Introduction to Different Competitive Strategies
Following report is prepared in order to understand the different competitive strategies which are adopted by the different companies of different countries which help them in doing effective business. Competitive strategies can be defined as planning done for future so that competitive marketing advantage can be enjoyed in the future. It is done by having more effective strategies than that of the competitors present in the market. The total rate of return from investment is increased by adopting a creative strategy or the business. As the competition is increasing it increases various challenges also for which companies need to adopt different strategies in order to face these competition more effectively so that it can success in its field. In the following report companies are taken from the food and beverage sector and another from the computer industry (Madsen and Walker,2015). These companies in order to supply services at global level use different strategies which helped them in making their global presence. This report will help learner to understand how these companies are using the different AAA i.e. adaption, aggregation and arbitrage in order to increase their revenues by facing the global challenges and giving the other companies a good competition.
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For any business to excel it is important that strategies are followed so that the company can compete with the other competitors present in the same field. AAA strategy is one of the different strategies which were developed Ghemawat. It is also known as AAA triangle theory. In this theory each A stands for adaption, aggregation and arbitrage. These strategies aims to decide the best strategy for the business through international expansions. If the companies want to enjoy full benefits than these approaches should be implemented effectively. In general these strategies help any business by increasing their revenues by growing their local revenues and also deliver economies of scale through global operations. Also through this strategy the supply chain of the business is made efficient by removing the disparities from national and regional market. There are different examples of how various organisation use and keep balance in these strategies although it is difficult to achieve all the tree strategies as it require a good amount of resources and this makes it difficult to keep balance among all (De and Meyer,2010). Before choosing the given three strategies it is important that the companies focus on the nature and strength before deciding about the primary policy. Adaption calls for the required changes that a particular company need to adopt in order to meet the demand in the market. It is done so that the companies operations remain matched with the functioning of the other companies in the same field. Than aggregation helps the business in increasing the scale of market by reaching to global market without actually ignoring the demands of the local buyers. Than comes the arbitrage which help the business in choosing the market which can give maximum profit to the business due to change in the cost and price of the products. This help the business in choosing the market which can provide the different factors of production at the minimum price and therefore the total profit can be increased. These strategies therefore help in facing the various global challenges and also increases the market by providing the services to the customers of different places having the same needs. Although different A strategy has different level of effectiveness and also require resources to implement in the business which make it difficult to implement them successfully and therefore it is the decision of the company to weather adopt al the three A in the business or some of them (Teece,2010).
In order to get a clear understanding of each strategy it can be compared how it is utilised in different companies like as follows:
Adaption in computer industry and food business
Frosty boy is an Australian company which provides best soft serve and frozen yogurt. It manufactures quality products for the customers since 1976. After this Home-Tyme is another company which is in Canada and providing the services to the customers since 1992. This company is known for the meat products which are provided at too reduced price and with no taxes. Both these companies has provided various job opportunities in the places where they are operating. Theses companies are doing good business still there are various challenges which are faced by them (De and Meyer,2010). They have successfully implemented the strategy of three A so that they can maintain their growth. These companies uses water as their main ingredient like in the cleaning or as a cooling agent. Therefore if there is a change in the environment in context of the availability of water it affects the operations of the cited companies. It creates problem as less water is available in comparison to demand against them. As the food industries demand large amount of quality water they need to adopt the measures in text with the top quality available method so that they can overcome this barrier. The Frosty boy and Home-Tyme through widespread adoption of water can move towards sustainable improvement achieving in connection of economical development from resource use as effect to bring down water availability (Porter,2012). Apart from this adaption help the two companies in adapting the preference of the customers of the local market and help the food industries in bringing change and innovation in their products so that the customers are provided with what taste they want. Different taste is prefer at different part of countries due to change in culture therefore adapting the need of customer the food items are therefore provided accordingly (Bharadwaj,2013). The cited companies has also adopted the new techniques of packaging which helped both these companies in using an innovative type of packing the products which are more attractive and are preferred by the customers. Apart from attractiveness this adaption also helped them these companies in packing the products in such a way that customer can carry it with themselves comfortably. Not only this, adaption has proved to be of great help for the computer industries also but in a different manner as the challenges for this industry is different. Continuous change take place in the technology which create need for adaption. Both the companies Access technology group limited of east England and Accumuli plc of south east England took the benefits through adopting to change in the technology that take place in the computer world so that they can compete with other companies of the same industry. As both these companies are operating on small scale innovation helped them in doping the market expansion, cutting the total cost (Casadesus and Ricart,2010).
Aggregation in computer industry and food business
Aggregation is the process through which standards are set so that the existing economies of scale can be utilised. Companies are benefited through this strategy as they cover more market with the same products through doing the active marketing and advertising. As in the food industry human resource is the main requirement as without it process can not be taken to further stages. With the help aggregation both these food companies are benefited in making the required number of employees available so that they can meet the future demand and also apart from human resources also these companies with the help of aggregation strategies maintain the required amount of stock with them so that continuity in the supply of food products can be maintained (Grant,2016). Both these companies has used the manageable modes for increasing their total revenue by opening stores in different part of the countries and also by giving franchisees to the different agents which helped in market maximisation. Other companies like Access technology and Accumuli plc use the same strategy in dealing with the differences. The strategy of aggregation help the cited two companies to identify scope in the global market and also do not compromise with the domestic customers. This shows that geographic aggregation strategies are of vital use to the these industries. Cultural aggregation help these companies in providing the different customers with their variety of demands.
Arbitrage in computer industry and food business
It is the third strategy among the different strategies of operation. Arbitrage helps in reducing the cost of labour and material without actually changing own location. It discovers the difference between the benefits of different locations so tat the total cost of production can be minimised to minimum (Santos,López and Trespalacios2012). It also helps in creating the global advantage to the company. In this strategy the differences are discovered and than bridged so that advantage can be taken. Outsourcing is much adopted in this strategy. Suppose if it is absorbed that for home time food company it is better to get the products ready made from other source and than sell those by their own is more beneficial than the company can go for it. This way the total cost will be reduced which will increase profit margin for the company. Arbitrage is further classified into cultural arbitrage. People from different culture demand different food items also different taste therefore it is important to provide them with what the actually want. The difference in the laws and legislations of the different countries also create an possibility for administrative arbitrage. Different taxes are imposed on the different sector and the rate of tax also varies therefore the companies can reduce the payments of interest by using the deals which create profitable finance dealings. Geographic arbitrage is the another scope provided in the same strategy (McGrath,2013). This concept helped the business by removing the location constraint from the business. Now companies can deliver its products to different areas and cover more market. This helped all the above four companies in acquiring more consumers. The companies that are dealing in the computer field are benefited by getting the knowledge from across the countries which help them in being updated with the latest changes that take place in their industry. After this is the economic arbitrage which originated due to the change in total cost of labour and capital and the cost of complimentary products which are different at different places. Food industry is benefited through this arbitration by exploiting the cheap labour (Kristal, Huang and Roth,2010).
The above report concludes that the strategy of AAA has successfully contributed in the growth and development of the frosty boy, home tyme, access technology group limited and Accumuli plc. These strategies helped the cited companies in managing their total cost, expanding the market, adopting to new technology (Porter,2011). The report suggest that different strategies should be adopted on the basis of the global history and its financial statements. All these strategies are not required to be implemented together but may be at some point in future all need to be line down. There are different challenges which are faced by the different companies of different industries like lengthy supply chain or security or lack of information. Therefore in this case these strategies are of much help. In this competitive era where all the companies are trying to prove themselves better than each other works on their quality policies and reduce price these strategies are of great help.
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