Lesson-5

Discussion Questions(DQs)

5.1. Read: "Strategic Management in Action: The Global Perspective: Sukhoi Holding Company”

a. Research various aircraft manufacturers?

b. Conduct a mini-SWOT analysis of Sukhoi Holding Company.

c. How is Sukhoi Holding Company going to develop a competitive advantage over other aircraft manufacturers?

d. Explain if strategy should be low cost provider, differentiation, or focus. Explain.

Sukhoi is a Russian-based aircraft company which produces regional jets to compete with its competitors such as Bombardier and Embraer companies. As this company aims to be a world player in aviation, it is striving to control 15% of the world’s regional plane markets by the end of 2024. However, the great challenge the company now facing is that the demands for such regional jets have been shrinking rapidly than ever before, and reason for this is that so many regional jets have already been sold in the markets (Coulter, 2013).

a)      Various aircraft Manufacturers

From the research of various aircraft manufacturers, it is known that while there are many manufacturers, a very few have dominated the major portion of the markets. These are briefly discussed here as follows:

1.      Airbus:  Airbus, a European based company, whose headquarters are located in Toulouse,

France and other major cities of Europe. It is one of the world’s leading aircraft manufacturers, specially fulfilling approximately half or more of the orders for airliners with more than 100 seats. Airbus currently is producing up to 14 jet aircraft types having capacity of 100 to 525 seats. It has become popular as the Airbus aircraft family as it gets more than 9,200 orders from all over the world, and reasons for this are its economics, comfort, and versatility. 

2.      Boeing:  Boeing is US-based Company, headquarters located in Chicago, considered as the

largest manufacturer of commercial jetliners and military aircrafts. The main commercial product that Boeing manufacturers are the 737, 747, 767 and 777 families of airplanes and the Boeing Business Jet, with nearly 12,000 commercial jetliners in service worldwide.

3.      Bombardier: Bombardier Aircraft, a Canadian-based company, is the world's third largest

civil aircraft manufacturer and are leaders in the design and manufacture of innovative aviation products and services for the business, regional and amphibious aircraft markets. Some of its major services include: business aircraft- Business aircraft - Learjet, Challenger and Global aircraft families; Commercial aircraft - new CSeries program, CRJ Series and Q-Series aircraft families; Amphibious aircraft - Bombardier 415 and Bombardier 415 MP aircraft; Jet travel solutions - Flexjet; Specialized aircraft solutions.

4.      Embraer: Embraer, Brazilian based company, has been considered as one of the main

aircraft manufacturers in the world with an emphasis on specific market segments with high growth potential in commercial, defense, and executive aviation. Embraer continues to lead the industry with its innovative regional and commercial jet product lines.

5.      Tupolev: It is a Russian aerospace and defence company, headquartered in Moscow,

officially known as Public Stock Company (PSC). PSC Tupolev develope, manufacture and overhaul both civil and military aerospace products such as aircraft and weapons systems. They are also actively developing missile and naval aviation technologies, with more than 18,000 Tupolev aircraft produced for the USSR and the Eastern Bloc.

Apart from above, there are other aircraft manufacturers such as Hawker BeechCraft, Lockheed Martin, Cessna-Aircraft, Cirrus Design, Diamond aircraft, Mooney etc.  These aircraft companies also equally striving to compete with each other in terms of market focus, differentiation, and cost leadership.

b)     A mini-SWOT analysis of Sukhoi Holding Company

A mini-SWOT analysis includes a brief overview regarding its four dimensions such as Strengths, Weaknesses from internal analysis, and Opportunities and Threats from external analysis. A mini-SWOT analysis of Sukhoi Holding Company is presented as follows:

Strengths (S): Sukhoi holding company is good at several things such as the best regional aircraft producer, strong and reputed brand, wide range of product lines, good workforce practices and technologically advanced.

Weaknesses (W): Despite its strengths, it has some of the weaknesses such as only regional focus, ineffective marketing and advertising, small jets and military products based.

Opportunities (O): Some of the things that Sukhoi can be good at are economies of scale, economies of scope, and product specialization.

Threats (T): However, Sukhoi cannot stay away from its external threats such as Shrinking markets for regional jets, growing competitors, economic crisis, and possibility of declining military jets as peace agreements come into play.

c)      Sukhoi’s competitive advantage over other aircraft manufacturer

A competitive advantage can be achieved by adopting either one of these three strategies- low cost provider, differentiation, and niche market focus. In order to achieve a competitive advantage, Sukhoi should pursue anyone of these strategies that makes it apart from other competing companies.

For achieving its competitive advantage over its competitors, it has to focus on three major activities. First, it should strive to focus its investment on R& D which will help the company to develop its internal products as well as understanding the market needs. It should always go one step ahead and think forward what it can be. Second, it has to build a good relationship with its stakeholders giving each of them what they want and how they can be satisfied. As we know, the business only can survive when customers and its key people are happy with the company and its products so that making a good relationship with them can lead towards achieving a competitive advantage. Third, it has to provide training and development to its employees and after sales support service to its customers (Coulter, 2013). For example, the Company itself supports a complete cycle of work in aircraft engineering: from frontend engineering to comprehensive after sales support.

d)     Low cost provider, differentiation, or focus strategy

I think that either differentiation or focus strategy would be effective for Sukhoi. It is true that as new technology develops, its cost-cutting strategy will be common for aircraft manufacturers. On the other hand, if it is able to become a different in terms of pricing, quality, marketing, product and support services then the company can achieve its competitive edge in the marketplace (Pearce II, J.A.,& Robinson, R.B., 2014(14th Edition)). As mentioned in the case, there is increasingly declining the markets for regional jets which mean that there will be lesser demand in the future. To address this issue, the company will not be able to produce the larger products at a cheaper cost-cost due to diseconomies of scale so what can Sukhoi can do is either go for differentiation or market focus strategy. 

In addition to this, as competition is intensifying and markets are reducing day by day, it will be hard to survive in the market for Sukhoi if it stays doing nothing. It is also true that when competitions take place, the total market will be divided among all the competitors, and being a market leader will be very difficult. Sukhoi, therefore, should focus on its specific markets to be a leader on that particular product, and being a different from other competitors in terms of products, services and process, in order to charge customer premium charge for its products or services. For this Company should focus on R&D to come up with new innovation and technology along with market focus so that it can achieve a sustainable competitive advantage over its rivals.

References

Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.

David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.

Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.

Be sure to support your work with specific citations from this week's Learning Resources and any additional sources.

5.2. Read: Strategic Management in Action Cases: Case #1 Driving for Success.

a. Explain Toyota's keys to success.

b. Analyze the Toyota Production System and how it gained Toyota a competitive advantage.

c. What would happen if Toyota launched marketing campaigns praising the highly innovative and sporting styling of a Camry (a fairly conservative model)? How would consumers react to that message which seems inconsistent with the car's styling?

d. Why do you feel that Toyota launched its Scion car (low priced model)?

Case: Driving for Success

Toyota is one of the well-known leading automobile manufacturers in the world in terms of quality and production efficiency. The production systems used in the company play an important role for the success of the company. This paper is likely to answer the some of the strategic questions regarding to Toyota’s situation.

a.      Toyota’s Keys to Success

Toyota’s key success is mainly related to a combination of its different functional strategies-people, product, and support process. In order to succeed, the company has greatly improved its business over the years by applying the four management principle that guide its employees in terms of problem solving, people and partners, process and philosophy. The idea behind these principles is that “good thinking means good product.” (Coulter, 2013). In addition to this, the company also uses its scientific problem solving methods by inspiring its workers and managers to engage in some kinds of experimentation to be a leader in the innovation. Some of the major keys to success of Toyota are as follows:

·         Toyota uses the JIT and Lean Manufacturing systems in its every manufacturing plant in the world so as to reduce the production costs efficiently.

·         The values of Toyota are based on quality, reliability, durability, value for money, convenience and environment safety. They have initiated newer technologies like producing hybrid gasoline electric automobile, Advanced Parking Guidance, four-speed automatic with buttons for power and economy shifts and eight-speed conduction that is automatic.

·         They initiated Innovative International Multi-purpose Vehicle plan that helped them optimize manufacturing and supply methods for trucks and multipurpose automobiles. The assembly line for automobiles was used in facilities of places like Thailand, Indonesia and South Africa.

·         Toyota introduced 'Toyota Way 2001', that was a glimpse of guiding principles that every workforce should hold. The principles were Respect for People and Continuous improvement. It gave value to improvement, teamwork and respect (Coulter, 2011).

b.      The Toyota Production System and its competitive advantage

It is definitely true that there is highly positive co-relation between the Toyota production system and its competitive advantage. The company achieves its competitive advantage by deploying its good manufacturing process in which vehicles are produced side by side on the assembly line. This in effect helped the company to shorten its assembly lines by 35%, and reduce its installation costs effectively. In addition to this, the company did excel at R&D by spending a huge money for its innovative products or services. Furthermore, it focuses on waste management and follows a six sigma concept to reduce the defects (Coulter, 2013).

c.       Toyota’s Marketing Campaigns praising the highly innovative and sporting style of a Camry  (a fairly conservative model)

Camry has been considered as Toyota’s best selling in terms of its reputation such as durability, safety, and reliability (Coulter, 2013). It is true that Toyota's marketing campaigns praising Camry's design as highly, innovative and sporty, might look strange for marketing guru's and other car manufacturers. However, this model helps in reestablishing the model in the market that defines itself as the car that helps you to be stylish and sporty despite of choosing to have the proven comfort and reliability. Having said this, hence, this effort has helped the company to rebrand the image of its successful models to match the new generation.  

d.      The reason regarding to Toyota’s launch of Scion Car (Low Priced Model)

I think there must be reasons why Toyota launched its Scion Car which is totally based on low price model. It can be true that this car was launched in 2003 in order to aim for innovation and keeping the youngsters in the mind that the company was offering its reliability but utilitarian cars for their parents’ generation. Truth to be told, the company targeted low income people ages having less than 40 years. This low price model strategy, however, not just helped to increase the sales as an instance success on youths but also attracted the entire people in the U.S. Markets.

References

Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.

David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.

Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.

Young, B. (2015). Why is Toyota so Successful? Retrieved from http://nfhsraiderwire.com/showcase/2015/10/20/why-is-toyota-so-successful/

The Case Study of "Netflix"

Overview of the case-“Netflix”

This case attempts to highlight the strategic challenges and opportunities faced by Netflix. Neflix, founded in 1997 by Reed Hasting & Marc Randolph in California, USA, grew rapidly along with more than 24.4 million subscribers and they have 100,000 movies titles to choose from (Coulter, 2013). However, the company started to face troubles when it announced to charge different prices for its DVDs by mail and streaming video plans.  In addition to this, as competition intensified, achieving a competitive advantage by offering the service the customers want, by when and how become more challenge and tough in the marketplace. In order to compete with such challenges, company focuses on its competitive strengths-streaming and other initiatives such as developing profitable partnerships with content providers for cost cutting strategy.

Strategic issues

The major strategic issues found for Netflix are growing number of competitors, increasing content costs, lack of proper pricing for its services, and increasing concerns for its piracy and losing market share etc.

Analysis & Evaluation

As a part of analysis and evaluation, Netflix’s strategic direction, resources, capabilities and core competencies are discussed here as follows:

1.      Strategy that should be used by Netflix

It can be noticed that Netflix first started with a prospector strategy as it came up with new innovation. It was prospector in a sense that it changed the way customers wanted to watch movies. As a prospector, it developed a new process so that customers are delivered movies directly without going into a movie rental business like Blockbuster. However, it seems that now Netflix has changed from a prospector to the defender strategy as more competitors emerged in different areas. For instance, streaming area includes companies such as Hulu, Amazon, and Apple, and Video on Demands includes RedBox, HBO and so forth (Coulter, 2013). Having considered all, hence, I think that Netflix should use both Prospector and defender strategies so that there will be high chance of being market leader by developing new innovations and protecting other competitors to win the company’s market share.

2.      Netflix’s resources, capabilities, competencies and core competencies contributing to its success

The success of Netflix is mainly relied on its strategic resources, capabilities and competencies.  It is true that when these organizational strengths are well-combined with its external market opportunities then success can be accomplished. The major resources of the company are its people, service and capital and infrastructure that are properly used to build core competencies to gain a competitive advantage. Netflix’s core competencies and strengths are smooth delivery of the services, seamless and valuable customer experience. In addition, the company has developed the model and software which are making its features unique and difficult for its competitors to replicate.

3.      Netflix’s focus on the three functional concerns (Product, People and Support processes)

It’s clear that Netflix’s three functional concerns include the product, people and support processes. First, it is related to product category. It includes online designing of services-movies which can be bought by subscribing and choosing the appropriate options after paying off certain charges. The product is made by connecting various movies partners by which customers choose the movies to watch what they want, when they want and where they want. Second, talent people are recruited, trained, developed and retained in the company with rewards and incentives to even motivate for improving their performance. Last but not the least, support processes- as information technology advances, it would be more easy for Netflix to sale even more and expand its services deploying various systems such as  information systems, financial/accounting systems.

4.      Netflix’s competitive advantage relative to its value chain

It can be pointed out that Netflix’s competitive advantage is more concerned with its value chain activities that are created for smooth operation and services.  Its value chain operation is quite fast and more efficient along with innovative logistics systems that are likely to lower the costs and improve the efficiency so that a competitive advantage can be achieved. For instance, it has improved a streamline distribution process and making outstanding headway in its content purchasing and licensing (Coulter, 2013). It is true that value chain would provide a competitive advantage through low cost competitive strategy for Netflix.

Summary, conclusions & Recommendations

In short, it can be known that Netflix is the company with high value as it has a larger number of subscribers and provides the quick services to its valuable customers. The company provides DVDs by using the latest technologies that helps it to become a leader in online video streaming.  Some of the major recommendations for Netflix are as follows:

·         It would be better for the company to improve its technologies by investing its R&D and Innovation so that it can become what it really aspires for.

·         It is also necessary that it should improve its online services by investing its funds in boosting its services and mail-order speed. In addition, it should offer its streaming video services globally and quickly so that the costs of licensing content globally will be diminished as potential subscribers increase.

·         Netflix should focus on customer satisfaction by offering what they want, customer service and device ubiquity so that more and more customers will be in the favor of Netflix.

·         It is true that as online streaming matures, the company has to find the ways to reach mass audience with improved and more content to be an innovative than its rivals.

References

Coulter, M. (2013). Strategic Management in Action (6 ed.). New Jersey, USA: Pearson Education, Inc.

David, F. R. (2011 (13th ed.). Strategic Management: CONCEPTS AND CASES. New Jersey: Pearson Education,Inc.

Pearce II, J.A.,& Robinson, R.B. (2014(14th Edition)). Strategic Management: Competing for Domestic and International planning. New York: McGraw-Hill Irwin.

(n.d.) Retrieved from https://www.netflix.com/