BUSN3001 Competitive Strategy : AAA Global Strategy Framework

Introduction

The main objective of the global strategy is the management of the variation which stem up from the international markets. This research, there is a new framework that is regarded as AAA model which has been formulated in order to decipher the nuances of the three strategies. This framework could be utilized for the development of the score card for the organization to show how the organization are functioning in the global parlance (Block, Kohn, Miller and Ullrich, 2015).  The strategic choice entails for a substantial degree of the prioritization that is the framework which would be impact to the companies (Block, Kohn, Miller and Ullrich, 2015).  The organization tends to focus on the specific strategy in order to build the competitive advantage in the market place.  This report will explain the implementation of the models of the adaptation, aggregation as well as arbitrage and they would define how the organization could use this theory to be able to attain their organizational objectives along with the goals.

Discussion:

AAA global strategy framework was formulated by Ghemawat that approaches on three generic approaches that are aimed for the global value creation (Comas Martí and Seifert, 2013). The adaptation strategies usually aims to increase on the revenue as well as the market share for the organization through utilizing more than one business model that fits on their local preferences and requirements (Comas Martí and Seifert, 2013). Aggregation is the achievement of the economies of scale and involves standardization of important portion of value creation. Arbitrage is a tool for exploitation of the economics and other divergences that exists in national and the regional market. The focus of this strategy is on two industries, the food/ beverage industry for the coca –Cola Company and MacDonald’s. The other industry is the pharmaceutical industry for the Pfizer and the Sun Pharmaceutical companies.

The food and the beverage industry in Australia has experienced various paraphernalia of varied proportions. The Coca-Cola Company aims to initiate various strategies when it comes to the packaging and offering of products that are health conscious as well as keeping with the changes in the trends as much as the client’s centricity is concerned (Madsen and Walker, 2015). The company launched Coke Life in Australia which is version of the coca cola but it has lower number of calories and it’s natural in flavor.  The management of the organization has been expecting to rake up the profits of the company to over one hundred Australia dollars as a cost saving measure which would continue over several years. Based on the annual report of the company, they sell beverage product to more than two hundred countries (Todd, Beling and Scherer, 2015). They have been able to adapt on their packaging, branding and marketing to be successful in the various countries.

The other company is McDonald’s which has made their presence to more than 118 countries and they serve to millions of customers every day. They have a tag line which highlights that they are ‘modifying on the burgers around the world’ (Chopra, Sachdeva and Bhardwaj, 2016). To be able to respond to the changes to the consumer tastes, they have modified on their menu which includes salads, smoothies, fruits and the seasoned fries. The local to the deviation from the standard menu has been employed to be able to abide to the regional food preferences.

Implementation of the aggregation strategy

The food and beverage industry has been dependent on the aggregation strategy. The Coca- Cola company implemented aggregation strategy in order to expand beyond the USA and be able to achieve the worldwide economies of scale. The company provides more than three hundred brands apart from the Coca-Cola beverage in order to suit the preferences of the customers. Additionally, they have a long history when it comes to acquisitions from brand like Barq’s, Odwalla and the Fuze Beverage (Salunke, Weerawardena and McColl-Kennedy, 2013).

On the other hand MacDonald’s company has earned revenue through investing in the properties, franchising of the restaurant and they are also operator of the restaurant. The company has utilized all the possible means in order to be able to maximize on the revenue as well as the cost minimization (Madsen and Walker, 2015). Additionally, they use the franchising model which is their growth strategy that has minimum risk.

Implementation of the Arbitrage strategy

The food and beverage industry are on the verge of the globalization that involves over range of the factors. Coca-Cola is the prime example for the economic and a geographic arbitrage. The company usually outsource and produce mostly in China with more than thirty nine facilities all across the country (Salunke, Weerawardena and McColl-Kennedy, 2013). Additionally, the company has manufacturing plants to the local bottling rights in many countries to enable them reduce on the cost of the production. The company aims in producing high quality products in the target market to the various region.

MacDonald’s has benefited from the arbitrage opportunity which are offered by globalization. Mc Donald’s have been able to leverage on the arbitrage opportunity which has been offered by the globalization. The company has been able to leverage their US reputation for providing a high class business to the other countries (Todd, Beling and Scherer, 2015). The company is already positioned as high quality food chain especially in the mind of the clients in the new economies which they venture (Rothlin and Mccann, 2016). Additionally, the company has previously done backward integration with the famers by offering contract farming when it came to the agricultural economies to ensure there is consistent supply of the required quantity as well as quality of the raw materials at a price that is negotiated and fixed (Todd, Beling and Scherer, 2015). This has ensured that there is consistent in the quality as well as taste to the finial products they produce.

Pharmaceutical industry

The pharmaceutical industry has been growing at a rapid rate, this has been attributed by the advancement of the research that has enabled them to come up with new drugs. The research of formulation of a new drug and their patent cost a lot especially when an organization is processing testing, patenting, safety and their marketing (Rothlin and Mccann, 2016). The company should make sure they are able to market the end product to the client in the various countries since the law usually differ to the different part of the world. In the analysis of using the two companies we will be able to know how this industry are implementing the AAA strategy to be able to expand on their operations.

Implementation of the adaptation strategy

Pfizer Company usually a distinct sales strategy to be able to market on their product. To enable the organization to be able to sell in the various country they modify for them to be marketable. The organization used alternative ways putting into account the aspect of the culture, economic as well as the regulatory difference.  Some of the steps they took was to build on their brand through the community outreach programs (Schlegelmilch, 2016). Additionally, they devoted on all their resources in order to work with the pharmacist who plays the vital role particularly to help the patients to choose medications (Yilmiz, Mubin and Bulut, 2014). On the other hand, Sun pharmaceutical company which is based in India are they are the fifth largest in the world had to make changes to be able to suits the needs of the country demand and global market. The company was able to adapt on their chemical formula, their ingredients as well as the packaging style that were suitable to the individuals in a given country (Todd, Beling and Scherer, 2015). The company has a strong research and county specific implementation strategy in order to have a competitive edge over the rival firms (Jha, Dhanaraj and Krishnan, 2014). For the past ten years the company had challenges to get patent for various high end products, but they were able to overcome this problem and are able to produce cheaper, high quality generic version for these product and be able to gain a market share.

Implementation of the aggregation strategy

The aggregation strategy has been associated with overcoming on the differences through implementation of the cross border means. The objective of this technique has been for the evaluation as well as exploit of the similarities for the creation of the economies of scale. When it comes to Pfizer organization they utilizes administrative aggregation (Porter and Ronit, 2015). They use this strategy to market on their products, an example when they want to market these drugs in Europe they are required to meet certain regulatory requirements for the few countries and when they achieve this they can now qualify to sell all throughout the European market (Schlegelmilch, 2016).  On the case of Sun Pharmaceutical Company they realized on their global presence for their growth and they were able to successfully acquire various competing businesses to different countries as well as geographies (Porter and Ronit, 2015). Up to date the organization has been able to gain over nineteen acquisition to enable them increase on their market to the various countries.

Implementation of the Arbitrage strategy

When it comes to Sun Pharmaceutical company on the strategy of arbitrage they have established on their research capabilities in the developing countries to enable them to reduce their cost that has increased immensely and they would be able their capabilities to enable them produce products at a cheaper price (Yilmiz, Mubin and Bulut, 2014). Additionally, the organization has been able to establish majority of their manufacturing facilities especially in the Asian countries with a much lower cost of production. They have been able to these countries to the developed counties and sell them at high prices (Caiazza and Ferrara, 2016). When it comes to Pfizer Company they are utilizing tax arbitrage. This entails relocation in order to cut on their taxes. They have taken over the AstraZeneca of the United Kingdom since in this country there is no paying of the taxes on any overseas earning, and the tax rate are significantly lower, hence they are able to make a lot of profits.

Conclusion

The above aspects discloses a careful analysis of the marketing element of the triple A model in the context of the food and beverage industry and the pharmaceutical industry.  From the analysis done it is clear both of these two industries are on the verge of acceptance of the globalization and the emergence of different aspects that are rather complex for the entities to be able to pursue business interest in their respective domains. The organizations that have been examined in the analysis should use as well as balance these strategies but the tradeoffs is always there in between them. They should be in a position to manage on the cross border differences, since each industry is part of the globalization that is restricting on the world. The strategy in which the organizations use will depend on factors such as the globalization and the financial statements. From the research it can be deduced that both of these industry to some consideration look in consolidating of their stake and position hence, they would be able to thrive towards the path of growth, development as well as profitability.

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