ASSIGNMENT COVER

HHAHA
HAMBRA EDU SERVICES

STUDENT’S NAME : SARAVANA RAO A/L VENKATRAO

I/C NO / MATRIX NO. : HMPM 21217

PROGRAMME : EXECUTIVE MASTER IN OPERATION & PROJECT

MANAGEMENT

CLASS DATE : 22 MAY 2021

INTAKE DATE : 17 APRIL 2021

MODULE : INNOVATIVE DEVELOPMENT IN OPERATION

MANAGEMENT

TRAINER’S NAME : DR CAPT SHAHRUL BAHRIN BIN ZAINAL ABIDIN

CENTRE : AETC SHAH ALAM

OVERALL MARK
(Fill up by Trainer)

INDICATOR MARK

EFFORT ( 10% )
PRESENTATION (10% )
CONTENT ( 40% )
TOTAL ( 60% )
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PROGRAMME:

EXECUTIVE MASTER IN
OPERATION & PROJECT
MANAGEMENT

MODULE:
INNOVATIVE DEVELOPMENT IN
OPERATION MANAGEMENT

HAMBRA EDU SERVICES

F-16-2, Alam Avenue 2, Jalan Serai Wangi N16/N,
Seksyen 16, 40000 Shah Alam.
www.executivetraining.com.my
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TABLE OF CONTENTS
Contents Page Number
INTRODUCTION……………..........................................................................4
1.1 Key Elements In Strategic Group Analysis………………………..7
1.2 Strategic Choice…………………………………………………………………..9
1.3 Strategic Implementation…………………………………………………….10
1.4 Strategic Group Mapping……………………………………………………..11
1.5 Strategic Control…………………………………………………………………...13
1.6 Operational Control………………………………………………………………15
1.7 Characteristics Of Strategic Control System………………………17
1.8 Strategic Thinking…………………………………………………………………18

2.0 Extent of Product(Or Service) Quality…………………………………..20

2.1 Extent Of Geographic Coverage……………………………………………..21
2.2 Numbers Of Market Segments……………………………………………….23
2.3 Distribution Channel………………………………………………………………24
2.4 Extent of Branding………………………………………………………………….26
2.5 Marketing Effort………………………………………………………………………28
2.6 Degree of Vertical Integration…………………………………………………29
2.7 Product or Service Quality…………………………………………………………31

Conclusion……………………………………………………………………………………………33
Bibliography &
References……………………………………………………………………..34-35

INTRODUCTION

On the first hand accomplishing this assignment by contemplating through the question given, it fundamentals on
the course model that studied through mass discussion in class and also exchanging in ideas in INNOVATIVE
DEVELOPMENT IN OPERATION MANAGEMENT subject. The base of the first question explores through
the
strategic group analytical methods that has been exposed within thorough studies and vast debate on expanding
business on economical sector that flows through service or product that speaks on its quality.
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Secondly the base of second question discusses the criteria used within the industry to boost its service through
manufacturing and operational by adapting the innovative that studies by such critical thinking, advent skills that
explore the advantages that could be implied on the industry to boost its ROI (return of investment). Furthermore,
scholars that been hired to conduct such study develops the criteria or idea within the grouping firm to explore the
market to enhance such product or service provided by any industry.

Adding up this type of innovation can be looked as an efficient control system that considered to be one of the
guarantors of the efficiency of the management activities that have been undertaken within the scope of each and
every implemented function of an organization. Thus , here it varies on many degrees of utilization, efficiency and
effectiveness, thereby determining the need for resource allocation, combining various activities and changes in the
scope and intensity of activities, and in this way becoming one of the crucial factors determining the level of
efficiency of a management.

Its being an interest that instills in this issue, where both in theoretical as well as pragmatic view derived In terms.
This type of approaches are inherently intertwined where theoretically it provides a foundation for practical
solutions: the methods, techniques and tools of control. On the other hand, a theory stays as generalization of
solution which stems from management practice.

Lastly, this assessment conducted on the basis of study or journals that has been studied thoroughly by experts and
scholars approaching quantitative research, survey, multiple regression analysis, and test to identify such
innovative method created to be applied into operational management that carries the flow of an operation to create
such product or service quality required by market or client. In a nutshell, this permits such exploration on the
grouping analysis on industry level and much varying degree in an organization, where critical ideas are explored,
studied through, pigmented on the risk taken for such ideas that will impact the operational management flow in
any designated industry or workplace.

Question 1: What are the advantages of undertaking a strategic group analysis?.

As we can dive deep into answers, introduction is a prior for SGA(strategic group analysis) where the
term derived as a team/group of individuals that creates a strategic management within an industry that
faces environmental forces, same resources and follows similar strategy in responding environmental
forces. Vital parts of strategies used within an industry can vary from pricing practice, type of resources,
level of technology investment and leadership skills, product/ service quality, scope of the
product/service. By supporting the introduction above, this strategic group can be identify where the
analyst or the manager capable of understanding better strategic to be implied that multiple firms are
adapting the ideas or strategic practice within the same industry.

Secondly, the number of groups exist within an industry detects the direct rivals from the same sector or
region than indirect rivals involves. Why such this happens because on how this group could lead the
direction and scope of an organization and also acts as an over lay that achieves the advantages created
within the industry to be competed in the market wise. Taking into account from the review of a scholar
named Michael Porter where he reviews and by theory where strategic groups can be divided into
consideration of certain combination of characteristics and environmental opportunities and threats that
determine according to different strategic group.

As Michael Porter also claims as an enterprise belongs to the same strategic group will have more
competitor within an industry than those not belonging to the same strategic group will have lesser
competitor. In addition, the attention of competitors within the same strategic group, the possibility of the
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migration should be considered. The barriers of migration are one factor that limit the transfer of the
enterprises between the different group within an industry. The barrier of migration can be defined as if
the barrier is low, the entry threat is high and if the barrier is high, the entry threat is low.

On the other hand, Michael Porter theory on value chain analysis remarks that was put by him in his book
called Competitive Advantages in 1985. The value chain analysis extinguishes that terms are generally
stands on a series of economic activities conducted by enterprises to create value for customers,
shareholders, employees and other interest groups. The difference here stands on how value chain among
different enterprises forms the source of enterprises competitive advantage.

In past, experts and scholars emphasis on the “diamond model” to study and the competitiveness in the
market, analyze the advantages and disadvantages that could take place in the six elements of the model,
also putting forward countermeasures from the macro and micro perspectives.

This application of value chain enhances as an new energy that mainly focuses on the deliberated
business model and energy supply model, and few literacy that used to study the competitiveness of a
single enterprise. Thus, this answer for the question which I’m answering adequate on advantages that
applies on undertaking a strategic group analysis.

Based on the characteristics described above, this divides the activity of value chain into three main parts
such as firm level, industry level and global value chains. As mentioned criteria are shown in Figure 1
below.

Figure 1: Michael Porter model of value chain.

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1.1 Key Elements In Strategic Group Analysis.

At present, breaking down the key matters that can be used an advantages of strategic group analysis that
contribute better results and produce key results for enterprises, customer, shareholders , employees and
other groups as well. It can be distinguish as the strategic key management that dwells into a process of
specifying objectives of an organization, firm , industry level and then the allocated resources provided
can be implemented successfully. Strategic management also can be considered as being the highest order
of managerial activity that the top management performs and also their appointed executive teams.
Normally, it provides the overall direction of the entire organization and also known to be set of action
and decision that made can be a key result to the formulated and implementation of the approached
design to achieve the objective of the organization with the environment that isn’t constant and keeps on
changing in a manner that being advantageous. It’s extremely critical in the survival of an organization.

As referring to the Figure 2 below it can be known elements that are needed in strategic group analysis
which are supposed to select the directions in which it will move towards. Here it can be thrown into
three major elements which namely strategic analysis, strategic choices and strategy implementation.

Figure 2: The major elements in Strategic managemen

Strategic Analysis as mentioned in Figure 2 are very much concerned with an understanding of an organization
strategic position with allocating resources. It can be define here that with much concerning the attitude that going
on in an environment and how the changes could affect the activities of organization. Strategic analysis it aims on
the factors that can be viewed as that can have impact on the present and the future performance of the
organization. When strategic management is performed in right manner, thus it likely to be selecting the correct
strategy. There are three major factors that contribute and can be considered during strategic analysis. The first
factor is business environment. It is rigid for any organization exist without interacting by a complex, political,
commercial, economic, social cultural and technological environment.

The environmental changes are at times too complex for certain organization than others. Therefore, when such
issue faced by an organization, the clear understanding are prior to understand the impacts so that it’ll be easy to

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formulate a strategic plan. The main importance on this is to understand better on the environmental effects on the
business.

Adding on, the second factor lies on organization resources, which acts as an internal influences. By taking into
account, regarding the strategic capability of the organization, it is necessary to consider to weakness and its
strengths. The weakness and strength can be identified when considering the organization resource like
management, physical plant and its financial structure. Thus, it adheres the forming of an observation of an internal
influences and restriction on strategic choices.

The final factor for strategic analysis will be proceed on the stakeholder differences in the development of an
organization which solely depends on their goal, objectives and expectations. By far it contributes such
assumptions and beliefs of stakeholders that structure the culture of an organization. The resources, expectations,
environment and objectives in the political and cultural framework in the organization to provide the ground of
strategic analysis for the organization. To understand further on this issue, the extent of strategic position in the
organization, it is essential to examine how far the implication and direction of the current strategy.

1.2 Strategic Choice

Normally strategic analysis creates the base or foundation of the strategic choice. Once strategic analysis
is finalized, its now ready to be adapted as a strategic choice. Strategic choice is normally defined as the
practice for choosing the best of the best possible course of action, its basically used as
an evaluation of available strategic options. It can be derived into three parts as include as generation of
strategic option, evaluation of the option and selection of the strategy. These three parts plays an
important role where it ensures the selected option is the best.

The second part is the evaluation of the strategic choice taken in an organization. It can be examined as in
the strategic analysis so that assessing their relative merits. When an organization decides on any option
or choices, it implicates to ask few questions of the choice eligibility. Such as example, the question
asked are the credibility of strength taken in a choice or option which has been analyzed and built and
taking into account the advantages and disadvantages that overcome the weakness while minimalizing
any threat the business, organization, economic sector, industry and firm level will be facing.

The final part will be the selection of the strategy where it’ll be the process of selection that such
organization choose to pursue. At times, the selected choice Is usually a subject due to management
judgement. Thus, its extremely essential to be understand that, in the selection process, it can’t be every
time viewed as a pure logical , objective act. During this period, the selected strategy normally strongly
influenced by managerial level and values and other groups with an interest in the organization. Here at
one point, it reflects the power structure of an organization.

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However, the strategic choices here are thoroughly expands by the scholars and experts that been hired
within a group to carry out such choices that elaborated in three minor parts that succumbs on the choice
will be made on which creates the advantages and disadvantages evaluates the options are made to be
carried as an operational activity.

1.3 Strategic Implementation

Third final major element of strategic management is a part that is concerned with strategy translated into
action. It’s a stage where the strategy is translated to action and the implementation of this strategy part
requires proper and channelized deployment of the organization resources, effective change of a
management, careful handling of the possible changes that might happen in the structure of an
organization and last but not least the careful planning. In present, there are several parts that involves in
strategy implementation.

The first part lies on the planning and allocation of resources provided. During this its implemented as
involving with resource planning that includes the logistics of implementations. Following on second
part, is the organization decision and structure. While this implementation takes place, certain changes in
organization takes place and should be done. Finally the third part will be strategic change in the
management.

As such strategy being implemented, it requires the strategic change to be managed well. Considering
this, action taken by managerial level is very much vital and required as it is paving the way the changes
in any process taking place to be managed and the mechanism that able to use. The mechanism here
mentioned here can be described as much concerned with redesign of an organization, changing daily
routine and activities , cultural aspects of an organization and finally the political barriers to change or
ample to be implemented in the organization.

In conclusion, this there elements captured of such strategic management that interconnected in that order
for such strategic choice to be chosen, there must be an analysis of options where to determine the
strategy that’s going to be effective and efficient in a longer timeline in such organization. Strategic
implementation normally depends on strategic choices. This implicates the strategy that normally done
after different strategies have being considered so that a finalized conclusion can be arrived at the choice
where the organization will accomplish the objective aimed at.

1.4 Strategic Group Mapping

An useful tool for guiding the separation of a strategic group in an industry is firmly known as the
strategic group mapping. The group mapping can be displayed as a two dimensional which helps to
explain the different strategies of the organization. These two dimensional shouldn’t be interdependent
because it may shows in the map inherent correlation. Very importantly, managerial level personnel

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should chose those dimensions that lies on a scale of salient yet relevant to their particular sector and
industry.

As laying the brick for the definition of strategic group mapping, its not difficult to create one, however
some simple guidelines can be drawn here on developing them:-

 Key competitive attributes – As many firms share similar competitive attributes such likes on
pricing practices and product scope in a market. The first step taken here is developing the
strategic group mapping which is to identify key competitive attributes where logically
differentiate the firms in a competitive sets. It’s not always known in advance of creating the map
and its important to be ready to create multiple maps using different variables.

 Create map based upon 2-key variables: Variables selected here and assigned to X and Y axis
respectively. Selecting a logical gradation value for each axis so the differences will be
observable. When the mapping is complete plots from each firm’s location on the map for the
industry to be analyzed. Each firm which plotted use a third variable, such as revenue to represent
the actual plot size of each firm. A type of variable like revenue helps reader to understand the
relative performance of each firm in terms of the third variable.

 Identify the strategic group: As all the firms has been plotted through the mapping, enclosing
each group of firms that emerges in a shape where it reflects the positioning on the strategic
group. This represent the assessment whether or not the differences between each group is
meaningful or should new variables be selected from another set of strategic group can be drawn.

Lastly, stating the guidelines for strategic group mapping is very easy as taking into account what type
and selection of variables to be create the map. The set here will be a key point as such variable will
determine the industry to deploy its strategy to be carried out in action. It can be seen in the Figure 3
where sample of strategic group mapping is shown.

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Figure 3: SGM to signify the amplified strategy choose by firms.

As according to Michael Porter, moving from one strategic group to another is very difficult because
every strategic group creates its own image and branding in the market place ,here Porter states few point
to be kept in mind:

- Strategic groups can shift over time in the needs of customer or technological advancement that
evolves over time in the marketplace. Therefore, managerial personnel should be alert and not
assuming that membership in a particular strategic group permanently stays or the firm fixed into
same strategy. By having sufficient resources and focus, firms can enter and exit any strategic
groups over time.

- Fast forwarding few recent years, more endured trends has been identified and been defined as a
growing number of industries in the hastening pace of consolidation. Competitors are seeking to
merge with rivals to limiting the effects on price wars that impacts the profitability negatively.
The consolidation among the industries can markedly redefine the stability of the strategic group

- Creation of strategic group and analyzation distinguish an effective way to develop

comprehensible understanding of how the firms within the industry compete each other. Each and
every strategic group depicts firms on similar type , if there is no identical competitive attributes
didn’t take place the map helps managerial level personnel to identify other important differences

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among competitive positions. The differences here can be subjected to further analyzing which
helps to define more subtle differences.

1.5 Strategic Control

Here by stating another strategic part that formed within a industry can be strategic control where
it overcomes the focuses in duality on questions like:-

i) The strategy being implemented as planned?

ii) The results provided by the strategy are intended?

And to answer this, Strategic control takes roles as a critical evaluation of plans, activities and results ,
and thereby providing information for future action. To be put in place, there is a four type of strategic
control: premise control, implementation control, strategic surveillance and special alert control.
Here looking deep into this matter, it evolves that such practice in strategic group conveys a in depth
evaluation of factor mentioned as it how impacts on the industry, company, firm and enterprise as well.

Premise control- it is established early in the strategic planning process and act as a basis for formulating
strategies. It has been designed in such way to systematically checked and continuously whether the
premises set during the planning and implementation processes are very valid. Therefore, it involves in
checking the environmental conditions. Premises control are primarily concerned with two types of
factor:

(a) Environmental factor such as inflation, interest rates, acts & regulations, demographic/social
changes, inflation
(b) Industry factor such as barriers to entry, substitutes, suppliers and competitors.

All premises at times does not require same amount of control. Therefore, managerial personnel or
executives who exist within the strategic group should select those premises and variables in:-

(a) are very likely to change whereas variables

(b) would contribute a major impact on the company and its strategy if it did.

Implementation control: it can be distinguished that such strategic type that provides an additional
source of feed forwarding information. Such strategy here designed to assess whether an overall strategy
should be changed in light any unfolding event . The results obtained with the incremental steps and
actions leads to implementation of an overall strategy. In addition, there are two basis type that leads to
implementation control are:-

1) Monitoring strategic thrusts : Two approaches can be useful that enacts as implementation control
that focuses on monitoring strategic thrusts :
- Firstly, to reaching an agreement earlier in planning process on which thrusts are critical
factors in the success of the strategy carried out into action or that thrusts at itself.

- Secondly, is a method of stop and go where assessments, tests, analyzation linked to series of
meaningful threshold such as time, cost, research and development, success etc are being
associated with particular threshold.
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2. Milestone Reviews: it’s a significant points in the development of a program such large
commitments of resources must be made. A milestone review basically involves a full scale
reassessment in the strategy and can be a tool of advisability of continuing or refocusing the
direction within in an industry.

Strategic surveillance: This type of strategic action has been designed to monitor and surveillance a
broad range of event happens internally or externally within an industry which are likely to threaten the
industry. The simplicity of this idea designed here are formed as general monitoring of multiple
information sources which can be encouraged with specific intent by being the opportunity to uncover
important yet unanticipated information. Therefore, “environmental scanning” can be a similar tone for
strategic surveillance however the rationale here is different. Its usually seen as part of chronological
order of planning cycle devoting for generating information for new plan or strategy. By contrast it
designed as establishing strategy on a continuous basis.

Special Alert control: Once implementation of a strategy takes place, this tool here are needed
thoroughly and can be counted as always as to reconsider the firm’s basis strategy based on a sudden and
unexpected event. (i.e., natural calamity, chemical spill, product defects, hostile takeovers and etc). This
type of control should be conducted throughout the entire strategic analysis process.

1.6 Operational control:

An up and running control system where it designed to ensure day to day actions are consistent with
established plans and actions carried out through strategy analysis. It focuses on events in a recent period
and here the systems are derived at the requirements of the management that voices out on how action
and plans to be carried out operationally. Moreover, this action here requires training, one to one
teachings, motivation, leadership discipline and determination.

Furthermore, there are few evaluation techniques majoring in operational control such as value chain
analysis, quantitative performance measurement, Benchmarking and key factor rating. By contrast, each
evaluation will be distinguished exponentially of how strategy analysis within an industry carried with
planned strategy by focused key marks that has been explained before and carried out into day to day
basis operational level. In a nutshell, managerial level personnel will be focused on the rate of
productivity can be produced by limitation of targets or milestones fixed within an industry.

Evaluation techniques for Operational Control:

- Value chain analysis: Firms and industry employ this strategy to look out and evaluate
competitive potential of resources and capabilities. By taking time of study the skill related to
those associated with primary and support activities, firms are able to comprehend their cost
structure, and identify their activities thorough where value of such can be created.

- Quantitative performance measurement: this evaluation consists of reports throughout the

performance achieved within the firms and industry such as sales growth, profit growth,
economic value, and ration analysis). This evaluation begs on manager review at regular
intervals. For an example, if sales growth is a target fixed as a milestone, the firms by all
means should prepare the gathering and exporting sales data. In addition, certain quality
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aspects of experiment task will be carried out such as survey, opinions, judgement and
intuition on checking up the firms or industry performance whether on the right track.

- Benchmarking: a layout process on learning methodology of how other firms performs hogh
quality actions exceptionally. Some benchmark are simple and straightforward. For example,
KFC s moving in the right direction with things like grilled chicken and white meat filets as
well as its value menu. More multi-branding will help this chain to diversify away from
chicken only now that McDonald's has trained the public to think of quick-service restaurants
in terms of multiple protein options. In conclusion, while this clear leader in the chicken
segment has a lot of work ahead of itself, it is on the right path.

- Key Factor Rating: based on an examination closely of key factors involved or affecting
performance such as (marketing, operations, financial and human resource capabilities) and
assessing overall organizational capability based on collected information. Hofer and
Schendel have developed this technique to make a comparative analysis of a firm’s own
resources deployment position and focus of efforts with those of competitors. First the
technique requires the preparation of a matrix of functional areas with common features. For
e.g. focus of financial outlay, physical resources, organizational systems and technological
capability.

1.7 Characteristics of an effective strategic control system

As looking further into the strategic control system it tend to have few qualities in common areas within
an industry. This characteristics can be justified:

- Suitable: must be aligned with the needs of an organization and within an industry. Must
conform to the nature and needs of the job and the area to be controlled efficiently.

- Simple: control system in this characteristics should be understandable and easy to operate. A
complicated operational method could cause unnecessary mistakes without advanced skills,
confusion among employees. When the control system is adapted perfectly, employees can
interpret in the right way and ensure its implantation.

- Selective: focusing solely on attention on key, strategic and important factors which are
critical to performance. Insignificant deviations should be ignored at all cost.

- Flexible: Competitive, technological advances and other environmental factors force

organization changes the course of the direction to be aligned within its resources. As a result,
it should be flexibly controlled. To support further, its imposes to adjust or adverse changes
that could open to new opportunity.

- Forward looking: must provide timely information on deviation as its operates upon the
strategy chosen. Any departure from this standard should be captured fast due to implicating
the steps taken into action from damaging before things goes out of hand.

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- Reasonable: controls should be parting effectively in both parties or ways. It should be

attainable by all means, thus it should be balanced among employees as the bar if set to high it
could be difficult for employees and demote them as well, also when the bar set too low, it
doesn’t pose challenges for the employee.

- Objective: it is effective when control system has clear vision on how the organizational
within an industry steer further. When the standards are stated and set in clear, its easy for
evaluating the performance. Vague standards are impossible as it could lead to not achieving
milestone in a right way.

- Acceptable: Controls in this system wont work unless people want them to. It should be
acceptable to chosen whom to apply and when to apply. This works perfectly when the control
system is quantified, objectified, attainable and understood by one and all.

1.8 Strategic thinking

Defining this term is quite difficult where the absence of a consensus of what strategic management is.
The distinguished term for strategic management is that an approach made to management which fusing
strategic planning (analyzed plan development through environment, competition and strategy choices)
and also the firm within an industry system of operational making decision. This process has five
dimensions and will be listed out of this strategic thinking takes places into action:-

i) First, strategic management requires wide understanding of strategic planning deeply

with strategically centered organized situation.

ii) Secondly, it requires widen discussion, analyzation and negotiated goal objectives which
culled out which are not suitable for the organization and within an industry.

iii) Thirdly, Strategic management relies solely on sharing ability to think strategically by
managerial personnel throughout the firm

iv) Fourthly, A performance variance evaluation system is very necessary as it focuses top
level evaluators attention on critically positive or negative strategic factors.

v) Finally, it requires supportive strategically motivational systemic and value oriented

among top level personnel.

Strategic thinking is what generates creative, environmentally relevant ideas and concepts of how to turn
them into systematically managed action plans. Here, the requirements of strategic thinking requires
factual and logical input data because its competitively dangers the base strategy formulation on
erroneous information provided. Therefore, long held assumptions should be identified and analyzed if
the assumptions could still serve as an strategy or to be neglected if its didn’t serve the purpose at all.
Moreover, if the managerial personnel attempts to think strategically, it should be implemented as soon as
possible and committed to conservation of organizational resource rather than expecting a good idea that
precipitate a funds, people and support. In a nutshell, strategic thinking must be done without creating a
pattern which competitors can identify and anticipate.
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Question 2: What criteria can be used for grouping firms within an industry. Give an
example to support this statement?.
Of what has been explained in Question 1, we know what does stands for strategic group analysis and
how it branches off systematically. Hereby, moving on the next question it adheres the criteria that can be
used for grouping firms within an industry. Therefore, few criteria has been researched thoroughly and it
completes my answer for this question asked. However, there can be numerous criteria over which firms
can be measured:
 Extent of product (or service) diversity.
 Extent of geographic coverage.
 Number of market segments served.
 Distribution channels used.
 Extent of branding.
 Marketing effort.
 Degree of vertical integration.
 Product (or service) quality

From the criteria given and stated as it is, it will be from now on breaking down the each criteria of how
it works as an strategic methodology that works on a grouping firm within an industry. Much obliged
each criteria linked as a chain that contributes its own factor that substantially creates the path for the
objective or goal achieved by the grouping firms within the fixed period

2.0 Extent of product (or service) diversity.

Product diversity is often the marking technique that many companies use to make more money out
of certain products that can be adapted and remarketing. This may involve companies adapting and
replacing a product so that they can enter it into a different market to be make more profitable and to be
expanded more into market.
This will often be done after a company has done sufficient market research and planning, otherwise the
whole re branding could fail miserably and the company would lose even more money. Thus, a figure
would explain more how the extent of product or service diversity are made of as attached figure:

Figure 2.0 shows the type of diversification on any products or services attained in market.

As in order, why such grouping firms made this diversification as an criteria because to achieve higher
profitability. Moreover, there are another terms can be justified for this criteria, and known as Business-
level product diversification – Expanding into a new segment of an industry that the company is already
operating in. To converse more, few factors has been listed in for this criteria understand in a proper
way:-

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 Diversification mitigates risks in the event of an industry downturn.

 Diversification allows for more variety and options for products and services. If done
correctly, diversification provides a tremendous boost to brand image and company
profitability.
 Diversification can be used as a defense. By diversifying products or services, a company
can protect itself from competing companies.
 In the case of a cash cow in a slow-growing market, diversification allows the company to
make use of surplus cash flows.

There are few notables diversification that helps supports my answer from a well known sector. Such
sectors are:-

General Electric
General Electric commonly comes into discussions when talking about successful diversification stories.
GE began as an 1892 merger between two electric companies and now operates in several segments:
Aviation, energy connections, healthcare, lighting, oil and gas, power, renewable energy, transportation,
and more.
 
Walt Disney
Walt Disney Company successfully diversified from its core animation business to theme parks, cruise
lines, resorts, TV broadcasting, live entertainment, and more.

2.1 Extent of geographic coverage.

There is no easier route into personalized marketing than market segmentation. By breaking down your
customer base into groups, you can target your resources and ensure your audience receives the
messaging that is most relevant to them. Moreover, its a common strategy when you serve customers in a
particular area, or when your broad target audience has different preferences based on where they are
located. It involves grouping potential customers by country, state, region, city or even neighborhood.
This marketing approach is common for small businesses that serve a wide demographic customer base in
a local or regional territory.

From pinpointing such reason, such segmentation is taken seriously to uncover the potential ideas that
sorted out to bring out the profitability in highly order in taking account of such segmentation that helps
the product or service to be marketed in a longer run. Such example stated here with given example with
ample explanation as well:-

i) Selling Seasonal Products

Seasonal products, such as winter gear, swimwear and beach attire, often are marketed to geographic
segments. Winter gear is promoted for several months leading up to late fall in the Midwest and northern
regions of the United States where snowy weather is common. Beach attire is often targeted year-round in
summer regional area. In areas with distinct winter, spring, fall and summer seasons, swimwear normally
is promoted for a few months, including late spring and the summer swimming season.
ii) Size of Community is Key
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The size of a community also plays a part in geographic segmentation. One company may market
lawn mowers to rural communities where most residents have a yard but target city dwellers with
weed trimmers or leaf blowers for manicuring lawns or sidewalks. Population density can also impact
decisions regarding transportation with rural customers requiring more personal vehicles than urban
citizens.

iii) Local Retailer for Local People

Local discount or departmental store retails that selling a variety of product categories appealing to
different demographics often use local geographic segmentation in their marketing efforts. Small
town businesses, for instance, often flood the local market with radio and newspaper ads that have
broad local reach and affordable rates.

iv) Geography and Food Preference

Certain foods have very specific geographic interest in the regional nationwide, for instance, its
common in the South and Southeast regions. Seafood, while enjoyed elsewhere, is marketed more
heavily along the east and west coasts, where supply is fresh all year. McDonald's offers seasonal
seafood meals, including lobster and crab, in selected markets like New England. This is an example
of regional segmentation based on geographic consumer preferences and product availability. Small
chains may find similar opportunities to achieve supply and demand advantages in select geographic
markets.

v) Breaking Into New Territory

In some situations, grouping firms within an industry uses geographic segmentation selectively to
target new local territories or regions. Starbucks often distributes coupons for coffee drinks in certain
regions when it opens several new stores. In this case, the company has a promotional objective of
customer growth in a new market, but it may emphasizes other goals, such as increased market share
or higher profitability, in more established markets.

2.2 Number of market segments served.

In Strategic Group Analysis, it’s the process of dividing a brand consumer or business market, normally
consisting of existing and potential customers which divides into sub-group of consumers known as
segments based on characteristics. The overall aim for this example are entitled for high yield segments,
which are likely to be the most profitable or that have growth potential – so that these can be selected for
special attention (target markets).

Market segmentation assumes that different market segments require different marketing programs – that
is, different offers, prices, promotion, distribution, or some combination of marketing variables. Market
segmentation is not only designed to identify the most profitable segments, but also to develop profiles of
key segments in order to better understand their needs and purchase motivations. Insights from
segmentation analysis are subsequently used to support marketing strategy development and planning.

Such approach can be extinguished as S-T-P approach which can be determined as:-

Segmentation → Targeting → Positioning

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Figure 2.1 shows the S-T-P approach used by firms in marketing level

This approach is made to know providing the framework for marketing planning objectives. Furthermore,
when the market is segmented, one or more segments are selected for targeting, and products or services
are positioned in a way that resonates with the selected target market or markets. Also putting into
another definition, s the process of dividing up mass markets into groups with similar needs and wants.
As the STP approaches here, it can be termed down as the process of segmenting the market is
deceptively simple. Seven basic steps describe the entire process including segmentation, targeting, and
positioning. In practice, however, the task can be very laborious since it involves poring over voluminous
data, and requires a great deal of skill in analysis, interpretation, and some judgment. Although a great
deal of analysis needs to be undertaken, and many decisions need to be made, marketers tend to use.

2.3 Distribution channels used.

Distribution is the process of making a product or service available for the consumer or business user
who needs it. This can be done directly by the producer or service provider or using indirect channels
with distributors or intermediaries. The other three elements of the marketing mix are product, pricing,
and promotion.

Decisions about distribution need to be taken in line with a company's overall strategic vision and
mission. Developing a coherent distribution plan is a central component of strategic planning. At the
strategic level, there are three broad approaches to distribution, namely mass, selective and exclusive
distribution. The number and type of intermediaries selected largely depend on the strategic approach.
The overall distribution channel should add value to the consumer.

Moreover, it is fundamentally concerned with ensuring the products reach target customers in the most
direct and cost-efficient manner. In the case of services, distribution is principally concerned with access.
Although distribution, as a concept, is relatively simple, in practice distribution management may involve
a diverse range of activities and disciplines including detailed logistics, transportation, warehousing,
storage, inventory management as well as channel management including selection of channel members
and rewarding distributors.

As three broad approaches that mentioned above will be termed very detailed in a manner to understand
the criteria very well as we seek:-

a) Mass distribution (also known as an intensive distribution): When products are destined for a
mass market, the marketer will seek out intermediaries options that appeal to a broad market base.
For example, snack foods and drinks are sold via a wide variety of outlets including supermarkets,
convenience stores, vending machines, cafeterias and others. The choice of distribution outlet is
skewed towards those that can deliver mass markets in a cost efficient manner.

b) Selective distribution: A manufacturer may choose to restrict the number of outlets handling a
product. For example, a manufacturer of premium electrical goods may choose to deal with
department stores and independent outlets that can provide added value service level required to
support the product.

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c) Exclusive distribution: In an exclusive distribution approach, a manufacturer chooses to deal

with one intermediary or another type of intermediary. The advantage of an exclusive approach is
that the manufacturer retains greater control over the distribution process. In exclusive
arrangements, the distributor is expected to work closely with the manufacturer and add value to
the product through service level, after sales care or client support services. Another definition of
exclusive arrangement is an agreement between a supplier and a retailer granting the retailer
exclusive rights within a specific regional area to carry the supplier's product.

As the discussion on this criteria grows, here it can be spot softly that push and pull strategy is amended
here, as it grows substantially whether In a push strategy, the marketer uses intensive advertising and
incentives aimed at distributors, especially retailers and wholesalers, with the expectation that they will
stock the product or brand, and that consumers will purchase it when they see it in stores. In contrast, in a
pull strategy, the marketer promotes the product directly to consumers hoping that they will pressure
retailers to stock the product or brand, thereby pulling it through the distribution channel.

Typical distribution channel involved in this criteria can be categorized as:

Wholesaler: A merchant intermediary who sells chiefly to retailers, other merchants, or industrial,
institutional, and commercial users mainly for resale or business use. The transactions are B2B (Business
to Business). Wholesalers typically sell in large scale of quantities

Retailer: A merchant intermediary who sells direct to the public. There are many different types of retail
outlet - from hypermarkets and supermarkets to small, independent stores. The transactions in this case
are B2C (Business to Customer).

Agent: An intermediary who is authorized to act for a principal in order to facilitate exchange. Unlike
merchant wholesalers and retailers, agents do not take title to goods, but simply put buyers and sellers
together. Agents are typically paid via commissions by the principal.

Jobber: A special type of wholesaler, typically one who operates on a small scale and sells only to
retailers or institutions.

2.4 Extent of branding.

Brand extension is a marketing strategy in which a firm marketing a product with a well-developed image
uses the same brand name in a different product category. The new product is called a spin-off.

Organizations use this strategy to increase and leverage brand equity defining the net worth and long-
term sustainability just from the renowned name. It increases awareness of the brand name and increases
profitability from offerings in more than one product launching a new product is not only time-
consuming but also needs a big budget to create brand awareness and to promote a product's benefits.
Brand extension is one of the new product development strategies which can reduce financial risk by
using the parent brand name to enhance consumers' perception due to the core brand equity.

While there can be significant benefits in brand extension strategies, there can also be significant risks,
resulting severely damaged brand image. Poor choices for brand extension may deteriorate the core brand
and damage the brand equity. Most focuses on the consumer evaluation and positive impact on parent
brand. In practical cases, the failures of brand extension are at higher rate than the successes.

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A brand's "extendibility" depends on how strong consumer's associations are to the brand's values and
goals. Product extensions are versions of the same parent product that serve a segment of the target
market and increase the variety of an offering. This tactic is undertaken due to the brand loyalty and
brand awareness associated with an existing product. Consumers are more likely to buy a new product
that has a reputable brand name on it than buy a similar product from a competitor without a reputable
brand name. Consumers receive a product from a brand they trust, and the company offering the product
can increase its product portfolio and potentially gain a larger share in the market in which it competes.

Brand extension research mainly focuses on consumer evaluation of extension and attitude toward the
parent brand and referring to Aaker and Keller brand extension model. In their 1990 model, Aaker and
Keller provide a sufficient depth to examine consumer behavior and a conceptual framework. The authors
use three dimensions to measure the fit of extension. First, the "Complement" refers to consumers taking
two product classes (extension and parent brand product) as complementary in satisfying their specific
needs. Secondly, the "Substitute" indicates two products have the same user situation and satisfy the same
needs, which means the product classes are very similar and that the products can act to replace each
other. Lastly, the "Transfer" describes the relationship between extension product and manufacturer
which "reflects the perceived ability of any firm operating in the first product class to make a product in
the second class". The first two measures focus on the consumer's demand and the last one focuses on the
firm's perceived ability.

Figure 2.2 Aaker and Keller model on brand extension.

From the line extension to brand extension, however, there are many different types of extension such as
"brand alliance", co-branding or "brand franchise extension. Another form of brand extension is a
licensed brand extension. In this scenario, the brand-owner works with a partner (sometimes a
competitor), who takes on the responsibility of manufacturing and sales of the new products, paying a
royalty every time a product is sold.

Brand extension can also be done through marketing strategies such as guerrilla marketing, where brands
can promote their goods or services through unconventional means such as emotional connections to the
brand by tackling social problems/dilemmas. These emotional connections are generally done through
social experiments where brands express their concern and offer small solutions thereby making the
brand standout.

In a nutshell, “categorization theory” is used to distinguish further of a brand extension and its effect
through its theory named fundamentally. In a spite when consumers are faced with thousands of products
to choose amongst, they are not only initially confused, but try to categorize by brand association or
image given their knowledge and previous experience. A consumer can judge or evaluate the extension

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product with his or her category memory. Consumers categorize new information into specific brand or
product class label and store it. This process is not only related to consumer's experience and knowledge,
but also involvement and choice of brand. If the brand association is highly related to extension,
consumer can perceive the fit among brand extension
2.5 Marketing effort.

Merely known of reengagement marketing, despite for its popular term called downstream marketing. Its
undertaken by bring a user back to a product that has ostensibly been abandoned. While it is not always
effective, reengagement marketing is popular because it is cheap. When a single user has apparently
churned, the product team must weigh the cost of attempting to reengage that user against the cost of
acquiring a new user.

With web-based products, reengagement campaigns are almost always delivered by email, as it is an
inexpensive medium that is capable of converting with little friction by using embedded links. Emails are
also incredibly easy to track, test, and iterate upon; the content of emails can be constructed in any
number of combinations over which send rates, open rates, and click rates are readily and easily
quantifiable.

For a reengagement campaign, an email will typically focus on a specific call to action involving a
discount or an invitation to explore an aspect of the service that the user hasn’t yet accessed. Templates
addressing specific situations are constructed according to the relevant situational dynamics, and the
analytics system automates the delivery of emails to appropriate recipients.

The transparency of email campaign conversion allows for continual optimization but may also create a
sense of progress that isn’t wholly warranted; email campaigns are notoriously ineffective, generally
producing conversion rates of far less than 10 percent. The return on invested time should be tracked
carefully when engaging in email reengagement campaigns.

On mobile platforms, a more powerful alternative to email reengagement campaigns is called push
notification. A push notification is a system message delivered (“pushed”) by an application. Such
application can be famously known as Lazada, Shopee, Groupon and etc. Push notifications are
received by user opt-in (at first launch, most applications request to send push notifications); if a user has
selected to receive them, the user converts extraordinarily well.

Determining when reengagement should be pursued is mostly a function of the definition of churn for
that product. Users who have churned out of a product are not only largely resistant to reengagement
overtures, they’re also likely to consider such attempts spam, which incites negative feelings for the
product and potentially damages its reputation.

2.6 Degree of vertical integration.

The criteria here known as the implementation that refers to an arrangement in which the supply chain of
a company is integrated and owned by that company. Usually each member of the supply chain produces
a different product or service, and the products combine to satisfy a common need. It is contrasted with
horizontal integration, wherein a company produces several items that are related to one another.

Vertical integration and expansion is desired because it secures supplies needed by the firm to produce its
product and the market needed to sell the product. Vertical integration and expansion can become
undesirable when its actions become anti-competitive and impede free competition in an open

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marketplace. It can be viewed as the model shown as the horizontal integration where it contrasts with
vertical integration.

Figure 2.3 shows horizontal integration versus vertical integration in a automobile industry

Vertical integration is often associated with vertical expansion which is the growth of a business
enterprise through the acquisition of companies that produce the intermediate goods needed by the
business or help market and distribute its product. Such expansion is desired because it secures the
supplies needed by the firm to produce its product.

The result is a more efficient business with lower costs and more profits. On the undesirable side, when
vertical expansion leads toward monopolistic control of a product or service then regular action that may
need to rectify anti-competitive behavior.

Some of the integration benefits walks on which may vary according to state of technology in the
industries involved, roughly corresponding to the stages of the industry lifecycle. Such benefits are:-

i) Lower transaction costs.

ii) Synchronization of supply and demand along the chain of products.
iii) Lower uncertainty and higher investment.
iv) Ability to monopolize market throughout the chain by market foreclosure.
v) Strategic independence.

To support my answer above, it can be viewed economic theory where it can be relates to the manner of
vertical integration into literature on incomplete contracts that was developed by Oliver Hart and his
coauthors. For an example, considering a seller of an intermediate product that is used by a buyer to
produce a final product. The intermediate product can only be produced with the help of specific physical
assets (e.g., machines, buildings). As the buyer own the assets (vertical integration) or should the seller
own the assets (non-integration). Thus, suppose that today the parties have to make relationship-specific
investments and complete contracts cannot be written, the two parties will negotiate tomorrow about how
to divide the returns of the investments. Since the owner is in a better bargaining position, he will have

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stronger incentives to invest. Hence, whether vertical integration is desirable or not depends on whose
investments are more important either.

2.7 Product (or service) quality

Products and Services that meet or exceed customer expectations result in customer satisfaction. Quality
is the expected product/service being realized. Before a customer makes a purchase (exchanges money
for a product/service) he or she does a mental calculation. Products/services that are produced and
manufactured to specifications that are appropriate to the price (money to be given in exchange by the
customer) of the product/service is an operational or manufacturing view of quality.

Here, the customer receives the value that he or she expects since operations has built quality standards
into the product. An operations view of quality is a common view of the concept of quality. However,
quality is a function of how the customer views the product/service that he or she receives. The customer
view always compares what they expect with what they actually receive regardless of how operations
conceives quality. How do customers arrive at their expectations?

Marketing, especially sales, has a major effect on how the customer views quality. As mentioned earlier,
customer satisfaction is based on receiving the actual product/service as expected. When marketing and
sales enthusiastically promises a product/service that manufacturing or operations cannot deliver, then
expectations are not met, the customer is dissatisfied, and quality (in the customers’ eyes) is not realized.

Quality is not an absolute to be determined by operations or manufacturing. Variables that affect quality
are:
- (a) customer expectations (obtained from marketing and sales, as well as word of mouth
and previous experience)
- (b) actual product/service received (how a service is performed by operational people
and actual tangibles received (cold food for example)

The following model explains on how the product or service provided by a firm within an industry.
Figure 2.4 explains lot of the product or service reaches its consumer availability.

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Figure 2.4 The Perceived Service Quality Model.

This model explains from year 1982, Christian Gronroos introduced The Perceived Service Quality
Model (see Figure 2.4). According to him, service quality studies and subsequent model development has
from the beginning based on what customers perceive as quality. In other words, service quality is an
outgrowth of the marketing concept that focus on the customer. What is important is what is perceived as
quality by the customer and not what designers or operations people feel is good or bad quality.

The quality of a service, as perceived by the customer, is the result of a comparison between the
expectations of the customer and his or her real-life experiences. If the “experienced quality” exceeds
“expected quality,” the “total perceived quality” is positive. If expectations are not met by performance or
the actual experience, the perceived quality is low. There are multiple customers in an internship
program: students, internship suppliers, and sponsoring entities, for example. Final success is dependent
on initial expectations compared to actual performance.

Conclusion
Finally this assignment has come to an end by answering both question in a given timeline where
thorough study and research has taken place to identify the real meaning from the question given. To
identify strategic group analysis within an industry is not a small gap that can be filled with any answers,
It requires such commitment from students to understand 100 percent on the researched answer
conducted by experts and scholars.

Thus it can be defining the way each point or advantages taken down as an answer in question given to
notify as how such systematic control works as an advantage in Strategic Group Analysis. It can be
deferred the answer given isn’t enough at all but with correct methodology and studies, its advised that
question that has been asked has been answered carefully.

Furthermore, moving on the next question it does breakdown on how such strategic criteria can be placed
within the grouping firm and listing it entirely of how system works within the grouping firm. Hereby,
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such models and figures has been attached further as an image to show of how the system works in a
grouping firm.

Moreover, I can come to a decision that question given does really explore the innovative development
where question asked has been explained each and every strategy that could take place in an organization
or grouping firms within an industry. Its because unlocking a key point of every innovation that born
creatively as an idea and applied to make the goals or milestone achieved in an organization. Adding on,
the criteria asked here is to identify how such product or service applied strategically to enhance profit for
such organization in a longer period.

In a nutshell, such assignment given here is to explore student innovate such answer that could be a
reference in future as a personnel that creates such strategic method to enhance the grouping within an
industry to achieve its milestone set for a longer period. To support this, such innovation could lead the
organization achieved its aim and goals within a period calculated and move to the top level of high
profitability in economic sector chosen.

Bibliography & References

https://www.jdsupra.com/legalnews/doj-and-ftc-propose-highly-anticipated-60222/
1.
 Hart, Oliver; Moore, John (1990). "Property Rights and the Nature of
the Firm". Journal of Political Economy. 98 (6): 1119–1158. 
2.
 Grossman, Sanford J.; Hart, Oliver D. (1986). "The Costs and Benefits of
Ownership: A Theory of Vertical and Lateral Integration". Journal of
Political Economy. 94 (4): 691–719.
3.
 Paul Stokstad, Enforcing Environmental Law in an Unequal Market: The
Case of Concentrated Animal Feeding Operations, 15 Mo. Envtl. L. &
Pol’y Rev. 229, 234-36 (Spring 2008)

4.
https://everythingwhat.com/what-criteria-can-be-used-for-grouping-
firms-within-an-industry

5.
https://www.mbaknol.com/strategic-management/strategic-control-and-
operational-control/

6 "Idea Vertical Integration". 30 March 2009. Retrieved 12 April 2015.

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7. Marketing tactics: Guerilla marketing, marketing

strategy, evangelism marketing, viral marketing, word of mouth
marketing

8. Zhang, S. and Sood, S. (2002), ""Deep" and "surface" cues: Brand

extension evaluations by children and adults", Journal of Consumer
Research, 29(1), pp. 129–41.

9. https://www.accountingtools.com/articles/product-
diversification.html

10. https://brandongaille.com/10-strategic-group-analysis-advantages-
and-disadvantages/

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