Baby Care Industry
Introduction
The baby care industry is among the fasted growing industries in the world. The industry caters for roughly four million babies in a yearly basis. This means that the industry rakes in a lot of money at the end of any fiscal year. In fact, Transparency Market Research found that in 2011, it was estimated that the total amount of money spent in this industry alone was 44.7 billion dollars. This number was estimated to reach USD 47.7 by the end of the year 2012 and to go further in the years that follow. In the global market, the Europe, Middle East and Africa region has and still dominates the baby care industry. This region enjoys 37.4% of the global baby care market revenue share and is expected to do so for a longer period. This dominant market is followed closely by the Asia-Pacific markets.
The growth of this particular market is largely fuelled by the growing baby population in most developing countries where the disposable incomes of the parents have also increased considerably. Moreover, the average age of parents has increased over the past few years. This means that people are now starting families at older ages making them more likely to be financially stable. Finally, the number of women entering the mainstream working has been on the increase in recent years making the market flourish.
The changes that keep on affecting this market have necessitated the need for industry players in this particular market to adopt not only to the demands but also to the growing competition. Only through the adaptation of market competitive strategy will the company be able to compete with key players in the industry such as Johnson and Johnson.
The importance of achieving strategic fit
Strategic fit is the level at which an organization matches its mission as well as strategies to its external structures as well as the opportunities in the external environment. A strategic fit allows a company to operate in its own competitive state with as much efficiency as possible. Furthermore, it examines the resource base of a company and explores how these can be utilized to achieve maximum benefit. One can therefore summarize strategic fit as the aligning of the company’s strategy with competitive strategy.
The existence of a strategy for any given company maintains the direction as well as the scope of that company more than long term goals. This is important in any changing business environment for it enables the company to remain grounded. A strategic fit is mostly expressed in a company’s strategy goals which are then developed or put in action in a strategic plan. This process of implementing strategy goals is referred to as strategic management. The planning as well as the implementation of a strategy is what is referred to as a strategic fit (Thompson, 2001, p. 56).
Aiming to achieve a strategic fit is important in that it enables the company recognize the customer as well as the supply chain improbability. It also helps highlight competitions as well as the supply chain strategies. This also will help the company recognize the perfect supply chain. Being able to recognize this will help map out the right strategy needed to be able to achieve maximum market penetration. Being able to analyze competition as well as the market will enable the company to be able to map up a strategy. In this we have to analyze Johnson and Jonson and the marketing strategy applied in their case that has made them successful in the market. This includes a complete analysis as to the strategy used by the competitors. It is imperative to examine the general baby product market, and trying to weed out what may be important and applicable to our case.
Having established the existence of a market and the competition it is important to consider the customers and their demands. A strategic fit concept allows the company to foresee such problems and thus address them. It is about building supply chain strategies that are able to face customer demands as well as uncertainties. Strategic fit also demands for responsiveness towards the customer demands for quality and quantity (Analoui, & Karami, 2003, p. 61). An example of this is to respond to a large product portfolio a company needs to increase the production and storage capacity which will in turn increase the cost. The increase in cost will have an inverse effect on the efficiency of the supply chain. In this case, a strategic decision to increase the responsiveness will have additional cost which will lower the efficiency of the company. Such a scenario creates a trade between responsiveness and efficiency.
It is therefore very important to understand the demand at each stage of supply chain and choose the appropriate level of responsiveness or efficiency for that particular level. To achieve strategic fit companies need to bring consistency between implied demand uncertainty and supply chain responsiveness. For a high implied demand uncertainty the company needs a responsive supply chain and for a low implied demand uncertainty we need an efficient supply chain.
Porter’s Five Forces framework as a tool of competitor analysis
Porter’s five forces is an analysis tool used to explore the environment in which a company or a product in which that company operates in order to gain a competitive advantage or strategy. This system examines five key areas namely the threat of entry, the power of buyers, the power of suppliers, the threat of substitutes, and competitive rivalry.
These forces establish an industry structure and the competition level in that industry. In most cases, the stronger the competitive forces in the industry, the less profitable the industry is (Henry, 2008, p.35). Also, an industry with low barriers to enter, having few buyers and suppliers but many substitute products and competitors is seen as very competitive and is therefore not so attractive due to its low profitability.
Threat of new entrants: This determines the level of ease of a company’s entrance into a particular industry. In most cases profitable industries have less entry barriers. In this case the rivalry soon intensifies leading to competition for the market share. Most of these competitions lead to the fall of profits. In most cases, existing companies usually create high entrance barriers that will deter the new entrants. In most cases, the threat of new entrants is high when Low amount of capital is required to enter a market and existing companies can do little to retaliate. Also, when existing firms do not have patents, trademarks or do not have established brand reputation (Hill, & Jones, 2007, p.72). In most of these cases, there is no government regulation. Customer switching costs are very low and there is low customer loyalty. The products are nearly identical and economies of scale can be easily achieved.
Bargaining power of suppliers: In most cases Strong bargaining power allows suppliers to sell higher priced products or low quality raw materials to their buyers. This may be a great disadvantage to the company’s profit for they have to pay more for the material. This happens in most cases where there are many buyers but a few suppliers and these suppliers are large thus they can afford to threaten the buyers (Fleisher et.al, 2007, p.83). There are few substitute materials thus the buyers have no option but to stick to the available material. Finally, either the suppliers may have scarce resources or the cost of switching raw materials is very high.
Bargaining power of buyers: In this case, the buyer has the upper hand. They have the power to demand lower price or higher product quality from industry producers. This is not good for the producer for lower prices usually translate to lower revenues for the producer while higher quality demands raise the production cost. This happens when buying of the product is in large quantities or control many access points to the final customer but only few buyers exist. This may also be the case when the switching cost to other suppliers by the customers is low. In such a scenario, substitutes to the product are a lot and the buyers are price sensitive (Hill, & Jones, 2007, p.76).
Threat of substitutes: This happens when buyers can easily find substitute products with attractive prices or better quality to those with lesser qualities and when buyers can change from one product to the other with less cost.
Rivalry among existing competitors: This is usually the major determinant on how profitable and competitive an industry is. In a competitive industry, companies have to compete aggressively for a market share. This usually results in low profits. This happens in a situation where there are many competitors, exit barriers are high, the industry’s growth is slow, or there is low customer loyalty.
Adopting a revolutionary as opposed to an evolutionary approach to change
Change is never an easy feat for any company whether its bid or small. However, when any given company decides to adopt a new order or strategy, change has to be effected. This change may be effected either in a revolutionary approach, or in an evolutionary approach. In search a situation, an evolutionary approach may be classified under prolonged periods of growth where no major disruptions occur in the company’s routine. On the other hand, revolutionary approaches happen where turning points in the company’s existence that needs to be addressed quickly and swiftly. The adaptation of a revolutionary approach to change in the company is of a greater advantage due to a number of reasons (Hatch, & Schultz, 2008, p. 87).
Revolutionary change more often than not is orchestrates change from the top. In any organization that has adopted the revolutionary strategy, there are visible good signs. These include a workforce that is effective and competent, effective tool are put in place to be able to effect the duties delegated and above all, the leadership is effective. Employees are trained and the effectiveness of the training is measured. They have flat organizational structures and control people's actions through data and a transparent performance management system rather than position (Abrahamson, 2004, p.74). In this case, visible leading and lagging performance indicators that measure financial, customer, internal process and the learning and growth characteristics of the organization become evolved.
Change brought about by a revolutionary approach is seen as positive. In such a scenario, Competitors are seen as a prompt to innovation. Markets for one product are swallowed up by new ones opportunities and innovations. In this case, customer complaints are treated as an opportunity to learn and change processes to improve efficiency and effectiveness. In this case, risks are determined and managed consistent with the company’s vision, goals and values. Governance is not treated as a chore but something in which pride is taken. Finally, projects in this case are well managed and deadlines are adhered.
Effective revolutionary change takes place in three stages which are reengineering, reconstruction and innovation (Cerasale, & Stone, 2004, p. 25). All these stages contribute and ultimately lead to the eventual readjustment of the company by the creation of a complete suitable environment.
Finally, a revolution pace means that a company analyzes, besides its running projects, current, potential, future requirements on its products or particular sub-systems and uses the analysis results to construct or improve an infrastructure for building its future products.
Strategic drift and how it may be avoided
Strategic drift is referred to as the failure of a company to respond to its external environment. It can also be defined as the departure from a company’s strategic plan over time by a range of small or individually inconsequential actions not being undertaken or being undertaken in a way not conducive to the desired outcome. In most cases, a strategic drift arises when a company rapidly develops strategy in a way that does not keep up with the changing environment. This situation causes a company's strategies to fail to address the strategic state of the company (Thompson, & Martin, 2010, p. 10).
Despite the potential of a company encountering a strategic drift, this should not be viewed as a concrete device but rather as a hurdle that the company needs to overcome in order to succeed. However, there are steps that a company can put in place that would be able to help prevent a strategic drift before it happens.
Leadership: The viability of how any given company or organization works is usually determined by a well planned leadership strategy. Thus, while good leadership may be responsible to the success of the company, the opposite may result in a drift of the company’s strategy. A well planned, leadership oriented strategy will not only avoid a drift but also has the capability of noticing a drift before it becomes established in the company.
Growth: The future growth of any given company is determined by a perfectly defined growth strategy. The growth strategy is the one responsible for the creation of the company’s guidelines and goals for the future. Thus, a well planned growth strategy will ensure that the company sticks to its goals by coming up with good planned formulas. Lack of a clearly defined growth strategy will lead to a drift in the company’s strategies (Haberberg, & Rieple, 2007, p. 48).
Culture: The culture of any given organization determines the success or failure of that company. A company that has a well planned strategy of management that addresses a way to be followed by both employees and leaders to avoid difference in interpretation of issues and ideas that may not favor the growth of the company is a well organized company. The regulations of an organization should be impartial in order to fit not only the employees and managers, but also the customers.
Human resource: Over the years, human resource has become one of the most essential aspects in the operation of a business. A skilled and motivated work force can help the company create a competitive advantage which other companies may find difficult to imitate in a market. This will cause the company to need to have highly skilled and oriented personnel to be able to boost maintaining of market leadership to avoid the drifting or falling of the company.
Advertisement: Advertisement is one of the most essential components that characterize the operation of a market. This is because it raises the awareness of the consumers about the availability any given products in the market. Therefore a well planned advertisement is an important for it helps a company penetrate a market, especially when introducing a new product into that market. A poorly planned and executed advertisement may transmit to limited growth of the company which in return may cause a drift in the company.
The contribution of administrative management to implementing strategy in respect of leading strategic change
Administrative managements play a very important role in the implementation of strategy more so in leading strategic change. Not only is this office in charge of ensuring that the strategy set forth is implemented, but also in setting the pace as well as the style in which the strategy is implemented. Generally, it is the duty of then administrative management to ensure that the strategic vision put in place is turned into concrete and tangible results (Cunningham, & Harney, 2012, p. 67).
Strategy formulation entails heavy doses of vision, analysis, and entrepreneurial judgment. Thus, successful strategy implementation depends on the skills of working through fellow employees, organizing, motivating, culture-building, and creating stronger fits between strategies. How the organization operates and its entrenched behavior does not change just because a new strategy has been announced or put in place. In this particular case, most administrative management takes on the role of strategy management. In most cases, this is no easy task. Strategy implementation has to be tailored to the company's overall condition and promotion, to the nature of the strategy and the amount of strategic change involved and to the management's own skills, style, and methods (Camillus, 1986, p. 53).
The general duty of the administrative management in this case can be divided into four main sections. First, it is their duty to perform the recurring administrative tasks associated with strategy implementation. Secondly, it is their duty to fill the gaps between strategy and the various internal commands in order to align the whole company towards backing strategy accomplishment. Third, it the duty of the administrative management to Figuring out an agenda and a set of action priorities that matches up well with the organization's overall situation and the context of the- sluing in which implementation must take place. Finally, it is their duty to come up with what managerial approach and leadership style to adopt in inducing the needed organizational changes. How therefore does the administrative management accomplish a successful implementation of the change strategy?
The administration management has to pinpoint the key functions and tasks requisite for the successful execution of the change strategy. The requisite tasks vary depending on the company’s strategy as well as competition. Once this has been established, it is their duty to understand the relationship between Activities. This can be related by the flow of material through the production process, the distribution channels, used the type of customer served, the technical skills and know-how needed to perform them. the need for a strong centralized authority over the workers/employees, the sequence in which tasks must be performed, and geographic location in which the tasks will be performed, to mention some of the most obvious ways. Such relationships are important because interrelationships usually become the basis for grouping activities into organizational units. If the needs of strategy are to drive any given company’s design, then the relationships worth looking out for are those that link one piece of the strategy to another (Van Den Berghe et.al, 2004, p.38).
The third step is to group the activities into organizational that can easily carry out the strategy. Once the groups have been set up and their duties determined, it is imperative that the administrative management determine the degree authority and independence each unit will receive. The final step is to act as the provider of coordination between the units. In playing the important part of setting up and unifying the units, the administrative management ensures the successful implementation of the strategy set up in terms of leading a strategic change.
Conclusion
In conclusion, strategy plays an important role in the success or failure of any given company. Regardless of whether the company is just starting or has been established in the market, the strategy set up by the company determines its success rate. Therefore, a company should be very careful in outlining the kind of strategy it will adopt in a given market. Furthermore, it should be very careful in the selection of the strategy implementers because the key to any successful strategy implementation is always the people driving the implementation.
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