The organization
Discuss About The Dynamic Capabilities Strategic Management.
Marketing strategy is generally a long-term and forward-oriented scheme that is intended to design a game plan for the business organization in reaching out to the people and making them prospective customers of the service or product that they offer. The fundamental purpose of a marketing strategy is to achieve a competitive and sustainable advantage. The marketing will help the business organization in identifying the target markets as well as the value proposition that can be offered on the basis of analyzing the best market opportunities. It also involves the vital marketing information and also the information regarding the intended customers and other elements that are high-level. All these are intended to improve the value proposition of the business organization (Arnould & Wallendorf, 2014).
A strategic business unit (SBU) is a unit of a business that is fully functional and has got its individual direction as well as vision. It generally carries out its operations as a separate identity and is very vital to any department of an organization. It is in charge of a given range of activities or products. It gives a report to the main headquarters of the organization about the status of its operations. In most cases, it is large enough to have its own support functions that enable it to carry out its duties efficiently. A strategic business unit brings a number of benefits to an organization and has therefore in many cases been adopted by many business organizations and other large companies (Barney & Hesterly, 2010).
This article discusses the roles that a strategic business unit performs to an organization as well as the requirements for implementing a better and achievable marketing strategy. A specific organization will be picked to help discuss these factors and their influences on the organization.
The organization selected for this study is the LG Electronics Australia Pty Limited Company. This company deals with all household electrical appliances, mobile communication handsets and information systems equipment within Australia. They sell mobile phones such as tablets, smartphones, smartwatches as well as other mobile phone accessories; television and home entertainment systems that include home theatre and audio systems, Blu-ray players and DVD players; and home appliances such as fridges, kitchen appliances, dishwashers, washing machines, vacuum cleaners etc. all these products are produced at different units within the organisation. Each unit that produces each category of items operates under different strategic business units that operate differently as separate entities in charge of manufacturing the specific product that they are involved with (Pearce et al, 2014).
The strategic business unit (SBU)
From this organization, we select the mobile phones and accessories as our strategic business unit within this organization that is able to operate as a separate entity as well as makes decisions on how to manage the products and services that they deal with. In this case, this strategic business unit deals with the manufacture and sales of all mobile related accessories. This business unit has been operational for over three decades within the country to provide mobile phones and related accessories and has never disappointed. They manufacture and sell mobile phones, such as smartphones, wearables, and smartwatches, tablets, mobile phones batteries, chargers, earphones etc. This business unit is therefore responsible for determining its own marketing strategy that will enable the product that it handles to meet its intended recipients as well as meet the main objectives of the organizations (Burgelman et al, 2008). This specific business unit is able to exercise responsibility as one of the foremost roles of SBU. It also enhances accountability, accountancy, independence, and efficient funds allocation since this unit will be operating on its own.
The main marketing strategies that are involved in this strategic business unit is all about allowing a better interaction with the customers as well as also getting the employees involved. The strategies are important in creating a lead magnet that will ensure that the product reaches the intended users at an impressive rate (Cavusgil & Zou, 2011). The most commonly used way of making an interaction with the customers is through the social and mainstream media. This business unit has the ability to be built and hence thrive solely on the foundation of social and mainstream media. At this point, the employers will also be involved in the promotion of the products that this unit deals within the most common social media sites such as Facebook, snapchat, twitter, Instagram etc. this also enables them to reach out to other already successful business enterprises and other potential customers that are maybe looking for similar products in order to purchase (Clark, 2012).In any given SBU, it is important to note that the most vital aspect is to be able to provide answers to the following questions; what differentiates the product of your company from other potential competitors? What value does your institution provide and how important it is in comparison to other available alternatives? These questions are in relation to the competitive positioning strategy. The competitive marketing strategies for this given SBU include the following;
The marketing strategy direction
Market profile- this strategy involves the size of the market, the range of competitors within the market as well as the state of growth. The strategic business unit selected targets the larger Australia nation since mobile phones are currently used by all individuals worldwide. Being that mobile phones are commonly used, there are also a number of companies that are also involved in the business hence the competition level is very high.
Competitive analysis- this strategy makes an analysis of the weaknesses, strengths, threats as well as the opportunities that are available in the landscape. Once the strengths and opportunities have been clearly analyzed, the business unit makes a decision on where to make an investment as well as the areas that need improvements in order to meet their objectives and also meet more customers hence outdoing their competitors. During this stage, the possible threats are also assessed and possible recommendations on how to make adjustments are made (Covin & Slevin, 2008).
Positioning strategy- this strategy is concerned with how the business unit will position whatever it offers in order to focus on the opportunities that are available in the market. This strategy is very vital since it determines whether the SBU will be able to grab the available opportunities available in the market in order to ensure that they reap highly from those opportunities.
Once a better competitive positioning strategy has been achieved, it is important to develop an effective brand strategy that will help the business unit to communicate its positioning as well as solidify its value each and every time it gets to the market. These two strategies will form a great part when building the foundations for the business (Cravens & Piercy, 2014).
The SBU will be able to offer a one of a kind offering that the market requires and also bring a bigger and noticeable differentiation as compared to other competitors in the market.
The market will be able to know the company’s name as well as associate it with the product that it is providing to the market or that one product that it has been known for. In this case, the one product that this SBU will be known for is only quality mobile phones and accessories. This helps build a company’s name and brand (Day & Day, 2008).
The SBU will be able to make a continuous delivery of the product it deals with such that it is able to continue winning the mindshare in the market as well as defend the SBU own tuff thus influence the market.
Competitive positioning strategy
These are tools that help a business organization to have a clear understanding of the competitive environment, recognize the options that are open to the organization, set the right the strategic priorities, deliver the strategy and finally put an intelligent work on vital areas such as marketing, purchasing and other organizational operations (Fornell & Wernerfelt, 2011). These tools may include a combination of both tangible and intangible techniques that are used to make a formulation of a marketing strategy and also put to use the tactics. The following tools are as discussed below;
- SWOT analysis
Carrying out a SWOT analysis involves collecting and portraying information and details about both the external and internal determinants that could have an influence on the business. This analytical tool is commonly used during the process of strategic planning. It is intended to identify and make a timely priority of the strengths, weaknesses, opportunities as well as strengths of any organization (Grönroos, 2015). It is also a framework that assists the managers of any organization to make a synthesis of the insights that are obtained after carrying out an internal analysis of the strengths and weaknesses of the organization in relation to those derived from analyzing the possible external threats and opportunities.
SWOT is basically an acronym that stands for the following;
Strengths- this includes those factors that put the company a notch higher in comparison to other competitors.
Weaknesses- this involves all the factors can be considered dangerous whenever they are used against the firm by other competitors in the market.
Opportunities- it is all about the situations that are considered favorable to the organization and that can be used to bring a competitive advantage over other competitors.
Threats- it includes the situations or conditions that are considered unfavorable and that can affect the normal operations of a business enterprise in a negative manner.
Strengths and weaknesses influence the internal operation of a company and are able to be managed directly by the company (Hitt et al, 2012). On the other hand, opportunities and threats are generally external and therefore little can be done by the company to regulate or control them. This means they can only make anticipations and then react to them. SWOT analysis is generally simple and has a value of focusing on the vital issues that can affect the organization. This, therefore, makes it a common and widely used tool.
The SWOT tool is generally practical to use and also simple to carry out.
Benefits of competitive positioning strategy
It is also very easy and clear to understand.
The tool focuses on very vital internal and external factors that affect the organization.
It is very helpful when identifying the future goals and objectives that an organization would wish to achieve (Schmitt & Simonson, 2008).
This tool is also helpful when there is need to initiate further and detailed analysis.
- Porter’s five forces
This is an analysis tool that makes use of the five main industry forces in order to recognize the competitive intensity in a given industry as well as its level of profitability (Howard, 2009). Its development was purposefully to determine how the five vital competitive forces have an influence on the industry. These five forces were identified as follows; Industry rivalry, threat of substitutes, bargaining power of employees, bargaining power of buyers and threat of entry.
The above forces influence the structure of an industry as well as the competition levels available in that industry. The profitability levels depend on how weak the competitive forces are in the industry, that is, the weaker the competitive forces, the higher the profits realized by the organization. Categorization of industry competitiveness and the profitability levels can be done as follows (Jain, 2010).
High entry barriers, low competition, suppliers have weak bargaining powers, buyers have weak bargaining power and there is few or no substitute services or products.
This type of industry often leads to high profits
Unattractive industry
Low entry barriers, very intense competition, there is a lot of substitute services or products, the buyers have a strong bargaining power and the suppliers have a strong bargaining power.
This tool is important to a business unit in the formulation of an organizations strategy since it depicts how influencing each of the five vital forces is in a given industry. The five forces and their influences are as discussed below.
The threat of new entrants
This is a force that makes a determination of how easy it is to make an entry to given industry. In an industry that has few entry barriers and is of high profit, the chances of having intense rivalry are increased (Jain, 2009). In situations where more companies compete for the same market share, the profits will begin to reduce. The possible threats that new entrants to an industry may face include the following;
Low required amount of capital to enter an industry
Lack of government regulation
Little retaliation from the existing companies
Nearly identical products
Easily achievable economies of scale
Suppliers bargaining power
In situations of strong suppliers bargaining power, the suppliers will be able to make sales at high prices and with low quality. An organization will, therefore, have to pay more to acquire the products. The suppliers bargaining power is increased when; Suppliers have scarce resources, there are many buyers with few suppliers, the costs of changing raw materials are high and when there are little substitute raw materials.
Stronger bargaining power allows buyers to ask for lower prices and high-quality products form the producers (Teece et al, 2010). The lower prices will translate to little revenue for the producer whereas the high-quality products will increase the costs of production hence a reduction in the profits for the producers. The buyers bargaining power is improved when; there are few buyers, many substitutes exist, buyers are sensitive to the prices and the costs of switching to other suppliers are low.
Threat of substitutes
This force is mostly felt when the buyers are able to find substitute products or services at very affordable prices and improved quality. It also occurs when the buyers are able to switch from one product to another with very little costs involved. For example in the case of the selected SBU, the chances of a buyer switching from LG manufactured mobile phones to say Samsung manufactured mobile phones is easily attainable and will not cost the buyer anything (Ulaga & Chacour, 2015).
This is the main force that will determine whether the industry will be competitive and profitable it will be. In an industry that is competitive, the companies will also have to aggressively compete for a market share that thus leads to reduced profits. The rivalry is likely to be intense when; there are high exit barriers, there is slow industry growth, there is reduction in customer loyalty, there are several competitors and when the products have substitutes are not easily differentiated.
To make use of this tool, the SBU needs to gather information on each of these forces then make an analysis of the results. They should then be able to formulate strategies that are in relation to the conclusions (Van et al, 2013).
Several marketing teams always find it difficult to get the correct strategy that will market their products. The above findings have several different impacts on the strategic marketing strategy in relation to the planning and implementation. Better marketing tools and strategies will help the organizations carry out their activities more efficiently and effectively. The tools that were discussed above will enable any prospective organization to have a clear picture of the competitive environment that they intend to move into and what necessary strategic priorities should they put in place in order to ensure that overcome the competition and thus achieve the company’s goals. Marketing is one vital strategy that has to be carefully discussed before selecting the best strategy to adopt. The SWOT tool will help the SBU to identify the potential strengths and opportunities that they can build on to ensure that the mobile phones and accessories that they avail to the buyers will meet their specifications and therefore outdo other competitors that offer the same product. An analysis of the potential threats and weaknesses is also done and this will enable the SBU to develop better ways of handling them whenever they arise (Varadarajan & Menon, 2011).
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