Competitive Strategy Demonstrate the Capabilities

Question: Discuss about the Competitive Strategy for Demonstrate the Capabilities of Organisations. Answer: What is Strategy Key Ideas Organisations have started using the word strategy as a buzz word to demonstrate their capabilities and show off their business acumen. Phrases such as we want to be the low-cost provider, pursue a global strategy, achieve unrivalled customer service, integrate a set of regional acquisitions and always be the first mover are examples of organisational tactics, goals, descriptions and objectives which are being referred to as strategies are actually small components of overall business strategy. The term strategy means the art of the general and has come up from a Greek word strategos. Strategy is not the process of defining goals and objectives; rather it is the process of identifying ways of achieving defined goals and objectives(Freeman, 2010). To clearly understand what a strategy is it is more important to understand what strategy is not. Defining a strategy require managers and leaders to provide high level vision and orchestration in allocating available resources to achieve de sired goals(Ansoff, 2007). While formulating strategies organisations much ensure that four basis questions are being answers. Firstly, strategy must define the market or industry in which the business needs to compete. Secondly, what unique value the business is bringing to the market or what are its competitive advantages which no other rivals can match. What exactly the business is offering and why consumers should choose them over other options available to them. Businesses need to select between cost or differentiation strategy before targeting their audience(Ansoff, 2007). Thirdly, it is important to identify the available resources and capabilities needed to achieve the competitive advantage. Finally, it is important to identify ways of sustaining the competitive advantage. Strategies that answer the above mentioned four questions are considered to be good strategies and enable achievement of organisational goals. Application of Ideas IKEA is an example of a company that has successfully applied these ideas to achieve their goals. Companys strategy clearly defined its market, it targets market include young workaholic customers who have less time and look for inexpensive furniture(IKEA, 2015). They prefer furniture with modern design and good storage capacity. IKEA offers inexpensive furniture that has modern designs, the company has opened stores in almost every major country this gives them a much wider scale than local competitors. The company purchases its components from manufacturers across the globe and sell unassembled furniture which is later assembled by the customers. Transporting unassembled components help the company save huge transportation costs allowing it offer cost advantage to its customers(Yohn, 2014). Their showrooms are huge and allow customers to make their purchase decisions in a fun and low pressured environment where order fulfilment is immediate. IKEA strategy thus help the company offe r unique value to their target customers in the most cost effective manner, thus, helping the company achieve a competitive advantage that cannot be matched by competitors. IKEAs strategy helps them in defining a clear line between dos and donots. IKEA does not compete in high-end furniture business, it designs all its furniture but do not manufacture them and they deliver all the products but do not assemble them. Business Model Innovation Key Ideas Business Model Innovation helps companies retain their future success by changing their business models at the right time before they lose their competitive advantage in todays fiercely competitive business environment (Matzler, et al., 2013). Business model innovation is much bigger than creating a new technology or identifying a new market, it is also bigger than spending thousands of dollars on research and development or allocating the best employees to work. It is all about delivering existing offering to existing markets using existing technologies in a new way. Business Model Innovation involves adopting a new business model which is already delivering successful outcomes in other industries (Foss Saebi, 2015). Organisations that possess the ability to innovate their business model not only sustain their current competitive advantage but also guarantee success in future. These organisations change the rules of business in their own industries as well as reshape other industri es with their success. Business Model Innovation is concerned superior to all other forms of innovation as it outperforms in terms of total shareholder returns(Foss Saebi, 2015). Instead of assign thousands of dollars in new technology and research and development, smart organisations such as Apple and Nespresso preferred business model innovation to become world leaders. Initiation, ideation, integration and implementation are the four basic steps which when followed can help organisations innovate their business model. Business Model Innovation enable organisations increase their operating margins and create a sustainable competitive advantage much faster than any forms of product or process innovation. Businesses can select from any one of the 55 business model patterns to achieve business model innovation however it is important to understand that only one business model innovation should be targets at a specific time. Application of Ideas The four steps of initiation, ideation, integration and implementation has enabled Uber, the San Francisco based startup achieve Business Model Innovation. Uber has almost completely replaced the classic taxi business model by serving as intermediate and connecting passengers with private taxi owners through their mobile app. Customers can book a vehicle from anywhere, anytime using Uber online app. The company has merged classic taxi business model with the advancement in technology and the e-commerce business model to develop an innovative business model for itself. It allows passenger to book all kind of vehicles using its online app, these orders are then transfers to private vehicle owners, payments are made online to Uber which is then moved to taxi owners. Business Model Innovation in this case has helped the company in reshaping the entire industry with great success. Uber business model is now being adopted with many other companies such as Ola, onlinecabs etc. Founded in 20 09, today has its presence in more than 40 countries across the globe and has a valuation of $18 billion, making it one of the leaders in its industry. References Ansoff, H. I., (2007) Strategic Management. Hampshire: Palgrave Macmillan. Foss, N. J. Saebi, T., (2015) Business Model Innovation: The Organizational Dimension. Oxford: Oxford University Press. Freeman, R. E., (2010) Strategic Management: A Stakeholder Approach. Cambridge: Cambridge University Press. IKEA, (2015) Welcome inside our company. [Online] Available at: https://www.ikea.com/ms/en_AA/this-is-ikea/about-the-ikea-group/index.html [Accessed 2015]. Matzler, K., Bailom, F., Eichen, S. F. v. d. Kohler, T., (2013) Business model innovation: coffee triumphs for Nespresso. Journal of Business Strategy, 34(2), pp. 30-37. Yohn, D. L., (2014) How IKEA Designs Its Brand Success. [Online] Available at: https://www.forbes.com/sites/deniselyohn/2015/06/10/how-ikea-designs-its-brand-success/ [Accessed 2015].