Strategy in today’s world is easily confused with tactics and objectives of business, which are actually only a part of the strategy. Strategy is more of an all rounded concept that clearly defines a company’s target market, the strengths of the company that would attract the market, the resources the company has to deliver value to the market, and how the company plans to sustain in the market (Grant, 2015). This also means that a strategy would not just define what a company does but it also defines what a company does not do (Gobble, 2012). One of key strategic framework that can be used by most of the companies in today’s business market is the Ghemawat’s “AAA” Global Strategy Framework. The three A’s stand for Adaption, Aggregation and Arbitrage. Adaption is when a company tailors its business model according to the local requirements, Aggregation is standardizing a significant of value proposition and Arbitrage is globalizing the supply chain based on the economy of regions (Ghemawat, 2013). Note that it is not necessary for an organization to adopt all the A’s mentioned. Depending on the need and the current position in the value chain a company can used one method or a combination of two or all three (Hollensen, 2015). However, all these steps are not implemented in one go but rather are usually done one after another to make sure that the changes are not too much to adopt into the organization’s current business model (Motohashi, 2015).
Zara is an internationally recognized apparel retail brand known for its fast fashion and seasonal wear. The company has its presence all around world in 2000 stores and is currently looking for ways to make the products accessible to a wider customer base. The need of the company can be fulfilled in different ways. The current customer base can be increased by creating products for a new target market that is specific to a region or an age group. However, this would involve a lot of development and research work that may affect the revenue of the company. An Adaption strategy with a geographic focus can be used by Zara. In an adaption strategy, the region is selected based on the how little change has to be made to the current value proposition of the products. The new region should have a market similar to another popular market making the adaption process simple. One region as such is the Country New Zealand. Zara has a strong presence in Australia which is known as the sibling of New Zealand, given very low CAGE distance. The countries have similar culture and economy making the establishment of retails an easier task for Zara. The company can also search for other countries that are similar in highly populated continents like Asia and Europe.
Innovation is a major differentiator in the present market given the high competition and the need for economic yet sophisticated products. Innovation is also a way of adopting the continuously changing market by increase the value of the product or decreasing the costs to ensure that the company sustains in the market (Drucker, 2014). A business model defines the functioning of the company which is divided into four components: value proposition – the service offered by the company to the customers, Market Proposition – the target market, Value chain infrastructure – how the company uses its resources to fulfill the needs of customers, and global management model – which details how a company manages its operations. Business model innovation is hence, innovating two or more of the concepts of business model (Massa, 2013). The need for business model innovation is more of a competitive strategy especially with the advent of globalization. When a company is expanding globally it is necessary that each of these aspects have to be changed according to the target country (Amit, 2012). Also, this may not always mean that new product has to be introduced or a brand new market has to be targeted (Davenport, 2013). Increasing the value of the existing products in innovative ways is can also add to the existing model (Leih, 2014).
Microsoft Corporation is a well-known American multinational technology company. The company is known for its operating system, consumer electronics and software products and had been one of the most successful company. However, the continuous increase in the competition in all the software markets and the lack of innovation from Microsoft’s end has put the company in jeopardy. The company is clearly unable to hold its ground in the smart phone industry even after the acquisition of Nokia. The company had tried in releasing Nokia mobiles with a windows OS and had failed given the economic and User friendly interface of android and the superior technology of Apple Inc. the company has also made an effort in the search engine area and had been dominated by google. Another recent acquisition of Microsoft is Skype which is currently being used widely. However, the competition in this market is also stiff. The reason Microsoft is facing hurdles is that instead of going deep and increasing the value of their existing products, they are going wide and acquiring products. Finding ways to improve the functionalities of Windows OS and Microsoft Office and ways to make the Windows mobile OS user friendly is required. The way their phones look has to be changed given the increasing need of sophistication. Hence, the business model of the company has to find innovative ways to improve their existing products.
Amit, R. and Zott, C., 2012. Creating value through business model innovation. MIT Sloan Management Review, 53(3), p.41.
Davenport, T.H., 2013. Process innovation: reengineering work through information technology. Harvard Business Press.
Drucker, P., 2014. Innovation and entrepreneurship. Routledge.
Ghemawat, P., 2013. Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business Press.
Gobble, M.M., 2012. Innovation and strategy. Research-Technology Management, 55(3), pp.63-67.
Grant, R.M. and Jordan, J.J., 2015. Foundations of strategy. John Wiley & Sons.
Hollensen, S., 2015. Marketing management: A relationship approach. Pearson Education.
Leih, S., Linden, G. and Teece, D., 2014. Business model innovation and organizational design: a dynamic capabilities perspective.
Massa, L. and Tucci, C.L., 2013. Business model innovation. The Oxford Handbook of Innovafion Management, pp.420-441.
Motohashi, K., 2015. Management Strategies for Global Businesses. In Global Business Strategy (pp. 21-40). Springer Japan.
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