I need 4 responses to my classmates posts and each post needs to be 150 words min with references. Please keep in order.
1.ROBERT- Frito-Lay definitely engages in strategic alliances to get a better foothold on perimeter space in a grocery retailer. One of the biggest alliances that we partner with every year is Anheuser-Busch. The textbook states that “Alliances are more likely to be made by partners with complementary resources and capabilities. One of the most important motives for alliances in these markets is to gain market power” (Hoskisson, 2013, p. 204). The biggest advantage that comes out of our partnership is the ability to cross-merchandise our products and run better promotions through IRC’s. What makes this alliance so effective is that you can use the power of the brands and the two organizations to gain valuable space on the perimeter of a retailer during key holiday weeks. The article stated, “A strategic alliance is a purposive relationship between two or more independent firms that involves the exchange, sharing, or co-development of resources or capabilities to achieve mutually relevant benefits (Gulati, 1995)” (Kale, & Singh, 2009, p. 46). The benefits that Frito-Lay and Anheuser-Busch get out of the alliance are equal in comparison which is why they make a perfect strategic alliance.
The area I learned most in chapter 8 had to deal with diversification strategy which I believe that Frito-Lay does an amazing job implementing such a strategy. The textbook states “A diversification strategy allows a firm to use its knowledge, skills, and resources to pursue opportunities for value creation in new business areas while also seeking to develop new capabilities and acquire new resources through participating in those areas” (Hoskisson, 2013, p. 225). Our portfolio of products covers a vast amount people based on many different things. The latest addition to our portfolio and which it has done extremely well is our Simply Organic Doritos. This is a great example of creating an opportunity by utilizing one of our best selling brands and taking it to the organic natural sections at grocery retailers. The diversification strategy is extremely successful through the many different types of products and innovation that Frito-Lay produces every year.
The PEST analysis will help your organization determine all of the various external political, economic, social, technological, legal and environmental factors that might affect a business. Once your organization does the PEST analysis they would have a better understanding of how to strategically implement their corporate strategy.
References:
Hoskisson, Robert E. Competing For Advantage. 3rd ed. Australia: South-Western Cengage Learning, 2013. Print.
Kale, P., & Singh, H. (2009). Managing strategic alliances: what do we know now, and where do we go from here?. Strategic Direction, 26(2).7
2.DAVID-
General Motor’s strategic plan is simple but incredibly powerful. “We are here to earn customers for life. Our purpose shapes how we invest in our brands around the world to inspire passion and loyalty. It drives us to translate breakthrough technologies into vehicles and experiences that people love. It motivates the entire GM team to serve and improve the communities in which we live and work around the world. Over time, it’s how we will build GM into the world’s most valued automotive company”.
GM participates in Network Cooperative Strategies where they share objectives with other firms. As of 2010 they shared interests with over 450 companies, some of which you may already know: Chevrolet, GMC, Buick, Cadillac, Saab, Opel, AC Delco, Oldsmobile, OnStar, Maven and more. This strategic plan works well and allows them to reach areas not readily available to GM, span products globally and allows them to have participation in major decisions that are made that were not available to them before that may have an effect to their business.
The area I learned the most in would be in Diversification. There are many reasons for diversification within a company and can very value added. Multiple levels of diversification can impact the financial controls within a company and help create core competencies for continued success.
A PEST analysis helps a company understand the market growth or decline and assists in organizing a plan for moving forward in daily and future operations in an organization.
3.TAMMY- In my current position, there are many alliances. I am a quasigovernmental agency and work with local and state officials in my job duties. I work with the entire Upper Peninsula for economic development through a group called the UPEDA, Upper Peninsula Economic Development Authority. I would consider this to be complementary strategic alliance. We share resources and capabilities on all projects our desire is that Michigan will gain competitive advantage when an organization decides to relocate or open a new firm. The text definition states those things and defines this as “business-level alliances in which firms share some of their resources and capabilities in complementary ways to develop competitive advantages” (Hoskisson, Hitt, Ireland, & Harrison , 2013, p. 206) . The reading speaks of trust and building relationships with your alliances, this has been a long-standing tradition and mutual respect is thriving (Kale & Singh, 2009) . A PEST analysis in this situation would help Michigan discover what barriers we would be facing in business attraction. The video says a PEST analysis tells you three things: how to spot opportunities, implement appropriate practices and break free from old assumptions (Kryscynski, 2014) . Michigan is working on this diligently.
Chapter 8: “Multidivisional structure was described a consisting of several operating division, each representing a separate business or profit center with the top corporate officer delegates responsibilities for day-to-day operations and business-unit strategy to division managers” (Hoskisson, Hitt, Ireland, & Harrison , 2013) . I worked for an organization that had a diverse portfolio they owned and operated restaurants and hotels and managed a bank of restaurants inside a casino. The goal was diversity and they had considered many other types of restaurants and hotels to purchase. This was done to protect profits by diversifying industries to absorb market trends.
REFERENCE
Hoskisson, R. E., Hitt, M. A., Ireland, R. D., & Harrison , J. S. (2013). Competing for Advantage (3 ed.). Mason: South-Western.
Kale, P., & Singh, H. (2009). Managing Strategic Alliances: What do we kow now, and where do we go from here? Academay of Management, 45-62.
4.LYDIA-
‘Network cooperative strategy is a cooperative strategy in which multiple firms agree to form partnerships to achieve shared objectives’ (p.207).
If I had to guess, I would say that my firm participates in the network cooperative strategy. In our reading this type of strategy is described as a firm aligning themselves with firms that mirror their services in regards to having the same ‘complementary markets and complementary resources’ which is referred to as an ‘alliance network’(p.207). Our partnership is based off of Research and is guided by International Council for Harmonization of Technical Requirements for Pharmaceuticals for Human Use and Good Clinical Practices (ICH/GCP). The firms that participate in this network feed off of one another’s knowledge and experience in the industry to assure that we all are practicing ICH/GCP. The firms within the network all work for a common good of achieving a shared objective. The firms within my network are all working towards a shared objective of bringing safe pharmaceuticals to the shelves of consumers. Pharmaceuticals are something that the world cannot live without. There is a pharmaceutical for things as simple as foot fungus and as technical as diabetes making the demand for pharmaceuticals ‘relatively constant and predictable’ (p.207). In our reading firms that possess these qualities within a network are characterized as a stable alliance network (Hoskissson, Hitt, etc.). I believe this is an important factor that keeps the fire burning for all the firms within the network to have that competitive advantage making it an effective strategy.
‘The desire for increased compensation, reduced managerial risk, and empire building can motivate top managers to engage in diversification that is not in the best interest of the shareholders or other stakeholders’ (p.247).
This statement is self-explanatory and is also my biggest learning related to corporate strategy. As a person in leadership we have to constantly align our reasoning of doing things against the strategy of the firm in all areas. If it doesn’t align with the strategy of the firm, then we may need to go back to the drawing table. To me a PEST Analysis is a tool that would work well with a SWOT Analysis seeming that they both seem to zero in on what is an opportunity an what is/is not a threat to the firm and its strategy. The biggest difference is that one measures market and the other a business unit or idea (businessballs). Overall if the strategy is accepted, it is applied to the entire firm including business units. Therefore, I believe that the PEST Analysis is beneficial in helping to develop a corporate strategy but not as a stand-alone tool because there has to be a balance to measure how the strategy aligns with the business units within the firm. That leads back to the opening statement of how top managers can make decision that are not in the best interest; this is likely if they are bias in the tools that they use to help implement corporate strategy.
Businessballs .com. Retrieved via web April 12, 2017: http://www.businessballs.com/pestanalysisfreetemplate.htm