International Stragetic Management
Answer to Question Number 1
The price war is the most comprehensive way of doing business in the market. The rival companies often lower down their price of the product so that they can attract the customers towards avail their goods and services. The other reason for doing so is to increase the share of the company in the market. The price war is generally a short-term process in which the price of the product is decreased for a certain period of time, which does affect the profit margin of the company (Kapacinskaite & Ethiraj, 2017). Although there are certain benefits of having a price war, gaining the amount of sizable market share can increase a long-term profitability of the company. There are both advantages as well as disadvantages of having price wars. The customers can have products at a lower cost similarly the companies gain new customers. The winners of the price war are more candidates that are profitable. The disadvantage includes the eradication of the competitor, which means the customers have minimum choice of the brands thus loose the pricing power.
There are certain ways by which the companies can be able to deal with the price wars. The company can compete based onnon-pricemeasures, which will; not harm the financial stability.adding more features in their products, and providing more benefits to the customers to attract them. The respondent of the company needs to be strategically planned; it needs not to respond to every price war but being selective etc.
Answer to Question Number 2
Certainly several benefits are present of the driver of profitability. There are certain tools, which make sure the importance of understanding the concept. The first thing that can be identified from the driver of profitability is their strength. Similar to the strength it also enables to understand the weakness of the returns of the invested capital. The level of performance of the company against its competitor can be well distinguished with the help of understanding the concept of driver of profitability. a company can be termed a growing company when it rises up from the prior state towards the new achievement. The driver of profitability plays a vital role in understanding the history of the profits status of the company as compared to the present state (Dawson, Young, Murray & Wilkinson, 2017). It is the perfect setup for the companies to understand their financial condition in front of the other rival companies. The constant check allows their performance results. The strategies of the companies to get determined based on this vital factor. if the company is gaining profit that symbolises their business strategy is working and if not the change in the strategy is done. The proper usages of the resources are also determined by understanding the driver of profitability in the organisations. The return of the invested capital can be positive only when there is a great amount of profit taking place. ROIC is the most effective tool of measuring profitability by comparing the usage of the capital funds by the organisations.
Answer to Question Number 3
The rare and valuable resources of the Amazon Company are the growth of the diverse online services, the growth of the mortar and bricks presences. Apart from it the private label products are increasing at enormous rate, the vast network of delivery all over the world, the presence of experts in the ecommerce business, the presences of warehouses in the strategic location and also the presence of the great distribution hub, global brand value etc.
The presence of so many rare and valuable resources made it possible for the company to grow at such an extent. Depending on their category, they are classified into different resource locations such as primary and support activities. The inclusions of the resources in the marketing and sales, services, technological development etc. are the common resources location (Mere Roncal, et al 2019).
The sustainability of the Amazon in the market is based on various factors that includes the brand value of the company; the advantage of vast supply chain networks all over the world, the improvement in the usage of artificial intelligence has contributed largely in the growth of the company.
Answer to question Number 4
The introduction of the new and improved technology to achieve the better quality of the product at the same time reduces the manufacturing cost is known as value innovation. The process is highly efficient as it reduces the unnecessary cost of production and eliminates the unnecessary steps. Value innovation is the innovative way of improving the existing model of production if not changed completely. The improvement of the present services enables the reduction of the price of products that increase the profit margin. The ultimate aim of value innovation is the creation of the demand by changing the market in a way to render the level of competition that is not required in the market. The use of the value innovation technique is a highly popular way to lift the business at a higher position (Lichtenthaler, 2017). The importance of the value innovation in the companies has strengthened their competitive position in the market is much higher in respect to its rival company. Canon is the company who has a blue ocean strategy for the first time, which enables them to lead the market in a much greater way. They have removed the traditional copymachine, which took a large amount of space with old features, and the maintenance cost is also high for the blue ocean strategy which has new features, faster than the previous one and requires minimal maintenance. This innovation helped a lot in maintaining their position in the market. The lower investment with the highest profitable rate has increased the profit margin of the company.
Answer to Question Number 5
a) What actions taken at the functional level have enabled Nordstrom to successfully implement its strategy?
Nordstrom is one of the legendary fashion retailers whose headquarter is in Sweden. The company when started their operation their condition was not that much potential as it started with a single shoe store in Seattle. Now the progress has reached to such a potential and legendary level that they have at present240 stores in 31 states. The revenue strength of the company is also very sound. The main reason for the one type of overnight success of the company is their good employee appointment strategies and the company truly cares for the preferences and inclinations of the employees (Svatošová & Svobodová 2016). In addition to this the quality that are offered by Nordstrom are completely differentiated from other rival companies. The stores of the company are so enchanting that all the stores have an appealing atmosphere with good music arrangements. However it is most important to include here that the main reason behind the success of the company is their efficient functional level. The employees of the company are provided good preferences in the company and the customer service ethos of the company is at the central level that is to be executed by the employees of the company. The organisational chart of the company is like a pyramid where the employees of the company are in the highest level and the CEO of the company is at the bottom who is the person behind the success rates of the employees (Elosge, Oesterle, Stein & Hattula, 2018). Thus it can be said that the company’s success is highly responsible for the efficient and effective functioning strategy of the company.
b) What is the source of Nordstrom’s long-term competitive advantage? What valuable and rare resources does Nordstrom have that its rivals find difficult to imitate?
When the company started their business operations their condition was not very satisfactory but the satisfactory and legendary fact is at present the company literally holds a legendary platform in the market of Sweden and the company is capable to establish themselves as the most potential company before all the rival companies. There are several factors behind the immense success of the company in such a short time and the factors that are really problematic for the rival companies of Nordstrom to imitate. The factors are:
The company mainly targets the affluent customers and tries to satisfy their needs and requirements. Thus, in order to cater the attraction of the affluent customers the products of the company are completely different and more elevated from the other rival companies of Nordstrom. The stores of the company are located in upscale areas and have some sort of enthralling and expensive fitting and fixtures to draw a good impression of the customers. It is not possible for the other rival companies to construct stores in such upscale areas and most of the other companies try to grab the attention of the middle class customers. In addition to this the other companies never cared for making the stores unique with a musical atmosphere and like this. Finally the company selects employees with more pragmatism as compared to other companies. The employees of the company are selected for their ability to interact and communicate with the customers in an impressive way (Zhao, Yan & Keh, 2018). In addition to this the CEO and top bureaucrats of the company interact with the employees of the company and try to boost up their success rate. Such motivations are not provided in the other companies.
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