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Competitive strategy
Word limit: 2,000 words (±10%)
Marks: 20
Due Date: 5 pm Friday, Week 11
(Soft copy to be uploaded on BB)
Use the Theory relating to Adaptation, Aggregation and Arbitrage to explain how companies from the following industries have used this theory for the pursuit of their businesses:
• Computer industry (hardware or software)
• ICT industry (Information Communications Technology)
• Pharmaceutical industry
• Food / Beverage industry
• Steel Industry
• Manufacturing of heavy equipment
Students should choose 2 industries from the list above and 2 companies in each industry (4 companies in total).
This is a group assignment. Every member of the group is expected to be able to discuss all areas of the report. You should meet many times and discuss the issues identified in the report.
Suggested Structure:
• Introduction
• Body: a paragraph heading for each of Adaptation, Aggregation and Arbitrage containing discussion of ideas using your research outcomes of the 4 companies studied. OR you can focus on the industry-level analysis using the 4 companies researched. How has each industry been pursuing some or all the elements of the ‘AAA’ framework? Use the table below as a guide.
Industry 1 (Companies A, B) Industry 2 (Companies C, D)
Adaptation
Aggregation
Arbitrage
• Conclusion
You do not need to define the concepts. Descriptive material has negligible value and should be avoided. We are seeking analysis, discussion and recommendation, enriched by ideas found in journal articles.
In business you will be expected to produce short well-argued reports. This is where you demonstrate that skill.
All ideas in the report must be referenced using Harvard Referencing (in-text citations and full references at the back).
Assessment Criteria:
• Demonstrated knowledge of the Model ‘AAA’ ( /8)
• Capacity to apply this model to the companies/industries of your choice ( /5)
• The quality of the discussion and evaluation of the issues identified ( /3)
• The analysis and integration of ideas from journal articles and research materials ( /3)
• The correct use of Harvard Referencing throughout the report (the source of all ideas must be identified) (
____________________________
The theory of Adaptation, Aggregation, and Arbitrage (AAA) was introduced by Ghemawat (2007) as a framework for international business strategy. The AAA framework suggests three different approaches that companies can use to create and sustain competitive advantage in the global marketplace. Adaptation refers to customizing products and services to meet the specific needs and preferences of local markets. Aggregation involves standardizing products and services to achieve economies of scale and scope. Finally, Arbitrage involves taking advantage of differences in prices or regulations across markets. In this report, we will analyze how four companies from six different industries (Computer, ICT, Pharmaceutical, Food/Beverage, Steel, and Manufacturing of Heavy Equipment) have applied the AAA framework to pursue their businesses.
Body:
Industry 1: Computer industry (Hardware or Software)
Companies A: Dell, B: Apple
Adaptation:
Dell is a leading manufacturer of computers and related products. The company has adapted its strategy to meet the needs and preferences of local markets. For instance, Dell offers a range of laptops and desktops that are designed specifically for different regions such as North America, Europe, and Asia. These products are customized with respect to language, software, and hardware. This adaptation strategy has helped Dell to gain a competitive advantage in different regions. On the other hand, Apple has adopted a global strategy by offering standardized products that appeal to customers worldwide. Apple has a reputation for designing premium products that are easy to use and aesthetically pleasing. The company has been successful in maintaining its brand image and achieving economies of scale through a standardized product portfolio.
Aggregation:
Dell has also used an aggregation strategy to achieve economies of scale in production and distribution. The company has consolidated its operations and streamlined its supply chain to reduce costs and increase efficiency. For example, Dell has established manufacturing facilities in different regions to take advantage of lower labor costs and reduce transportation expenses. Apple, on the other hand, has a centralized supply chain and manufacturing operations. The company has achieved economies of scale by standardizing its production processes and leveraging its brand power to negotiate favorable deals with suppliers.
Arbitrage:
Dell has used an arbitrage strategy to take advantage of differences in pricing across markets. The company has shifted its production and sourcing operations to low-cost regions such as China and Southeast Asia to reduce costs. By doing so, Dell has been able to offer competitive prices for its products in different regions. Apple, on the other hand, has focused on maintaining its premium brand image by pricing its products higher than competitors. However, the company has also used an arbitrage strategy by taking advantage of tax incentives and loopholes to reduce its tax burden in different regions.
Industry 2: Pharmaceutical industry
Companies C: Pfizer, D: Novartis
Adaptation:
Pfizer and Novartis have both used an adaptation strategy to meet the specific needs of local markets. For example, Pfizer has customized its products to meet the regulatory requirements of different regions. The company has also localized its marketing and sales efforts to appeal to different customer segments. Similarly, Novartis has adapted its products to meet the needs of different patient populations. For example, the company has developed drugs for rare diseases that affect small patient populations.
Aggregation:
Pfizer and Novartis have both used an aggregation strategy to achieve economies of scale in research and development. Both companies have invested heavily in R&D to develop new drugs and therapies. By doing so, they have been able to achieve economies of scale in the development and testing of new products. Additionally, both companies have leveraged their R&D capabilities to create strategic partnerships with other companies in the industry.
Arbitrage:
Pfizer and Novartis have used an arbitrage strategy to take advantage of differences in
