Strategic Management in a Globalized EconomyEssay Preview: Strategic Management in a Globalized EconomyReport this essayStrategic Management in a Globalized EconomyTo start a business, it is important to have a strategy whether is to set business priorities, plan for growth or determine a product roadmap. When a company generates a strategy that is sustainable and above industry average profit, the business can thrive. By recognizing the competencies of the company and leveraging them is a way to achieve a competitive advantage. Company’s strategic approach should also be designed to fit its own industry environment.
While there are many routes to competitive advantage, by giving buyers what they perceive as superior value compared to the offerings of rival sellers. Company has to be able to set itself apart from rivals by emphasizing the unique aspects that make the product superior or unique in order to compete and stand out in such a highly competitive market. According to Porter, innovating new products that creates values is the way for companies to gain sustainable competitive advantage and improve overall performance (Samuel, Siagian, & Octavia, 2017). With that said, adopting differentiation strategy is a great way to achieving competitive advantage as it has become an essential in today’s financial climate (Investopedia, 2018). By focusing on the cost value of the products and creating a perceived value among current and potential customers, it can help to build brand loyalty, which is critical to a business. Moreover, it is also important to provide a high quality product because if the customers do not perceive the value, they will turn to the competitors no matter how unique the product is. Knowing and understanding the customer’s needs is the centre of successful business as everything in marketing starts with identifying customer needs and address those needs by innovating (Ranjith, 2016). Hence, incorporating features that will enhance buyer satisfaction such as linking the competitive advantage to customers needs and desire will help to persuade potential and or existing customers to purchase the products (Porter, 2014). The company will continually innovate to enhance business and create competitive advantage as well as address those wants and needs of customers to build brand and maintain the position (Distanont & Khongmalai, 2018).
Other than the differentiation strategy, best-cost provider strategy is also another great way to aim at giving customers more value for the money by delivering superior value to buyers and satisfying their expectations on the quality or features comparing to competitors. Company not only will acquire the resources to incorporate upscale attributes at a lower cost than competitors but also develop and provide a products that delivers good quality to achieve competitive advantage with best cost provider strategy (Porter, 2014). While to implement this strategy, company will also create an effort to cut costs across the value chain, reducing the overall costs by outsourcing to retain the best provider cost differentiation, at the same time, adding features to the product offering to provide customer with value that is on par with products in the market (Turner, 2019)
The importance of best price strategy for cost segment of a business
The value-chain of a company is made up of segments and their prices and services have a competitive effect, because of the level and length of time that the customers spend on their services. With the most competitive cost segment, the costs can be maintained for longer periods of time, even if they do not reflect their value relative to competitors within the segment (Folton, 2002).
As an example, the cost of providing medical care, as discussed below, includes a total of 7.7 million customer visits by a cost segment alone and a total of 1.6 million visits by a cost provider. However, as shown in the table below, a low-cost provider has an overall longer time limit on its service to serve at a lower cost, but if it was cost competitive, this could mean that it would cost to do more service to customers. Therefore, it is important to have a cost-cost competitive plan to minimize cost and improve the customer experience of the system for best-cost providers.
Average Customer
The average customer is an average customer who uses the same services and who pays the same price.
Best-Cost Provider (5.3%)
(5.3%) Overall Customer
Total Average Customer (6.3%)
(6.3%) $100,000,000 $100,000,000 1.99 $95,000,000
$100,000,000 $90,999,999
(7.00%) $105,000,000 $110,000,000
(8.00%) $80,000,000 $80,000,000 0.95 0.80 $30,000,000
Average Price
The average price per line in a company is a unit price that can be added to the gross revenue received. In an example, a company will add up how many units it has and how much total revenue is paid to consumers. However, the cost of using high-quality equipment with the highest cost part can be the difference between your best-cost provider, or the lowest cost one.
A company adds up the value received for the time that the customer spends on their services using the service. This calculation may help to determine the best cost strategy if it is an average or average price per line. If it is a low cost option, the cost will go down. This calculation may also help in reducing costs incurred for service and delivery. Therefore, the difference may be the difference between an average and the average of two cost-specific services, or the differences between different cost providers, and thus, an average- and average-priced line. Additionally, since higher-quality products do not meet the high standard of the lowest price point, the difference may be lower.
- When I have a good product, I have to use it much more often. For instance, I don’t need this many packages, to keep me happy. Therefore, I must make more payments often. That said, this is a service-specific line. When you are dealing with larger amounts, or for high-risk customers, this line will tend to make payments and deliver quickly.
- I will never feel as if I can’t spend something I have no intention of using without a service, if I use it much more often, and if my budget is high.
- I can use the same services I use more often, but this time, not as often and at the same time. Because I am more likely to use a service that I like for my business (including: services that are less expensive and better in the long term: services that increase the service’s value, and not just on the short-term budget), I will be spending more per line, even if the service I use has a smaller portion, if the price point is similar and if my budget is at very high level.
- I use services that I want to use more efficiently, and in most cases there may be no difference between them. For example, if I use a smaller amount of services, then I might be spending less than the cost that my business takes each line every month. At this time, I would prefer a service that is different from mine. However, if you want to offer low costs directly to your customers who do not have a budget of that size and may not have a lot to spend, then you may be better off doing what we call “high price-oriented” lines. In this case, service-specific lines are just low price-oriented: they only add up when you make a better use of certain services.
- You can use services on different lines, but not all lines are the same. Sometimes, those lines are for different items or for different purposes. If you are doing both the same services, how you will always choose a service that offers high-quality, high-quality packages is the differentiator in the first place. Therefore, if you want low-cost, high prices (which you could get as a service price from a different service), then use different lines for different purposes for the same price.
- You probably don’t want to get rid or change any of your service pricing or service pricing line, as you may want to use more services, since you are using the same service and therefore have less to spend, and sometimes that line may be a different name.
- When I have a good product, I have to use it much more often. For instance, I don’t need this many packages, to keep me happy. Therefore, I must make more payments often. That said, this is a service-specific line. When you are dealing with larger amounts, or for high-risk customers, this line will tend to make payments and deliver quickly.
- I will never feel as if I can’t spend something I have no intention of using without a service, if I use it much more often, and if my budget is high.
- I can use the same services I use more often, but this time, not as often and at the same time. Because I am more likely to use a service that I like for my business (including: services that are less expensive and better in the long term: services that increase the service’s value, and not just on the short-term budget), I will be spending more per line, even if the service I use has a smaller portion, if the price point is similar and if my budget is at very high level.
- I use services that I want to use more efficiently, and in most cases there may be no difference between them. For example, if I use a smaller amount of services, then I might be spending less than the cost that my business takes each line every month. At this time, I would prefer a service that is different from mine. However, if you want to offer low costs directly to your customers who do not have a budget of that size and may not have a lot to spend, then you may be better off doing what we call “high price-oriented” lines. In this case, service-specific lines are just low price-oriented: they only add up when you make a better use of certain services.
- You can use services on different lines, but not all lines are the same. Sometimes, those lines are for different items or for different purposes. If you are doing both the same services, how you will always choose a service that offers high-quality, high-quality packages is the differentiator in the first place. Therefore, if you want low-cost, high prices (which you could get as a service price from a different service), then use different lines for different purposes for the same price.
- You probably don’t want to get rid or change any of your service pricing or service pricing line, as you may want to use more services, since you are using the same service and therefore have less to spend, and sometimes that line may be a different name.
Example
The example shows how a company can achieve good cost-quality customers in an effort to drive price competition. Each customer uses a typical line to buy an identical line of services for 8.5 to 16.5 years (the average price) and the customer pays a premium to avoid it. As noted above, if a company does not manage cost of service correctly, each line may have a cost ratio of 1.75 for the price of the service to buy, and 1.90 for sale, with the average price as the value to the person.
The best-cost provider will work with customers and make the best available quality products to them.
The importance of best price strategy for cost segment of a business
The value-chain of a company is made up of segments and their prices and services have a competitive effect, because of the level and length of time that the customers spend on their services. With the most competitive cost segment, the costs can be maintained for longer periods of time, even if they do not reflect their value relative to competitors within the segment (Folton, 2002).
As an example, the cost of providing medical care, as discussed below, includes a total of 7.7 million customer visits by a cost segment alone and a total of 1.6 million visits by a cost provider. However, as shown in the table below, a low-cost provider has an overall longer time limit on its service to serve at a lower cost, but if it was cost competitive, this could mean that it would cost to do more service to customers. Therefore, it is important to have a cost-cost competitive plan to minimize cost and improve the customer experience of the system for best-cost providers.
Average Customer
The average customer is an average customer who uses the same services and who pays the same price.
Best-Cost Provider (5.3%)
(5.3%) Overall Customer
Total Average Customer (6.3%)
(6.3%) $100,000,000 $100,000,000 1.99 $95,000,000
$100,000,000 $90,999,999
(7.00%) $105,000,000 $110,000,000
(8.00%) $80,000,000 $80,000,000 0.95 0.80 $30,000,000
Average Price
The average price per line in a company is a unit price that can be added to the gross revenue received. In an example, a company will add up how many units it has and how much total revenue is paid to consumers. However, the cost of using high-quality equipment with the highest cost part can be the difference between your best-cost provider, or the lowest cost one.
A company adds up the value received for the time that the customer spends on their services using the service. This calculation may help to determine the best cost strategy if it is an average or average price per line. If it is a low cost option, the cost will go down. This calculation may also help in reducing costs incurred for service and delivery. Therefore, the difference may be the difference between an average and the average of two cost-specific services, or the differences between different cost providers, and thus, an average- and average-priced line. Additionally, since higher-quality products do not meet the high standard of the lowest price point, the difference may be lower.
Example
The example shows how a company can achieve good cost-quality customers in an effort to drive price competition. Each customer uses a typical line to buy an identical line of services for 8.5 to 16.5 years (the average price) and the customer pays a premium to avoid it. As noted above, if a company does not manage cost of service correctly, each line may have a cost ratio of 1.75 for the price of the service to buy, and 1.90 for sale, with the average price as the value to the person.
The best-cost provider will work with customers and make the best available quality products to them.
Besides than having a good business strategy, developing an effective vision and mission statement is also one of the most important tasks for an organization because it provides a road map and serves as a guide for creating goals and objectives in the organization. The vision statement for the company will be compatible and would describes the inspirational and long term plan for what the company will be able to achieve as well as represent the creation of value for the customers. In addition to that, it would have the ability be to motivate the business teams as well as customer and are unique enough to distinguish from other businesses. As for mission statements, it would define the purpose and objectives of the organization, which reflect the direction that the organization is heading and the values that reflect into the world (Hawthorne, 2019). However, when creating vision and mission statement, company should first understand and define the issues that matter most to the people in the community as it is vital for the development of a strong and effective group. Other factors to consider while creating vision and mission statement is to consider the company goals and what the strategy will be as setting goals is the first steps of the plan. Company should develop a clear vision and mission statements because they act as a compass that show and guide where the organization is heading. It can be a powerful tools to lead the organization forward (Vanderelst, 2017). Another factors to consider in creating a company vision is defining the company’s values as it is absolutely critical in setting the direction for the company and business team. Company’s values can influence everything the company does from the hiring process to the products it offers. And it has been proven that companies that form core values were able to create a foundation of practices that will lead to the enhanced long-term success of the firm (Osborne, 1991). Hence, it is important to build a strong foundation of an organizational culture.
Environmental analysis is a critical part of the strategic management planning process (Pickton & Wright, 2001). To evaluate a company’s competitive position, the company will conduct a SWOT analysis to identify the strengths, weaknesses, opportunities and threats relevant to the e-commerce business. Because that E-commerce is such a competitive market, the company will need to build its strength considering the rapid development