Introduction
Ideally, business performance depends on the strategy that management adopts. The success of the existing company, as well as the possibility of implementing an idea of starting a new business, must consider the level of market competition. Strategic planning is essential to the success of a business and the efficiency of operations (Barney and Tyler 39). Firms’ managers in highly competitive markets must make decisions regarding the current as well as the future performance of their companies. They hire consultants to help them analyze their business environments and make sound decisions that can help them survive market competitions. One of the commonly used tools to conduct the business analysis as well as assessment of business environment is the porter’s five forces.
Q1. Analyze the description of the Japanese animation industry using Porter’s Five Forces model
The porter’s five forces model entails analyzing business environment to assess the position of power in the business. The businesses owners are more concerned with the future existence of their businesses and their power to compete for markets. The porter’s five analysis helps to describe the variables that are important when making business decisions. It considers five essential forces that influence the business performance. Given the description of the Japanese animation industry, the porter’s five model would be used for analysis as below.
The supplier power
The profitability of business is affected significantly by the behavior of its suppliers. The analysis of suppliers’ power helps in determining the degree of control they have in the business (Porter 83). Firms in the Japanese animation industry require the contributions of suppliers for labor and drawing materials. These businesses have limited labor supply because the detailed drawings they need must be done by experts who are not readily available. Additionally, the Japanese animated films have become more popular with a wide audience, implying that firms must continue producing them. Besides, switching cost for the firms is very high due to limited labor market. As such, suppliers have great power to influence the profitability of the industry.
The Buyer power
The customers’ bargaining power entails their influence on the products as well as services quality. Also, it involves the impacts customers’ power on the business strategies. Customers constitute the market demand for the product. Therefore, the market is constrained if there are limited customers or when there are many producers for the same product. Given the high demand for the Japanese animated firms, buyers have little bargaining power owing to the fact that firms can export their programs, and there are many local consumers.
Threats of new entrants
The high demand and profits made by firms in the industry is likely to attract new firms (Porter 107). Additionally, new firms will consider the number of barriers to entry, and if they are few, they will enter the market. From the description of the Japanese animated industry, TV broadcaster remits Y9m profit to the producer. This profit is likely to attract new firms to the industry which would increase competition.
Competitive Rivalry
Competition arises as a result of the presence of many firms that produce the same commodity and serve the same market. The level of competition also depends on the size of the market for the product or service. There are 430 firms in the anime production industry. Thus, the level of competition for a market as well as inputs is very high. The production cost for the program is very high implying that firms must develop effective marketing and pricing strategies to survive in the market.
Product and technology development
Q2. How can widespread availability of high-speed broadband internet influence the industry’s competitive conditions? And; in continuation, why and what strategies can be adopted going forward by a typical mid-sized production company?
In many industries such as media, entertainment, and other firms involved in interactive services, the employment of broadband internet have proved highly beneficial. The access to broadband internet has not only promoted the growth of new firms but also it has enhanced the sustainability of the incumbents, particularly in the movies and animations industry. Various factors influence the competitive conditions of a firm. One of such factors is the availability of internet services which have a greater impact on the building of the competitive power of a firm.
Most companies focus the global market for their products and services. In this market, there is stiff competition since it is the marketplace for most of the global enterprises. Through the internet, people can interact with other networks and businesses without being limited by time or space. Additionally, the availability of internet enhances connections of people with other. Thus, the global market has been transformed fundamentally through the internet.
The high-speed broadband internet enhances the infrastructural growth of an industry. This infrastructure is essential for the strategic development of the industry. Additionally, the efficiency of operations in an industry with high-speed internet is very high hence its competitive capacity. Besides, the availability of high-speed broadband internet will increase access to markets (Sharma, 81). In industries dealing with interactive services and productions that involve the internet as the main distribution channel, market accessibility is made easy.
Prices, as well as market stability, are fundamental to the ability of a firm to compete with others in the market. The availability of internet helps the firm to establish a stable market for its products. With market stability, the price elasticity of demand tends to be relatively low. Prices are highly rigid and have low tendency to affect the market. Therefore, firms can confidently change prices without fear of losing the market. As such, their competitive conditions improve.
Customers use the internet to search information regarding prices and products as well as comparing products quality. They switch their consumption patterns to producers with favorable quality and prices. Internet availability also improves the interaction of the customers with firms. Improvement in the quality of the firm results in high-quality products and favorable competitive conditions.
The cost of searching for prices and quality information about the products is negligible with high-speed internet. The location of prices of products or services is made easy by the availability of internet through search engines. The low cost of supplying information to the customers cuts on the costs that firms incur which enable them to reduce prices. Prices reduction increases the demand for the products or services, resulting in high profits. Moreover, low prices help the firms to fight market competition and improve their competitive conditions.
The high-speed broadband internet provides consumers with a basis to get high attention level with respect to prices (Wolf, and Zee, 92). Most consumers tend to ignore negligible figure in prices. They assume that small changes in prices are insignificant and will continue to purchase the same product even if a small margin has increased the prices. Thus, industries with high –speed internet will retain customers even after increasing prices. They will be able to generate high profits, leading to high-quality production. Additionally, the high profits made will enable such industries to deploy the most effective strategies and technology in production which will promote their power to compete.
Formulation of strategies is a process that continues throughout the life of operations of a business. Strategic management helps in formulating strategies that enable business organizations to achieve their objectives. Strategic management considers the capacity of the business, the constraint, as well as the business environment before coming up with strategies. The successful execution of the selected strategy depends on the standards of the firm’s infrastructure. Mid-sized companies need to incorporate various strategies in their management activities to achieve the desired objectives. Some of these strategies are described below.
Customer –oriented growth strategies
Many companies, particularly small and mid-sized companies fail to implement their profitability and revenue growth targets because of failing to adopt the relevant strategies to address their problems. To increase the probability of realizing high-profit growth rates, small and mid-sized companies must adopt and execute appropriate strategies.
The profitability level mainly depends on the efficiency of operations and the sales volume. To increase the sales, companies must ensure a large customer base. Some companies develop market and products segmentation strategy to increase their market share. They use internet marketing as well as ordering to reduce costs. Thus, they can offer fair prices for their products and services.
Another growth strategy that focuses on customers involves activities that have a high impact on the value the business places on customers. The customers are grouped into categories with common interests to ease service delivery and collection of information. Most of the companies start by considering the existing customers before they look for new customers in their growth plans.
Q3. What are the valuable resources and capabilities at the disposal of Mayfair Flowers? Why?
The resources of a firm entail possessions such as assets, capabilities as well as processes of an organization. The attributes of a firm, knowledge, and information are also parts of firm’s resources. These resources are controlled and by the firms and used to help them improve their efficiency and facilitate the implementation of strategies. Primarily, these resources are classified into physical, human, and organizational capital resources (Liabotis and Bio n.p). When these resources enable the firms to develop and sustain a competitive advantage, they are regarded as valuable resources. Valuable resources facilitate the implementation of firm’s strategies and promote its level of efficiency as well as effectiveness. Other characteristics that of firm’s attribute that enhance their effectiveness include but not limited to inimitability, durability, rareness, and non-substitutability.
Capabilities entail the features of the existing resources that create rooms for development and improvement. The capabilities in a firm represent the development of a collaborative process which requires the application and exploitation of individual’s competencies (Morgan 3). Mayfair flowers have various valuable resources and capacities which can promote its competitive advantage if they are effectively exploited. Some of these capabilities and resources are discussed below
Reputation
Janet had a good reputation for her work as a manager in the investment bank. People knew her through interactions during Christmas events because she went out to buy flowers for her employer. A high reputation is important because it helps in building the brand and increasing market share. Excellent customer service helped Janet in developing critical skills and great reputation which are reflected in her success in the new business.
Communication and collaboration
Effective communication is an essential ingredient of strategic management and decision making (Harrison 114). As a manager, Janet participated in the development of strategic plans for the bank, goal setting, and decision-making. She was able to communicate well with florists when ordering flowers and discussing with clients about their requirements. Thus, to her new business, good communication skills and collaborative capability are valuable resources since they help her in sustaining competitive advantage in the market.
Relationship
A good relationship with both suppliers and customers is of paramount importance in business. It facilitates marketing as well as the supply of raw materials. Effective exploitation of market opportunities depends on the strength of the relationship between the firm and the customers. Janet had good and satisfactory customer services. She was able to expand her market through effective communication which also helped her in gaining new clients.
Experience
Experience is important for both operations and management of business. It entails the previous exposure to work that makes one familiar with conditions and business environment. The success of a firm depends on to a great extent on the experience of the manager. Janet was familiar to business management situations having worked as a manager. She knew how to set and implement optimal strategies. The great experience helped her in evaluating the customers’ needs and serving them accordingly. As a result, she thrived successfully after starting her own business with high stability and competitive power.
Intelligence
Intelligence entails the capacity, understanding, and creativity in setting and implementing plans. Strategic management, decision making, and execution of strategies require a high level of intelligence. Successful exploitation of opportunities and problems solving in business situation rely on the intelligence of the managers. The success of Mayfair flowers firm is correlated to the intelligence of Janet. She specifically bought flowers that match the occasions to highly satisfy her clients. Besides, Jane’s high intelligence level promotes efficiency in operations and management of her Flower firm. Thus, intelligence proves highly valuable to formulation and execution of her firm’s growth strategies.
Q4. Provide strategic recommendations with rationales for Janet for evolving her strategy to cope with the growth of Mayfair Flowers?
Indeed, Mayfair Flower firm have experienced a notable growth which prompts the owner to seek assistance on how she can cope with an ever-growing market. Jane considers changing the location of her firm to premises with ample space. Business expansion is beneficial both to the owner and to the market it serves. Some benefits, commonly known as economies of scale often accompany the expanding firms. However, some limitations also go along with benefits. Therefore, there is a need to make sound decisions concerning the change of strategies to cope with the rapid growth of the firm. Some of the most suitable strategic recommendations for Janet for changing strategy to cope with high growth rate of her firm as discussed below.
Consider the financial implication of firm’s growth
Jane needs to take some financial implications of her firm’s growth. She needs to keep a constant check on the key indicators of the performance of her firm. She must constantly check the rate of revenue as well as profitability growth. The inventories of her products should be well maintained to help in detecting any negative change of variables. Large space is required to accommodate firm’s expansion. Therefore, Jane must consider increasing the lease. In general, the growth of a firm goes with a cost. Jane must seek the assistance of experts to maintain the growth of her business.
Deployment of the right team
The management of a rapidly growing firm requires highly trained experts. Jane should consider hiring personnel who have more experience in the flower industry than her because her firm will effectively be steered to success by her team. The team should constitute the best personnel for efficiency in performance of various departments.
Adopt effective strategies to manage the market share
Jane’s firm has grown wide and it commands a large market share. Other firms in the industry continuously change their strategies to offset market competitions. Some of them adjust their strategies to be in line with Jane’s strategies. Therefore, she should adopt effective strategies to her share of the market. Otherwise, it might start declining. The strategies used to manage market share tumble into four main categories which include the following:
Share maintenance
The evaluation of the market position of an organization is essential for making decisions about whether or not to increase its market share. If a firm is operating at the optimal level, an attempt to increase market share will result in a loss since the costs will exceed benefits. Therefore, Jane should hire experts to carry out the operating position of her firm to prevent the reduction of profits. If the firm is operating at optimal market share, Jane should consider using other strategies such as product innovation and market fortification to maintain her market share and business growth.
Market segmentation
Effective customer service is achieved through the analysis of the market to determine customer response to the services or products of the firm. Market analysis helps to improve customer service, thereby promoting the market share of a firm’s products. Market segmentation entails putting customers with common interests into specific groups to increase the efficiency of service delivery. Mayfair flower firm has a large market consisting of various categories of customer (Bruwer and Buller 339). For effective delivery of service to these customers, Jane should consider dividing the market depending on the level of service customers require. This will help her to easily cope with the growing market needs and overcome high competition.
Product differentiation
Many firms are dealing with the same product and services as Jane, which is the main cause of high competition in the market. Product differentiation entails introduction of some changes in the products in form of packaging or branding to make them more appealing to the customers. By differentiating products attracts new customers and helps to maintain the current one. Therefore, Jane should consider offering using more attractive flowers and use more appealing packaging methods than her competitors. Using product differentiation helps in maintaining the level of profitability and to achieve stable market (Mehanna 122). Thus, the firm cannot be affected by emergence of adverse conditions in the market.
Maintaining high level of customer satisfaction
A larger market share business cannot continue to look for even larger markets due to risks and costs involved. Rather, it should focus on analyzing its current market share and seek strategies of maintaining it at an optimal level. Customer satisfaction is essential for their confidence in the firm’s products. Therefore, Jane should adopt strategies that will simultaneously maintain her market share and customer satisfaction.
Conclusion
Strategic management is the central pillar of the business. The success of business organizations depends on the strategies chosen by the managements. The challenge of analyzing the conditions under which businesses operate necessitate for the assistance of consultant firms to help managers reach optimal decisions. Firms in the same industry often engage in competition for markets and sources of raw materials. Therefore, managers should adopt strategies that will improve the competitive conditions of their firms. Besides competing for market share, managers should consider analyzing the operation levels of their firms to avoid losses as a result of overextension in the markets. Customer satisfaction is fundamental to the survival of the firms. Business managers should not only look at profitability and revenue growth but should also consider maintaining high levels of customer satisfaction.
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