Week 5: Victory Motorcycles
Evidently, Victory Motorcycles is keen on using its American identity as a corporate level strategy to compete with Japanese motorcycle manufacturers. It is important to note that this idea is based on a thorough research that assessed the strong connection that American riders have with American-made heavy weight motorcycles. A good example is how the parent company involved a prestigious globally recognized named McKinsey and Company in finding the best market segment and ways to penetrate the market dominated by many well-established motorcycle manufacturers from the US and Japan.
One of the main pillars of the corporate-level strategy was to observe how, Harley-Davidson, a major player in the industry failed to meet the demand of American consumers. Although bikers were loyal to the American bike manufacturer, it is evident that they were not happy with some of the features. For example, they modified or changed some parts right after making purchases. The modification means that the company failed to meet all their expectations and they had to change what they considered inferior. This, in my view, explained why Victory Motorcycles capitalized on Harley-Davidson’s weaknesses and ventured into the heavy weight motorcycles. On the same note, innovating to bring the cost of their motorcycles down would allow the company to gain a competitive end. In my view, this strategy would not only increase the profit margin but also increase the sales since more people could afford the bikes.
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In my opinion, reducing the cost such motorcycles is not an easy task considering the fact that Victory Motorcycles operates in the US where the cost of production, research and development is relatively high. Therefore, the company should consider forming strategic alliance with partners from other parts of the world that produce similar bikes but are yet to penetrate the American market (Vattikoti, K., & Razak, A. (2018). For example, such a partnership can assist in acquiring cheaper and more efficient technology without investing heavily research and development. However, this approach does not lead to the desirable outcome if it leads to low profit margin due to profit sharing.
References
Vattikoti, K., & Razak, A. (2018). An Empirical Study On Strategic Alliances Of Multi-National Companies In The Modern Global Era-A Select Case Study. Academy of Strategic Management Journal, 17 (4), 1-13.
Week 6: Dr. Pepper Snapple Group
The case study of Dr. Pepper Snapple Group provides a platform for understanding how a combination of strategies brings the best outcome. However, I believe that building and enhancing leading brands is the main contributor to the firm’s success. In my view, succeeding in a competitive industry is not about focusing on high-growth or high-margin categories but offering the best option. The history of the company and the entire beverage industry speaks volumes regarding the most crucial strategy. The most important question is: which of the six strategies is the most important in terms of assisting the company to remain competitive for over a century? This explains why major players in the industry such as Coca-Cola and Dr. Pepper Snapple Group are still dominating the industry. In my view, their competitive advantage is due to their ability to build and enhance their brands over the years allowing their products to survive for decades despite the stiff competition. Also, building and enhancing leading brands marches with the company’s strategy of expanding through acquisitions. For example, the strategy informs which leading brands are worth acquiring and expanding depending on their performances in specific markets.
In my opinion, building and enhancing leading brands as a strategy while at the same time focusing on acquisition to strengthen the firm’s distribution channels leads forces the company to focus on well-established companies alone when looking for possible acquisitions. This denies the company a chance to acquire small companies that can help in enjoying industry-specific scalability. For example, the acquisition of a small firm that introduces a unique product or brand is worth developing due to scalability capacity it brings. Therefore, Dr. Pepper Snapple Group should consider introducing roll up strategy (capacity pooling) in the acquisition of small businesses. The idea is to acquire and merge multiple beverage makers allowing them to pull the resources together and reduce their operation costs. The strategy will allow the company to penetrate a larger market and introduce new brands for developing and enhancing.
References
Chatterjee, S., & Brueller, N. N. (2015). A new M & A methodology: Five lessons in anticipating post-merger resource interactions and challenges. Strategy & Leadership, 43 (4), 26-37.
Week 7: Internationalization Risks
Although internationalization offers a promising expansion opportunity, it is evident that associated risks discourage them from venturing beyond national borders. While avoiding political risks is a possible reason, I believe that economic risks are the major reasons. Internationalization leads to a drop in firms’ return. Although the drop is temporally, firms will understandably try to avoid such scenario since success in new markets abroad is not guaranteed. Therefore, the reasons behind the reluctance is to maintain an upward trend while at the same time avoid the risks associated with penetrating a new market that is totally different from its traditional market. For example, a study by Siebers (2012) revealed the difficulties that American retailers experiencing in serving Chinese customers who do not subscribe to the same culture, purchasing behaviors, and preferences as the US. The need market research to consider culture differences and other factors makes expansion within a specific country more feasible than internationalization.
The political and risks associated with internationalization are enough reasons not to venture into specific countries depending on the political situations. For example, post-election violence is common in developing democracies to experience violence after every election, which disrupts economic activities. This means that business for multinational companies will always slow down or collapse during such periods. The high level of corruption is another discouraging factor that creates an unfair environment for competition. For example, Epaphra and Massawe (2017) identified corruption in the tendering process as the main reason that discourages companies from investing in the region. From a company’s viewpoint, it is better to expand within a country that expand to another country where merit does not count but the amount that rogue investors are willing to pay to win tenders.
References
Epaphra, M., & Massawe, J. (2017). The effect of corruption on foreign direct investment: A panel data study. Turkish Economic Review, 4 (1), 19-54
Siebers, L. Q. (2012). Foreign retailers in china: The first ten years. The Journal of Business Strategy, 33 (1), 27-38.
