ASSIGNMENT COVER
HHAHA
HAMBRA EDU SERVICES
STUDENT’S NAME
: SARAVANA RAO A/L VENKATRAO
I/C NO / MATRIX NO. : HMPM 21217
PROGRAMME
:
EXECUTIVE MASTER IN OPERATION & PROJECT
MANAGEMENT
CLASS DATE
:
22 MAY 2021
INTAKE DATE
:
17 APRIL 2021
MODULE
:
INNOVATIVE DEVELOPMENT IN OPERATION
MANAGEMENT
TRAINER’S NAME
:
DR CAPT SHAHRUL BAHRIN BIN ZAINAL ABIDIN
CENTRE
:
AETC SHAH ALAM
OVERALL MARK
(Fill up by Trainer)
INDICATOR
EFFORT ( 10% )
PRESENTATION (10% )
CONTENT ( 40% )
TOTAL ( 60% )
MARK
~2~
PROGRAMME:
EXECUTIVE MASTER IN OPERATION
& PROJECT MANAGEMENT
MODULE:
INNOVATIVE DEVELOPMENT IN
OPERATION MANAGEMENT
HAMBRA EDU SERVICES
F-16-2, Alam Avenue 2, Jalan Serai Wangi N16/N,
Seksyen 16, 40000 Shah Alam.
www.executivetraining.com.my
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Contents
TABLE OF CONTENTS
Page Number
INTRODUCTION……………..........................................................................4
1.1 Key Elements In Strategic Group Analysis………………………..7
1.2 Strategic Choice…………………………………………………………………..9
1.3 Strategic Implementation…………………………………………………….10
1.4 Strategic Group Mapping……………………………………………………..11
1.5 Strategic Control…………………………………………………………………...13
1.6 Operational Control………………………………………………………………15
1.7 Characteristics Of Strategic Control System………………………17
1.8 Strategic Thinking…………………………………………………………………18
2.0 Extent of Product(Or Service) Quality…………………………………..20
2.1 Extent Of Geographic Coverage……………………………………………..21
2.2 Numbers Of Market Segments……………………………………………….23
2.3 Distribution Channel………………………………………………………………24
2.4 Extent of Branding………………………………………………………………….26
2.5 Marketing Effort………………………………………………………………………28
2.6 Degree of Vertical Integration…………………………………………………29
2.7 Product or Service Quality…………………………………………………………31
Conclusion……………………………………………………………………………………………33
Bibliography &
References……………………………………………………………………..34-35
INTRODUCTION
On the first hand accomplishing this assignment by contemplating through the question given, it
fundamentals on the course model that studied through mass discussion in class and also exchanging in
ideas in INNOVATIVE DEVELOPMENT IN OPERATION MANAGEMENT subject. The base of the first
question explores through the
strategic group analytical methods that has been exposed within thorough studies and vast debate on
expanding business on economical sector that flows through service or product that speaks on its quality.
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Secondly the base of second question discusses the criteria used within the industry to boost its service
through manufacturing and operational by adapting the innovative that studies by such critical thinking,
advent skills that explore the advantages that could be implied on the industry to boost its ROI (return of
investment). Furthermore, scholars that been hired to conduct such study develops the criteria or idea
within the grouping firm to explore the market to enhance such product or service provided by any industry.
Adding up this type of innovation can be looked as an efficient control system that considered to be one
of the guarantors of the efficiency of the management activities that have been undertaken within the
scope of each and every implemented function of an organization. Thus , here it varies on many degrees
of utilization, efficiency and effectiveness, thereby determining the need for resource allocation, combining
various activities and changes in the scope and intensity of activities, and in this way becoming one of the
crucial factors determining the level of efficiency of a management.
Its being an interest that instills in this issue, where both in theoretical as well as pragmatic view derived
In terms.
This type of approaches are inherently intertwined where theoretically it provides a foundation for practical
solutions: the methods, techniques and tools of control. On the other hand, a theory stays as generalization
of solution which stems from management practice.
Lastly, this assessment conducted on the basis of study or journals that has been studied thoroughly by
experts and scholars approaching quantitative research, survey, multiple regression analysis, and test to
identify such innovative method created to be applied into operational management that carries the flow
of an operation to create such product or service quality required by market or client. In a nutshell, this
permits such exploration on the grouping analysis on industry level and much varying degree in an
organization, where critical ideas are explored, studied through, pigmented on the risk taken for such ideas
that will impact the operational management flow in any designated industry or workplace.
Question 1:
What are the advantages of undertaking a strategic group analysis?.
As we can dive deep into answers, introduction is a prior for SGA(strategic group analysis)
where the term derived as a team/group of individuals that creates a strategic management
within an industry that faces environmental forces, same resources and follows similar strategy
in responding environmental forces. Vital parts of strategies used within an industry can vary from
pricing practice, type of resources, level of technology investment and leadership skills, product/
service quality, scope of the product/service. By supporting the introduction above, this strategic
group can be identify where the analyst or the manager capable of understanding better strategic
to be implied that multiple firms are adapting the ideas or strategic practice within the same
industry.
Secondly, the number of groups exist within an industry detects the direct rivals from the same
sector or region than indirect rivals involves. Why such this happens because on how this group
could lead the direction and scope of an organization and also acts as an over lay that achieves
the advantages created within the industry to be competed in the market wise. Taking into
account from the review of a scholar named Michael Porter where he reviews and by theory
where strategic groups can be divided into consideration of certain combination of characteristics
and environmental opportunities and threats that determine according to different strategic group.
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As Michael Porter also claims as an enterprise belongs to the same strategic group will have
more competitor within an industry than those not belonging to the same strategic group will have
lesser competitor. In addition, the attention of competitors within the same strategic group, the
possibility of the migration should be considered. The barriers of migration are one factor that
limit the transfer of the enterprises between the different group within an industry. The barrier of
migration can be defined as if the barrier is low, the entry threat is high and if the barrier is high,
the entry threat is low.
On the other hand, Michael Porter theory on value chain analysis remarks that was put by him in
his book called Competitive Advantages in 1985. The value chain analysis extinguishes that
terms are generally stands on a series of economic activities conducted by enterprises to create
value for customers, shareholders, employees and other interest groups. The difference here
stands on how value chain among different enterprises forms the source of enterprises
competitive advantage.
In past, experts and scholars emphasis on the “diamond model” to study and the competitiveness
in the market, analyze the advantages and disadvantages that could take place in the six
elements of the model, also putting forward countermeasures from the macro and micro
perspectives.
This application of value chain enhances as an new energy that mainly focuses on the deliberated
business model and energy supply model, and few literacy that used to study the competitiveness
of a single enterprise. Thus, this answer for the question which I’m answering adequate on
advantages that applies on undertaking a strategic group analysis.
Based on the characteristics described above, this divides the activity of value chain into three
main parts such as firm level, industry level and global value chains. As mentioned criteria are
shown in Figure 1 below.
Figure 1: Michael Porter model of value chain.
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1.1
Key Elements In Strategic Group Analysis.
At present, breaking down the key matters that can be used an advantages of strategic group
analysis that contribute better results and produce key results for enterprises, customer,
shareholders , employees and other groups as well. It can be distinguish as the strategic key
management that dwells into a process of specifying objectives of an organization, firm , industry
level and then the allocated resources provided can be implemented successfully. Strategic
management also can be considered as being the highest order of managerial activity that the
top management performs and also their appointed executive teams. Normally, it provides the
overall direction of the entire organization and also known to be set of action and decision that
made can be a key result to the formulated and implementation of the approached design to
achieve the objective of the organization with the environment that isn’t constant and keeps on
changing in a manner that being advantageous. It’s extremely critical in the survival of an
organization.
As referring to the Figure 2 below it can be known elements that are needed in strategic group
analysis which are supposed to select the directions in which it will move towards. Here it can be
thrown into three major elements which namely strategic analysis, strategic choices and strategy
implementation.
Figure 2: The major elements in Strategic managemen
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Strategic Analysis as mentioned in Figure 2 are very much concerned with an understanding of an
organization strategic position with allocating resources. It can be define here that with much concerning
the attitude that going on in an environment and how the changes could affect the activities of organization.
Strategic analysis it aims on the factors that can be viewed as that can have impact on the present and
the future performance of the organization. When strategic management is performed in right manner,
thus it likely to be selecting the correct strategy. There are three major factors that contribute and can be
considered during strategic analysis. The first factor is business environment. It is rigid for any organization
exist without interacting by a complex, political, commercial, economic, social cultural and technological
environment.
The environmental changes are at times too complex for certain organization than others. Therefore, when
such issue faced by an organization, the clear understanding are prior to understand the impacts so that
it’ll be easy to formulate a strategic plan. The main importance on this is to understand better on the
environmental effects on the business.
Adding on, the second factor lies on organization resources, which acts as an internal influences. By taking
into account, regarding the strategic capability of the organization, it is necessary to consider to weakness
and its strengths. The weakness and strength can be identified when considering the organization
resource like management, physical plant and its financial structure. Thus, it adheres the forming of an
observation of an internal influences and restriction on strategic choices.
The final factor for strategic analysis will be proceed on the stakeholder differences in the development of
an organization which solely depends on their goal, objectives and expectations. By far it contributes such
assumptions and beliefs of stakeholders that structure the culture of an organization. The resources,
expectations, environment and objectives in the political and cultural framework in the organization to
provide the ground of strategic analysis for the organization. To understand further on this issue, the extent
of strategic position in the organization, it is essential to examine how far the implication and direction of
the current strategy.
1.2
Strategic Choice
Normally strategic analysis creates the base or foundation of the strategic choice. Once strategic
analysis is finalized, its now ready to be adapted as a strategic choice. Strategic choice is normally
defined as the practice for choosing the best of the best possible course of action, its basically
used as
an evaluation of available strategic options. It can be derived into three parts as include as
generation of strategic option, evaluation of the option and selection of the strategy. These three
parts plays an important role where it ensures the selected option is the best.
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The second part is the evaluation of the strategic choice taken in an organization. It can be
examined as in the strategic analysis so that assessing their relative merits. When an organization
decides on any option or choices, it implicates to ask few questions of the choice eligibility. Such
as example, the question asked are the credibility of strength taken in a choice or option which
has been analyzed and built and taking into account the advantages and disadvantages that
overcome the weakness while minimalizing any threat the business, organization, economic
sector, industry and firm level will be facing.
The final part will be the selection of the strategy where it’ll be the process of selection that such
organization choose to pursue. At times, the selected choice Is usually a subject due to
management judgement. Thus, its extremely essential to be understand that, in the selection
process, it can’t be every time viewed as a pure logical , objective act. During this period, the
selected strategy normally strongly influenced by managerial level and values and other groups
with an interest in the organization. Here at one point, it reflects the power structure of an
organization.
However, the strategic choices here are thoroughly expands by the scholars and experts that
been hired within a group to carry out such choices that elaborated in three minor parts that
succumbs on the choice will be made on which creates the advantages and disadvantages
evaluates the options are made to be carried as an operational activity.
1.3
Strategic Implementation
Third final major element of strategic management is a part that is concerned with strategy
translated into action. It’s a stage where the strategy is translated to action and the
implementation of this strategy part requires proper and channelized deployment of the
organization resources, effective change of a management, careful handling of the possible
changes that might happen in the structure of an organization and last but not least the careful
planning. In present, there are several parts that involves in strategy implementation.
The first part lies on the planning and allocation of resources provided. During this its
implemented as involving with resource planning that includes the logistics of implementations.
Following on second part, is the organization decision and structure. While this implementation
takes place, certain changes in organization takes place and should be done. Finally the third
part will be strategic change in the management.
As such strategy being implemented, it requires the strategic change to be managed well.
Considering this, action taken by managerial level is very much vital and required as it is paving
the way the changes in any process taking place to be managed and the mechanism that able to
use. The mechanism here mentioned here can be described as much concerned with redesign
of an organization, changing daily routine and activities , cultural aspects of an organization and
finally the political barriers to change or ample to be implemented in the organization.
In conclusion, this there elements captured of such strategic management that interconnected in
that order for such strategic choice to be chosen, there must be an analysis of options where to
determine the strategy that’s going to be effective and efficient in a longer timeline in such
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organization. Strategic implementation normally depends on strategic choices. This implicates
the strategy that normally done after different strategies have being considered so that a finalized
conclusion can be arrived at the choice where the organization will accomplish the objective
aimed at.
1.4
Strategic Group Mapping
An useful tool for guiding the separation of a strategic group in an industry is firmly known as the
strategic group mapping. The group mapping can be displayed as a two dimensional which helps
to explain the different strategies of the organization. These two dimensional shouldn’t be
interdependent because it may shows in the map inherent correlation. Very importantly,
managerial level personnel should chose those dimensions that lies on a scale of salient yet
relevant to their particular sector and industry.
As laying the brick for the definition of strategic group mapping, its not difficult to create one,
however some simple guidelines can be drawn here on developing them:
Key competitive attributes – As many firms share similar competitive attributes such
likes on pricing practices and product scope in a market. The first step taken here is
developing the strategic group mapping which is to identify key competitive attributes
where logically differentiate the firms in a competitive sets. It’s not always known in
advance of creating the map and its important to be ready to create multiple maps using
different variables.

Create map based upon 2-key variables: Variables selected here and assigned to X and
Y axis respectively. Selecting a logical gradation value for each axis so the differences will
be observable. When the mapping is complete plots from each firm’s location on the map
for the industry to be analyzed. Each firm which plotted use a third variable, such as
revenue to represent the actual plot size of each firm. A type of variable like revenue helps
reader to understand the relative performance of each firm in terms of the third variable.

Identify the strategic group: As all the firms has been plotted through the mapping,
enclosing each group of firms that emerges in a shape where it reflects the positioning on
the strategic group. This represent the assessment whether or not the differences between
each group is meaningful or should new variables be selected from another set of strategic
group can be drawn.
Lastly, stating the guidelines for strategic group mapping is very easy as taking into account what
type and selection of variables to be create the map. The set here will be a key point as such
variable will determine the industry to deploy its strategy to be carried out in action. It can be seen
in the Figure 3 where sample of strategic group mapping is shown.
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Figure 3: SGM to signify the amplified strategy choose by firms.
As according to Michael Porter, moving from one strategic group to another is very difficult
because every strategic group creates its own image and branding in the market place ,here
Porter states few point to be kept in mind:
-
Strategic groups can shift over time in the needs of customer or technological
advancement that evolves over time in the marketplace. Therefore, managerial personnel
should be alert and not assuming that membership in a particular strategic group
permanently stays or the firm fixed into same strategy. By having sufficient resources and
focus, firms can enter and exit any strategic groups over time.
-
Fast forwarding few recent years, more endured trends has been identified and been
defined as a growing number of industries in the hastening pace of consolidation.
Competitors are seeking to merge with rivals to limiting the effects on price wars that
impacts the profitability negatively. The consolidation among the industries can markedly
redefine the stability of the strategic group
-
Creation of strategic group and analyzation distinguish an effective way to develop
comprehensible understanding of how the firms within the industry compete each other.
Each and every strategic group depicts firms on similar type , if there is no identical
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competitive attributes didn’t take place the map helps managerial level personnel to
identify other important differences among competitive positions. The differences here can
be subjected to further analyzing which helps to define more subtle differences.
1.5
Strategic Control
Here by stating another strategic part that formed within a industry can be strategic control
where it overcomes the focuses in duality on questions like:i)
ii)
The strategy being implemented as planned?
The results provided by the strategy are intended?
And to answer this, Strategic control takes roles as a critical evaluation of plans, activities and
results , and thereby providing information for future action. To be put in place, there is a four
type of strategic control: premise control, implementation control, strategic surveillance and
special
alert
control.
Here looking deep into this matter, it evolves that such practice in strategic group conveys a in
depth evaluation of factor mentioned as it how impacts on the industry, company, firm and
enterprise as well.
Premise control- it is established early in the strategic planning process and act as a basis for
formulating strategies. It has been designed in such way to systematically checked and
continuously whether the premises set during the planning and implementation processes are
very valid. Therefore, it involves in checking the environmental conditions. Premises control are
primarily concerned with two types of factor:
(a) Environmental factor such as inflation, interest rates, acts & regulations,
demographic/social changes, inflation
(b) Industry factor such as barriers to entry, substitutes, suppliers and competitors.
All premises at times does not require same amount of control. Therefore, managerial personnel
or executives who exist within the strategic group should select those premises and variables in:(a) are very likely to change whereas variables
(b) would contribute a major impact on the company and its strategy if it did.
Implementation control: it can be distinguished that such strategic type that provides an
additional source of feed forwarding information. Such strategy here designed to assess whether
an overall strategy should be changed in light any unfolding event . The results obtained with the
incremental steps and actions leads to implementation of an overall strategy. In addition, there
are two basis type that leads to implementation control are:1) Monitoring strategic thrusts : Two approaches can be useful that enacts as implementation
control that focuses on monitoring strategic thrusts :
- Firstly, to reaching an agreement earlier in planning process on which thrusts are
critical factors in the success of the strategy carried out into action or that thrusts at
itself.
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-
Secondly, is a method of stop and go where assessments, tests, analyzation linked to
series of meaningful threshold such as time, cost, research and development, success
etc are being associated with particular threshold.
2. Milestone Reviews: it’s a significant points in the development of a program such large
commitments of resources must be made. A milestone review basically involves a full
scale reassessment in the strategy and can be a tool of advisability of continuing or
refocusing the direction within in an industry.
Strategic surveillance: This type of strategic action has been designed to monitor and
surveillance a broad range of event happens internally or externally within an industry which are
likely to threaten the industry. The simplicity of this idea designed here are formed as general
monitoring of multiple information sources which can be encouraged with specific intent by being
the opportunity to uncover important yet unanticipated information. Therefore, “environmental
scanning” can be a similar tone for strategic surveillance however the rationale here is different.
Its usually seen as part of chronological order of planning cycle devoting for generating
information for new plan or strategy. By contrast it designed as establishing strategy on a
continuous basis.
Special Alert control: Once implementation of a strategy takes place, this tool here are needed
thoroughly and can be counted as always as to reconsider the firm’s basis strategy based on a
sudden and unexpected event. (i.e., natural calamity, chemical spill, product defects, hostile
takeovers and etc). This type of control should be conducted throughout the entire strategic
analysis process.
1.6
Operational control:
An up and running control system where it designed to ensure day to day actions are consistent
with established plans and actions carried out through strategy analysis. It focuses on events in
a recent period and here the systems are derived at the requirements of the management that
voices out on how action and plans to be carried out operationally. Moreover, this action here
requires training, one to one teachings, motivation, leadership discipline and determination.
Furthermore, there are few evaluation techniques majoring in operational control such as value
chain analysis, quantitative performance measurement, Benchmarking and key factor rating. By
contrast, each evaluation will be distinguished exponentially of how strategy analysis within an
industry carried with planned strategy by focused key marks that has been explained before and
carried out into day to day basis operational level. In a nutshell, managerial level personnel will
be focused on the rate of productivity can be produced by limitation of targets or milestones fixed
within an industry.
Evaluation techniques for Operational Control:
-
Value chain analysis: Firms and industry employ this strategy to look out and evaluate
competitive potential of resources and capabilities. By taking time of study the skill
related to those associated with primary and support activities, firms are able to
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comprehend their cost structure, and identify their activities thorough where value of
such can be created.
-
Quantitative performance measurement: this evaluation consists of reports
throughout the performance achieved within the firms and industry such as sales
growth, profit growth, economic value, and ration analysis). This evaluation begs on
manager review at regular intervals. For an example, if sales growth is a target fixed
as a milestone, the firms by all means should prepare the gathering and exporting sales
data. In addition, certain quality aspects of experiment task will be carried out such as
survey, opinions, judgement and intuition on checking up the firms or industry
performance whether on the right track.
-
Benchmarking: a layout process on learning methodology of how other firms
performs hogh quality actions exceptionally. Some benchmark are simple and
straightforward. For example, KFC s moving in the right direction with things like
grilled chicken and white meat filets as well as its value menu. More multi-branding
will help this chain to diversify away from chicken only now that McDonald's has
trained the public to think of quick-service restaurants in terms of multiple protein
options. In conclusion, while this clear leader in the chicken segment has a lot of work
ahead of itself, it is on the right path.
-
Key Factor Rating: based on an examination closely of key factors involved or
affecting performance such as (marketing, operations, financial and human resource
capabilities) and assessing overall organizational capability based on collected
information. Hofer and Schendel have developed this technique to make a
comparative analysis of a firm’s own resources deployment position and focus of
efforts with those of competitors. First the technique requires the preparation of a
matrix of functional areas with common features. For e.g. focus of financial outlay,
physical resources, organizational systems and technological capability.
1.7
Characteristics of an effective strategic control system
As looking further into the strategic control system it tend to have few qualities in common areas
within an industry. This characteristics can be justified:
-
Suitable: must be aligned with the needs of an organization and within an industry.
Must conform to the nature and needs of the job and the area to be controlled efficiently.
-
Simple: control system in this characteristics should be understandable and easy to
operate. A complicated operational method could cause unnecessary mistakes without
advanced skills, confusion among employees. When the control system is adapted
perfectly, employees can interpret in the right way and ensure its implantation.
-
Selective: focusing solely on attention on key, strategic and important factors which
are critical to performance. Insignificant deviations should be ignored at all cost.
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-
Flexible: Competitive, technological advances and other environmental factors force
organization changes the course of the direction to be aligned within its resources. As
a result, it should be flexibly controlled. To support further, its imposes to adjust or
adverse changes that could open to new opportunity.
-
Forward looking: must provide timely information on deviation as its operates upon
the strategy chosen. Any departure from this standard should be captured fast due to
implicating the steps taken into action from damaging before things goes out of hand.
-
Reasonable: controls should be parting effectively in both parties or ways. It should be
attainable by all means, thus it should be balanced among employees as the bar if set
to high it could be difficult for employees and demote them as well, also when the bar
set too low, it doesn’t pose challenges for the employee.
-
Objective: it is effective when control system has clear vision on how the organizational
within an industry steer further. When the standards are stated and set in clear, its easy
for evaluating the performance. Vague standards are impossible as it could lead to not
achieving milestone in a right way.
-
Acceptable: Controls in this system wont work unless people want them to. It should
be acceptable to chosen whom to apply and when to apply. This works perfectly when
the control system is quantified, objectified, attainable and understood by one and all.
1.8
Strategic thinking
Defining this term is quite difficult where the absence of a consensus of what strategic
management is.
The distinguished term for strategic management is that an approach made to management
which fusing strategic planning (analyzed plan development through environment, competition
and strategy choices)
and also the firm within an industry system of operational making decision. This process has five
dimensions and will be listed out of this strategic thinking takes places into action:-
i)
First, strategic management requires wide understanding of strategic planning
deeply with strategically centered organized situation.
ii)
Secondly, it requires widen discussion, analyzation and negotiated goal
objectives which culled out which are not suitable for the organization and within
an industry.
iii)
Thirdly, Strategic management relies solely on sharing ability to think
strategically by managerial personnel throughout the firm
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iv)
Fourthly, A performance variance evaluation system is very necessary as it
focuses top level evaluators attention on critically positive or negative strategic
factors.
v)
Finally, it requires supportive strategically motivational systemic and value
oriented among top level personnel.
Strategic thinking is what generates creative, environmentally relevant ideas and concepts of how
to turn them into systematically managed action plans. Here, the requirements of strategic
thinking requires factual and logical input data because its competitively dangers the base
strategy formulation on erroneous information provided. Therefore, long held assumptions should
be identified and analyzed if the assumptions could still serve as an strategy or to be neglected
if its didn’t serve the purpose at all. Moreover, if the managerial personnel attempts to think
strategically, it should be implemented as soon as possible and committed to conservation of
organizational resource rather than expecting a good idea that precipitate a funds, people and
support. In a nutshell, strategic thinking must be done without creating a pattern which
competitors can identify and anticipate.
Question 2: What criteria can be used for grouping firms within an industry. Give an
example to support this statement?.
Of what has been explained in Question 1, we know what does stands for strategic group analysis
and how it branches off systematically. Hereby, moving on the next question it adheres the criteria
that can be used for grouping firms within an industry. Therefore, few criteria has been researched
thoroughly and it completes my answer for this question asked. However, there can be numerous
criteria over which firms can be measured:
 Extent of product (or service) diversity.
 Extent of geographic coverage.
 Number of market segments served.
 Distribution channels used.
 Extent of branding.
 Marketing effort.
 Degree of vertical integration.
 Product (or service) quality
From the criteria given and stated as it is, it will be from now on breaking down the each criteria
of how it works as an strategic methodology that works on a grouping firm within an industry.
Much obliged each criteria linked as a chain that contributes its own factor that substantially
creates the path for the objective or goal achieved by the grouping firms within the fixed period
2.0
Extent of product (or service) diversity.
Product diversity is often the marking technique that many companies use to make more
money out of certain products that can be adapted and remarketing. This may involve companies
adapting and replacing a product so that they can enter it into a different market to be make more
profitable and to be expanded more into market.
This will often be done after a company has done sufficient market research and planning,
otherwise the whole re branding could fail miserably and the company would lose even more
money. Thus, a figure would explain more how the extent of product or service diversity are made
of as attached figure:
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Figure 2.0 shows the type of diversification on any products or services attained in market.
As in order, why such grouping firms made this diversification as an criteria because to achieve
higher profitability. Moreover, there are another terms can be justified for this criteria, and known
as Business-level product diversification – Expanding into a new segment of an industry that
the company is already operating in. To converse more, few factors has been listed in for this
criteria understand in a proper way:



Diversification mitigates risks in the event of an industry downturn.
Diversification allows for more variety and options for products and services. If
done correctly, diversification provides a tremendous boost to brand image and
company profitability.
Diversification can be used as a defense. By diversifying products or services, a
company can protect itself from competing companies.
In the case of a cash cow in a slow-growing market, diversification allows the
company to make use of surplus cash flows.
There are few notables diversification that helps supports my answer from a well known sector.
Such sectors are:General Electric
General Electric commonly comes into discussions when talking about successful diversification
stories. GE began as an 1892 merger between two electric companies and now operates in
several segments: Aviation, energy connections, healthcare, lighting, oil and gas, power,
renewable energy, transportation, and more.
Walt Disney
Walt Disney Company successfully diversified from its core animation business to theme parks,
cruise lines, resorts, TV broadcasting, live entertainment, and more.
2.1
Extent of geographic coverage.
There is no easier route into personalized marketing than market segmentation. By breaking
down your customer base into groups, you can target your resources and ensure your audience
receives the messaging that is most relevant to them. Moreover, its a common strategy when you
serve customers in a particular area, or when your broad target audience has different
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preferences based on where they are located. It involves grouping potential customers by
country, state, region, city or even neighborhood. This marketing approach is common for small
businesses that serve a wide demographic customer base in a local or regional territory.
From pinpointing such reason, such segmentation is taken seriously to uncover the potential
ideas that sorted out to bring out the profitability in highly order in taking account of such
segmentation that helps the product or service to be marketed in a longer run. Such example
stated here with given example with ample explanation as well:-
i)
Selling Seasonal Products
Seasonal products, such as winter gear, swimwear and beach attire, often are marketed to
geographic segments. Winter gear is promoted for several months leading up to late fall in the
Midwest and northern regions of the United States where snowy weather is common. Beach attire
is often targeted year-round in summer regional area. In areas with distinct winter, spring, fall and
summer seasons, swimwear normally is promoted for a few months, including late spring and the
summer swimming season.
ii)
Size of Community is Key
The size of a community also plays a part in geographic segmentation. One company may
market lawn mowers to rural communities where most residents have a yard but target city
dwellers with weed trimmers or leaf blowers for manicuring lawns or sidewalks. Population
density can also impact decisions regarding transportation with rural customers requiring
more personal vehicles than urban citizens.
iii)
Local Retailer for Local People
Local discount or departmental store retails that selling a variety of product categories
appealing to different demographics often use local geographic segmentation in their
marketing efforts. Small town businesses, for instance, often flood the local market with radio
and newspaper ads that have broad local reach and affordable rates.
iv)
Geography and Food Preference
Certain foods have very specific geographic interest in the regional nationwide, for instance,
its common in the South and Southeast regions. Seafood, while enjoyed elsewhere, is
marketed more heavily along the east and west coasts, where supply is fresh all year.
McDonald's offers seasonal seafood meals, including lobster and crab, in selected markets
like New England. This is an example of regional segmentation based on geographic
consumer preferences and product availability. Small chains may find similar opportunities to
achieve supply and demand advantages in select geographic markets.
v)
Breaking Into New Territory
In some situations, grouping firms within an industry uses geographic segmentation
selectively to target new local territories or regions. Starbucks often distributes coupons for
coffee drinks in certain regions when it opens several new stores. In this case, the company
has a promotional objective of customer growth in a new market, but it may emphasizes other
goals, such as increased market share or higher profitability, in more established markets.
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2.2
Number of market segments served.
In Strategic Group Analysis, it’s the process of dividing a brand consumer or business market,
normally consisting of existing and potential customers which divides into sub-group of
consumers known as segments based on characteristics. The overall aim for this example are
entitled for high yield segments, which are likely to be the most profitable or that have growth
potential – so that these can be selected for special attention (target markets).
Market segmentation assumes that different market segments require different marketing
programs – that is, different offers, prices, promotion, distribution, or some combination of
marketing variables. Market segmentation is not only designed to identify the most profitable
segments, but also to develop profiles of key segments in order to better understand their needs
and purchase motivations. Insights from segmentation analysis are subsequently used to support
marketing strategy development and planning.
Such approach can be extinguished as S-T-P approach which can be determined as:Segmentation → Targeting → Positioning
Figure 2.1 shows the S-T-P approach used by firms in marketing level
This approach is made to know providing the framework for marketing planning objectives.
Furthermore, when the market is segmented, one or more segments are selected for targeting,
and products or services are positioned in a way that resonates with the selected target market
or markets. Also putting into another definition, s the process of dividing up mass markets into
groups with similar needs and wants. As the STP approaches here, it can be termed down as the
process of segmenting the market is deceptively simple. Seven basic steps describe the entire
process including segmentation, targeting, and positioning. In practice, however, the task can be
very laborious since it involves poring over voluminous data, and requires a great deal of skill in
analysis, interpretation, and some judgment. Although a great deal of analysis needs to be
undertaken, and many decisions need to be made, marketers tend to use.
2.3
Distribution channels used.
Distribution is the process of making a product or service available for the consumer or business
user who needs it. This can be done directly by the producer or service provider or using indirect
channels with distributors or intermediaries. The other three elements of the marketing mix are
product, pricing, and promotion.
Decisions about distribution need to be taken in line with a company's overall strategic vision and
mission. Developing a coherent distribution plan is a central component of strategic planning. At
the strategic level, there are three broad approaches to distribution, namely mass, selective and
exclusive distribution. The number and type of intermediaries selected largely depend on the
strategic approach. The overall distribution channel should add value to the consumer.
Moreover, it is fundamentally concerned with ensuring the products reach target customers in the
most direct and cost-efficient manner. In the case of services, distribution is principally concerned
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with access. Although distribution, as a concept, is relatively simple, in practice distribution
management may involve a diverse range of activities and disciplines including detailed logistics,
transportation, warehousing, storage, inventory management as well as channel management
including selection of channel members and rewarding distributors.
As three broad approaches that mentioned above will be termed very detailed in a manner to
understand the criteria very well as we seek:a) Mass distribution (also known as an intensive distribution): When products are
destined for a mass market, the marketer will seek out intermediaries options that appeal
to a broad market base. For example, snack foods and drinks are sold via a wide variety
of outlets including supermarkets, convenience stores, vending machines, cafeterias and
others. The choice of distribution outlet is skewed towards those that can deliver mass
markets in a cost efficient manner.
b) Selective distribution: A manufacturer may choose to restrict the number of outlets
handling a product. For example, a manufacturer of premium electrical goods may choose
to deal with department stores and independent outlets that can provide added value
service level required to support the product.
c) Exclusive distribution: In an exclusive distribution approach, a manufacturer chooses to
deal with one intermediary or another type of intermediary. The advantage of an exclusive
approach is that the manufacturer retains greater control over the distribution process. In
exclusive arrangements, the distributor is expected to work closely with the manufacturer
and add value to the product through service level, after sales care or client support
services. Another definition of exclusive arrangement is an agreement between a supplier
and a retailer granting the retailer exclusive rights within a specific regional area to carry
the supplier's product.
As the discussion on this criteria grows, here it can be spot softly that push and pull strategy is
amended here, as it grows substantially whether In a push strategy, the marketer uses intensive
advertising and incentives aimed at distributors, especially retailers and wholesalers, with the
expectation that they will stock the product or brand, and that consumers will purchase it when
they see it in stores. In contrast, in a pull strategy, the marketer promotes the product directly to
consumers hoping that they will pressure retailers to stock the product or brand, thereby pulling
it through the distribution channel.
Typical distribution channel involved in this criteria can be categorized as:
Wholesaler: A merchant intermediary who sells chiefly to retailers, other merchants, or industrial,
institutional, and commercial users mainly for resale or business use. The transactions are B2B
(Business to Business). Wholesalers typically sell in large scale of quantities
Retailer: A merchant intermediary who sells direct to the public. There are many different types
of retail outlet - from hypermarkets and supermarkets to small, independent stores. The
transactions in this case are B2C (Business to Customer).
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Agent: An intermediary who is authorized to act for a principal in order to facilitate exchange.
Unlike merchant wholesalers and retailers, agents do not take title to goods, but simply put buyers
and sellers together. Agents are typically paid via commissions by the principal.
Jobber: A special type of wholesaler, typically one who operates on a small scale and sells only
to retailers or institutions.
2.4
Extent of branding.
Brand extension is a marketing strategy in which a firm marketing a product with a well-developed
image uses the same brand name in a different product category. The new product is called a
spin-off.
Organizations use this strategy to increase and leverage brand equity defining the net worth and
long-term sustainability just from the renowned name. It increases awareness of the brand name
and increases profitability from offerings in more than one product launching a new product is not
only time-consuming but also needs a big budget to create brand awareness and to promote a
product's benefits. Brand extension is one of the new product development strategies which can
reduce financial risk by using the parent brand name to enhance consumers' perception due to
the core brand equity.
While there can be significant benefits in brand extension strategies, there can also be significant
risks, resulting severely damaged brand image. Poor choices for brand extension may deteriorate
the core brand and damage the brand equity. Most focuses on the consumer evaluation and
positive impact on parent brand. In practical cases, the failures of brand extension are at higher
rate than the successes.
A brand's "extendibility" depends on how strong consumer's associations are to the brand's
values and goals. Product extensions are versions of the same parent product that serve a
segment of the target market and increase the variety of an offering. This tactic is undertaken due
to the brand loyalty and brand awareness associated with an existing product. Consumers are
more likely to buy a new product that has a reputable brand name on it than buy a similar product
from a competitor without a reputable brand name. Consumers receive a product from a brand
they trust, and the company offering the product can increase its product portfolio and potentially
gain a larger share in the market in which it competes.
Brand extension research mainly focuses on consumer evaluation of extension and attitude
toward the parent brand and referring to Aaker and Keller brand extension model. In their 1990
model, Aaker and Keller provide a sufficient depth to examine consumer behavior and a
conceptual framework. The authors use three dimensions to measure the fit of extension. First,
the "Complement" refers to consumers taking two product classes (extension and parent brand
product) as complementary in satisfying their specific needs. Secondly, the "Substitute" indicates
two products have the same user situation and satisfy the same needs, which means the product
classes are very similar and that the products can act to replace each other. Lastly, the "Transfer"
describes the relationship between extension product and manufacturer which "reflects the
perceived ability of any firm operating in the first product class to make a product in the second
class". The first two measures focus on the consumer's demand and the last one focuses on the
firm's perceived ability.
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Figure 2.2 Aaker and Keller model on brand extension.
From the line extension to brand extension, however, there are many different types of extension
such as "brand alliance", co-branding or "brand franchise extension. Another form of brand
extension is a licensed brand extension. In this scenario, the brand-owner works with a partner
(sometimes a competitor), who takes on the responsibility of manufacturing and sales of the new
products, paying a royalty every time a product is sold.
Brand extension can also be done through marketing strategies such as guerrilla marketing,
where brands can promote their goods or services through unconventional means such as
emotional connections to the brand by tackling social problems/dilemmas. These emotional
connections are generally done through social experiments where brands express their concern
and offer small solutions thereby making the brand standout.
In a nutshell, “categorization theory” is used to distinguish further of a brand extension and its
effect through its theory named fundamentally. In a spite when consumers are faced with
thousands of products to choose amongst, they are not only initially confused, but try to
categorize by brand association or image given their knowledge and previous experience. A
consumer can judge or evaluate the extension product with his or her category memory.
Consumers categorize new information into specific brand or product class label and store it. This
process is not only related to consumer's experience and knowledge, but also involvement and
choice of brand. If the brand association is highly related to extension, consumer can perceive
the fit among brand extension
2.5
Marketing effort.
Merely known of reengagement marketing, despite for its popular term called downstream
marketing. Its undertaken by bring a user back to a product that has ostensibly been abandoned.
While it is not always effective, reengagement marketing is popular because it is cheap. When a
single user has apparently churned, the product team must weigh the cost of attempting to
reengage that user against the cost of acquiring a new user.
With web-based products, reengagement campaigns are almost always delivered by email, as it
is an inexpensive medium that is capable of converting with little friction by using embedded links.
Emails are also incredibly easy to track, test, and iterate upon; the content of emails can be
constructed in any number of combinations over which send rates, open rates, and click rates
are readily and easily quantifiable.
For a reengagement campaign, an email will typically focus on a specific call to action involving
a discount or an invitation to explore an aspect of the service that the user hasn’t yet accessed.
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Templates addressing specific situations are constructed according to the relevant situational
dynamics, and the analytics system automates the delivery of emails to appropriate recipients.
The transparency of email campaign conversion allows for continual optimization but may also
create a sense of progress that isn’t wholly warranted; email campaigns are notoriously
ineffective, generally producing conversion rates of far less than 10 percent. The return on
invested time should be tracked carefully when engaging in email reengagement campaigns.
On mobile platforms, a more powerful alternative to email reengagement campaigns is called
push notification. A push notification is a system message delivered (“pushed”) by an application.
Such application can be famously known as Lazada, Shopee, Groupon and etc. Push
notifications are received by user opt-in (at first launch, most applications request to send push
notifications); if a user has selected to receive them, the user converts extraordinarily well.
Determining when reengagement should be pursued is mostly a function of the definition of churn
for that product. Users who have churned out of a product are not only largely resistant to
reengagement overtures, they’re also likely to consider such attempts spam, which incites
negative feelings for the product and potentially damages its reputation.
2.6
Degree of vertical integration.
The criteria here known as the implementation that refers to an arrangement in which the supply
chain of a company is integrated and owned by that company. Usually each member of the supply
chain produces a different product or service, and the products combine to satisfy a common
need. It is contrasted with horizontal integration, wherein a company produces several items that
are related to one another.
Vertical integration and expansion is desired because it secures supplies needed by the firm to
produce its product and the market needed to sell the product. Vertical integration and expansion
can become undesirable when its actions become anti-competitive and impede free competition
in an open marketplace. It can be viewed as the model shown as the horizontal integration where
it contrasts with vertical integration.
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Figure 2.3 shows horizontal integration versus vertical integration in a automobile industry
Vertical integration is often associated with vertical expansion which is the growth of a business
enterprise through the acquisition of companies that produce the intermediate goods needed by
the business or help market and distribute its product. Such expansion is desired because it
secures the supplies needed by the firm to produce its product.
The result is a more efficient business with lower costs and more profits. On the undesirable side,
when vertical expansion leads toward monopolistic control of a product or service then regular
action that may need to rectify anti-competitive behavior.
Some of the integration benefits walks on which may vary according to state of technology in the
industries involved, roughly corresponding to the stages of the industry lifecycle. Such benefits
are:-
i)
ii)
iii)
iv)
v)
Lower transaction costs.
Synchronization of supply and demand along the chain of products.
Lower uncertainty and higher investment.
Ability to monopolize market throughout the chain by market foreclosure.
Strategic independence.
To support my answer above, it can be viewed economic theory where it can be relates to the
manner of vertical integration into literature on incomplete contracts that was developed by Oliver
Hart and his coauthors. For an example, considering a seller of an intermediate product that is
used by a buyer to produce a final product. The intermediate product can only be produced with
the help of specific physical assets (e.g., machines, buildings). As the buyer own the assets
(vertical integration) or should the seller own the assets (non-integration). Thus, suppose that
today the parties have to make relationship-specific investments and complete contracts cannot
be written, the two parties will negotiate tomorrow about how to divide the returns of the
investments. Since the owner is in a better bargaining position, he will have stronger incentives
to invest. Hence, whether vertical integration is desirable or not depends on whose investments
are more important either.
2.7
Product (or service) quality
Products and Services that meet or exceed customer expectations result in customer satisfaction.
Quality is the expected product/service being realized. Before a customer makes a purchase
(exchanges money for a product/service) he or she does a mental calculation. Products/services
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that are produced and manufactured to specifications that are appropriate to the price (money to
be given in exchange by the customer) of the product/service is an operational or manufacturing
view of quality.
Here, the customer receives the value that he or she expects since operations has built quality
standards into the product. An operations view of quality is a common view of the concept of
quality. However, quality is a function of how the customer views the product/service that he or
she receives. The customer view always compares what they expect with what they actually
receive regardless of how operations conceives quality. How do customers arrive at their
expectations?
Marketing, especially sales, has a major effect on how the customer views quality. As mentioned
earlier, customer satisfaction is based on receiving the actual product/service as expected. When
marketing and sales enthusiastically promises a product/service that manufacturing or operations
cannot deliver, then expectations are not met, the customer is dissatisfied, and quality (in the
customers’ eyes) is not realized.
Quality is not an absolute to be determined by operations or manufacturing. Variables that affect
quality are:
- (a) customer expectations (obtained from marketing and sales, as well as word
of mouth and previous experience)
- (b) actual product/service received (how a service is performed by operational
people and actual tangibles received (cold food for example)
The following model explains on how the product or service provided by a firm within an industry.
Figure 2.4 explains lot of the product or service reaches its consumer availability.
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Figure 2.4 The Perceived Service Quality Model.
This model explains from year 1982, Christian Gronroos introduced The Perceived Service
Quality Model (see Figure 2.4). According to him, service quality studies and subsequent model
development has from the beginning based on what customers perceive as quality. In other
words, service quality is an outgrowth of the marketing concept that focus on the customer. What
is important is what is perceived as quality by the customer and not what designers or operations
people feel is good or bad quality.
The quality of a service, as perceived by the customer, is the result of a comparison between the
expectations of the customer and his or her real-life experiences. If the “experienced quality”
exceeds “expected quality,” the “total perceived quality” is positive. If expectations are not met by
performance or the actual experience, the perceived quality is low. There are multiple customers
in an internship program: students, internship suppliers, and sponsoring entities, for example.
Final success is dependent on initial expectations compared to actual performance.
Conclusion
Finally this assignment has come to an end by answering both question in a given timeline
where thorough study and research has taken place to identify the real meaning from the
question given. To identify strategic group analysis within an industry is not a small gap that can
be filled with any answers,
It requires such commitment from students to understand 100 percent on the researched
answer conducted by experts and scholars.
Thus it can be defining the way each point or advantages taken down as an answer in question
given to notify as how such systematic control works as an advantage in Strategic Group
Analysis. It can be deferred the answer given isn’t enough at all but with correct methodology
and studies, its advised that question that has been asked has been answered carefully.
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Furthermore, moving on the next question it does breakdown on how such strategic criteria can
be placed within the grouping firm and listing it entirely of how system works within the grouping
firm. Hereby, such models and figures has been attached further as an image to show of how
the system works in a grouping firm.
Moreover, I can come to a decision that question given does really explore the innovative
development where question asked has been explained each and every strategy that could take
place in an organization or grouping firms within an industry. Its because unlocking a key point
of every innovation that born creatively as an idea and applied to make the goals or milestone
achieved in an organization. Adding on, the criteria asked here is to identify how such product
or service applied strategically to enhance profit for such organization in a longer period.
In a nutshell, such assignment given here is to explore student innovate such answer that could
be a reference in future as a personnel that creates such strategic method to enhance the
grouping within an industry to achieve its milestone set for a longer period. To support this, such
innovation could lead the organization achieved its aim and goals within a period calculated and
move to the top level of high profitability in economic sector chosen.
Bibliography & References
https://www.jdsupra.com/legalnews/doj-and-ftc-propose-highly-anticipated60222/
1.
Hart, Oliver; Moore, John (1990). "Property Rights and the
Nature of the Firm". Journal of Political Economy. 98 (6):
1119–1158.
2.
Grossman, Sanford J.; Hart, Oliver D. (1986). "The Costs and
Benefits of Ownership: A Theory of Vertical and Lateral
Integration". Journal of Political Economy. 94 (4): 691–719.
3.
Paul Stokstad, Enforcing Environmental Law in an Unequal
Market: The Case of Concentrated Animal Feeding Operations, 15
Mo. Envtl. L. & Pol’y Rev. 229, 234-36 (Spring 2008)
4.
https://everythingwhat.com/what-criteria-can-be-used-forgrouping-firms-within-an-industry
5.
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https://www.mbaknol.com/strategic-management/strategiccontrol-and-operational-control/
6 "Idea Vertical Integration". 30 March 2009. Retrieved 12
April 2015.
7. Marketing tactics: Guerilla marketing, marketing
strategy, evangelism marketing, viral marketing, word of
mouth marketing
8. Zhang, S. and Sood, S. (2002), ""Deep" and "surface" cues:
Brand extension evaluations by children and adults", Journal
of Consumer Research, 29(1), pp. 129–41.
9. https://www.accountingtools.com/articles/productdiversification.html
10. https://brandongaille.com/10-strategic-group-analysisadvantages-and-disadvantages/
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