Research Korner: Porter’s Generic Strategies model

Strategic Management of Zara

Company Background         In 1963, Amancio Ortega started a small company in Spain that manufactured women’s pajamas and lingerie products for garment wholesalers. In 1975, after a German customer cancelled a sizable order, the firm opened its forts Zara retail shop. The original intent was simply to have an outlet for cancelled orders but the experience taught the firm the importance of a marriage between manufacturing and retailing – a lesson that guided the evolution of the company ever since. From a starting point of 6 stores in 1979, the company established retail operations in all the major Spanish cities during the 1980’s. In 1988 the first overseas Zara store opened in Porto, Portugal, followed shortly by New York City in 1989 and Paris in 1990. But the real ‘step-up’ in foreign expansion took place during the 1990s when Inditex entered 29 countries in Europe, the Americas and Asia (particularly during 1998 to 2001 when it entered 21 of these 29 countries). In parallel with its overseas expansion, Inditex diversified its retail offering by adding and acquiring new brands in order to target different customer segments. Each brand operates independently, with its own stores, ordering system, warehousing and distribution system, subcontractors, and organizational structure (Inditex 2006). Zara is the largest Inditex division – accounting for more than 75 percent of total Inditex sales. The first Zara clothing store opened in 1975 in Spain as a small retailer selling men’s and women’s clothing. Since then Zara chains have grown into retailing giants with almost 1000 stores worldwide and an impressive sales record. The success of Zara is partly to do with the appeal of its men’s and women’s and children’s fashions and accessories that display unique style but at real world prices.   Task1 Industry Analysis             Strategic management starts with strategic planning an important part of the strategic planning process is External Environment Analysis. It is important that the company conduct a futuristic view of its environment as the environmental conditions may change from the date of the conception of the strategic Plan. Forecasts are needed in strategic planning and all environmental factors must be forecasted. This section will present an in-depth analysis of the industry where Zara competes. The analysis will include customer analysis, competitor analysis, PEST analysis, Porter’s Five Forces Analysis and to have a complete view of the company’s business environment a SWOT analysis will be conducted.             External environmental analysis reveals the health of an organization, its values, political climate, its use of technology and resources, its competitive rank within the industry, its overall image, and the areas requiring improvement (Gilley and Maycunich 2000). An organization’s environment is composed of those institutions or forces that are outside the organization and potentially affect the organization’s performance. These typically include suppliers, customers, competitors, government regulatory agencies, public pressure groups, and the like (Sims 2002). Because of uncertainty, these environmental factors play an important role in determining the success of the organization. Organizations are now faced with very dynamic environments where government regulations rapidly changes, new competitors arise, raw material are difficult to acquire, and consumer preference continues to change and so on. Now let us look at these external factors that shape the organization’s strategies and objectives and affect the organization’s success.             The global textile and clothing industry also experienced changes. One of the biggest changes is the removal of import quotas that has opened opportunities for large exporters such as China and India. The textile and clothing industry, particularly in Europe is characterized by fragmented production with a large number of small and medium-sized companies mainly located in Italy, Greece, France, Germany and Spain (Nordas 2004). The textile and clothing industry in Europe is also becoming more international and international competitors are posing greater threats. Sub-contracting or delocalization of textile and clothing production to countries with lower labor and transportation costs is also becoming popular among European retailers as it reduce lead-time and costs (Berkeley and Steuer 2000). European retailers and manufacturers are also changing their business models to keep up with the changing customer demands and tastes (Lopez and Fan 2007).   The Fashion Industry             The fashion industry is composed of different products and markets where there is an element of style, which is short-lived. The fashion industry is characterized by the following characteristics: 1. Short Life-Cycles – the product is often short-lived, designed to capture the mood of the moment. Consequently, the period in which it will be saleable is likely to be very short and seasonal, measured in months or even weeks. 2. High Volatility – demand for these products is rarely stable or linear. It may be influenced by the inconsistencies in weather, media, celebrities and icons. 3. Low Predictability – because of the volatility of demand it is extremely difficult to forecast with any accuracy even total demand within a period, let alone week by week or item by item demand. 4. High Impulse Purchasing – many buying decisions by consumers for these products are made at the point of purchase. Meaning, the shopper when confronted with the product is stimulated to buy it, hence the critical need for ‘availability’.               The clothing industry has been changed by globalization. Now national brands such as Zara and Mango from Spain, Topshop from the United Kingdom, Hennes & Mauritz from Sweden, Gap from the United States, United Colors of Benetton from Italy, Uniqlo from Japan and Esprit from Hong Kong are crossing borders to become national brands. These clothes retailers are following the internationalization process of US retailers predominantly targeting the youth market (Stone and McCall 2004). Today’s fashion industry is highly competitive and the constant need to refresh product arranges means that there is an inevitable move by many retailers to extend the number of ‘seasons’ (Christopher et al 2004).   Consumer Analysis             Zara positions itself as the designer-boutique alternative for the price-conscious but trendy consumer (Cohen and Roussel 2004). Today’s consumers are spending less on clothing – choosing to spend their disposable income on healthcare, electronics, education, and travel and leisure. Moreover they can now choose from a wide assortment of inexpensive products.   Competitor Analysis             Three main competitors of Zara pose the biggest threats. These are Mango, the Gap and H&M. Almost any retailer can be a threat to Zara due to its wide range of merchandise categories. The Gap is one of Zara’s main competitors as it also sell the same merchandise as Zara does at a more affordable prices and less trendy styles. The company also has a world-wide presence. H&M (Hennes and Mauritz) is one of Zara’s most threatening competitors. H&M also has been quick to internationalize which allows it to gain sales in countries outside its native Sweden. H&M also is more attentive when entering new markets and tends to enter one country at a time, as opposed to Zara who multitasks globally. H&M builds distribution centers in their international locations in order to cut down lead times and potential logistics costs. Another threat to Zara is that H&M carries trendy clothing choices that they have designed based on the melding of international apparel tastes (Craig et al 2004). Mango, also a Spanish fashion retailer is also known for its excellent business model and supply chain management. Mango has a history comparable to Zara’s being a Spanish company with approximately the same number of stores in the same number of countries worldwide, and a recent history of great success. Like Zara, all the Mango stores are located in prime positions, whether in the main shopping centers or premises located in city centers. Stores are of sufficient size to display its collections. The products of Mango are also similar to Zara’s in style, pricing and quality. However, Mango is very different from Zara in organizational strategy as Mango is based on a franchising system, and in marketing strategy, relying heavily on advertising campaigns.   Porter’s Five Forces Analysis 1. Competition among existing firms (High) – the competition among existing firms in the clothing industry is very fierce. Zara does not only compete with local Spanish brands such as Mango or Springfield, it also competes with other European brands such as H&M, Topshop and United Colors of Benetton. Zara also competes with international brands like Gap. 2. Threat of new entrants (High) – the clothing industry is very fluid and open. Small and medium-sized companies enter the fashion arena frequently. 3. Threat of substitute products or services (High) – consumers are always on the look out for more quality trendy products at more affordable prices. The threat that other companies can offer the same quality or better quality products at lower prices is high. 4. Bargaining power of suppliers (Low) – fashion retailers/merchandisers outsource their production in places where transportation and labor costs are cheap. Zara strictly controls its production and has a very stringent contracts with suppliers. 5. Bargaining power of consumers (Medium) – the consumers is the focal point of Zara’s business model. In spite of this, Zara has conditioned the minds of the consumers by offering limited stocks and by quickly replenishing its products.    Task 2 Strategic Capabilities Innovative Business Model             Inditex, the company that owns Zara has an innovative business model that serves as the foundation of its strategic capability. The business model of Zara gives utmost importance to customer and continuous innovation. The organization considers the customer as the beginning and end of its business. However, Zara has pushed forward by giving the customer an active role from the start of the chain and turned it into the principal drive for its entire business model. The requests, comments and suggestions of the customers are considered by the design team which, based on this, create some proposals that are sent to stores immediately. The start of the company’s business model is the store. The store is important to the company’s business model because this is where informatio0n from the customers are received and collected. These information are sent to design centers and commercial departments in real-time. The response from the customer with new requests sets the process going. Zara stores receive new products twice a week , thereby giving a quick response to the customer.   Excellent Supply Chain Management             For Zara stores to be able to offer cutting edge fashion at affordable prices requires the firm to exert a strong influence over almost the entire garment supply chain: design, purchasing, production, distribution, and retailing. Zara produces clothes that resemble the latest couture creations, but they beat the designers to market. Because they use less expensive fabrics, they can also provide the product at a lower price. To achieve this type of competitive advantage, Zara controls most of its supply chain, by managing all design, warehousing, distribution, and logistics functions. Zara design the organization, operational procedures, performance measures and even office configurations to make information and product transfer easy. Because Zara’s merchandise is produced in small quantities, provided on predictable schedules, and displayed in the stores for only a short amount of time, customers visit Zara stores more frequently. This has an added advantage of helping Zara avoid the cost of advertising.             The scheduling techniques of Zara is also very efficient. <ul style="margin-top: 0in; margin-bottom: 0in" type="circle"> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Centrally Managed Inventory – controlled and timely delivery of clothing to all stores across the world</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Reduced Design Cycle Time – timely response to items that sell well and ability to quickly alter or enter new designs</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Strong IT System – allows almost immediate communication of sales and inventory information across enterprise</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%">Logistics and Distribution – clothes move within hours to their destination, efficient scheduling of shipments</li> <li class="MsoNormal" style="text-align: justify; line-height: 200%"> </li> </ul> Fashionable Items at Real World Prices             The particular operation strategy used by Zara helps it respond quickly to shifts in customer demand and build a powerful brand. Zara estimate that it takes only two weeks to convert design ideas into products on the shelf to satisfy its young, hip, clientele with fashion for the masses. Store employees regularly tour urban hot spots looking for new trends and reporting back to designers. Knowing what’s in today may be out next month is the secret of the success of the Spanish retailer as is the ability to apply operations strategy that puts new fashion concepts on the shelf twelve to fifteen days.             Zara’s appeal is in its clothes themselves. Zara has earned a reputation of being able to come up with more affordable interpretations of catwalk styles into its stores with breathtaking speed. A design presented in a fashion show by a luxury design house will not be available to the masses for months, but Zara is able to create something that looks like it in just two weeks. This enables Zara to attract a large number of customers who cannot afford designer clothes or who are looking for a more affordable alternative (Tungate 2008).             Although Zara is known for its ability to provide more affordable interpretations of catwalk clothes, it is also known as a company that can create innovative fashion pieces. This is attributed to its highly effective design strategy that starts in the stores. The customer feedbacks, requests and suggestions that are gathered from the customers in every store is passed to the design team. The design team also consult magazines, trade fairs, and fashion shows to know the latest in the fashion industry. The company ensures product quality by designing its own products. Zara employs around 300 people in its headquarters in Spain. The headquarters staff is composed of designers, specialists and buyers. Together they produce designs for approximately 40,000 items per year from which 10,000 are selected for production. Unlike their industry peers, these teams work both on next season’s designs and, simultaneously and continuously, also update the current season’s designs. Extensive feedback from the store network also forms an integral part of the design process. Women’s, men’s and children’s designers sit in different halls in a modern building attached to the Inditex headquarters.             The store managers play an important role in making sure that each store only offers what customers want and need. Store managers monitor the tastes and demands of the customers, and tailor stock accordingly. That is the reason why even if there are two Zara stores in the same city the products that are being offered are not exactly the same. Zara’s product managers keep in touch with stores, seeking feedback from customers and monitoring the popularity or otherwise of items (Tungate 2008).   Task 3 Strategic Choices Porter’s Generic Strategies             Michael Porter believed that a firm can choose between two options. These are cost advantage and differentiation. There are according to Porter three generic strategies that a company can employ. These are cost leadership, differentiation and focus. Cost Leadership             Overall, cost leadership requires a firm to develop vigorously an optimally efficient scale of operation and to control tightly the firm’s cost in all activities (Reid et al 1993). Focus Strategy         A focus strategy requires a firm to concentrate on a particular market segment which may be dictated by factors such as the buyer, the product, or the location rather than the overall market. The strategy is predicted on the notion that a firm that devotes its entire energies to a niche or target can better achieve competitive advantage than those rivals which broadly compete across the market (Reid et al 1993). Differentiation             Firms that follow the generic differentiation strategy seek to exploit firm-specific assets by producing goods or services, which are almost unique compared to those offered by rivals. Differentiation is not limited to the physical nature of the product. Other significant dimensions of differentiation include distribution channels, marketing efforts, after sales service and so on. Essentially a firm seeks to establish itself as unique within its industry. Effective differentiation is generally resistant to the forces of competition. Potential and existing rivals must overcome the uniqueness of the product and try to erode customer loyalty. Customers are less likely to switch because of a perceived lack of similar alternatives (Reid et al 1993).   Imperative Strategic Choices             Zara employs different strategies to gain competitive advantage over its competitors. In order to become the leading fashion retailer in the world, Zara employs a combination of both differentiation and cost leadership strategies. This imperative strategic choice is achieved through:   1. Distribution Channels             One of the possible threats to the company and a potential source of failure is its Spain-centric production and distribution. Majority of the company’s processes are being done in Spain and the company’s two distribution channels are in Spain. If the external environment is subjected to drastic changes such as political unrest, economic flux, weather changes, calamities, and terror attacks the company will be vulnerable. In order to avoid this and to strengthen the company’s presence in other locations, the company can develop distributions channels in strategic locations in Asia and in America.   2. Complimentary Sales Channels             In order to reach the consumers and to fully utilize technology, Zara can make use of the internet as an alternative sales channel where customers can shop online. Catalogues can also be used as an alternative sales channel. Zara can choose to grow in three sales channels – stores, internet and catalogue. Although the stores are Zara’s primary sales channel, internet and catalogue sales can strengthen Zara’s profile and increase the level of service to customers, thereby making Zara even more accessible.   3. Expansion in Europe, South America and Asia             One strategic choice that is pertinent to the strategic positioning of Zara is expansion.             Zara continues to expand to new markets. In 2006, Zara entered markets such as Croatia, Slovakia, Colombia, Guatemala and Oman (Annual Report 2007). The chain continued its expansion process with openings in the main commercial areas of large cities. In line with the company’s strategy of growth, in 2007 Zara opened up in Peking with the first store of the Chain in the Chinese capital, and continued growth in the Russian market with openings in Moscow, Kazan, Rostov and Novosibirsk. In Europe, stores opened in such places as Bologna and Naples (Italy), Frankfurt (Germany), Gotenborg (Sweden) and Oslo (Norway). What is more, the chain began to operate in five new markets: Croatia, Slovakia, Guatemala, Colombia and Oman (Annual Report 2007).   Task 4 Recommendation and Justification             The recommended growth strategies for Zara is Market Expansion through Market Development. The focus of market development is entrance to new markets where Zara is not yet present.   Market Expansion through Market Development             Finding new markets may not guarantee success for the firm. A firm can also achieve growth in developing markets. Market development strategy involves developing new markets by duplicating the business operation, with minor adaptive changes. The firm can undertake a market expansion strategy. In market expansion, the same expertise and technology and sometimes even the same plant and operations facility can be used. There is therefore potential synergy and resulting reductions in investments and operating costs. Geographic expansion may involve changing from regional operation to a national operation, moving into another region, or expanding to another country (Proctor 2000).               The expansion of Zara in Europe, South America and Asia requires a more developed and well-managed supply chain. In order to make the expansion strategy effective the company must further develop its supply chain management process. In order to strengthen the company’s supply chain management, Zara can make use of different strategies where necessary. These strategies include Total Quality Management and Quick Response. These strategies do not aim to replace Zara’s supply chain processes but to enhance and support the company’s already effective supply chain. 1. Total Quality Management             The idea of total quality management (TQM) emphasizes planning for quality, including designing the product in such a way that consistent quality is more easily obtained and more easily measured. The impetus for a company to devote significantly more resources to quality through a TQM program comes from a trend that most companies are now experiencing – an increased competitive pressure that leads to higher costs associated with poor quality. The product must be designed in such a way that it can be produced consistently without losing sight of the design aspects demanded by the customer. The production process must be designed with quality in mind (Summers 1998). 2. Quick Response             Quick Response (QR), a program developed by textile and apparel manufacturers and retailers around 1985 as a way to cope with problems challenging the apparel industry, uses a combination of strategies to reduce inventory levels, improve merchandise quality, increase worker productivity, increase stock turnover, and reduce merchandise markdowns and inventory costs. Fundamentally, QR is a way to gather information about consumer preferences and to reflect them in production decisions in a timely manner. To comply with consumers’ needs, QR relies on sales data. Through computerized information systems, sales data are transmitted and transformed as useful information that reveals consumers’ preferences and reactions, and decisions are then made promptly to respond to what consumers want (Kang and Sullivan, 1999).             The QR strategy links all activity to real time demand. It is customized by the individual retailer or manufacturer and is particularly suited to small and medium-sized firms. It is designed to be context specific and to be contingent upon the setting. Quick Response as an operations strategy is designed to overcome the impact of seasonality in operations.       References Annual Report 2006, Inditex, viewed 09 December, 2008,             <http://www.inditex.com/en/shareholders_and_investors/investor_relations/annual_reports>   Annual Report 2007, Inditex, viewed 09 December, 2008,             <http://www.inditex.com/en/shareholders_and_investors/investor_relations/annual_reports>   Berkeley, N and Steuer, N 2000, Comparative Analysis of EU and National Trends in the Textile and Clothing Industry, viewed 09 December, 2008, <http://www.stile.coventry.ac.uk/adapt>   Christopher, M, Lowson, R and Peck, H 2004, ‘Creating Agile Supply Chains in the Fashion Industry’, International Journal of Retail and Distribution Management, vol. 32, no. 8, pp. 367-376.   Cohen, S and Roussel, J 2004, Strategic Supply Chain Management: The Five Disciplines for Top Performance, McGraw-Hill Professional.   Craig, A, Jones, C and Nieto, M 2004, Zara: Fashion Follower, Industry Leader, Philadelphia University, viewed 09 December, 2008             <http://www.philau.edu/sba/news/zarareport.pdf>   Jones, S J 2005, Fashion Design, Laurence King Publishing.   Kang, J K and Sullivan, P 1999, ‘Quick Response Adoption in the Apparel Manufacturing Industry: Competitive Advantage of Innovation’, Journal of Small Business Management, vol. 37, no. 1, p. 1. Lopez, C and Fan, Y 2006, Internationalization of Spanish Fashion Brand Zara, Brunel University, viewed 09 December, 2008,             <http://bura.brunel.ac.uk/bitstream/2438/2003/4/Zara.pdf>     Nordas, H K 2004, The Global Textile and Clothing Industry Post the Agreement on Textiles and Clothing, World Trade Organization, viewed 09 December, 2008, <http://www.wto.org/english/res_e/booksp_e/discussion_papers5_e.pdf>   Proctor, T 2000, Strategic Marketing: An Introduction, Routledge, London.   Reid, G C, Jacobsen, L R, and Anderson, M E 1993, Profiles in Small Business: A Competitive Strategy Approach, Routledge, New York.   Stone, M A 2004, International Strategic Marketing: A[N] European Perspective, Routledge, New York.   Summers, M 1998, Analyzing Operations in Business: Issues, Tools, and Techniques, Quorum Books, Westport CT.   Tungate, M 2008, Fashion Brands: Branding Style from Armani to Zara, Kogan Publishers.

Strategic Management of Zara

Company Background In 1963, Amancio Ortega started a small company in Spain that manufactured women’s pajamas and lingerie produ...

Strategic Management of Zara

Strategic Management of Zara

Company Background In 1963, Amancio Ortega started a small company in Spain that manufactured women’s pajamas and lingerie produ...

Porter's Five Forces Model on BBA GROUP - a textile company

Introduction Every business is subject to factors that affect the firm’s function as a whole.  These factors are the ones attributed for the success or even the failure of a business (Oliver 1997).  In the light of this, there are certain ways or techniques to be considered in order to emerge and continue to be competitive within the market place. The marketing concept has been defined as ‘the key to achieving organizational goals’ and the marketing concept rests on ‘market focus, customer orientation, coordinated marketing and profitability’. In a profit making business, the firm obviously has to try and achieve this level of customer satisfaction as a way of staying ahead of the competition and making a profit (Moschis 1994). Today, more and more people and organization are striving to be recognized in the business arena.  With this objective, these organizations had been able to competently and effectively adapt to the situation in the market place by using generic strategies that enhanced their competitiveness.  There are five different generic strategies that a business can choose.  These include cost leadership, differentiation, focused cost leadership and integrated cost leadership/differentiation.  Each generic strategy helps the company to establish and exploit a competitive advantage within a particular competitive scope (Hitt, Ireland & Hoskisson  2003). Thus, this paper will critically examine the generic strategy used by BBA Group. Further this paper will provide an analysis of the company using some marketing tools like PEST and Porter’s Five Forces Model to determine the situation of the company in the internal and external marketing environment. In addition, this paper will also give emphasis on the competitiveness of the company.  Herein, the discussion will include the determination of the strategies used by the company. Overview of the Company             BBA Group has been established in 1897 as a textile manufacturing industry, named W.Wilson Cobbett Ltd.  At present, BBA groups operate in a global market in two distinctive areas of business.  First the aviation service systems which consist of Aviation Services and BBA aviation systems, through its subsidiaries in Latin America, US and Europe.  This division provides fuelling and refuelling services, cleaning, maintenance, aircraft sales, servicing, repair, technical support and training of pilots.  Next, BBA develops specific material for different industrial and hygiene sectors. Herein, they provide non-fabric products by the mechanical interweavement of textile fibres for the manufacture of sanitary towels and babies nappies.  This business division also specializes in embossing activities for printing original colour motifs like kitchen paper. BBA Group is publicly recognized company traded on UK stock exchange.  The companies involved in such group focus on providing products and services to aviation industries and speciality materials industries.  The aviation services and systems groups serve regional airline, commercial and military aviation clients and world business aviation by it primary operating industries and their subsidiaries. Some of these industries are Signature Flight Support, International Turbine Service, Dallas Air motive and others.  The aviation division of BBA is known to be the 5th largest aviation groups in UK and amongst the top 40 largest industries in the world market.             Furthermore, BBA is also a vital player in the aviation support business. Such group has business operations at over 100 locations in the international market including 46 of the world’s top 100 airports.  Part of the companies business is joining mergers and acquisition. Such strategy helped the company to expand its business portfolio and expand their territories in the global market. Utilizing PEST Analysis In order to analyze the environmental aspects of BBA Group, PEST analysis will be used.  PEST Stands for Political, Economic, Sociocultural and Technological factors that influence Argyle’s overall performance in the market place. ·        Political Sector A company will not be able to gain success, good reputation and trust if it will not consider legal and political sector as part of their strategy.  BBA Group has been able to follow the principles of business ethics. Hence, the company considers legality in all their actions.  They make sure that all their products and services adhere to the standards and wills satisfy their client worldwide.  Politically, BBA group had been able to follow all the standards set by the country and other international organization satisfies their customers. ·        Economic Sector Economically, it can be said that throughout the years, BBA Group had enjoyed being at the top of its competitors.  The economic status of BBA is highly remarkable that it always give its consumers the best and quality products and services in the two business divisions.  In addition, the company’s growth and expansion on different countries in the world is an obvious evidence that BBA has been able to have a stable economic capacity to sustain and maintain its competitive position in the market place. ·        Sociocultural Sector Culture is an important factor in understanding an industry, because for any organization to operate effectively, it must for some extent have a general set of believe and assumptions on how culture will influence the productivity and the success or failure of any company. Culture environment is one of the important principles that influence the organization.  Hofstede (1991) identifies that there are four dimensions that differentiate cultures at a national level (power distance, individualism-collectivism, masculinity-femininity, uncertainty avoidance), which help to understand that people arrive to organizations with their own national culture.  In the BBA, the management sees to it that they value the opinion of their employees no matter what is their nationality.  Since, this company is competing globally; it cannot be denied that they need employees from different cultures to be in the company to help in the decision making.  It is also indicated that the international managers has been able to create a positive relationship in the local managers. Moreover, the management of the company has seen to it that they would be fair in treating all their employees. In addition, as mentioned earlier, the company sees to it that their social commitment is being achieved by satisfying the consumers with their quality products and services in aviation and special material industries. Herein, the company values the consumer by knowing their demands and providing their demands and in aviation and special material products. The business division of BBA has been able to make the company more competitive. Moreover, with the BBA core mission to provide customer satisfaction is also given emphasis. Accordingly, the company’s mission and vision can only be achieved if and only they would focus immensely on satisfying their customers and clients. BBA had many consumers all over the world and the company is succeeding due loyalty given by their target market. To be able to serve their customer and clients better, they have initialize a strategy which includes a set of strategies that greatly influence the whole corporation in achieving its goal. ·        Technological Sector The complexities of achieving business success through increased efficiency, effectiveness and competitiveness, combined with innovative applications of modern technology, has heightened the awareness of both Technology and business managers towards more strategically oriented approaches for planning and management of any industry (Luftman, Oldach & Lewis, 1993).  BBA has been able to use technological advancement for creating new and innovative products and services needed by its customers may it be from the aviation or the special materials business. Part of this is their utilization of modern technology in producing new products that will meet the demands of their target market. They also use the purpose of information technology by creating their own website to let their consumers have an easy access of knowing the company and the products and services that the company has made for them. Review Industry Structure             An industry is a group of firms that market its products closely substituted from each other.  According to Porter (1980), some industries tend to become more profitable and competitive than the others. Hence, an existing industry such as the BBA Group based in UK should always remember that their industry will only survive by utilizing a strategy that would enhance the competitiveness of the business. In Porter’s model, it is assumed that there are five forces that particularly affect an industry. The model is useful if a manager strives to get the better off rivals. The framework provides excellent understanding of the industry context in which the firm operates.             Porter’s Five Forces Model includes threat of entrance of new industries.  The main objective of BBA is to stay in the competitive position in the global market Although, the company knew that this type of industry belongs to higher entry barriers, the management has been able utilize an approach to make sure that the company will still be competitive in the international level.  In order for BBA to compete and stay in the international marketing environment, the management team had provided a long term vision to be followed by the industry as a whole. The use of merging and acquisitions has been able to strengthen the capability of the company to strongly and efficiently compete within the marketplace in both local and international arena.  The agreement made by BBA with these leading industries has strengthened their capabilities to compete in the global arena in terms of producing quality products and service especially for their aviation systems.  Moreover, with the existence of new entrants in this kind of business, the competition becomes tougher and tougher.  Since, these new entrants can be a threat for the company in terms of substitute products, BBA have again utilizes a strategy that will enhance their product more. Product differentiation approach was implemented by the company as their marketing strategy. This is to ensure that with these new entrants their product will still be different, unique and full of quality to satisfy their target market. The bargaining power of a supplier could be a threat for the profit of the company, and BBA management is aware of it.  Since the company’s goal is to provide the customers of their needs and expectations in terms of diamond production, the company has been able to utilize all its resources. In addition, BBA, also uses supply and distribution channel effectively. Porter’s also include in his model the concept of the bargaining power of Buyers. Hence, BBA sees to it that their clients will be satisfied in their products with regards to aviation or special material products or service.  According to the management of the company, the Argyle fundamental premise is a simple as achieving the core mission and objective by merely satisfying their customers and clients. And lastly, BBA also considers the intensity of rivalry.  In this manner, they are willing to provide strategies and techniques in a way that their competitors will see them as a tough competitor for the benefit of the whole organization. Since the competition of these industries worldwide is very strong, BBA utilizes all their resources to enhance the operation of the BBA and to be recognized as the leading industry in diamond production. They also tried to include innovative marketing strategy and used technologically advanced equipments to produce quality diamond products. Conclusion             Analysis shows that because of the management and marketing strategies of BBA Group, they are still enjoying their competitive position and competitive advantage in the global market.  In addition, it also shows that part of the generic strategy of the company is product or service differentiation and joining into mergers and acquisitions.  The company has been able to adapt to the marketing environment because of its strong commitment of providing quality products and services for both of their business operations. References BBA GROUP (2006).  Available at [www.bbagroup.com]. Accessed on [24/04/06].    BBA GROUP (2006).  Available at [http://uk.finance.yahoo.com/q/pr?s=BBA.L]. Accessed on [24/04/2006]. Hitt, MA, Ireland, RD and Hoskisson, RE, 2003, Strategic Management, Competitiveness and Globalization.  5th Edition. Thomson, Southwestern. Hofstede, G (1991). Culture and Organization. Software of the mind. New York: McGraw-Hall Book Company Luftman, J.N.; Lewis, P.R; Oldach, S.H. (1993). “Transforming the Enterprise: The Alignment of Business and Information Technology Strategies.” IBM Systems Journal 32(1): 198-221. Moschis, G, 1994, Marketing Strategies for the Mature Market, Westport, C.T.        Quorum Books Oliver, C, 1997, Sustainable competitive advantage: Combining institutional and resource-Based views. Strategic Management Journal, Vol 18. No. (9), pp. 697-713. Porter, M. E. (1980).  Competitive Strategy. Free Press.

Porter's Five Forces Model on BBA GROUP - a textile company

Introduction Every business is subject to factors that affect the firm’s function as a whole. These factors are the ones attributed for t...