NVidia Corp. is an American technology company that designs graphics processing units (GPUs) for the cryptocurrency, gaming, and professional market. They also develop systems on a chip used in the automotive market and mobile computing. They are the producers of GeForce gaming graphics processing unit which has been in competition for many years with advanced micro devices (AMD). NVidia has however been advancing their systems year after another regarding their expansion in gaming industry bringing in their handheld shield tablet, shield portable and shield android TV. Since 2014, NVidia Company has majored in four markets producing gaming, data center, professional visualization, and auto. The company has also focused on artificial intelligence. In addition, they also provide their clients with parallel processing capability which assists scientists and researchers in running high-performance applications effectively (NVidia home). Although the market for their products has stiff competition posed by their competitors, NVidia Corp. has always used different strategies to meet their goals and objectives.
Strategy development is a process that takes different steps to come to realize not a one-day event as it sounds. It is well compared to a scientific process that takes several steps to complete. There are different tools used in strategic planning that are primarily used to see the development process through and to evaluate it. NVidia Company decided to use Quantitative Strategic Planning Matrix (QSPM) and Grand Strategy Matrix (GSM) as their strategic development tools. This tools assisted the company is going through the development process. The two come in to evaluate the company's competitive position and market growth. At the hypothesis stage, GSM classifies the company in one of the four quadrants based on market growth and competitive position. Each quadrant contains specific strategies that are relevant to that quadrant. The selected quadrant selected gives strategies that are to be followed in the realization of a company's objectives and goals (Yelle, 2017). Notably, using the GSM method, NVidia Company has realized their specific goals though under stiff competition posed by their primary competitor AMD. The company has also advanced its products widely to cope the challenge of market growth.
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On the other hand, QSPM is an expert strategic approach that comes in the evaluation stage of the strategy development process. It involves some computation to objectively select the best strategy using input from the management techniques. In other terms, the method uses inputs from stage one analysis, tries to compare them with results of stage two to the last stage and decides objectively among alternative strategies. The first stage involves identifying the primary strategic factors using strategic tools such as EFE matrix and IFE matrix. After analyzing the key strategic factors using the two tools, the company is supposed to formulate the type of strategy to pursue. This can be done using stage two strategic development tool, for instance, SWOT, SPACE matrix, or IE matrix model. After consideration of the first step of the key strategic factors in stage two. The objective of QSPM is to decide on the most suitable approach to see through the company's goals (Yelle, 2017). QSPM allows the company to rank the alternative strategies based on the weight assigned to the company's SWOT.
After considering the strategic development tools, the company is required to select best two among the alternatives given. QSPM evaluates the SWOT of the company and gives the best alternative. Considering the IFE of NVidia Company strategic management 2014, the primary goal for NVidia was to sustain the internal strength and to note and improve on the weaknesses and turn drawbacks into strengths. The best alternative for seeing this objective through was by staying aggressive in the PC gaming market. Notably, NVidia has the best chance to improve the current technology to get a competitive advantage over their competitor. Production of more advanced gaming technology earns customers equity and loyalty. Maintaining the customers' loyalty is the most fundamental aspect of the business (Strategic Management, 2014). NVidia Company has a key strategy of satisfying the already loyal clients so that they can give appealing comments to the others. Having an always up to date technology will see the company's goal true. The other part of the strategy is an expansion to more international markets giving the company more worldwide recognition and base. Some of the methods to incorporate is improving online workshops and training labs by bringing up a virtual reality training scenario for instance. This strategy was paramount in overseeing NVidia for future generations. Improvement of technology and expansion of the market to more places were the two strategies given priority by NVidia management. They were the best strategies for their company which is under competition. Improvement of technology will guarantee the company future in the market while the expansion of market will increase the company's returns. However, the two were only given priorities but other strategies could be used. Some of these strategies include allying with other companies to produce other forms of goods in the same industry (Fang, 2017).
Notably, strategies are classified into three levels, and they have to cut across to see the company do well in the three basic levels. The strategies given priority should help the company face the problems in the industry. The main problem in the technology industry is advancement in technology which replaces the old technology. At a corporate level, advancement in technology will help NVidia cope the challenge. Expansion to more global areas will give the company a marketing functional strategy increasing the market for its products. The business strategy incorporates the two helping the company maintain its competitive advantage. A typical company's strategy should consider the three levels to see the company's future. Notably, a strategic plan is a long-term plan that foresees the company future, unlike the operational plan that operates on daily basis.
In essence, the two are the recommended strategies to see the long-term objectives of NVidia Company. However, the best formulated and implemented strategies become obsolete as internal and external factors change. Therefore, the company should engage in systematic review and evaluation of those strategies. Strategy evaluation is important to sensitize the organization about a potential problem before it is critical. The process of evaluation involves three basic steps. First, the underlying bases of the strategy are examined for the potential defect. Then the actual results are compared to the expected results to determine whether the approach was viable. And finally, a curative action is taken to ensure the performance rhymes with the plans. To adjust to factors like competition, economy, company growth and regulatory environment, a company must consider new strategies. However, not all strategies give the desired outcome, bringing in the need for evaluation of the implemented strategies (Strategic Management, 2014). The evaluation may, however, result in alteration, immediate change, or abandonment of one or more of the company's strategy.
Considering the goals laid upon by the company management, the strategies implemented have seen through the objective. According to NVidia 2014 global citizenship report discussing the opportunities, successes, and challenges, the company ranked number six in the Newsweek green rating. It also earned a score of 87 out of 100 in carbon disclosure project, became the first company to get greenhouse gas assurance in IT industry, and was the first to transition to the global initiative G4. These results implied that the company was doing better than the competitor (NVidia home). Hence, the results after evaluation of the implemented strategy showed that the company's future was secure. The desired outcome of the company was to rank better than its competitor, and through the measurable milestone, the company has already seen itself a record its competitor will not acquire soon.
In essence, the involvement of the company in research and implementation of new technology has seen the company a competitive advantage all through. NVidia Company has been in the forefront of bringing in the improved technology in the industry thus giving its customers a reason to stick. Moreover, the strategy of expansion of their market to the whole globe has also seen the company's success. Expansion of market increase profits and also competitive advantage where NVidia products are supplied in the broader market reducing competition in the small market. The vast market also spreads out information about the company's product increasing demand for its products. Notably, strategic planning aims at company's future more than the current situation. Therefore, more paramount considerations have to be taken care of before coming up with strategies. On the other hand, operational planning takes care of the basic operation of the organization. Operational plans may change day in the day when the company tries to shape its operation (Stones). However, in the realization of the future goals, the company has to keep in mind the intended results of the strategic planning when executing operational plan. For better strategies to be incorporated, the company’s management should also consider the porters five force analysis.
NVidia porters five analysis
Due to the increased competition, there is a great need for the company’s management to consider porters five forces analysis as another strategic management tool to analyze the industry and understand underlying levers of profitability in NVidia Company.
Analyzing the new entrants in the gaming market is one of the fundamental steps to come up with a good strategy. Notably, the industry is growing and many companies are willing to venture into this market to provide cheaper products. NVidia has to incorporate new strategies to build effective barriers to this challenge. One of this strategy is to make a new product that will bring in new customers and maintain the old ones. Also, NVidia can build economies of scale which will assist in lowering fixed cost per unit (Alvisi, 2006). These strategies will aim at maintaining the old customers and creating new hence making sure company profit is not affected.
Notably, a decrease in the number of suppliers increases supplier bargaining power which lowers the overall profit of the final product. NVidia Company can strategize in this area by building efficient chain with multiple suppliers. NVidia can also develop a dedicated supplier whose business depends upon the firm to reduce the bargaining power.
Buyer bargaining power increases with significant increase in the number of companies producing the same product. The more the customers have alternatives the more they will inquire for discounts hence affecting the company’s profits in the long run. NVidia Company should build a large base of customers which will help in reducing their bargaining power and also help the company to streamline its production process and sales (Alvisi, 2006). NVidia production of new products will also reduce the defection of existing customer to their competitors.
When a new product in the market meets the customer economic need in a different way, the industry profitability suffers as customers find an alternative. Some of the strategies that NVidia should incorporate to build a barrier in this gap are, being service oriented other than product oriented. Customers will stick to the company because of the service was given. NVidia should also invest in trying to know what their customers need other than just selling them what they are buying (Alvisi, 2006). In this case, the company can be able to fill the loophole in the market hence leaving no chance for the entrance of substitute.
Finally, there is rivalry amongst the existing competitors which in many cases is a healthy competition in business. However, when the rivalry is intense, it causes a reduction in price and eventually a down drive to profits. NVidia has powerful competitor AMD Company which poses a great challenge in gaming software. However, to create a barrier, NVidia should build a sustainable differentiation in its products (Alvisi, 2006). The company should also build scale so that the competition can be better. Lastly, NVidia can collaborate with the competitor to increase the market size other than just competing in a small market.
By better analysis of Porter's five forces, NVidia Company can gain a complete image of what will bring profits in future. The corporation can identify game-changing trends early and can respond to exploit the available opportunities. Understanding the five forces can help the company management to shape the forces in the favor of the company early enough.
To sum up this discussion, NVidia Company has been using different strategies to meet its goals. The company which is situated in America deals with gaming, data center, professional visualization, and auto. Their main competitor AMD has been posing a great competition in the market making NVidia make strong strategic plans to cope with the situations. Some of the method used in strategic development was the GSM and QSMP which helped the company to access the best ways. Expansion of the market in the whole world and continuous advancement of their technology were the best alternatives given priority. The two strategic actions were targeted to see the company's future existence in the market and give a competitive advantage. According to the results portrayed, the two strategies were effective and were viable for the recommendation. After review and evaluation, they were found to be beneficial to the company's future.
References
Alvisi, A. (2006). The economics of digital games (Vol. 272). Sage Publications, London.
Fang, D. (2017). Two analytical essays in distribution channels (Doctoral dissertation, The Hong Kong Polytechnic University).
Nvidia home. Strategy, 2014 Citizenship Report. Retrieved from http://www.nvidia.com/object/fy14-gcr-strategy.html
Stones, D. strategic planning versus operational planning. Retrieved from https://www.youtube.com/watch?v=2weg_EorCR0
Strategic Management. (2014). Mastering strategy. Washington, D.C.: The Saylor Foundation
Yelle, E. (2017) Monitoring & Evaluating a Strategic Plan. PPT
Yelle, E. (2017) Strategic Planning Formulation Framework. PPT
