Blacks Leisure Group Board - Essay Example

Blacks Leisure Group Board Contents Introduction It is always a grand accomplishment for a business enterprise, when the innovation on its' services and products works and results in a blockbuster quarter; however, a short term success does not make for true business excellence, a true business excellence demands sustainability (HBS, 2009). Business sustainability comes from the maintenance of competitive advantage and for maintaining a competitive advantage a business strategy is required. A strategy that will make the business exclusive and as well as carry the company and its business forward as the world around it changes (HBS, 2009). Hence, for the development and sustenance of a competitive advantage the marketing planner of a company needs to recognize that the advantage an organisation or brand possesses that is meaningful will be copied or improved upon by competitors sooner rather than later (Wilson R. and Gilligan C., 2005, p 405). This paper is prepared as a report for the Blacks Leisure Group detailing how the company can develop and sustain its competitive advantage. Blacks Leisure Group Established a century and a half earlier in 1863, by Thomas Black, the Blacks Leisure Group has come a long way from being a humble sails manufacturing company to a camping, outdoor and sporting goods retail empire. Today, for millions of those out-door loving enthusiasts, the company is more of an institution that a mere retail store. Presently, the Black Leisure Group holds a powerful presence within two of the exclusive markets in which the company operates: Broadwear and Outdoor. Currently the management team of the group is focusing on restoring and, developing and sustaining its competitive advantage. The management is also concentrating on building upon the disciplines of operational improvements that was achieved in the current financial year (Black Leisure Group plc, 2008). However, to in order to return to its past performance levels and to develop and sustain its competitive advantage an innovative business strategy with further radical changes will be required. To be able to lock horns with other competitors and to come on top in the present era of fasted paced innovation and ruthless competition, the sustainability and competitive advantage of companies are defined by innovative strategies. Henceforth, in order to conceive of a corporate strategy through the company will successfully be to develop and sustain its competitive advantage, first a better understanding of the link between strategy and competitive advantage is a must. Strategy and Competitive Advantage According to the definition of competitive advantage, it as an advantage gained over competitors by offering the consumers a greater value for their investments either by means of low prices or by the provision of greater benefits that does justice to higher prices. For a company to gain a competitive advantage over its competitors Michael E. Porter has identified four "generic" business strategies (Porter E.M, 1980). These "generic' strategies relate to the extent to which the scopes of a business' activities are narrow against the extent to which a business seeks to differentiate its products. The four strategies are as follows: Differentiation Strategy: This strategy is based on studying the different criteria used by consumers while buying products and selecting one or more of these criteria and then positioning the business to meet the chosen criteria. This differentiation strategy is all about charging a premium price for a product that covers the added production costs, ensuring profit and as well as giving the consumers obvious reasons to choose the product over the other less or not differentiated products. The examples of differentiation strategy can be better understood with case studies of Mercedes cars and Bang & Olufsen Company (Porter E.M, 1980). Cost Leadership Strategy: The goal of this strategy is to become the lowest-cost producer in the particular industry. Most of the market sections of an industry are supplied with emphasised minimal costs. If the final selling price that is achieved is at least equal or nears the average for the market, then theoretically the lowest-cost producer will be able to reap the best profits. The cost-leadership strategy for ensuring competitive advantage is generally associated with companies that do large-scale businesses, offering regular products with comparatively less differentiation that gets perfectly accepted by majority of the customers. Occasionally, the low-cost leader also uses the 'discount on products' strategy to maximize its sales and to further enlarge its market share. Examples of companies that practice this strategy are Dell Computers, Nissan Automobiles and Tesco (Porter E.M, 1980). Differentiation Focus Strategy: This third of the four strategies is usually associated with small and upcoming or conservative business enterprises that cater to a small or a particular market harbouring special consumer needs. Hence, the main aim of this strategy is to differentiate within one or a small number of target market segments. This strategy focuses on providing products that are different from those of the other larger companies targeting a bigger market or a broader group of consumers. The most vital element of this strategy is ensuring that the consumers really do have different needs and wants and hence catering to these needs and wants. This strategy of differentiation focus can be found in the business dynamics of any successful niche retailer (Porter E.M, 1980). Cost Strategy Focus: In accordance to this strategy, a business seeks the advantage of a lower-cost in limited or small number of market sections. The product will be basic and perhaps a bit similar to those higher-priced products of the featured brands, however, these will come within the affordability range of mostly all consumers. These kind of products are also known as "me-too's". Those small-scale retailers featuring their own label or having discounted label products are examples of Cost Focus strategy (Porter E.M, 1980). These four standard business strategies underlined by Michael E. Porter to gain a competitive advantage are practiced by most of the companies and business firms according to the business needs of the company. However, for a company to gain a competitive advantage is one thing but to be able to sustain that advantage over a long period of time is quite another. For instance, the Blacks Leisure Group can vie for competitive advantage by adopting one of the four generic or the classical strategies, as per its business needs, but in order to develop a sustaining competitive advantage, which is the main goal of the company, it will need much more than a generic strategy. Sustainable Competitive Advantage What does sustaining or a sustainable competitive advantage that is the focal point of every business or corporate strategy actually mean How can a company be able to sustain their competitive advantage amidst brisk change and innovation in the market place What are the key threats to sustainability and how can a company respond to these threats and keep the business competitive (Ghemawat P., 2005) Finding the answers to these questions will automatically lead to the better understanding of sustainable competitive advantage and how can a company like the Blacks Leisure Group be able to develop a sustaining competitive advantage. In simple terms a sustainable competitive advantage is an advantage that enables a company or a business to compete and survive against other competitors over a long period of time. For a company to attain a sustainable competitive advantage over its competitors, it is very important for the company to develop a competitive strategy that includes a wide array of techniques to gain advantage for a comparatively longer period of time (Burrus D, 2003). To ensure long term profitability a company should respond strategically to competition is what Michael E. Porter wrote in his revolutionary 1979 HBR update, that dealt with the, "The Five Competitive Forces that Shape Strategy" (Porter E. M., 1979). The only thing that is certain is change and in the present era this certainty of change is accelerating rapidly with time. Hence, for a business enterprise to be able to develop a sustaining competitive advantage is no doubt a very challenging task. This challenging task of keeping in pace with the changing demands of the consumers triggered by the social and environmental changes requires rapid innovations on the part of the company. Every change and each new trend requires a new business strategy. A strategy is needed that will not just ensure a short term success but also a long term competitive advantage. As for the threats to a company's profits and sustainability, Michael E. Porter' s 1979 HBR update, "The Five Competitive Forces that Shape Strategy" provides a detailed study on the all possible threats or the competitive forces that shapes competitive strategy of a company. In addition, the update also identifies the following competitive forces that can do damage to the prospective profits of a company for a long term: Knowledgeable customers can force down the prices by playing one company against the other rival company. A powerful league of suppliers may constrain a company's profits by charging higher prices. New entrants with new capabilities and a hunger for a market share can make a mess of the of the investments that a company requires to stay in the game and Substitute or new offerings can always lure customers away (Porter E. M., 1979). For a company to make a business strategy for attaining a sustainable competitive advantage, the adoption of a competitive advantage strategy only is not enough. It needs to be aware of all the unseen factors that come in play for the strategy to be competitively successful for a long period of time. Characteristics of Sustainable Competitive Advantage The two important features that characterises a sustainable competitive advantage are: It creates adaptability and flexibility so that the products of a company changes with the customers changing needs and demands. The Microsoft approach to this feature of sustainable competitive advantage, it creates consumers dependence on its new products. And it builds on the advantage of the existing products. The flexibility and adaptability of a product is also characterised a company's ability further development and horizontal integration. This can be seen in the AT&T's move into computers and cellular communications. There is a creation of flexibility and alternatives in the company's sources and means of production. The flexibility of mixed production systems is best exemplified in the Nissan's production structure. Upon the examination of Nissan's mode of operation in Japan, Mexico and U.S., it can be seen that in Japan the operating systems heavily rely on robotics, while in the U.S. the reliance on robotics is moderate and while in Mexico labour is the main operating system. On the other hand the flexibility of a company in terms of vertical integration can be witnessed in the business modules of Proctor and Gamble. The company is vertically integrated into plastic and paper production and this protects the company's diaper production from fluctuations in resource price and also guarantees quality and availability. Developing Sustainable Competitive Advantage for Blacks Leisure Group For the Blacks Leisure Group to develop a sustaining competitive advantage, the company needs to work at protecting, building and expanding their unique assets and strengths. This, will need the company to make use of the environmental monitors to look for opportunities through which the company can expand its expertise and as well as bring in new skills into the company. The Heineken was able to operate globally by repeatedly engaging itself in small equity participants with local brewing companies. Later it transferred its expertise simultaneously testing the market for mew opportunities (Devinney T., 1997). As change is the most vital factor that leads to the loss of competitive advantage, maintaining of systems that monitor the environment for changes helps in gaining and maintaining sustainable competitive advantages. Nissan Automobiles uses a scenario planning model that links the demographic trends of a country to the specific standardised automobile model types. This helps the company to make plans for necessary model changes (Devinney T., 1997). The Blacks Leisure Group will have to develop internal systems that can quickly and effectively adapt to changes. Generally, the management of most of the companies are adverse to changes and most of the management system tends to reward consistency. However this practice slowly leads to the attrition of competitive advantage. The IBM is perhaps the most typical example of how complacency can lead to failure adapt with the PC revolution, which it helped to foster (Devinney T., 1997). To prevent this kind of happenings the company needs to develop an internal reward structure that values new ideas and encourages experimentations. The creation of gap between the company and its competitors generally helps in sustaining a competitive advantage. Another factor and one of the most important one is targeting an ideal group of customers having abundant knowledge about the needs and wants of the targeted customer group and hence delivering efficiently as per the needs and wants of the customers. The other factors that come in, in the development of a sustainable competitive advantage are: Promotion of the brand and maintaining the reputation of the brand. Creation of switching costs. Preventing discouraging the imitation of the company's products and services, through propriety processes and patents. By effectively controlling the channels of distribution and supply. By effectively controlling the many dimensions of added value and By making an effort to achieve the lower costs (Devinney T., 1997). Conclusion By developing a competitive advantage that is sustainable a company can achieve a true business excellence. There are many theories and theoretical models that show how a company can attain a sustainable competitive advantage. All of these theories and models are based on assumptions, conjectures and suppositions. Adoption of these theories will surely enable in formulation and implementation of a company's of business strategies and to some extent it may succeed in the development and sustenance of a company's competitive advantage, however, these theories will not guarantee an overall success. In fact, in business nothing or no theory however good it may be can guarantee a complete sustainable competitive advantage. The thing that matters most in business is how fast can a company can respond to changes and how aptly can a company apply these theories in its response. It's all about learning, taking the right measures at the right time and having an idea about future changes that may come, and hence making preparations for it. Citations: Porter E.M, 1980, Competitive Strategy: Techniques for Analyzing Industries and Competitors, Free Press, U.S.A. Wilson R. and Gilligan C., p 405, January, 2005, Strategic Management and Marketing: 3rd Edition, Butterworth-Heinemann Ltd, U.K. References: Black Leisure Group plc, October, 2008, Strategy, Black Leisure Group, U.K., retrieved on 14th March, 2009, from: http://www.blacksleisure.co.uk/Corporate_Information/Company/Strategy/Default.aspxid=14 Burrus D, November, 2003, Creating and Sustaining Competitive Advantage, Small Business Advocate, retrieved on 14th March, 2009, from: http://www.smallbusinessadvocate.com/small-business-articles/creating-and-sustaining-competitive-advantage-520 Devinney T., September, 1997, Sustaining Competitive Advantage, Development Program for Managers, retrieved on 14th March, 2009, from: http://74.125.95.132/searchq=cache:Zw1hZ0ADZPUJ:www2.agsm.edu.au/agsm/web.nsf/AttachmentsByTitle/DPM9705.PDF/%24FILE/DPM9705.PDF+sustaining+competitive+advantage+:.edu&cd=2&hl=en&ct=clnk&gl=in&client=firefox-a HBS, 2009, Strategy: Building and Sustaining Competitive Advantage, Executive Education, Harvard Business School, U.S.A., retrieved on 14th March, 2009, from: http://www.exed.hbs.edu/products/sbsca/ Ghemawat P., September, 2005, Sustaining Competitive Advantage, Harvard Business Publishing, Harvard Business School, U.S.A., retrieved on 14th March, 2009, from: www.hbsp.harvard.edu/relay.jhtmlname=itemdetail&id=9718C - 51k Porter E. M., 1979, The Five Competitive Forces that Shape Strategy, Harvard Business Review, Harvard Business School, U.S.A., retrieved on 14th March, 2009, from: http://www.exed.hbs.edu/assets/shape-strategy.pdf Read More