Competitive Strategy AAA Global Market Essay

Question:

Discuss about the Competitive Strategy AAA Global Market.

Answer:

Introduction

The AAA global market strategy was given by Ghemawat which offers three generic approaches to global value creation. The Adaptation strategy strives for the increase in the sale volume and market share by modifying one or more components of the organization’s model to meet the requirement of residents. Aggregation strategy includes achieving optimum economy in the market and improving its efficiency regionally as well as globally. Arbitrage involves exploiting the difference of different markets, like purchasing low from one market and selling high in other to earn good return (Ghemawat, and Jones, 2016).

Companies: computer hardware

  1. Asus
  2. Acer

ICT (information communication technology)

  1. Microsoft
  2. IBM

Implementation of Adaptation strategy in computer hardware companies

The computer hardware industry is engaged I manufacturing computers and its parts. The industry includes products like web camera, storage devices, CPU etc. This industry operates globally and it also influences other sectors and products of the market. The adaptation strategy is further subdivided into five parts that is variation, focus, externalization, design and innovation.

Asus Pvt. Ltd. is a technology oriented company expanded globally which is renowned for high quality products and cutting-edge innovation. The corporate has a vision to provide 3C (computer, communication, consumer electronics) with innovation in a simplified manner. As a part of variation the company not only needs to focus on changing the products as per local requirement but also the company need to change the policies, methods as well for the better working of the company. So the Asus ltd.’s mission is to create passion for technology in people but also implement on long term relationship with the customer and the focus of the company rely on quality production only (Asus, 2017). They give utmost priority to introducing new products and setting new standards in the market. Supporting to the statement the company also focuses on quality management practice for the internal process of the company (Asus, 2017). They focus on local market as well by making cost efficient products. As the company is among top 4 largest PC vendors of world (as per business week’s InfoTech 100), it provides the best motherboards in the world with finest designs (Ghemawat, 2013).

Acer Pvt. Ltd. Is a Taiwanese multinational hardware corporation which has gained specialization in electronic technology. The company has also achieved a place in top 6 largest computer vendors in the world (Gartner, 2017). The company also aimed to make its products cost effective by deleting marketers and distributors from the supply chain. In order to increase its market capitalization, the company acquired Wi-Fi pet camera maker Pawbo. In order to spread the product worldwide, Acer hired labor force as per the market strategy. It also reduced the intervention of different distribution channel for becoming a cost efficient company. The company also focused on the local market by including traditional retail seller in their supply chain. The company has gained respect in Australian market by becoming leading PC vendor in government and education market (Reference for business, 2017).

Implementation of adaptation in information communication technology industry

ICT stands for the process of communication through different innovative methods such as telecom, IT services etc. Microsoft is one of the top most American multinational company which is best known for its software. The working of Microsoft has been very efficient one as it is approachable by all categories of people (Ghemawat, n.d.). The company always makes commendable innovation which is cheered by all such as Xbox, psp’s etc. this software is an open source as it appears in-built in computers. The focus of Microsoft is to become world largest vendor in ICT industry. With respect to innovation the company also focuses on its sale that the innovation which they are providing shall be gained by all (Microsoft, 2017).

IBM (International Business Machine) corporation is also an American multinational technology company. The company has a strong grip on the software, hardware and middleware products. As per adaptive strategy the company mainly focuses on the innovation process through which sale process automatically increases. The company has shifted its business mix by commoditizing the market and focusing on higher value and more profitable sale in the market. The company creates monopoly in the market by providing best customer satisfaction response, in fact the company also keeps its employees satisfied therefore the IBM employees are awarded with five Nobel Prizes, six Turing Awards, ten National Medals of Technology and five National Medals of Science.

Implementation of aggregation in computer hardware companies

Aggregation refers to the process of dealing with the change in the environment and creating economies of scale. Its objective is to make full use of the geographical differences of places and attain benefit from it. Due to this difference in climatic condition it makes the product distinctive from others present in the market (Ghemawat, 2011).

In Asus Pvt. Ltd., the company was originated in Taiwan due to which the company has a major grip in that market. With geographical aspect there are many other avenues such as CAGE (cultural, administrative, geographical, economic) that is these factors also influence the market of Asus. Like Asus has EU license to work in European market. As the company has many retail distributors also due to which the company is most loved in local market. It has broad base which provides employment to many people from Europe for innovation which raised the share of company in European market. In respect to CSR of the company, the company tries to initiate green revolutions for the betterment of the community.

Acer Pvt. Ltd. also originally belongs to Taiwan due to which this company also has an impact on the economy of the place. The sale of Acer is widely spread in the country. The demand of the country is for hi tech products due to which the company offers quality products and has gained a reputed position in the market. The company has its logo which is regarded as Acer green which promote environmental benefits to the country. The company has its widespread networking due to which it has a wide administrative circle. The company also provides sponsorship in order to become economically viable.

Implementation of Aggregation in ICT industry

Microsoft Inc. is originated by bill gates in Washington due to which the holds a huge amount of market of Washington. The company is also known for its nice behavior among the employees themselves and also towards the society. The company has created a good image in the market by complying with all the provisions related to the product and by saving themselves from being penalized. As US is an innovative country due to which the raw material being sold in that country are cheap and easily available. This reason makes the product economic in that particular area. This software is also an aid to the government as it helps government in accessing resourceful information about several corporations and also it facilitates sharing such information with general public as well.

IBM’s headquarter is globally verified and spread across a large area which makes creates a reputation in the mind of employees and consumer as well. As the company provides quality product therefore this helps in the increment of sale. The company led an initiative called smarter plant with offered economic growth, sustainable development, societal progress and near-term efficiency of the country. The company’s brand was ranked best brand worldwide also the company maintains a good employer-employee relationship which creates a good reputation in the market (Armonk, 2017). The company provides several leadership and management program for the qualitative efficiency of the employees. It is said that IBM stands for I’m being mentored due to the due to the company's open door policy and encouragement for mentoring at all levels

Implementation of Arbitrage in computer hardware companies

Arbitrage, the third generic approach of the AAA strategy refers to the process of exploiting the differences present in the environment rather than adapting the changes (Jha, Dhanaraj, and Krishnan, 2014). Conditions of different places affect this approach like, a product not available at a place shall be imported from nearby which shall increase the margin of the sale and outsourcing and off shoring also work as a key factor in this approach. Instead of resolving the difference, a company exploits this subject in order to gain profit (Mauri, and de Figueiredo, 2012).

In Asus Pvt. Ltd., as the company is originated in Taiwan whose neighboring countries are China and Japan which are hi- tech countries. Therefore Asus easily get the opportunity to receive such hi tech technology from these countries and provide its services to other part of the world technology are not sufficient (Hiner, 2011). So in this way Asus exploits the differences instead of reducing them. Legal and political differences also affect the sale of the product. As this company is not bound to pay some taxes in US as it is not their home country due to which the company gets some revenue saved (Asus, 2017).

With reference to Acer Pvt. Ltd., the company also has geographical benefits as the company’s working is spread all round the world but it is widely used in Taiwan and nearby places because in those areas innovation and technology is required more as compared to others. The most common economic arbitrage that is differences in the labor cost. The can easily exploit such effect by outsourcing ad offshoring as this technique is widely used in the field of technology (Mathew, 2017).

Implementation of arbitrage in ICT industry

Microsoft receives a good use of the environment present in US due to which the company is able to get qualified labor at a reasonable cost. Adding to which the sale margin of the company also increases as the company has a corporate cultural environment. Microsoft Company is well renowned as the company hires a large amount of expatriate which increases globalization and it also provide better employment opportunities round the globe (Microsoft, 2017).

IBM has got a quality labor as its employees are from companies like Apple Inc., Microsoft etc. as Warren Buffett has also invested in company’s share due which it created an image in the mind of people regarding the company’s solidarity which helps in increasing the sale of the company. As the company has a large employee base which helps in making a big family which influences them to purchase products of the same company. As IBM believes in innovation, so as the geographical conditions represents the company the company receive such manpower from US (The Guardian, 2010).

Overall synopsis

Elements of discussion

Computer hardware companies (ASUS and ACER)

ICT industry (MICROSOFT and IBM)

Adaptation

Asus ltd has an aim to provide innovation to every person in a simplified manner so that it is approachable and delivered by everyone to everyone.

Acer aims to make its product cost effective so that every section of society can make use of such technology.

Microsoft focuses on increasing the efficiency of its human resource and provides innovation for entertainment as well as formal use.

IBM aims to get market capitalization by making innovation wherever possible.

Aggregation

Asus as well as Acer aims to exploit the county factors present in the environment in order to increase its sale margin.

Microsoft aims to makes its products approachable by all and also focuses of sharing the resourceful information with and making use of the same.

IBM focuses on creating smart earth by providing economic and sustainable development.

Arbitration

Both the companies’ attempts to make full use of the cultural, administrative etc. factors present in the environment.

Both the companies aim to manipulate the target market positively for the growth process.

(Source: by author)

Conclusion

The above discussion carefully examines the AAA strategy of business in context with the computer hardware and ICT industry. Microsoft and IBM both aspire to create innovation and facilitate change for people. And in computer Hardware Company Asus focus on innovating the products and making it to reach of everyone were as Acer focuses on reducing the cost of product and making it cost I cost efficient so that it is purchased by all sectors of the economy.

References

Hiner, J, 2011, CES: Has ASUS discovered the strategy to take down the iPad?, viwed on 17 May 2017, from

Reference for business, 2017, Acer Inc. - Company Profile, Information, Business Description, History, Background Information on Acer Inc., viewed on 17 May 2017, from

Asus, 2017, ‘Corporate Profile’, ASUS press release.

Microsoft, 2017, MICROSOFT PHILANTHROPIES: Technology as a force for inclusion, viewed on 17 May 2017, from

Armonk, 2017, International Business Machines Corp, viewed on 17 May 2017, from

Ghemawat, P., 2013. Redefining global strategy: Crossing borders in a world where differences still matter. Harvard Business Press.

Ghemawat, P., 2011. The cosmopolitan corporation. Harvard Business Review, 89(5), pp.92-99.

Mauri, A.J. and de Figueiredo, J.N., 2012. Strategic patterns of internationalization and performance variability: effects of US-based MNC cross-border dispersion, integration, and outsourcing. Journal of International Management, 18(1), pp.38-51.

Ghemawat, P., (n.d.) Globalization. Wiley Encyclopedia of Management.

Ghemawat, P. and Jones, G.G., 2016. Globalization in Historical Perspective. The Laws of Globalization and Business Applications, p.56.

Jha, S., Dhanaraj, C. and Krishnan, R., 2014, January. MNE R&D in Emerging Markets: Arbitrage, Adaptation & Aggregation in Global Innovation Networks. In Academy of Management Proceedings Academy of Management, Vol. 2014, No. 1, p. 17650.

Microsoft, 2017, Why Microsoft, viewed on 17 May 2017, from

Asus, 2017, The ASUS the winning formula, viewed on 17 May 2017, from

The Guardian, 2010, Company profile of IBM, viewed on 17 May 2017, from

Mathew, A, 2017, Acer Inc. Success Story, viewed on 17 May 2017, from

Asus, 2017, The meaning of “ASUS”, viewed on 17 May 2017, from

Gartner, 2017, Predicts 2017, viewed on 17 May 2017, from

How to cite this essay: