How do these different approaches allow us to gain insights into the way successful organisations execute strategy?

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Case study 1: Metro Group

Metro Group is one of the leading retail and wholesale companies in the world. It operates in some business sectors involving self-service wholesale trade, hypermarket, consumer electronic stores, department store and online shopping. Metro Group conducts its business in over 33 countries across Europe, Asia and Africa. With all business activities, Metro Group always promote high standards of living and growth by creating economic, social value and environmental on behalf of customers, employees,  investors and society.

To strive for a sustained positive developments year by year, Metro has formed the foundation including 4 strategic focal points as position strategy (position school) of Metro in both domestic and international countries. They are named Transform, Grow, Improve, Expand and Innovate. Because of being a multinational corporation, all of these points Metro group takes account of local requirements in different countries. Transform strategy can leverage Metro’s strengths including adapting assortments to local demands, expanding own-brand assortment, focusing on  service activities and creating new sales channel. Grow strategy mentions Metro’s strengths in making targeted investment in new products, services and chosen investments in its sales divisions’ price level. Improve strategy regards how to increase its cost efficiency and cash flow. As permanent cost optimization, Metro can make in the creation of added value for its customers. By optimization of cash flow, it can create the founding source of its investments. Expand strategy means the excellent expansion of its presence in many countries it has eyed and done business such as the regions of European, Asia. Innovate strategy is the involvement of all customers’ requirements and Metro always considers them both opportunities and challenges facing up to. By leverage its strengths in tapping the broad expertise available in its group, Metro can continue to strengthen its innovation.

The following example of innovation strategy is an evidence of implementation of Metro position strategy. In electric consumer retailing market under the brand of REAL, Real has achieved its goals by joining in the growth of online shopping. With changes of customer shopping habits and behaviors, Real can offer them multi-channel strategy. In particular, Real has opened the online store with the assortments from 2,000 to more than 10,000 products available in the website of www.real-online.de. Customers can easily approach and shop through this online store. After receiving their orders placed, products can be paid and picked up in the local stores. Innovation strategy shows the intelligent link – up of the online store and local store business. More innovated, Metro can encourage customers in shopping online by marking the average transaction of online shopping higher than that of customers shopping in the local stores.

Because Metro has had many different business sectors, we can pick up Metro Cash and Carry’s competitive strategy for analyzing. This competitive strategy is tailor – made sales formats and flexible sales concept which are very different from other competitors such as Aeon, LOTTE or Takashimaya, ect. Metro Cash and Carry distinguishes itself by emphasizing local product with the 90 percent of its assortments purchased from local providers while other retailers have picked up their parent country products and supplied to local customers for branding. Moreover, Metro Cash and Carry has adapted to meet the specific conditions and demands of respective countries abroad by offering flexible formats.

Format

Conditions

Regions

Classic

10,000 – 16,000 sqm

Western European

Junior

6,500 – 8,500 sqm

Eastern European and Asia

Eco

2,500 – 6,500 sqm

Southern European and Japan

MAKRO Punkt

Around 1,500 sqm

Poland, Bulgaria, Croatia, Romania, Serbia, Ukraine

Other special format (no name)

Around 3,000 sqm

China, France

 

Metro critical resources are strong financial strength and innovation. Basing strong financial resource, Metro can expand its business by funding more research and development in over 33 countries all over the world. Metro Cash and Carry operates over 728 stores in 30 countries on different three continents like Europe, Asia and Africa and continues to expand on the growth of regions of Eastern Europe and Asia. Real also operates about 426 stores in Germany, Poland, Russia, Romania, Turkey and Ukraine and focuses on its expansion in online stores. With innovation, Metro has owned 5 success stories as example for its differentiation: Metro Cash and Carry becomes Germany’s best wine seller, Real enters new markets on the Internet,  Media – Saturn offers powerful service features, Galeria Kaufhof opens stores focusing on local demands, Metro Properties improves its yield through revitalization.

Case study 2: Amazon.com

Amazon.com is the biggest company operating with the e-commerce phenomenon. Growing from a book seller, until now, Amazon.com becomes a seller with sdiversified products from book to music CDs, software, office products, hardware, electronics, etc. With the revenue in 2011, Amazon.com becomes the largest e-commerce company in the world.

Amazon.com’s strengths are strong brand name which is combined between the large production selection and pricing price with discount in order to serve customer the high quality products with the lower cost; strong infrastructure with effective automated distribution centers in US and oversea market like UK, France, Japan, Germany and Canada. Along with these distribution centres, there are six global websites to serve domestic and international customers. Another important strength is to have 2 segments B2C and B2B e-commerce for serving the larger number of customer from enterprises to individuals. Basing its strengths, Amazon also leverages its opportunities such as growth of internet users in the next five years in the international market; e-commerce expansion in Asia and the Pacific.

However, like many e-commerce company, Amazon.com always faces up to some weaknesses and threats. Firstly, even though Amazon.com has owned 6 global website, there is lack of Spanish website version while Latino and Hispanic Americans are the fastest – growing online ethic group. Secondly, as focusing on the reasonable price strategy with the high quality products by offering free shipping, this causes future financial outcome. Thirdly, Amazon faces up to many e-commerce competitors like eBay, Bames & Nobles and Wal-mart as well as the increase trend of offline enterprises which will entry in the market because of low barriers.

By analysing the external context and leveraging its strengths, Amazon.com has built strong infrastructure. Especially, its distribution centres has grown from 50,000 to 285,000 sqm since 1997 and inventories have risen over 200,000 titles which are always available to serve customers.

Amazon.com has implemented its strategy by offering the quality products and services using the best technology with the low price. Then, it can build the high loyalty in customers’ minds while maintaining interests and profits for its company and its shareholders. To treat its staffs, Amazon offers the best working environment, promotes many career chances, creates their responsibility towards environment and society.

With the mission of providing the high quality products with the reasonable price strategy, Amazon.com creates its competitive advantages by maintaining and improving the operational efficiency. Amazon creates its logistical competencies by purchasing large volume of products from providers and having the long relationship with many suppliers. These suppliers must offer Amazon a wide selection of products with the great discounts. Hence, Amazon can have the ability enough to offer shopping convenience, purchase ease and speed and reliability. Moreover, to improve this competitive advantage, Amazon always invests in warehousing and logistical system which can deliver ad ship over 95% products order on the day and short its delivery time and cost.

According resource based view, Amazon has strong infrastructure which is 6 global websites www.amazon.com, www.amazon.co.uk, www.amazon.de, www.amazon.co.jp, www.amazon.fr, www.amazon.ca. in each website, Amazon has achieved its value-added differentiation by focusing on customer’s information services. It means that Amazon.com’s website maintains and retains customer satisfaction and provides automated customization for customers. The another resource of Amazon.com is new business model which is matrix from  shopping convenience, ease of purchase, speed of fulfilment, decision – enabling information, a wide selection, reasonable price and customer reliability. The new business model comes from synergistic combination of information service and logistical system.

 Estee Lauder

Estee Lauder Co is one of the leading manufacturers of product lines such as skin care, makeup, fragrance and hair care. After its establishment in New York in in 1946, Estee Lauder make its international expansion over 150 countries in the world with many brands like Estee Lauder, Clinique, M-A-C, Bobbi Brown, Coach, etc.

In 2012, even though global crisis, Estee Lauder has achieved sales gain in all regions and illustrated the company strengths and product portfolio power. To achieve these results, Estee Lauder must leverage its strengths such as a tribute to the commitment, hard-working attitude, product portfolio and service quality, outstanding leadership of the entire management team. Moreover, Estee Lauder also catches its opportunities in expanding its business in both developed and growing countries because it recognizes the trend that in the past year, demand of prestige beauty has grown faster and faster than mass in all key markets around the world, especially in developed countries. Also, in the developing countries,, rising incomes and the expansion of middle high consumers in combination with the global purchasing power and their willingness to spend on beauty have been considered important contributors. However, along with having more opportunities of efficient expansion, Estee Lauder are also facing up to biggest challenge such as intensive competition in the globe.

Estee Lauder has implemented its strategy through the power of creative marketing such as selling its products through upscale department stores and shopping mall which help Estee Lauder build its brand as high-end level; creative promotion strategy by pioneering free sample, investing in samples as direct mail and free gift with purchase, but not outsourcing any advertising firm. The remarkable results from these strategies show in its financial performance with net sales in the Americans and skin care valued $4 billion while cut expenses for not outsourcing are $145 million.

As building a strongly global brand, Estee Lauder Inc., has been different from other competitors by leveraging or exploring its competitive advantages. Two most important strategies are consumer – inspired innovation and modern distribution system. Estee Lauder has become 2nd among most innovative corporation around the world by its consumer-inspired innovation. By identifying emerging consumer group or middle high income consumers, Estee Lauder can offer them many of its product lines and delight its consumer everywhere. The result of this competitive advantage is that in 2012, Estee Lauder made significant process as well as attracted new customers and maintain existing customer with 2012 net sales of $9,713.6 million in comparison with the 2011 amount $8,810 million. Concerning about distribution channel, Estee Lauder focuses on modern distribution system, especially in department stores of North American and international regions while other competitors are with many unfocused distribution channel such as travel retailer, salons or spas or retail store. As the evidence of this competitive strategy, fiscal 2012 net sales by distribution channel is mentioned with North America and international department store of 54%, the rest of travel retailer, retail stores, perfumeries, salons/spas, etc.

 

Total:

 

 

References

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  10. Metro Group available at http://www.metrogroup.de/internet/site/metrogroup/node/9251/Len/index.html
  11. Amazon.com available at http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual
  12. Estee Lauder available at http://www.esteelauder.co.uk

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