Week 3 540 Essay Example | Topics and Well Written Essays - 750 words

Week 3 540 - Essay Example Enter the Wireless Communication market,† (Simulation). An analysis done on the prospects of these two proposals, reveals that the agenda or proposal to expand the existing Digital Imaging or Dig-Image market share, can be beneficial than the option of entering the Wireless Communication or W-Comm. But, at the same time, this decision to go for Dig-Image has certain internal as well as external risk. So, this paper will analyze the risks of this investment decisions and importantly the mitigation of those risks. Normally, organizations wanting to increase its value, as to invest in projects that provides a positive Net Present Value. The Net Present Value of an investment project is usually determined by the subtraction of the projects total cost from the present value of the projects expected future cash flows. And, if the Net Present Value is higher than the projects cost, then it is expected that the project will increase the firms value According to the outline provided by the Marketing Research Reports, SAI should use the best capital budgeting approach in the form of NPV, as it will identify cash flows rather than profits. Then, it utilizes all the cash flows and in turn discounts the cash flows properly. So, in the case of Dig-Image, the sales of it in new markets depend upon its existing market share from the global perspective, price per product and importantly the size of market. As SAI through its Dig-image proposal tries to expand its market share throughout the world, it should be aware of the risks associated with foreign exchange exposure and the relevant mitigation strategy of hedging. Foreign exposure in the sense, the frequent fluctuations in the exchange rates will negatively affect the operating cash flows and importantly the dollar value of the SAI’s total assets and liabilities. This risk will have both short term as well as long term effect and could dent any new initiatives from SAI. This

Discussion on Business Organization Essay Example | Topics and Well Written Essays - 1000 words

Discussion on Business Organization - Essay Example This market leadership may relate to pricing innovation, product innovation, new forms of promotion, development of new market segments, or initiating a new trend in the market. Quite often such market leaders may not be large organizations, but more innovative smaller organizations, like Dyson in vacuum cleaners; or organizations with better expertise, like specialized accounting firms or those with more talent and competencies, like Stella McCartney in fashion designing. Simon, 2009, p.29, terms such smaller organizations as â€Å"hidden champions†. These â€Å"hidden champions†, reframe the definition of market leadership to â€Å"market leadership not only in terms of market share, but see it as an extended claim to overall leadership in their markets† (Simon, 2009, p.29). Table – 1 below gives the advantages and disadvantages of market leadership. ... Compounding the contribution of these factors to problems in identifying market leadership is the issue that some organizations, do not concentrate on achieving leadership by merely market share. They may to look to acquiring leadership in other aspects, like asset leadership, which gives them a boost towards taking over market leadership. Asset concentration may be in terms of competencies of the employees, or superior equipment or strength in distribution channels. Identifying market leadership thus becomes a more difficult endeavour (Pickton & Masterson, 2010, p.40). Following in the path laid out by a market leader are the organizations that may be called market followers. Market followers identify and keep a track of the successful ideas and strategies employed by market leaders. This does not imply that they follow a me-too product design and promotion strategy. Rather, the strategy employed is to allow the market leader to employ resources in testing their innovative ideas and strategies, and then cash in by employing the successful innovative ideas and strategies themselves. This can be seen from the example of the competitors of McDonald’s in the 1990’s waiting for McDonald to identify locations for its outlets, using its resources, before moving into the location as a competitor. It is these market followers that need to identify the market leaders, so as to copy their successful innovative ideas and strategies (Pickton & Masterson, 2010, p.39). 2. The EC Unfair Commercial Practices Directive and the German Act against Unfair competition define unfair competition as â€Å"unfair commercial practices that are likely to distort the economic behaviour of consumers† (De

Explore the relationship between the material and the spiritual in Essay

Explore the relationship between the material and the spiritual in Beowulf and The Millers Tale - Essay Example Geoffrey Chaucer’s â€Å"The Miller’s Tale† is the second part of the Canterbury Tales and narrated by the alcoholic Miller and is a vulgar fable, depicting debauchery in contrast to the heroism underlined in Beowulf. Both Beowulf and the Miller’s Tale have been interpreted as using biblical analogies and allegories and the focus of this paper is to explore the relationship between the material and spiritual in Beowulf and the Miller’s Tale. If we firstly consider Beowulf , it is evident that the recurrent themes of war, tragedy and loss and military heroism are pertinent to historic patterns human behaviour whilst simultaneously providing a clear depiction of Anglo Saxon cultural norms. Moreover, French Historian de Certeau argues that â€Å"history aims at calming the dead who still haunt the present, and at offering them scriptural tombs† (Certau, 1998). Additionally, Certau highlights that the various themes and use of language in Beowulf convey the notion of inevitability through â€Å"labor of death and a labor against death† (Certau, 1998, p.5). This is further reflected in Beowulf by the denial of death and references to fear, loss and death. If we further consider the development of literary historicism, Foucault’s vision propounds that human behaviour is innately driven by motivation for power, which is clearly mirrored in Beowulf (Foucault, 1979, p22). Furthermore, in context of the medieval period within which Beowulf is set, there is clearly a dichotomy between philology, which studies the words and new historicism, which considers the historicism context (Frantzen, 1990, p114). Moreover, Philology posits that to understand people, the literary language must be understood whereas historicism indicates that to comprehend the language, the people must be understood for example the Anglo-Saxon gift culture represented assertion of

US Intel Community Essay Example | Topics and Well Written Essays - 1000 words

US Intel Community - Essay Example The great thing about this agreement is that there is a common face to it and is apparently diplomatic and open addressing on alien nations1. But there is as well a dark and covert side and although they allegedly are not appropriated to operate domestically, they do act domestically through the big private institutions - enforcing the policies of the UN Organizations. Understanding that explains how UN policies are interconnected and enforced in the United States. From the start of this nation history, there have been two sects - Internationalists and Nationalists. The Nationalists were our Founders. The Internationalists were the Tories - oppositions of independence. Traditionally, the military have been accountable for interior security and homeland defense. The National Security Act of 1947 regrouped the leadership of the armed forces following Second World War, validating a Defense Department (DOD) with a Secretary of Defense (SECDEF) that content directly to the Commander-in-Chief. As we now acknowledge, the NSC was not arranging a great job aligning all the facets of Office of Homeland Security2. For instance, border security was addressed in a split way by a number of agencies. Intelligence was not being effectively shared. To start with, from ethical point of view, the National Security Act of 1947is an act that governs all partaking office with origins and roots from the US governance. Taking the account that United nation is excluded from the provision of United states intelligence information is unethical on account that the organization has rights as far as the laws is of concern. The organization has been of help in identification of individuals disputes and always alerted the States on any prevailing measures needs to be taken just on time. 2. How would you define "morally intolerable" and "morally acceptable" from an intelligence operation perspective concerning national security? Is torture of terrorists or enemy

Sociological Theories and Historic Figures of the Feminism Coursework

Sociological Theories and Historic Figures of the Feminism - Coursework Example Rousseau, the laws of the particular state are a record of the collective desires of all the people and the application of those laws should be universal to all people of the state. The role of the government in Rousseau’s political system is enforced and respect the sovereign people’s will and in no way should it seek to dominate the general will. The legislature function is to ensure that the law supports the state’s preservation. The function of the tribunate according to Rousseau’s political system is to maintain the state by the promotion of the idea of spiritual kingdom separate from any political system. Hegel’s dialectical idealism is where Hegel used different and more precise terms for dialectical trios. He used two different sets of terms for his trios, which include abstract negative concrete and immediate mediate concrete. According to Hegel, Geist, which is a German word for spirit or mind, is used to imply to the category-by-category culmination, dialectically of the negative of the infinite abstraction, resulting to the category of absolute mind or spirit (Geist). Karl Marx presents the concept of alienation by describing the social alienation of people from their human nature aspects because of living in a society stratified into social classes (Swatos & Peter, 13). He presents the concept of class-consciousness, which refers to the beliefs held by an individual concerning their social class, the structure of that class and the interests of the particular class. For the concept of class antagonism, Marx implied the conflict that exists in a society due to the competing socioeconomic interests brought by the different classes of people that exist in the society. Marx’s concept of revolution discusses social revolution where the working class tries to overthrow the bourgeoisie. Marx believed that proletarian revolutions are sure to happen in all capitalist nations.

Concepts Of Equaltiy Diversity And Rights Essay Example for Free

Concepts Of Equaltiy Diversity And Rights Essay Equality: Equality has been established to ensure that everyone has the right to equal opportunities, equal rights in work environment or in general and therefore classed as important focused and organizations take it really seriously as they have to ensure that every individual employee are entitled to same choices, opportunities and are treated equally. There are various types of equality such as the racial equality act, gender equality act, women’s equality act, Marriage equality and many more however the Equality Act 2010 (the Act) replaced previous anti-discrimination laws with a single Act. The equality of act in health and social care setting came into force on 1 October 2010. Whenever an individual need health care or medical treatment or when an elderly or an individual with mental problems who are being cared for in nursing homes, care in day Centre and such, they have the right not to be discriminated against because of their race, gender, gender identity, disability, religion or belief or sexual orientation. Diversity: is to understand that every individual is unique and recognize individual’s difference, therefore respected and valued in community or in the workforce. We live in an increasingly diverse society and need to be able to respond appropriately and sensitively to this diversity. In the healthcare setting, workers will reflect this diversity around gender, race and ethnicity, disability, religion, sexuality, class and age. Rights Every individual is entitled to basic human rights and in turn they have to able to and if not learn to respect other’s human rights. Right to life nobody even the government can try to end an individual’s life. This also means that an individual has the right to be protected if their life is at risk. The human rights act also prohibits the death penalty in UK. The courts have held that the right of life however don’t include right to take your own life. The right to life is absolute however it does not always apply in certa in situation. A person’s right to life is not breached if they die when a public authority (such as the police) uses necessary force to: †¢stop them carrying out unlawful violence †¢make a lawful arrest †¢stop them escaping lawful detainment Of course, even in these circumstances, death would be avoided wherever possible, and the force used must be absolutely necessary and strictly  balanced. According to law, Everyone’s right to life shall be protected by law. No one shall be disadvantaged of his/ her lives intentionally save in the execution of a sentence of a court following his/her conviction of a crime for which the penalty is provided by law. In health and social care setting career or anyone has to be able to respect other’s human rights. Right to liberty every individual has the right to their personal freedom. The government cannot take away an individual’s freedom by detaining them without any good reason even if it’s just for short period of time. Importantly, the Human Rights Act provides that if an individual is arrested, they have the right to: †¢Why an individual have been arrested and what charges they face, would be told in a language they would understand. †¢Be taken to court punctually. †¢Have a trial within a reasonable time. †¢If an individual is confident enough than Go to court to challenge their detention if they think it is unlawful. In health and social care setting worker/career, every patient is entitled to right of their personal freedom therefore they have the right to equal required health care services needed as everyone else within the care setting. Discrimination is unlawful within Britain. Law protects you from discrimination at situation like these †¢At work. †¢As a consumer †¢When using public services. However there are two types of discrimination overt discrimination and covert discrimination. Overt discrimination is when a colleague of an individual is paid more because of their gender even though they both are doing the same job with the same qualification, there should be no differences at all. Unfortunately sometimes it does still takes place and that individual have to be aware and make sure that it is sorted out. Covert discrimination is opposite to overt, this is more complicated to demonstrate as it is hidden. For example it is when an individual is applying for a job with the same qualifications and experience as other applicants, someone between those two might not get picked because of their skin color or their sexuality or their ethnicity. It still does take place but the only thing is hard to  demonstrate as it is hidden. An individual has to be aware of covert discrimination against people using health and social care services. Stereotyping is dangerous and common with the children, which they tend to pick up from the adults. The most common types of stereotypes are that All overweight people are too lazy to get anything done All homeless people do not want to work. The Williams and Best gender study from 1992 found that within 30 different countries, males were typically characterized as adventurous, powerful, domineering and independent. Females, on the other hand, were characterized as sentimental, submissive and superstitious, however slowly the society has been making transition away from the stereotyping. Prejudice is when someone makes and judgment about someone without really knowing the facts. Sub culture is a culture is a culture with its own distinctive norms and values for example chav, Emo, Goth etc. people might judge them and stereotype them without knowing, some people see Goth as dark inside, dark thoughts and heavy makeup, but who are they to know assume that, because in fact they are only seeing them visually, if they actually approach them and talk they might not be what they think they are at all. In the health and social care profession an individual may still have these thoughts not just health and social care settings but everywhere however they have to be careful of how they see and treats others which will make an impact in their work. If individual lets prejudices interfere them with their work in health and social care the person will not be treated fairly.

Strategies to Sustain Competitive Advantage

Strategies to Sustain Competitive Advantage Q1: Using an appropriate model, evaluate the business model of a company of your choice, describing how the company differentiates itself from its competitors and sustain competitive advantage. 1. Executive Summary Cummins started off as diesel engine manufacturing company since 1919 and now growing as â€Å"power† leader in the world. Cummins expand network through company- owned distributor, independent distributor and dealer to serve customer globally. In 2009, Cummins reported net income of $428 million in $10.8 billion of sales [1]. Cummins have been diversifying its business to broad range of products from power generation, filtration technology, turbo technology, fuel system, emission controls and air handling [2]. Due to external pressure and growing market in Asia, Cummins recently setup Centre of Excellent in Singapore focus more on Marine and Offshore market. In this post module assignment, competitive strategy will only focus on Cumminss marine and offshore business. In this PMA, the value curve is based on own industry experiences assumption. However, analysis on financial will based overall Cummins business listed in stock market which named â€Å"CMI†. 1.1. Vision Statement â€Å"Making peoples lives better by unleashing the Power of Cummins† [3]. Cummins believe in by developing new technology will lead to better living for the people. 1.2. Mission Statement Cummins mission statement as quoted below [3] â€Å"Motivating people to act like owners working together† â€Å"Exceeding customer expectations by always being first to market the best products† â€Å"Partnering with our customers to make sure that they succeed† â€Å"Demanding that everything we do leads to a cleaner, healthier, safer environment† â€Å"Creating wealth for all stakeholders.† 1.3. Cummins compare with Industrial leader Figure 1 Financial Analysis CMI Vs Industry Leader [4] Figure 1 shows overview financial analysis of Cummins (CMI) compare within industry leader [4]. Cummins rank 35 among 379 diversified machinery industries in industrial goods sector for market capitalisation. Cummins stock values increase more than triple over the past 3 years and promise future growth with its business strategy [4]. 1.4. Ocean Strategy Ocean strategy has been introduced by W.C. Kim and R Mauborge since 2004. Starting then, this strategy is adopted and implemented successfully in various organisations globally. Recently, Malaysias Prime Minister Datuk Seri Najib Razak shared his experience on Ocean Strategy when dealing with increasing crime in the country [5]. He is using Blue Ocean Strategy as management tools in order to promote thinking out of the box. Key successful activities such as leveraged untapped resources when replaced police with soldier doing patrolling around countrys border and conduct training for new police force in the underutilised army facilities. This initiative save a lot of money from government and promote cross functioning role among government agency [5]. The principle of the ocean strategy is treating market as universe. There are two oceans available in the universe named Red Ocean and Blue Ocean. Red Ocean defined as known competition. In this Ocean, product is already well defined and competitors only able to compete with price [6] .Customer expectation on the product almost generic and not much technology can be developing in this area. For diesel engine in marine and offshore market, the competitors for Cummins include Caterpillar, MTU and Mitsubishi. How Cummins can break trough become market leaders? Cummins apply Blue Ocean Strategy when dealing with its business. Blue Ocean Strategy defines as untapped market which no competition and industries that do not exist at this point of time [6]. This in return will resulting higher profit compare with conventional approach. This clearly shows in W.C. Kim and R Mauborge studys on business launches in 108 companies. They summarize revenue and profit impact of business launches shows in Figure 2. In this study, 86% business launches within own boundaries (Red Oceans) and 14% business launches looking for new opportunities (Blue Oceans) [6]. Red Oceans approach focus on existing customer by improving their product and study shows that this resulted 62% on total revenue and 39% on total profit. In contrast, 14% of the businesses launches by creating blue oceans can bring in higher return which about 61% of the total profit [6]. Cummins spend heavily on research and development for past 5 years as shown in Figure 3. In 2010 alone, Cummins invest 414million in new technology development [2]. One of recent Blue Oceans initiatives is setting Marine and Offshore Centre of Excellent in Singapore. This business focus on the â€Å"Packaging† instead of selling conventional type of â€Å"bare diesel engine† like other competitor such as CAT, MTU and Mitsubishi. Figure 4 shows pictorial view on the value added components into bare diesel engine 1.5. Strategy Canvas Figure 5 shows strategy canvas of the marine and offshore diesel engine. X-axis represents critical success factors of the markets competition and Y-axis correspond to values perceived by marine and offshore customer. Marine and offshore is a mature and establish market. Engine makers always compete with price, image, brand, delivery, product performance and service availability. Cummins performs averagely in critical successful factors. However, in order to compete in the competitive market, Cummins break through conventional way by creating new team to focus on product value added specifically for marine and offshore customer. Cummins applied Blue Ocean strategy. Figure 6 shows Red Ocean strategy from others diesel engine maker and Blue Ocean strategy from Cummins. Q2: Using either Porters generic strategies or the Strategy Clock, identify examples of organizations following strategies of differentiation, low cost or low price, and stuck-in-the middle or hybrid. How successful are these strategies. 2. Porters 5 forces generic Strategies â€Å"Using the five forces framework, creative strategists may be able to spot an industry with a good future before this good futureis reflected in the prices of acquisition candidates† Michael Porter [7]. Porters five forces: Threat of New Entrants: Analyse potential new comer to market is important to understand potential future competitors Bargaining Power of Buyers: Buyers is the party that create demand for industry, understand buyers requirement will help to maintain competitive advantages. For example, bargaining power of buyers is high if product is standard. Threat of substitute products or service: Buyers always look for alternative or cheapest way to get products or service. Substitute product can bring the overall industry price lower Bargaining Power of Supplier: Supplier supply raw material or service to manufacturer. Bargaining power of supplier is high when to many buyer and less supplier in the market Rivalry among existing competitors: Current fast moving industry, its important understand the strategy of existing competitors. Example: How competitor gain competitive advantages or product differentiation. Porters 5 Forces allowed the company undertand and analyse own industry struture and futher help the management to decide on companys strategy. According to Porter, organisation is able to gain competitive advantanges by strategies the company using one of the â€Å"Porters Generic Strategies† as shown in Figure 8; 1) Cost Leadership, 2) Differentiation, 3) Focus [8]. 2.1. Cost Leadership Strategies Cost leadership strategies emphasize on low cost in company strategies. Company will offer low per-unit cost product or service to customer that sensitive to price. In order to become low cost provider, company can practise integration strategies (backward, forward and horizontal). There are few factors that will affect the strategies include economies of scale, learning curve, productivity, company structure, relationship with supplier and quality control. Several example organizations that practice this are Wal-Mart (general merchandiser), Air Asia (budget Airline) and Macdonalds (Fast Food) [9]. In this PMA, I will use Air Asia as example to study its business model and look into company successful factor. Air Asia strategy as illustrate in Figure 9, the company mission is to continue to be the markets carrier low cost provider. In order to compete with other aircraft carrier and achieve company vision for â€Å"Lowest cost airline†, Air Asia implement a few strategy to reduce operation cost. Strategy implemented as per below: 2.1.1. Keep operation cost low- NO frills In order to compete in this competitive market, Air Asia able to keep operational cost low by implementing few â€Å"NO†s in the strategy [10]: NO meal: No food or drinks will be provided free in the in-flight service. NO frequent flyer program: NO Membership or rewarding program which commonly used for others airline like Kris flyer for Singapore Airline and Skymiles for Delta airline. NO Seat assignment Ticket: In order to keep administrative cost low NO Entertainment: NO news paper and entertainment system such as movie, games and music. No ticket : Ticketless replaced conventional type printed ticket No waiting lounge: NO lounge provide in the airport 2.1.2. Single air craft fleet In order to streamline the operation, Air Asia phasing out its 14 Boeing B737 in 2010 and replace by only operate single air craft which is A320. Few advantages of using single aircraft as stated below Keep inventory cost low Saving cost in service and maintenance such as keeping same model of spares parts. No duplicated resource due to difference Air Craft experience needed Reduce time and training cost due to only one model. This allowed the company avoid going to through the expensive â€Å"learning curve† process and also may dissatisfied demanding customer. Michael and Nikos study on the organisation learning curves for customer dissatisfaction across airlines. They plotted estimate U-Shaped learning curve as show in Figure 10 and show evident that complaint rates followed U-shaped function of experience Able to increase fuel efficiency and improve productivity 2.1.3. Simplified distribution system Air Asia design simple user friendly system for customer to book and check- in their ticket. Customers are able to check in using own mobile as shown in Figure 11. This ticketless system is able to reduce waiting time for customer queuing to check- in at the airport counter. 2.1.4. Point to point network (≠¤ 4 hrs) All Air Asia flight is running by point to point network within 4 hours radius or less as its business model. This model only carry passenger from point A to point B without any connecting flight. This in order to keep operation cost simple in order to reduce costs [10]. 2.1.5. Optimum Aircraft Utilization Another way to keep operating cost low and maximizes profit, Air Asia increase productivity by optimise flight utilisation. Air Asia is the fastest in the region by achieving 25 minute turnaround time. Air Asia is able to achieve equal or more than 75% for last 5 years on the load factor. Once, Air Asia achieve close to 100% load factor for Bali Perth route. Load factor is defined by AirAsia as â€Å"numbers of passengers as a percentage of number of seats flown† [10]. On top of that, Air Asia applies â€Å"Tier based† system for ticketing which depend on supply and demand. When demand is low, the price is low. When demand is high the ticket price will also go high. This system is efficient especially during low season allowed Air Asia maintain the reasonable high percent load factor, 2.2. Differentiate Strategies Differentiation strategies offer service or product which unique perceived by customer. Differentiation strategies do not guarantee good payback especially current standard product offered in the industry is more than enough to meet customer expectation. There will a risk on implementing this strategy and need to study carefully on customer requirement before implementing. Product value added, extra servicing, products flexibility and better compatibility are some of the features that can create differentiate in the industry. Cost is not an issue in this strategy; hence company can demand higher price if customer strongly attached to offered differentiation features. Typical move in this strategy is product development. Organisations that apply these strategies include Apple (Lifestyle product), Raul Lauren (Apparel) and Maytag (Home appliance) Apple is applying differentiate strategies compare with other competitors in the industry by selling lifestyle product instead of conventional electronic gadget. In first 6 months of 2011, Apple spends 1.2 billion in research and development. This is about 40% increase compare with 2010 [13]. One of the successful examples when Apple launches iPad during 2010 and Steve Jobs defined iPad as â€Å"entirely new category of mobile devices†. Apple sold more than 15 million units worldwide after launching [14]. 2.2.1. Innovative and creativity product Apple is a â€Å"trend leading† company in the market. The company famous in creating innovative products and able to capture a significant market share after launching new products. Apple spends heavily in research and development because the company believe RD are critical for future growth and are able to create competitive advantages 2.2.2. Wide range of software and applications Apple created another successful platform for customer to download software and application. Traditional, example like phone, other competitor just focus on few simple features which only contains game, photography function, movie and some basic feature. By introducing new approach, Apple created â€Å"The App Store†. Now â€Å"The App Store† has more than 350,000 apps available for iPhone, iPad and iPod touch globally. The apps offered wide range of application from games, entertainment, utilities, social networking, music and others. In Jan 2011, Apple announces that more than 10 billion apps have been downloaded . 2.2.3. Apple store Unlike others competitors store which only focus on products price and feature, Apple differentiate by giving customer different shopping experience in the store. Apple design Apples retail store to give the patrons good impression of stylish, clean, fashion and stream-lined. The product like i Phone, iTunes and etc will placing in a place that customer can try out the features and application. 2.2.4. Provide good service and maintenance Apple provides good service respond compare with others competitors like Samsung and Nokia. In Singapore, Apple provides one to one exchange for i Phone if there is defect and still under warranty. This is different from some of the competitors, depend on the level of repair, some will take about 2 to 3 weeks. This will create some issue for some consumer that only has one hand phone. 2.3. Focus Strategies Focus strategies offers product or service to fulfil the requirement for targeted groups of customer in the industry [9]. Focus strategies can be categorized into 2; Focus cost leadership which focus on low cost solution in narrow market and Focus differentiation provide customised product or service to niche market [16]. Market penetration and market development can be use when applying focus strategies [9]. Focus strategies beneficial when competitors are not able to support on unique requirement of certain group of customer. Organisation which pursuing this strategies include IKEA (Furniture), Ferrari (Automotive) and Federal Express (logistic) 2.3.1. Focus Cost Leadership Strategy IKEA is the Swedish global furniture company that applied focus cost leadership strategy in their business strategy. IKEA offering wide range of home furnish product with low price so that many people can afford to purchase. In order to achieve the strategy, IKEA apply below concept: 2.3.1.1. Design and develop base on price In order to keep competitive price, IKEA design and develop product base on price. The price is â€Å"fix† even before the product is launch. The designer will have to work directly with supplier to ensure meeting low cost by optimised productivity, material efficiency and process improvement [17]. 2.3.1.2. Reduce logistic, handling and operating cost In order to reduce logistic, handling and operating cost, IKEA designer always consider flat-pack transportation and self-assembly during design and development phase. Flat-pack furniture is often delivered in multiple sub assemblies together with simple instruction manual and required customer to perform self assembly. This modular concept is able to save transportation, handling and operating cost. For example, assembled furniture tends to be more bulky and is more expensive to store in warehouse and transportation. Besides, that, IKEA is able to save operating cost by reduce one â€Å"Assembly† process in production . 2.3.1.3. Self-Service in IKEA Store In order t keep the operating cost low and reduce the needs of sales assistance, IKEA design the flow of store layout and display the product effectively by using â€Å"actual room† concept. For example, sofa is placed in â€Å"living room† section and bed is placed in â€Å"Bed Room† section. All the furniture is clearly labelled and useful information like dimension is easily located in the display product [17]. 2.3.2. Focus Differentiate strategy Ferrari is applying focus differentiate strategy by develop high performance car within automotive industry. Ferrari focus on high end consumer compare with other automotive competitors like Honda, Toyota or Ford which target more broad customer. Below is the strategy for Ferrari: 2.3.2.1. New Way of Purchase Car Ferrari compete created innovative approach by introduce new way of purchase car â€Å"Premium Ownership Program† to serve its target customer. This program include insurance, maintenance, warranty , Ferrari tailored made driving course and pit stop service which provide the customer â€Å"mind free† after owning and driving Ferrari car [18]. 2.3.2.2. Innovative Technology Ferrari developed own software to meet customer service expectation such as rapid response times, up to date database and personalise customer service. One of the latest features such as, the customer can view the look of the vehicle and change the preference in â€Å"Service configurator system† even in pre-order stage [19]. 2.3.2.3. Best Dealer Ferrari believes choosing the right strategic partner or dealer is the right way to serve the customer. In order to motivate the dealer, Ferrari created prestigious award Podio Awards for supplier or business partner recognition. 2.4. Stuck in the middle or Hybrid Strategies Porter does not recommend â€Å"Stuck in the middle† or Hybrid strategies if the company want to achieve above average performance in the industry. Company must choose either one of the strategy in the Porters Generic strategy. He claimed that it is difficult for a company to strategies the business to produce low cost product but still remain unique perceived by customer [8]. However, Rodney Goon argues on Porters theory and commented some of the company such as Singapore Airline (SIA) are able to success using â€Å"Hybrid strategy†. Figure 12 shows business strategy applied by SIA which plotted by Rodney [21]. Singapore Airline have been awarded 2nd place in World Top Airline in 2010 by Skytrax in Hamburg [22]. Figure 13 shows main operating cost for SIA. Top 3 costs consist of Fuel, Aircraft and People [23]. In order to achieve competitive advantages, SIA apply below approach: 2.4.1. Become Market Leader Differentiation Strategy SIA founded in 1972 started as small airline company and now evolve become the world trend leading company for Airline industry. SIA become market leader by setting trend started since 1970s when introducing headsets, drink and choice of meals in Economy Class. Figure 14 shows overview on SIA trend setting for more than 39 years in the industry. In 1991, SIA introduce satellite- based telephone to enable passenger to call to ground during flying. In 1998, in order to improve the quality and standard of in-flight meal, SIA formed International Culinary Panel which involves renowned chef from all over the world. By doing this, the passengers are able to enjoy world class cuisine even during travelling. In order to improve customer service satisfaction, SIA introduce in-flight entertainment system named Krisworld which include Audio and Video system. Passenger can watch movie, listen to music and playing game during flying. In 2004, SIA reach another milestone by flying world longest non-stop flight from Singapore to New York (Newark). In 2007, SIA flying new Airbus design A380 which is world largest passenger Aircraft from Singapore to Sydney . 2.4.2. Brand â€Å"Singapore Girl† Differentiation Strategy SIA successfully improve its service compare with others competitors by creating unique iconic image for SIAs air stewardess as â€Å"Singapore Girl† and promote â€Å"Youre a great way to fly† started in 1972. This iconic brand is famous of caring, elegant and good looking girl whom will provide good service for the passenger during on board the plane. â€Å"Singapore Girl† has continuously won many awards in Airline and Travel Industry over the years . 2.4.3. Low Cost -Cost Leadership Strategy â€Å"Everything behind The Scenes Is subject To Rigorous Control† quoted by Rodney . SIA spend heavily on the area that customer can be seen as discussed above in order to remain premium in the industry but cutting cost for area that behind the scene in order to remain cost compatible. Total cost for Singapore airline is about 14.2% is the lowest in the market compare with other competitors like American Airline which labor cost is approximately 31% of total operating expense . Other than that, average price per aircraft purchase is less than other airline provider. This is due to SIA is the market leader in trendsetting and always working with aircraft builder like Airbus when there is new product launching. First purchase in world for A380 allowed SIA command a better purchase price. Q3: What are the major advantages and disadvantages of an integrative strategy? 3. Integrative strategy Organisation is able to gain competitive advantages by using integrative strategy. Integrative strategy can be categorized as vertical, backward, forward and horizontal integration. There are advantages and disadvantages when applying each concept and detail discuss as below: 3.1. Vertical Integration Vertical integration is business strategies which expand its business either through gaining control over company that distribute or selling its product (Forward integration) or taking control over company that provide the raw material for finish goods (Backward Integration). Figure 15 illustrate 4 typical stages for value added chain in PC industry (27). Example for Dell or Hewlett Packard, in order to produce a personal computer, assembly components such as chips, microprocessor and disk drive etc is needed from others manufacturing company (Intel/ Micron). Similarly, component parts manufacturing needs raw material like chemical, metal and ceramic to manufacture the component. Kyocera is one of the suppliers for those materials. Backward integration strategy in this case is trying to taking control over components parts manufacturing and raw material supplier. Whereas for forward integration strategy, PC maker try to gains control over the company that selling or distribute the final product such as OfficeMax and ComUSA [27] This company provide platform to reach end user. 3.2. Forward Integration Forward integration strategy involves increase ownership or control over retailers or distributor and illustrates in Figure 16. One of the effective mean of forward integration is through Franchising [9]. Approximate $2 trillion revenue created annually through franchising business every year globally. This equal to 4th largest Gross National Product in the world [28]. Advantages and disadvantages as discuss below: Advantages: Getting understanding customer better One of the companies using forward integration strategy successfully is Dell. Dell founded in 1984 by Michael Dell with one direction â€Å"selling final products to customer directly† [29]. By doing this, company able to reach end user and getting feedback instantly through companys distributor and retailer without filtering. Low development and training cost By introduce franchising; the company are able to reduce development and training cost. Franchisor will provide training, equipment and product to franchisee. This in order to skip the â€Å"trial error† phase for franchisee and able to help franchisee generate profit with less risk. Example companies like Subway, McDonalds and 7-eleven. Provide better services Company can provide better services through its own controlled network and services. Provide lower cost of sales In order to compete in this competitive world, price of the end product is always one of the critical successful factors for the company. Dell is using this strategy to reduce price bypassing third party involvement such as retailers etc. No mark up from other company in the finished goods Disadvantages: Increase bureaucratic cost Expanding business forward which also means that increase bureaucratic cost for whole value- added chain activities. Due to uncertain demand in current market, it will post some risk to the company Increase Inventory Getting control over distributors or retailer, indirectly manufacturer may have to manage whole product cycle inventory include end products. Company may incurred higher inventory cost if wrongly manage 3.3. Backward Integration Manufacturer need supplier provide raw material in order to produce its end products or service. Backward integration allowed company gain control toward supplier as shown in Figure 16. Advantages and disadvantages as discuss below: Advantages: Getting better quality control Company are able to apply standard quality plan throughout the value chain. This is especially important when dealing with sophisticated components such as crankshaft, piston and turbocharger for engine. By improving the quality of this critical component will increase competitive advantages among the rivals Reduce threat from powerful vendors By increasing control over the vendors, it will reduce threat from powerful vendors. Optimized supply chain â€Å"Keeping track of so many suppliers is onerous† says Mark Shimelonis of Xerox [9]. Nowadays, a number of companies following Japanese firms lead in managing the supply chain to ensure uninterrupted supplies and low prices. Lower structure cost Outsourcing is one of the examples of the backward strategy. Outsourcing strategy will able to reduce cost when company engaging third party specialist that performing charging lower than company own operate value-chain activity. Cummins outsource IT support to India Company and panel design to CMR or Auto Maskin to keep the company structure cost lower. Nike outsourcing its manufacturing plant in China due to lower labor cost [27]. Disadvantages: Technology change Technology change is inevitable in current competitive market. But backward vertical integration may lock a company â€Å"way of doing business† and prevent organisation changes due to technology change. One of the examples is when radio manufacturer acquired a manufacturer of vacuum tube in 1950s to reduce production cost. When, transistors replace vacuum tube in 1960s, the competitor rapidly change to latest technology. However for this radio manufacturer company, the management refuse to change and as the result, lost in the competitive advantages and cause business failure. Thus, backward integration can cause serious disadvantages when trying to match rapid technology change [27] Risk of information loss Increase control over the supplier which mean also potentially important information flow to the supplier. For example, Cummins need to provide important parameter and interfacing information in the engine control module to backward supplier like CMR and Auto Maskin in order to joints develop the engine protection panel. Technical drawing will be shared among backward supplier and manufacturer. Potential high cost Less supplier competition will lead to less efficiencies when produce a product. The backward support company will work in the â€Å"comfort zone† and less initiative. The manufacturer is â€Å"forced† to get the input from â€Å"internal supplier† even there will be some others external supplier can produce lower cost .As the result will cause potentially higher production cost . 3.4. Horizontal Integration Horizontal integration refers to company that use â€Å"single industry strategy† and seeking control over competitor in same market. A number of the company apply this concept as growth strategy. Merger and acquisition allowed the company to expand its core business and technical capabi Strategies to Sustain Competitive Advantage Strategies to Sustain Competitive Advantage Q1: Using an appropriate model, evaluate the business model of a company of your choice, describing how the company differentiates itself from its competitors and sustain competitive advantage. 1. Executive Summary Cummins started off as diesel engine manufacturing company since 1919 and now growing as â€Å"power† leader in the world. Cummins expand network through company- owned distributor, independent distributor and dealer to serve customer globally. In 2009, Cummins reported net income of $428 million in $10.8 billion of sales [1]. Cummins have been diversifying its business to broad range of products from power generation, filtration technology, turbo technology, fuel system, emission controls and air handling [2]. Due to external pressure and growing market in Asia, Cummins recently setup Centre of Excellent in Singapore focus more on Marine and Offshore market. In this post module assignment, competitive strategy will only focus on Cumminss marine and offshore business. In this PMA, the value curve is based on own industry experiences assumption. However, analysis on financial will based overall Cummins business listed in stock market which named â€Å"CMI†. 1.1. Vision Statement â€Å"Making peoples lives better by unleashing the Power of Cummins† [3]. Cummins believe in by developing new technology will lead to better living for the people. 1.2. Mission Statement Cummins mission statement as quoted below [3] â€Å"Motivating people to act like owners working together† â€Å"Exceeding customer expectations by always being first to market the best products† â€Å"Partnering with our customers to make sure that they succeed† â€Å"Demanding that everything we do leads to a cleaner, healthier, safer environment† â€Å"Creating wealth for all stakeholders.† 1.3. Cummins compare with Industrial leader Figure 1 Financial Analysis CMI Vs Industry Leader [4] Figure 1 shows overview financial analysis of Cummins (CMI) compare within industry leader [4]. Cummins rank 35 among 379 diversified machinery industries in industrial goods sector for market capitalisation. Cummins stock values increase more than triple over the past 3 years and promise future growth with its business strategy [4]. 1.4. Ocean Strategy Ocean strategy has been introduced by W.C. Kim and R Mauborge since 2004. Starting then, this strategy is adopted and implemented successfully in various organisations globally. Recently, Malaysias Prime Minister Datuk Seri Najib Razak shared his experience on Ocean Strategy when dealing with increasing crime in the country [5]. He is using Blue Ocean Strategy as management tools in order to promote thinking out of the box. Key successful activities such as leveraged untapped resources when replaced police with soldier doing patrolling around countrys border and conduct training for new police force in the underutilised army facilities. This initiative save a lot of money from government and promote cross functioning role among government agency [5]. The principle of the ocean strategy is treating market as universe. There are two oceans available in the universe named Red Ocean and Blue Ocean. Red Ocean defined as known competition. In this Ocean, product is already well defined and competitors only able to compete with price [6] .Customer expectation on the product almost generic and not much technology can be developing in this area. For diesel engine in marine and offshore market, the competitors for Cummins include Caterpillar, MTU and Mitsubishi. How Cummins can break trough become market leaders? Cummins apply Blue Ocean Strategy when dealing with its business. Blue Ocean Strategy defines as untapped market which no competition and industries that do not exist at this point of time [6]. This in return will resulting higher profit compare with conventional approach. This clearly shows in W.C. Kim and R Mauborge studys on business launches in 108 companies. They summarize revenue and profit impact of business launches shows in Figure 2. In this study, 86% business launches within own boundaries (Red Oceans) and 14% business launches looking for new opportunities (Blue Oceans) [6]. Red Oceans approach focus on existing customer by improving their product and study shows that this resulted 62% on total revenue and 39% on total profit. In contrast, 14% of the businesses launches by creating blue oceans can bring in higher return which about 61% of the total profit [6]. Cummins spend heavily on research and development for past 5 years as shown in Figure 3. In 2010 alone, Cummins invest 414million in new technology development [2]. One of recent Blue Oceans initiatives is setting Marine and Offshore Centre of Excellent in Singapore. This business focus on the â€Å"Packaging† instead of selling conventional type of â€Å"bare diesel engine† like other competitor such as CAT, MTU and Mitsubishi. Figure 4 shows pictorial view on the value added components into bare diesel engine 1.5. Strategy Canvas Figure 5 shows strategy canvas of the marine and offshore diesel engine. X-axis represents critical success factors of the markets competition and Y-axis correspond to values perceived by marine and offshore customer. Marine and offshore is a mature and establish market. Engine makers always compete with price, image, brand, delivery, product performance and service availability. Cummins performs averagely in critical successful factors. However, in order to compete in the competitive market, Cummins break through conventional way by creating new team to focus on product value added specifically for marine and offshore customer. Cummins applied Blue Ocean strategy. Figure 6 shows Red Ocean strategy from others diesel engine maker and Blue Ocean strategy from Cummins. Q2: Using either Porters generic strategies or the Strategy Clock, identify examples of organizations following strategies of differentiation, low cost or low price, and stuck-in-the middle or hybrid. How successful are these strategies. 2. Porters 5 forces generic Strategies â€Å"Using the five forces framework, creative strategists may be able to spot an industry with a good future before this good futureis reflected in the prices of acquisition candidates† Michael Porter [7]. Porters five forces: Threat of New Entrants: Analyse potential new comer to market is important to understand potential future competitors Bargaining Power of Buyers: Buyers is the party that create demand for industry, understand buyers requirement will help to maintain competitive advantages. For example, bargaining power of buyers is high if product is standard. Threat of substitute products or service: Buyers always look for alternative or cheapest way to get products or service. Substitute product can bring the overall industry price lower Bargaining Power of Supplier: Supplier supply raw material or service to manufacturer. Bargaining power of supplier is high when to many buyer and less supplier in the market Rivalry among existing competitors: Current fast moving industry, its important understand the strategy of existing competitors. Example: How competitor gain competitive advantages or product differentiation. Porters 5 Forces allowed the company undertand and analyse own industry struture and futher help the management to decide on companys strategy. According to Porter, organisation is able to gain competitive advantanges by strategies the company using one of the â€Å"Porters Generic Strategies† as shown in Figure 8; 1) Cost Leadership, 2) Differentiation, 3) Focus [8]. 2.1. Cost Leadership Strategies Cost leadership strategies emphasize on low cost in company strategies. Company will offer low per-unit cost product or service to customer that sensitive to price. In order to become low cost provider, company can practise integration strategies (backward, forward and horizontal). There are few factors that will affect the strategies include economies of scale, learning curve, productivity, company structure, relationship with supplier and quality control. Several example organizations that practice this are Wal-Mart (general merchandiser), Air Asia (budget Airline) and Macdonalds (Fast Food) [9]. In this PMA, I will use Air Asia as example to study its business model and look into company successful factor. Air Asia strategy as illustrate in Figure 9, the company mission is to continue to be the markets carrier low cost provider. In order to compete with other aircraft carrier and achieve company vision for â€Å"Lowest cost airline†, Air Asia implement a few strategy to reduce operation cost. Strategy implemented as per below: 2.1.1. Keep operation cost low- NO frills In order to compete in this competitive market, Air Asia able to keep operational cost low by implementing few â€Å"NO†s in the strategy [10]: NO meal: No food or drinks will be provided free in the in-flight service. NO frequent flyer program: NO Membership or rewarding program which commonly used for others airline like Kris flyer for Singapore Airline and Skymiles for Delta airline. NO Seat assignment Ticket: In order to keep administrative cost low NO Entertainment: NO news paper and entertainment system such as movie, games and music. No ticket : Ticketless replaced conventional type printed ticket No waiting lounge: NO lounge provide in the airport 2.1.2. Single air craft fleet In order to streamline the operation, Air Asia phasing out its 14 Boeing B737 in 2010 and replace by only operate single air craft which is A320. Few advantages of using single aircraft as stated below Keep inventory cost low Saving cost in service and maintenance such as keeping same model of spares parts. No duplicated resource due to difference Air Craft experience needed Reduce time and training cost due to only one model. This allowed the company avoid going to through the expensive â€Å"learning curve† process and also may dissatisfied demanding customer. Michael and Nikos study on the organisation learning curves for customer dissatisfaction across airlines. They plotted estimate U-Shaped learning curve as show in Figure 10 and show evident that complaint rates followed U-shaped function of experience Able to increase fuel efficiency and improve productivity 2.1.3. Simplified distribution system Air Asia design simple user friendly system for customer to book and check- in their ticket. Customers are able to check in using own mobile as shown in Figure 11. This ticketless system is able to reduce waiting time for customer queuing to check- in at the airport counter. 2.1.4. Point to point network (≠¤ 4 hrs) All Air Asia flight is running by point to point network within 4 hours radius or less as its business model. This model only carry passenger from point A to point B without any connecting flight. This in order to keep operation cost simple in order to reduce costs [10]. 2.1.5. Optimum Aircraft Utilization Another way to keep operating cost low and maximizes profit, Air Asia increase productivity by optimise flight utilisation. Air Asia is the fastest in the region by achieving 25 minute turnaround time. Air Asia is able to achieve equal or more than 75% for last 5 years on the load factor. Once, Air Asia achieve close to 100% load factor for Bali Perth route. Load factor is defined by AirAsia as â€Å"numbers of passengers as a percentage of number of seats flown† [10]. On top of that, Air Asia applies â€Å"Tier based† system for ticketing which depend on supply and demand. When demand is low, the price is low. When demand is high the ticket price will also go high. This system is efficient especially during low season allowed Air Asia maintain the reasonable high percent load factor, 2.2. Differentiate Strategies Differentiation strategies offer service or product which unique perceived by customer. Differentiation strategies do not guarantee good payback especially current standard product offered in the industry is more than enough to meet customer expectation. There will a risk on implementing this strategy and need to study carefully on customer requirement before implementing. Product value added, extra servicing, products flexibility and better compatibility are some of the features that can create differentiate in the industry. Cost is not an issue in this strategy; hence company can demand higher price if customer strongly attached to offered differentiation features. Typical move in this strategy is product development. Organisations that apply these strategies include Apple (Lifestyle product), Raul Lauren (Apparel) and Maytag (Home appliance) Apple is applying differentiate strategies compare with other competitors in the industry by selling lifestyle product instead of conventional electronic gadget. In first 6 months of 2011, Apple spends 1.2 billion in research and development. This is about 40% increase compare with 2010 [13]. One of the successful examples when Apple launches iPad during 2010 and Steve Jobs defined iPad as â€Å"entirely new category of mobile devices†. Apple sold more than 15 million units worldwide after launching [14]. 2.2.1. Innovative and creativity product Apple is a â€Å"trend leading† company in the market. The company famous in creating innovative products and able to capture a significant market share after launching new products. Apple spends heavily in research and development because the company believe RD are critical for future growth and are able to create competitive advantages 2.2.2. Wide range of software and applications Apple created another successful platform for customer to download software and application. Traditional, example like phone, other competitor just focus on few simple features which only contains game, photography function, movie and some basic feature. By introducing new approach, Apple created â€Å"The App Store†. Now â€Å"The App Store† has more than 350,000 apps available for iPhone, iPad and iPod touch globally. The apps offered wide range of application from games, entertainment, utilities, social networking, music and others. In Jan 2011, Apple announces that more than 10 billion apps have been downloaded . 2.2.3. Apple store Unlike others competitors store which only focus on products price and feature, Apple differentiate by giving customer different shopping experience in the store. Apple design Apples retail store to give the patrons good impression of stylish, clean, fashion and stream-lined. The product like i Phone, iTunes and etc will placing in a place that customer can try out the features and application. 2.2.4. Provide good service and maintenance Apple provides good service respond compare with others competitors like Samsung and Nokia. In Singapore, Apple provides one to one exchange for i Phone if there is defect and still under warranty. This is different from some of the competitors, depend on the level of repair, some will take about 2 to 3 weeks. This will create some issue for some consumer that only has one hand phone. 2.3. Focus Strategies Focus strategies offers product or service to fulfil the requirement for targeted groups of customer in the industry [9]. Focus strategies can be categorized into 2; Focus cost leadership which focus on low cost solution in narrow market and Focus differentiation provide customised product or service to niche market [16]. Market penetration and market development can be use when applying focus strategies [9]. Focus strategies beneficial when competitors are not able to support on unique requirement of certain group of customer. Organisation which pursuing this strategies include IKEA (Furniture), Ferrari (Automotive) and Federal Express (logistic) 2.3.1. Focus Cost Leadership Strategy IKEA is the Swedish global furniture company that applied focus cost leadership strategy in their business strategy. IKEA offering wide range of home furnish product with low price so that many people can afford to purchase. In order to achieve the strategy, IKEA apply below concept: 2.3.1.1. Design and develop base on price In order to keep competitive price, IKEA design and develop product base on price. The price is â€Å"fix† even before the product is launch. The designer will have to work directly with supplier to ensure meeting low cost by optimised productivity, material efficiency and process improvement [17]. 2.3.1.2. Reduce logistic, handling and operating cost In order to reduce logistic, handling and operating cost, IKEA designer always consider flat-pack transportation and self-assembly during design and development phase. Flat-pack furniture is often delivered in multiple sub assemblies together with simple instruction manual and required customer to perform self assembly. This modular concept is able to save transportation, handling and operating cost. For example, assembled furniture tends to be more bulky and is more expensive to store in warehouse and transportation. Besides, that, IKEA is able to save operating cost by reduce one â€Å"Assembly† process in production . 2.3.1.3. Self-Service in IKEA Store In order t keep the operating cost low and reduce the needs of sales assistance, IKEA design the flow of store layout and display the product effectively by using â€Å"actual room† concept. For example, sofa is placed in â€Å"living room† section and bed is placed in â€Å"Bed Room† section. All the furniture is clearly labelled and useful information like dimension is easily located in the display product [17]. 2.3.2. Focus Differentiate strategy Ferrari is applying focus differentiate strategy by develop high performance car within automotive industry. Ferrari focus on high end consumer compare with other automotive competitors like Honda, Toyota or Ford which target more broad customer. Below is the strategy for Ferrari: 2.3.2.1. New Way of Purchase Car Ferrari compete created innovative approach by introduce new way of purchase car â€Å"Premium Ownership Program† to serve its target customer. This program include insurance, maintenance, warranty , Ferrari tailored made driving course and pit stop service which provide the customer â€Å"mind free† after owning and driving Ferrari car [18]. 2.3.2.2. Innovative Technology Ferrari developed own software to meet customer service expectation such as rapid response times, up to date database and personalise customer service. One of the latest features such as, the customer can view the look of the vehicle and change the preference in â€Å"Service configurator system† even in pre-order stage [19]. 2.3.2.3. Best Dealer Ferrari believes choosing the right strategic partner or dealer is the right way to serve the customer. In order to motivate the dealer, Ferrari created prestigious award Podio Awards for supplier or business partner recognition. 2.4. Stuck in the middle or Hybrid Strategies Porter does not recommend â€Å"Stuck in the middle† or Hybrid strategies if the company want to achieve above average performance in the industry. Company must choose either one of the strategy in the Porters Generic strategy. He claimed that it is difficult for a company to strategies the business to produce low cost product but still remain unique perceived by customer [8]. However, Rodney Goon argues on Porters theory and commented some of the company such as Singapore Airline (SIA) are able to success using â€Å"Hybrid strategy†. Figure 12 shows business strategy applied by SIA which plotted by Rodney [21]. Singapore Airline have been awarded 2nd place in World Top Airline in 2010 by Skytrax in Hamburg [22]. Figure 13 shows main operating cost for SIA. Top 3 costs consist of Fuel, Aircraft and People [23]. In order to achieve competitive advantages, SIA apply below approach: 2.4.1. Become Market Leader Differentiation Strategy SIA founded in 1972 started as small airline company and now evolve become the world trend leading company for Airline industry. SIA become market leader by setting trend started since 1970s when introducing headsets, drink and choice of meals in Economy Class. Figure 14 shows overview on SIA trend setting for more than 39 years in the industry. In 1991, SIA introduce satellite- based telephone to enable passenger to call to ground during flying. In 1998, in order to improve the quality and standard of in-flight meal, SIA formed International Culinary Panel which involves renowned chef from all over the world. By doing this, the passengers are able to enjoy world class cuisine even during travelling. In order to improve customer service satisfaction, SIA introduce in-flight entertainment system named Krisworld which include Audio and Video system. Passenger can watch movie, listen to music and playing game during flying. In 2004, SIA reach another milestone by flying world longest non-stop flight from Singapore to New York (Newark). In 2007, SIA flying new Airbus design A380 which is world largest passenger Aircraft from Singapore to Sydney . 2.4.2. Brand â€Å"Singapore Girl† Differentiation Strategy SIA successfully improve its service compare with others competitors by creating unique iconic image for SIAs air stewardess as â€Å"Singapore Girl† and promote â€Å"Youre a great way to fly† started in 1972. This iconic brand is famous of caring, elegant and good looking girl whom will provide good service for the passenger during on board the plane. â€Å"Singapore Girl† has continuously won many awards in Airline and Travel Industry over the years . 2.4.3. Low Cost -Cost Leadership Strategy â€Å"Everything behind The Scenes Is subject To Rigorous Control† quoted by Rodney . SIA spend heavily on the area that customer can be seen as discussed above in order to remain premium in the industry but cutting cost for area that behind the scene in order to remain cost compatible. Total cost for Singapore airline is about 14.2% is the lowest in the market compare with other competitors like American Airline which labor cost is approximately 31% of total operating expense . Other than that, average price per aircraft purchase is less than other airline provider. This is due to SIA is the market leader in trendsetting and always working with aircraft builder like Airbus when there is new product launching. First purchase in world for A380 allowed SIA command a better purchase price. Q3: What are the major advantages and disadvantages of an integrative strategy? 3. Integrative strategy Organisation is able to gain competitive advantages by using integrative strategy. Integrative strategy can be categorized as vertical, backward, forward and horizontal integration. There are advantages and disadvantages when applying each concept and detail discuss as below: 3.1. Vertical Integration Vertical integration is business strategies which expand its business either through gaining control over company that distribute or selling its product (Forward integration) or taking control over company that provide the raw material for finish goods (Backward Integration). Figure 15 illustrate 4 typical stages for value added chain in PC industry (27). Example for Dell or Hewlett Packard, in order to produce a personal computer, assembly components such as chips, microprocessor and disk drive etc is needed from others manufacturing company (Intel/ Micron). Similarly, component parts manufacturing needs raw material like chemical, metal and ceramic to manufacture the component. Kyocera is one of the suppliers for those materials. Backward integration strategy in this case is trying to taking control over components parts manufacturing and raw material supplier. Whereas for forward integration strategy, PC maker try to gains control over the company that selling or distribute the final product such as OfficeMax and ComUSA [27] This company provide platform to reach end user. 3.2. Forward Integration Forward integration strategy involves increase ownership or control over retailers or distributor and illustrates in Figure 16. One of the effective mean of forward integration is through Franchising [9]. Approximate $2 trillion revenue created annually through franchising business every year globally. This equal to 4th largest Gross National Product in the world [28]. Advantages and disadvantages as discuss below: Advantages: Getting understanding customer better One of the companies using forward integration strategy successfully is Dell. Dell founded in 1984 by Michael Dell with one direction â€Å"selling final products to customer directly† [29]. By doing this, company able to reach end user and getting feedback instantly through companys distributor and retailer without filtering. Low development and training cost By introduce franchising; the company are able to reduce development and training cost. Franchisor will provide training, equipment and product to franchisee. This in order to skip the â€Å"trial error† phase for franchisee and able to help franchisee generate profit with less risk. Example companies like Subway, McDonalds and 7-eleven. Provide better services Company can provide better services through its own controlled network and services. Provide lower cost of sales In order to compete in this competitive world, price of the end product is always one of the critical successful factors for the company. Dell is using this strategy to reduce price bypassing third party involvement such as retailers etc. No mark up from other company in the finished goods Disadvantages: Increase bureaucratic cost Expanding business forward which also means that increase bureaucratic cost for whole value- added chain activities. Due to uncertain demand in current market, it will post some risk to the company Increase Inventory Getting control over distributors or retailer, indirectly manufacturer may have to manage whole product cycle inventory include end products. Company may incurred higher inventory cost if wrongly manage 3.3. Backward Integration Manufacturer need supplier provide raw material in order to produce its end products or service. Backward integration allowed company gain control toward supplier as shown in Figure 16. Advantages and disadvantages as discuss below: Advantages: Getting better quality control Company are able to apply standard quality plan throughout the value chain. This is especially important when dealing with sophisticated components such as crankshaft, piston and turbocharger for engine. By improving the quality of this critical component will increase competitive advantages among the rivals Reduce threat from powerful vendors By increasing control over the vendors, it will reduce threat from powerful vendors. Optimized supply chain â€Å"Keeping track of so many suppliers is onerous† says Mark Shimelonis of Xerox [9]. Nowadays, a number of companies following Japanese firms lead in managing the supply chain to ensure uninterrupted supplies and low prices. Lower structure cost Outsourcing is one of the examples of the backward strategy. Outsourcing strategy will able to reduce cost when company engaging third party specialist that performing charging lower than company own operate value-chain activity. Cummins outsource IT support to India Company and panel design to CMR or Auto Maskin to keep the company structure cost lower. Nike outsourcing its manufacturing plant in China due to lower labor cost [27]. Disadvantages: Technology change Technology change is inevitable in current competitive market. But backward vertical integration may lock a company â€Å"way of doing business† and prevent organisation changes due to technology change. One of the examples is when radio manufacturer acquired a manufacturer of vacuum tube in 1950s to reduce production cost. When, transistors replace vacuum tube in 1960s, the competitor rapidly change to latest technology. However for this radio manufacturer company, the management refuse to change and as the result, lost in the competitive advantages and cause business failure. Thus, backward integration can cause serious disadvantages when trying to match rapid technology change [27] Risk of information loss Increase control over the supplier which mean also potentially important information flow to the supplier. For example, Cummins need to provide important parameter and interfacing information in the engine control module to backward supplier like CMR and Auto Maskin in order to joints develop the engine protection panel. Technical drawing will be shared among backward supplier and manufacturer. Potential high cost Less supplier competition will lead to less efficiencies when produce a product. The backward support company will work in the â€Å"comfort zone† and less initiative. The manufacturer is â€Å"forced† to get the input from â€Å"internal supplier† even there will be some others external supplier can produce lower cost .As the result will cause potentially higher production cost . 3.4. Horizontal Integration Horizontal integration refers to company that use â€Å"single industry strategy† and seeking control over competitor in same market. A number of the company apply this concept as growth strategy. Merger and acquisition allowed the company to expand its core business and technical capabi