation.

The competitive environment of ABL can be evaluated with the help of Porters Five forces model.

Bargaining power of Buyers:- ABL has grown in Brazil France and Canada. Therefore, it is expected that the bargaining power of buyers will be low.

Bargaining Power of Suppliers- The supplier's bargaining power will also be low. ABL currently employs over 15,000 people and conducts business in more than 50 countries. The expert team is currently engaged in a wide variety of global projects Vendors have an effect on other people in the business because they can change the quality and price of goods and services. Companies can raise or lower prices, or they can improve or lower the quality of the things they sell. Companies' ability to make money is hurt by sellers who have a lot of power and raise the costs of buying things (Kızıldağ & Uğurlu, 2023).

Threat of Substitutes- Threat of substitutes will be moderate as it is not easy to implement the strategic options implemented by the company ABL. The group uses strategic project planning, management, and execution to guide clients toward environmentally friendly solutions. ABL's expansion has occurred organically as a result of the company's astute hiring of more experts in a wide variety of sectors. The company expanded through strategic mergers and acquisitions. Strategic alliances have been formed by the participants. A strategy for expanding into other countries has been implemented.

Threat of New competitors- Threat from new competitors will be high, as ABL is planning to expand in Japan. Local companies can pose a new threat for the company. . Among them include finance, infrastructure, health care, education, communication, and environmental concerns. Each task at ABL requires a unique set of expertise from the company's specialists. Environmental protection, waste reduction, and recycling are just a few examples of how this group puts its resources to use.

Rivalry from competitors- Rivalry from competitors will be high, as the company has its presence in many new countries. This information can be used by businesses to evaluate the opportunities and threats they face in the future. Improving a product's quality while keeping the price the same may raise demand from customers, leading to more purchases. The availability of several sources for raw materials promotes competitive input costs, resulting in cheaper production.

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