Marketing management assignment writing help analysis on : Report on business context – Porter’s diamond analysis – Marketing
Porter’s National Diamond Analysis
Introduction
The Porter Diamond Model has been developed by Michael Porter, which explains the reasons and factors as to why companies become competitive in particular setting. The approach makes use of clusters of industries, where the competitiveness of one company is compared with performance of other companies. There are six key factors, which are included in this model that help in analyzing the competitiveness. The factors are demand conditions, firm’s strategy, structure and rivalry, government, chance, related and supporting industries and factor conditions. The following diagram shows displays all the factors of the Diamond Model:
When a company of some other country tries to establish its base in foreign country with the purpose of expansion it can make use of this model for the purpose of ascertaining the business opportunities and competitiveness. In the following section of this paper, Diamond Model will be applied for ascertaining the competitiveness of South African food retail industry for assessing the opportunities available for a company based in UK and trying to expand its international business.
Analysis of factors of Diamond Model
The factors of the diamond model are discussed as under:
Factor conditions:
This factor principally includes physical resources, knowledge resources, capital resources, infrastructure, etc. There are some specialized resources, which play an extremely influential role in a specific industry to gain competitive advantage. In the context of establishing food retail industry, the above factors will play a prominent role in helping the industry to gain competitive advantage. UK based company, when trying to establish in South Africa, will be able to get ample of resources that are required for the purpose of establishing itself in the country. Since, the company is undertaking a crucial move it is essential that, for the top positions, it may relocate some of its existing employees and for the operating staff; recruitments may be done in the country (South Africa – Republic of Retail Foods 2010 Annual Retail Food Sector report, 2011). Thus, it will prove to be helpful in effective establishment of the company in South Africa.
Demand conditions:
Under this factor, the home country demands play an extremely significant role. This plays a pivotal role in understanding of the needs and desires of the customers. Thus, factor proves to be particularly helpful in shaping the attributes the products made domestically and creates space for innovation and quality (BI, 2012). The research about demand condition of South African market for fast food industry portray the demand of fast food is increasing on a continuous pace, and the company, which is trying to gain a base for itself in the country, can do so by giving importance to product differentiation, customer relationship management, corporate social responsibility. The demand patterns of the country exhibit high demand for safe, nutritious, fresh, and healthy food (BI, 2012).
Related and Supporting Industries:
This factor has a crucial role to play and highlights that related and supportive industries can prove to be extremely helpful for the company in establishing itself. It is so because it provides cost effective inputs and also leads to up gradation of the company. This also stimulates and motivates the other companies in the similar chain to undertake innovations. In the South African market, there is growing and booming trend of the retail food sector. The sector has seen about 5% growth in 2009, which is a result of tourism and growth in the income of middle class of the society (South Africa – Republic of Retail Foods 2010 Annual Retail Food Sector report, 2011). Thus, it is clear that if a retail food company is trying to establish itself in South Africa there are high chances that the company might be able to get the support of the industry. The UK retail industry will be able to get a sound and effective base for its smooth establishment and development.
Firm Strategy, Structure and Rivalry:
It is the fourth determinant of the Diamond Model in the context of competitiveness. This explains that the company should set proper goals and manage them in an effective manner, which will play a vital role in determining the success of the company. Along with this, company needs to design its strategy in such a manner that it will be able to address the competition faced in an effective manner. For facing the intense rivalry in the home country, the company needs to undertake innovation products and services, which will prove to be helpful in addressing the competition. When entering South African market it is suggested to the company to use information and communication technologies (ICT) to gain competitive advantage in fast food industry of South Africa. The companies, which are willing to enter the market, must pay due importance to consumerism in order to gain opportunities for the foreign investors. The company should make use of innovation and affordable meals option for the purpose of addressing the competition in the country (Maumbe). This strategy will prove to be particularly helpful for the company in gaining a strong base for itself in the country.
Government:
Government has an influential role to play in determining the level of competitiveness as it influences the supply conditions, demand conditions, competition between firms, etc. Intervention of the government can occur at local, regional, national or supranational level. The Government of South Africa provides ample opportunities for the foreign investors and encourages them to enter the market, which will also contribute in increasing the GDP of the country. The growth rate of the country is on an increasing pace which is a result of support provided by the government to the foreign investors (South Africa Country Commercial Guide, 2011). The increased foreign investment have prove to every helpful in fastening the pace of development of the country.
Chance:
The element of chance is uncertain and depends upon the level of planning and time the company gives to the above discussed factors. The chance factor has a pivotal role to play the deciding the fate of the companies. Chance element is critical as they create discontinuities, which can lead to success for the some companies and failures for others (South Africa Country Commercial Guide, 2011). Thus, the company needs to give due importance to above factors in order to gain the added advantage of this factor.
Conclusion
Thus, the above discussed are the few factors and also the essentialities which the company needs to cater in order to gain competitive advantage. The results of the model indicate that the environment is supportive and can prove to be helpful for the company in developing staring base for itself and gaining competitive advantage. The attempts of the company can gain positive response as per the findings indicated by the porter diamond model. There are some basic requirements which are to be given importance which will help the company in fulfilling its objectives.
Part 2 Contemporary Management Issues
Introduction
Contemporary management issues principally include the current issues faced by the organization in management and leadership. The companies have taken steps for the purpose of monitoring and managing the key indicators. The basic purpose of using these techniques by the company is for cutting down costs and save money. The issues help in evaluating the application of management theory and how companies can put these theories into practice and how they directly impact the reputation of the company (Flores- Araoz, 2011). There are many issues of contemporary management issues including Corporate Social Responsibility, Quality of Work Life and Quality Circles, Business Ethics, Corporate Governance and Transparency. In this section of the paper, two main contemporary management issues, i.e. corporate social responsibility and corporate governance are discussed in detail.
Contemporary Management Issues
Corporate Social Responsibility:
Corporate social responsibility principally refers to the concern shown by the company towards its social environment. According to this concept, it is extremely beneficial for companies to give due consideration to the societal impact of the actions and activities, which are undertaken by them. The organizations also need to take steps, which will prove to be helpful for the company in improving the general welfare of the society. The aim of the organization should not only be towards the effectiveness of their organizational operations but also take care of the needs of the society (Flores- Araoz, 2011).
In the context of South Africa, CSR is not only a topic of conversation but is also enacted by some of the major companies. After the apartheid era, the country had to face high levels of inequalities in terms of education, infrastructure, economic power, etc. For the purpose of combating these issues, the governmental authorities have taken the initiative of social programs and initiatives. Although the companies Act, of South Africa does not oblige any company for undertaking CSR practices the document of country’s policy explicitly highlights the needs and relevance of CSR practices. The large multinationals situated in the country have shown an initiative for the purpose of making a contribution towards the society. This is done not only for social benefits but also for earning efficiency gains. It has been indicated that addressing the social issues by the company leads to increase in the levels of the productivity of the company which makes a dynamic change in the profitability and share value. The guidelines, which are followed for the purpose of CSR in South Africa, have been mentioned in detail in King Reports (Flores- Araoz, 2011).
Many leading companies like Johnson and Johnson, Sony, etc. have been taking active steps for promoting CSR in South Africa. The basic aim of these companies is to show commitment towards the society with the help of innovative programs and initiatives that aim at helping the less developed countries in fastening their pace of development. The companies have made a significant contribution in the fields of education and training, healthcare and social welfare of South Africa. They aim at bridging the gap between the skills and improve the socio economic, heath and education level of the country. They try to curb the issues that threaten the growth and well being of the nation (Social responsibility, 2012; Corporate Social Responsibility. 2012). Thus, it is clear that the company, which is willing to enter the market of South Africa, must pay attention to Corporate Social responsibility in order to gain a dominant position in the market.
Corporate Governance
It is important for a business organization to run their business activities in an economical and efficient manner so that performance improvement can be achieved. This can be achieved when the organization is successful in meeting the ethical considerations and give value to the stakeholders within and outside the organization. The organization should make sure to serve its stakeholders in an ethical manner. It is important for an organization to determine its existing ethical considerations among the stakeholders and fulfill their expectations regarding the ethical considerations.
In the context of South Africa there are unique socio cultural settings with appropriate leadership, employee welfare considerations and issues of corporate governance (Malherbe, 2001). It is very important for the organizations to focus on the type of management systems that prevail in South Africa. The major focus of organizations is to serve the financial interest of shareholders and earn profits. In the context of Corporate Governance, South Africa is known as the King. The country has been under consideration in the Companies Act and Johannesburg Securities Exchange Listing Requirements for setting and strengthening an effective corporate governance framework (Vermaak, 2012). The company is required to have a stabilized structure of working so that it can progress in the long run and continue to grow. This can be done when the firm does effective allocation and management of resources so that the vast capital can be fully utilized and profits can be resulted. The role of market is very effective in South Africa, in which foreign institutional investors are the major players. The company should get itself registered with all the requirements of the government and should work in compliance with the existing accounting standards in the market.
It would be an opportunity for the organization to focus on the weaknesses and areas of poor performance of the South African market. This would be beneficial for the organization to remain competitive and survive in the new market of South Africa. In this manner the company can build its brand image and target the new customer base to try the services offered by their food retail business. In this manner the company would be successful for creating its standing in the new market with a vibrant business culture and highly satisfied and valued stakeholders. An important thing to be considered is to effectively follow the rules and regulations and give proper training to the staff and the directors of the top management to comply with the obligation of the South African market.
Conclusion
In the above section of the paper, contemporary management issues have been highlighted. Along with this paper, also highlights two main contemporary issues, which the company needs to take into consideration before entering the market of South Africa.
Part 3 Market Entry Strategy
Introduction
Market entry strategies are very important for the companies to expand their business in order to globalize their business operations. An organization that wants to invest its capital in some other country so that it can open up its business in the respective country has to go through various research and investigation. This is a crucial step so that the appropriate market strategy can be adopted for creating a successful business that results in the generation of revenue. Usually the companies aim to expand its operations on the international arena so that it can expand its market share and earn profits.
Opening up business in the markets of South Africa offers a great potential for the companies of UK. It is necessary for the organization to go for extensive market research so that it can get an idea that the business will be successful in the country. An important perspective of indulging into the market research is to get the knowledge about the new customers, their characteristics, and reasons and patterns of buying the product. For this purpose a structured business plan is important for adapting to the mew market and new country.
A specific business plan considers the objectives behind the company’s decision to enter into the South African market and expanding its business operations. It is important for the industry to identify the appropriate route to reach the new target market and the new customer base. The company is required to have a proper and clarified plan so that it can take active steps to open up its business in South African economy. In the business plan, it should be identified that who are the target customers, and what services the company is going to offer in the South African Market (Ntloedibe, 2009). It is essential to identify the marketing and promotional strategies that the company will adopt for creating awareness about its existence in the new market.
Market Entry Strategy for Opening Business in South Africa
Market Entry is related to the consideration of the company’s customers and its existing competitors in the new country. It is necessary for the industry to consider the goods and services of its competitors and the chances of offering the competitive products in a better way. South Africa is known as the Republic of Retail foods which is an ever growing sector of the country. The retail sector of South Africa is mainly dominated by local products but is gaining attention of the imported products. The trend of supermarket chains prevails in the country where there are few major competitors who dominate the market (Mushuku, 2010).
Acquisition can be an effective market entry strategy that can be adopted by the industry to open up its food business in South Africa. The potential customers of the food retail industry are the middle class people and the increased number of tourists who visit the country. One of the drawbacks for the company can be the low rates of tariff for European people. There are various opportunities for the company to achieve success because of the new protocols and other government agreements.
South African economy is a sophisticated economy so the industry should take a well planned step along with the consideration of various factors. An important factor to be considered is the pattern of income distribution. Ten percent of the South African population earns 45 percent of the national economy. Majority of consumer demand is price sensitive as there are five major regions in which the retail centers operate. By analyzing all the factors in which the South African market operate, the company should undertake a low risk strategy of making entry to the market.
The company can go for a merger strategy by merging with the existing player in the food retail business of South African market (Francis 2010). This will be helpful for the country to reach its target market, and exit as a new entity in the new market. This strategy will be effective for the organization to understand the operations of the company with which it has merged and work in coordination with the existing and the modified operations. In this manner, less time of the company will be consumed to enter into the target market because of the existing functions of the company with which merger has been done. This strategy will be effective in reducing the competition of the new company with the already existing competitors in food retail business.
Conclusion
In this manner, the company will not face many barriers in entering the new market of South Africa. The acquisition strategy would be helpful for the company to utilize its skills, technological efficiencies, and supply of materials in an effective manner. Thus, it would successfully expand its operations and increase its customer base, so that it can work on a global scale and earn increased profits. South African Market would serve as an effective option for the organization to achieve globalization and cater to the large section of consumers across the world.
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