Analyse the attractiveness of an industry

1. Analyse the attractiveness of an industry of your choice using Michael Porter’s ‘Five Forces’ model.

Porte’s Five Forces analysis of Uber (Transport Industires)

Figure 1, shows five Porters Five Forces related to UBER industries

According to the above diagram of Porter Five Forces for Uber Industries, it can be observed that they have divided it into five demands and supply needs according to customer needs.

Bargaining power of buyers:

Uber is a leader in the transportation industry, and as it deals directly with the customers, a high chance of losing profit is there because they need to develop a system according to the city. The power here is distributed to buyers, and that is why customer satisfaction is very important to sustain in the market. To overcome that, they develop a system to pay to sellers on a bargain system also (Wakhu & Bett, 2019).

Bargaining power of suppliers:

In the transportation industry, everything works more dynamically, and the profit is also divided among sellers and buyers. To give services in the ride, Uber made direct contracts with companies like Samsung and apple for screens in their rides, and in return, they directly advertise their product in the ride.

The threat of New Entrants:

Like all other industries transportation industry also faces threats from newcomers because it's easy to come into this industry because of less investment and partnered investment. Because even a similar product and service pattern can easily dislocate the profit of an average earning company. This industry is having issues in the local competition also because of trust and values.

The Threat of Substitute products and services:

A substitute is not always the same product or service; it can be something using the same resources. Even if the resources can be changed and the service remains the same, it can be considered a substitute until it serves the same set of customers.

Rivalry amongst the brands:

As a brand, Uber faced so many rivalries from other brands because of similar service, but what makes a difference is always important for a leading brand to develop and differentiate themselves from others. That is a difference in cost, better service, high customer satisfaction, and better outreach. All of these measures define the difference and increases rivalry as well (Isabelle, Horak, McKinnon & Palumbo, 2020).

2. Describe how you would use the Customer Matrix to evaluate the competitive strategy options that may be open to a firm that is losing market share relative to the competition.

In the market, each business industry has its shares, and all the industries try to make their services and goods based on the customer requirement. And on that base, they make their market strategies, so if an industry is losing their shares in the market, it was checked using the customer matrix to identify the issues and other options to take advantage of competition.

Figure 2 shows the Customer Matrix.

In the above-presented matrices, the vertical line shows the Perceived value in Use (PVU) that basically explains how the customers perceive the service or product, like the quality. The horizontal line shows the perceived price. Giving an example, there are different options demonstrated by product A.

The first method, Move the product to the west, as shown in the figure, means reducing the product's price while maintaining the same quality. But it can also be a cynical move because competitors can do the same and take out the market shares. But to sustain in low-cost market strategy always helps to be in the loop, the smaller margin may provide less profit. Still, it's a long run strategy that was also implemented by Frito Lay in their products, where they distributed their product into smaller units to increase the sale (Barrett, Haug & Gaskins, 2020).

The second method is to move the product to the northeast and develop our product more innovatively to get the value of its uniqueness and keep the price the same.

The third method, the smartest and toughest move to north directly with keeping the price same and understanding the customer’s needs more. This strategy affects business directly because it's based on the customer's requirement, and no competitor can do it without a survey. So, it will be a direct hit for us to grow without making anyone follow us.

The fourth and last method is to move the product to the southwest, which means removing all the small details from the product and making it more cost-efficient for the customers with fewer features. This will also increase the sale with less manufacturing cost.

3. Explain the criteria used to identify a ‘strategic asset’. Select an organization you are familiar with and identify three of its strategic assets, explaining why each of these assets would be difficult for competitors to imitate.

Strategic asset are resources that can be valuable, rare, imitable, and organization support (Barney, 1991)

Value of resources and capabilities

Microsoft is a global leader in the software of operating systems for computers, and it has a huge reach because of its unique facilities and abilities. Microsoft is the founder company of modern-day operating systems. Their strategy was to make a more interactive system that is easy to use and understand by the users. Within time they evolved their software and operating system according to the need. They know the customer value and need and produce a remarkable product known as the Windows operating system, a giant of operating systems throughout the world. Their competitors always had an idea to beat them. Still, Microsoft is smart as they produced their own set of resources applicable in windows like their office suite and website development language (Sulindawati, Suharsono, Lasmawan, Natajaya & Sunu, 2019).

The rarity of Resources and Capabilities

In market competition, Microsoft makes their unique hold by having a better brand value that they created by themselves on a longer run by investment and promotion. Microsoft promoted its products in its unique way with a strategical pattern that is not easy to track down.

Also, with their innovative brains in technology, they have innovative brains in art, which works in a combination to produce great output. Microsoft has its own culture of appreciating art and working with artists to make a fusion with technology. They have both the technology and art enthusiastic team for work, and that's how they achieved that appealing and straightforward look of their unique design (Ben Bajarin, 2011).

Organizational Support

As a brand, Microsoft has a hold on all the services of innovation, research, and technology to deal with the market needs. Also, they have a hold on their understanding of competitors, stakeholders, hardware, and software. All of the teams of each department work together to make the product a success.

The reason for the high reach of Microsoft is that they have control of their product from scratch to the store and know how to manage it. They have a tie-up program with all of the major hardware giants producing laptops and computers. And their customers also support them in that.

4. Explain how the Corporate Parenting Matrix could be used to help formulate a corporate acquisition and divestment strategy.

Figure 3, shows the Corporate Parenting Matrix, Adapted from

The Corporate Parenting Matrix is used to make an improvement in the opportunities of the industry by giving the right direction. Business expansion, sharing of resources, and security from capital markets can be act as a strategic value and done by the corporate parents (Gurkov, 2015).

Corporate Parenting Matrix, as represented in Figure 3, has two sides; one is positive and negative that has to be decided by the parent. A portfolio can be done by any parent corporation that has multiple units of business under them. And based on that, they are classified into five steps to make a decision (Gurkov, 2014).

Heartland Business

On the basis of corporate interest, a parent corporation can prioritize, if they have an opportunity between them and critical success factor (CSF).

Edge-of-Heartland Businesses

When any of the Unit of the Parent company doesn't fit under their characteristics, then they decide not to interfere in the unit's own strategies and plans. And as a result, a unit company got the freedom to make their own decisions to implement they get only little investment from the parent then. But If the unit’s idea becomes successful, parents hold the command and convert it to a Heartland Business.

Ballast Businesses:

If any unit is taking an initiative that doesn't work under parent corporate ideologies, they leave that unit as an individual and use it only for the cash flow. This type of business is known as Cash Caw (BCG). And after that, the corporate parent may decide that business moves to any other territory position to reduce any kind of risk and loss.

Alien Territory Businesses:

In an alien territory business, it is the same business of any unit which may provide profit but doesn't follow the ideologies of a parent is shifted to any other location. Because according to parents, that business has low CSF value and also not developing the characteristics.

Value Trap Businesses:

This is also an additional business by a unit, but in a value trap business, it is more valuable but not working just because of low CSF and abandoned by parent corporate, which is generally a mistake made by the parents.

5. Describe how you would use the cultural web to establish whether an organization's culture needs to change to deliver its strategy.

Figure 4 shows the Culture Web.

All the organizations have their own strategies and ideologies that are also followed by their cultural web. Cultural web directly suggests whether a cultural change is required or not based on the organization (Gelfand, Lim & Raver, 2004).

There are six components of a cultural web, and that are rituals and routines, symbols, the structure of organization, stories, power structure, and control system in the organization. All of these components are interlinked with each other, as shown in figure 4.

All the above components of the cultural web need to be understood first as a leader. Because it is our responsibility to analyze them and understand their actual use in the organization, and based on that, take decision on their implementation. Identifying them is not enough to compare them, and making a plan with all the components is necessary.

Because changing culture in an organization will make a huge impact on all the employees. As a leader, it is our responsibility to make a better strategy for the change without any basic implementation (Marcus & Gould, 2000).

References:

Wakhu, P. O., & Bett, S. (2019). Effect of Competitive Strategies on Performance of Uber Online Taxi Firm in Nairobi, Kenya. International Journal of Current Aspects, 3(IV), 80-92.

Isabelle, D., Horak, K., McKinnon, S., & Palumbo, C. (2020). Is Porter's Five Forces Framework Still Relevant? A study of the capital/labour intensity continuum via mining and IT industries. Technology Innovation Management Review, 10(6).

Barrett, P. T., Haug, J. C., & Gaskins, J. N. (2020). An Interview on Leadership with Al Carey, CEO, PepsiCo Beverages. Southern Business Review, 38(1), 31-38.

Sulindawati, E., Suharsono, N., Lasmawan, W., Natajaya, N., & Sunu, G. (2019). The Implementation of a Village Financial Administration Teaching Model through Microsoft Excel Program. International Journal of Innovation, Creativity and Change, 5(6).

Gurkov, I. (2015). Corporate parenting styles of the multinational corporation: A subsidiary view. Progress in International Business Research, 10, 57-78.

Gurkov, I. (2014). Corporate Parenting Styles in the Global Economy. Higher School of Economics Working Paper No. WP BRP, 20.

Gelfand, M. J., Lim, B. C., & Raver, J. L. (2004). Culture and accountability in organizations: Variations in forms of social control across cultures. Human Resource management review, 14(1), 135-160.

Marcus, A., & Gould, E. W. (2000). Crosscurrents: cultural dimensions and global Web user-interface design. interactions, 7(4), 32-46.

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