Zappo.com Company Analysis
ZAPPO.COM COMPANY ANALYSIS 36
Businessmanagers in the modern world are increasing under pressure to devisenew ways to keep their businesses relevant in the face of globalizedcompetition that businesses are facing. Being cautious aboutemploying financial tricks in a bid to increase the profit margins,as well as being seemingly unable to gain advantage that comes withproduct design or marketing alone, many of these managers are nowturning their attention on how to manage both their organizationaland human resources. As the Chief Executive Officer of Zappos.com, anonline shoe and clothing shop that sells to a global market, I wouldput in various researched and proven strategies to turn the company’sfortune around, by employing strategies that will pull customers tothe company in a bid to beat competition from companies offeringsimilar services to Zappo.com
The company’s Vision
Asan online company, I would come up with a vision that captures thecompany’s aspirations being an online company that is bothbelievable and captivating to potential customers. Coming with thenew company’s vision, important questions such as, “why do weexist as a business?” and what need or needs are being met by thisbusiness?” should be asked. As the CEO of Zapoo.com, I would comeup with a vision that highlights the company’s desire to givecustomers an expedited shopping experience that solves their fashionproblems by enabling them to have access to the world’s leadingshoe and clothing brands at a great and affordable price.
Thecompany’s mission should go in line with the company’s area ofspecialization and carry the company’s desire to be at the top ofits competitors’. Questions such as, “how does the company planto make it in this business?” and “how and what must we primarilyfocus on as a business to become number one choice of our targetcustomers?” At Zappo.com, I could change the company’s missionto read as “To offer stylish, great, affordable brands and clothingaccessories to our assorted customers.
Inredeveloping the company’s values, I would focus on making it clearthe principles, standards and tenets that must be upheld as beingtrue and will never compromise the business. This would alsoincorporate how the company’s employees must collectively think andbehave like a business in a bid to fulfill their purpose, achieve thevision as well as executing the company’s mission.
Ina bid to increase the company’s effectiveness, I would focus oncoming up with new financial objectives to maximize profits and atthe same time minimize the costs of production. In line with this, Iwould aim to cut costs by reducing the company’s operationalexpenses, by evaluating any unnecessary expenses and cut them off.This could also see the laying off of every redundant staff.
Iwould, as the CEO of Zappo.com come up with various strategicobjectives that would enhance the turning around of the company’sfortunes. In this line, I would focus on overhauling the turnaroundstrategy components such as management and stabilizing the businessby focusing on areas such as cash management, its generation andconservation. The strategic objectives would also focus ondemonstrating control of all aspects of the business as well asensuring legal compliance of the company.
Chapter3: External Analysis
The Zappo.com industry
Zappo.comis an online shoes and clothing retailer based in KLs Vegas, U.S.A.The company sells a large variety of shoes from virtually all everymajor manufacturer, extending its activities to selling of handbags,sunglasses, apparel, watches and electronics. In a bid to facilitateits online business, the company provides free shipping on allpurchases. The company further reemploys a sophisticated computersystem called ‘genghis’thatmanages all the company’s operations. As such, tracking ofinventory is done so closely that customers are able to check online,for instance, how many pairs of Clarks Desert boots, size 12 areavailable. Zappos.com, now part of Amazon has with time build arounddelivering exceptional customer service by maintaining a 365 days ayear return policy apart from offering free shipping of good.
Seven components of the macro-environment
Themacro environment of a business refers to the general environment ofthe business that is usually uncontrollable when compared to themicro forces of the business environment.
Abusiness’ economic environment refers to the economic factors witha significant impact on the working of the business including itseconomic system, trade cycles, nature of economy, the level of incomeof the company, distribution of income and wealth and the statutoryposition of the business. However, the macroeconomic environment of abusiness has three main elements being economic policies, economicconditions and the economic the business finds itself.
Inconnection with this, the economic conditions of any economy dogreatly affect the functioning of a business. This is becauseimprovements in economic conditions, for instance, go along toimproving the style and quality of life, ability of the public topurchase, as well as, their consumption levels. As the CEO ofZapoo.com, I would frame my policies while keeping in mind theprevailing economic policies put in by the government. The prevailingeconomic system and changes also goes a long towards affectingbusinesses to a large extent.
Thepolitical environment in any country significantly affects businesseswith a stable and dynamic political environment, for instance, beingcrucial for business growth. The political ideology decides as towhat kind of business activities that should be conducted in a givencountry, the areas that should be opened for private sector toinvest, those areas that should be preserved for the public sector,and what areas entry for foreign companies should be allowed. Assuch, all the laws and regulations that cover all the businessaspects are usually enacted by the government of the day. Thisimplies that the government is accountable for providing the rule ofthe game, which goes a long way into making business functionsmoothly, as well as helping to maintain competition and regulatemonopolies when they arise.
Asthe CEO of Zappo.com company, I would be at the forefront in lobbyingthe government through its lawmakers to make favorable rules andregulations that favor the practicing of business in the country andbeyond. Lobbying the government in such ways creates a conduciveenvironment for the running of the business even beyond its countryof origin, considering that Zappo.com is a global company.
Social cultural environment
Thesocio cultural environment is the influence that is implemented byspecific cultural and social aspects beyond the business’ control.These factors are, for instance, the attitude of employees to work,the caste system, languages, customs and traditions, education,religion, value systems, social responsibility and business ethicsportrayed by employees. It’s important to note that culture goes along way into shaping the thoughts as well as the behavior patternsof both the members of the society and a company’s employees. Thelevel of urbanization in different countries also affects the successof business in those countries to a great extent. As such, I would asthe CEO of Zappo.com position the company’s representatives inalmost all the countries that Zappo operate in a bid to capture theinterests and consumer preferences in the different countries.
Technologicalchanges bring about a change services, lifestyle, as well as theproducts to be sold. The ever changing trends in technology createproblems for enterprises considering that the changes do rendervarious plants and products outdated quickly. As such, success in anycompany, the magnitude of Zappo.com depends on both research andinnovation. Promoting research and innovation means that the companyestablishes a research and development department by creating patentsand copyrights for the company’s products. This goes a long wayinto giving multinational companies, such as Zappo.com a competitiveadvantage. It’s, therefore, important for business to analyzechanges taking place in the technological environment and adapt tothe new technology as fast as possible.
Theseare the environmental and geographical aspects, such as, reserves,weather and the climatic conditions that a business operates. Inthis line, governments frame various Acts aimed at controllingenvironmental pollution and conservation of non-perishable resources.As such, businesses must keep in mind the geographical factors ofpollution and the various enactments towards this. Fortunately forZappo.com, being an online company, such geographical factors do notaffect the conducting of business since the company is not affectedby the prevailing geographical challenges.
Demographicfeatures, such as, a population’s size, growth, level of education,income and age level do affect the size of demand, the liking,fashion tastes and consumer preferences. It’s worth noting that thedemographic environment differs from one nation to the other and evenfrom place to place in the same country. It’s thus essential for meas the CEO of Zappo.com to have an up to date business analysis ofthe different demographics that the company operates. Having this inmind, the company will be best placed to provide different productsfor its customers with a consideration of their different tastes.
Theinternational environment is mainly important for businesses thatdepend on both imports and exports. Zappo.com is a good example ofthis, considering that the company has to import goods for its localcustomers as well as export t it’s far off customers. Factors, suchas, a recession in the foreign market or even the protection policyby foreign countries may lead to difficulties for an industry thatdepends on exports. Moreover, with the fast development incommunication by the use of internet, for instance, beauty contestsand fashion shows among different countries leads to a cross borderspread of culture and attitudes, which affects consumer preferences.It’s, therefore, imperative for me as the CEO of Zappo.com to keepin track of such international developments that clearly fall in thecompany’s area of operation in a bid to provide customers with thegoods that go in line with their tastes as well as with their newpreferences that arise.
C.Summary of the business macro environment
Asseen in the various macro environmental factors that affect business,it’s important for any business to keep in mind that environmentsand business are closely related to each other. As such, theenvironment may either be a stimulant for the success of a businessor a constraint. Businesses are able to expand when favorable changestake place in the environment. Consequently, when the prevailingcondition comes turns out to be unfavorable for the business, thebusiness is bound to face insurmountable problems and challenges.
Forces in business
Externalbusiness forces are those factors that affect a businesses’strategic planning originating from the outside and are lesscontrollable.
i.Discusseach in detail
Theseare forces that come about as a result of competition from existingcompetitors already in the market. Such forces affect the volume ofsales in any company if rival companies are doing better than yourcompany. For Zapoos.com, questions, such as, whether the company’sclothing line holds a better position than the competitors could beasked. In the face of such forces, a business may be vulnerable tocompetition moves in the industry
Threat of new entrants
Thisforce arises when an environment in which a company is operating inis under a threat of newly coming similar industries. For example,could there be new entrants into the clothing fashion industry, whopose a threat to existing businesses.
Bargaining power of suppliers
Thisrefers to the ability of industry suppliers to determine the cost ofthe products they supply. In this case, suppliers leverage on theexistence of many companies that sell their products meaning thatthey have alternatives.
Bargaining power of buyers
Powerfulbuyers in any company should be viewed as a threat mainly when theindustry has many competitors supplying similar products. Thebargaining power of buyers refers to their ability to bargain downprices that are charged by companies or demand better qualityproducts.
Threat of substitute products and services
Thecoming up of other products such that substitutes what your companyoffer is threat that companies have to deal with. In the case ofZapoos, for example, the coming in of sandals that can e used as analternative to shoes may lead to a decrease in the sale of shoes andconsequently a drop profits.
ii.Summarize your five forces analysis
Acompany the size of Zapoos.com should engage in various strategies tomake sure that these different groups in the online industry do notaffect its productivity. As such, the main task of the manager indealing with these group is to ensure that their recognize changesthat occur in them, give rise to new opportunities to counter theirimpact, as well as, formulate effective strategies for response. Asthe CEO of Zapoos.com, I would also consider to alter the strength ofone of the groups and to its advantage in a bid to counter theeffects and threats of the other groups.
e.Discuss strategic groups in your industry
Newdevelopments in areas, such as, technological innovations that allowincreased product differentiation, as well as, identification of newcustomer groups and market segment make it of paramount importancefor any company to develop an appropriate to respond to such groupsof customers.
Draw and discuss a strategic group map
Amongvarious industries, strategic groups signifying the set of companiespursuing a similar business model do emerge. This means that managersare tasked with mapping out their competitors with a focus on theirchoice of specific business model. This is, for instance, focusing oneither focused leadership or cost leadership.
ii.Discuss potential strategies based on your map
Strategicmanagers must firs map their competitors according to their choice ofa specific business model in an effort to have better understandingof the differences in profits. This could also include determininghow other companies have worked towards developing a particulardistinctive competence and also how the company been able to identifywhich particular customer needs to satisfy the different customergroups. The business can then utilize this information to betterposition his business model and in the process move closer to itscustomers, differentiate itself from its rivals and learn how toreduce its operating costs. Secondly, a company can better recognizehow the changes taking place in the industry are impacting itscompetitive advantage by following both a cost constructive and adifferentiation process. By this the company is also able to identifythreats as well as existing opportunities.
f.Summarize your external analysis
Anexternal analysis of business operations as seen in the variousanalysis methods helps managers in understanding issues affecting theeffectiveness of a business, as well as the fitting actions they canemploy in a bid to counter the negative issues. It’s important formanagers to consider the results found in the various analysismethods employed in a bid to come up with the most appropriatesolutions for the business. In a bid to place the business in theinternational market, an understanding of the underlying factors thatmight be detrimental to the success of the business must first beanalyzed. Just like any other business, the growth and of zapoo.comis dependent on its adaptability to macro environmental factors. Asthe CEO of Zapoo.com company, I would be concerned on adaptingseamlessly to these factors considering that they pose huge threatsto all the business units.
Chapter4: Internal Analysis,
Acompany’s internal analysis involves the evaluation of thecompany’s internal situation that includes analyzing its valuableresources and capabilities the company’s relative cost position, aswell as the company’s’ competitive strength versus that of itsrivals. The two most valuable indicators of analyzing how well ascompany’s strategy is effective is getting to know whether thecompany’s direction is on the right track, as well as its strategicobjectives and also analyzing whether the company’s situation iscurrently an above average industry performer. The existence ofpersistent shortfalls in the achievement of the company’sperformance targets, as well as, a weak performance, in comparison toits competitors are some of the most reliable warnings that thecompany is suffering from poor strategy making, incompetent executionof the strategy, or even a lack of both. As the CEO of Zappo.com,therefore, an evaluation of the current strategies and theirexecution would be on top of my agenda in a bid to decipher theshortfalls in the whole system and work towards overhauling it.
The present strategy at Zappo.com
Zappocurrent CEO Tony Hsieh has put in a strategy that has seen thecompany remain synonymous with offering of excellent customer serviceby stimulating “cult like” loyalty among its customers. As partof its expansion process aimed at reaching a bigger global market,the company in 2011 sold its business to Amazon at a cost of 1.2billion dollars, a transaction that went on to earn Hseieh profitsamounting to 400 million dollars. The move helps in understanding thecompany’s recent initiative to invest 350 million dollars inrevitalizing its business in Vegas.
Currently,the financial objectives employed at Zappo online shoes and clothingcompany seems to be working and in tandem with the company’sstrategies. In this line, the company is operating in a model thatfocuses on enabling the customers have an unforgettable shoppingexperience, as well as keeping its employees satisfied. In 2012, thecompany was hit a gross profit of 840 million dollars in the salemerchandise with the profit projected to hit 1 billion dollars in thenext financial year. This in way shows that the company has been ableto keep its finances on track, and also that the company’s strategyis being executed appropriately.
It’sonly fair for to put it that Zappos is an above-average industryperformer considering the huge milestones that the business has beenable to cross in terms of moving from being a local to a globalcompany. The growth in the company’s fortunes has been facilitatedby its focus on customer needs and preferences and meeting themadequately. The company has also been to remain as an above averageindustry performer by making sure that its employees are trained inmanner that goes beyond filling orders. In this line, the companydeveloped a strategy that was focused on hiring the best candidatesonly.
b.What are the important resources and capabilities
Firmsall over the world are tasked with dealing two kinds of resources,being both the tangible and intangible resources. Tangible resourcesare usually quantifiable, for instance, manufacturing equipments andfinancial capital. Financial capital resources, for, example, go along way into helping an organization acquire other physical assets,such as technology. These resources also help in acquiring humancapital. However, it’s important to realize that tangible resourcesalone cannot create value for customers. As such, intangibleresources also play a vital role in the value creation process.Intangible resources are seen when, for example, manufacturedequipment have to be operated by the employers in this case, humancapital or even by computers that are normally programmed usingsoftware that is developed by human capital.
i.Why are they valuable, rare, and unique
Suchresources are usually valuable, rare, as well as, unique due to thefact that finding the most suitable resources is a huge challenge fororganization. The resources are valuable because they enable anorganization to exploit the various opportunities that arise, andalso neutralize any threats in the external environment. Byeffectively using the capabilities available in a company to exploitavailable opportunities, a company is in a position to create valuefor its customers. The resources are also rare because they are inmany cases few and when available, rivals in the business run toposses them. As such, a company is able to enjoy the competitiveadvantages that come with the rare resources’ by developing andexploiting the valuable capabilities available and differ from thosethat are shared by the rivals.
ASWOT analysis in any organization is usually an integrated approachthat aims to confront a company’s internal strengths and weakness,in addition to a business’ external business opportunities andthreats. This is done in a bid to generate possible strategic optionsthat can be pursued to address the prevalent situation. The SOTanalysis helps a company to understand where it’s coming from, itsstrengths and weaknesses, and which opportunities and threats can beexpected.
Whendetermining the strengths in an organization, various importantquestions are asked. These are, for instance, the advantages that thecompany posses, what the organization seems to do better than othersand the organization are selling position. It’s important theorganization to consider its strengths from the consumers’ opinion,as well as from an internal perspective. If the company has anydifficulties recognizing the strengths, it’s worth writing down alist having the organization’s characteristics since some of theseturns out to be strengths. It’s also important to think of thestrengths in relation to the company’s competitors in a bid torealize your businesses’ under achievements.
Questions,such as, what can the business do to improve the business, whatshould be avoided, individuals in the market that are likely torealize the weaknesses and the factors leading to a loss of sales areimportant in disentangling the businesses’ weaknesses. Uponrealization of these weaknesses, it’s important for managers to berealistic and face the unpleasant truths head on as soon as possible.
Questionsasked in analyzing a company’s opportunities are for instance, thegood opportunities that can be spotted and the interesting trendsthat the manager has knowledge of. As such, valuable opportunitiesemanate from enacting changes in various areas like, changes intechnology employed by the company in both a narrow and broad level,changes in the policy that’s related to the industry, a change inthe social patterns lifestyle changes, as well as, changes inpopulation profiles,
Evaluatingthreats requires that managers face questions, such as, the obstaclesfaced by the business, what competitors are doing to counter theproblem, whether the changing technology is a threat to thebusinesses position, and could any of the company’s’ weaknessesbe a serious threat to the existence of the business. There is alsothe issue of whether quality standards or job, products, or servicespecifications are a threat to the continued excellence of thebusiness.
d.Prices and costs compared to key rivals
Someof Zapoos.com key rivals are Gear.com, Shoebuy.com, Bluefly.com, andOnlineshoes.com. Products traded by the business are in the sameprice range with these competitors, though Zapoos has beenintelligent in upholding its position as one a leading onlineretailer. This has mainly due to the loyalty that its customers havein the company which has been enabled by the company’s incentives,such as, no shipping charges, a virtually stress free shipping andits offering of all designs in the clothing and shoes market.
i.Value chain analysis
Avalue chain analysis of a company like Zapoos.com can be done byfirst identifying the company’s primary, as well as, supportservices that add value to its products. This can then be followed byanalyzing these activities in a bid reduce the operation costs orincrease the differentiation of its products. A value chain isrepresentative of the internal activities that a company employs inits efforts to transform both the inputs and out puts. Byunderstanding the internal activities of a firm, and value chainanalysis enables managers to recognize the company’s competitiveadvantages or disadvantages. A value chain is formed by certainprimary activities that support activities that add value to acompany’s performance, as well as, its products. Primary activitiesinclude inbound logistics, operations, outbound logistics, marketingand sales, and services given. Support activities, on the other hand,comprise of the company’s infrastructure, human resourcemanagement, procurement, and technology. The more effective a companyis able to integrate these functions seamlessly, the more productivethe firm is bound to be.
e.Other strategic issues and problems
Strategicissues refer to the major external or internal factors that canhamper or expand the alternatives that are available for theorganization to solve its primary strategic problems. As such, issuesmay, for instance, be functional in nature, e.g. a lack of thefinancial strength needed to finance pricey acquisitions. As such,its important for managers to solve such issues promptly with morethan one opinion needed in dealing with the problem identifies.Options to solve such problems must be firs be evaluated for theircompetitive viability, desirability and feasibility in order toaddress them comprehensively.
Chapter5 Generic Strategies
Genericstrategies in organizations help in understanding a firm’scompetitive strategy and position within its industry. Variousgeneric strategies do take a fundamentally diverse approach in thecreating, combining and sustaining the competitiveness of any firmwhile at the same time deciding the scope of the strategic target.It’s important that a company makes a choice among the variousgeneric strategies to avoid finding itself in a situation that makesit uncompetitive in any front.
The cost of leadership
Thisgeneric strategy is based on the fact that companies that constructat the least cost in their industry can go on to charge the leastprice. This enables these companies to get a superior market share,or even charge similar fees in a bid to get more profits than theexisting competition. A cost leader often positions his products bytargeting average consumers for the market with a slight focus ondifferentiation. As such, the key useful areas of this form ofleadership center on the efficient in, manufacturing, logistics andservices given to the consumers.
Differentiationstrategies strive to gain exceptionality in the business as isprofessed by the potential buyers. Though this differentiation hashigh costs, the strategy enables the company to go ahead and chargehigher prices. The ability for companies to charge higher pricesenables differentiators to outperform competitors by hindering theirability to employ such a strategy. As such, in a bid to attractcustomers to pay premiums in a given company, for instance, thedifferentiated items must possess some acceptable or customerprofessed unique attributes, for example, quality, prestige,sophistication and lavishness. The main challenge in this type ofleadership is the ability to identify these attributes and go on todeliver value that is centered on each market segment.
Thisstrategy targets a specific market division or even a geographicsection that enables it to serve customers even better. While thespan of the focused leadership is seen as a matter of the extent,focused companies in many cases serve the requirements of a givensegment so distinctive that broadly based rivals feel inadequate inchoosing to serve it.
Best cost provider strategies
Thesestrategies aim to give consumers more worth for their money bydistributing a greater value to the consumers through fulfillingtheir expectations on the value and service features, as well asfulfilling their expectations on price. These eye-catching approachescan take the form of attractive attributes, such as, good quality tooutstanding product performance. Any company that has the resourcepower as well as competitive abilities to incorporate such featuresinto its products can sell its goods at a lesser cost than itscompetitors. The big risk in this strategy is its vulnerability bygetting squeezed in between the strategies of other firms that employboth the low cost and high end differentiation strategies. This meansthat a best cost provider must present its consumers considerablylower costs in its selling of upscale products.
Focused low cost strategy
Thisstrategy is focused on offering low costs to products with a focus onacquiring a competitive benefit by attending to those customers inthe targeted market at a lower cost than its rivals. The approachhas a substantial pull when a company is in a position that it canlessen its costs by restricting its customer base to distinctcustomer segment. The main disparity that is there between a focusedlow cost strategy and a low cost provider is the volume of theconsumers that each strategy appeals to. In this case, low costprovider uses a product offering that appeals to a broad base ofconsumers and various market segments.
The pros and cons of the strategies as they pertain to Zappo.com
Employingeither of the different generic strategies at Zappo.com means that,as the CEO, I am tasked with the responsibility of evaluating how thestrategies have worked for other companies and what can be done torectify the deficiencies in the different strategies. Thedifferentiation strategy, for instance, calls for the developing of aproduct or even service that has distinctive attributes differentfrom potential customers. Such a strategy is effective because thecompany can be able to charge the customers a premium for theproducts or services given, which is more profitable for the company.However, such a strategy may backfire if the market acceptance of thepremiums is not sufficiently accepted. Employing such a strategy alsodemands that a company must keep worrying that its competitors maycopy its business model and go on to steal customers from them. Itcould also take quite a long amount of time for a company toimplement such a strategy since the company needs to first achieve astrong brand image that distinguishes it from the rest. Additionally,during periods when the company faces changing consumer tastes, thecompany may end up having insufficient customers to offset its costsleading to losses.
The most appropriate strategy explain of its rationale
Decidingon which generic competitive strategy to employ serves as a frameworkon which the manager is seen as effective in offering the best marketpractice for his company. The five generic competitive approachesposition the business in the market and determines itscompetitiveness. As such, as the CEO of Zappo.com, I would employ thebest cost producer strategy, because it is the only compromises oflow cost differentiation and differentiation that thrives andachieves the desired results. This is because the bottom line in anybusiness is having a competitive edge over competitors. Otherstrategies, such as, compromise or middle ground strategies seldomproduce the expected sustainable competitive advantages or evenoffering a distinctive competition position.
Chapter6 Strategic moves, timing and scope
Companiesdo employ various strategic moves that are in various intervals withthe aim of building a competitive advantage of the competitors. Suchmoves can see a company employ the element of surprise instead ofdoing what competitors expect the business to do in a bid to grabtheir targeted customer’s attention. It’s worth noting that thegrowth of firms is highly dependent on the company’s proactivenature of taking the market share from its rivals, or even goingahead to create new markets. This means that incumbents in the fieldneed to be prepared to defend the attacks from emerging businessesby, for instance, expanding their business, or even opening newunexplored markets.
Discuss offensive options
Offensivestrategies employed by businesses are aimed at improving their marketposition by taking a certain degree of the market from theircompetitors. These offensive approaches include both indirect anddirect attacks in the market, or even having the business focus toserve new markets in order to avoid facing off with rivals that havealready assumed their position in the market. A direct attack istaken if a company has superior resources. However, for firms facingsuperior rivals, an indirect attack is more appropriate. In line withthis, an extreme form of an indirect attack can see businessescompletely avoid their competitors and go on to engage in activitiesthat are far removed from those of their rivals.
Moreover,firms may also engage in choosing from a large number of differentstrategies aimed at accomplishing their offensive objectives. Suchstrategies range from bypassing the competition to all out frontalattacks that are aimed to win the competition or even using flankingattacks. A flanking attack, for instance, is used to exploit theweakness prevalent in a competitor while at the same time avoidingany risks that are come with rival offensive marketing strategies,.In this case, flank attacks are based on a path that has the leastform of resistance and attacks competitors in areas that they areleast capable of defending. These areas are, for example, somesegments that aren’t well served by the competitor since they donot seem important to them. A frontal attack, on the other hand,involves the attacking of a business’ competitor head on, bychasing the customers of the company under attack by wooing them withthe provision of similar products, promotions, and even prices.However, such an attack is considered to be risky since winning thebattle is never assured unless the attacker is armed with a veryclear competitive advantage of his competitor.
Discuss defensive options
Themain focus of a defensive strategy is to make the attack appearunattractive and hence discourage any potential competitor fromlaunching an attack. In this case, the incumbents shape the emergingcompetitor’s expectations regarding the profitability of theindustry by convincing them that returns on their investment are soslow that its makes no sense for them to invest in the industry. Assuch, defensive strategies are effective when they happen before thecompetitor launches his investment in the industry. This means thatan incumbent needs to be timely in discouraging the competitor not tocommit any substantial investment in the sector since ones thecommitments is made, it becomes more difficult to dissuade him.
Theincumbent could also initiate actions that are intended to makeeverything complex for the new entrant by, for instance, convincingthem that their calculations were too optimistic hence they earlyexperience in the sector is not worth pursuing in the long run. .Signaling, for instance, takes place when a company announces theirintention to take a certain action, with the announcement seeming toserve different objectives from what the company aspires and are notnecessarily mutually exclusive. These could see the company announcea commitment to the industry hence deterring the competitors.
Postentry strategies, on the other hand include defending of positionbefore an entrant becomes established, introducing of fighting brandsand engaging in cross-parry activities. Incumbents do, for instance,defend their position by embracing as well as improving thetechnology that comes with the competitor by, for example, hiringsome of the competitor’s best employees.
Scope of operations
Thescope of operations in companies, such as Zappo.com includesinterrelated activities that range from capacity planning, assuranceof quality, forecasting, scheduling, and employees motivation. It’sworth noting that understanding the scope of scope of operationsbegins with high level business plans and strategies both for theshort and long term. As such, the scope of operations is usuallydivided into main areas, such as, decision making, designing newsystems in the company and running the operation as well ascontrolling the whole organization towards the projected direction.
Mergers and acquisitions
Mergersrefer to the coming together of two companies that are mainly equalin size, hence pooling their resources to form one single businessforce. This means that the stakeholders in both the companies have anequal share of ownership. Moreover, the top management in bothcompanies also continues with their senior management positions.Acquisitions, on the other hand, refers to the purchase of onebusiness acquires another’s operations and its possessions orcontrols the company’s stocks. Such moves are employed by companieswith the sole purpose of strengthening the two companies when theyoperate as a single unit which goes a long way into dominating themarket.
Discuss vertical integration
Verticalintegration is a business strategy that has over time been a keyforce in the development of high managerial sophistication. In thisline, vertical integration varies in breadth, degree, stages, andform. Vertical integration involves those activities that areconducted in-house in a bid to increase the productivity o thecompany. As such, the main benefits that come with verticalintegration are cost reductions that are achieved through a possibleimproved coordination of activities.
Outsourcinginvolves the hiring of outside groups to perform a certain task foranother organization that the organization either cannot do orchooses not to do. The advantage of this is that the company benefitswith outside expertise that a company may be lacking, which goes along way into solving some of the recurrent problems that employeesin a given organization are not able to solve.
strategic alliances and partnerships
Instrategic alliances, companies come together out of a mutual need andshare their risks with one common objective. Such alliances enablethe acquiring of more resources than any single company could own oreven buy. This in turn greatly expands the ability of the businessesto create new products at a reduced cost, bring in new technology, aswell as, penetrate other markets and fend off competition from theclosest competitors.
of your planned activities
Asthe CEO of Zappo.com, I would engage in various strategies discussedin the above strategic moves that would work to the benefit andgrowth of the company. Engaging in defensive strategies to ward offcompetition would greatly help in maintaining Zappo at the top in theonline sale of shoes and clothes. I would also use outsourcing ofservices in a bid to aid the ailing areas in the business by bringingexperts to diagnose the prevailing problems. A vertical integrationof the business activities would also benefit the company to a greatextent since not so performing quarters will be highlighted andworked on appropriately.
Chapter7: International strategies
Theemergenceof new markets in emerging economies has become ever more significantgrounds for international trade activities of internationalcorporations. International companies are now taking advantage in thelucrative opportunities in emerging country markets. In this line,the rise of China, as a major economic power in Asia has turned thecountry into one of the big factories in the world which has gone onto influence global trade. The main drivers for companies engaging ininternational strategies are their urge to find new customers in newcountries, with the aim of increasing their turnover. Other reasonscould also be that local markets are slow or have declined or yet thepresence of increased consumer absorption in the local market whichmakes it hard to hold onto current customers hence the need to findnew consumers.
Rationale for your company competing internationally
Zappo.cohas every reason to compete internationally if it wishes to realizeits full objectives, among them being the increase in profitsturnover. In this line, larger markets mean that the business has apotential for greater profits. Competing on the international frontalso means that Zappo will be able to look for new business openingsas well as expand its goods and services. It’s of importance tonote that there still exist unexploited markets globally that is yetto be exploited making it of more importance that Zappo goes beyondits current reach to open up such new markets.
Zappo.comcould also hugely benefit in competing internationally by makingdirect investments to emergent as well as already explored markets.In this line, the company could make direct investments in foreigncountries by either making direct acquisitions in the host market oreven developing its own facilities in the new countries. Theadvantage with Zappos.com is that it’s an online company hence is,therefore, exempted from making Greenfield investments in the newmarkets that require the setting up of new facilities in the newmarkets. All what Zappos has to do is announce its entry into the newmarket through the various forms of advertisement prevalent in thatcountry, such as, broadcast, billboards or even through social mediaadvertisements. By competing on the international front, Zapposglobal index as an online clothing apparel and shoes seller will alsoincrease its profit margins, which go along way into creatingconsumer confidence in the company’s products.
Include the pros and cons for each as they apply to your company
Competingon the international front has its merit and demerits for Zappos,considering the excitement that comes with the exploring of newmarkets and also the risks associated with such markets. In thisline, some of the benefits that come with competing internationallyis the fact that Zappo will be able to have access to new customers.Local markets become saturated with time, hence the need to look fornew markets and a potential for new customers to keep the businessgrowing a s well as maintain or increase its profit margins. Indiaand china have emerged as attractive new markets considering thatthey are the two most populous nations in the world. Additionally, the presence of a high population of middle income citizens makes itmore apparent that Zappos invests in such market that offer a hugeopportunity for its high end products attractive to such class ofconsumers.
Competinginternationally also lowers the costs for businesses in that a firmcan increase the volume of its sales by entering into new markets.The growth that comes with overseas expansion thus enables a businessto have purchase its supplies in greater numbers which go a long wayinto giving a firm some leverage when it comes to the negotiating ofprices with the suppliers. Competing internationally will also helpZappo.com to diverse its business risk. By this, the company will befree from a risk of failure since its already entrenched in manycountries. As such, a failure in one country will not greatly affectthe business, since it might be performing excellently in othercountries.
However,various risks are associated with competing internationally that maybe detrimental to the success Zappo. Such negatives may come in theform of economic problems that could affect the new countries. Thismeans that a country’s economic conditions and policies, as wellas, currency exchange rates may hurt the operations of Zappointernationally. This is in view of that economies are unpredictablemeaning that any economic meltdown in countries that Zappo hasinvested could go be a drawback to the business’ success.
Asan online company, there is also the cultural risk that Zappo mayface as it endears to entrench itself in the international market.This may arise as a result of differences in language, customerpreferences, norms and cultures in different international countries.Cultural differences even when different citizens share the samelanguage can cause problems in the acceptance of the commodities thata company sells. This is because a company like Zappo.com, thatdeals with shoes and clothes may experience a culture shock in somecountries, whereby, its citizens do not approve of the company’sproducts.
C.Discuss other international options
Acompany such as Zappo.com, with the intention of competinginternationally requires that its strategy in the importing andexporting of goods is coordinated coherently. Exporting involveseither indirect or direct exporting. Engaging in indirect exportmeans that the company’s products are transported to abroadcountries by other agents with the company not involving itself withany special activity that is connected with the international market.This is because the sale to international markets is treateddifferently from the sale in the local market. When it comes toindirect export of commodities, the company is directly involved inthe marketing of its products in the foreign markets. As the CEO ofZappo.com, I would employ both direct and indirect export of productsas the situation requires in a bid to maximize on all the effectivemarketing activities of the company’s products.
Thisis also one of the ways that Zappo.com could use to entrench itselfin the international market. In this case, the internationallicensing firms are involved in the giving of trademark rights,patent rights as well as copyrights that enhance operations in theinternational market. This means that the licensor’s products goahead to market the company’s products in the assigned area and paythe licensor fees as well as loyalties related to the volume of salesrealized. Many foreigh countries authorities approve of such movessince they bring more business technology in the country. As such,Zappo.com could seize such openings in the global market in a bid toexpand its wings and achieve its objectives.
d.Describe and defend your international strategy
Theability of a company to develop an international business capabilitygoes along to augmenting its growth, as well as, its profit margins.Zappo international strategy involves the incorporation of variousbusiness strategies that will support the company’s efforts towardsrealizing its dream. As such, Zappo international strategy involvesexporting directly into the targeted abroad countries and to a lesserextent uses indirect advertising. This means that the company usesshipping lines to export its products to customers without chargingthem, an activity that has seen it maintain its internationalcustomers. The company has also developed different forms ofadvertisements for its varied customers as it seeks to get themessage reach in the most appropriate way. This is because someadvertisement could be culturally prohibitive in some countries hencethe need to tailor them in line with customer tastes. The mainpurpose for Zappo diversification into the international market is inline with its growth projections of reaching its goods to virtuallyevery part of the globe. This is also justified by the amount ofprofits that have been realized and also those projected to berealized which has continued to increase the company’s global indexas an online company.
Chapter8: Corporate strategy
Corporatestrategy in business is the understanding of strategies to befollowed by an organization, as well as, choosing the appropriateones and implementing them. Managers must be cognizant of the issuesand questions that have to be dealt with when developing thecompany’s corporate strategy and ensure that they are formulatedeffectively. This means that an organization’s corporate strategyincorporates its major plans made to enhance the running of anorganization and the realization its objectives. Corporate strategiesare in many cases developed by the managers’ understanding of therelationship between their business and the environment in which theyoperate.
Amajor part of strategic management is putting in place mechanisms todevelop the best possible resources available and competencies in anorganization, its structure and the external environment. This,therefore, requires that the corporate strategy must be highlyflexible if it can cope with the high level of decision making in themodern world. The purpose of a company’s corporate strategy isfurther seen in the sense that it enables organizations to make theirown future instead of just reacting to issues and changes that comeits way.
Discuss diversification into related businesses for your company
Thiskind of diversification takes place when the company decides to addor expand its existing market or line of production. This means thatthe company penetrates a new market that is related to its businessactivities. When related diversification takes place, a company makeseasier the buying of its products by going ahead to manufacturecomplementing products, or offer complementing services. As the CEOof Zappo.com, my company would be involved in the diversification ofits products at various levels in a bid to capture potentialcustomers.
Productdiversification has also developed with time to incorporate thesharing of both tangible and intangible resources, and even thosethat can be duplicated with the same trademark is employed. Moreover,product diversification also employs opportunities for strategicintegration. In this line, the integration of marketing strategies oftwo businesses goes a long way into bringing extra benefits, whereby,the integrated endeavors give room for extra competitive gains.However, this kind of diversification may not always bring theexpected profits and results. This mainly happens when anunderestimation of the problems that accompanies such diversificationdue to issues, such as, cultural differences and human resourcemanagement. For related diversifications to succeed, it’simperative that companies capitalize on the strengths or thecompetitive advantages that the company has already established.
Thiskind of diversification in many cases has nothing to do with acompany leveraging its current business strengths or even weaknesses.As such, this diversification if more focused on diversifying acompany’s financial portfolio in a bid to protect it againstpotential losses. Interestingly, many businesses engage in thisdiversification without knowing by involving themselves with numerousunrelated businesses. Unrelated diversification is also beneficial inthe sense that such businesses are believed to have a stableperformance over the course of time. This happens under the notionthat if some businesses owned by an organization on a downward trend,others may be in a cycle of growth which complements those that areplummeting.
However,this kind of strategy is considered as the riskiest of all othermarket levels. This is because of the possibility of failure in allthe diversified business due to a lack of a 100 percent concentrationin the different ventures. Operating multiple ventures is not alwaysguaranteed to increase profits since such ventures are denied of allthe resources required to make them thrive since the resources haveto be shared among the many businesses. Another drawback is also seenin the fact that the corporate level managers do not have adequateknowledge with regard to the unrelated business in a manner that theycan provide enough meaningful strategic guidance or even allocatecapital according to the requirements.
Diversificationin business may also take place through internal developments,vertical integration or by mergers and acquisitions. If Zappo.comwishes to employ a diversification in its business, it must be ableto monitor and manage its corporate strategy. As such, portfoliomanagement techniques are those methods that any diversifiedorganization use in determining the kind of business to engage,manage the business and maximize its corporate performance. As theCEO of Zappo.com, I would only engage in related product kind ofdiversification that would complement the company’s products suchas diversifying the selling of clothes to include those that are wornby people from diverse religious backgrounds.
A nine-cell industry attractiveness matrix
Defining critical internal and external factors
Oneof the traditional ways that individuals start a business’splanning process is by conducting an environmental scan aimed atdetermining the opportunities a s well as the threats in thatexternal environment. It’s also of importance to conduct aninternal scrutiny of the environment in a bid to identify the basicinternal strengths and weaknesses of the business in question. Thecritical external factors are those that are uncontrollable from thecompany’s point of view, for instance the socio-politicallegislative, regulatory, demographic and economic factors. Companiescan, however, attempt to mildly deal with these factors by lobbyingnegotiating, as well as bargaining with the external agents, forinstance, local governments that define their existence. On the otherhand, internal factors are those that to a great extent can becontrolled by the firm. They are the functional activities that canbe deployed by business units in order to succeed in the face ofcompetition.
Assessment of external factors
Uponthe identification of the uncontrollable factors, it’s ofimportance that businesses determine how each of the external factorscontributes to the attractiveness of the industry that the businessis operating. In assessing the industry, managers classify thefactors into two groups. One group contains issues, such as, totalmarket, industry profitability, and market growth which all butcontribute to the company’s competitiveness. The second groupcomprises of the factors that do affect a company and it’scompetition in various ways. This is, for instance, when externalfactors affect multinational company, quite differently when theparent company is located in different countries where issues, suchas infaltory trends and currency parity are very much prevalent.
Assessment of internal factors
Mostof these internal factors usually managerial in nature arecontrollable and also critical to success. This means that asuccessful strategy for any business should hold together a set ofwell integrated programs in the production of goods, finance,marketing and distribution. When using a quantitative approach, aweighted average is usually computed on the basis of assigned weightsand ratings for each factor.
Current positioning of the business in the Attractiveness-Strength Matrix
Inthe growth share matrix approach, a different procedure is employed,whereby each business unit is designed to fall on a defined pointand is quantitatively determined by the value of two coordinates,being the relative market share and growth. The weighted scoreapproach thereby uses a quantifiable set of coordinate measurementsoccurring within the attractiveness strength matrix.
Forecasting the trends of each external factor
Inan effort to assess what the future of a business the first trendsthat take place for each opf the external factors must be predicted.This means that a composite of these trends can be used to indicatethe future attractiveness of the industry. Trends used in forecastingare also similar to assessing the current external factors.
Developing the desired position for each external factor
Uponpredicting what the future holds for the specific industry,determining what moves that are supposed to be made within each ofthe controllable factor is of paramount important. To achieve this,formulating a strategy that bears the clear terms for multinationalprograms for the company is done, which goes a long way into securinga long term sustainable competitive advantage.
Desired positioning of each business in the attractiveness strength matrix
Formulatingthe base and forecasting of the trends in the external factors helpsin identifying the most likely future scenario of the business. Assuch, strategic action programs should be determined in order torealize the preferred position in all controllable interior factors.This requires that a subsequent sensitivity analysis is conductedwhich is used to construct significant alternative state of affairsas well as to decide what programs the company should follow for eachof those cases.
Formulation of strategies for each business
Atthe level of business units, strategies imply a set of broad actionprograms aimed at achieving the long-term competitive strengths asthe company aspires. These basic strategies are directly distilledfrom the evaluation of both the interior and external factors. Thismeans that the strategy ends up having two broad components beingthe action programs for controllable success factors, with theobjectives of counteracting any internal flaws and enhancing thebusinesses strengths, as well as, an action program that is based onexternal factors designed to thwart the existence of negativeconsequences of undesirable developments.
Chapter9: Internal operations
Evaluatingof a business’s internal operations is always important in order toregulate the prevailing in-house as well as the company’s financialgrowth. In this line, for any manager to have a precise perception oftheir business, managers are supposed to evaluate each and everyaspect of the company with a wholesome and present operationalanalysis.
Discuss how you will develop policies and procedures in your company
Abusiness that has clear cut written down policies and procedures arehelpful in integrating the guidelines, rules and the objectives of acompany. The developed policies and procedures are then incorporatedinto one manual that is made available to the company’s staff forguidance in their day to day activities. With this in mind,developing of the company’s procedure and policies requires thatvarious stages, such a, identifying the need for the policy,drafting, gathering information, consulting and reviewing can be usedto come up with an effective policy manual. Identifying the need inpolicy development is done in anticipation of the need or in responseto a need that arises. If the actions of the employees, for instance,indicate a sense of confusion regarding the best way to behave whilein the office, such as their office dress codes, or the use of cellphones in the office, then procedures and policies regulating suchbehaviors have to be developed. Policies and procedures should alsoidentify the individuals who have been delegated to takeresponsibility in the implementation of the policy.
Discuss how you might use business process reengineering in your company
Businessreengineering is concerned with fundamental redesigning of the corebusiness processes with the aim of attaining spectacular improvementin output. Business reengineering works through the adoption of newvalue systems that place importance on customer needs of the diversecustomers. In this line, a company reduces its managerial layers andalso purges fruitless activities in two main areas. This is done byfirst redesigning of functional organizations into cross functionalteams and secondly by using technology that improves thedissemination of information as well as helping in decision making.
Discuss how you might use best practices and/or benchmarking in your company
Benchmarkingin business is an important aspect that enables a manager to knowwhether the company’s performance is either stronger or weaker thanthe competitors. It also gives a company a clear direction on theimprovements that are needed to boost the company’s profits. Thebest practices in benchmarking require that the manager analyses indetail how the company is faring in comparison with its competitors. Pertinent problems that arise need to be addressed promptly and makechanges to the ailing areas. It’s also important for the top levelmanagement to understand that benchmarking is a continuousimprovement process that in that once the changes are made, then thebusiness should be benchmarked once more to see the results.
Discuss how you might use total quality management in your company
Totalquality management is a management system that is employed by themanagement system of any organization involving the company’semployees aimed to maintain their constant improvement. Total qualitymanagement employs strategies, effective communication and data toassimilate discipline in the activities of the organization as wellas its culture. Using of total quality management in at Zappo.com asthe CEO would incorporate managing of customer expectations byunderstanding both their current and future needs and going on tomeet their requirements. Total quality management at Zappo.com wouldalso incorporate involvement of employees by motivating them to puttheir efforts towards attaining a common objective as a company by,for example, giving them incentives.
Chapter10: Culture and leadership
Cultureis in the very essence an abstraction. However, forces created invarious social and organizational situations bearing their roots fromculture so powerful that if managers are unable to understand theoperations of these forces they become victim to the differentorganizational cultures. Mangers face resistance whenever they try tochange the behavior of their employees or even that of theirsubordinates. Some cultures that arise in businesses are whendepartments in organizations appear to be more interested in fightingwith each other, instead of simply getting the job at hand done.Leaders are tasked with the responsibility of initiating theappropriate kind of culture, or even developing a culture based onquality customer service.
a.Discuss healthy and unhealthy cultures
Ahealthy culture in a business is what attracts employees and keepsthem committed to what their organizations stands for as well asattracting customers and maintaining them. A healthy culture inbusiness is a shared culture that is created through shared plans,stories, purpose, beliefs, and language. A business that has acquiredsuch feats means that the business has been able to model the desiredculture over time with a sense of trust and care among the employees.Healthy cultures in organizations are represented in ways, such as,mentored leadership, clear following of objectives, real ownership,measured accountability, demonstrated purpose and achieved storiesand beliefs.
Unhealthycultures in business causes lots of problems and is a drawback to thebusiness’ success. An unhealthy culture is bound to hurt a businessboth in the immediate and in the long-term. Unhealthy cultures inbusiness are characterized by issues, such as, passing of blame whena mistake occurs as well as finger pointing, employees unwilling towork with each other choosing to isolate themselves in groups, aswell as, lacking a passion to help an organization realize itsobjectives. Unhealthy cultures may be exhibited by leaders also whenthey constantly criticize their subordinates with the belief thatthey are helping them to improve. As the CEO of Zappo.com, I wouldconduct an analysis to see the cultures prevalent in the organizationand weed out the unhealthy ones in the most appropriate manner.
b.Describe specifically how you intend to promote and perpetuate ahealthy corporate culture
Establishingand maintaining a healthy corporate culture calls for a vigorous andmeticulous planning of the company’s initiatives. Various ways thatI as the CEO of Zappo.com would do to promote a healthy corporateculture would include rewarding of employees achievements. This makesthem feel appreciated and increase their willingness to work towardsthe realization of the company’s objectives. I would also ensurethat positions in the organization are clearly defined to avoidconflict of roles leading to disharmony. Other important strategiesthat I would employ include creating opportunities for growth,improving sociability, tolerance for change, conflict, and risk, aswell as increasing the level of interpersonal communication in theorganization.
c.Discuss how you will lead the implementation of your new strategy
Implementationof new business strategies is bound to create some conflicts if it’snot effectively. This is because change is usually disruptive of thenorm as employees try to adapt to the new procedures or processes. Assuch, I would implement the new strategy as the CEO of Zappo.com byfollowing some steps which includes first of all, breaking thestrategy into smaller faces for its adoption. This would be followedby communicating to the employees the roadmap of the change at hand,create as scorecard for the new strategy implementation, obtainfeedback through conducting employee surveys, request customersatisfaction and finally open myself to the new strategy based on thefeedback. Such small steps are bound to bring about the requiredchange, which would go along to making Zappo.com a better and moreprofitable company.