Generic Strategies : Global Value Creation

Generic Strategies for Global Value Creation

Introduction

Basically, generic strategies are used and applied by a particular company or organization to gain competitive advantages and scope in the market. In the present time, most of companies are applying such generic strategies to position within the industry. These strategies allow organizations to make strategic decisions towards market scope. Simply, it can be said that, generic strategies are the method used by the firms to gain competitive scope and advantages in the industry. This helps a company to attain competitive scope over competitors in the market. These strategies also help in improving the sales margin by reducing costs. In this research paper, generic strategies for creating value in a global context would be outlined and discussed.

Generic Strategies

In the strategic management, there are 3 main strategies such as: adaptation, aggregation, and arbitrage that used to create value in the global context. For instance,

Adaptation Strategies: These strategies are applied by a company in order to enhance market share as well as revenue by modifying or changing elements of business model to suit local preferences & requirements. For example, as per adaptation strategy, a company may change features of its product or services in order to fulfill the wants and expectations of the customers. Along with this, it should also be noted down that, this is most widely common strategy because some degree of adoption is needed for all the products. The main types of adaptation strategies are discussed as below:

• Variation: As per variation strategy, a company doesn’t need to bring any changes in its current products and services. But, the organization has to modify or adjust its business positioning, policies, and expectations for the success. For example, Whirlpool is providing smaller washers as well as dryers in Europe than USA (Dubey, Gunasekaran, Childe, Fosso Wamba, Roubaud, & Foropon, 2021).
• Focus: According to this, a company mainly focuses on different areas such as: geographies, products, market segment, and states of value chain. On the other hand, a vertical focus strategy limits a company’s direct involvement into the specific steps in the supply chain. Moreover, segment focus includes targeting a more limited customer base. These types of strategy are used by most of luxury goods manufacturers.
• Externalization: According to this, a company gain competitive scope in the industry via strategic alliances, networking, franchising etc. This helps the multinational companies to fulfill the local requirements and preferences of the customer at the reduced risks and cost. For example, McDonald is the company that provides franchising to others and it also has company owned stores.
• Design: Based on this, a company has to reduce the cost of its products and services to compete in the market. For instance, most of manufacturing are focusing on design flexibility in order to overcome supply chain differences. On the other hand, cost can also minimized by proposing standardized production platforms. For example, Tata motors company that effectively introduced a care in India which is affordable to most of citizens (Szczepańska-Woszczyna, 2018).
• Innovation: According to this approach of adaptation strategy, a company pays too much attention on enhancing the efficacy of adaptation efforts. For example, IKEA’s flat-pack design has reduced the impact of geographic distance by cutting the transportation cost. This allowed the company to expand its business into different countries of the global world.

Aggregation Strategies: These strategies are used by the companies in order to achieve economic of scope or scope by creating global and local efficiencies. According to these strategies, a company focuses on standardizing a major portion of the value proposition. The key purpose of this strategy is to exploit similarities among the geographies rather than adapting to differences. Based on this method, specific ways are identified to economic scope and scale into the global business model without bargaining local receptiveness. Toyota is the company that has used this approach.

Moreover, based on this strategy, a company is mainly invest and focus on standardization’ for the purpose to create as well as use existing economics of scales across a range of locations. By adopting this strategy, establish its brand reputation and image in the new markets via research and development, active advertising etc. This strategy helps a company in providing the cost advantages. For case a company can buy raw materials or products at the lower price. In addition to this, it can also be said that, this strategy is also more important in improving the profit level and revenue quickly (Stevens, & Templeton, 2020).

Arbitrage Strategies: According to this value creation strategy, a company is focus on exploiting differences rather than adopting them. Wal-Mart is using this strategy to gain competitive advantages. For instance, Wal-Mart is saving millions of dollars by buying low cost products from China. The company buys products at the lower price and sells them in higher rate in other nations. Simply, it can be said that, it is a method to buy the product in one market and selling it in another market at the higher price.

 On the other hand, as per this strategy locational differences are analyzed for the benefits of the company. For example, Apple is one of the leading technology companies that outsource manufacturing from China in order to save the material and labor costs. The main objective of the company is to save manufacturing cost so that it can offer high quality and innovative products at the reduced price to the customers. This strategy has allowed the company to gain more market share by achieving competitive advantages (Kao, Wang, & Farquhar, 2020).

Conclusion

On the basis of above discussion and analysis, it can be concluded that, today’s business organizations are using a range of generic strategies for the different purposes. These strategies allowing today’s companies to improve economies of scale and attain competitive scope and advertising. On the other hand, companies are able to save millions of dollars by using such strategies in an effective and proper manner. Along with this, it should also be noted down that, a company can use such approaches not only to increase profit and revenue but also gain competitive scope and advantages over competitors. Moreover, it is also found that, a company can establish strong position in the both local and global market by using these strategies. Such strategies are implemented by a company for the competitive edge. In addition to this, it can also be summarized that, these strategies are more helpful in satisfying the expectations and wants of the customers at the reduced price. Along with this, values at the global level can be created by using these strategies. These also allow a company to generate greater revenue and deal with the competitors successfully. Overall, it can be said that, generic strategies offers range of tangible and intangible benefits to a company.

References

Dubey, R., Gunasekaran, A., Childe, S. J., Fosso Wamba, S., Roubaud, D., & Foropon, C. (2021). Empirical investigation of data analytics capability and organizational flexibility as complements to supply chain resilience. International Journal of Production Research, 59(1), 110-128.Retrieved from: DOI:10.1080/00207543.2019.1582820

Kao, G. H. Y., Wang, S. W., & Farquhar, J. D. (2020). Modeling airline crisis management capability: brand attitude, brand credibility and intention. Journal of air transport management, 89, 101894. Retrieved from: DOI: 10.1016/j.jairtraman.2020.101894

Stevens, A., & Templeton, A. (2020). Collective action and labour militancy interrupted: Back-to-work legislation and the state of permanent exceptionalism at Air Canada. Economic and Industrial Democracy, 41(1), 6-28. Retrieved from: https://journals.sagepub.com/doi/pdf/10.1177/0143831X16682306

Szczepańska-Woszczyna, K. (2018). Strategy, corporate culture, structure and operational processes as the context for the innovativeness of an organization. Foundations of Management, 10(1), 33-44. Retrieved from: DOI:http://dx.doi.org/10.2478/fman-2018-0004