The main challenge for many businesses today is to find an approach of realizing a competitive advantage over other competing products in a market which can be achieved by giving customers greater value and at the same time achieving greater benefits (Grant, p.32).
Porter proposed three generic business strategies that could be used in order to have a competitive advantage. These are; cost leadership, differentiation leadership and focus (Porter, p. 23). Cost leadership can be achieved by organizations by acquiring market share by dropping the prices of their products or by retaining regular prices and consequently increasing their profits. This is accomplished by decreasing costs to levels less than those of the competitors (Akan et al., p. 45).
Differentiation strategy is used by companies that pursue in order to gain a share in the market by offering unique products that their customers value. This strategy is commonly linked with charging a high price for the product to indicate the higher cost of production and additional value-added attributes the customer is provided with that gives the customers reasons to prefer. the product over other products that are less differentiated (Powers and Hahn, p. 56, 57).
Focus strategies involve achieving the cost leadership or differentiation leadership within niche markets in ways that are not available to more broadly-focused players. It focuses on a particular market niche, customer, geographical area or product line. The idea is to serve a narrow set of customers better than the competitors who serve a larger range of customers. It involves focusing the cost leadership or differentiation on a small scale in order to make ones company be unique within a specific sector in the market (Akan et al., p. 47).
A system of shared beliefs, values and assumption which governs how people behave in organizations is termed as the Organizational culture. The ways the people act, perform their duties, relate to one another and even dress in the organization are dictated by these shared values (Davenport and Prusak, p. 104). Every organization put in place and upholds a culture that is unique and it offers rules and limits for the manner in which the members of the organization behaves.
Organizational culture characterizes an organization’s general way of life, and includes a range of components that make the organization be unique amongst collaborators both internal and external. Companies must institute an organizational culture which is healthy, strive to uphold it, and ask its fellows to participate actively for the organization to be successful (Verbeeten, p. 446). Organizational cultures can be classified in several ways and analysis of the organizational cultural should be among the main steps to be undertaken in any organizational management study (Verbeeten, p. 451).
Organization should have a structure that dictates how its operation should be carried out to boost its productivity. Formal organizational structure should spell out clearly the work to be done by the authority, every staff, responsibility allocated to each staff, the title of each person in the organization and the relationship between the subordinate staff and their superiors (Parker, p. 417). The managers generate this structure in order to achieve the goals of the organization.
The formal structure offers a background for defining management power, duty and accountability of the managers through division of labour and departmentalization. Formal structure is the manner in which the organization is organized by persons with the charge for the organization’s management. The managers generate the formal structures that permit the organization to achieve its specified aims. The purpose for having an organizational structure is to uphold communication and to ensure that there is no overlapping of jobs and other employees may be doing less than expected.
Formal organization structure of an organization comprises of various approaches including; Functional structure whereby the staffs are divided into sections or departments that each handles activities that are related to a specific area of the business, such as production, information technology, marketing, human resources and customer service. In a multidivisional structure the employees are grouped into departments depending on the products or services, and the regional locations (Parker, p. 419).
Dimensions of organizational strategy
- Generic business strategy
Samsung Company is faced with competition in the market by other companies dealing with similar products. These companies include Nokia, LG, Apple, Lenovo, Ramtons among others that deals with products ranging from mobile phones, Computers, Laptops, household appliances among others. Samsung will employ two generic business strategies; that is the cost leadership and differentiation leadership to achieve a competitive advantage against this market competitors.
a). Cost Leadership
With this strategy, Samsung aims at becoming the lowest-cost producer in the industry. Samsung will produce its products on a large scale with the aim of increasing its profits. To further increase its share in the market, Samsung will also have a discounted price of its products in order to maximize sales.
In order to be the lowest-cost producer, Samsung will achieve this by: employing lean methods of production, increasing its productivity levels, negotiating the lowest prices for the production inputs, effective technological use in the production process and looking for access to a distribution channels that is most effective (Davidson, p. 33, 34)
Furthermore, Samsung will reduce the costs by employing less expensive employees and then training them and also reducing the number of staff in order to cut on costs. The costs of training will also be reduced by formulating internal systems for skills and knowledge sharing among the employees in the organization.
Samsung will also suspend any activities which do not have a cost advantage and contemplate outsourcing activities to other organizations having a cost advantage (Malburg, p. 31).
Samsung will strive to have a large share in the market to achieve more profits by lowering prices that will lead to higher demand (Hyatt, p. 12, 13). The company will employ mass production and distribution, input cost, technology, product design, resource capacity utilization, access to raw materials and economies of scale (Malburg, p. 31; Venu, p. 1).
b). Differentiation Leadership
Differentiation entails making your products different from and more attractive compared to those of ones competitors. Samsung will use various approaches to achieve competitive advantage.
This will include coming up with superior product quality in terms of its durability, additional benefits, reliability and improving on its features (Allen and Helms, p. 45, 47). For example in the mobile phone industry, the Samsung phones will have features that are more appealing to the customers such as having the latest operating systems like the Android which will support internet based technologies.
For the market to understand the additional benefits that are being offered by the differentiated product, Samsung will put in place effective sales and marketing strategies. This will make customers more informed about the high quality products and thus make them more inclined to buy them.
Samsung will also champion for effective branding to achieve robust client appreciation and their wish and thereby achieving brand loyalty form the customers who will buy our products all the time even if there are other competing products from other companies.
Samsung will distribute its products across all main channels of distribution such that the retailers in all the regions have the products where the customers will be able to access and buy them.
Samsung will do rigorous advertisement in all communication media such as the internet, TV, radio etc to promote the products. The company will also sponsor community activities such as games i.e Soccer, Athletics, Tennis etc to also help in promoting its products and visibility in the market.
Samsung will also strive to improve customer service so that the customers feel that they are being treated well and will get quality for money they spend in buying our products.
Lastly, the company will help to nurture a culture of endless enhancement and innovation within the team. The employees will be encouraged to always look for innovative ways to improve in the quality of the products to beat the competition in the market. This will be achieved by fostering good research, development and innovation by the team members (Martins and Terblanche, p. 67)
- Organizational culture
Samsung Company will employ and follow strict organizational culture in order to achieve its goals of becoming the leader in the market. Some of the main values for the organizations are;
a). Samsung puts emphasis on achievement of its goals by its employees. It focuses on results being achieved. Each department must do its best to achieve its mandate and improve on the business efficiency (Kaplan and Norton, p. 21; Gordon and DiTomaso, p. 788).
b). Samsung company dictates that its employees are expected to be perfect in their work. Employees are expected to have a culture of paying a high attention to detail and to accomplish their jobs with precision (Magee, p. 56)
c). Samsung Company places a high importance on innovation. The company employees are encouraged to take risks and be innovative while performing of their jobs. The employees are expected to look for means to increase their performance instead of doing their work in the same manner that they were taught to do them (Kralj and Marki?, p. 104).
d). Samsung strives to treat their employees with respect and dignity and being fair to everyone. Therefore all decision making in the company will be done having in mind how the decisions will affect the people in the organization.
e). To foster a positive relationship among employees and between the employees and managers, Samsung encourages the culture of teamwork and collaborations. The work activities are organized around teams instead of individuals (Miklav?i? ?umanski, et al., p. 111)
f). Since there is competition in the market, Samsung puts emphasis on the culture of aggressiveness on the part of its employees. Therefore, we place a high significance on competitiveness and beating the competition from other companies at all costs.
- Formal organizational structure
Samsung being a multinational brand its continued successful operation will be maintained by having in place the following kinds of organization structure i.e regional, functional and product organizational structure;
Since Samsung is a global company, there is need to divide the company structure into regional segments. In terms of management, the top directors are based in the home country at the top of the management, and then each segment is comprised of regional managers who report to the top directors in the home country. By so doing, the different market demands are met in a localized manner in terms of the product lines and pricing since this can be unique for each region. This will also give the company a competitive against small regional competitions.
Samsung employs a top-down flow of command with a high level executive at the highest position, with various intermediate managers at departmental level. The employees are divided into sections that each handle undertakings associated to a functional area of the business. The departments include research and innovation, production, marketing, human resources, information technology, accounting and customer service. Each of these areas is being headed by a manager who directs all activities that are related to his or her functional area. Everyone in the company that works on each of the area reports to the manager of their respective departments. The department managers in turn report to the chief executive officer. These departments are separately managed from one another by the heads of department, and they are only answerable to the top executive.
The company choses to have this kind of formal organization structure since it will lead to a competitive company business because every employee is inclined to learn a lot about his or her specific function and thereby creating specialists who are highly skilled (Mantere, p. 299). For example, an employee has a great prospect to become an expert in marketing if he or she is positioned in a department that comprises fully of marketing professionals.
Within this structure, business efficiencies are created and the costs are kept low by grouping every staff that serves a specific role into one department and since they share the same background training, conflicts are quite infrequent within the departments. All this will foster the smooth running of the business (Mantere, p. 304).
Samsung will employ this organizational structure to enable it to penetrate the market and improve on sales of its various products. Here, the highest executive at the topmost of the management line, while different products are divided into small companies with each product segment having its managers who report to the top executive managers. The products of interest for Samsung are Mobile phones, tablets, computers, laptops, iPhones, iPads and household appliances. The company will set up a division or department for each of these product lines with their respective managers.
Irrespective of what service or product a company offers, quality is crucial to developing and maintaining competitive advantage and thus must be an important part of the company’s competitive strategy. For the different market niches the company serves, the quality as defined by the customer shows the best worth a company can put into its product and services. Each product for each market niche should offer and provide the utmost value to consumers in that segment.
The organizational culture is an effective mechanism for integrating the behavior of the employees’ on the objective of the organization so that they can be more effective in executing and realizing the goals of the organizational.
Formal organization structure provides fundamental structure of division of work and accountabilities, it creates clearness on what provision and contribution each employee expect from others, what is expected of him or her by others. It also encourages discipline in the organization. In a formal organization structure, all the departments together with their activities are well spelt out and this makes it easy to co-ordinate and thereby making its management easier.
Akan, O., Allen, R.S., Helms, M.M. and Spralls, S.A . 2006. Critical tactics for implementing Porter’s generic strategies, Journal of Business Strategy, 27(1) pp. 43-53.
Davidson, S. 2001. Seizing the competitive advantage. Community Banker, 10(8), pp. 32-34.
Gordon, G.G. and DiTomaso, N. 2007. Predicting corporate performance from organizational culture, Journal of Management Studies, 29(6), pp. 783-798.
Grant, R. 2008. Contemporary Strategy Analysis. Blackwell Publishing: Malden, MA
Hyatt, L. 2001. A simple guide to strategy. Nursing Homes, 50(1), pp. 12-13.
Kaplan, R. S., & Norton, D. P. 2011. The Strategy-focused Organization: How Balanced Scorecard Companies Thrive in the New Business Environment. Boston, MA: Harvard Business School Press. pp. 15-27.
Kralj, D. and Marki?, M. 2008. Processes Innovation and Sustainable Development, WSEAS Transactions on Environment and development, 4(2), pp. 99-108.
Magee, K. C. 2002. The Impact of Organizational Culture on the Implementation of Performance Management. Doctoral Dissertation.
Malburg, C. (2000), Competing on costs. Industry Week, 249(17), p. 31.
Mantere, S. 2008. Role Expectations and Middle Manager Strategic Agency. Journal of Management Studies, 45(2), pp. 294-316.
Martins, E.C. and Terblanche, F. 2003. Building organizational culture that stimulates creativity and innovation, European Journal of Innovation Management, 6(1), pp.64-74.
Miklav?i? ?umanski, M., Kolenc, I. and Marki? M. 2007. Teamwork and defining group structure”, Team Performance Management, 13(3-4), pp.102-116.
Parker, S. K. 2007. “That is my job”: How employees’ role orientation affects their job performance. Human Relations, 60(3), pp. 403-434.
Porter, M.E., 1985. Competitive Advantage Creating and Sustaining Superior Performance. Free Press, New York.
Powers, T.L. and Hahn, W. 2004. Critical competitive methods, generic strategies, and firm performance. The International Journal of Bank Marketing 22(1), pp. 43-64.
R.S. Allen, and. Helms, M.M. 2006. Linking strategic practices and organizational performance to Porter’s generic strategies. Business Process Management Journal,12(4), pp. 433-454.
Schein, Edgar H. 2004. Organizational Culture and Leadership, Third Edition, John Wiley & Sons, San Francisco, 2004
Venu, S. 2001. India: competitive advantage: alternative scenarios. Businessline, 12, pp. 1.
Verbeeten, F. H. M. 2008. Performance Management Practices in Public Sector Organizations: Impact on Performance. Accounting, Auditing and Accountability Journal, 21(3), pp. 427-454.