Business Strategy Analysis
Business Strategy Analysis
Strategic management is the craft, science and art of formulation; implementation and evaluation of cross functional decisions critical to enabling an organization achieve its long term goals and objectives (Sakas,Vlachos ; Nasiopoulos, 2014). Ideally, strategic management entails specification of an organization’s vision, mission and objectives and outlines the policies and plans put in place so as to achieve the set objectives. Key to strategic management is the coordination and integration of the activities of the different functional units of an organization in order to effectively and efficiently achieves the long- term organizational objectives.
Strategy analysis gives room for critically looking at the competitive and environmental context within which an organization operates which in turn helps in designing and formulating reasonable and practical recommendations which can enable the organization to position itself in the market (Grant, 2016). There are different tools which strategic thinkers use to analyze business strategies. Some of these frameworks include value chain, Blue Ocean, Five Forces, SWOT and Four Corners. This paper uses the Blue Ocean Strategy framework to analyze the business strategy for Coca Cola Company, Toyota Motors and Ale Inc. The following strategies for each company will be analyzed marketing strategy, competitive strategy and the corporate strategy.
Blue Ocean Strategic Framework
Blue Ocean is a powerful strategic analysis framework which requires businesses to go beyond the traditional way of competing. This strategy was introduced by Chan Kim and Renee Mauborgne. According to this framework, although the traditional competition based strategies traditionally used by companies are necessary, they are not enough to sustain the desired performance (Grant, 2016). As a result, there is a need for companies to go beyond competing for the available markets. To achieve growth opportunities and new profits, organizations should create blue oceans. A blue ocean is a new and uncontested market that makes competitors and hence competition irrelevant Kim, W. C., & Mauborgne, R. A. (2014. According to this framework, an organization can eliminate competition by creating a market space of its own, a market space that is uncontested. This will lead to creation of new value chain and deceasing cost.
Coca Cola Strategy Analysis
With its headquarters located in Atlanta, Georgia, Coca Cola is the leading brand in the beverages industry. Incorporated in Wilmington, Delaware, the company is a multinational beverage corporation, a manufacturer, marketer and retailer of non-alcoholic beverages and syrup. Its flagship product, Coca-Cola was invented in 1886. The formula for this product was later sold in 1889 to Asa Griggs who later incorporated the company. Currently, the company sells its products in more than 200 countries globally (Coca-Cola Company, 2017). Significant umber products currently offered by Coca Cola have been added to the company’s product line through acquisitions. For instance, Minute Maid was acquired by Coca Cola in 1960. Thums Up was also acquired by the company in 1963. Since 1920, the company’s stocks have been traded in the stock markets. Currently, the company’s stocks are traded in the New York Stock exchange. As of may 2017, James Quincey was the Chief Executive Officer and the president for Coca Cola Company (Coca-Cola Company, 2017). Muhtar Kent was the company’s Chairman of the Board. Coca Cola and its subsidiaries produce syrup concentrate. This concentrate is then sold to various bottlers who are located in different parts of the world. These bottlers then produce the end product which is packaged in cans and bottles and sold to the end consumers.
Coca Cola prides itself in key success factors encompassed in its operations. Some of these success factors include the capacity to effectively introduce prices which are competitive, wide range of products, extensive and effective distribution channels and global operational system. Recently, the company has been forced to operate under intense competitive pressures especially due to the competition witnessed from other companies, significantly PepsiCo. However, in most of the developing nations, the brand is still predominant. The company has not been able to effectively penetrate into China and in the Middle East due to continued domination by PepsiCo.
Coca Cola Market/Industry Strategy
Coca Cola offers products which are sensitive to the disposable incomes of its consumers. In most markets, the consumers have viewed the products offered by Coca Cola as inexpensive. This has given the company an edge to even penetrate more markets. Additionally, the marketing strategy of the company has been boosted significantly by the increase in disposable income of consumers in most of its markets. The impact of this has been rise in purchases towards things such as soft drinks. As the worked continues to go through final crisis, Coca Cola has introduced marketing measures which are geared towards adjusting the prices of its products so as to favor the current conditions. The rice adjustment strategy has enabled the company to Counter the effects of inflation and rise in costs of living.
Advancement in technology has also favored Coca Cola in its marketing strategy. As technology advances, the world is changing to a global village. Business communication has been made easier and more effective through the use of online platforms. These online platforms also favor Coca Cola products in the sense that most of these platforms are used by the young population who are more prone to purchasing soft drinks (Coca-Cola Company, 2017). The powerful brand of Coca Cola has become a selling point for the companies and bottlers affiliated to Coca Cola. Effective communications boosted by technological advancements have ensured that adverts as well as promotional materials are known and hence lacing the company at a better position to grow. Technological advancements and new communication platforms can significantly help Coca Cola to create new uncontested markets (Blue Oceans). This can happen though reframing of its promotional messages to target the young people and the untapped markets.
As a way of marketing its products, Coca Cola has embraced distribution channels which include the use of bottling companies, sales agents and merchandisers. These distribution channels have ensured that the products offered by coca cola reach the customers at their convenience and at the right time. As a distribution strategy, Coca Cola has also used retailers such as supermarkets to conveniently make their products accessible to their consumers. Brand Loyalty has also helped the company in increasing its profitability as well as expanding its market share. The distribution strategy used by coca cola in its marketing strategy has largely focused on ensuring that their consumers get their products when and where they need them. Through this, the company has been able to create unique taste among its consumers compared to its key competitors. Through this the company can effectively create Blue Oceans especially in the new markets where its competitors have not yet penetrated.
Coca Cola Competitive Strategy
Coca Cola competes with other companies such as PepsiCo in the non-alcoholic segment of the beverages industry. This segment is quite competitive, consisting of a number of firms. Competitive products offered by Coca Cola to its consumers include sparkling beverages, Juices and fruit drinks, energy drinks and functional drinks. Most of these products are sold in ready to drink form to the consumers. Other than PepsiCo, other competitors of Coca Cola include Nestlé, Unilever and Kraft Foods. In most countries, the company also competes with retailers who have made their own labels of soft drinks.
Coca Cola has opted to use the Hybrid competitive strategy where the company maintains its prices but at the same time tries to act differently from its competitors (Coca-Cola Company, 2017). So as to deal effectively with the rising competition, Coca Cola has utilized the marketing mix encompassing pricing, sales promotions, advertising, product innovation and trade mark development. The annual marketing budgets of the company have been increased significantly. Marketing programs and campaigns are geared towards ensuring that the Coca Cola brand still remains the referred brand among its consumers. Further, the company has continued to launch new products which are of highly quality. Through the use of global franchise networks, Coca Cola has been able to ensure that its products are accessible to its consumers when and where they need them. This has been a major boost to the company in retaining and even increasing its market base. Further, the company has come up with good company objectives which have created a competitive edge in the market place. Some of these objectives include creation of effective partnerships, customer satisfaction programs and valuable share holding.
While most of the competitive strategies employed by Coca Cola have not been geared towards creating Blue Oceans, some of them can be instrumental in creating unique uncontested markets. For instance, the company has created a wide product range, with some of the products having exclusive production rights. For instance, the Coca Cola product which is the leading brand in Coca Cola has exclusive production rights hence cutting competition significantly, Further, creation of Blue Oceans is also made possible through additions of products to the company’s product line. Product filling strategy employed by the Coca Cola Company has been responsible for this mile stone. By adding new products to the company’s product line, the company is able to satisfy the needs of its customers, increase its products and increase the capacity of the company. Further, the acquisition strategy which the company has used often to increase its product base has been instrumental in reducing competition significantly. Once the company acquires a competing brand, it can improve on the product hence creating a blue ocean.
Despite the mounting competitive pressures, Coca Cola has continued to maintain ethical competitive advertising behaviors. Significantly, the company’s culture to produce quality products though out time has been commendable. Further, the Coca Cola has been engaging itself in community social responsibility programs such as volunteer services to the community. These programs have helped the company to brand and position itself in the market. For instance, Coca Cola has embraced a social strategy on water stewardship where it has focused on ensuring that the communities have access to clean drinking water.
Coca Cola Corporate Strategy
The success of Coca Cola in most parts of the world is an indication of a strong corporate governance and sound corporate strategy employed by the company management. The market leadership enjoyed by the company is deeply rooted on the capability of the company to effectively and timely react to the changes in the market dynamics. An organization’s ability to dominate a given market does not always emanate from the number of years it has existed existence in the market bit rather its ability to make wise moves (Coca-Cola Company, 2017). These moves have been evident in cola’s strategy. For instance, concentration on Fanta and Sprite has definitely paid off. Earlier on when investing in the beverage was restricted, coca cola formed partnerships with government bodies. Later on, the company joined with other ventures. The strategic partnerships formed with these ventures helped the company position itself for the futures. The company’s strategy in forming partnerships with bottlers has served in helping the company achieve its critical goals in marketing hence increase in profitably.
Since the bottling partners are in direct engagement with the final consumers, the company can get real time feedbacks which are critical to improving the products offered by the company. As a result, the company can create new products which address the needs of the specific consumers. Through this, the company is able to create Blue Oceans especially in markets where Coca Cola’s main competitors have not yet reached. Additionally, the company has a clear vision and a mission that inspires all its stakeholders in going an extra mile to achieve the desired corporate objectives. This is an important corporate strategy that the company has employed and that has been significant in the success witnessed at Coca Cola.
Recommendation for Strategic Value Innovation
The market for Coca Cola Products can be improved significantly due to the recent changes in demographics in most countries especially in Africa. Consumption of Soft Drinks and beverages is inversely related to age. This means that the young people consume soft drinks more than the older people. In most countries, the population of young people is increasing. The marketing strategy for Coca Cola to use celebrity advertising in most of these countries aims at taping this increasing market. From the perspective of the Blue Ocean framework, this has been working. Coca Cola can create an uncontested market in the young population through the use of advertising messages which target the young population.
Apple Inc. Strategy Analysis
With its headquarters in Cupertino, California, Apple Inc is an American Multinational company that is engaged in the design, development and sale of consumer electronics, software and other online services. The major brads of the company include iPhone Smart phones, iPod media player, Mac Computers and iPad tablets, and Apple smart watch among others. The company is among the fastest growing organizations in the world. The company operates in the consumer electronics industry (Apple Inc, 2017). In this industry, the company has operated in three major segments which include the computer segment, smart phones segment and the media player segment. One of the key attributes behind the company’s success is its ability to deliver innovative, cutting edge and creative consumer electronics to the markets at a premium price. Apple Inc was founded by Steve Jobs, Ronald Wayne and Steve Wozniak in 1976. The company was later incorporated in 1977.
Apple Inc Market/Industry Strategy
Apple Inc has continued to create competitive advantage in the market through the formulation of a number of marketing strategies. One of these strategies is the use of product strategy. Currently, the product strategy used by Apple Inc is at the centre of its marketing strategy. Further, this strategy has become the company’s main basis for competitive advantage. Development of highly intuitive and user friendly products is one of the key reasons behind the success of the company’s products compared to its competitors. Additionally, the simplicity and uniformity in the designs of these products have contributed to the success of the company’s brand. Innovative features, premium user experiences as well as special design considerations have also added on the creation of a competitive advantage of the company’s competitors (Apple Inc, 2017). Most of these products offered by Apple Inc are not original but just a development of some old products. For instance, there existed ultra thin laptops before the introduction of the MacBook air computers. Similarly, the portable media player existed even before the introduction of the iPod. Smart phones also existed way before the company introduced the iPhones and iPads. However, these products have outdone most of their predecessors because of the innovativeness ad uniqueness that these products offer. Additionally, user experience has been key in making the Products a success.
Another key marketing strategy employed by Apple Inc is through the use of premium marketing strategy. Through this, the company has been able to maintain its brand image. Relatively, the products offered by Apple Inc are expensive compared to its competitors. For instance, the price of an iPhone can be twice or three times the price of a comparative android Smartphone. The premium pricing is used by the company as a marketing strategy. The high prices are used as a show of brand superiority (Apple Inc, 2017). This pricing strategy can be used by Apple Inc to create unique products which are uncontested in the market place hence creation of a Blue Ocean.
Apple Inc Competitive Strategy
Apple Inc has formulated a number of strategies aimed at creating competitive advantage over its competitors. One of the key strategies employed by company is the use of product differentiation in the functionality and design of its products. Apple Inc has integrated advanced features and capabilities in its products. These features and product capabilities have acted as a basis for competitive advantage (Hitt, Ireland & Hoskisson, 2012). Concentration of producing products which meet the customer expectations while doing away with the undesirable qualities has significantly helped Apple Inc in creating a competitive advantage over its competitors. The pricing strategy used by Apple Inc has also been useful in helping its products stand out when compared to the ones offered by its competitors. Devices and software produced by Apple Inc sync and work well with each other. Additionally, applications are able to work together on multiple devices. The differentiation strategy employed by Apple Inc as a way of dealing with its competitors has helped the company in creating products which are superior compared to its competitors hence becoming Blue Oceans.
Apple Inc Corporate Strategy
Designing and developing products which surpass the expectations of their consumers is at the core of the organization’s corporate strategy. Apple employs a proactive and retroactive approach in its product strategy as a way of creating a competitive advantage. Through this, the company develops most of its products based on some existing products of its competitors. However, Apple improves these products by adding differentiating features and removing the features which are undesirable and the ones which are not user friendly. The result of this is that the products produced now appear new and more innovative but still familiar. In the light of the Blue Ocean Framework, Apple Inc has used its product strategy and incorporated it in its market strategy to create products which are unique hence eliminating competition significantly (Hitt, Ireland ; Hoskisson, 2012). Apple also employs constrained diversification in its corporate strategy. The business utilizes its competencies in developing both hardware and software. Apple’s strategy to control both software and hardware is defiantly a crucial feature in enabling it to offer quality uncontested products in the market place hence the creation of Blue Oceans.
Social Responsibility in Competitive Strategy
In its competitive strategies, Apple Inc has embraced ethical and social responsible strategies when dealing with its competitors. Most of the competitive strategies the company has embraced focus on designing and integrating unique features which can differentiate its products from that of its competitors. Additionally, the company has continuously improved the quality of its products regardless of the increasing competition in the industry.
Recommendation for Strategic Value Innovation
The strategy used by Apple Inc can be improved. For instance, some of the services offered at a premium price should be integrated into the company’s devices and offered freely to the customers. A good example of these services is the MobileMe which is a service that is used to keep contact, emails and calendars. The argument behind this recommendation is that a customer happily using the service across the devices offered by ale would mostly likely no switch to the products offered by the competitors. If Apple Inc makes use of this, competition on its services will greatly be reduced and hence crating of Blue Oceans can be created easily.
Toyota Motors Strategy Analysis
With its headquarters in Japan, Toyota Motor Corporation is the biggest automaker in the world. The company has close to 522 subsidiaries. The company was founded by Kiichiro Toyoda in the year 1937 as a spinoff from Toyota Industries owned by his father. Currently, Toyota Motors Corporation produces vehicles under five major bands which include the Toyota Brand, Lexus, Hino, Daihatsu and Ranz (Toyota Motors, 2017). Further, the company has continued to hold stakes in other companies such as Subaru and Isuzu. Akio Toyoda is the CEO of the company. In 2008, Toyota was declared as the number one automobile manufacturer and sales in the world. This was a start of a journey of success that the company would definitely achieve over the year and in future.
Toyota Marketing Strategy
Market segmentation and target market are the core pillars in Toyota’s marketing strategy. This strategy is based on the company’s philosophy that it should provide the “Right car in the Right Place” to its customers. Additionally, the company believes that this should be offered to the right person. Toyota uses both psychological segmentation and demographic segmentation to target its markets. In segmentation marketing, a company first chooses the kind of market to target and then positions itself to offer the products that this particular market needs. By doing market segmentation, a company concentrates on the specific and unique needs of the target market. In Toyota Motors, the market segmentation, market targeting and market positioning are also based on the ‘care’ that the company places on its users (Toyota Motors, 2017). As mentioned earlier, Toyota has resulted to using demographic setting and psychological setting as the main basis for its market segmentation and market positioning strategy.
With regard to demographic market segmentation, Toyota Motors subdivides its products for the large families and those with smaller families. For instance, the large family size and those of upper and middle-income group have been kept in consideration by the company. AS a result of this, the company has offered quality vehicles for this group. Such vehicles which target this particular group include Land Cruisers, Toyota Prado and Camry (Teece, Pisano ; Shuen, 1997). With regard to psychological segmentation, the company has also subdivided its products to focus on a particular group of people. For instance, the company produces certain vehicles which focus on the classy, high income earners and sporty people and other vehicles which focus on the people who really don’t care about class and the low-income earners. For instance, the Toyota Fortune and the Toyota Altis Sport Model focuses on the high class, sporty people.
Toyota Competitive Strategy
With the mounting pressure on competition, Toyota has been keen to ensure that it remains competitive. So as to achieve competitive advantage over its competitors, Toyota has created strategies touching an all business areas. Particularly, its marketing strategy which focuses on given market segmentation and market positioning has really helped the company in producing products which surpass the expectation of its customers. Through this, the company has been placed in a better position compared to its customers. For instance, Through the use of market segmentation, Toyota can easily increase its share market hence significantly growing its customers. Market segmentation is a useful marketing tool which the company can use to create Blue Oceans. This emanates from the fact that by doing market segmentation, the company can focus on producing certain vehicles which offer unique features and qualities to its clients hence eliminating competition in those given segments.
Toyota Corporate Strategy
Toyota has adopted one of the best management styles and business models in the world. The management culture at Toyota Motors is a steady one that has significantly transformed the company to a world class business. The corporate strategy used by Toyota Motors is pillared on the principle of cutting waste by significantly cutting down the total distance moved by things in between production plants (Dyer & Nobeoka, 2000). The company has set out a powerful mission statement that seeks to sustain its growth through the provision of an awesome customer experience and dealer support. Through this, the company management seeks to foster continuous improvement in its process. Therefore, the customers are satisfied with the products that get from Toyota hence placing the company in a position to create uncontested markets.
The company has also created a work culture that is aligned to the company’s strategic goals hence helping the organization to foster its journey of achieving its objectives. For instance, the company has instilled a culture of leadership within the organization. Managers are trained not to see themselves as bosses but rather as business process improvers. Further, the management at Toyota believes not only in making cars but rather in making the best cars which meet the expectations of their customers. As a result, the company has developed an overall corporate strategy that focuses on continuous process improvement which aims at achieving this goal. Through this culture, the company has tended to eliminate the competition in the Red Oceans but rather striving to create its own Blue Oceans.
Recommendation for Strategic Value Innovation
While Toyota has achieved significant success over the years to become the best automobile maker and seller in the world, there are still untapped markets that the company can focus on to increase its market share and its profitability as well. For instance, there is still a gain the developing world where people need quality vehicles but cheaper ones. Toyota Motors can take advantage of this to develop cheaper but high-quality vehicles. If this is done, competition in these countries can be eliminated significantly hence allowing the company to create new uncontested Blue Oceans.
Social Responsibility in Competitive Strategy
Toyota Motors can be commended for its strive to produce vehicles which take into consideration social welfare of the communities. For instance, as a competitive strategy, Toyota has been keen to produce environmentally friendly vehicles with high performance and fuel efficiently. Further, through the establishment of eco vehicle assessment centre, the company has been keen to develop competitive vehicles which electricity controlled (Toyota Motors, 2017). Through all these aspects, Toyota can be seen as a company that is highly concerned with the social welfare of its customers.
Strategic management entails specification of an organization’s vision, mission and objectives and outlines the policies and plans put in place so as to achieve the set objectives. Strategy analysis gives room for critically looking at the competitive and environmental context within which an organization operates which in turn helps in designing and formulating reasonable and practical recommendations which can enable the organization to position itself in the market. The paper has analyzed the marketing strategies, competitive strategies and the corporate strategies of Coca Cola Inc, Apple Inc and Toyota Motor Company. In doing so, the Blue Ocean framework has been used. This framework requires businesses to go beyond the traditional way of competing. From the analysis, all the three companies have tried to create Blue Oceans by creating products with unique features and qualities and which focus on specific needs of the customers. However, there is still a room for more strategic innovations which can help these companies in expanding their markets and increasing their profits as well.
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