Thereare various types of general strategies that are used to achieve anduphold competitive advantage in the market. The strategies weredescribed by Michael Porter in the book CompetitiveStrategy: Techniques for Analyzing Industries and Competitors (1980).The strategies include segmentation strategy, cost leadership,focused cost leadership and differentiation strategy and expansionstrategy [CITATION Per11 l 1033 ]. The business level strategies aim at creating a unique value for thecompany.
Themost appropriate business-level strategy Apple Inc. can adopt toincrease overall customer satisfaction and attract new customers mustmatch the external opportunities and threats with its corecompetencies.
AppleInc. is likely to be the leading information technology company andthe mobile phone maker in the world in the future. The reason behindthis is that it has managed to remain competitive through theproduction of high-quality products that are tailor made to meet thecustomer specifications. Differentiation strategy is the mostappropriate business-level strategy that Apple Inc. can use to retainexisting customers and attract new ones. A switch to other strategiessuch as cost-leadership strategy would push customers to thecompetitor’s products [ CITATION Mic09 l 1033 ].
Marketcommonality and resource similarity are the two main building blocksin gaining competitive advantage. Apple’s main rivals includeSamsung Inc. and Microsoft. The three multinational companies operatein the same market, and each market is significant to theiroperations. The competition rivalries amongst the companies have ledto a constant lawsuit between Apple Inc. and Samsung Inc. An on-goinglawsuit has been pending since 2011, for example, between Apple andSamsung in a dispute over smartphone and tablets patents.
On6thMarch 2014, Apple Inc. was awarded approximately $930 million by theDistrict Court. The extent of resource similarity between Apple Inc.products and Samsung’s products often create patent issues. As aresult, the extent of competition is threatened. Adoption ofbusiness-level strategies such as differentiation will be the mainsource of competition.
Diversificationinvolves acquiring firms in other industries or lines of business.The acquired firm may have a poor technology, which may be, improvedafter acquisition by the predator. Diversification can either resultto increase in value or a decline in value. Resources, capabilities,and core competencies are the main drivers of value creation as aresult of diversification. Diversification can help in transferringcore competencies across the different businesses. Sharing of scarceresources can also lead to value creation.
Relateddiversification results to economies of scale resulting from costsavings. Related diversification, such as vertical integration, wouldalso help Apple Inc. gain significant market power. Verticalintegration contributes to increasing the market share. Unrelateddiversification is a major source of financial economies. Apple Inc.would be able to efficiently allocate the available capital toprofitable projects.
VictoryMotorcycles employs progressive styling in designing its cruisermotorcycles unlike other American V-Twin manufacturers who stillfollow the traditional classic formula. Victory Motorcycle has asavvy marketing strategy. The marketing strategy helps in creatingcompetitive advantage. Product innovation is also essential inimproving its competitiveness. The company designs a uniquemotorcycle from its previous one. In 2008, Victory Motorcyclesreleased Victory Vision Motorcycle, a futuristic-looking luxurytouring motorcycle. In 2009, a six-speed transmission 106/6 V-Twinmotorcycle was released. The diversification strategy ensures thatVictory Motorcycles manufactures throughout the year.
VictoryMotorcycles needs to re-introduce other business strategies such ascost leadership strategy. The strategy would make the company’sproducts affordable to most consumers. Cost leadership strategy canbe achieved by simplifying the motorcycle’s manufacturing process,minimizing sales-related costs and controlling the manufacturingcosts. The main challenge is ensuring that the quality of themotorcycles isn’t compromised [ CITATION Mic09 l 1033 ].
Accordingto Carola, CEO compensation should be based on the managerial powerand the prevailing market forces. To some extent, the managerialpower will depend on the size of the company. However, the amountshould not be very high to have a negative impact on the performanceof the firm. CEO compensation is composed of five main componentsthe basic salary, annual bonus, stock grants, option grants andpayouts that are as a result of long-term incentive plans. Theshareholders should monitor the performance of the CEO. This is tominimize the incidences where the CEO pursues projects that are meantto benefit them at the expense of the firm. Restructuring the CEOcompensation was found important to reduce such cases[ CITATION Car06 p 54 l 1033 ].
Aneffective remuneration and reward system for company executives iscrucial in supporting an organizations’ business strategy.Effective executive remuneration results to cost savings, goodcompany reputation, and corporate culture, attracting and retaininghighly qualified executives. However, executive compensation shouldbe reasonable and competitive. The compensation package of theexecutives should be tied to the organizations’ performance. Thereshould be a clear relationship between executive performance and theincentives being paid. Linking compensation to performance helps toensure that shareholders’ interest are taken into consideration
Thereare various strategies that a firm can employ. Dr. Pepper SnappleGroup (DPS) is a major beverage company with an integrated corporatemodel including brand proprietorship, bottling, and distribution ofnon-alcoholic beverages in the US, Canada, and Mexico. Its maincompetitors include Coca-Cola Company, Pepsi Inc., Nestle Inc., andKraft Foods Inc.
Amongthe six strategies outlined, DPS should build and enhance on theexisting leading brands. DPS should focus on marketing the leadingbrands to enhance customer loyalty. Its main brands are soft drinks.DPS can also strengthen its distribution channels through verticalintegration. The integration is essential in increasing its marketshare. DPS can create its bottling company to enhance distribution.Additional bottling companies are essential in improving marketcoverage [ CITATION Per11 l 1033 ].
Carola Frydman, D. J. (2006). CEO Compensation. CEO Compensation, 7-14.
Michael A. Hitt, R. D. (2009). Strategic Management: Concepts & Cases Competitiveness and Globalization 8th Edition. South-Western: Cengage Learning.
Per V. Jenster, D. E. (2011). Company Analysis: Determining Strategic Capability. New York: Wiley.