Companies are working in a very unstable environment in which they are facing external forces in their environment which affect the strategic decisions that they are taking in order to expand their economic activities in a healthy way. The external environment of an enterprise analyzing into two crucial factors: the micro environment and the macro environment. The key element of the modern management is the appropriate recognition of the business environment. The forces close to the organization that affect its ability to serve its customers are the micro-environment (Kotler, et al, 2004). The macro-environment includes bigger forces that affect the whole micro-environment (Kotler, et al, 2004).
These dynamic factors lead companies from the sector of Supermarket to adapt through changes, to exploit their opportunities and avoid threats in order not to face serious survival problems. The previous year the Greek supermarkets made a 3 percent drop in the supermarket turnover and in retail sector as well. If we wanted to specialize our report we must noticed that according to a research of Icap the supermarkets in Greece won’t recover from the sales fall until 2017. Furthermore, the dynamic of the Supermarket sector presented that five companies commanded 60 percent of all turnover in last year. The basic macro-environmental forces that affect any organization are as follows:
Concluding the analysis for the main external forces in the macro environment of the Greek food retail industry, we must highlight that branded products provide superior quality and value that improve the lives of the costumers. Nevertheless, the key point for every business is the deep understanding from the top management of the crucial meaning that has for the consumers the fill of their needs from the utility of their goods.
1.1.b) Recent years the sector of the retail food in Greece has presented a decline in their development due to the economic crisis of the country. Every corporation has to create a clear message inside and outside the business framework in order to acquire the competitive success and avoid any failure. The deep understanding of the market rules will help firms to analyze the key tools and identify the right path to the financial success. The basic principle for enterprises is to increase their sales and maximize their profits. Moreover companies must recognize consumers habits by producing products or service, having the goal to fulfilled and satisfy their needs.
The Greek crisis has forced companies to organize business plans and carry out mergers and collaborations with big names in both domestic and international market. Supermarkets develop new strategies such as the introduction of own label products in order to cope with increasing competition. Especially recent years the major industry chains increased the utility of their product by using promotions tips (discounts, advertising, innovative services and products, etc). Additionally market leaders have an extensive network of outlets with wide geographic coverage and different types of shops.
Finally, enterprises must build the trust by giving to the consumer a clear brand promise. The central idea behind the key function of a good organised strategic research includes different parts of evolution for the company in order to be in a strong position and build a competitive advantage. The emphasis of market research changes the basic role of a company transforms it in a more customer-centric firm.
1.2) Nowadays organizations must be prepared to deal with several levels or types of strategic management. Moreover, in order to survive in a very competitive environment, every firm has to develop a strategic programme which will give the right path in order to make the crucial steps to corporate excellence. Managers make decisions based whether the outcome of their enterprise could deliver value to its costumer through the benefits of their products. Additionally, companies measure performance from different activities similar to its rivals in order to remain competitive and having successful achievements.
At first we could say that strategies give the platform to the firms in which defines the mission and the vision but also highlight the key characteristics such as strengths or weaknesses of the company. Sometimes collaboration with other organizations (strategic partnerships) even with competitors, is vital part for the understanding the local market when successful companies enter new areas of business. Besides partnerships or alliances between businesses we also have part of joint venture which we could say that it's an agreement between parties for a particular purpose and usually a particular framework.
Sklavenitis is one of the biggest supermarket chains in Greece. The company was founded in 1954 and even from the first years of its creation constitutes a big partner of the local retail market of food. The last few years the company considered to be a leader of the market wining a big position in the portion of the retail food. Sklavenitis proceeded in cooperation agreement establishing a new joint venture with Marinopoulos in order to operate and develop hypermarkets. This was not the first attempt of the company which tried to do it last year through an agreement with the Veropoulos which ultimately was unsuccessful. The basic platform for the collaboration of the two companies will be a platform for the development of creative and innovative concepts in the retail market and it is clear that it will bring tangible benefits not only for employees and partners, but also for consumers. The deal with the Marinopoulos is essentially the third major move made by Sklavenitis over a half year, and was preceded by the acquisition of Veropoulos share Chalkiadakis Cretan chain and then the acquisition of Makro stores gave input passport in the market wholesale. It is possible the joint venture model will also be implemented for other companies in the market.
Question 2
2.1) A synopsis of the theory (Porter) helps us understand that enterprises must focus on d
ifferent strategies in order to have the right competitive advantage. The framework which is used to outline the three major strategic options (differentiation, cost leadership, focus) helps organizations to achieve a sustainable competitive advantage. Each of the three options is presented below:
Differentiation: The differentiation strategy involves companies which are trying to prove to the costumers that they are different by distinguish the firm’s products or services from the competitors. Companies which are using this type of strategy are less concerned with price but they are specialize in cutting costs in the areas that don't contribute to the business competitiveness.
Cost leadership: Organization by using a cost leadership strategy target on cost reductions and tight cost controls having the goal to produce products more efficiently than competitors. The basic concept in which this strategy focus is on providing a wide range of goods and at the same time establishing a business network in order to become a cost leader.
Focus: By adopting a focus strategy, firms target on a specific market or consumer group. Unlike differentiation and cost leadership strategies, a focus business strategy spotlight on one small portion of the market.
The article give us a brief understanding for the meaning of cost strategy which is defined as a unique way of adding value more than cutting costs. The most common source of corporate failure is management’s belief that their costs are out of line rather than that their strategy is misjudged. The majority of firms that are destroying wealth are doing so by focusing their attention on reducing their cost base rather than reinventing their strategy. Enterprises reconsider their strategy based on their economic performance finding ways such as of slashing prices without decimating margins.
Finally, from the above data (theory and article) firms must create an effective approach based on ‘unique mix of activities’ (Porter). Moreover we must say that the key meaning from the above analysis is that we must find the right level to reduce because every level of cost is like a level of service or a level of quality. An effective strategy makes operational efficiency a second-order activity, because the top management should make rational decision based on justified practises and reduce the price to the point where they believe that more sales will result.
2.2) The basic problem for modern management is to make decisions about every part of an organization, including structure, control systems, reactions to the environment, and human resources (Richard L. Daft). Every company need to have people with experience in dealing with the function of a decision making problem because nowadays it's a vital part of good management how an enterprise solves its problems and achieves its goals. Any organisation has to understand the importance of innovation in order to improve their strengths and increase business value through high-performing output.
Businesses are operating in an unstable environment in which they must be innovative in order to find new effective path to work in a healthy way. Firm performance is measured in terms of financial, market and innovation performance. Moreover, companies uses process and systems innovation as a way of further improving their products and adding value to customers. Many firms have not a clear perception of the quality progress which under different environments influenced by experiences of efficiency development, innovation policy support, industry type and ownership .
Enterprises are more interested to eliminate costs and expenses in order to survive from the European crisis. The crucial point for them is to use innovative strategy which could give their workers the ability to continuously transform knowledge and ideas into new products, processes and systems for the benefit of the firm. They could also exploit their skills with a business strategic model for which could redefined their industry. At last we could say that innovation capability can help firms play a dominant role in shaping not only the future of their industries but also will give them the absolute advantage to reach profitability and performance excellence.