Wk3 DQ1

Discussion Question 1 CLOs 1, 4, 6 

Research a company that was in a similar situation (to that described in your CLA prompt). What did
the company do strategically to improve their strategic position? Was the strategy successful?

Ans:

There comes always a situation in a business when it experience the ups and down. But it matters
that, how it strategically takes its step to convert its weakness into its strength (Thompson, Peterat,
Gamble, & Strickland III, 2016). Companies like General Motors, Starbucks, and IBM.

Focusing on one company, IBM is one of those business who has to bear loss of $16 Billion between
the years 1990-1993. Sales of company was fallen to 6 % during the year 1991 and continues.

Facing such huge loss, this company decided to look at its history. For that, they setup R&D
department spending $50 Billion. And what they found was, bearing loss more into hardware parts
compared to other business such as software, mainframes, PC, and other equipment. Along with that,
they even found their operating cost was higher and controllable (Christen, Boulding, & Staelin, 2009).

Being based upon these problem, they come up with mainly two strategy which are defensive in
approach.
a. Outsourcing: It is expected that 20,000 workers were cut from the work in the process of
operational cost saving process.

b. Transfer the nature of doing business: when some product of business is making huge loss, and
other products has to bear it, sometimes it is better to leave the product which customer is not being
satisfied and your company's profit is going down. They completely outsource the hardware parts and
transfer them as service Industry.

After the implementation of above mentioned strategy, company was able to position its business in
the market.

References
Christen, M., Boulding, W., & Staelin, R. (2009). Optimal Market Intelligence Strategy When Management
Attention Is Scarce. Management Science, 55, 526-538. Retrieved from
https://www.jstor.org/stable/40539167?
Search=yes&resultItemClick=true&searchText=strategy&searchText=to&searchText=manage&search
Text=huge&searchText=market&searchText=potential&searchUri=%2Faction%2FdoBasicSearch
%3FQuery%3Dstrategy%2Bto%2Bmanage%2Bhuge%2B

Thompson, A. A., Peterat, M. A., Gamble, J. E., & Strickland III, A. J. (2016). Crafting and Exectuting
Strategy; THE QUEST FOR COMPETITIVE ADVANTAGE (twenty ed.). New York: MC-Graw Hill
Education.

Ans:

One of the greatest comebacks even after being the on verge of bankruptcy is
the Apple Inc. The company today is ranked as one of the biggest company with the
market capitalization of $926.9 Billion (Forbes, 2018 (June)). The American
multinational technology formed in 1976 specialized in consumer electronics, computer
software, and online services (latest addition). The company was performing well at
selling its personal computers to Steve jobs, one of the founders has to resign. The
company because of various internal and external factors such as high pricing, PowerPC
and high competition from Microsoft began to lose focus and started to fall out.
However, when Gil Amelio in 1996 power the company, he brought this idea to
acquire NeXT owned by Steve jobs in early 1997. This brought the Steve Jobs back to
Apple and started the partnership with Microsoft. The Apple in the late 90's was
struggling, however, the introduction of the iMac in 1998, changed the market
structure. iMac, all-in-one computer, reinforced the company's turnaround. The product
became so successful that it helped Steve jobs to regain his position of CEO. After the
success of iMac, they released the iPod and the iTunes in 2001 through iconic Apple
technology and returned the company to the profitability.
Today, Apple has the several ranges of products. In fact, the sub-brands of
Apple, iPhone, MacBook, and iPad have their own unique feature to deliver. This way
Apple has made a major comeback after the fall down in the 90's. The innovation and
differentiation strategy of Apple has made it unique and distinctive from its competitors
as well as made the lives of consumer simpler and better.

References
Forbes. (2018 (June)). The World's Largest Public Companies. Forbes.
Ans:

Strategic positioning is the positioning of an organization (unit) in the future, while taking into

account the changing environment, plus the systematic realization of that positioning. It mirrors the

decisions, an organization makes about the sort of significant worth it will make and how that quality

will be made uniquely in contrast to rivals. (Olhager, 2003).  While starting any business company one

must have effective strategies, core competitive advantages, know competitors, updated and also

offer better facilities. So I chose to carry out the research of Nepal commercial bank.

            The banking sector in Nepal has undergone transformation in recent years. The deregulation

of the financial services segment has brought challenges and opportunities for long standing players

like Nepal commercial bank (NCB). NCB is leading commercial bank of Nepal operating in the private

sector. As the corporate sector in the country has greater freedom to access the capital markets

today, the dependence of industry on bank funds has been declining. This led to a gradual erosion of

income from loans for working capital- for long the source of bank margins. With growing competition

in the financial sector, its merchant banking business narrowed down considerably. (Demetriades,

1996)
 As part of strengthening its portfolio, NCB examined various options. Personal banking is

perceived, among others, as a growing market. It offers a platform on which new products, tailored to

specific customer needs and promising regular accruals to bank profits has been launched. The

research cell of the bank began conceptualizing various products based on its own understanding of

customer needs .A study was undertaken on a sample size of 500 individuals covering cross section of

incomes, age groups and urban rural divides. One of products that finally took shape was personal

banking. The main strategy of the introducing new product was that this product would offer to a

saving account holder-both new and old- an automatic interest free overdraft facility of up to

Rs.50,000 for six months. This new product was aimed for the Nepalese middle class families, both in

cities and the countryside, whose demand for the personal credit was going in tandem with the

ingoing consumer boom in the country.

However, the implementation of this strategy was great failure because the middle class

customer were not loyal. They constantly shifted their accounts from one bank to another and had no

consistency. And as many other banks provide similar types of services, attracting the customer only

with the proposed overdraft facilities was quite hard for them. 

References

Demetriades, P. O., & Luintel, K. B. (1996). Banking sector policies and financial development in

Nepal. Oxford Bulletin of Economics and Statistics, 58(2), 355-372.

Olhager, J. (2003). Strategic positioning of the order penetration point. International journal of

production economics, 85(3), 319-329.

Ans:

  In CLA 1, the case is like this, there is a company which was previously doing well and
enjoying growth and success along with good market share. But now the situation has been
changed. All of sudden, due to slumbering economy the company's profit is decrease and the
operating expenses is increasing. Hence, to solve this problem there are certain strategy that will
improve their strategic position of the company. Here I will talk about Amazon.

      Amazon is the product of American genius Jeff Bezos. His aim was to serve customers by
giving opportunities like making more choice and convenience through the internet ordering- at
the time-books, and their delivery. The company enjoyed huge growth and success having good
market share. The company targeted book lovers and provided a way for customers to browse
for, order and receive books. By 2013 Amazon's sales were around $74bn with $2bn free cash
flow (Grundy, 2015). But suddenly, many competitors enter into the online market and start
offering better service. However, to improve their strategic position Amazon give priority to
adaptability. Yes, the company strategy succeed because they have built and sustained a
competitive advantage because they learned to adapt.

     Moreover, the company decided to merge with Whole Foods. The two completely different
companies fusing together to forge not only a new alliance, but a new opportunity that, as a
result, offers a new competitive advantage: options--a one-stop-shop for everything you need,
now including organic produce (Boss, 2017). This strategy succeed as the employee of the
company worked together. The two different company has their own culture. However, the
company was success to accomplish this as they believe in working together. The company also
applied the value of cross-pollinated teams. It means, selecting a member from one team and
rotate him through another team, often to his dismay. This will lead to a wider panoramic view
of the organization. Hence, the company strategy succeed and today we all know Amazon is
market share is good and they are enjoying profit.

References

Boss, J. (2017). Amazon's Competitive Advantage Isn't Cost Or Convenience, It's This

Grundy, T. (2015). The source of Amazon's Competitive Advantage.

Ans:

Basically, strategic positioning is the positioning of an organization in the future, while taking
into account the changing environment, plus the systematic realization of that positioning. It also
includes the devising of the desired future position of the organization on the basis of present and
foreseeable developments, and the making of plans to realize that positioning. Moreover, a strategic
positioning reflects the company which thinks about the kind of value it will create and how it will
differentiate from rivals.

However, unhappy buyers, inferior product line, weak competitive advantage strategy with
regard to low-cost leadership or differentiation, strong emotional commitment to an aging technology
the leader has pioneered, outdated plans, and equipment, a preoccupation with diversification into
other industries, and mediocre or declining profitability. For every business firm, it is equally
applicable from starting up to the booming state. So, every business man should take care of all
above activities.

Now, coming to the main question, let's take an example of the telecommunication network
service history of Nepal. Well, there was totally a monopoly market of NTC (Nepal Telecom) in past. 
Later, Mero Mobile brand was introduced in order to bit the monopoly of NTC. At that time this was
only privately owned telecommunication for Nepal at the time. It was the first private company to
operate public GSM services in Nepal. It was growing slowly in the market. They were building
networks to all over the country within few years. The team was successful till building network
throughout the Nepal however it lacked the different services that people were expecting. However
later in 2010, Mero mobile was re-branded by NCell, named Nepal Cell.

But, they were still unable to provide the service. The network service was also poor that lots
of customers were disappointed of the service. So at the time, 80 per cent of the Spice Nepal was
purchased by Finnish TeliaSonera, the new management is changing the way Mero Mobile looks like.
They have spent about 12 crore (120m) USD to transform Spice Nepal to new look. The company had
announced that it would be spending 25 crore USD within 2009 and 2010.
 Then after, in 2016, Ncell has officially become a part of Axiata Group Berhad, a Malaysian
telecommunications group with its rebranding on 16 August 2016. Ncell provides different offers and
services on its network. It is presently providing the services to different title likes entertainment
(Bonus Packs, Afnai Dhun, Daily Packs and Music or prbt) messaging (MMS, Short Number and Bulk
SMS, SMS, Voice SMS), and utilities (Balance, Call Forwarding, Call Waiting, Conference Call, My5).
These services were able to attract the customers and then the strategy worked. After that the
customers kept on riding.  But, the strategies of Ncell need to be re modified. It means that they
should use de-marketing, should be focused on potential and active users. This is because, people are
getting the Sim card but the active users are in limited in numbers.

In this way they were successful to reposition their brand and still the number one profit earning and
a good service provider in Nepal.

References
Mero mobile rebranding as Ncell. (2010). In techsansar. Retrieved
from http://techsansar.com/featured/mero-mobile-rebranding-as-n-cell/

Thompson, T. S. (2015). Crafting and Executing Strategy: Concepts and Readings with connect (18th
Ed.). New York: McGraw-Hill.

Wk3 DQ2
Discussion Question 2 CLOs 8 

What are the three principal advantages of strategic alliances over vertical integration or
mergers/acquisitions?

Ans:

In this ever competitive market, external growth or integration of the company

can sometimes lead to rapid expansion and growth. A merger and acquisition help to
bring the two different or same firm together and increase the size of the business
under the same common board of directors (Lubatkin, 1983). Similarly, a vertical
integration as a form of backward integration increases the opportunity for business to
obtain and improve the quality of the supplies. To know more in detail, let's take an
example of a Himalayan Java, one of the popular coffee stores of Nepal.

Suppose, Java recently integrated (vertical) with its suppliers (coffee producers
from Gulmi). One of the benefits of this integration to the java would be the control
over the quality and the delivery times. If the coffee beans are not up to the mark, the
research and development team of java and local coffee farmers can work together to
improvised the quality of the components. Also, they can try various kind of beans to
use in the new range of products. Further, Java can adapt the just in time approach to
overcome the factory costs as well as can enjoy the pricing strategy.

Similarly, if Java wishes to merge with the local bakery shop, the company can
enjoy producing in the economies of scale (cakes and pastries). Since the java is more
of a coffee shop but with the merge with the bakery café, it can widen its offerings with
the complementary goods (pastries, doughnuts, Momo's). Since, the existing company
is an already established brand, the marketing and distribution costs of this new
business is likely to be saved from the same sales outlets and sales teams (Roll, 1986).
Therefore, business will get highly befitted through the expansion, and the possibilities
are endless if the company can effectively select its mergers.

One of the biggest benefits of the strategic alliance is the possibility of the
greater career opportunities for company and workers (Stimpson & Farquharson,
2010). The addition of various departments will challenge the current role of the
employee. Besides, the business now has the control to the supplies of materials to the
competitors so, it has the potential to limit the competition. Also, when two similar
business mergers or from an alliance, they can produce in an economy of scale. For
instance, if clothing line merges with another clothing line then, the quantity of fabrics
and threads increases for the alliances which lead to buying supplies in larger quantities
to operate in a larger scale of business.

Therefore, these are few advantages to a business of strategic alliances over

vertical integration or mergers/acquisitions.

References
Lubatkin, M. (1983). Academy of Management Review, 8(2), 218-225. Mergers and the
Performance of the Acquiring Firm.

Roll, R. (1986). The hubris hypothesis of corporate takeover. Journal of business, 197-

216.

Stimpson, P., & Farquharson, A. (2010). Cambridge International AS and A Level

Business Studies. London: Cambridge University Press.
 

Ans:

Businesses adopt different strategies of alliance, integration, and mergers and acquisitions for

different reasons. One obvious reason is to prosper and grow.

Strategic alliance is a business relationship between two or more businesses that enables each to

achieve certain strategic objectives. Vertical Integration, on the other hand, is a strategy where a
business acquires operations within the same production Level (Thompson Jr, Williams, Gamble, &

Strickland III, 2018). Similarly, merges and acquisitions are taking over the ownership of another

existing firm. Each of these strategies comes with certain advantages.

However, when comparing these three different strategies, strategy alliance comes with the

advantage of low investment. Since both the businesses come with their own resources, each has

comparatively low investment in comparison to investment required for vertical integration and

mergers and acquisitions.

Another advantage of strategic alliance is shared risks (Mowery, Oxley & Silverman, 1996). Firms

involved can share risks. Back in 1990, film manufacturers like Kodak joined with other manufactures

Canon to create films for advanced photo system. The contract however was terminated once the film

was developed. But the alliance definitely helped the companies minimize the risks by developing a

common product-risk in terms of product acceptance and investment. The companies avoided the

risks Sony incurred when it alone tried to develop a new format with their cassettes. While with

mergers and vertical integration, since one party takes the ownership of things, the level of risk is

comparatively high.

Likewise, strategic alliance is useful to create competitive advantage. The strategic objectives can be

achieved through pool of resources and skills. The set of resources helps firm gain knowledge and

expertise. Resources, skills, and ideas often leads to great innovations. And great innovations can help

companies stand out and gain competitive advantage eventually. Same happened with PepsiCo. The

company joined hands with Lipton Co to market its ready-to-drink teas. Since Lipton was already a big

name in the tea industry, the alliance helped in the acceptance of Pepsi's product and helped in the

distribution network as well.

References

Mowery, D.C., Oxley, J.E., & Silverman, B.S (1996). Strategic Alliances and Interfirm Knowledge

Transfer. Strategic Management Journal, 77-91.

Thompson Jr, A. A., Williams, M. P., Gamble, J. E., & Strickland III, A. J. (2018). Crafting & Executing

Strategy: The Quest for Competitive Advantage: Concepts and Cases. New York: McGraw-Hill

Education.

Ans:

Strategic alliances is a business relationship between that empowers to achieve certain business
objectives. Vertical integration in other hand is the strategy where supply chain of a business is owned
by another company to gain power over its suppliers. While, merger/acquisition is an agreement done
by two or more business to transfer the ownership and forming a new team under the same business
(Thompson, Peterat, Gamble, & Strickland III, 2016).
 The three principal advantages of strategic alliances over vertical alliances and merger/acquisition are:

a.Shared Resources to form low cost product: When two or more firms are coming together
with an objective, let's say of developing a new product. Then, each firm will use their best
capabilities to prepare the best product. It means they will jointly share their resources
and specialization. Which results additional value forming a low cost product with higher
quality. Which turns out to be a competitive advantage. For an instance: Hero-Honda bike
produced by Japanese Honda company and Hero MotoCrop an Indian Company which was
very successful in the launched market.

b.Shared risk: share the risk involved in that business. Risk such as product acceptance and
investment will be shared if the product gets terminated. Similarly, they will remain
conscious on avoiding the possible risk that may arise in the future with two companies'
future analysis regarding the product than one company over other both strategy
(Christen, Boulding, & Staelin, 2009).

c.Facilitates more production, learn best practices, and more potential profitability:

Because of the strategic alliances two company can have these things as benefits as one
can learn the best practices of another firm by sharing their internal working functions.
And by learning best practices, company can be benefited in a long run which facilitates
more production (Arino & Reuer, 2004). 

Though, the strategic alliances has such principal advantages over vertical integration and
merger/acquisition, every strategy has their own importance in the situation of crisis or growth. Each
time strategic alliance cannot help to achieve the company's long-term goal because it even has
disadvantages such as if the product made by strategic alliance goes failure, both companies
reputation will go under water.

References
Arino, A., & Reuer, J. J. (2004). Designing and Renegotiating Strategic Alliance Contracts. The Academy of
Management Executive (1993-2005), 18, 37-48. Retrieved from
https://www.jstor.org/stable/4166090?
Search=yes&resultItemClick=true&searchText=strategic&searchText=alliance&searchUri=%2Faction
%2FdoBasicSearch%3Fpage%3D1%26amp%3Bed%3D%26amp%3BcurrentPath%3D%252Faction
%252FdoBasicSearch%26amp%3BQuery%3Dstrategic%2Balli

Christen, M., Boulding, W., & Staelin, R. (2009). Optimal Market Intelligence Strategy When Management
Attention Is Scarce. Management Science, 55, 526-538. Retrieved from
https://www.jstor.org/stable/40539167?
Search=yes&resultItemClick=true&searchText=strategy&searchText=to&searchText=manage&search
Text=huge&searchText=market&searchText=potential&searchUri=%2Faction%2FdoBasicSearch
%3FQuery%3Dstrategy%2Bto%2Bmanage%2Bhuge%2B

Thompson, A. A., Peterat, M. A., Gamble, J. E., & Strickland III, A. J. (2016). Crafting and Exectuting
Strategy; THE QUEST FOR COMPETITIVE ADVANTAGE (twenty ed.). New York: MC-Graw Hill
Education.

Ans:

  Strategic alliances are simply known as an agreement between two or more than two companies
achieve some strategic and mutually beneficial objective with the joint contribution of resources,
shared risk, shared control, and mutual dependence (Russo & Cesarani, 2017). Basically, firms and
corporations get into a strategic alliance in order to develop a more effective process, expand into a
new market or develop an advantage over competitors. The basic advantages of the strategic alliance
over vertical integration and/or merger/acquisition are low investment cost and risk, flexible and
adaptive to change, and the speed of deployment of wherewithal.
            In comparison to vertical integration or merger/acquisition, a strategic alliance is
comparatively associated with lower investment cost and risk as each of the partner's pools their
resources and share the associated risk for achieving the agreed objective. Basically, this step is taken
during the time when a company needs investment and uncertainty is very high. Here the strategic
partners will specialize their key roles and responsibilities in areas they are good at and be doing so
entails productivity and efficiency, which eventually helps in lowering cost for specific projects they
have partnered in.

            A strategic alliance is more flexible and adaptive to change compared to mergers and
acquisitions. This allows companies to be adaptive to change when the environmental conditions or
technological development is highly dynamic (Culpan, 2008). The strategic partnership could enhance
your productive capacity, provide a distribution system, or extend your supply chain. Besides that,
another major advantage of the strategic alliance over vertical integration or merger/acquisition is the
pace of the deployment of wherewithal.Companies racing against rivals for global market leadership
need strategic alliances and collaborative partnerships with companies in foreign countries to get into
critical country markets quickly, gain inside knowledge about unfamiliar markets and cultures, and
access valuable skills and competencies that are concentrated in particular geographic locations.

References
Culpan, R. (2008). The Role of Strategic Alliances in Gaining Sustainable Competitive Advantage for
Firms. Management Revue, 19(1), 94-105.

Russo, M., & Cesarani, M. (2017). Strategic Alliance Success Factors: A Literature Review of Alliance
Lifecycle. International Journal of Business Administration, 8(3), 1-9.