Strategic Management &

Innovation Specialization

Course (2): Strategy Formulation

Capstone Project: e-Types

SUBMITTED BY:
DOAA MOSAAD ISMAIL – APRIL 2020
 E-types business analysis and competitive environment
We can think of e-types business strategy as a critical tool for analyzing the competitive context in which e-types
operates in, and for making informed recommendations for what actions can be taken towards making effective and
wise business strategies. Therefore, we can draw SWOT frame work for e-types business to map out how they can
go forward with their strategy:
• Geographic presence in different regions.
• Strong online presence on different social
networking sites .
• Wide product portfolio
• High product quality increases brand loyalty .
Strengths • Intellectual property rights.
• Strong financial position
• Access to low cost suppliers
• Competent and committed human capital
• Well-developed and efficiently integrated IT
infrastructure.
• The exponential growth in the population (existing
& potential customer segments)
• The changing customer needs, tastes and
preferences.
• The development of new technologies to assist the
product/service production and delivery process.
Opportunities • Rise in the customers’ disposable income and
increase in the affluent customer base.
• Customers may start preferring new and creative
products/services as a result of changing tastes.
• The diminishing boundaries and rising global
interconnectedness allow the organization to get
into the international market
• insufficient current assets negatively affect the
liquidity position.
• Insufficient budget for the marketing and promotion
activities.
• Less expenditure on the research and development
Weaknesses activities .
• Poor justified pricing.
• poor waste management practices and inability to
integrate sustainability in business operations.
• poor inventory management practices.
• The changing regulatory framework and
introduction of new stricter regulations.
• Shortage of skilled labor in the market .
• The increasing number of direct and/or indirect
competitors.
• The deteriorating economic conditions which
Threats influence the customers' spending patterns and
purchasing power.
• The rise in inflation increases the cost of
production and affects the business profitability.
• The growing environmental sustainability trends
act as a major threat when offered
products/services are not environment friendly.
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 E-types business analysis and competitive environment
E-types can use the previous SWOT matrix to exploit the opportunities and minimize the threats in the external environment by
leveraging its strengths and overcoming its weaknesses (its internal environment).The framework is based on developing four types of
strategies, including:
• Leveraging strengths to exploit external opportunities.
• Overcoming weaknesses to exploit external opportunities.
• Leveraging strengths to minimize the threats.
• Overcoming weaknesses to minimize the threats.
Therefore, we can suggest the following attributes for e-types to move forward:
▪ The geographic presence in different regions can act as one of the major strength of the organization. It determines
the business’s reach to the target market and ensures the easy accessibility.
▪ The wide product portfolio can allow the organization to expand the customer base and offset the losses from one
product category with benefits obtained from the other.
▪ The strong financial position and health can allow the firm to make further investments.
▪ The access to the suppliers that offer raw material at a lower cost can improve the overall business efficiency.
▪ The locational advantage can improve the competitive positioning of the firm in various ways, such as- lower cost,
improved accessibility or enhanced brand image.
▪ The well-developed and efficiently integrated IT infrastructure can improve the operational efficiency and increase
knowledge of the latest market trends.
▪ Competent and committed human capital can act as a powerful source of competitive advantage, particularly when
business is service oriented in nature.
▪ High product quality increases brand loyalty and improves e-Types's performance in a competitive market.
▪ Workplace diversity can also act as a major business strength, particularly when the organization intends to
operate in the international market.
▪ The horizontal and/or vertical integration can increase the control over whole value chain, result in improved
access to raw material and quick product delivery to the final customer.
▪ The owned intellectual property rights that can make the product offerings unique and exclusive, making it difficult
for competitors to imitate.
▪ The Improvement in the customers- lifestyle and standards mean more consumption on consumer goods and
services, and more opportunities to encourage the purchase.

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 Resource Based view for successful growth strategy
Based on the previous environment analysis for e-types, it becomes definite that e-types environment
has become more uncertain, volatile and fast changing environment that ever before. This lead to think of
the great impact of the inner workings of the firm that will be a great deal towards future success.

“ We do what we believe or should we do what we expect the client to want?.. We have two different
currencies in this company; we have money, like cash flow, and we have prestige, street respect, doing
something great,… here we actually had a lot of work, had a lot of cash flow, and we could take the
decision based on what we felt was right for our design style.

Do we want to be the kind of company that just does what the clients wants? Or the company that
challenge our clients? But in terms of integrity, honest, respect, in that currency we did really well. And
may be also in the long run, getting a client because of that”.

Therefore, if we look inside e-types firm, we can tell that e-types behavior and performance for future
success can be explained by the differences in the resources and capabilities that they posses and control.

These resources are;

▪ Tangible resources such as their cash flow and liquidity
▪ Intangible resources such as; their brand value, intellectual prosperities, culture, technology. These resources are
extremely important for the value of their company.
▪ Human Resources such as; the expertise and talents of their employees.

E-types can utilize these resources and capabilities to create superior market performance despite the
changes in the external environment; fluctuation in demand or changing in technology,..etc.

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 Resource Based view for successful growth strategy
This could be achieved through:
▪ investing extensively in the training of its employees that it can employ a large number of skilled and motivated
employees.

▪ E-types can leverage their diversified workforce, with people of many geographical, racial, cultural and educational
backgrounds to help the company by bringing in diverse ideas and methodologies of doing things.

▪ E-types can recruit qualified and accredited professionals to work under in its team. These innovative teams allow it to
come up with new products and enter new markets.

▪ E-types can maintain product quality and increase brand awareness based on the high presence in the current market
and establish strategic partnerships with their current and potential suppliers, retailers, dealers and other stakeholders
for their future growth.

▪ E-types can leverage their number of intellectual property rights that include trademarks and patents. These allow it
exclusivity over its products and competitors cannot copy or reverse engineer them.

▪ E-types can increase their product portfolio providing products in a large range of categories. This can guarantee a
number of unique product offerings that are not provided by competitors.

▪ E-Types can increase their number of outlets in many state, supported by a strong distribution network that makes sure
that its products are available easily to a large number of customers in a timely manner.

▪ E-types can establish a low cost structure to enable it produce at a low cost and sell its products at a low price, making it
affordable for its customers.

▪ E-types can utilize their strong financial position with consecutive profits in the past 5 years, along with accumulated
profit reserves that can be used to finance future capital expenditures.

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 VRIO framework for a sustained competitive advantage
In order to understand the sources of competitive advantage, we can consider VRIO framework to analyze
the internal environment for e-types and the ability of their resources and capabilities to create a
sustained competitive advantage for future success.

The below model summarize e-type Resources VRIO framework:

Valuable? Rare? Imitability? Organized?

Yes, their brand Yes, their talents Costly to imitate Yes, the company
identity, human and expertise are their mix of human is organized to
resources, and rare. 80% of their resources, their capture the full
competitors are intangible assets potential of the
Tangible assets out of the league. and their working resources and
are highly conditions and capabilities.
valuable The diversity of
their human culture. They have the
resources bring a These things can’t adequate
rare innovative be imposed or management and
ideas bought because operation system
they come from along with routine.
within.

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E-types Global Strategy
E-types can broaden their presence into global markets given the opportunities of future growth in the
horizon. However E-types must acknowledge the fact that going abroad comes up with certain costs “the
liabilities of foreigners”. Therefore, the most important motive towards their approach of multinationalizations
would be; Strategic Assets Seeking; which means that e-types can target countries and regions renowned for
generating world-class innovation such as; East Asia, Europe and North America and therefore, they can tap
into these locations to generate more innovation.

They can choose to broaden their presence in global markets through green-filed investment and build a
wholly owned subsidiary company in these global markets from scratch. This will assure full control over
their operations, technologies, and quality.

However, such decision can come with significant hidden costs which may make e-types can run into high
risk, as they might lose full control over their operations in the foreign markets.

To overcome these costs, e-types might take the following actions;

▪ Enhance and develop their IT infrastructure that ensures efficiency and control over its internal and external
operations.

▪ Build a strong presence on social media with more than millions of followers on the three most famous social
media platforms: Facebook, Twitter and Instagram. It has high levels of customer engagement on these
platforms with low customer response time.

▪ The presence in foreign new locational advantage can improve the competitive positioning of the firm in various
ways, such as- lower cost, improved accessibility or enhanced brand image which could generate more profit.

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Global Strategy: Localization
Based on our previous analysis for e-types external environment, we can admit
that e-types are operating in an industry (Design and Brand innovation) where the
local differences make a significant difference. It certainly make sense to
accommodate for these differences in their global strategy.

Therefore, e-types can adopt the local responsiveness approach in their global
strategy; this means that they can accommodate and adapt their products
(designs and brand innovation) along with their processes to the differences
found in the different foreign markets they operates in.

This localization strategy takes into account the inherent diversity that exists in
the international markets and treats individual as cultural beings whose values
and behaviors are shaped by the unique culture in which they live.

Therefore, e-types localization strategy would be geared towards:

understanding local consumer preferences and other locale specific

requirements. Then, adapting business strategy to best satisfy the consumer
needs.

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Strategic Decision Making Model at e-types: Bounded Rationality

Given these knowledge about e-types competitive context and their potential
growth strategy, we can come to a conclusion that formulating strong strategy for
e-types eventually is a conduct of strategic decision making.

Since expanding their presence to global markets through localization strategy is

considered a strategic decision; as it would require a lot of managerial actions to
implement the expansion presence in foreign markets and also substantial
resources to ensure smooth global expansion.

However, this kind of decision cannot be seen as the optimal solution due to the
bounded rationality of e-types decision makers, as they wouldn’t engage in
comprehensive search to find the relevant information to optimize their strategy,
they would instead use heuristics or rules of thumbs, educated guessings and
common sense.

Therefore, e-types decision makers often have the tendency to find this decision a
satisfactory solution for formulating a strategy for future growth instead of an
optimal solution.

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E-types Strategic forecasting

In order for e-types to match the resource allocation pace to the anticipated changes in their
environment, e-types must estimate the future benefits and the future costs of
implementation.

The logic of “expanding their presence into global markets is that they would exploit the
opportunities in the global markets to increase their reach to new potential clients and
expanding their client base to achieve profits.

However we could expect that the costs of establishing new business entity in the foreign
markets from scratch could be significantly high, in addition to the uncertain and
unpredictable global market environment which make the process of managing and
controlling the activities at a distance very difficult.

The challenges for e-types is to be able to foresee such costs and not only to foresee the
benefits. However, if we could estimate the future value of the global expansion strategy
outweighs the future costs, then this strategy is considered an effective one.

And despite the fact that it's impossible to account for all the factors that may influence this
strategic decision, e-types decision makers could plan for some deviations when making this
strategy or systemize other ways to exploit the knowledge and information that is required to
make more informed and more rational decisions.

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