Strategies to Sustain Competitive Advantage

Strategies to Sustain Competitive Advantage Q1: Using an appropriate model, evaluate the business model of a company of your choice, describing how the company differentiates itself from its competitors and sustain competitive advantage. 1. Executive Summary Cummins started off as diesel engine manufacturing company since 1919 and now growing as â€Å"power† leader in the world. Cummins expand network through company- owned distributor, independent distributor and dealer to serve customer globally. In 2009, Cummins reported net income of $428 million in $10.8 billion of sales [1]. Cummins have been diversifying its business to broad range of products from power generation, filtration technology, turbo technology, fuel system, emission controls and air handling [2]. Due to external pressure and growing market in Asia, Cummins recently setup Centre of Excellent in Singapore focus more on Marine and Offshore market. In this post module assignment, competitive strategy will only focus on Cumminss marine and offshore business. In this PMA, the value curve is based on own industry experiences assumption. However, analysis on financial will based overall Cummins business listed in stock market which named â€Å"CMI†. 1.1. Vision Statement â€Å"Making peoples lives better by unleashing the Power of Cummins† [3]. Cummins believe in by developing new technology will lead to better living for the people. 1.2. Mission Statement Cummins mission statement as quoted below [3] â€Å"Motivating people to act like owners working together† â€Å"Exceeding customer expectations by always being first to market the best products† â€Å"Partnering with our customers to make sure that they succeed† â€Å"Demanding that everything we do leads to a cleaner, healthier, safer environment† â€Å"Creating wealth for all stakeholders.† 1.3. Cummins compare with Industrial leader Figure 1 Financial Analysis CMI Vs Industry Leader [4] Figure 1 shows overview financial analysis of Cummins (CMI) compare within industry leader [4]. Cummins rank 35 among 379 diversified machinery industries in industrial goods sector for market capitalisation. Cummins stock values increase more than triple over the past 3 years and promise future growth with its business strategy [4]. 1.4. Ocean Strategy Ocean strategy has been introduced by W.C. Kim and R Mauborge since 2004. Starting then, this strategy is adopted and implemented successfully in various organisations globally. Recently, Malaysias Prime Minister Datuk Seri Najib Razak shared his experience on Ocean Strategy when dealing with increasing crime in the country [5]. He is using Blue Ocean Strategy as management tools in order to promote thinking out of the box. Key successful activities such as leveraged untapped resources when replaced police with soldier doing patrolling around countrys border and conduct training for new police force in the underutilised army facilities. This initiative save a lot of money from government and promote cross functioning role among government agency [5]. The principle of the ocean strategy is treating market as universe. There are two oceans available in the universe named Red Ocean and Blue Ocean. Red Ocean defined as known competition. In this Ocean, product is already well defined and competitors only able to compete with price [6] .Customer expectation on the product almost generic and not much technology can be developing in this area. For diesel engine in marine and offshore market, the competitors for Cummins include Caterpillar, MTU and Mitsubishi. How Cummins can break trough become market leaders? Cummins apply Blue Ocean Strategy when dealing with its business. Blue Ocean Strategy defines as untapped market which no competition and industries that do not exist at this point of time [6]. This in return will resulting higher profit compare with conventional approach. This clearly shows in W.C. Kim and R Mauborge studys on business launches in 108 companies. They summarize revenue and profit impact of business launches shows in Figure 2. In this study, 86% business launches within own boundaries (Red Oceans) and 14% business launches looking for new opportunities (Blue Oceans) [6]. Red Oceans approach focus on existing customer by improving their product and study shows that this resulted 62% on total revenue and 39% on total profit. In contrast, 14% of the businesses launches by creating blue oceans can bring in higher return which about 61% of the total profit [6]. Cummins spend heavily on research and development for past 5 years as shown in Figure 3. In 2010 alone, Cummins invest 414million in new technology development [2]. One of recent Blue Oceans initiatives is setting Marine and Offshore Centre of Excellent in Singapore. This business focus on the â€Å"Packaging† instead of selling conventional type of â€Å"bare diesel engine† like other competitor such as CAT, MTU and Mitsubishi. Figure 4 shows pictorial view on the value added components into bare diesel engine 1.5. Strategy Canvas Figure 5 shows strategy canvas of the marine and offshore diesel engine. X-axis represents critical success factors of the markets competition and Y-axis correspond to values perceived by marine and offshore customer. Marine and offshore is a mature and establish market. Engine makers always compete with price, image, brand, delivery, product performance and service availability. Cummins performs averagely in critical successful factors. However, in order to compete in the competitive market, Cummins break through conventional way by creating new team to focus on product value added specifically for marine and offshore customer. Cummins applied Blue Ocean strategy. Figure 6 shows Red Ocean strategy from others diesel engine maker and Blue Ocean strategy from Cummins. Q2: Using either Porters generic strategies or the Strategy Clock, identify examples of organizations following strategies of differentiation, low cost or low price, and stuck-in-the middle or hybrid. How successful are these strategies. 2. Porters 5 forces generic Strategies â€Å"Using the five forces framework, creative strategists may be able to spot an industry with a good future before this good futureis reflected in the prices of acquisition candidates† Michael Porter [7]. Porters five forces: Threat of New Entrants: Analyse potential new comer to market is important to understand potential future competitors Bargaining Power of Buyers: Buyers is the party that create demand for industry, understand buyers requirement will help to maintain competitive advantages. For example, bargaining power of buyers is high if product is standard. Threat of substitute products or service: Buyers always look for alternative or cheapest way to get products or service. Substitute product can bring the overall industry price lower Bargaining Power of Supplier: Supplier supply raw material or service to manufacturer. Bargaining power of supplier is high when to many buyer and less supplier in the market Rivalry among existing competitors: Current fast moving industry, its important understand the strategy of existing competitors. Example: How competitor gain competitive advantages or product differentiation. Porters 5 Forces allowed the company undertand and analyse own industry struture and futher help the management to decide on companys strategy. According to Porter, organisation is able to gain competitive advantanges by strategies the company using one of the â€Å"Porters Generic Strategies† as shown in Figure 8; 1) Cost Leadership, 2) Differentiation, 3) Focus [8]. 2.1. Cost Leadership Strategies Cost leadership strategies emphasize on low cost in company strategies. Company will offer low per-unit cost product or service to customer that sensitive to price. In order to become low cost provider, company can practise integration strategies (backward, forward and horizontal). There are few factors that will affect the strategies include economies of scale, learning curve, productivity, company structure, relationship with supplier and quality control. Several example organizations that practice this are Wal-Mart (general merchandiser), Air Asia (budget Airline) and Macdonalds (Fast Food) [9]. In this PMA, I will use Air Asia as example to study its business model and look into company successful factor. Air Asia strategy as illustrate in Figure 9, the company mission is to continue to be the markets carrier low cost provider. In order to compete with other aircraft carrier and achieve company vision for â€Å"Lowest cost airline†, Air Asia implement a few strategy to reduce operation cost. Strategy implemented as per below: 2.1.1. Keep operation cost low- NO frills In order to compete in this competitive market, Air Asia able to keep operational cost low by implementing few â€Å"NO†s in the strategy [10]: NO meal: No food or drinks will be provided free in the in-flight service. NO frequent flyer program: NO Membership or rewarding program which commonly used for others airline like Kris flyer for Singapore Airline and Skymiles for Delta airline. NO Seat assignment Ticket: In order to keep administrative cost low NO Entertainment: NO news paper and entertainment system such as movie, games and music. No ticket : Ticketless replaced conventional type printed ticket No waiting lounge: NO lounge provide in the airport 2.1.2. Single air craft fleet In order to streamline the operation, Air Asia phasing out its 14 Boeing B737 in 2010 and replace by only operate single air craft which is A320. Few advantages of using single aircraft as stated below Keep inventory cost low Saving cost in service and maintenance such as keeping same model of spares parts. No duplicated resource due to difference Air Craft experience needed Reduce time and training cost due to only one model. This allowed the company avoid going to through the expensive â€Å"learning curve† process and also may dissatisfied demanding customer. Michael and Nikos study on the organisation learning curves for customer dissatisfaction across airlines. They plotted estimate U-Shaped learning curve as show in Figure 10 and show evident that complaint rates followed U-shaped function of experience Able to increase fuel efficiency and improve productivity 2.1.3. Simplified distribution system Air Asia design simple user friendly system for customer to book and check- in their ticket. Customers are able to check in using own mobile as shown in Figure 11. This ticketless system is able to reduce waiting time for customer queuing to check- in at the airport counter. 2.1.4. Point to point network (≠¤ 4 hrs) All Air Asia flight is running by point to point network within 4 hours radius or less as its business model. This model only carry passenger from point A to point B without any connecting flight. This in order to keep operation cost simple in order to reduce costs [10]. 2.1.5. Optimum Aircraft Utilization Another way to keep operating cost low and maximizes profit, Air Asia increase productivity by optimise flight utilisation. Air Asia is the fastest in the region by achieving 25 minute turnaround time. Air Asia is able to achieve equal or more than 75% for last 5 years on the load factor. Once, Air Asia achieve close to 100% load factor for Bali Perth route. Load factor is defined by AirAsia as â€Å"numbers of passengers as a percentage of number of seats flown† [10]. On top of that, Air Asia applies â€Å"Tier based† system for ticketing which depend on supply and demand. When demand is low, the price is low. When demand is high the ticket price will also go high. This system is efficient especially during low season allowed Air Asia maintain the reasonable high percent load factor, 2.2. Differentiate Strategies Differentiation strategies offer service or product which unique perceived by customer. Differentiation strategies do not guarantee good payback especially current standard product offered in the industry is more than enough to meet customer expectation. There will a risk on implementing this strategy and need to study carefully on customer requirement before implementing. Product value added, extra servicing, products flexibility and better compatibility are some of the features that can create differentiate in the industry. Cost is not an issue in this strategy; hence company can demand higher price if customer strongly attached to offered differentiation features. Typical move in this strategy is product development. Organisations that apply these strategies include Apple (Lifestyle product), Raul Lauren (Apparel) and Maytag (Home appliance) Apple is applying differentiate strategies compare with other competitors in the industry by selling lifestyle product instead of conventional electronic gadget. In first 6 months of 2011, Apple spends 1.2 billion in research and development. This is about 40% increase compare with 2010 [13]. One of the successful examples when Apple launches iPad during 2010 and Steve Jobs defined iPad as â€Å"entirely new category of mobile devices†. Apple sold more than 15 million units worldwide after launching [14]. 2.2.1. Innovative and creativity product Apple is a â€Å"trend leading† company in the market. The company famous in creating innovative products and able to capture a significant market share after launching new products. Apple spends heavily in research and development because the company believe RD are critical for future growth and are able to create competitive advantages 2.2.2. Wide range of software and applications Apple created another successful platform for customer to download software and application. Traditional, example like phone, other competitor just focus on few simple features which only contains game, photography function, movie and some basic feature. By introducing new approach, Apple created â€Å"The App Store†. Now â€Å"The App Store† has more than 350,000 apps available for iPhone, iPad and iPod touch globally. The apps offered wide range of application from games, entertainment, utilities, social networking, music and others. In Jan 2011, Apple announces that more than 10 billion apps have been downloaded . 2.2.3. Apple store Unlike others competitors store which only focus on products price and feature, Apple differentiate by giving customer different shopping experience in the store. Apple design Apples retail store to give the patrons good impression of stylish, clean, fashion and stream-lined. The product like i Phone, iTunes and etc will placing in a place that customer can try out the features and application. 2.2.4. Provide good service and maintenance Apple provides good service respond compare with others competitors like Samsung and Nokia. In Singapore, Apple provides one to one exchange for i Phone if there is defect and still under warranty. This is different from some of the competitors, depend on the level of repair, some will take about 2 to 3 weeks. This will create some issue for some consumer that only has one hand phone. 2.3. Focus Strategies Focus strategies offers product or service to fulfil the requirement for targeted groups of customer in the industry [9]. Focus strategies can be categorized into 2; Focus cost leadership which focus on low cost solution in narrow market and Focus differentiation provide customised product or service to niche market [16]. Market penetration and market development can be use when applying focus strategies [9]. Focus strategies beneficial when competitors are not able to support on unique requirement of certain group of customer. Organisation which pursuing this strategies include IKEA (Furniture), Ferrari (Automotive) and Federal Express (logistic) 2.3.1. Focus Cost Leadership Strategy IKEA is the Swedish global furniture company that applied focus cost leadership strategy in their business strategy. IKEA offering wide range of home furnish product with low price so that many people can afford to purchase. In order to achieve the strategy, IKEA apply below concept: 2.3.1.1. Design and develop base on price In order to keep competitive price, IKEA design and develop product base on price. The price is â€Å"fix† even before the product is launch. The designer will have to work directly with supplier to ensure meeting low cost by optimised productivity, material efficiency and process improvement [17]. 2.3.1.2. Reduce logistic, handling and operating cost In order to reduce logistic, handling and operating cost, IKEA designer always consider flat-pack transportation and self-assembly during design and development phase. Flat-pack furniture is often delivered in multiple sub assemblies together with simple instruction manual and required customer to perform self assembly. This modular concept is able to save transportation, handling and operating cost. For example, assembled furniture tends to be more bulky and is more expensive to store in warehouse and transportation. Besides, that, IKEA is able to save operating cost by reduce one â€Å"Assembly† process in production . 2.3.1.3. Self-Service in IKEA Store In order t keep the operating cost low and reduce the needs of sales assistance, IKEA design the flow of store layout and display the product effectively by using â€Å"actual room† concept. For example, sofa is placed in â€Å"living room† section and bed is placed in â€Å"Bed Room† section. All the furniture is clearly labelled and useful information like dimension is easily located in the display product [17]. 2.3.2. Focus Differentiate strategy Ferrari is applying focus differentiate strategy by develop high performance car within automotive industry. Ferrari focus on high end consumer compare with other automotive competitors like Honda, Toyota or Ford which target more broad customer. Below is the strategy for Ferrari: 2.3.2.1. New Way of Purchase Car Ferrari compete created innovative approach by introduce new way of purchase car â€Å"Premium Ownership Program† to serve its target customer. This program include insurance, maintenance, warranty , Ferrari tailored made driving course and pit stop service which provide the customer â€Å"mind free† after owning and driving Ferrari car [18]. 2.3.2.2. Innovative Technology Ferrari developed own software to meet customer service expectation such as rapid response times, up to date database and personalise customer service. One of the latest features such as, the customer can view the look of the vehicle and change the preference in â€Å"Service configurator system† even in pre-order stage [19]. 2.3.2.3. Best Dealer Ferrari believes choosing the right strategic partner or dealer is the right way to serve the customer. In order to motivate the dealer, Ferrari created prestigious award Podio Awards for supplier or business partner recognition. 2.4. Stuck in the middle or Hybrid Strategies Porter does not recommend â€Å"Stuck in the middle† or Hybrid strategies if the company want to achieve above average performance in the industry. Company must choose either one of the strategy in the Porters Generic strategy. He claimed that it is difficult for a company to strategies the business to produce low cost product but still remain unique perceived by customer [8]. However, Rodney Goon argues on Porters theory and commented some of the company such as Singapore Airline (SIA) are able to success using â€Å"Hybrid strategy†. Figure 12 shows business strategy applied by SIA which plotted by Rodney [21]. Singapore Airline have been awarded 2nd place in World Top Airline in 2010 by Skytrax in Hamburg [22]. Figure 13 shows main operating cost for SIA. Top 3 costs consist of Fuel, Aircraft and People [23]. In order to achieve competitive advantages, SIA apply below approach: 2.4.1. Become Market Leader Differentiation Strategy SIA founded in 1972 started as small airline company and now evolve become the world trend leading company for Airline industry. SIA become market leader by setting trend started since 1970s when introducing headsets, drink and choice of meals in Economy Class. Figure 14 shows overview on SIA trend setting for more than 39 years in the industry. In 1991, SIA introduce satellite- based telephone to enable passenger to call to ground during flying. In 1998, in order to improve the quality and standard of in-flight meal, SIA formed International Culinary Panel which involves renowned chef from all over the world. By doing this, the passengers are able to enjoy world class cuisine even during travelling. In order to improve customer service satisfaction, SIA introduce in-flight entertainment system named Krisworld which include Audio and Video system. Passenger can watch movie, listen to music and playing game during flying. In 2004, SIA reach another milestone by flying world longest non-stop flight from Singapore to New York (Newark). In 2007, SIA flying new Airbus design A380 which is world largest passenger Aircraft from Singapore to Sydney . 2.4.2. Brand â€Å"Singapore Girl† Differentiation Strategy SIA successfully improve its service compare with others competitors by creating unique iconic image for SIAs air stewardess as â€Å"Singapore Girl† and promote â€Å"Youre a great way to fly† started in 1972. This iconic brand is famous of caring, elegant and good looking girl whom will provide good service for the passenger during on board the plane. â€Å"Singapore Girl† has continuously won many awards in Airline and Travel Industry over the years . 2.4.3. Low Cost -Cost Leadership Strategy â€Å"Everything behind The Scenes Is subject To Rigorous Control† quoted by Rodney . SIA spend heavily on the area that customer can be seen as discussed above in order to remain premium in the industry but cutting cost for area that behind the scene in order to remain cost compatible. Total cost for Singapore airline is about 14.2% is the lowest in the market compare with other competitors like American Airline which labor cost is approximately 31% of total operating expense . Other than that, average price per aircraft purchase is less than other airline provider. This is due to SIA is the market leader in trendsetting and always working with aircraft builder like Airbus when there is new product launching. First purchase in world for A380 allowed SIA command a better purchase price. Q3: What are the major advantages and disadvantages of an integrative strategy? 3. Integrative strategy Organisation is able to gain competitive advantages by using integrative strategy. Integrative strategy can be categorized as vertical, backward, forward and horizontal integration. There are advantages and disadvantages when applying each concept and detail discuss as below: 3.1. Vertical Integration Vertical integration is business strategies which expand its business either through gaining control over company that distribute or selling its product (Forward integration) or taking control over company that provide the raw material for finish goods (Backward Integration). Figure 15 illustrate 4 typical stages for value added chain in PC industry (27). Example for Dell or Hewlett Packard, in order to produce a personal computer, assembly components such as chips, microprocessor and disk drive etc is needed from others manufacturing company (Intel/ Micron). Similarly, component parts manufacturing needs raw material like chemical, metal and ceramic to manufacture the component. Kyocera is one of the suppliers for those materials. Backward integration strategy in this case is trying to taking control over components parts manufacturing and raw material supplier. Whereas for forward integration strategy, PC maker try to gains control over the company that selling or distribute the final product such as OfficeMax and ComUSA [27] This company provide platform to reach end user. 3.2. Forward Integration Forward integration strategy involves increase ownership or control over retailers or distributor and illustrates in Figure 16. One of the effective mean of forward integration is through Franchising [9]. Approximate $2 trillion revenue created annually through franchising business every year globally. This equal to 4th largest Gross National Product in the world [28]. Advantages and disadvantages as discuss below: Advantages: Getting understanding customer better One of the companies using forward integration strategy successfully is Dell. Dell founded in 1984 by Michael Dell with one direction â€Å"selling final products to customer directly† [29]. By doing this, company able to reach end user and getting feedback instantly through companys distributor and retailer without filtering. Low development and training cost By introduce franchising; the company are able to reduce development and training cost. Franchisor will provide training, equipment and product to franchisee. This in order to skip the â€Å"trial error† phase for franchisee and able to help franchisee generate profit with less risk. Example companies like Subway, McDonalds and 7-eleven. Provide better services Company can provide better services through its own controlled network and services. Provide lower cost of sales In order to compete in this competitive world, price of the end product is always one of the critical successful factors for the company. Dell is using this strategy to reduce price bypassing third party involvement such as retailers etc. No mark up from other company in the finished goods Disadvantages: Increase bureaucratic cost Expanding business forward which also means that increase bureaucratic cost for whole value- added chain activities. Due to uncertain demand in current market, it will post some risk to the company Increase Inventory Getting control over distributors or retailer, indirectly manufacturer may have to manage whole product cycle inventory include end products. Company may incurred higher inventory cost if wrongly manage 3.3. Backward Integration Manufacturer need supplier provide raw material in order to produce its end products or service. Backward integration allowed company gain control toward supplier as shown in Figure 16. Advantages and disadvantages as discuss below: Advantages: Getting better quality control Company are able to apply standard quality plan throughout the value chain. This is especially important when dealing with sophisticated components such as crankshaft, piston and turbocharger for engine. By improving the quality of this critical component will increase competitive advantages among the rivals Reduce threat from powerful vendors By increasing control over the vendors, it will reduce threat from powerful vendors. Optimized supply chain â€Å"Keeping track of so many suppliers is onerous† says Mark Shimelonis of Xerox [9]. Nowadays, a number of companies following Japanese firms lead in managing the supply chain to ensure uninterrupted supplies and low prices. Lower structure cost Outsourcing is one of the examples of the backward strategy. Outsourcing strategy will able to reduce cost when company engaging third party specialist that performing charging lower than company own operate value-chain activity. Cummins outsource IT support to India Company and panel design to CMR or Auto Maskin to keep the company structure cost lower. Nike outsourcing its manufacturing plant in China due to lower labor cost [27]. Disadvantages: Technology change Technology change is inevitable in current competitive market. But backward vertical integration may lock a company â€Å"way of doing business† and prevent organisation changes due to technology change. One of the examples is when radio manufacturer acquired a manufacturer of vacuum tube in 1950s to reduce production cost. When, transistors replace vacuum tube in 1960s, the competitor rapidly change to latest technology. However for this radio manufacturer company, the management refuse to change and as the result, lost in the competitive advantages and cause business failure. Thus, backward integration can cause serious disadvantages when trying to match rapid technology change [27] Risk of information loss Increase control over the supplier which mean also potentially important information flow to the supplier. For example, Cummins need to provide important parameter and interfacing information in the engine control module to backward supplier like CMR and Auto Maskin in order to joints develop the engine protection panel. Technical drawing will be shared among backward supplier and manufacturer. Potential high cost Less supplier competition will lead to less efficiencies when produce a product. The backward support company will work in the â€Å"comfort zone† and less initiative. The manufacturer is â€Å"forced† to get the input from â€Å"internal supplier† even there will be some others external supplier can produce lower cost .As the result will cause potentially higher production cost . 3.4. Horizontal Integration Horizontal integration refers to company that use â€Å"single industry strategy† and seeking control over competitor in same market. A number of the company apply this concept as growth strategy. Merger and acquisition allowed the company to expand its core business and technical capabi Strategies to Sustain Competitive Advantage Strategies to Sustain Competitive Advantage Q1: Using an appropriate model, evaluate the business model of a company of your choice, describing how the company differentiates itself from its competitors and sustain competitive advantage. 1. Executive Summary Cummins started off as diesel engine manufacturing company since 1919 and now growing as â€Å"power† leader in the world. Cummins expand network through company- owned distributor, independent distributor and dealer to serve customer globally. In 2009, Cummins reported net income of $428 million in $10.8 billion of sales [1]. Cummins have been diversifying its business to broad range of products from power generation, filtration technology, turbo technology, fuel system, emission controls and air handling [2]. Due to external pressure and growing market in Asia, Cummins recently setup Centre of Excellent in Singapore focus more on Marine and Offshore market. In this post module assignment, competitive strategy will only focus on Cumminss marine and offshore business. In this PMA, the value curve is based on own industry experiences assumption. However, analysis on financial will based overall Cummins business listed in stock market which named â€Å"CMI†. 1.1. Vision Statement â€Å"Making peoples lives better by unleashing the Power of Cummins† [3]. Cummins believe in by developing new technology will lead to better living for the people. 1.2. Mission Statement Cummins mission statement as quoted below [3] â€Å"Motivating people to act like owners working together† â€Å"Exceeding customer expectations by always being first to market the best products† â€Å"Partnering with our customers to make sure that they succeed† â€Å"Demanding that everything we do leads to a cleaner, healthier, safer environment† â€Å"Creating wealth for all stakeholders.† 1.3. Cummins compare with Industrial leader Figure 1 Financial Analysis CMI Vs Industry Leader [4] Figure 1 shows overview financial analysis of Cummins (CMI) compare within industry leader [4]. Cummins rank 35 among 379 diversified machinery industries in industrial goods sector for market capitalisation. Cummins stock values increase more than triple over the past 3 years and promise future growth with its business strategy [4]. 1.4. Ocean Strategy Ocean strategy has been introduced by W.C. Kim and R Mauborge since 2004. Starting then, this strategy is adopted and implemented successfully in various organisations globally. Recently, Malaysias Prime Minister Datuk Seri Najib Razak shared his experience on Ocean Strategy when dealing with increasing crime in the country [5]. He is using Blue Ocean Strategy as management tools in order to promote thinking out of the box. Key successful activities such as leveraged untapped resources when replaced police with soldier doing patrolling around countrys border and conduct training for new police force in the underutilised army facilities. This initiative save a lot of money from government and promote cross functioning role among government agency [5]. The principle of the ocean strategy is treating market as universe. There are two oceans available in the universe named Red Ocean and Blue Ocean. Red Ocean defined as known competition. In this Ocean, product is already well defined and competitors only able to compete with price [6] .Customer expectation on the product almost generic and not much technology can be developing in this area. For diesel engine in marine and offshore market, the competitors for Cummins include Caterpillar, MTU and Mitsubishi. How Cummins can break trough become market leaders? Cummins apply Blue Ocean Strategy when dealing with its business. Blue Ocean Strategy defines as untapped market which no competition and industries that do not exist at this point of time [6]. This in return will resulting higher profit compare with conventional approach. This clearly shows in W.C. Kim and R Mauborge studys on business launches in 108 companies. They summarize revenue and profit impact of business launches shows in Figure 2. In this study, 86% business launches within own boundaries (Red Oceans) and 14% business launches looking for new opportunities (Blue Oceans) [6]. Red Oceans approach focus on existing customer by improving their product and study shows that this resulted 62% on total revenue and 39% on total profit. In contrast, 14% of the businesses launches by creating blue oceans can bring in higher return which about 61% of the total profit [6]. Cummins spend heavily on research and development for past 5 years as shown in Figure 3. In 2010 alone, Cummins invest 414million in new technology development [2]. One of recent Blue Oceans initiatives is setting Marine and Offshore Centre of Excellent in Singapore. This business focus on the â€Å"Packaging† instead of selling conventional type of â€Å"bare diesel engine† like other competitor such as CAT, MTU and Mitsubishi. Figure 4 shows pictorial view on the value added components into bare diesel engine 1.5. Strategy Canvas Figure 5 shows strategy canvas of the marine and offshore diesel engine. X-axis represents critical success factors of the markets competition and Y-axis correspond to values perceived by marine and offshore customer. Marine and offshore is a mature and establish market. Engine makers always compete with price, image, brand, delivery, product performance and service availability. Cummins performs averagely in critical successful factors. However, in order to compete in the competitive market, Cummins break through conventional way by creating new team to focus on product value added specifically for marine and offshore customer. Cummins applied Blue Ocean strategy. Figure 6 shows Red Ocean strategy from others diesel engine maker and Blue Ocean strategy from Cummins. Q2: Using either Porters generic strategies or the Strategy Clock, identify examples of organizations following strategies of differentiation, low cost or low price, and stuck-in-the middle or hybrid. How successful are these strategies. 2. Porters 5 forces generic Strategies â€Å"Using the five forces framework, creative strategists may be able to spot an industry with a good future before this good futureis reflected in the prices of acquisition candidates† Michael Porter [7]. Porters five forces: Threat of New Entrants: Analyse potential new comer to market is important to understand potential future competitors Bargaining Power of Buyers: Buyers is the party that create demand for industry, understand buyers requirement will help to maintain competitive advantages. For example, bargaining power of buyers is high if product is standard. Threat of substitute products or service: Buyers always look for alternative or cheapest way to get products or service. Substitute product can bring the overall industry price lower Bargaining Power of Supplier: Supplier supply raw material or service to manufacturer. Bargaining power of supplier is high when to many buyer and less supplier in the market Rivalry among existing competitors: Current fast moving industry, its important understand the strategy of existing competitors. Example: How competitor gain competitive advantages or product differentiation. Porters 5 Forces allowed the company undertand and analyse own industry struture and futher help the management to decide on companys strategy. According to Porter, organisation is able to gain competitive advantanges by strategies the company using one of the â€Å"Porters Generic Strategies† as shown in Figure 8; 1) Cost Leadership, 2) Differentiation, 3) Focus [8]. 2.1. Cost Leadership Strategies Cost leadership strategies emphasize on low cost in company strategies. Company will offer low per-unit cost product or service to customer that sensitive to price. In order to become low cost provider, company can practise integration strategies (backward, forward and horizontal). There are few factors that will affect the strategies include economies of scale, learning curve, productivity, company structure, relationship with supplier and quality control. Several example organizations that practice this are Wal-Mart (general merchandiser), Air Asia (budget Airline) and Macdonalds (Fast Food) [9]. In this PMA, I will use Air Asia as example to study its business model and look into company successful factor. Air Asia strategy as illustrate in Figure 9, the company mission is to continue to be the markets carrier low cost provider. In order to compete with other aircraft carrier and achieve company vision for â€Å"Lowest cost airline†, Air Asia implement a few strategy to reduce operation cost. Strategy implemented as per below: 2.1.1. Keep operation cost low- NO frills In order to compete in this competitive market, Air Asia able to keep operational cost low by implementing few â€Å"NO†s in the strategy [10]: NO meal: No food or drinks will be provided free in the in-flight service. NO frequent flyer program: NO Membership or rewarding program which commonly used for others airline like Kris flyer for Singapore Airline and Skymiles for Delta airline. NO Seat assignment Ticket: In order to keep administrative cost low NO Entertainment: NO news paper and entertainment system such as movie, games and music. No ticket : Ticketless replaced conventional type printed ticket No waiting lounge: NO lounge provide in the airport 2.1.2. Single air craft fleet In order to streamline the operation, Air Asia phasing out its 14 Boeing B737 in 2010 and replace by only operate single air craft which is A320. Few advantages of using single aircraft as stated below Keep inventory cost low Saving cost in service and maintenance such as keeping same model of spares parts. No duplicated resource due to difference Air Craft experience needed Reduce time and training cost due to only one model. This allowed the company avoid going to through the expensive â€Å"learning curve† process and also may dissatisfied demanding customer. Michael and Nikos study on the organisation learning curves for customer dissatisfaction across airlines. They plotted estimate U-Shaped learning curve as show in Figure 10 and show evident that complaint rates followed U-shaped function of experience Able to increase fuel efficiency and improve productivity 2.1.3. Simplified distribution system Air Asia design simple user friendly system for customer to book and check- in their ticket. Customers are able to check in using own mobile as shown in Figure 11. This ticketless system is able to reduce waiting time for customer queuing to check- in at the airport counter. 2.1.4. Point to point network (≠¤ 4 hrs) All Air Asia flight is running by point to point network within 4 hours radius or less as its business model. This model only carry passenger from point A to point B without any connecting flight. This in order to keep operation cost simple in order to reduce costs [10]. 2.1.5. Optimum Aircraft Utilization Another way to keep operating cost low and maximizes profit, Air Asia increase productivity by optimise flight utilisation. Air Asia is the fastest in the region by achieving 25 minute turnaround time. Air Asia is able to achieve equal or more than 75% for last 5 years on the load factor. Once, Air Asia achieve close to 100% load factor for Bali Perth route. Load factor is defined by AirAsia as â€Å"numbers of passengers as a percentage of number of seats flown† [10]. On top of that, Air Asia applies â€Å"Tier based† system for ticketing which depend on supply and demand. When demand is low, the price is low. When demand is high the ticket price will also go high. This system is efficient especially during low season allowed Air Asia maintain the reasonable high percent load factor, 2.2. Differentiate Strategies Differentiation strategies offer service or product which unique perceived by customer. Differentiation strategies do not guarantee good payback especially current standard product offered in the industry is more than enough to meet customer expectation. There will a risk on implementing this strategy and need to study carefully on customer requirement before implementing. Product value added, extra servicing, products flexibility and better compatibility are some of the features that can create differentiate in the industry. Cost is not an issue in this strategy; hence company can demand higher price if customer strongly attached to offered differentiation features. Typical move in this strategy is product development. Organisations that apply these strategies include Apple (Lifestyle product), Raul Lauren (Apparel) and Maytag (Home appliance) Apple is applying differentiate strategies compare with other competitors in the industry by selling lifestyle product instead of conventional electronic gadget. In first 6 months of 2011, Apple spends 1.2 billion in research and development. This is about 40% increase compare with 2010 [13]. One of the successful examples when Apple launches iPad during 2010 and Steve Jobs defined iPad as â€Å"entirely new category of mobile devices†. Apple sold more than 15 million units worldwide after launching [14]. 2.2.1. Innovative and creativity product Apple is a â€Å"trend leading† company in the market. The company famous in creating innovative products and able to capture a significant market share after launching new products. Apple spends heavily in research and development because the company believe RD are critical for future growth and are able to create competitive advantages 2.2.2. Wide range of software and applications Apple created another successful platform for customer to download software and application. Traditional, example like phone, other competitor just focus on few simple features which only contains game, photography function, movie and some basic feature. By introducing new approach, Apple created â€Å"The App Store†. Now â€Å"The App Store† has more than 350,000 apps available for iPhone, iPad and iPod touch globally. The apps offered wide range of application from games, entertainment, utilities, social networking, music and others. In Jan 2011, Apple announces that more than 10 billion apps have been downloaded . 2.2.3. Apple store Unlike others competitors store which only focus on products price and feature, Apple differentiate by giving customer different shopping experience in the store. Apple design Apples retail store to give the patrons good impression of stylish, clean, fashion and stream-lined. The product like i Phone, iTunes and etc will placing in a place that customer can try out the features and application. 2.2.4. Provide good service and maintenance Apple provides good service respond compare with others competitors like Samsung and Nokia. In Singapore, Apple provides one to one exchange for i Phone if there is defect and still under warranty. This is different from some of the competitors, depend on the level of repair, some will take about 2 to 3 weeks. This will create some issue for some consumer that only has one hand phone. 2.3. Focus Strategies Focus strategies offers product or service to fulfil the requirement for targeted groups of customer in the industry [9]. Focus strategies can be categorized into 2; Focus cost leadership which focus on low cost solution in narrow market and Focus differentiation provide customised product or service to niche market [16]. Market penetration and market development can be use when applying focus strategies [9]. Focus strategies beneficial when competitors are not able to support on unique requirement of certain group of customer. Organisation which pursuing this strategies include IKEA (Furniture), Ferrari (Automotive) and Federal Express (logistic) 2.3.1. Focus Cost Leadership Strategy IKEA is the Swedish global furniture company that applied focus cost leadership strategy in their business strategy. IKEA offering wide range of home furnish product with low price so that many people can afford to purchase. In order to achieve the strategy, IKEA apply below concept: 2.3.1.1. Design and develop base on price In order to keep competitive price, IKEA design and develop product base on price. The price is â€Å"fix† even before the product is launch. The designer will have to work directly with supplier to ensure meeting low cost by optimised productivity, material efficiency and process improvement [17]. 2.3.1.2. Reduce logistic, handling and operating cost In order to reduce logistic, handling and operating cost, IKEA designer always consider flat-pack transportation and self-assembly during design and development phase. Flat-pack furniture is often delivered in multiple sub assemblies together with simple instruction manual and required customer to perform self assembly. This modular concept is able to save transportation, handling and operating cost. For example, assembled furniture tends to be more bulky and is more expensive to store in warehouse and transportation. Besides, that, IKEA is able to save operating cost by reduce one â€Å"Assembly† process in production . 2.3.1.3. Self-Service in IKEA Store In order t keep the operating cost low and reduce the needs of sales assistance, IKEA design the flow of store layout and display the product effectively by using â€Å"actual room† concept. For example, sofa is placed in â€Å"living room† section and bed is placed in â€Å"Bed Room† section. All the furniture is clearly labelled and useful information like dimension is easily located in the display product [17]. 2.3.2. Focus Differentiate strategy Ferrari is applying focus differentiate strategy by develop high performance car within automotive industry. Ferrari focus on high end consumer compare with other automotive competitors like Honda, Toyota or Ford which target more broad customer. Below is the strategy for Ferrari: 2.3.2.1. New Way of Purchase Car Ferrari compete created innovative approach by introduce new way of purchase car â€Å"Premium Ownership Program† to serve its target customer. This program include insurance, maintenance, warranty , Ferrari tailored made driving course and pit stop service which provide the customer â€Å"mind free† after owning and driving Ferrari car [18]. 2.3.2.2. Innovative Technology Ferrari developed own software to meet customer service expectation such as rapid response times, up to date database and personalise customer service. One of the latest features such as, the customer can view the look of the vehicle and change the preference in â€Å"Service configurator system† even in pre-order stage [19]. 2.3.2.3. Best Dealer Ferrari believes choosing the right strategic partner or dealer is the right way to serve the customer. In order to motivate the dealer, Ferrari created prestigious award Podio Awards for supplier or business partner recognition. 2.4. Stuck in the middle or Hybrid Strategies Porter does not recommend â€Å"Stuck in the middle† or Hybrid strategies if the company want to achieve above average performance in the industry. Company must choose either one of the strategy in the Porters Generic strategy. He claimed that it is difficult for a company to strategies the business to produce low cost product but still remain unique perceived by customer [8]. However, Rodney Goon argues on Porters theory and commented some of the company such as Singapore Airline (SIA) are able to success using â€Å"Hybrid strategy†. Figure 12 shows business strategy applied by SIA which plotted by Rodney [21]. Singapore Airline have been awarded 2nd place in World Top Airline in 2010 by Skytrax in Hamburg [22]. Figure 13 shows main operating cost for SIA. Top 3 costs consist of Fuel, Aircraft and People [23]. In order to achieve competitive advantages, SIA apply below approach: 2.4.1. Become Market Leader Differentiation Strategy SIA founded in 1972 started as small airline company and now evolve become the world trend leading company for Airline industry. SIA become market leader by setting trend started since 1970s when introducing headsets, drink and choice of meals in Economy Class. Figure 14 shows overview on SIA trend setting for more than 39 years in the industry. In 1991, SIA introduce satellite- based telephone to enable passenger to call to ground during flying. In 1998, in order to improve the quality and standard of in-flight meal, SIA formed International Culinary Panel which involves renowned chef from all over the world. By doing this, the passengers are able to enjoy world class cuisine even during travelling. In order to improve customer service satisfaction, SIA introduce in-flight entertainment system named Krisworld which include Audio and Video system. Passenger can watch movie, listen to music and playing game during flying. In 2004, SIA reach another milestone by flying world longest non-stop flight from Singapore to New York (Newark). In 2007, SIA flying new Airbus design A380 which is world largest passenger Aircraft from Singapore to Sydney . 2.4.2. Brand â€Å"Singapore Girl† Differentiation Strategy SIA successfully improve its service compare with others competitors by creating unique iconic image for SIAs air stewardess as â€Å"Singapore Girl† and promote â€Å"Youre a great way to fly† started in 1972. This iconic brand is famous of caring, elegant and good looking girl whom will provide good service for the passenger during on board the plane. â€Å"Singapore Girl† has continuously won many awards in Airline and Travel Industry over the years . 2.4.3. Low Cost -Cost Leadership Strategy â€Å"Everything behind The Scenes Is subject To Rigorous Control† quoted by Rodney . SIA spend heavily on the area that customer can be seen as discussed above in order to remain premium in the industry but cutting cost for area that behind the scene in order to remain cost compatible. Total cost for Singapore airline is about 14.2% is the lowest in the market compare with other competitors like American Airline which labor cost is approximately 31% of total operating expense . Other than that, average price per aircraft purchase is less than other airline provider. This is due to SIA is the market leader in trendsetting and always working with aircraft builder like Airbus when there is new product launching. First purchase in world for A380 allowed SIA command a better purchase price. Q3: What are the major advantages and disadvantages of an integrative strategy? 3. Integrative strategy Organisation is able to gain competitive advantages by using integrative strategy. Integrative strategy can be categorized as vertical, backward, forward and horizontal integration. There are advantages and disadvantages when applying each concept and detail discuss as below: 3.1. Vertical Integration Vertical integration is business strategies which expand its business either through gaining control over company that distribute or selling its product (Forward integration) or taking control over company that provide the raw material for finish goods (Backward Integration). Figure 15 illustrate 4 typical stages for value added chain in PC industry (27). Example for Dell or Hewlett Packard, in order to produce a personal computer, assembly components such as chips, microprocessor and disk drive etc is needed from others manufacturing company (Intel/ Micron). Similarly, component parts manufacturing needs raw material like chemical, metal and ceramic to manufacture the component. Kyocera is one of the suppliers for those materials. Backward integration strategy in this case is trying to taking control over components parts manufacturing and raw material supplier. Whereas for forward integration strategy, PC maker try to gains control over the company that selling or distribute the final product such as OfficeMax and ComUSA [27] This company provide platform to reach end user. 3.2. Forward Integration Forward integration strategy involves increase ownership or control over retailers or distributor and illustrates in Figure 16. One of the effective mean of forward integration is through Franchising [9]. Approximate $2 trillion revenue created annually through franchising business every year globally. This equal to 4th largest Gross National Product in the world [28]. Advantages and disadvantages as discuss below: Advantages: Getting understanding customer better One of the companies using forward integration strategy successfully is Dell. Dell founded in 1984 by Michael Dell with one direction â€Å"selling final products to customer directly† [29]. By doing this, company able to reach end user and getting feedback instantly through companys distributor and retailer without filtering. Low development and training cost By introduce franchising; the company are able to reduce development and training cost. Franchisor will provide training, equipment and product to franchisee. This in order to skip the â€Å"trial error† phase for franchisee and able to help franchisee generate profit with less risk. Example companies like Subway, McDonalds and 7-eleven. Provide better services Company can provide better services through its own controlled network and services. Provide lower cost of sales In order to compete in this competitive world, price of the end product is always one of the critical successful factors for the company. Dell is using this strategy to reduce price bypassing third party involvement such as retailers etc. No mark up from other company in the finished goods Disadvantages: Increase bureaucratic cost Expanding business forward which also means that increase bureaucratic cost for whole value- added chain activities. Due to uncertain demand in current market, it will post some risk to the company Increase Inventory Getting control over distributors or retailer, indirectly manufacturer may have to manage whole product cycle inventory include end products. Company may incurred higher inventory cost if wrongly manage 3.3. Backward Integration Manufacturer need supplier provide raw material in order to produce its end products or service. Backward integration allowed company gain control toward supplier as shown in Figure 16. Advantages and disadvantages as discuss below: Advantages: Getting better quality control Company are able to apply standard quality plan throughout the value chain. This is especially important when dealing with sophisticated components such as crankshaft, piston and turbocharger for engine. By improving the quality of this critical component will increase competitive advantages among the rivals Reduce threat from powerful vendors By increasing control over the vendors, it will reduce threat from powerful vendors. Optimized supply chain â€Å"Keeping track of so many suppliers is onerous† says Mark Shimelonis of Xerox [9]. Nowadays, a number of companies following Japanese firms lead in managing the supply chain to ensure uninterrupted supplies and low prices. Lower structure cost Outsourcing is one of the examples of the backward strategy. Outsourcing strategy will able to reduce cost when company engaging third party specialist that performing charging lower than company own operate value-chain activity. Cummins outsource IT support to India Company and panel design to CMR or Auto Maskin to keep the company structure cost lower. Nike outsourcing its manufacturing plant in China due to lower labor cost [27]. Disadvantages: Technology change Technology change is inevitable in current competitive market. But backward vertical integration may lock a company â€Å"way of doing business† and prevent organisation changes due to technology change. One of the examples is when radio manufacturer acquired a manufacturer of vacuum tube in 1950s to reduce production cost. When, transistors replace vacuum tube in 1960s, the competitor rapidly change to latest technology. However for this radio manufacturer company, the management refuse to change and as the result, lost in the competitive advantages and cause business failure. Thus, backward integration can cause serious disadvantages when trying to match rapid technology change [27] Risk of information loss Increase control over the supplier which mean also potentially important information flow to the supplier. For example, Cummins need to provide important parameter and interfacing information in the engine control module to backward supplier like CMR and Auto Maskin in order to joints develop the engine protection panel. Technical drawing will be shared among backward supplier and manufacturer. Potential high cost Less supplier competition will lead to less efficiencies when produce a product. The backward support company will work in the â€Å"comfort zone† and less initiative. The manufacturer is â€Å"forced† to get the input from â€Å"internal supplier† even there will be some others external supplier can produce lower cost .As the result will cause potentially higher production cost . 3.4. Horizontal Integration Horizontal integration refers to company that use â€Å"single industry strategy† and seeking control over competitor in same market. A number of the company apply this concept as growth strategy. Merger and acquisition allowed the company to expand its core business and technical capabi

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Topic: Thalassemia disorder Thalassemia is an inherited co-dominant blood disease. It is characterized by reduced synthesis of the hemoglobin and less red blood in children affected by this disorder. Hemoglobin is the means through which red blood cells carry oxygen in our body. We need two forms of globin genes to make beta globin chains in our body, one from each globin gene. If one or two of these genes are defective, it produces beta thalassemia which is the less severe form of this disease. This disorder is a very common genetic disorder facing millions of people worldwide. People with mild Thalassemia usually do not need treatment. On the contrary, people who are severely affected will need regular blood transfusion. This form of the disease is common among people in the Mediterranean. This form can also be seen in North America and parts of Asia. This disorder is caused by changes in the DNA of cells that make hemoglobin, the substance in human red blood cells that carries oxygen throughout your entire body. This disease is a inheritance disorder passed from parents to children. When parents have low count of hemoglobin and high could of red blood cell it is then transferred to their new born child. There are various types of this disorder. It depends on gene factor relating to the child’s parents. The more altered genes, the more severe your condition. Hemoglobin particles are made of alpha and beta parts that can be affected by mutations. There are three major forms of this disorder that are categorized based on the severity of symptoms. They are minor, intermediate and major. Children with the minor or trait of the disorder do not experience any symptoms and may not require treatment. Children with the intermediate f... ... spleen. When the patient spleen cell is removed, their bodies become susceptible to bacterial infections. Some patients with this disorder also experience bone deformities where the bone of the face and other parts of the body are affected. Treatment option for the disorder includes; blood transfusion, which is done to replace the affected hemoglobin, Excess iron removal from the blood stream by administering folic acid to the patient, bone mirror transplant and sometime a surgery may be required In a research conducted by the American Academy of Family Physicians, patients with this disorder trait have a normal life expectancy provided to live a health live style – health eating regular exercises. However, those with the more severe form of the disease (beta thalassemia major), on average live 17 years and generally die before their thirtieth birthday. Dabah Bono

P G in China

In 2008, P&G has become a company with the 6th biggest market value, and has a sale of approximately $45 billion. In 1988, P&G entered the market in the Great China Area due to the potential customers and profits hidden behind it. Up to this date, P&G has established 0 joint ventures and proprietorship in major cities like Guanos, Beijing, Tannin, Shanghai, etc. In this dissertation, we will carefully analyze its international operations in the Great China Area and examine the factors that made its success. We will first analyze the reasons why it entered China in the first place by looking into different aspects of China's overall image.Then, we are going to look further into the operational strategy it uses to keep itself functioning. We will also examine the procedure of how it manages its staffing across the sea and hires local employees. Besides, we will talk about TTS marketing strategies in the Great China Area market by looking into the ops (Products, Price, Promotion and Pla ce) of P China and P Hong Kong. Reasons to enter the Great China Area It is reasonable and necessary for international corporations such as P to enter the Great China Area market. Reasons as following: Increase the sale; Decrease the cost; Increase the popularity; Meanwhile, it is also really important to analyze the risks for entering the market.Here is the risk assessment for entering the great China market. The risk assessment based on following six elements: political stability–the stability of politics and overspent, the more stable the better; market chances–the number of customers and the purchase power of customers, the higher the better; economic development and achievement–the growth of economic and the expectation for the future, the higher the better; legal impediment-?the restriction from the law, the less the better; physical impediment–the restriction from resources, the less the better; differences in terms of culture- -to what extent is t he domestic culture different from foreign cultures.The political stability in China: China is a socialist country and always controlled by en regime–the communist party of China. The government has high control in the country and do not need to worry about other regime within the country. Therefore, the political stability in China is good for investing. The market chances in China: China owns the biggest population in the world. The potential market in China is huge, especially when the need for imported goods grows so fast in recent years in China. The economic development and achievement in China: China keep growing fast in recent year and the growth rate keeps rising. In 2007, the GAP growth rate was 1 1. 4, and the GAP as 24. 6619 trillion dollars.In 2008, the GAP rise to 30 trillion dollars. According to the data in terms of GAP and the growth rate, the economic environment in China is appropriate. The legal impediment in China: China's legal system is new in the world after the reform. There are some bugs on laws exist in China and some people or company utilize it, and there are some unreasonable laws exist. However, the Chinese legality system keeps improving and the relative laws to foreign company are always good for investors. In terms of legality system of China, it is good for entering and investing. The physical impediment in China: the land area in China is 960 million square kilometers which ranks 4th in the world.China is also a main energy import and export country in the world, with the north temperate zone having the most. Overall, China owned lots of resources and has potential. The difference in terms of cultures: There are many differences between the eastern culture and the western culture. China is a socialist country and most western countries are capitalist country. The language is also a problem, Chinese is one of the most difficult languages in the world ND the Chinese culture is the oldest culture olives in the world. Now adays Chinese are willing to touch new culture and lean new technologies. The culture difference could be a problem meeting in China.Overall, China as a stable-politics country with high growth rate is a talented market and the risk for entering is acceptable. Operational strategies of P&G China Procter & Gamble (P&G) entered Chinese market in 1988, P&G and Hutchison Hampton LTD. Had a joint venture together and invested Procter & Gamble China LTD. Company with 70% and 30% company share respectively. P&G takes advantages from the joint venture P&G china Ltd. The company has more stable financial resources and larger economies of scale. More importantly, could share risk with its partner initially in an unfamiliar international market. P&G China set its headquarter in Guanos. It cooperated with its first partner for operation—–the Guanos soap factory Ltd.P&G China kept the factory core product, Joshua brand shampoo, and bought out its rest products and stop the producti on. This local partner is very helpful to P&G. Guanos soap factory has its own production factory, mature supply networks, good local brand reputation, some profitable reduces and local distribution and sale networks. Moreover, Guanos soap factory has connection with Guanos government which helps receive supports and benefits from government. From the current point, this is one successful case for international cooperation. P&G China did adequate marketing research for Chinese market. The company firstly chooses some product categories which has lower entry restrictions such as hair care products, skin care products.Meanwhile these product categories are very profitable and have huge growth space with perspective of market development and product development. This is one of the important reasons why China could continue growing in a fast speed after it entered China. In order to save cost, increase profit and better control operation, P&G was looking for more local partners to produ ce its products. So far, P&G owns or controls more than 1 0 subsidiary corporations around China area especially in big cities such as Beijing, shanghai, Changed etc. P&G learnt a lot from its first partner—- Guanos soap factory, the company selects its partners with requirements.That is the partner company should be in small size but could fill gaps in P&G's value chain. In this way, first of all, P could use its size and brand reputation easily control or take the major part in the corporation to keep its operating stability. Then, P could use partners resources for local production, distribution or even social networks and more. Two companies could arrange a co-specialization situation. However, P also had problems from its partners especially in the area of washing powder. For example, the cooperation with Beijing second daily chemical factory. The factory used to have its panda brand washing powder products.After the factory joined P and became P panda washing powder fac tory, the reduce and brand were kept. During the operation, the factory campaniles that P smaller its brand logo image on the product which may affect its brand reputation and consumer reputation. On the other hand, some employees left the factory and set up their own Company to produce similar products as panda brand washing powder product which involves within copyright issues. Similar problems happened when P China cooperate with Changed oil chemical factory. P china should do more research about the culture of Chinese companies. They are very protective about their own brand and reputation.They are afraid of losing control, and lots of facts show that they may use illegal methods to â€Å"protect† their profits. The lessons P learnt from failure cooperation will help them gain experience and better collaborate with Chinese companies. China could not be successful without its efficient and effective distribution and sale strategies. We mentioned, P has many local partners around China and the company used its size and big brands take over the control in the corporation. In this way, P can fully use local partners distribution network resources without influence. P has different progress and use different methods for underside market and urban market.The marketing teams are better specialized and tasks are more specific. The operation will be more efficient and effective for different markets. Work with distribution partners. The company has both whole sale partners and retailer partners. P formulates concrete policy to benefit both types of partners. And the company is currently seeking corporation with big franchisee retailers such as Walter. P has a complete and mature system to manage its distribution network. Logistics Management P has a chosen a reliable third party logistics service provider to be in hare of almost all of its products' distribution-?Bagging Logistics Group.With the special â€Å"door-to -door† service and the principle O f â€Å"Customer comes first†, Bagging has built a big logistics operating network throughout China for P&G, and by having thousands of well-trained workers performing the â€Å"door-to-door† service to consumers, it saves P&G 6 million every year of cost on logistics. Inventory Management Fist of all, having a good sale on its products implies that it has to control every kind of its goods at an acceptable quantity, for example, P&G cannot increase the production of Durable intensively just because it is earning none, because it has a high externally cost to the environment, which government will raise the price of it. If P&G is having too much inventory of Durable batteries while the price of it is increasing at the same time, the sale will see an instant drop, and this gap between production and consumers' will to purchase it would even lead to diminishing of the brand.Therefore, P has to conduct very serious speculation and forecast before it decides how much inven tory it is going to have. Vendor-Managed Inventory is the strategy P prefers to use when it comes to dealing with inventories in Great China Area, a market with tens of thousands of suppliers. The vendors has an agreed inventory of P's products kept in their through the communication with the provider through a information system, EDI (Electronic Data Interchange). In this information system, effective and useful information is exchanged between the producers(I. E. , P&G) and the vendors, so P&G will know when a vendor needs more inventory in his store and can make quick adjustment to it.In this process, a third party logistics providers can also be involved and adjust and demand and supply to ensure the vendors has the squired level of inventory, which greatly reduce the cost of the transferring of the inventory. Human resource management of China Richard Duper, the former CEO of P&G, once said: † If you leave our warehouses, money and our brand here, but take away our men, w e will be nothing; however, if you take away all our warehouses, money and our brand but leave our men, we will rise again. † P&G has entered Chinese market since 1988, more than 25 years. It currently has more than 7000 employees around great China area.Effective human resource management is one of the keys that made P&G China's success. But how exactly does P manage its staffs exactly? Systematic Advantage Localize its team: back in 1 988, P China has more foreign employees than Chinese, but now 98% of P China' employees are local people. Local teams could help better fit into local market and save labor costs. However, P&G still keeps its core positions for foreign employees. For example, the research and develop department, most positions in top management. In this way, P&G ensure it fully control the company and make strategy decisions. Efficient training system: P&G has standard and complete training system for its employees globally.The training helps every local employ ee understand the job itself and the company. Therefore, employee could better understand how could they contribute the company and have better career opportunities. Nice working environment and transparent rewards and punishment system: P&G try to build nice working environment for its employees. The company set standard for employee treatment and try to build friendly and fair company culture to raise its employ satisfaction. Therefore, employees are more motivated and they have higher loyalty for the company. Meanwhile, has a transparent rewards and punishment system in order to keep employees' motivation.Selection system: P has very complete employee selecting system and the company is willing to train inexperienced youths. It has connections with various education institutions around great China area. International Staffing Local hiring P owns more than 50 branches in China, and every branch is open for the first round of employment. P does not need the person to have the match ing experience for the job position that he is applying for, however, basic concept and professional skills is required. After filtering the original applicants, the remaining applicants will be sent to P's headquarter in Guanos for the second round, and also the last round of the interview.In order to make sure that the interview is unbiased and legitimate, at least 3 managers from headquarter in China are required for every interview. Also, given the fact that all the applicants need to spend a considerable amount of money, not matter living near or far from Guanos, all the expenses for every applicant are covered by China. The interview can be broken into four parts: Icebreakers, Questioning, Information Exchange and Final Appraisal. The Questioning stage is when the famous P&G's Eight Questions re asked. The questions are made by Human Resource Department in P's headquarter in US, however, the way they are tested is different in the Great Chain Area.According to our interview in P&G Hong Kong, the facial expression and the logics behind an applicant's answer are what matter the most while in the IIS the completion and structure of the answer are major considerations, as P is trying to make its employees match to standard for even surpass the standard P set for its employees around the world.. In the Great China Area, the hiring of staff also follows the same principle that he company is always trying to emphasize: The quality and moral of the person comes first. Fresh graduates from a first-class university in China, due to their flexibility and competitiveness, are the type of applicants that P China adores the most. The data has shown that 90% of the new employees are university graduates from all over China.Expatriate Once an applicant is officially an employee of P China, a series of complicated and motivating training await for them. Due to the flexibility of college students, it is usually very easy for them to absorb the management mode and thinking model quickly. As a result, spends an average Of $30 million on over 1 00 expatriated staffs every year from US in order to better instill the values of the company into employees' mind. For the expatriated employees, most of them are native American workers at managerial level, they are transferred to China mainly to train the â€Å"new born† employees, give managers at positions suggestions and be in charge of the interviews of applicants. Due to the great staff welfare policy P&G has, managers from U.S are given a big increase on their salary for â€Å"compensation†, as they have to be exposed to a completely different culture ND pay more tax give that they are working in two places. However, because of the increasing caliber and standard of Chinese managers, a lot of them are actually being sent to headquarter in Ohio, U. S for further development. Data has shown that an average of 100 Chinese managers and 10 managers from Hong Kong are sent to U. S every year. Ma rketing strategies of P&G China Products The products of household care category that P&G offered in the Great China Area vary according to different regions. For example, in the mainland market and Hong Kong market, the following items are available as shown: China Hong KongDetergent Ariel, Tide FAA Battery Durable Diaper pampers Pampers Indoor Fragrance Iambi Purr As can be seen from the data given, the types of household care products are quite different be;en China and Hong Kong. After our analysis, the following factors can give rise to this situation. Demographical Difference As a country With a huge population, China generates a great demand for basic household care product, I. E. , detergent. As a result, more kinds of detergent are expected in the Chinese market. Also, with more people from rural areas entering the city nowadays, detergents with a lower price (Tide, Ariel) compared to FAA are more accepted. Beside this, the increasing variety of people in China mainland ind icates a more diverse demand when it comes to daily-use products.Hong Kong, on the other hand, tends to have a much smaller and less diverse population, therefore the need generated for many kinds of detergent is not very intensive. Also, Hong Kong has launched some of its own local brands ( e. G. , FUD(Axe), Lagoon) for batteries and detergent that already established great trust among consumers, making it harder for P&G to have many brands to compete with them. Psychological Difference As said before, with the increasing variety of Chinese population, people are starting to have different demands and options on the kind of detergent they purchase as a result of the different kinds of fabrics and clothing materials they have. The increase of the demand implies that there need to be a more complex system of commodities, especially in detergent.However, when it comes to Hong Kong, as said before, the small population has somehow unified people's need for multiple brands; besides, it is worth-mentioning that as a city that represents the modern culture and financial business activities, Hong Kong folks tend to care more about their personal image appearing to others, and this is mainly why there exists the demand for an indoor fragrance product (Iambi Purr) in Hong Kong. Price Price is an extremely important and most uncertain factor in the market. A setting of a price is to increase a product's sale and generate profits for it. A good pricing strategy combines both the consideration of its own cost and consumers' affordability, and is a reflection of the variable market as well. Being a company known for its reasonable prices, P has unique pricing strategies for its household care products.First of all, having segmented the market, P launched different sizes of detergent and charge them with different price to cater needs for detergent and batteries from different levels. For Tide 360, three kinds of package are being introduced to the market: 2. 9 for egg(an a verage of Y 0. 97 /keg) ; YE. 9 for egg (Y 10. 5 /keg) and 15. 9 for 1. Keg (Y 9. 6 /keg). To capture the market in less developed areas, P has produced an â€Å"economical package† of 34. 8 for 5 keg ( 6. 96 / keg). What is more, due to the wider spread of thriftiness, P uses odd-even pricing more intensively in the Great China Area than it does the North America. In a supermarket, prices like Y 2. 9 , *11. 9 can often be seen when we look at some of the batteries and detergents sells, in order to make consumers consciously think that the price is collaboratively set after a series of considerations, and thus view the items as cheaper and a lot more worth- buying. Also, for products like Pampers, aims to use skimming pricing strategy to maintain its market place. Targeting at groups with higher income, this strategy makes Pampers more expensive than the rest, thus creating the feeling among consumers that Pampers are better than other reduces in terms of quality standards, e ffects and values. It is also worth- mentioning that with this strategy applied to shampoos such as Heads , Swanson, P has made an instant success, gathered larger group of consumers and increased the customers' loyalty by a great deal.Last but not least, P&G sets its price by paying a great deal of attention to the moving direction of its competitors, mostly from Milliner, to say in other words: is constantly adjusting its price according to the movement from Milliner in order to remain competitive in the field. In 2013, due to the economic downturn in the Great China Area, Milliner has been forced to lower its price in order to keep the original consumers they have. The price of a egg package Mom, a leading brand in detergent owned by Milliner, has decreased from YE to Y 33. 4 , half as expensive as it used to be. As a result of this practice, P&G decreases the price of Tide of the same package from 38 to Y 32 , a little bit less than Milliner, just to keep getting hold of the mar ket.As we can see from above, low price strategy is also an important strategy that helps P&G to stay firmly in the business. Note: American Dollar 1 = Y 6. 206; Canadian Dollar $ 1= *5. 780 Promotion As one of the strongest and most competitive commodity company in the world, what sort of promotion techniques should P&G have in order to generate new demand and face the challenges from the variable Chinese market? Increasing the number of its brands. Up to this date, P&G has over 300 brands covering fashion industry, health, household care products, cosmetics, perfume and food, etc. With a large coverage in the market, P&G does a great job in bringing in everyone's attention.Also, Sometimes, the brands in competition with each other are tooth from P, making profit for What is more, due to the trust built in customers in Chinese market, it is very easy for P to sweep out other local brands and develop at a steady pace. Advertisement For large companies aiming for the whole market, ad vertising is without a doubt a very useful â€Å"weapon† for the company's growth In long stand. A good advertisement cannot only bring the company massive profits, but can also build a good brand image for the company as a whole. Large amount Of investment In 2011, P&G spent Y 33. 26 billion in the Great China Area, over six times than what it had spent ten years ago.Besides, it is worth-mentioning that the total expenditure on advertisement in 2011 was *55. 89 billion , indicating that views the Great China Area as a very important market. It is shown that among ten brands with the most advertising expenditure in 2005, half of them are P&G's brands. Appropriate and effective content The common technique it uses is by comparison: the person in the clip will usually show the difference between P and other brands. Tide and Durable are typical examples for this; Also, P will have a professional presenting the daily problems, and then provide the solution by introducing a ewe pr oduct. Oral-B in the health category is an example of this technique.Both techniques successfully capture consumers' needs and make them want P&G's products even more. Good choice of people Having a person everyone loves in the advertisement certainly means more people will start thinking about the products, and P is always wisely choosing the person in the advertisement to make sure it generates a great effect in its potential market. Philanthropy as another advocating method In 2007, donated *7. 5 million to China Education Development Foundation, initiating the â€Å"Quantifications]ahoy† (National Healthy Education Plan); In 2010, spent another million on aiding China Social Welfare Foundation, mainly for letting children from less developed area have a better Children's Day (Novo. 10th); From 2007 to 2009, P&G has donated 4 million three times consecutively to Project Hope in order to help kids who cannot finish school in China; In total, P&G has donated to build 131 ele mentary schools in China from 1 991 to 2008, and it has been planning to build 200 by the end of 2010. Etc. Place On Gag 18th1988, entered China as a join venture with two soap companies and a foreign trade corporation in Guanos. After two months, Head& Shoulders, the first brand P&G has in the Great China Area, was launched, and in only two months, more than 95% Of the population in Guanos has known the brand. After twenty years of development, P&G has now become the biggest commodities company with a sale of almost 18 billion every year in the Great China Area, making China the second largest market throughout P&G's global operation.When P first entered China, China was still going through the stage of reformation and opening up. Gudgeon Province, where Guanos is at, was one of the few regions that darted trading with other countries, which provided a great deal of opportunity for foreign companies like and Milliner. Studies have shown that an estimated value of 26. 2 billion doll ar per year is created solely from foreign direct investment during the period between 1979 and 2007, while in 2007 the FED was even increased to 74. 8 billion dollar. Also, it cannot be denied that the caring policies towards the infrastructures and resource allocation are another major reason why P chose Guanos.With the construction of industrial areas and the introduction of less tax to companies, P saved a great amount of money on the start up cost, and thus was able to develop at a faster and steadier pace. Besides these, Guanos, as a terminal in the Peking- Guanos Railway, Guanos can provide P with a convenient distribution system and provide guarantee to the allocation of P's products throughout coastal areas in China. Summary P&G chooses enter China, an emerging market and place of resources. P&G keeps the growth of its economies of scale, increases revenue and decreases cost.

Bernard Bailyns Interpretation of the American Revolution...

Introduction No one will argue that the American Revolution was one of the most significant events in shaping American ideology. The impact on the economy, sociological and ideological make-up of America are still seen in todays society. Many great minds have passed commentary on the causes and impacts of the American Revolution such as; Bernard Bailyn, Louis Hartz, Joyce Appleby, and Gordon Wood. This research examines why these experts believed what they did about the causes of the American Revolution and how we can correlate those causes to the economic and political crisis America is now facing in the 21st century as compared to the 18th century. Literature Review The Revolutionary War physically started in 1775 and ended in†¦show more content†¦These acts then led to the long string of others given out by King. In 1765, Parliament passed the Quartering Act, which required colonists to provide barracks and supplies to British soldier and also the Stamp Act that required stamps to be placed on paper products such as playing cards, pamphlets, almanacs, and newspapers. Unlike the acts before it, the Stamp Act was a direct tax on the colonies and made many believe the passage of it was not merely an impolitic and unjust law that threatened the priceless right of the individual to retain possession of his property until he or his chosen representative voluntarily gave it up to another; it was to many, also, a danger signal indicating that a more general threat existed [3] The American colonies had good reason to suspect some other motives were at play in Britain and with their fears came more taxes. With their ever-growin g belief that in some way Britain was devising a plan to seize their liberties, colonists started to boycott British luxury goods so Britain would have to stop the taxes since they would not be making revenue. However, this did not stop Parliament from adding new taxes to the list. In 1767, the Townshend Revenue Acts were imposed and set a new series of taxes on the colonists to offset the costs of administering and protecting the American colonies. Items taxed include imports such as paper, tea, glass, lead and paints. The restrictions BritainShow MoreRelated The British Colonies in the New World Essay465 Words   |  2 Pagesin history in attempt to discover the reasons the events occurred. The aforementioned statement applies to the American Revolution as countless number of books has been written concerning the American colonies decision to declare independence from England. Woody Holton and Bernard Bailyn are two historians who have probed the subject and reached two separate decisions about the revolution. Focusing on the fears and threats the colonists felt, Bailyn identifies England as the threatening force againstRead MoreQuestions for Ap Us History3870 Words   |  16 Pagesthe Natives. The only thing that was pure about him was his seamanship. 6. What major issues does Bartolome de las Casas bring up regarding Spanish expeditions in the Caribbean? He describes what the Spanish expeditions are doing to the Native Americans who live in the area. He also wrote about how the Natives used to live before the Spanish came. He describes their cruelty and how inhumane it is. 7. Identify one early and one subsequent motive that drove Columbus to oppress indigenous peoples