Competitive Strategy Aggregation and Arbitrage

Question: Discuss about the Competitive Strategy for Aggregation and Arbitrage. Answer: Introduction AAA framework stands for Adaption, Aggregation and Arbitrage, which offers an organization to create global value of products or services. There are different approaches that an organization can adopt in order to implement this business framework. The implementation of this framework depends on the business process and target market. For instance, an organization needs to understand cultural needs and requirements of the target market in order to create value (Schlegelmilch 2016). The purpose of this report is to evaluate the use of AAA framework for four companies from two different industries. This report will emphasize the procedures in which companies are creating value for their products and services. In this competitive era, it is highly important to understand needs and demands of the consumers (Ghemawat 2015). It helps global companies to gain superiority in competitive market. Selecting Industries and Companies In this report, two industries have been selected such as food industry and retail industry. The business processes of these industries are different. In food industry, Bulla Dairy Foods and Haigh's Chocolates have been selected. On the other hand, Redbubble and Target Australia Pty Ltd have been selected. The organizations selected in this study are based on Australian market. The companies have adopted different business strategies in order to create a global value in competitive market. Following is the implementation of AAA framework in order to identify the adopted strategies of the above-mentioned companies. Evaluating AAA framework for Food Industry In food industry, the aim of the organizations is to understand food preference of the target market in order to create global value. Apart from that, the companies need to evaluate the buying behavior of the consumers in order to understand whether the target market is health conscious or not. According to the evaluation, the companies need to manufacture products according to the requirements of specific target market. Moreover, in food industry, companies need to comply with a set of policies developed by the government (Morschett, Schramm-Klein and Zentes 2015). Here, the companies need to maintain the minimum quality of food in order to maintain business sustainability. When it comes to the adaptation strategy, companies in food industry need to understand consumers preferences. AAA framework helps to build efficient strategies to gain competitive advantages in an efficient manner. Adaptation Bulla Dairy Foods Adaption refers to the strategy through which an organization adopt some key components in the business model, which suits to the consumers preference. In food industry, an organization needs to adopt the food preference and health consciousness of the target market in order to maintain business sustainability. Bulla Dairy is an Australian dairy firm, which manufactures ice cream, sour cream, yogurt and cheese in national and international market. In case of Bulla Dairy, the company the company has adopted manufacturing strategy according to the requirements of Australian target market (Margulescu 2015). Here, consumers are health conscious and therefore, they prefer high quality food. Therefore, the company has contained less cholesterol to the products in order to attract consumers from target market. Moreover, in order to satisfy consumers needs and requirements the company provides manufacturing details through their official website. Here, the company provides recipes of the pro ducts in order to maintain transparency. The adaptation strategy of Bulla Dairy helps the company to satisfy needs and requirements of the Australian consumers (Motohashi 2015). Haigh's Chocolates Haigh's Chocolates is a confectionery industry of Australian market. The company has wide range of products related to the South Australia, New South Wales and Victoria target market. The company has taken approach of sharing manufacturing ingredient with the consumers. Therefore, the company has a tour facility for the consumers to see how they make chocolates (Rothaermel 2015). This adaptation strategy helps the company to influence consumers buying behavior and satisfy health safety needs of the consumers as well. In order to satisfy needs of different type of consumers, the company has a range of eggless chocolates. In this manner, the company has products for both vegetarian and non-vegetarian consumers. In food industry, it is highly important to maintain a minimum product quality. Moreover, the company should have product for different group of consumers. For example, the adaption strategy of Haighs Chocolate helps to fulfill requirements of both vegetarian and non-vegetarian consumers in an effective manner. Aggregation Bulla Dairy Foods Aggregation strategy helps an organization to meet consumers expectation according to four major dimensions such as geographic, cultural, administrative and economic. In order to retain new and existing consumers, Bulla Dairy has adopted aggregation strategy. Here, the company has proposed Fonterra in order to acquire intellectual property from the company. In this strategic movement, the company had acquired the Brownes tub ice cream. It helps the company to enlarge the product range in domestic marker (Cusumano, Kahl and Suarez 2015). When it comes to the aggregation strategy, an organization can enlarge their product range by aggregating with alliances. Therefore, Bulla Dairy would merge up with an international organization of developing country in order to expand business. Aggregation strategy helps to merge up resources of two organizations from similar industries. Therefore, it can be said that Bulla Dairy has implemented this strategy in order to expand product range in inter national market. Haigh's Chocolates This strategy helps to build market in international market in an efficient manner. In order to expand in overseas market, it is highly important to merge up business with a company of the host country. It helps to understand cultural background of the targeted market of the targeted country in an effective manner (Leonidou et al. 2015). Aggregation strategy helps to aggregate the business model with another business organization in order to influence global consumers. However, Haigh's Chocolates does not have such strategies, as the business of this company is limited to the domestic market. Arbitrage Bulla Dairy Foods Arbitrage strategy helps to earn revenue from the price difference between geographical locations. An organization can buy the raw materials where market price is low in order to maximize profitability. Bulla Dairy is conducting their business in domestic market. Therefore, the company does not have the opportunity to buy raw materials from overseas market. In order to implement arbitrage strategy, the company has developed efficient relationship with their suppliers (Gilinsky Jr et al. 2015). In this manner, the company can purchase raw materials at low rate even during high market demand. Efficient relationship with the suppliers helps to maintain good product supply among the target market. Haigh's Chocolates In case of Haigh's Chocolates, the company would adopt the arbitrage strategy by outsourcing their manufacturing unit in developing countries. In this manner, the company would be able to reduce the manufacturing cost with the help of low labor and raw material cost. Apart from that, the company would improve their manufacturing quality by investing more in research and development. However, the company does not have such strategies with which cost of production can be reduced (Prajogo 2016). The company would implement this strategy in order to reduce manufacturing cost of products. Here, the company would target a developing country and open a manufacturing unit. In this manner, the company would be able to reduce employee cost along with cost of raw materials. Evaluating AAA framework for retail Industry Adaptation Redbubble Redbubble is an online retail store who provides customized printed products to the targeted customers. Apart from that, the company also provides a range of pre-designed artwork to the consumers. Therefore, the company has adopted cultural preference of the consumers in Australian and US market. Here, the company conducts RD in order to determine clothing preference of the targeted consumers in order to deliver products according to the consumers needs and requirements in domestic and international market. Apart from that, the company has a range of artwork experts from different cultural background. It helps to match with a range of cultural people in global market (Wigand et al. 2015). The business process of the company depends on the consumers clothing preferences. Consumers may have certain desires, which they want to incorporate into their cloths. Therefore, the company has shows a flexible approach in order to maintain consumers satisfaction. Target Australia Pty Ltd Target Australia is an online retail market in Australian market. The company has a range of consumers goods such as cloths, toys, cosmetics, electronics and homewares. As the company has diversified product range, the company has adopted adaptation strategy in order to satisfy a range of consumers in domestic and global market. The company has online feedback portal in order to understand cultural needs of the consumers (ZHU, SU and ZHOU 2015). In this manner, the company has adopted adaptation strategy in order to satisfy the targeted consumers in global market. Aggregation Redbubble The company has targeted the US market in order to expand globally. In order to understand the cultural background of the US consumers, the company has developed manufacturing unit in San Francisco. It helps the company to aggregate with the US market in order to increase business profitability in an effective manner (Motohashi 2015). As the company does not have any alliance in international market, the company would maintain high profitability with this adaptation strategy. Cultural background of Australian and US consumers is different and therefore, the company would take advantage from the target market in an effective manner. Target Australia Pty Ltd The parent company of Target Australia is Wesfarmers Group, which has good brand image in overseas market. In order to expand in international market, the company has adopted aggregation strategy with the help of own brand image. In order to influence consumers in international market, the Target Australia communicates with both suppliers in consumers in target market (Crossingham and Hubbard 2016). In this way, the company investigates consumers needs and demands in an efficient manner. The strategy of Target Australia capitalizes the brand image of the parent company in order to flourish in international market. Arbitrage Redbubble In case of Redbubble, the company is conducting business in two major locations such as Australia and United States. Therefore, the company has adopted arbitrage strategy in order to purchase raw materials from the market where price is low (Schlegelmilch 2016). In this manner, the company takes advantage of price difference between two geographical locations. Apart from that, approximately 51900 artists had sold their innovation through this website due to its efficient arbitrage strategy. Through this organizational strategy, sellers of this website would be able to take advantage from currency fluctuation of different geographical location. Target Australia Pty Ltd Target Australia has a wide range of products and the company operates business in 125-targeted countries. The company is headquartered in North Geelong, Victoria. In order to reduce organizational cost, the company takes advantage from price different between different countries in global market (Morschett, Schramm-Klein and Zentes 2015). Share price of Wesfarmers Ltd is 43.03 AUD in Australian market. The company takes opportunity of price difference of shares in international market. The company majorly trade with equities in order to maintain a risk free profitability. Conclusion While conducting, it can be said that AAA framework is a useful tool, which helps to expand in global market. In order to expand in global market, it is highly important to understand needs and requirements of the targeted consumers. Here, companies need to adopt the most appropriate adaptation, aggregation and arbitrage strategy according to the business process. In this report, two industries have been studied in order to identify their business strategies. After conducting the study, it can be said that adoption of strategy from AAA framework depends on the business process and industry types. In this report, business strategy of four organizations has been evaluated. From this evaluation, it has been identified that in order to conduct business in international market, it is highly important to aggregate resources with organization in similar industry. It helps the companies to increase profitability by reducing organizational cost. 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