Group assignment on the course Business policy and strategy

Weight: 30% for document preparation and 20 % for presentation

Due date: meskerem 15/2015

Instruction:

 Take mini-cases as provided below

 The content of the analysis should consist
1. Summary of the case from its respective concepts point of view
2. Make analysis in line with the case questions available at the end of each case.
3. Copying from internet sources leads to disqualified result.

Mini case1: Zara: The Capabilities behind the Spanish “Fast Fashion” Retail Giant.

Q1: Yes b/c there will be many influences the external environment over the next several years that
might affect the way Zara competes. The influences may be political, economic, sociological and
technological. An example of technological influence would be the first factor for the companies
to maximize their core-competences to take a competitive advantage from their rivals. So, the
business owners should consider implementing latest technology in their planning process for
streamlined integration and make room for future explanation. This allows owners to create
operations using the most effective technology available. If it’s not implemented a better
technology within its system, may it loses its competitive advantage by other revilers companies
easily.

Q2: It’s very difficult to imitate Zara’s supply chain as a capability for competitors because Most
Zara supply chain are owned by the parent and many of its suppliers, are considered long-time,
relationship-oriented partners. This creates loyalty between the companies. Which are rooted
deeply in the firm’s history, accumulate over time, and are relatively difficult for competitors to
analyze and imitate. Because they are embedded in unique patterns of routines, intangible
resources are difficult for competitors to analyze and imitate. So, having Loyalty of supply chain
is the bases for capability and core-competency which help ZARA to take competitive advantage
from its revilers. It would be extremely difficult for ZARA’s competitors to imitate its supply
chain management and rise to its accomplishments.
Q3: I believe that food and beverage industry is the possible industry. Because food related
products are basic need for the customer and companies have to supply these basic food items to
stores. Those stores would get supply rapidly for the customer as quick as possible to create value.

Q4: Now a day marketing is all about satisfying human needs. Zara branded products Give
customers what they want and get it to them faster than anyone else to satisfying the desire of the
customer. it providing customized product for its customer which is take as competitive
advantage from other competitors. It provides constant innovation to develop new products that
provide customers with new perceived benefit. Further it provides new design made from quality
materials that are affordable.

Q5: Supply chain will be the operation Area because Zara has its own dying plant, sews many of
the garment in its own factories, and large supply of basic cloth. Over all the company has a
unique set of capabilities that fit together well as it manages activities of produce fast fashion and
has loyalty from its partner supply.

Summary of the case

Zara’s ability to produce new clothing designs quickly is a core competence and also a
competitive advantage for the firm. This ability of innovations in the groups of creative designers
rather than individuals to quickly develop new fashions. Innovative actions will be required by
big pharma companies seeking to develop capabilities by using resource properly which is the
foundation of the core competency. That’s leads to get competitive advantage. So, develop
innovation as a core competence and critical factor for the success of ZARA.

Business-level strategy is an integrated and coordinated set of commitments and actions the firm
uses to gain a competitive advantage by exploiting core competencies in specific product
markets. Effectively managing of the firm’s resources are the bases for capability development.
Capabilities is all about properly using of all resources that have been purposely integrated to
achieve a specific task or set of tasks. Capabilities are a more likely source of core competence.
That’s leads to get competitive advantage.

Mini case2: Unilever Cooperates with Many Firms and Nonprofit Organizations to Implement
Its Strategy While Creating a More Sustainable Environment
Source:

The above cases are extracted from the book written by Michael A. Hitt, R. Duane Ireland and
Robert E. Hoskisson (STRATEGIC MANAGEMENT Competitiveness & Globalization
Concepts and Cases 12ed-

p: 100-101 and p: 374-375 respectively

Q1: Unilever's multi-national strategy: A multi-national strategy is a type of international

strategy in which strategic and operational decisions are decentralized to strategic business units
in specific nations or regions with the intention of guiding each unit and giving each unit an
opportunity to customize products to the local market.

The competition within each nation is the main emphasis of the multi-national strategy because it
is believed that country borders segment market needs. This inadvertently assists in meeting the
unique requirements and preferences of regional clients. As a result, this kind of strategy gives
the company a significant competitive advantage. Additionally, it aids in increasing a company's
local market share so that it may focus on the needs of the neighborhood's customers. A multi-
national strategy, however, can occasionally end up being more expensive since it prevents the
growth of economies of scale.

Unilever sells a lot of consumer goods throughout Europe. The company has 400 global brands
that are divided into the food, home care, and personal care business groups. But recently,
Unilever has prioritized transnational strategy over multi-national strategy in order to achieve
both local market responsiveness and global efficiency targets.

Q2: Sustainable business model: A sustainable physical environment is one in which business
activities are intended to favorably respond to potential and actual changes in the physical
environment in order to create a sustainable environment. In order to establish a sustainable
business model that is put at the service of the greater good, Unilever created a manifesto living
plan, according to CEO Paul Pullman, who assumed the position in 2009. According to this plan,
Unilever must increase sales while reducing its environmental impact by half by 2020.

As Unilever complained, the company promised to improve the wellbeing of one billion people
by making them wash their hands or brush their teeth as well as by selling them food with less
salt or fat. The goal is to source all of the company's agricultural products in ways that do not
degrade the earth. Unilever, which currently has 250 production facilities, is actively expanding,
particularly in developing and emerging nations, in order to support its aggressive expansion
plans for a sustainable development model. Long-term, Unilever anticipates that emerging
markets will account for 75% of its growth.

By partnering with Jacobs manufacturing facilities around the world, both businesses will
collaborate to implement cost-cutting measures, foster co-innovation, and accelerate the
introduction of new product categories with designs that minimize their environmental footprints
in terms of carbon, water, and food waste. Additionally, Unilever has separated into six areas
with an emphasis on providing top-notch nutrition and health innovation. This division is part of
the company's effort to produce ideas for sustainable new launches and to enhance current goods
while boosting brand value.

Q3: Unilever's sustainability goals have been outlined in their statement of how they are
collaborating with various non-profit, non-governmental organizations (NGO's) to address
pressing problems, facilitate supplier improvement of sustainable living, and reach customers in
society at large who require information to enhance their sustainability lifestyles with better
food, security, and poverty alleviation. The consumer goods forum, the world business council
for sustainable development, the world economic forum, the tropical forest alliance 2020,
naturally occurring refrigerants, the global green foundation forum, and the zero hunger
challenge and scale up nutrition initiatives supported by the United Nations are a few of the
NGO's that are involved in these initiatives.

Q4: Since Pullman took over in 2009, Unilever has sustained its positive growth trajectory with
better income performance and associated stock market performance; therefore, in
accomplishing these things through better organizational design, lofty objectives but also by
using a number of cooperative strategies with moving out of the quarter-by-quarter earnings
guidance reports, Unilever suggests that it has allowed it to focus shareholders on its longer-term
goals.

Case 2: the US airline Industry

Source: Charles W. L., Gareth R., Jones Melissa A. Schilling (STRATEGIC MANAGEMENT
THEORY 11TH EDITION p: 76-77

Q1-The Competitive force analysis for Airline Industry is explained as follows: Porter’s Five
Forces Model will make the analysis clear and concise as follows:

1. Threat of New entrants: Entering an Airline industry is a bit tougher as it involves a high
amount of investment. The airline companies are not able to pool the capital easily as they need
financial clearances from banks or creditors. However, if the interest rates on loan fall down,
new entrants are motivated to enter into the airline industry.

2. Bargaining Power of Suppliers: This kind of situation basically occurs, when the product has
a high demand and supplier have a few substitutes of products. In such a case, the bargaining
power of supplier increases.

The airline business industry generally falls under the control of two main organizations i.e.
Boeing and Airbus. Hence, it is often seen that few suppliers are available to supply the parts and
machinery of the aircraft.

3. Bargaining Power of Buyers: This kind of situation basically occurs, when the buyers have
many choices to choose from. In case of the airline industry, if the air tickets are costly, then the
consumers can choose to travel with another airline if it offers a reasonable deal.

4. Availability of substitutes: This particular element is closely associated with the bargaining
power of buyers. If the price of air tickets does not suit the passenger’s budget, then he/she can
switch to other travel options, such as train or bus.

5. Competitive Rivalry: If the new entrants offer affordable prices than the existing competitors,
then the customers would in no time switch to other options.

There are many reasons that lead to the low profitability in Airline Industry. They are as
follows:
• Price: This is one such factor that can affect the airline business in a huge way. An increase in
fuel prices, urges airline companies to raise the travel prices so as to cover the additional
expenses.

• Comfort & Flexible: Costumers prefer travelling by air when they have good disposable
income. Moreover, if any king of glitch is noticed in airline services, then it can harm the
airline’s profitability.

• Competitors: The business arena is incomplete without competitors or rivals. If the new
entrants offer a better deal by offering discounts on air tickets, the customers are likely to be
wooed by the offer. This kind of strategy poses a threat to its closest competitors.

• Suppliers: If the cost of production rises, there would be less number of suppliers that would
be interested in creating the inputs at a higher price.

• Non stable pricing: The Airline industry follows the non-stable pricing that gives an
impression to the customers that high prices are charged for the tickets. As the customers will not
have any idea on the prices of the air tickets they are not interested to opt for it.

Q2- Yes, indeed I believe that there are strategic groups in the U.S. airline industry. They are
known as “the big three” American, Delta and the United Airlines. They are the major airlines
industries. The airline industry is competitive because there are a numerous amount of airline
companies, and it’s a very capital intensive industry with high levels of regulations. Competition
varies from different groups, other than flight services they offer basic utilities too, which
differentiate in the cost for the availing their services. The increased demand for low cost flights
and with the high fixed and variable rates, results in the airline industries struggling to be
profitable. Moreover, the prices decided by these manufacturing companies are heavier than
other airline manufacturing companies because the cost of maintenance is relatively higher.

For ex: The two major airline manufacturing companies like Boeing and Airbus have a strong
market holding in the airline industry. They have a strategy of providing more number of seats
i.e. more than 300.
Q3. The airline industry is cyclical, which means that its business depends on the country’s
economic growth. During periods of economic prosperity, disposable income is on the rise. A
booming economy allows people to spend money on discretionary items such as air travel. So,
airline revenues are higher during economic growth and lower during economic contraction.

Q4. A major US-based international carrier sought to improve on-time performance (OTP) with
a more aggressive policy of departing on schedule; this meant leaving late-connecting passengers
behind despite the price paid in terms of upset passengers, the stress on gate and booking agents
who had to deal with the angry customers, and higher passenger-compensation costs. Another
legacy carrier decided to “buy” better OTP by increasing its block times (the total flight time,
from pushing back from the departure gate to arriving at the destination gate). The company built
more buffer time into its schedule, but the move resulted in lower plane utilization rates and
higher costs for crews that worked longer hours. Another example: Most low-cost carriers tend
to schedule tight turnaround times on the ground to maximize aircraft utilization. But in order to
maintain their OTP, they require passengers to arrive earlier than needed and wait in the aircraft
or stand in the Jetway (after their boarding passes have been scanned), often in either very hot or
very cold conditions.