Business Strategy is focused on the improvement of the competitive situation of a company’s or business unit’s goods or services within the particular industry or market fragment that the company or business unit serves (Wheelen and Hunger, 2008). It can be competitive or cooperative. Business strategy is asking how the company or its units should compete or cooperative in each industry (Wheelen and Hunger, 2008).
2.1.1 Competitive strategy
Michael Porter has proposed a Porter’s generic competitive strategy, which will discuss in the following chapter. Besides that, there is some competitive tactics, which details how a strategy is to carry out in term of when it is to be put into action (Wheelen and Hunger, 2008). Tactics if compare with …show more content…
There are many types of cooperative strategies such as collusion, and strategy alliances.
2.1.2.1 Collusion
It is an active cooperation of firms within an industry to diminish output and increase prices to avoid the normal economic law of demand and supply. An explicit collusion is illegal in many countries and in regional trade association. Explicit collusion can be express in which case firm directly using communication and negotiation, or indirectly through an informal system of signals (Wheelen and Hunger, 2008).
Besides that, collusion can be tacit, where there is no direct communication between competing firms. Tacit collusion can be successful if there are only few competitors, costs are alike among firms, price leader act by a firm, there is common industry culture that implementing cooperation strategies, there is a high frequency of small sales orders, fluctuations demand is dealt using large inventories and order backlogs, and keep out new competitors by having high entry barriers (Wheelen and Hunger, 2008).
2.1.2.2 Strategic …show more content…
access to advanced technology). There is very little interaction or communication among the partners. The mutual service consortia are a fairly weak and distant alliance, where appropriate for partners that wish to work together but not share their core competencies (Wheelen and Hunger, 2008). A joint venture is by two or more separate firms for strategic purposes, that creates an independent business entity and assigns ownership, operational responsibilities, and financial risks and rewards to each member, while preservative their separate identity. Loss of control, lower profits, probability of conflicts with partners, and likely transfer of technological advantage to the partners are the disadvantages of the joint ventures (Wheelen and Hunger, 2008). Joint venture and licensing arrangements are laid on the midpoint of the continuum. Licensing arrangements is an agreement in which the licensing firm grants rights to another firm in another country or market to produce and/or sell a product. The licensee might develop its competence to the point that it becomes a competitor to the licensing firm. Whereas, value-chain partnerships is a strong and close alliance where a company forms a long-term arrangement with a key supplier or distributor for mutual advantage (Wheelen and Hunger,
2.1.1 Competitive strategy
Michael Porter has proposed a Porter’s generic competitive strategy, which will discuss in the following chapter. Besides that, there is some competitive tactics, which details how a strategy is to carry out in term of when it is to be put into action (Wheelen and Hunger, 2008). Tactics if compare with …show more content…
There are many types of cooperative strategies such as collusion, and strategy alliances.
2.1.2.1 Collusion
It is an active cooperation of firms within an industry to diminish output and increase prices to avoid the normal economic law of demand and supply. An explicit collusion is illegal in many countries and in regional trade association. Explicit collusion can be express in which case firm directly using communication and negotiation, or indirectly through an informal system of signals (Wheelen and Hunger, 2008).
Besides that, collusion can be tacit, where there is no direct communication between competing firms. Tacit collusion can be successful if there are only few competitors, costs are alike among firms, price leader act by a firm, there is common industry culture that implementing cooperation strategies, there is a high frequency of small sales orders, fluctuations demand is dealt using large inventories and order backlogs, and keep out new competitors by having high entry barriers (Wheelen and Hunger, 2008).
2.1.2.2 Strategic …show more content…
access to advanced technology). There is very little interaction or communication among the partners. The mutual service consortia are a fairly weak and distant alliance, where appropriate for partners that wish to work together but not share their core competencies (Wheelen and Hunger, 2008). A joint venture is by two or more separate firms for strategic purposes, that creates an independent business entity and assigns ownership, operational responsibilities, and financial risks and rewards to each member, while preservative their separate identity. Loss of control, lower profits, probability of conflicts with partners, and likely transfer of technological advantage to the partners are the disadvantages of the joint ventures (Wheelen and Hunger, 2008). Joint venture and licensing arrangements are laid on the midpoint of the continuum. Licensing arrangements is an agreement in which the licensing firm grants rights to another firm in another country or market to produce and/or sell a product. The licensee might develop its competence to the point that it becomes a competitor to the licensing firm. Whereas, value-chain partnerships is a strong and close alliance where a company forms a long-term arrangement with a key supplier or distributor for mutual advantage (Wheelen and Hunger,