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Analysis On Superstar Firms And Their Strategies Case Solution & Answer

Analysis On Superstar Firms And Their Strategies Case Solution 

1. Introduction

The growth of the international business has created a formative change in the business. The rise of international trade has enabled the firms to become more prominent in the industry and strive more to achieve competitive advantage. There are giants in the world who are running their companies efficiently and effectively. The most important point for them is to become cost-efficient, which minimizes their cost and maximizes their profits. They are highly lucrative and they generate high revenue through their business operations. But,many firms are well-known in their domestic market but are not familiar in the international markets. The strategies that they have, make them sustainable only in the domestic market. (Panibratov, 2017)

Apart from that, if we consider the giants or mega-star companies, who are highly expended on a global scale and are the topmost priority of the consumers;they have created their positioning and have made their market value so high that there is no chance of them to have severe decline. This study comprises of some of the mega-firms and their strategies, which they apply to sustain in the international market.

1.1 Superstar Firms

The model of highly efficient firms came after the industrial revolution. The establishment of industries and the usage of heavy machinery in the firms, have created a scenario to make high sales and to engage the customers globally. The contribution of all businesses in the international market, has created a concept of blockbuster firms. The main reason behind it is that the industries are more focused on innovation and product expansion and their concentration is diverted on sales especially in the US, where the firms are trying to get more expanded.

 1.2 Model of Superstar Firms

The models of highly efficient firms comprise of some real aspects, such as:

  • The firms concentrate on innovation, which directs them to increase their sales and have the economies of sales.
  • The concentration of having more capital there is also the fluctuation in the labor cost.
  • The focus on innovation lead the firms to have the market expansions.
  • As the markup is high, the growth becomes higher.

1.3 Characteristics of Superstar firms

Management and Organizational Practices: The management and the organizational practices make the firm superior in the industry. The integrated and systematic structure makes them creative. (SHIVAKUMAR, 2017)For instance:Apple has less than 20% of its share in the market, but it hasa competitive advantage and a high market value. Social media apps like Facebook and search engine Google, have an average amount of market share, but they are high revenue-generating firms in the digital market.

1.3.2 Frugal Labor Usage:The frugal usage of labor is the most important practice that giant companies have. They hire labor on the frugal wages in order to decrease their cost incurrences. Google, Facebook, Amazon and other digital apps have market capitalization in trillions, but they spend billion on labor. They have the strategy of frugal labor, which gets them labor services in cheap amount.

Highly successful firms are categorized according to their sector:

2. Technological Requirements for Superstar firms

To become a highly successful firm; an organization needs to have sufficient capabilities and technical requirements, which must be adequate and must provide aid in the technological aspect. A successful firm must have modern techniques and operations, which create new and innovative ideas. There are different portions added in the technological requirements, such as: organizational structure, its production site, logistics and sales. (Sandra Martins Lohn Vargas, 2017). The competitive environment requires an integrated system that should have high technological specifications. An organization must focus on its operations in order to become highly successful  in the corporate world. As more advancement is done in the organization; a firm becomes more healthier in terms of technology and innovation.

The above diagram describes the technological use and integration in the organization, which directly leads it towards having innovation and rapid growth in the market. The organizational practices must be according to the current conditions.

2.1 Technological conditions

Innovation is also a very crucial tool in ensuring the market leadership. When a firm fails to adopt new technologies; it also fails in remaining at the forefront of the market. Therefore Innovation must be a continuous process that keeps the firm ahead of its competitors. A company that discovers a new technology that is superior and cheaper than the existing ones is the one that achieves market leadership.

Some technological factors are necessary for the succesful firms which are listed below:

  • The current technology which has the 3D features.
  • System configuration must be updated.
  • Equipment’s efficiency.
  • Internet speed.
  • Artificial intelligence.

2.2 Corporate Growth Strategies

The successful firms have implemented corporate growth strategies, which helps them to expand their business and aid in continuous growth. The market of any firm is expanded when it acts according to the current condition and forecasts the public’s needs. Growing a small business into a big firm is not an easy task and appropriate strategies and mechanisms must be made to turn a small business into a larger successful firm. ANSOF Matrix is used to explain the growth strategies for the firm.

2.3 ANSOF Matrix

2.3.1 Market Penetration

This implies growing your market and maximizing the number of customers. The big firms apply market penetration strategies to increase their market share. The companies lower their products’ prices and penetrate it in the market. Here, the firms compete with their rivals by decreasing their price and by increasing their market shares. The best example we can take of Nike, which has increased its outlets in the US and has expanded its business. Market penetration strategy helps you in engaging a larger number of consumers.

2.3.2 Market Expansion

Market expansion theory defines the expansion in the market by targeting a new audience and place. This strategy made the giant firms increase their market by entering a new place with the same product. The companies first analyze the demand of the customers of that particular place and then they introduce their products there. KFC expanded its market by the market expansion strategy. It has outlets in almost every country and city, which makes it a highly successful firm in the international market………………………….

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