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MGT504-GDB-2 – Dec 2011

Discussion Question (GDB –2)

“Recipe One” , a successful 15 years old brand of bakery items, serving middle class of a specific region of Pakistan and offering affordable and low price products is facing intense competition in recent years. Four of its major competitors are directly hitting its strategy targeting same customers in same region.

Company has two options;

Continue with the same strategy and react to competitor’s moves

Adopt a new strategy

You are required to explain;

Which strategy company is currently following?

Which option(1 or 2) will you suggest to “Recipe One” and why?

Note: if you suggest option 2, then also explain which strategy is best suitable? Please consider porter’s competitive strategy framework.

Views: 148

Replies to This Discussion

Solution:

Please read in handouts:

Porter’s Competitive Strategies

• Differentiation

• Low-cost leadership

• Focus

HOW STRATEGIES AFFECT ORGANIZATION DESIGN

Choice of strategy affects internal organization characteristics. Organization design characteristics need to support the firm’s competitive approach. For example, a company wanting to grow and invent new products looks and “feels” different from a company that is focused on maintaining market share for long-established products in a stable industry.

With a low – cost leadership strategy, managers take an efficiency approach to organization design, whereas a differentiation strategy calls for a learning approach. A low-cost leadership strategy (efficiency) is associated with strong, centralized authority and tight control, standard operating procedures, and emphasis on efficient procurement and distribution system. Employees generally perform routine tasks under close supervision and control and are not empowered to make decisions or take action on their own. A differentiation strategy, on the other hand, requires that employees be constantly experimenting and learning. Structure is fluid and flexible, with strong horizontal coordination. Empowered employees work directly with customers and are rewarded for creativity and risk – taking. The organization values research, creativity, and innovativeness over efficiency and standard procedures.

The prospector strategy requires characteristics similar to a differentiation strategy, and the defender strategy takes an efficiency approach similar to low-cost leadership. Because the analyzer strategy attempts to balance efficiency for stable product lines with flexibility and learning for new products, it is associated with a mix of characteristics. With a reactor strategy; managers have left the organization with no direction and no clear approach to design.

Now what is the present strategy??

Low-cost leadership

What should company do?

Continue same strategy.

Why?

a. Low price can be beaten with low cost, affordable items and better quality.

b. People must be given an edge on the item by offering something new, like easy purchase.

c. The items may be made available in all markets.

d. Use promotions.

e. Marketing must be done with focused strategy.

Some more reasons may be written on same lines with understanding.

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