Questions-Answers: Strategic management cases

Chipolte

• Define the components of Chipotle’s business strategy. How should the analysis influence the strategic direction of the firm? In light of economic and competitive forces, do you think CMG’s sustainability practices add value or diminish potential for the company?

The positive accomplishment domain depends significantly on the nature of strategy employed. Conferring to Ireland and Hoskisson (2015), strategy embroils an integrated and coordinated action undertaken to exploit crucial competencies and obtain a competitive advantage. There are various components which are included in the Chipotle’s business-level strategy. One of the elements is the mission statement which translates to food with integrity. In this part, the firm covers consumers who prefer a fast-casual dining experience at modest prices. Chipotle’s strategic manner does not target a distinct population but caters for those individuals who desire timely service and a fabulous dish created from all-natural ingredients.

Another component of the firm’s strategy entails marketing, where it has reduced its advertising costs following on its policy that other factors are similarly essential for brands success. The analysis should influence the strategic direction of the firm to start emphasizing more on other factors which will redeem its position. The element will include reviewing its policy on advertising considering the company’s closest rival, Taco Bell, emphasizes more on advertising (Ireland & Hoskisson, 2015). Through analysis, the firm’s management can construe the nature of things in the industry and as such evolve more aggressive tactics to guarantee continuity. In light of the current competition and changing economic forces, it is apparent that CMG’s sustainability practices will eventually lead the company to its ruin. The problem arises since maintaining the practices in the face of competition and changing economic forces is challenging as the economy now favors fast service and casual restaurant over the restaurants of CMG’s caliber. Individuals will now rather cut on their spending on food which impacts the corporation significantly. Additionally, the ever increasing competition in the domain calls for a change of CMG’s operational practices if it has to remain in business.

Krispy Kreme

• Consider industry characteristics which influence the level of competitiveness and impact performance results among Krispy Kreme and its rivals. What elements in the external environment present long-term risks for the company?

Many industry characteristics impact the nature of competitiveness and performance results among Krispy Kreme and its competitors. One of the factors entails the corporate governance structure. Conferring to Chandran, Lamoreux, Rice, and Seunsom (2015), shortcomings and accounting missteps coupled with other factors almost led the corporation to bankruptcy. Another characteristic entails the changing client trends, which are mirrored in the changing American diets that ultimately impact performance. Innovation represents business characteristics that affect competitiveness significantly. Implementing innovation is associated with increased competitive advantage and guaranteed continuity. For instance, by applying innovation in its operations in the 1980s, Krispy Kreme was relishing the competitive advantage (Chandran et al., 2015). Rapid expansion in the industry is similarly impacting competition where firms with steady income flow possess the potential to expand its customer base and improve performance. Franchising has also played a significant role in shaping the competition dynamics. Through domestically and internationally franchising, the corporation has been consistent in its success strategy and competitive advantage as most of the revenue is obtained there.

In fact, one element of the external environment that poses a constant challenge for the corporation entails the ever-changing market with the rise of the health-conscious American consumer. Though the company has strained to mitigate the risk through the introduction of a healthier brand of doughnuts, the impact of the health-weary client is consequently immense (Chandran et al., 2015). Overexpansion and sustaining growth is a looming risk that the corporation has to face continuously. The corporation had in the past unsuccessful attempts to maintain growth, and this poses a risk considering the nature of competition and the firm’s quest to maintain continuity.

Tesla

• Summarize the general environment trends that impact Tesla’s strategic decisions. Then examine the industry and competitor environments to gain a thorough understanding of all relevant conditions in the company’s external environment. What are the greatest impending threats facing Tesla?

Tesla is a corporation that has registered substantial success in the electric vehicle industry. Various environmental trends impact Tesla’s choices. Therefore, the trend is changing its target market. According to Ehrler, Gillis, Huesemann, Sandoval, and Turckes (2011), Tesla has been on an initiative to produce vehicles designed for the luxury market. Though there exists the risk of limited orders which may result in the downfall of the corporation, the change nonetheless offers a high growth prospect. Reliability and performance similarly impact Tesla’s decisions. Customers, particularly the family segment, have different concerns which influence the decisions made by the company before releasing their products in the market.

Tesla’s decisions are also influenced by its unwavering concern for the environment, particularly, the impending danger of global climate. By trusting that informed and ecological approachable consumers will be massively inclined to acquire environmental friendly products, the corporation banks on dealing in such products. Public concern has been identified to impact decisions substantially both in the political and legal domains. Global variations in customer demographics and population growth also have a significant impact on decisions at Tesla. Universal fiscal trends mainly in currency exchange rates impact Tesla’s decisions in its quest to expand overseas (Ehrler et al., 2015). Finally, other trends that might affect Tesla’s decisions includes globalization and technological change.

The greatest impending threat facing Tesla is the fast growing competitors substitute products. Though the company’s vehicles possess the upper hand regarding range and excellent performance, rival automakers are posing a substantial threat to the viability of the corporation. Additionally, the threat is reinforced with Tesla’s limited capacity to manufacture vehicles constrained by its size and resources’ access, making it vulnerable to other automakers in the industry. Another impending threat facing Tesla is that it risks losing its innovative superiority and paves the way for other rival manufacturers to advance their electric vehicle models and edge out the corporation in the industry (Ehrler et al., 2015). The increasing costs of crude oil have augmented interest in the need for energy conservation and renewable energies. Administrations are now opting for low-cost transportation modes like buses and trains which represent looming risks to Tesla automotive company. Finally, there exists a risk of conflict between Tesla’s policies regarding environment conservation in future about lithium-ion batteries employed in the vehicles. Additionally, such conflict is imminent with rising public concern over global climate change.

Ally Bank

• Review Ally Bank’s business strategy and Ally Financial’s corporate strategy. How do they fit with internal strengths and market conditions.

Ally Bank represents a financial institution offering clients a varied type of banking experience. The bank has two offices with no ATM functionality. Ally Bank’s business strategy incorporates numerous elements which nonetheless enable it to sustain growth and register success. With limited offices and no ATMs, the bank compensates this by introducing an immediate online banking (Erickson, Hassan, Karnik, Shin, & Turnley, 2015). The bank’s strategy has been reinvented from rebranding and creation of a new mission to accomplish objectives of the bank. The bank’s strategy mainly entails providing clients with the ideal customer service at the lowest likely cost. This is easily attained through ensuring personalized service to clients which are unmatched from the most Internet and traditional financial institutions. The corporation’s financial corporate strategy of re-investing back to the clients informed of competitive interest rates on certificate of deposits and other areas have ensured that it cultivates both trusts and satisfaction on its customers. Its brick-and-mortar approach enables the bank to have many cost-saving benefits while offering investment prospects for its clients (Erickson et al., 2015). By saving on overhead expenditures and transferring the savings to its customers in the form of increased interest rates, the bank can obtain profits. Ally Bank’s business strategy and corporate financial strategy fits squarely with its apparent internal strengths and the market conditions. Regarding the nature of online banking, it is important to mention that it is fast growing facilitated by the augmented client satisfaction in the Internet and web-based technology.

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