AbstractThe protectionist barriers are increasingly crumbling throughout the universe as companies rush to exploit new opportunities for survival and remain competitive in the market. In this paper, we have discussed various issues concerning global business strategy. We utilized different case studies, including BP Company and McDonald’s. It is evident that effective organizations are aware of the factors that impact on their operations. Stakeholder relationships are very vital in ensuring that the business runs smoothly. Industries or companies need to use scenario planning, Porter`s five forces analysis, and other strategic tools to determine the driving forces and forecast the future uncertainties in order to remain competitive. Additionally, value chain analysis helps managers to uncover the main activities, supportive processes and other value-adding processes needed for an effective business model. Leaders should be honest and open to stakeholder regarding what is happening and how effective leadership is likely to impact them. Also, the company should be dedicated and committed towards the interest of all of their stakeholders.
Keywords: stakeholders, global competition, policy
Question 1.2: Stakeholder Relationship
It is evident from the past cases at BP Company that they do not have effective stakeholder relationships. They have not put into place safety standards for the workforce, and they do not protect the environment. It is time that BP re-examines who are their stakeholders and what are their interests. The potential stakeholders include the community, workers, the consumers of oil, suppliers, investors, competitors, shareholders, Unions the government regulators and policy makers (Freeman, 2010). By examining these issues, they can contact their stakeholders in order to understand how their various interests can be best met. For instance, for the workers, they need a good working environment whereby safety is ensured, and they receive allowances for risky work. The society and community like the Gulf communities need the organization to give back to the community and protect the environment from any oil accidents. The organization needs to prioritize stakeholders and develop a culture that ensures they engage with the stakeholders frequently (Freeman, 2010).
Question 2.4: Scenario Planning
Scenario planning entails a strategic planning technique that a company or industry can employ to come up with long-term plans (Chermack, 2004). One of the highly competitive industry includes the information and telecommunication industry that can benefit from scenario planning. The telecommunication market is changing rapidly with the decline of the network equipment. There is a shift from the conventional large-scale hardware-based systems to service and software-driven models of business. Scenario planning can help in studying the current telecommunication industry, including the driving forces like software and service-driven system. It aids in understanding the industry`s uncertainties as well as their effect on the future of the sector (Chermack, 2004). Scenario planning can aid the companies to avoid misleading assumptions in the telecommunication industry. The key uncertainties are identified and added to the resulting scenarios. The key trends, as well as the key uncertainties, are presented by a technique that involves actors and roles so that the value systems for every scenario is illustrated (Chermack, 2004). Scenario planning can be used in different industries ranging from manufacturing, agriculture, food processing and automotive in determining how the future of these sectors will be.
Question 3.2: Porter`s Five Forces
The five forces of Porters include buyer`s power, the power of the supplier, competitive rivalry, the threat of substitution and the threat of new entry (Porter, 2008). One of the industries where competitors are having a financial performance challenge includes the telecommunication industry. The five forces affect the profitability of a telecommunication company in different ways. The five forces can be classified in vertical forces (power of the consumers and bargaining power of the consumers) and horizontal forces (threat of new entrants, the threat of substitution and competition rivalry) (Porter, 2008). Competitive rivalry includes the extent of rivalry between the firms that exist in the industry or market. When their competition is high because of many companies, they may be forced to lower their prices and share the profits. Also, the consumers will more freely from one company to another (Porter, 2008). In contrast, the absence of rivalry means that companies can set their prices high to increase their profits since there is not pressure from other competitors. When there are no barriers to entry and the industry is considerably attractive, a threat of new entrants exists (Porter, 2008). New entrants increase the competition in the market and will result to decline of profits as well as sales from every company.
According to Porter`s framework, the substitutes include services or products that can be used to satisfy the same needs. The more substitutes exist in industry; the more competitive the industry is hence lower potentiality of profitability (Porter, 2008). Buyers have significant bargaining power when they are important to the organization. Strong buyers exert significant pressure on the sellers forcing them to lower prices, or they switch to another seller. Thus, low profitability. Finally, the bargaining power of the suppliers includes the extent to which they dictate terms, determine the availability of raw materials and set prices. Powerful suppliers can increase the costs of their suppliers without impacting on their sales (Porter, 2008). Thus, the cost is passed to the sellers (companies) that might lead to a reduction of profits if they do not pass the cost to the buyers by increasing selling prices.
Question 4.2-a: Value Chain analysis of McDonald’s
Value chain analysis includes the activities of a given organization that ensure they deliver value to the consumers. McDonald’s is one of the world`s biggest chain of fast food restaurants. The primary activities include inbound and outbound logistics, services, operations, marketing and sales (Dey, 2016). Concerning inbound logistics, the company buys raw materials like vegetable from fixed suppliers only. McDonald practices backward vertical integration by replacing their suppliers in order to minimize costs as well as ensure high-quality products. For operations, the restaurant utilizes several types of equipment including large grills, counters, soda fountain, fryers and dressing station. This streamlines their operations (Ireland et al., 2008). The organization employs a mass-production process that necessities that every restaurant has its distribution network that carries food to the restaurants.
The outbound logistics include a drive-thru, sit-down, and counter service. The sit-down restaurant is the traditional process of dining out whereby waiters take orders, and the food is delivered. McDonald`s counter-service involves self-service (Dey, 2016). The marketing and sales activities utilize media and print advertisement to communicate and reach their clients. McDonald’s spends a significant budget on marketing their products. Regarding their services, McDonald’s ensures the high-speed provision of customer services which is a major competitive advantage.
The supportive activities include technology, Human Resource Management, and procurement. Human offers flexible schedules, double payment during holidays as well as night allowance. Technology ensures Just-in-Time deliveries as well as wireless headsets. Still, on technology, McDonald’s has the modern infrastructure (Ireland et al., 2008). Concerning procurement, McDonald’s employs franchise agreement and Corp guidelines for the farmers where they sort raw materials. Also, the company has an E-procurement system that streamlines their processes.
Question 4.2b
One of the reasons why McDonald is highly competitive is due to the introduction of innovative strategies and ensuring they keep pace with the changes happening in the market. As compared to the traditional value chain activities, the modern value chain has been altered by various changes taking place at McDonald’s. For instance, concerning their processes, the company is increasingly using computers that have automated different processes, including tracking of orders, the distribution and delivery of orders and other things. As such, the value-chain is increasingly efficient as compared to the conventional one. Concerning outbound logistics, the modern McDonalds is focused on conserving energy, effective management of waste as well as ensuring sustainable packaging. Thus, the organization is dedicated to enhancing their operations using innovative and sustainable practices by carrying out business using environmental-friendly strategies that increase their profitability and attractiveness. They have reoptimized their menu by adding healthier products. Hence, it affects where they source their raw materials (inbound logistics) (Dey, 2016). In improving the customer experience, McDonald’s today offers services like free internet access via Wi-Fi technologies. This has altered the supportive activities that make the company more attractive. In general, the new changes are altering the value chain in different ways.
- Chermack, T. J. (2004). Improving decision-making with scenario planning. Futures, 36(3), 295-309.
- Dey, K. (2016). The fast food industry in the UK. Analysis of McDonalds with PESTEL, VRIN and Porter’s Five Forces.
- Freeman, R. E. (2010). Strategic management: A stakeholder approach. Cambridge University Press.
- Ireland, R. D., Hoskisson, R. E., & Hitt, M. A. (2008). Understanding business strategy: Concepts and cases. Mason, OH: South-Western Cengage Learning.
- Porter, M. E. (2008). The five competitive forces that shape strategy. Harvard business review, 86(1), 25-40.
