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المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2
Strategic Management (MGT 401)
Due Date: 08/08/2022 @ 23:59
Course Name: Strategic Management
Student’s Name:
Course Code: MGT 401
Student’s ID Number:
Semester: Summer Semester
CRN:
Academic Year:2021-22-2nd
For Instructor’s Use only
Instructor’s Name:
Students’ Grade: /15
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
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The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or
other resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font.
No pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
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Understand the basic concepts and terminology used in Strategic Management (CLO1)
Identify opportunities and threats as well as strengths and weaknesses in the operating (CLO2)
Distinguish between different types and levels of strategy and strategy implementation environment of
hypothetical and real-world organizations. (CLO3)
Gain insights into the strategy-making processes of different types of organizations (CLO4)
Understand the contribution of various functional areas e.g. production, marketing, purchasing, and supply
management to the overall well-being of the organization. (CLO5)
Understand issues related to strategic competitive advantage in diversified organizations (CLO6)
This assignment includes 2 sections:
I.
Case study
Assignment Question(s):
Read carefully case No 8 from your textbook (entitled ‘iRobot: Finding the Right Market Mix?) and
answer the following questions: (1 mark each question)
1.
2.
3.
4.
5.
Draw the SWOT matrix of the iRobot company.
What is the competitive strategy used by iRobot company?
Use the five forces of the M. Porter matrix to describe the robot-based product industry.
Describe the different functional strategies of the iRobot company.
Describe the relationship of iRobot with its primary stakeholders.
Suppliers:
6. Describe the core competency and the outsourcing strategy of iRobot.
7. What kind of strategic alliance is used by iRobot? Why does iRobot choose it?
8. What are the main challenges that iRobot faces?
9. Assess the competitive advantage of iRobot in its market.
10. Recommend solutions for iRobot to improve its competitive advantage.
II.
Mini-project
From real national/international market, select any type of strategic alliance between two firms and
answer the following questions: (1 mark each question)
1. Briefly introduce your chosen firms, partners of the strategic alliance (industry, nationality, size,
market position…). Max 150 words
2. What is the type of strategic alliance used by your chosen firms? Explain its different reasons.
3. What is the method used by the firms to manage their cultures after alliance? underline the pros
and cons of this method.
4. Is this strategic alliance successful? Justify.
5. What recommendations can you give to the managers of these firms to improve their
competitiveness?
Notes.
✓ Use at least 4 references for your answers to section II.
✓ All references used should be listed by the end of your analysis, using the APA style.
iRobot Company
i.
Case Study
SWOT Matrix
A SWOT matrix or analysis refers to a strategic management model or strategic planning tool
that enables a company or individual to determine its weaknesses, opportunities, strengths, and threats
(Owens, 2020). For instance, SWOT analysis iRobot Company is essential in aiding the company in
making strategic plans or decisions for its competitive advantage. An important strength of the iRobot
company is that it was the first firm to manufacture and sell robots to customers for domestic use in a
creative, efficient, and innovative way. As a result, the firm managed to reduce the prices of its products
are it launched them, making its goods affordable to its customers. iRobot's weakness is relying more on
third-party firms and suppliers to produce its goods. Also, it relies on a limited market base by
concentrating on a certain number of consumers. The company is not directing its efforts and resources
on reaching a wider customer base and using creativity to generate its items (Pransky, 2012).
On the other hand, the company has several opportunities, such as increased economic changes
where customers are forced to change their spending behaviors, ensuring they have the resources to
purchase its goods. Further, a good relationship with the US armed forces has created a ready market for
iRobot's goods. Besides, the company also experiences threats such as increasing global competition in
the robotic sector. In this case, the increasing competition threatens its rank as the global leader
(Pransky, 2012).
iRobot's competitive strategy
The company's competitive strategy includes the production of connected and smart goods,
which is a reflection of the new technological capabilities. This is because the company can understand
the current trends caused by technological developments. For instance, the company initially designed
the first robotic vacuum (Owens, 2020).
The robotic vacuum was produced after iRobot company conducted adequate research to identify
potential areas with opportunities and maximize them by generating robotic vacuums before their
competitors (Patil, 2019). Also, iRobot has maintained its competitive advantage over its peers by
designing strategic goals guiding its robotics production. For example, it has developed a management
structure that supports and aligns with its processes and operations. This also enables the organization's
management to assess and effectively make strategic decisions. By deploying the Connect and Evolve
approach, the company can adjust to changes and external surroundings and changes in the internal
environment of the company. Besides, the company is customer-centric and directs a lot of efforts and
resources to profit-producing tasks and projects. For instance, a lot has been achieved within the firm
through automation. Forming strategic associations with home automation for technological
enhancements has been essential in ensuring that iRobot can reach the top rank. Lastly, iRobot company
positions its goods so they can practically be used in everyday operations, assisting users in performing
their usual tasks and involvements effectively (Pransky, 2012).
M. Porter matrix
The threat of substitution is high because customers in the robotics industry can use other or
alternative services and products from other firms or industries to satisfy their requirements. The
company might reduce this high threat of substitution by producing high-quality goods and services and
ensuring they are always available in the market. The threat of new entrants in the robotics sector is low
because new firms venturing into this sector must be able to access advanced technology and adequate
resources and capital for development and research. Third, the industry is associated with a low buyers'
bargaining capability because of the low competition. As a result, iRobot Company has high growth and
profit generation opportunities. It can control buyers' bargaining power through customer
diversifications and expanding its market reach. It can achieve this by launching new goods, deploying
product diversification methods, and targeting new marketplaces (Pransky, 2012).
On the other hand, suppliers have high bargaining power because their product demand is also
high. As a result, the company is supposed to reduce its dependency on its suppliers to gain strong
bargaining power over its suppliers. Finally, there is a low competitive rivalry in the industry because of
the reduced number of significant players in the sector. Despite the robotics industry growing rapidly
due to increased demand for robots and technological developments, iRobot has maintained its top
position (Patil, 2019).
Functional strategies of iRobot Company
The provision of products to two different marketplaces has enabled iRobot to effectively take
advantage of long-term security and consumers' adaptability success that is also associated with the
contractual duties of the state. One nation's supply and manufacturing sector are less likely to be
negatively affected when there is a market decline due to its physical location. The company has
deployed product matrix changes by increasing resources directed to its development and research about
customer needs and the outstanding features of the products to meet these needs. Shifting to technology
from extraterrestrial technology is essential in helping companies, customers, and governments, which
has enabled the corporation to re-strategize its programs. By deploying social media platforms such as
Facebook, Instagram, and others as its main marketing element, iRobot has achieved much in the
robotics industry. Among the achievements, in this case, include globalization of the company. as a
result, the company can reach extended marketplaces across the globe using social media sites. For the
company to retain its customers, it deploys aggressive product pricing measures. Besides, the company
deploys marketing investment and aggressive marketing strategies to sustain its top-line expansion,
development, and market leadership. For instance, the company is focused on sustaining a significant
leadership position in the robotics sector, particularly vacuum robots. This has been enhanced by the
company's position in smart homes globally (Patil, 2019).
Relationship of iRobot with its primary stakeholders
There is a good relationship between iRobot and its primary stakeholders, as illustrated by its
prolonged contractual associations. The company deals with designing and developing robots for
government, industrial purposes, and home use. This implies that the company's primary stakeholders
include companies worldwide, governments, and individual consumers. iRobot Company supplies and
sells its goods using various retailers across the country. However, the company sells its items
internationally using distributors. Also, iRobot utilizes online retailers such as Amazon to sell its goods
globally. Besides, there is a good relationship between the company and its stakeholders because of its
neutral stakeholder where some feel satisfied due to its continued expansion and development. However,
there were indications that some of its incentives did not coincide with its stakeholders based on the
2009 annual reports. Despite the company recording underperformances, it deployed a timed-based
stock reward system leading to high Chief Executive Compensation. This led to the organization being
reprimanded by its stakeholder services. The company responded to this by using its performance share
units to manage the situation in 2014, but this has not been able to turn things around. The company has
had bad and good relationships with its primary stakeholders (Adiguzel, 2018).
Core competency and outsourcing strategy of iRobot
The company's core competencies include marketing, designing, and developing robots which
means that its leading activities include producing and selling robots. Other operations such as
processing of the robots are not performed by iRobot. Therefore, the company is mainly involved in the
development and optimization of prototypes of robots. This is because the company outsources other
processes to third-party firms, which are also required to offer labor and raw materials to produce the
company's products. Previously, iRobot Company was not involved in long-term contracts with the
third-party producers of robots. As a result, the production of the robots was based on customer orders.
With time, the company was forced to venture into long-term contracts with third-party firms to produce
the robots. Besides, the company uses several engineering strategies to produce its items. Its products
are usually offered at manufacturing plants in their initial stages of production, allowing the
manufacturing plants to give their feedback. Based on the feedback, the company incorporates them into
the design of their items before the start of mass production. This reduces the period by the company to
transform items into finished products from the design stage to the mass manufacturing stage with better
yields and quality (Aphiratsakun & Liwsakphaiboon, 2020).
The strategic alliance used by iRobot Company
The strategic alliance used by the company is a non-equity strategic alliance. The alliance, in this
case, involves two or more firms signing a contract or contractual association to pool their capabilities
and resources together to enhance their operations, thus attaining increased sales and high-profit
generation. The company agreed to create an alliance with Advanced Scientific Concepts Company,
where it agreed to buy units from its alliance partner. On the other hand, iRobot company was going to
benefit from the Advanced Scientific Concepts company by being offered exclusive rights to using its
LADAR technology for uncrewed ground cars. Additionally, iRobot and Boeing Company formed an
alliance aiming to market the SUGV's commercial version and its production. The company chose to use
a non-equity strategic alliance because of its focus on activities that add value to its production process,
enhancing its products' quality. In this case, value creation entails each activity that can transform or turn
resources and labor into products that align with its customers' quality desires, thus meeting market
requirements. Therefore, the non-equity strategic alliance between iRobot and the two firms enables it to
produce complementary products and technology and have quicker and enhanced market access. As a
result, iRobot Company will record high sales for its products, acquire increased market reach and
generate more profits (Aphiratsakun & Liwsakphaiboon, 2020).
Main challenges for iRobot Company
The company's main challenges include the small competition in the robotics industry, big boys
in the market, and emergent competition (Baklouti & Alimi, 2017). First, the lack of stiff competition
originates from the company controlling a large portion of the market, such as the production and sale of
robotic vacuums. In this case, iRobot enjoys about six times its competitors' market share in the robotics
vacuum. This makes the company lack proper measures to enhance the quality of generating these
products. Second, the presence of big boys such as Samsung and LG Electronics is a threat to the
company's operations because of their capability and huge budgets. This could be a great threat to
iRobot company if such companies decided to venture into the production of robots. Also, suppose the
big boys like Samsung partnered with or acquired smaller companies in other regions. In that case, they
could sway many customers, thus denying iRobot Company an opportunity to sell its products to such
market bases. Besides, emergent competition is also another threat to iRobot company. Despite the
company lacking competitors in the industry, it is not guaranteed that such might emerge. According to
history, competition could emerge, which can happen at a high rate. For instance, companies such as
Samsung, which have the resources and capability to venture into the robotic sector, might one day
decide to start producing and selling robots (Burgsteiner et al., 2016).
The competitive advantage of iRobot in its market
The company is the main leader in smart home technology, an emerging trend. Its strategic plan
focuses on sustaining robust leadership in robotic vacuum cleaner production. The smart home segment
is significantly dependent on the company's penetration of Roomba global household, where innovation
is the main factor that ensures that its goods are unique from its competitors. Also, it has effectively
attained smart home advancement through deploying Braava goods through specific programs of
creating product awareness, steady development, and research into producing new products that meet
the current market needs. For instance, iRobot Company has acquired over 88 percent of the Northern
American market share (Baklouti & Alimi, 2017).
Besides, the company competes with corporations such as Samsung, a well-known company
with all the resources to generate enhanced quality items. Also, such companies have the required
capability of research and development. As a result, iRobot is forced to allocate additional resources and
capital to its research and development, which enables it to counter such threats from its competitors.
This ensures that iRobot is more creative, producing good quality products, keeping its customers, and
acquiring new customers. Maintaining its customers enables the company to increase the volume of its
sales and profits, which assists it in acquiring more resources to enhance its operations and product
research and development (Baklouti & Alimi, 2017).
How iRobot can improve its competitive advantage
Despite being ranked at the top in the production and sale of robots for a long period, much
should be done to enhance the company's marketing strategies. Also, its selling programs and
positioning are not clearly defined. This makes the company vulnerable to negative impacts from
competition from its competitors. Therefore, iRobot needs to allocate more capital and resources to its
marketing department to maintain its position as the leading company in producing and selling robots.
Enhancing its marketing strategies will lead to the company incurring additional costs, especially when
building a more advanced marketing department. However, following procedures properly will enable
the firm to improve its operations, leading to increased sales and improved profit generation, which will
cover the initial costs. Besides, iRobot should design measures to reduce its expenses and use resources
and capital by re-investing in the organization in new technology. This is because the company might
experience competition despite being a leader in the robotics industry. Robotics diversification will
guarantee the company of a continuous operation in case the robotics industry has new entrants with
capabilities more than iRobot's. For example, it can aim at designing new robots software that will
enable it to produce quality products rather than quantity. Also, the company can enroll its users in
software subscriptions integrated with hardware goods, enabling it to record high revenues (Tareque,
2020).
ii.
Mini Project
Briefly introduce your chosen firms and partners of the strategic alliance (industry, nationality,
size, market position…)
The chosen firms for strategic alliance include Walt Disney and Chevrolet, as described under.
The Walt Disney Company is a global firm in the entertainment and media industry based in the United
States, California. The company mainly deals with entertainment and media services. It has wide market
coverage in its service provision. The company has subsidiary media firms such as Disney parks, Disney
media, sports, and international. The company began as a cartoon studio, but to date, it has flourished
and grown big to the perfect name in the current media and entertainment industry. Disney has a
continued legacy of innovating global tales and experiences for their clients around the globe. Also,
Disney is responsible for creating and producing local...