Friends University Influence of Industry Characteristics and Dynamic Capabilities Essay

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3 IBM at 100 The answer for the questions is that IBM certainly has specific resources and capabilities that are not shared by rivals. The insight has been developed into a resource-based view, which has emerged as one of the three leading perspectives on strategy. While the industry-based view focus on how average firms within one industry, the resource-based view highlights how individual firms differ from each other within one industry. In SWOT analysis, the industrybased view focus on the external which are O and T, and the resource-based view concentrates on the internal S and W. IBM consistently delivered value to customers in the past century because of its valuable, rarity and hard to imitate capabilities that are embedded and exploited for an above average performance. Also, IBM over the year has become an on-demand business. Allowing the company to o anticipate and respond to dynamic, unpredictable changes in demand, supply, pricing, labor, competitors’ moves, capital markets, and the needs of all its constituencies—customers, partners, suppliers, and employees. And these businesses must respond to customers, partners, suppliers, and employees to keep them informed, motivated, and engaged. On the top of that, the company uses flexible cost structures and business processes. This flexibility enables it to adapt to changing business needs and conditions, reduce risk, and to do business at high levels of productivity, cost control, capital efficiency, and financial predictability. What I can take from the chapter is that taking advantage of all resources that are available to achieve new or additional objectives. That is, how to use existing capacities within 2 an organization to achieve new output and eventually outcomes. In a way, leveraging can be looked at one of the strategies that can be employed to improve efficiency. 3 Resources Component business models: Making specialization real By Pohle, George, Peter Korsten and Shanker Ramamurthy. IBM Institute for Business Value. August 2005 http://www.ibm.com/services/us/index.wss/ibvstudy/imc/a1017908?cntxt=a10032 08 1 Ryanair’s Strategy The winning strategy adopted by Ryanair encompasses different aspects. Firstly, the airline has specialized in offering short-haul flights, which take an average of 3 to 6 hours. To succeed in making such flights, the company uses the Boeing 737, which allows quick turnaround flights. Therefore, it can get more flying hours per day, creating cost efficiency. Secondly, Ryanair gets extra revenue from renting out overhead storage and seatbacks to advertisers. Such a source of revenue implies that the airline can manage to lower its travel costs. Thirdly, Ryanair has adopted a strategy of using secondary airports far from the main city (Peng, 2014). That lowers the price of travel significantly. For example, between London Stansted, which is near London, and Memmingen, close to Munich, Ryanair charges 221 dollars. Additionally, passengers have to part with 40 dollars for baggage, food, and drinks. On the other hand, passengers who choose British Airways are charged 441 dollars to travel from London to Munich. Therefore, passengers who choose Ryanair end up saving money but have to contend with the inconvenience of traveling to the main city after alighting from a flight. Fourthly, the airline also strives to compete with other smaller companies such as Easy Jet and Air Berlin by pursuing cost reduction. Some of the strategies adopted by the leadership in the airline have drawn controversy. For instance, CEO Michael O’Leary asserted that Ryanair would charge one pound to utilize the restroom. O’Leary went to the extent of suggesting that the airline would offer standing cabins to accommodate more people. In addition to that, the CEO asserted that the average traveler did not need the baggage service treatment since it was expensive. Despite the controversial remarks made by Michael O’Leary, this airline has made tremendous progress in terms of expanding its market share through cost reduction. 2 Reference Peng, M. W. (2014). Global strategy (3rd ed.). Cengage Learning. China’s Case Study 1- Microsoft feels threatened in China by Linux since Dell which runs on Linux has a very high market share of about forty two percent due to the availability of a free operating system. These personal computers are mostly for commercial and government purpose thus it is difficult for windows to establish a viable market in China. 2- In China, they view Microsoft as having some resources and capabilities, in that it worked with dome organizations to fund labs and with the Ministry of Education to finance computer classrooms in rural areas. They also offered China among other fiftynine countries the fundamental source code and permitted them to substitute some programs on Windows with local ones. 3- After appointing Timothy Chen as its CEO in China, Microsoft developed a softer strategy of recruiting large corporations as paying customers, which shall promote the legal users to use the product. This stopped them from using the threatening- letter approach thus they quit suing people and tolerated the high levels of piracy. 4- It is hard to change the Microsoft strategy since the country already has got the norm of using free Linux and cheap Microsoft copies pedaled by touts in back. The strategic changes are made by enhancing the process of research and development, going for the inorganic growth initiates in the highly competitive field. 5- The chapter shows that every company faces innumerable options for where to play and how to win. Often it has to sort out seemingly conflicting objectives, such as the need for both long-term growth and short-term profitability, to choose which options to pursue. To “maximize long-term value” means when there are mutually exclusive options to select those that will give the greatest sustained increase to the company’s economic value. 1 Emerging Markets: High Fashion Fights Recession 1. Considering the Five Forces framework, how would you characterize the competition in the luxury goods industry? Usually, buyers do not have a lot of bargaining power. New emerging markets also bring with them an increase in buyers, facilitating an increase in demand for products, and an increase in consumer spending, hence lower bargaining power. Entering the luxury goods market is also difficult as there are high capital and brand image requirements. There is a low threat of substitutes owing to the high entry prices, among other factors. Suppliers also have high bargaining power. The reason being there is a high demand for suppliers. The industry is suffering from a shortage of skilled workers who can produce high-end items. The companies that are already in the market are in competition and rivalry with each other, making it even difficult for other organizations to enter the market. In general, competition is high in the luxury goods industry as the companies that are already established are operating in an oligopolistic market. The companies that are already in the industry are limited creating a greater completion among them and industry concentration. 2. How much bargaining power did consumers as buyers have during the Great Recession? According to Peng (2017), the sale of luxury products was difficult in the Great Recession. The same went for other products and services during the recession period. The Great Recession handed the power to the consumers as it put them in a position of advantage, increasing their bargaining power. During this time, consumers were less inclined to use their money on things such as luxury items. Companies that sell luxury items were in trouble during this time. The majority of these organizations and companies resorted to the adoption of new strategies as a way of responding to the Great Depression. For instance, many of them 2 slashed their prices, others resorted to the development of cheaper product lines, and others opted to offload their inventory to retailers who conduct their business online. These new strategies were unconventional and unheard of in the luxury goods industry. 3 Reference Peng, M. W. (2017). Global strategy. Cengage learning.
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1

Reflection

Student’s Name
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2
Reflection.
The concepts I learned in the last two weeks have contributed immensely to my business
knowledge experience. Firstly, I learned that most businesses strive to create a competitive
advantage in different ways. For instance, a firm like Ryanair opted to pursue a cost reduction
strategy to gain a competitive advantage over other bigger organizations such as British Airways.
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Anonymous
Really helpful material, saved me a great deal of time.

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