1. How do customer relationships give companies a competitive edge? (20%)
Losing a customer means a lot more than losing a sale, it means losing the entire future stream of purchases that the customer would make over a lifetime of patronage. There are a number of reasons why a customer may stop buying from a company; very often though that reason is linked to poor customer service as opposed to something inherently wrong with the brand itself. Customer relationships give companies a competitive edge based on the merit that if consumers are happy more often than not those consumers will continue to do business with said company. A recent study conducted by TD Canada’s customer loyalty poll asked consumers which form of appreciation are
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The business portfolio analysis uses quantified performance measures and market growth to analyze a firm’s strategic business units as though they were a collection of separate investments. The BCG advises clients to locate the position of each of its SBUs on a growth share matrix. The vertical axis is the market growth rate, which is the annual rate of growth of the specific market or industry in which a given SBU is competing. The horizontal axis is the relative market share, defined as the sales of the SBU divided by the sales of the largest firm in the industry. Each of the quadrants are given a specific name and description based on the amount of cash they generate. Cash cows; are SBUs that typically generate large amounts of cash, far more than they can invest profitability in their own product line. They have a dominant share of slow-growth market and provide cash to pay large amounts of company overhead and to invest in other SBUs. Stars; are SBUs with a high share of high-growth markets that mat need extra cash to finance their own rapid future growth. When their growth slows, they are likely to become cash cows. Question marks or problem children; are SBUs with a low share of high growth markets. They require large injections of cash just to maintain their
Through sustaining the customer relationships, leaders of the company have realized that “becoming nearer to the consumer” is vital for the progression.
The BCG matrix portrays the perspective of the product portfolio, which is the growth-share matrix. This framework of tool categorizes products within a company's portfolio or within the business units as stars, cash cows, dogs, or question marks according to growth rate, market share, and positively or negative cash flow. By using positive cash flows a company can capitalize on growth opportunities. From this analysis, it can be seen that the products that is growing
market in that sense, and not use it in the more general sense of a marketplace
According to Holzer (2013), a company can use the BCG Matrix projections of market growth and market share to maintain a balanced portfolio. Their strategic goal is to that it always have money, leverage or 'milking' its proven products, develop new products, and seek new markets. Products are plotted on the BCG Matrix as: (1) stars, (2) cash cows, (3) question marks, or (4) dogs.
Organizations develop a myriad of strategies to help direct their company towards reaching its vision and goals. One such level of strategies, business-level strategies, involves determining how an organization is going to position itself and develop a competitive advantage within a market (Hill, Jones, & Schilling, 2014, p. 154). These strategies have implications for an organization’s ranking in an industry, their ability to attract suppliers and consumers, as well as their financial performance as a whole. One way by which an organization can assess the financial ramifications of their business-level strategies is to evaluate financial ratios. Financial ratio analysis allows managers to compare certain values against one another, as well as the values between companies (Crawford, 2012). These ratios evaluate such things as an organization’s profitability, debt, liquidity, and operations. In analyzing these ratios, organizations can see how their business level strategies affect the financial health of the organization over the long term. This paper sets out to evaluate the financial ratios of Starbucks and determine what this says about the ramifications of their past, current and future business-level strategies.
1. What is competitive advantage, and how does it relate to a company’s business model?
Good business strategies allow a firm to gain and sustain a competitive advantage over its rivals. Broad generic business strategies can have risks and drawbacks. In a broad generic differentiation strategy, firms run the risk of the product becoming commoditized, and the competitors have matched the quality standards of the product, which then shifts the focus to price. Also, firms need to control costs, and if its differentiated features raise costs but not perceived value in the consumer’s minds, they lose their differentiated status, according to Rothaermel (2017). Profit margins are eroded when costs increase. Another risk for a broad generic differentiated or cost-leadership strategy occurs when consumer’s taste change. With a
One of the reasons brand loyalty is hard to attain and keep today is consumers are finding the products they need and want. And those products most often are cheaper than brand products. Shoppers are smarter and better equipped to find deals that are best for their wallets.
It is imperative to satisfy customers and give them an amazing experience at the company. While it cost less to sell to existing customers and companies can increase profit by selling to the same customers; if customers are satisfied, there is more chance they will come back for more services or products. Satisfied customers are a free marketing for the company. However, it is the opposite if customers are dissatisfied. Dissatisfied customer will tell 8 to 10 people about his or her experience (O’Brien, A & Marakas, G. 2004). If by any reason, representatives see that the customer is not satisfy, they should act fast and fix the problem. Furthermore, there is more chance for sale representatives to sell to an existing customer that to a new customer. A good strategy for customer retention is to reward good customers. Companies can easily do
The business portfolio is the collection of businesses and products that make up a company. The best business portfolio fits the company’s strengths and weaknesses to opportunities in the environment. The company has to analyze the current portfolio and decide which businesses should receive, more, less or no investments. The company also has to develop growth strategies for adding new products of businesses to the portfolio.
The BCG matrix helps to identify the high growth prospects by classifying the firm products as per the growth rate and market share. It evaluates the strategic position of the company product and its potential. The classification is divided into 4 quadrants as follows; (Ionescu 2011)
Yes the consumer is the king of the market because the success of the business is totally depend on the consumer. As we all known the marketing starts with the consumer needs and ends with the fulfillment of the needs of the consumer. |
21. Now that your employer has classified his SBUs, the next step to take in using the BCG approach is to determine _____.
To start with, strategy is a procedure for a predicted future. It is the planning of raw materials to use them in their most efficient ways for the longest time possible. Using these resources in different and cheaper ways are the competitive advantages of a certain company. For example, having the same products but in lower prices and providing differentiated products in higher prices are competitive advantages. Today’s threats to companies are the sustainability of competitive advantage among competitors. Samsung is one of the companies that followed the strategy of design in order to achieve competitive advantage. Strategy by design is the decision making. “It is not only modifying a product in order to be easier to use; it is the creation of new markets by adding value to products or services.” (Tony Blair). Design is the implementation of styling to products or services so that a company can have high creative ability to compete against other companies. (Andrews, K.R. and Ronald, C., 1987). The main purpose of design isn’t only based on sales and production. However, it is based on the experiences and satisfactions of consumers with the products or services they are utilizing. As a successful business, one must think about the right things to do. Designers should work along with engineers in order to maintain products which help motivate customers. That’s what Samsung did to achieve its success by design. The group chairman, Kun-Hee Lee, did his visits to
“An Analysis of Marketing & Competitive strategies adopted by Hindustan Unilever Limited in Rural Area”