- April 17, 2014
- Posted by: essay
- Category: Term paper writing
The next step of strategic analysis following the exploration of internal and external environment and SWOT analysis is the choice of an appropriate strategy along with aligning this strategy with environmental factors. The purpose of this paper is to consider four types of generic strategies, identify elements from analytical models (Porter’s, PEST, RBV, etc.) which contributes to the SWOT variables of the chosen company (Mondelez International Inc.), and determine how each of the generic strategies can address this factor. The results of this analysis will further be used for generating strategic recommendations to Mondelez International Inc.
1. Overview of strategies
Overall, it is possible to identify four types of generic strategies: cost leadership, differentiation, niche focus and preemptive move (or first-mover advantage) (Root & Visudtibhan, 1992). Cost leadership means offering best prices for consumers; it can be reached by different methods: economies of scale, effective product design, overall economic balance, operational economy, and also with the help of field experience (Pickton & Masterson, 2010). Differentiation means offering products or services which can be perceived as unique compared to competitors (Haberberg & Rieple, 2007). In general, differentiation strategies can be classified into two types: quality strategies and branding strategies (Pickton & Masterson, 2010). Differentiation can also be reached in a variety of ways: better components of ingredients used for the products, better design, look and feel, combined products, diverse products, unique delivery channels, added services, etc (Mazzucato, 2002).
Focus, or niche, strategies are used by companies operating in a narrower market segment, and can include variations of cost leadership and/or differentiation strategy (Porter’s Generic Strategies). In these cases, the companies can optimize their resources, avoid dilution, reduce competitive pressure in particular market segments, and create unique identity (Iansiti & Levien, 2004). The implementation of focus/niche strategy can be done through targeting specific market segments, focusing the product line and operating in a limited geographic region (Wilson & Gilligan, 2012). Finally, pre-emptive strategies (or first-mover strategies) lead to the creation of unique competitive advantages or competencies, and are commonly implemented in the following ways: new products (and gaining opportunities associated with these products), new production systems, and gaining customer loyalty (Wilson & Gilligan, 2012).
2. Strategic choice
2.1. Selection of elements
For each of the dimensions of SWOT analysis, it is necessary to select an element from analytical models, such as internal analysis, Porter’s Five Forces model, Value Chain, PEST, etc. For strengths, such factor is geographical diversity of operations, outlined in the resource-based view, in the section of physical resources. For weaknesses, the chosen factor is lack of integration and empowerment of acquisitions, considered in the resource-based view in the section of acquisition-based resources. For opportunities, expansion into emerging markets was chosen as the key factor; this factor is described in PEST analysis in the section devoted to economic environment. For threats, the key factor is intensive competitive rivalry, which is described in the Porter’s Five Forces framework.
2.2. Impact of strategies on selected elements
The most important process in this section is to determine how the use of each type of strategy will help to take advantage of an opportunity or strength, or help manage a weakness or threat. Table 1 contains the list of strategies, SWOT dimensions, chosen factors and a tactic of using the particular strategy to address a particular factor.
|Dimension||Factor \ Strategy||Low cost||Differentiation||Focus||Preemptive|
|Strengths||Geographical diversity of operations||Use regional production capacity to provide most economic prices||Develop and market customized products for every geographic region||Use local products and ingredients for products, and market these brands as supporting domestic economy||Use the advantages of different geographical locations to gain leadership in the confectionery segment|
|Weaknesses||Lack of integration and empowerment of acquisitions||Use operational capacity to establish economic balance for all company brands and offer best prices||Market acquired and “native” brands together to gain greater customer attention||Use combined Craft & Cadbury power to become a leader in confectionery segment||Merge R&D capacity and distribution channels to create unique advantages for the product|
|Opportunities||Expansion into emerging markets||Offer best prices for the emerging markets using the advantage of the operational effectiveness||Become preferred brand in the emerging markets through extensive marketing and combined offering of a diverse number of products||Focus on confectionery sector and sell innovative products to gain market leadership in confectionery segment in emerging markets||With the help of operational capacity and innovative technologies become #1 confectionery manufacturer for emerging economies|
|Threats||Intensive competitive rivalry||With the help of economies of scale, provide best prices for customers||Establish unique brands and gain customer loyalty||Focus on the confectionery segment and using R&D capacity, create unique product offerings||Reach a dominant position in the confectionery segment and crowd out other competitors|
Table 1. Tactics for different generic strategies addressing SWOT factors
In this paper, different generic strategies and methods of their implementation were considered. Four key factors belonging to different dimensions of the SWOT matrix of Mondelez Inc. were selected: geographical diversity of operations, lack of integration and empowerment of acquisitions, expansion into emerging markets and intensive competitive rivalry. For each of these factors and for each type of strategy, a tactic for either managing a threat or weakness, or taking advantage of an opportunity of threat was developed. These data will further be used for the analysis of Mondelez Inc. strategies and generating strategic recommendations.