Above-Average Returns

Determine which of the two primary drivers of the competitive landscape is more influential. Explain your rationale. Use the internet to research an industry with a significant impact on your local economy (e.g., autos in Michigan or oil in Louisiana). Use the internet to research a business failure.

Identify an organization that could benefit from the application of the I/O Model of Above-Average Returns. Follow the five steps to justify your answer. Do not use Apple or Walmart in this exercise, nor should the organization you select be the same as another post.

  • The first step is for the company to study the external environment- the external environment consist of the competitors and the government, this will enable the company to formulate strategies to gain a competitive advantage and comply with the government for effectiveness.
  • The construction industry is undoubtedly an industry of high potential, buildings and other structures are being erected daily in the United States. Therefore the industry will have a high potential for above-average returns.
  • The organization can implement a strategy that involves investing in and having strong stakeholder relations with various institutions and countries. This will secure them contracts that will earn them average returns.
  • The assets and skills needed are resources, fundamentally, funds will enable the construction company to train their workers with unique training skills and instill knowledge of construction that allows them to be better hence gain average returns.
  • The final step is the implementation of strengths, this further extends to the organizational culture of the organizations, by so doing the company will set a firm strategy that will earn then above average returns.

PLEASE RESPOND TO CLASSMATES DISCUSSION WHETHER YOU AGREE OR NOT & A DETAILED WHY:

PART A – For my example, I have selected the computer manufacturer Dell to evaluate. I think that hypercompetition is the primary driver that is influencing the competitive landscape for this company. As the business becomes increasingly global, competitive edges become more difficult to develop and maintain due to growth and access to technology. While the computer manufacturing landscape is extremely competitive, Dell has been very successful in targeting schools and government as end users for their products to help generate consistent profits. By partnering with and including stakeholders from both of these realms, Dell has an understanding of the human capital that make up these groups and as such is able to bring products to market for their specific needs. While other companies might be able to make a less expensive or more technologically advanced product, by understanding what the user class needs, Dell has been able to tailor solutions that are durable, easy to use, highly scalable, and interchangeable to maintain their status as an industry leader. Maintaining a firm grasp on the five forces model of competition, Dell has been able to adequately forecast supply costs, establish a loyal base of buyers, and help create a high barrier to entry for any competitor seeking to enter into competition in this market space. As long as they continue to reinvest into the interests of their stakeholders, it is reasonable to expect the firm to earn above-average returns.

PART B – ADIDAS is the company I chose for this assignment because it is one of the largest manufacturers of sportswear, which includes shoes, clothing, and accessories. In 2015, the company presented a plan for a new business strategy to accelerate its growth through the year 2020 ( Adidas, 1). The company formulated their strategy that focuses on three elements: SPEED, CITIES, and OPEN-SOURCE (1). The new business strategy is aiming to increase the company’s net income by an average of 15% every year and dominate the market in the future (1).

SPEED – The strategy is to grow the company’s income rapidly. The new standard increases in-season creation and focuses on product customization options and innovations, or creating the latest trend for its consumers (1). The company is also focusing on digital technology by expanding its eCommerce business (1).

CITIES – The business strategy is focused on sustainability and winning the market in relevant geographical cities in the US, Europe, and Asia such as LA, New York, London, Paris, Shanghai, and Tokyo (1). To achieve this, Adidas is spending more money to invest in marketing efforts to promote its brand in these cities and help it to grow faster.

OPEN SOURCE – The business strategy where Adidas is using relevant initiatives to focus on creative collaboration with different sources – athletes, partners/retailers, and its consumers (1).