Strategy Development Innovation Orientation and Organisational Perfor

Question: Discuss about theStrategy Development for Innovation Orientation and Organisational Performance. Answer: Introduction Strategy development involves all the companys attempts to come up with ways of gaining a competitive edge over its competitors. It involves the attempts of the company to be more profitable and gain more customers in the market. According to Jose (2010), these strategies can be used by the company to boost revenue and maximize its shares in the market, gain economies of scale and gain a larger market coverage. Many companies have developed competitive strategies. The most common strategies used by the companies fall in the Adaptation, Aggregation and arbitrage framework (AAA) (Kluyver, 2010). This framework gives the companies ways of gaining economies of scale, managing variations within its operating borders and exploitation of the weaknesses of their competitors to outdo them in the market. According to Ghemawat (2011), adaptation strategy has been used by companies to boost their capital and increase their relevance in both global and local market. Such strategies may include; developing local branches and coming up with local sections in the world market. The aggregation strategies on the other hand are all the attempts of a company to gain economies of scale, through the creation of regionally or globally recognized operations. This has been achieved by most companies by such activities like; grouping of production procedures and standardization of production (Ghemawat, 2011). Lastly, some companies also use the arbitrage techniques to exploit the market. This helps the companies to locate different parts of the supply chain in the various regions. It is important to note that most businesses tend to combine these strategies in order to gain a faster competitive advantage (Javernick, 2010). However using the three strategies together poses an enormous leverage challenge as the companies may not have enough resources, manpower or technical knowledge to execute all the strategies at once (Ju, 2011). When a corporation combines two of the three strategies, it develops an AA model. This can be in the form of Adaptation and aggregation, and Aggregation and Arbitrage. Combining the two strategies has several advantages to the company. Some of these benefits include; the company will be able to beat its competitors in more than one dimensions at once, and the last advantage is that the tension of the managers between the two strategies will be better than that of the competitors. The combination of these strategies is vital to the manager as it will force the managers to do more work than just allocation and monitoring of duties. It will also force the managers to utilize fully the soft and hard integrative equipment. The managers will also be necessitated to integrate both algorithmic and structural strategies, in order to execute the two strategies at once (Rasha, 2013). These strategies have been used by several companies in the computer industry, information communication and technology industry, pharmaceutical industry, food and beverage industry and steel industry. In the pharmaceutical industry, its use can be explained by examining the case of Procter and Gamble Company (PG). The PG Company has used the adaptation strategy through setting up of several mini branches in different countries. The PG Company started manufacturing its product called Vicks cough syrup with honey for lower and middle-income earners in Mexico. The product then gained popularity, and the company went to other Latin American countries including Brazil. It then rebranded its product to Vicks Castro and developed a branch in California and Texas where it was sold. The trend in this companys case has grown making it expand its market and branches. It has developed branches in several countries like Britain, France, Germany, Italy and Switzerland. This has enabled the company to gain more market and hence gain a competitive advantage, given that its product is a natural one, given preference to with many consumers. PG Company has used aggregation techniques to create large economies of scale. It has done this by constantly creating global operations. It has created several mini-branches and constantly rebranded its products to suit the preference of the consumers in the different countries. To illustrate this, PG branded its Vicks Cough syrup as VICK Miel in Mexico. When it extended to California and Texas, it branded the same product as Vicks Castro. It also subsidized its prices in California and Texas. This enabled most low-income earners in California and Texas to be able to afford the product. Lowering the prices also made most consumers to prefer the product. The Vick Miel was also an herbal product. Since many people, especially in California and Texas, loved natural products, they opted for this product. This gave the company a competitive edge making it achieve significant sales in the countries it operated in. the company also took its product to other markets where homeopathic cold drugs were popular. In these countries, most medicines have chemical ingredients, whereas, the PG product is made of honey which is a natural product. The trend in the market sector as well indicates that most American shoppers in future will buy this product, repackage it and sell it globally. This will boost the companys sales making it gain economies of scale. The last strategy that PG has used is arbitrage strategy. Many shoppers are buying the Vicks cough syrup packaging it and reselling it to other customers. This is an indirect way of outsourcing. The buyers who resell the product in a different unique package makes the selling indirectly for the company. According to Dobni (2011), this is an efficient method, makes the company spend less money in repackaging and rebranding. This also enlarges the supply chain of the product in diverse countries. The next company that uses the three strategies is the Coca-Cola Company. This company falls in the food and beverage industry. The Coca-Cola Company is known worldwide for manufacture and distribution of soft drinks. The company has used adaptation strategies by developing several branches and outlets worldwide. These branches mainly act as bottlers for the coca cola company. Some of the bottlers include; Coca-Cola European partners in the United Kingdom, Coca-Cola bottlers the Philippines, Coa-colaFEMSA in Mexico, Embotelladora Andina S.A in Chile and Coca-Cola Africa. By developing several branch bottlers, the company has been able to gain competitive advantage. The company has also used this method to compete with several companies including PEPSI Company (ken, 2015). Coca-Cola Company has used aggregation strategies. These strategies are geared towards gaining economies of scale. The company has exploited this method to not only achieve significant sales but also to create and manage regional and global operations. It has concentrated on the global network delivery. Several Coca-Cola bottlers exist in different countries. These bottlers, in turn, distribute their products both locally and countrywide. The Coca-Cola Company has several global centers some of which are in Africa, Asia, Australia Philippines, Chile and United Kingdom. It has regional centers in Atlanta, Georgia and several near shore centers. Another strategy that the company uses is arbitrage strategy. The company only produces syrup concentrate. The concentrate is then sold to its global and regional bottlers. The bottlers then dilute the syrup, bottle it and do the selling. This makes the company reduce the cost of operations such as bottling. The company also promote different programs like sports and entertainment. These programs benefit the company as they help in advertising. When the company promotes sports, it brands the sporting equipment with their name. This helps in advertising the company name and products (cheng, 2010). The next company that uses the three competitive strategies is The International Business Machines Corporation (IBM). This company falls into the category of two industries. First, it falls in the computer industry as it manufactures and distributes computer soft wares and hardware. Secondly, it falls under information communication and technology industry. This is because of its major contributions in the technology environment such as the invention of Automated teller machines, floppy disk, the hard drive, the magnetic stripe card and SQL programming language. IBM Company has used the three competitive strategies conveniently. The first strategy being the adaptation strategy. This strategy has been employed by the company to gain competitive advantage (IBM, 2012). The company has formed over 170 branches worldwide. This has enabled it to sell its products to a larger market. The company uses this strategy to tap a global market. The company has also used advertising techniques to create awareness of its various products. This has been made possible through the use of media channels such as television channels, newspaper, and journals and through the internet and their website (IBM, 2013). The adaptive techniques used have ensured the company gain a stable local culture existence and hence, making it outstanding among several competing companies. The second strategy used by the IBM Company is the aggregation strategy. This strategy has enabled the company to derive economies of scale and gain global recognition. The company has continued to standardize the prices of its products making them more affordable. It has also hosted several consulting services in different areas like mainframe computers and nanotechnology. The company has also invented such machines as ATM machines, which are used worldwide. These inventions have seen people developing more interest in this endeavour making the sales level increase. The increase in the level of sales forms the main reason for the gain of economies of scale by this company. The last strategy used by this company is the arbitrage strategy. This technique has been used by the company through outsourcing of operations, developing of labor intensive groups and organizations, and separation of the supply chain in different countries (Shijia, 2014). The IBM Company has acquired several companies such as the weather company in 2016. In 2014 the company made plans to go fabless. This would see it offload the manufacturing activity to global founders. IT outsourcing has also been a major activity of this company (Salara, 2010). Alpha works, and SPSS are some of the companies that have benefited from the outsourcing practices of this company. These are some of the major ways the company uses to execute arbitrage strategy. The Acelor Mittal is another company that utilizes the three competitive strategies. This is a company that manufactures steel and steel products including heavy equipment and automotive. This company uses adaptation strategies to boost its revenue and shares in the market (Melodie, 2011). The company has developed branches in over 60 countries in the world. These branches market the same products making the company gain familiarity in the market. This has seen it maximize its local and international revenue. The company has also used the aggregation strategies to achieve economies of scale, create global markets and subsidize their products (Acelor, 2013). The company has developed a unique procurement strategy which is divided into three parts. The first one being the local procurement strategy. This strategy is carried out when dealing with local suppliers. The second strategy is a regional strategy which is used for regional suppliers, while the last strategy is the global strategy for international suppliers. The above procurement strategies have always offered the company great aggregation techniques making the company sell more and expand in the global market. The last strategy that the company has always used is the arbitrage strategy. This strategy has made the company able to exploit both the local and global markets at once (Parent, 2010). In 2008, the company outsourced its IT services to IT Companies in Western Europe, including; Satyam Computer services and Mind tree. This was a major arbitrage strategy as it enabled the company to locate different parts of its supply chains in several different places. The company has continued to utilize these three strategies to ensure it remains profitable, gains larger market shares and attain economies of scale altogether. In conclusion, it is apparent that companies must adopt competitive strategies so as to operate efficiently, compete fairly in the market and expand into the global market. All companies (Ghemawat, 2011)irrespective of the industry, strives to remain profitable, gain large market shares and achieve economies of scale. These will only be possible if they adopt the above three strategies. Although it would be difficult for accompany to combine and practice all there three strategies at once because of the leverage problems, most companies usually combine two of the strategies at once. By doing this, they always adopt the AA model, which can either be, adaptation and arbitrage or adaptation and aggregation model. These three strategies are relevant for every company that desires to grow into the global market. 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