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Essay Example on Business Strategies

3 pages
814 words
Carnegie Mellon University
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How collusion can have a negative effect on a business strategy.

Collusion is defined as a collective agreement between manufacturers of products or service providers. The agreement occurs to limit the output to charge high prices for the products or service or where the service provider or the manufacturer come to an agreement on paying a predetermined amount for service or product. The negative effect of collusion includes, high prices of service or product as the main goal of this strategy is to increase prices for consumers and service providers since the organizations are aware of demand fluctuation factor, this leads to adjustment of the prices accordingly. Discouragement to the entry of the new firms is another negative effect of the new firms in the market. Lack of competition is another effect; this occurs in cases of the uncorrelated shocks where it restricts the firms to compete due to the agreement made. Lastly, Presence of monopoly. Collusion may permit only involved firms and thus act as the only single producer where it leads to increase the firm's market power. Example of this strategy is a case of Tesla motor company that manufactures electric vehicle has merged into this strategy with companies like Dana holding, sotira corporation as a mean to compete with other manufactures.

Developing a business strategy in a hypercompetitive industry.

Business strategies are those choices, plans or decisions made by a firm to achieve high profitability and thus success. However hypercompetitive industries are those highly competitive turbulent industries.A firm may develop a business strategy in hypercompetitive industries through, focusing on generating the next advantage before the current one erodes examples through innovations.A firm may also come up with strategic soothsaying to predict what it customers want in future; this helps to seek new knowledge inorder to predict or create new ideas of opportunity which competitors will enter in but will be not served by another person. This can be achieved through understanding trends, combining products in the market and thus opening new opportunities. However, a firm may also decide to set up a disruption strategy by shifting the rules of the market this is achieved through setting goals and identifying core competencies that create disruption.Lastly, sustaining the unsustainable this is achieved through, Launch of numerous unsustainable initiatives and using the initiatives to outmaneuver the old strategies. There is a need to use dynamic interaction strategy to neutralize the competitor's previous advantage by making it obsolete or irrelevant.

How a business can achieve a business strategy that is successful based on strategies of differentiation and cost leadership.

Cost leadership strategy differentiation strategy is an action plan in which the firm does come up with to produce goods and services which are of low cost and with emphasis on differentiation. A company can have successful business strategies through innovation this may be achieved through coming up with new techniques, ideas, product or services, and Maintaining lower price. The organization must develop needed flexibility to serve the two objectives this is the ability of a firm to change to maintain and develop the differentiated product.Cost leadership requires to engage and follow the efficient processes of continuous improvement.The business organization ought to continually research for ways that can modify their operating system to lower prices and thus offer a desirable service or product that can achieve a competitive advantage.In differentiation to develop a competitive advantage, there is a need for the business to develop new products and services continually.

The differences between cooperative and competitive strategies.

All business unit in competitive strategies is separate and thus easy to manage while in cooperative the business units are unevenly distributed thus they are complex and are challenging to manage successfully. Example of cooperative strategies adopts of company Li &Fung that its headquarter is in Hong Kong which is network orchestrated.

The cost to manage cooperative strategy is high as it requires a lot of resources to put into use and in place. While in competitive strategies, the business is flexible and thus can induce any amount of resources as per the owner's preferences. Example, entrepreneurial businesses may look for investment capital and establish a business distribution capabilities that seek to introduce innovative products.

In the competitive strategy, businesses have small co-operated office while in a cooperative, It requires a larger corporate office to manage all the interdependencies. In Competitive strategies, the divisional performance is the most important criteria While cooperative requires coordination of business activities and forming an alliance criteria.Example, Pixar and Disney company, partnered to develop and market some computer animated features.

In Cooperative strategies, it is easy for a company to gain market power, While in competitive strategy the business has to market itself to gain market power. Example When and British Airways and American airline formed a cooperative alliance to achieve a higher market share position.


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