1. How have changes in technology affected the four major business-level strategies? How does this relate to the creation of sustainable competitive advantage for a firm?
Technological advancement has had a great impact on the business level strategies. Organizations have been forced to align their business-level strategies to the advancement in technology. First, cost reduction is a business level strategy that has greatly been affected by advancement in technology. Artificial intelligence technology has enabled the development of smart and more efficient machines (Arasti & Vernet, 2014). Consequently, the employment of such machines has significantly enabled the reduction of the cost of labor since they reduce the amount of labor required. Consequently, such technologies have facilitated the adoption of cost reductions as a business level strategy.
Secondly, advancement in technology has equally played a role in the facilitation of differentiation as a business level strategy. Advancement in Information technology has eased the access to information required in research for product development and differentiation (Arasti & Vernet, 2014). Agricultural biotechnology has greatly increased the ways through which agricultural products can be produced. Each of these ways results in a slightly differentiated product from the original one. Moreover, the use of robots in manufacturing has increased precision and consequently contributed to product differentiation (Arasti & Vernet, 2014). Therefore, a firm can differentiate its product from another by use of different technology in product differentiation.
Advancement in technology has equally influenced the development of focused strategies within the organization. The organization identifies and concentrates on a particular market niche in these strategies. For instance, the use of technology helps in the management of costs as already noted. This helps the firms to control the prices at levels that are favorable for a given market niche (Arasti & Vernet, 2014). Secondly, product differentiation enabled by technology empowers firms the firms to differentiate their products concerning the needs of the target market niche. These among other examples demonstrate how technology has facilitated focused strategies in firms.
Lastly, technological changes have also affected the combination strategies. These are strategies that combine the application of the organization’s grand strategy at different levels of the organization and the different businesses activities that the organization is involved. The use of technology has enhanced the integration and monitoring the implementation of the grant strategy at different levels and businesses of the organization (Arasti & Vernet, 2014). Information technology well as artificial intelligence has made it easy to monitor such integration and hence contributed to the adoption of combined strategies.
2. If a firm is successful domestically, it is likely to be successful internationally? Why or why not?
The fact that a firm is successful locally does not automatically imply that the firm will be successful internationally. Normally, several market factors vary between the local market and the international market. As such, the international market presents different dynamics compared to the domestic market. Therefore, it is not automatic that a firm, which succeeds domestically, will equally succeed internationally.
First, cultures are different in different parts of the world. Such cultures are great contributors to the success of a business organization. They determine consumer behavior and the relationship between the business and the consumers (Morrison, 2013). Furthermore, culture determines the consumer needs and the specific products that consumers will demand. Whereas a business may be compatible with one culture and hence thrive within the confines of that culture, it may not be able to thrive in another culture, due to differences in consumer needs and preferences. Moreover, strategies employed in one culture may not necessarily be effective in another culture (Morrison, 2013). As such, the domestic success does not imply that the business will automatically succeed internationally in the context of different cultures.
Secondly, the level of competition at the international level is quite different from the one at the domestic market. The competition at the international market is more dynamic and stiff compared to the domestic market (Morrison, 2013). Therefore, strategies used in the domestic market may not yield positive results in the international market. The complexity and intensity of competition in the international market make it impossible to succeed automatically in the international market even after succeeding at the domestic market level.
Lastly, different countries have different legal frameworks and political environments. The rules that govern international trade vary from one country to another. Moreover, the political environments are different from one country to another. Such political environment creates different business dynamics in different countries. Moreover, differences in laws of taxation equally introduce news dynamics in the legal business environment within the international market. As such, having succeeded in a domestic market does not directly imply that the business will succeed in the international market.
3. What determines the level of competitive intensity in an industry?
Several factors determine the level of competitive intensity within an industry. First, Cost-related factors are the major contributors to competition within an industry. Where firms invest heavily in the purchase of fixed assets they equally compete heavily to increase sells and consequently recover their investments (Jahan, 2012). Moreover, in cases where the cost of storage is significantly high, firms will compete to ensure that they sell more to reduce their requirement of storage.
Secondly, a high number of firms within a given market greatly contributes to competition within such firms. In cases where the market has largely been saturated, the firms compete highly to sell and remain operational (Jahan, 2012). Competition increases with increase in the number of firms in the industry while the market is constant.
The ability to differentiate products in a given industry is a factor that also determines the level of competition within that industry. In cases where the products can easily be differentiated competition is relatively low because firms differentiate their products to target specific market niches. On the contrary, competition is high where product differentiation is low. Firms compete with similar products and target the same market resulting in intense competition.
Lastly, the ease with which a firm can exit the industry equally plays a role in determining the level and intensity of competition. Where there are high barriers to exit the market such as cost implications, the intensity of competition becomes high (Jahan, 2012). On the contrary, the intensity of competition is low in industries where firms can easily exit.
4. Can a firm achieve competitive advantage and thereby strategic competitiveness without acting ethically?
Firms cannot achieve a competitive advantage and consequently strategic competitiveness without acting ethically. Several factors support and demonstrate this point of view. First, there is a strong connection between ethics and productivity. A firm that has a high culture of ethics keeps itself honest with its processes and its progress towards product quality improvement (Walabyeki, 2016). As such, the firm is able not only to be competitive but also to sustain such strategic competitiveness over a long period.
Secondly, business relates to different stakeholders such as employees, shareholders, customers and the community. Notably, the success of a business largely depends on the relationship between the businesses and the different stakeholders. Business ethics largely impact this relationship. Firms that maintain a high level of integrity enjoys a cordial relationship with its customers and shareholders. Consequently, shareholders are willing to invest more into the firm and hence improve its strategic competitiveness (Walabyeki, 2016). Similarly, customers trust the products from such businesses and consequently buy more products from them. This positions the firm to be more competitive in the industry. On the contrary, there is a poor relationship between the stakeholders and the business where business ethics are lacking. The shareholders do not have the confidence of investing more in the firm. Moreover, some may withdraw their investments and reduces the financial muscles of a firm that is necessary for making the firm more competitive. Moreover, business customers cannot trust the products of such businesses and hence shift to another competing firm (Walabyeki, 2016). As such, ethics is a significant factor in creating a competitive advantage for a firm and the overall strategic competitiveness of the firm.
5. Suppose you had to explain to a friend why you are studying strategic management. What would you tell that person?
I studied strategic management for various reasons. First strategic management is a concept that is relatively new compared to other fields of business study. As such, it presents a more contemporary outlook on business administration and management (Bergh, Connelly, Ketchen & Shannon, 2014). Moreover, it incorporates contemporary challenges in business management and equips one with the knowledge of dealing with such challenges.
Secondly, strategic management brings together and integrates traditional subjects in business and business policies. This helps in the development of a real world and practical view of business administration and management. Therefore, strategic management studies integrate all the traditional business management subjects into the contemporary business environment (Bergh, Connelly, Ketchen & Shannon, 2014). As such, it creates relevance of traditional subjects in the management of modern businesses, particularly in modern business environment and dynamics.
Lastly, strategic management studies are structured in such a way that they equip one with the knowledge required to understand interdepartmental relationships between different departments and the creation of synergy within an organization (Bergh, Connelly, Ketchen & Shannon, 2014). The structure of modern organizations is such that departments are interdependent. Therefore, business managers should understand such structures and ways of creating synergy in such organizations. Moreover, this course equips managers with the necessary skills required to better relate to people from diverse backgrounds.