Competitive Strategy Business Models

Question: Discuss about the Competitive Strategy for Business Models. Answer: Introduction: It is needless to state that the ulterior aim of any organization is profit maximization, yet in order to enhance the revenue, an organization needs to adopt an effective strategy. The term strategy is often used interchangeably with the term goal, yet it should be remembered that there lies a broad line of demarcation existing between the two words. While goal of an organization is to achieve a few objectives in a given period of time, strategy is a means to achieve the same. With the advent of globalization, most of the organizations expand their business beyond the confines of their locality, and engage in international trade. However, for the successful operation of international trade, an organization has to opt for the most effective global strategy that will help it enjoy competitive advantage over the other organizations (Thompson et al. 2013). Discussion: In a highly competitive market, if any organization is willing to survive, it must keep on experimenting and re-inventing, and modifying what it is doing, and herein lays the importance of a business model innovation. The business model innovation is an important marketing strategy where an organization starts analyzing the consumer behavior and understanding the consumer point of view regarding their immediate demands and needs. Business models have recently become the new basis of competition and this is because defining, innovating and evolving an organizations business model helps an organization enjoy competitive edge over rival organizations (Chesbrough 2013). It is very difficult for an organization to sustain itself in future, if it is unaware of the ways it can reach the members of its target market. Innovation is the only way through which one can create Consumer Value proposition that enables an organization make necessary changes to an existing business model, so that a n ew idea may be implemented in the form of a new business model. The idea of the introduction of a new business model is based on the concept that it will allow the organization offer products or services that is unique and one of a kind, and is hard to be imitated by the rival giant competitors. Again, at the same time, the new business model will also have to let the organization produce a product that is aligned with market trends, and hence will be able to easily capture the attention of the consumers (Leih et al. 2014). It has to be understood that business model innovation is an important strategy adopted by an organization, whereby an organization re-invents, rather than inventing technology. For instance, Amazon could be easily replaced by an e-commerce organization, unless it could adopt an effective strategy that could help it win competitive advantage over the other organizations. Hence, Amazon found a new way to create consumer value, and conduct business, with the help of its new electronic product, Kindle, whose scalable technology poses a serious existential threat to any of the rival competitors, including Apple (Aversa et al. 2015). An innovation can be created by increasing the value of a product offered, or by lowering the price at which it is afforded. In case of Amazon, for example, the Kindle is available at low cost, as a result of which those consumers who cannot afford an I pad, will be drawn to purchase kindle, and agin the product also uses some innovative, unique features like streaming media, that helps it gain competitive advantage over the immediate business rivals (Baden et al. 2013). In a global environment, an organization can flourish only if the cultural, administrative, geographical and economic factors of a foreign country appear favorable. The CAGE framework, as designed by Pankaj Ghemawat, helps an organization understand as well as critically evaluate the impact of distance on a country, keeping into consideration, the four factors that may differ or resemble. The greater the difference between the home country and the foreign country, the more difficult and challenging is it to operate the business activities in the foreign nation (Ghemawat 2015). The cultural factor is an important factor as cultural differences may affect the successful execution of business activities, and may disastrously affect international negotiations. For example, an organization may expand in foreign location, but the foreign employees hired, may have a different perspective about the degree to which he should accept institutional hierarchy at workplace, or regarding his long-t erm or short-term orientation. Again, administrative factors such as rivalry between nations, colonial ties between two nations, or participation in same trading blocs can also influence business operation in a foreign location. For example, because of the political rivalry between USA and Cuba, most of the US firms are prohibited from doing business in Cuba (Ghemawat 2013). Again, geographically speaking, the regional climate, geographical distance, also can affect the extent to which an organization can flourish in a foreign location. Although digital marketing has eliminated the inconvenience brought by geographical factors, yet shorter distance with the suppliers market can remarkably reduce the operational cost of the organization. Economic factors, such as the average income level of the foreign consumer market, the relative purchasing power of the foreign consumers can also influence the organizational success or failure of a firm (Collis 2015). Conclusion: To conclude, it must be remembered that an organization can achieve wider brand recognition, and greater profitability, once it expands its business in foreign locations. However, one of the biggest challenges of international trade is that an organization may lack sufficient knowledge about the differences that exist between two nations, and hence may fail to analyze and assess the impact of distance on their business in a foreign market. Hence, it is important to adopt the CAGE framework, and at the same time, introduce innovation in business, if an organization aims to achieve its business growth goals, in international market. In order to compete and survive in a global environment, and in a highly competitive market situation, an organization should not merely duplicate the business model of other rival giants, or remain content with its own. It must keep on challenging its ideas, and introduce new and original ideas. Reference List: Aversa, P., Haefliger, S., Rossi, A. and Baden-Fuller, C., 2015. From business model to business modelling: Modularity and manipulation.Business models and modelling, pp.151-185. Baden-Fuller, C. and Mangematin, V., 2013. Business models: A challenging agenda.Strategic Organization,11(4), pp.418-427. Chesbrough, H., 2013.Open business models: How to thrive in the new innovation landscape. Harvard Business Press. Collis, D.J., 2015. The Value of Breadth and the Importance of Differences. InEmerging Economies and Multinational Enterprises(pp. 29-33). Emerald Group Publishing Limited. Ghemawat, P., 2013.Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business Press. Ghemawat, P., 2015. From International Business to Intranational Business. InEmerging Economies and Multinational Enterprises(pp. 5-28). Emerald Group Publishing Limited. Leih, S., Linden, G. and Teece, D., 2014. Business model innovation and organizational design: a dynamic capabilities perspective. Thompson, A., Peteraf, M., Gamble, J., Strickland III, A.J. and Jain, A.K., 2013.Crafting Executing Strategy 19/e: The Quest for Competitive Advantage: Concepts and Cases. McGraw-Hill Education.