Potential Retail Trade and Competitor Reactions
There are various potential retail trade and competitor reactions that emerge as a result of interdependent of this type of trade and cannot operate independently of one another. Therefore, a retailer running in a business with entrant experiences potential reactions of their nearby opponents during decision making for their businesses. These reactions are;
- Decreasing product prices
This is whereby a trader reduces his/her product prices in order to compete with the fellow traders in the market. For instance, in the case of the Cambridge Sciences Pharmaceuticals, the retailer desires to increase its market share by decreasing the price of the medicines. This trader considers the possibility that nearby competitors can decrease their cost in retaliation.
- Launching new product or service
Some retailer traders react by implementing new products or services in order to be different from their competitors. When one competitor differs from the other in terms of products and services, chances are that he/she will create uniqueness in the eyes of customers. In this case, when retailers have differing resources, assets, capabilities as well as market positions, they are likely to attract more customers.
A good example is depicted in the snack food retail business, for instance, the two leading retailers, Burger King and McDonald’s, undergo similar market trends. However, they have reacted in obviously different approaches to the obesity reaction. For the Burger King, it has launched high-calorie, high-fat sandwiches that are reinforced by in-your-face, and is politically wrong advertisement. For the McDonald’s, it has rolled out food varieties, it regards as healthy. As a leading business, the McDonald becomes the steering for the government and consumer reaction to obesity. Once the other retailers, such as Burger King realizes this, it gets a chance to cherry-pick share in the less health conscious fast food segment. In this case, Burger King responds asymmetrically. In some cases, the objectives of business decision makers never align fully with other corporate objectives and companies normally react in ways which seem to be conflicting with their declared strategic purposes or having unbiased judgments of outsiders regarding the right path for them to follow.
Potential channel conflict issues
There are potential channel of conflict issues that result from competitor reactions. These can be;
- Unjust competition
This involves one retailer distributing misleading and false information, which can harm the company’s interests of another business. In this case, misleading and false information to customers, including dissemination of information that lack a reasonable basis related to properties, price, suitability of uses as well as the quality of goods, fake use other brand names, product labelling or farm name and packaging.
- Predatory pricing
This is whereby a retailer sets its product prices at the level, which signifies the sacrifice of returns in the short run to abolish competition and obtain higher returns in the long run once a competitor or more competitors have been chased away.
- Products and services price limits
This means that some retailers set low prices and high outputs so that other retailer competitors cannot make any return at that price. This is normally achieved by trading at prices just lower than the average sum costs of a potential competitor. This signifies to the potential competitors that it is impossible to make profits. In addition, some retailers can be having a higher level of knowledge regarding the product pricing, market, production cost as well as its customers, which eventually can deter competitors to prosper in the market and result in conflicting issues.
The Esquire and Men Health magazines are commonly known in the United States, both Magazines talk about men issues, ranging from sports, sexuality, and politics. Other companies like Nivea use these magazines for promoting their products, this is because these magazines have a wide readability and can be accessed by very many people. Nivea used Esquire magazines to advertise for its products for men. The strategy was right though coupled with some issues, for example, in one of the adverts the company did not use copy and visuals adequately.
Appendix one, Courtesy of Esquire magazine
Appendix two, courtesy of U.S health men magazine
The esquire magazine is one of the largest magazines on men’s issues in the United States. It has a wide circulation and a pass on readership of 5. The total monthly readership of the magazine is approximately 75,000-90,000 people (Esquire Magazine, 2009, p. 5). Its distribution rate is eleven times a year. The magazine is distributed via many platforms across the United States, for example, hotels, barbershops cafes and even book stores. The magazine tackles different topics that touch on masculinity; it assumes a very comprehensive and authoritative style when discussing some of the issues that affect men. This magazine costs 16dollars.
The men health magazine is a Lifestyle magazine that covers issues that affect men; it is one of the best sources of information for the men who are immensely active in what they do (Mens Health, 2010, p. 7). This magazine talks about different topics that involve physical, mental, and emotional life of men. As an acclaimed best selling magazine, men health has continued to give the readers tools that they need so that they can be able to live their lives to the fullest. The men’s health magazine is sold for 4dollars across the country. The magazine readership is wide and covers an approximately sixty thousand men in the country.
The Nivea brand is widely recognized in many parts of the world, the company mainly deals with skin care products. Nivea’s history can be dated back to the year 1911, since then, this company has extended influence in many parts of the world. Nivea Corporation is owned and operated by Beiersdorf. When the company first launched its Nivea for men products, it created a new ground by offering its aftershave balm product, this would be the first balm on the market that did not have alcohol, and it proved to be very popular among the different types of consumers worldwide.
|Many countries regulate media||Only consumers who can afford buy products||Consumers are more conscious of their skin||Media availability is key to patronize|
|Advertisement may be banned||Consumers have to accept product sophistication||People may be illiterate to understand advert||Media has to be available if alters promotion mix|
|Moral and religious value affect advertisements||Has set advertising set authorities||Lifestyle change affects promotion||Make products significant to consumer and less harmful to environment|
|Promotion to children in some countries is not allowed||Inflation could lead to strong dip in overall company sales||Different age groups utilize different products||Better technology can assist company to work with better process units|
Nivea Company is obliged in the production of products that are safe. Safety assessments are used to ensure that are the produced goods are within the provided guidelines of different quality agencies within the countries of production (Crawford, 2010, p. 9). People who manufacture and distribute these products are fully responsible. They should ensure that products manufactured are safe. The trade policies in different countries around the world act as barriers to the company’s operations, in some countries, the government can impose huge taxes on the company this can affect the operations of the company (Bhargava, 2015, p. 12).
The companies adverts are supposed to be clear and should not in any mislead the consumer of the products (Cant, Strydom, Oooste, & Duplesis, 2008, p. 9). Products should be affordable to target consumers. It is worth noting that factors for example, unemployment and inflation can affect the purchase of the company products, and the volatile market place can sometimes result to difficult financial crisis in the company. Sometimes, the company may go though price pressures, some established competitors, for example, can cause this Vaseline (Cant, Strydom, Oooste, & Duplesis, 2008, p. 10).
Many consumers are very conscious of the nature of their skin, therefore, they want quality, and if they detect that the products being advertised do not perform to the expected standards, they can simply turn away from purchasing the product (Cant, Strydom, Oooste, & Duplesis, 2008, p. 13). Many people want products that can enhance how they look, people want to have good skin textures (Crawford, 2010, p. 15). Change of lifestyle can also affect the purchase of the products by the consumers, for example, if the consumers have an interest in saving their beards then there is no need to buy the company products (Cant, Strydom, Oooste, & Duplesis, 2008).
Nivea is adapting quickly to the issue of technology, the company is now able to use technology in many ways (Evans & King, 2000, p. 14). Through the company’s research and development unit, the company is looking forward to come up with products that are more beneficial to the consumer. Use of media in advertising has proven to be a significant activity that has aided Nivea Company to boost products sales. Through print media, social media and use of TV, the company is now able to reach a diversified target consumer (Ries & Trout, 2008, p. 17).
The advert is fairly standard because it hardly inspires result-oriented marketing. One functions of standardization is creation of a larger market base (Crawford, 2010, p. 18). In regards to the above advertisement, the advertisement does not create large market base. However, the advert uses a black American and it therefore positions itself as an advert for people with a specific physical appearance (Noble, 2000, p. 18).
The copy of the image states “re-civilize yourself”, though the message could have been intended for a worthy cause, its meaning was taken to be offensive and therefore the advert did not turn to be efficient for passing the message that it was intended to pass (Trompenaars & Williams, 2004, p. 34). The copy of the advert was taken as an insult against men of color commanding them to re-civilize them by using Nivea products. “Re-civilize yourself advert stands out as a racist remark. The advert continues to urge the men of color to look like they really care.
The advert feature a man holding another man’s face, from careful observation it looks like the man wants to throw he face that he is holding away. Besides the picture of the man is the advertised products, the advertisement uses blue and white colors to get its message across the divide. The man is standing on what could be best explained as a parking lot. The fact that the company has used a heavy built man is not an accident, this has been done to associate the product with being muscular, it also helps to define the target market for the product, and the product is specifically intended for men.
It is easy to identify the product that the advert is trying to sell at the first glance of the company, the advert is trying to sell shaving cream for men, the product has been predominantly displayed in the left side of the advertisement, this has made it to become noticeable. The roles that have been assigned to the man who is pictured in this picture appear to be stereotypical, this is because, and then advert seems to target the men of color by suggesting that they should be civilized. The model in the picture is wearing a gray sweatshirt, a blue trouser, their hair is nicely trimmed, and they have no beards, suggesting that they have already utilized the product. Relationship that models have with product is that of consumer and product relationship (Crawford, 2010, p. 4).
The message that is displayed in this advert is that men should use Nivea products to make their appearances more appealing. The picture in the advert connects to the message by displaying a man who has already used a Nivea product. The advert claims seems to contend that men of color who keep long hairs should trim them and do away with their beards so that they can be accepted in the society. It is evident that society does not condone the behaviors of people who are considered to be uncivilized and it is for this purpose that the advert compares people who are not civilized to those who do not trim or cut their hair and beard. Considering that the Add was widely used in America a country that has dealt with racialism for a very long time then the context was wrong.
The advert used the print media in form of magazines; Esquire magazines to reach its customers. One of the reasons that the advert used this strategy is because, Esquire is a men magazine, and the advert targets men. The fact that the magazine has a huge readability bases makes it suitable for reaching to a very wide base area of the target consumers. This magazine is not expensive it creates a big consumer access to Nivea.
Despite the immense success that the advert may have enjoyed in its initial positing, it is worth noting that the advert failed in some of the strategies that it used. In regards to the communication process model, it is significant for all the advertisers in a particular company to consider all the factors that impact on the process of communications. In this case, the advertisement did not pay much attention to the message that it could be sending to the people of color, this is evidenced by its ignorant use of a face and the blatant words that urge all the people of color to re-civilize themselves by using Nivea products. The content of the advert is sharp and does not help in solving the problem to which it was intended.
Characterized by its simplicity, this advert is standard and has helped to create result marketing. This promotion has been tailored in a way that inspires use of product to a wide audience in universal market scene.
In its copy form the advert image states that “don’t let the sensitive skin irritate you”; despite being simple, the message in the advert is straight to the point. It helps people know that products which are being advertised are a beauty product. The advert does not in any way use specifics to give its message; to a large extent this makes the advert more successful.
The magazine is published in the health magazine, it is possible to identify what the advert is trying to sell through the first glance, and this is because one can see that the advert is trying to sell the beauty products. Products being displayed are noticeable even more than other aspects of advertisement. The advert has featured a shirtless male, the overall ensemble of the male in the picture reflects the product, this is because the male face is smooth and this is one of the major objectives of the products. The advert suggests that the people who will buy the Nivea products will look just like the man in the audience. Advertisement models are central in relation to all products that are being advertised. The products are placed in front of the model
The message that the advert is trying to pass is simple and straight to the point, according to the advert men should buy Nivea products at all times. The advert suggests that Nivea products are effective for the purpose of eliminating skin insensitivities among men.
The advert used Men’s health magazine to get its message across. The reason for using the magazines was because of fact that many men read magazines and Nivea men adverts targets men. Men magazine have a huge readability and are not expensive, this makes them suitable for advertising the men products.
In consideration of the communication process model in promotion, the advert has identified the target population for the products; their target populations are men who are already shaving and have skin insensitivity issues (Jain, 2000, p. 23). The communication objective of adverts was to get men to purchase the products for use in shaving. Through creative strategies, adverts use young models to create an appealing site to products. The media plan that has been used by the advert is the print media (Trompenaars & Williams, 2004, p. 34).
The move for Nivea to carry its promotion activities for men’s products in men’s magazines is a good move; this is because they reach their preferred target consumers (Crawford, 2010, p. 23). However, the strategy used by Nivea Company to advertise its Nivea for men products in the first advertisement is not right, this because the advert does not in any way consider the cultural consequences that may result from it, this can have very detrimental consequences for the company (Varadarajan, 2009, p. 45). Second advert is by all means right; the fact that it is straight to point has made it efficient in the promotion of the product.
Nivea has made major milestones in the promotion of its products, however, despite the strands, it is important that the company consider some ways that can help them to increase the efficiency of their promotion activities (Cant, Strydom, Oooste, & Duplesis, 2008, p. 67). In regards to the first advertisement, the company should use promotion strategies that are not considered as racists. It is evident that strategies that are considered as violations of other people cultural heritage can spoil the good name of the company; to do this the company should study the culture of their consumers in depth (Cant, Strydom, Oooste, & Duplesis, 2008, p. 56).
The language used in the advertisement s should be experiential instead of being sharp and blatant, for example, in the first advertisement, it was wrong for the company to use the words “re-civilize yourself” in an advert (Cant, Strydom, Oooste, & Duplesis, 2008, p. 45). Experiential adverts can bring the brand to life and help the consumers to identify with the brand. Before a campaign find its way to the media, it is advisable for the company to monitor it, this can help in knowing the effects that it will have on the consumers. Promotional advert campaigns that have not been monitored can result in very detrimental consequences (Cant, Strydom, Oooste, & Duplesis, 2008, p. 78). The company should strive to get the promotional balance right, this will assist the company to create a very strong brand affinity among the men, it will also help in creating and maintaining, and consistent dialogue with all the men and this will help in driving the sales of the company (Trompenaars & Williams, 2004, p. 76).
The company should use the Nivea for men product to create a positive self image for all the men; for example, the company can offer to distribute its Nivea for men products after it posts an advert. Trials can boost men’s use of products. Promotions help in the creation of brand awareness and the customer familiarity with the product, therefore apart from the print media, the company should utilize other means to assist the customers specify their skin type and find the products that best suits them (Smith & Schultz, 2004, p. 34).
The success of any organization or business is dependent on the promotion activities of the particular company good promotion activities is a key in helping a company to reach to its target consumers. Nivea is a company that has been in existence for a very long time it has utilized different promotion activities to reach to its consumers. Print media in for of magazines is a rich way that can be utilized to advertise products, Nivea has specifically used Esquire and Men’s Health magazine to advertise for its Nivea for men products. One of the main reason the company used this advertising agents is because they are specifically made for men and therefore, advertising here would ensure that the company is able to reach its target market. It is significant to get it right in the advertising activities this is because; adverts communicate way too much information than the company may actually think.
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Most business organizations are conversant with the Red Ocean Strategy and are used to rivalry and competition while hoping to achieve the highest level of success. A major challenge that such organizations however face is that they find it difficult to generate new demand or increase their market share. The Blue Ocean Strategy offers an important framework that businesses can adopt to be able to create uncontested markets and subsequently focus from the vicious circle of competition. This paper aims to investigate the validity and validity of the Blue Ocean Strategy using theoretical and practical approaches. The paper tests the theoretical validity of this framework through conducting an extensive literature review and then examines its practical applicability. The theoretical framework analyses the basic concepts of the Blue Ocean Strategy, reviews its conception, differentiates between the Red Oceans and Blue Oceans, reviews opinion of other scholars and analyses the tools and frameworks associated with the strategy. The strategy’s practical applicability is tested on the Emirates Airline Company to see how it can help this company to realize the highest level of success. Findings on this analysis indicate that the Blue Ocean Strategy is a valid and reliable framework that business organizations can use to establish new market environments, make rivalry and competition irrelevant, create and exploit new demand, achieve sustainable growth and ultimately realize the highest level of success. Recommendations for the implementation of the Blue Ocean Strategy are also made to ensure that Emirates Airline Company is able to realize the most desired level of success.
The main aim for any business organization is to generate the highest level of success while operating within a favorable business environment. Drastic transformations within the highly globalised contemporary economy however indicate that status quo, which is not sufficient in a globalised economy, cannot sustain a business. This is especially the case because many business organizations are increasingly suffering negative consequences of operating in a heavily crowed global market (Pollard 2007, 66). The ability for most business organizations to operate across the national borders has seen the number of competitors drastically increasing, which intensifies the degree of competition through pricing strategy and product differentiation. This in return contributes to constant decline in demand for products and the subsequent reduction in profit margins, which eventually forces certain business enterprises out of the competition field. On this note, new aspects of innovativeness are necessary to amend or create new processes as well as effective business models (Sushil 2007, 84). Innovation is particularly important as it would enable a business enterprise to successfully adapt to the ever transforming economic, social as well as technological sphere, which would in return allow it to achieve the highest level of success.
Business entities have for a long time engaged in a head-on competition in the market place in pursuit for high profit margins and continuous growth. They are particularly pursuing to gain a competitive edge, a huge market share and distinctiveness. As a result, such organizations end up employing the wrong strategic approaches for expansion, which has portrayed a steady decline in the available market spaces (Sushil 2006, 87). Despite the fact that the current technological advancements are increasingly enhancing product development by enabling suppliers to generate a huge variety of unique products and services, the global spectrum market niche is rapidly vanishing. This is due to the declining trade barriers across the national and regional borders as well as the readily available online information on a global scale. Similarly, there is limited evidence of any possible growth in demand for products and services, which is the case particularly in developed markets (Kyle 2005, 89). The ultimate result is that the level of supply for products and services within most industries is increasingly overtaking the level of demand (Pollard 2007, 78). This situation has unavoidably hastened the commoditization of goods and services, declining profit margins, and intensive price wars. An analysis of leading brands shows that the distinction between service and product varieties is increasingly becoming more merged, which is continuously making consumer choices for specific products and services to disappear. On this note, differentiating brands in the overcrowded and highly turbulent modern day industries continue becoming complex especially during economic upturns as well as downturns. This explains that there is dire need for business organizations to come up with an effective and innovative business strategy that can help them to get out of the vicious cycle of unfavorable product and service competition.
During the past few decades, a huge variety of strategy frameworks that business organizations can employ to develop new business models and eventually get out of the vicious cycle of product and service competition have been developed. While some of these strategies, like the Porters’ Five Forces, Ostrewalder’s Canvas and Kim and Mauborgne’s Blue Ocean strategies are startlingly famous, they have not been tested academically. The motivation to specifically look into the Blue Ocean Strategy is drawn from the fact that the strategy ranks as the most fundamental framework that can be used to develop innovative new markets that have a huge supply of customers, thereby enabling any business organization to gain sustainable level of success (Lee 2011, 210). Similarly, the book by Kim and Mouborgne, which documents information about strategy, was printed in over forty three languages and sold in over 3.5 million copies, which saw it ranking as the bestseller in the world. In addition, the book was awarded at the 2005 Frankfurter Book Fair as “The Leading Book of the Year” as well as ranked among the “Top Ten Business Books of the Year”. Furthermore, the book was ranked among the “Top Forty Most Influential Books in Chinese History”. Despite these significant achievements, which portray the Blue Ocean Strategy as the most appropriate strategy through which business organizations can obtain a sustainably successful edge, there has been constantly emerging questions inquiring about the extent to which this strategy has been tested empirically. This explains that there is dire need to research this strategy so as to generate academic information that can be given to practical users as an empirical verification of the suitability for using the Blue Ocean Strategy. Another motivating factor for researching the Blue Ocean Strategy is to help generate empirical information that can be utilized by both the academic and non-academic users.
The fact that the widely used Blue Ocean Strategy has not been academically researched indicates that the validity for its usage has not yet been tested. This shows that employing it within any business enterprise without a well formulated scientific verification may cause such enterprises to incur certain strategy-related errors that might eventually violate the often pursued level of success. This is because business organizations adopting a strategy that has not yet been tested might erroneously implement the framework in a manner that is not required, which may eventually attributed severe business failures (Lee 2011, 223). There is thus the need to conduct the current research so as to bridge the gap pertaining to the validity and reliability of the strategy in question. The research problem guiding this study is thus to investigate the degree to which application of the Blue Ocean Strategy is Valid and Reliable.
Formulation of a good research question is appropriate in this inquiry as it will help to collect sufficient information that can help to test whether employing the Blue Ocean Strategy can successfully promote organizational success on one hand while breaking the vicious circle of products and service competition on the other. The overarching question of inquiry that will be used in this research is:
- Establish whether the Blue Ocean Strategy is a valid as well as reliable concept to be employed in business organizations
This overarching question will be narrowed down into more specific questions that will guide the researcher in venturing into both the practical and theoretical research spectrums.
- Is Blue Ocean Strategy theoretically valid and reliable?
- Is Blue Ocean Strategy practically valid and reliable?
This section is intended to provide an in-depth review of the underlying theory behind the Blue Ocean Strategy so as to effectively respond to the question of whether this concept is theoretically valid and reliable. It will thus look into an array of published literature so as to provide fundamental information on this field of interest.
The Blue Ocean Strategy describes an innovative business practice that aims to enhance successful business operations through enabling business organizations to set the pace in lucrative emerging markets. This business theory suggests that business organizations are far much better when they venture in uncontested market avenues than indulging in the traditional business competition. It discourages businesses from venturing in the “Red Ocean” market places where business enterprises continuously compete against each other. As portrayed by the Blue Ocean Strategy, businesses should instead pursue for a way to operate in markets that are not yet invaded by other competitors (Srinivasan 2006, 151).
The Blue Ocean Strategy concept was introduced by Kim and Mauborgne in 2004 when they conducted an empirical inquiry on 150 business organizations operating in thirty industries for over one hundred years. The two scholars argued that two market categories that they described as Blue Oceans and Red Oceans prevailed and that companies operating in Blue Oceans managed to achieve true and sustainable success (Lee 2011, 312). They therefore made significant comparisons between the Red Ocean and Blue Ocean Strategies so as to exhibit to other business organizations the distinctive attributes that they ought to portray if they intend to employ either of the two strategies:
Table 2.2 comparing Red Ocean with Blue Ocean Strategy
|Red Ocean Strategy||Blue Ocean Strategy|
|Organizations compete in an existing market environment||Organizations establish uncontested market environment|
|Organizations engage in a head-on competition||Organizations render competition irrelevant|
|Rely on existing demand||Establish and exploit new demand|
|Create value trade-offs||Demolish value trade-offs|
|Align company activities along a huge variety of available choices for differentiation and cost reduction||Align company activities along new ventures that can result to differentiation and cost reduction|
Red Oceans describe market areas within which contested market spaces that are characterized by severe competition between business companies prevail. The Red Oceans characterize the traditional market environment where industry boundaries are precisely defined and widely accepted, rules of market competition are known and severe rivalry is the mode of operation for companies that aim to outperform their competitors to gain the greatest share of a heavily crowed market environment. There is also limited possibility for huge profits and sustainable growth (Srinivasan 2006, 155).
Unlike the Red Oceans, Blue Oceans characterize new and unexploited market spaces and opportunities. The new market spaces constitute of new value and demand creations, unexploited consumer bases, rapid and highly beneficial growth and a potentially huge market space that is not yet discovered. Competition in these market spaces is irrelevant and there are no set rules for competition. According to Kim and Mauborgne (2004, 71), the distinctive boundaries between these oceans only prevail in managers’ minds. This is because organizations have not yet managed to create uncontested market environments that can help to shift business focus from competition and rivalry to innovative value that would eventually perpetuate creation of new demand. Similarly, most business managers are conversant with the Red Ocean and hence are more prepare to engage in stiff competition than create new market spaces (Srinivasan 2006, 152).
Besides Kim and mauborgne’s Blue Ocean Strategy of creating a new market space, other scholars have invented ideas intended to portray how uncontested market spaces can be created. These ideas are however vaguely similar to the Blue Ocean Strategy, which offers the most strategic framework for establishing uncontested market spaces. Berry (2006, 17) for example explained how new markets can be created through employing service innovation. In his research, Berry discovered that most companies only pursue to increase the quantity of services offered without seeking to create service innovations that would ultimately generate new market spaces. He therefore recommended that such companies can diverge from that direction through understanding different types of service innovations (Berry 2006, 19). The companies in return would describe the niche factors identified through these innovations, which would eventually enable for new market creations. Similarly, Anderson & Gatington (2005, 406) explained that new markets can be created when firms undertake certain actions. They explained that new markets can be established when firms seek to satisfy certain unmet consumer needs. Such needs can be met when firms create novel products that would in return be used to address latent needs that were yet to be met. Another inquiry by Spencer (2005, 326) showed that governments play an important role in perpetuating new market creations. He discovered that the place of government in developed capitalist nations is critical especially because it constitutes to a group of decision makers who have authority to determine how limited tenure can be exploited. The government for example makes important decisions in the various policies that ought to be implemented, which influences a company’s decisions on whether potentially new market spaces can be exploited (Spencer 2005, 329).
According to Kim and Mauborgne, the Blue Ocean Strategy provides a wide range of analytical frameworks that companies can employ to be able to establish and penetrate a new market space. Each company should be able to choose the most appropriate framework that it can use to enter a new market space in a unique way. An important point to note, however, is that all companies should intend to focus on new customers and be prepared to create blue oceans in already exiting red oceans. An example of a Blue Ocean Framework that companies can adopt is the 4 Action Framework, which focuses of new value creation (Kyle 2005, 109).
Figure 2.6 the 4 action Blue Ocean Strategy framework
Emirates Airline Company is based in Dubai and it operates as a subsidiary company of the Emirates Group that is wholly managed by the State of Dubai’s Venture Corporation. The company runs more 3300 flights on weekly basis from its focal point in Dubai to over 144 cities situated in more than 78 nations around the world. Emirates Airline Company is the world largest carrier in terms of revenue and the largest in Middle East in terms of number of passengers, size of convoy and total revenue generated. This company, which was founded in 1985, is the world’s most rapidly growing with the number of passengers and the subsequent total revenue increasing drastically (Kus 2007, 34). In addition to obtaining Dubai’s leading position as the most prominent international air transport hub, Emirates Airline Company is fast invading the international market particularly in Europe and America and it is rapidly overtaking its main competitors.
Emirates Airline Company has particularly inclined its business operations on the Red Ocean Strategy where aims to venture in already invaded markets as well as pursuing to gain biggest market share and a highly competitive edge. The company has for example repositioned itself as an international carrier to be able to compete against the traditional aviation hubs like London Heathrow and Frankfurt. Given the fact that Emirates Airline Company has managed to gain a leading position in the industry, it should not pursue to venture in the Red Oceans but should implement the Blue Ocean Strategy to be able to realize sustainable success (Kus 2007, 48). The company should take advantage of declining demand among the traditional aviation hubs and the industry and implement the Value Innovation perspective to be able to succeed in an unfavorable market environment. The Value Innovation perspective will help the company to obtain a strategic growth by venturing into a completely different direction than that taken by other aviation hubs. The approach will enable the company to create a new market space where it can achieve a spectacular expansion and growth. While most aviation hubs concentrate on operating between Europe, North America and Australia, Emirates Airline can diversify its flights to Dubai, which is a new market space that is yet to be discovered (Kus 2007, 67).
Emirates Airline Company should also adopt the “Procedural Justice” perspective in decision making and knowledge creation. Through this perspective, the company should not follow the Red Ocean approach, which relies on forcing employees to engage in training activities but employees should be allowed to cooperate voluntarily (Kim & Mouborgne 2004, 80). This would ensure that the employees would not resist change, which would in return enhance execution of strategic decisions. The company should also focus on integrating value innovation with knowledge creation. Through this perspective, Emirates Airlines would ensure that it does not concentrate on building a competitive advantage or outperforming other market players but it would focus on breaking the competition and replication trap (Kim & Mouborgne 2004, 81).
Implementing the Blue Ocean Strategy will highly be beneficial to Emirates Airlines as it will create an opportunity for the company to venture in unexploited market space, which is an ideal choice for investment. This will enable the company to go beyond rivalry and competition and target to create a new market. This in return would ensure that the company is able to achieve a sustainable growth without being outpaced by other rival competitors. Similarly, implementing the Blue Ocean Strategy will ensure that Emirates Airlines is able to create a new niche by targeting a new category of customers whose latent need is yet to be met.
Given the great benefit that Emirates has achieved through obtaining a leadership position in the air transport industry, it should grasp this opportunity and apply the Blue Ocean Strategy into Practice. This would ensure that the leadership position obtained in sustainable for a long time. The company should also focus on becoming a low-cost carrier through expanding a huge variety of low-cost services. This would give this company a cost leadership position, which would increase passenger volume, which would in return enhance cost containment on one hand and operational efficiency on the other.
Business organizations have for a long time ventured in highly competitive markets where they intend to achieve a competitive edge on one hand and maintain the highest level of success on the other. This approach has however proven to fail most businesses since they face various business related challenged especially during economic upturns and downturns. As a result, business organizations have intended to pursue an appropriate business strategy that can help to retain a suitable level of success. The Blue Ocean Strategy has proven to be a valid and most reliable strategy that business organizations can use to attain the highest level of success as well as get out of the vicious circle of success. This is because the strategy enables a company to create new market spaces, render competition irrelevant, create new demand and align business activities along new ventures that can enhance differentiation and cost reduction.
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Research analysis for Canon Camera
The product name under analysis and research is Canon camera. It lies under the photography product category. Relevant information about Canon cameras can be found on various sources including www.canon.co.uk and www.theverge.com websites. I am studying this brand with an aim of identifying its equity. This study entails various consequences on brand equity, for example, consumer preference biasness. The purpose of the study is to find out the styles used by consumers to make decisions using consumer inventory, investigate the comparison between styles of decision making, and consumer purchasing effort of the digital cameras. This study will also entail the product life cycle with regard to the consumer behavior. This will entail promotional methods for the product that will enhance the marketing plan.
In 1933, Canon established an optical instrument laboratory. Later on in 1962, it built a five year plan preparation to enter into the business market fully. In 1967, the management opened a new headquarter in Kosugi office, which acted as a business solution and provided activities on information technology. Opening the branch had a great impact as it boosted the camera production to one hundred million units. Production of the digital camera reaches two hundred and fifty million units in 2014, after Canon signed its global partnership with Volkswagen with a task of managing print services. Later on, Canon entered industrial markets for cameras by launching M15P-CL camera for devices inspection. In 2016, Canon appointed a new corporate structure(“Canon CR6–45NMf Retinal Camera Adds Digital and Fluorescein Capabilities”, 1999). It then launchees the EOS-1D X Mark II camera.
The demand and demand trends of a product entail availability of a product, that is, where consumers can buy it from, the mode of payment to be used, either cash or by cards, and seasonality of the product’s life period. One will ask themselves what is the current demand for the product and how it is changing. If there is a possibility of future enhancements of the product that can enhance profitability then action is taken to use the advantage. Segmentation, positioning, and targeting are the ways of improving a products demand in regard to consumer behavior. Segmentation is a process whereby markets are divided into smaller portions of consumers with same needs. Market segmentation involves four major steps: identifying sets of product related needs, grouping consumers with the same needs together, defining each group and choosing a correct segment to serve (Scott et al., 1981). This is a formula which all organizations need to embrace in improving the marketing of their products. They have to note all the needs that could be served by their product, and more importantly, identify the consumers that could be highlighted to be having the same needs that can be addressed at the same level.
Targeting is the process of selecting one or more portions of the segmented consumers and pursuing it (Lin, 2002). By choosing a particular segment, research is carried out to determine the demands of the consumers, but thereafter, production process takes place to provide goods and services for the consumers. Positioning, on the other hand, is a way through which producers develop an accurate image of their product in consumer’s mind. Successful positioning entails communication of a unique proposition for the selling of the product and communicating the advantages of the product rather than its characteristics. When these three ways: segmentation, positioning, and targeting are put in practice, they provide some insights which will later motivate customers to buy the canon camera (Scott et al., 1981). The canon camera is a great product, the developer took time for its innovation and development, thus, it would be a huge blow if inappropriate marketing strategies will be employed that yields no fruits.
Potential users of the Canon camera had various views of this product with regard to its utility. Many people think that there is no difference between Canon and Nikon cameras, which is untrue since there are a number of differences between these two products. My research covered two different groups, which had different opinions. The first group thought there is no difference between Canon and Nikon camera, while the second group highlighted various differences. They clearly stated that Canon had a clear video performance than Nikon. Moreover, Canon lenses and cameras are cheaper as compared to Nikon. Canon’s ability to outperform Nikon in terms of pixel count and Canon’s camera availability in the market was also noted.
A primary market segment for a particular product is the part of the market place where an enterprise believes that it will get the bestselling chance (Doyle & Stern, 2006).This entails the group of consumers a company wants to convince to buy its product alone. This is determined by analysis to determine whether customers have something in common and analyzing competitors in the market to find out if their customers have something in common. The primary market segments for Canon camera will rely mostly on film industries and social media such as television channels and online websites and blogs. Due to this fact, social media is the main primary target for Canon cameras, while other primary targets are for personal use at home or by photographers (Pandey, n.d.). In most instances, the cameras are utilized by celebrities for social media purposes and the media houses for recording and collection of data. These two are the main influencers of the market ability of the cameras.
Demand for cameras has been decreasing abundantly due to threat from the photo function installed in various smartphones. Canon looks forward to develop a new market segment for IXUS, which will extend into the kids segment. Canon is doing this by targeting parents with kids between five and nine years. The managers noticed that parents can easily buy DC for their kids rather than smartphones. The first phase to enhance this will be through raising awareness on photography for kids, while the second phase is the implantation of photographical ideas deeply into the children’s minds. This will mainly target the families with a middle income. Canon always has the objective of finding out new markets so as to remain competitive. For example, in female photo shooting Canon explored the realm with a number of television commercials. They are also opening new markets targeting the youths who are about to be parents, because of saturation in the youth segment (Roberts, 1986). The youths have embraced the digital world more explicitly than the ageing. From this fact, canon is thus on the right track to target and introduce them to the new canon experience.
Targeting and positioning chooses the segment for a business then later on develops a marketing mix and position strategy for the product in each segment. In market targeting, one will consider the size of the market. The market is supposed to be large enough to enhance the segmentation process. If the market is too small it will lead to smaller segments, thereby not enhancing profitability. There should be differences between various market segments. The anticipated profits should be more than the costs of marketing planning. Accessibility must be enhanced to ensure that each segment can be reached by members of your team for purposes of receiving marketing messages. Different benefits are the core point to focus on the various segments need different benefits. Under market positioning, opportunities in the market for cheap cameras to be bought by low families are identified.
The first concept of the estimation of the market size is an understanding of the problems hindering customers and solving them, and the amount of utility driven from the product by consumers (Li & Calantone, 1998). The first step in determining the size of the market is determining the target customer. An estimation of the targeted consumers can then be done. Bwide public research revealed that the target group in the United States is 1300 for companies that are making cameras. The third step is the determination of the penetration rate into the market. This is done by creating a way of penetrating the product category. The nature of the product is the function of the penetrating rate. It is required to take a low penetration rate when dealing with specialized products. There is a seventy percent penetration rate into new technology. The forth step is calculating the market size, that is its volume and value. Market volume is calculated by multiplying the number of targeted consumers by the rate of penetration of the product. Our target customers are one thousand three hundred and rate of penetration is assumed to be seventy percent. The potential volume of the market is nine hundred and ten companies. Market value of the market is calculated by multiplying the average value by the market volume. We assume that each company sells an average value of USD two million five hundred thousand. So we take the nine hundred and ten companies multiply by USD two million five hundred thousand. We get USD two billion two hundred and seventy five million. The final step is to apply the data of the market size. This exercise has an assumption of obtaining the market potential for a particular product (Scott et al., 1981). An organization has to have relative information of the market climate and magnitude to determine how it will set its product or rather how the product will be released to the market.
Consumers purchase Canon camera online through need recognition. Most producers stimulate their customers to realize they have a need for a particular product. Companies can help customers access their products through search of information. This is done by the consumers searching the product in various websites. Internet shopping sites for example Amazon has become a helpful tool of information about various products. It is also important since it provides product reviews, which are written by consumers. Here, a consumer can find all brands of Canon cameras he or she desires. Another way is by searching using Epinions.com. This is a site that offers products and their ratings, tips of buying, and information on the prices of various products (Scott et al., 1981). It is renowned and more importantly, credible,which is key especially in the emergence of many scum websites on the internet.
The major challenge hindering products is how to connect with the potential customers through social media (Shankar et al., 2010). Understanding consumers’ needs is a key point to marketing, abd managers are trying to create online campaigns with the aim of encouraging consumers to buy from them alone. The main marketing areas which have been turned around by digital migration are products relevance, campaigns and speed. This is enhanced whereby text messages are sent to specific groups offering them relevant content. With so many ways through which potential customers access media either through WhatsApp, Facebook, YouTube or other social networks via a mobile phone, computer or tablet companies reach a large number of people (Scott et al., 1981). Many sales and marketing services have been taken online, because most buyers spend more time online on social media platforms than they spend on actual shops.
The competitive brand for Canon is Nikon cameras. In the beginning, Canon used Nikon lenses, but later on it developed x-ray indirect camera. Canon enhances this by using the product mix. It believes that the only way to success is through the provision of quality products. To attract more buyers, the company has maintained a balance between the cost and selling prices. Its pricing policy has encouraged customers to buy from it, since it is selling its product at the minimum amount possible. However, due to external forces such as competition, Canon is facing a competitive pricing mentality. It is seen that competition is high and to avoid this, Canon is using competitive pricing to keep its customers (Scott et al., 1981). Reduction of the cost is an attraction for all customers; customers will always go for the cheaper product regardless of the quality.
The company has enabled increased purchase from its customers through its affordable pricing policy. It concludes by quoting that if a certain price of a product seems convenient to a product then they will have no option rather than buying it. The company looks at the trends in demand of its product and comes up with pricing policies. By doing this, it has tried to keep its prices lower than that of the competitors, so as to satisfy consumer needs. In place distribution, Canon has partnered with transportation agencies to enhance full distribution of their goods to retailers and consumers at a minimum cost. Warehouses are evenly distributed so that the products are safe and at an available distance. From here, all the products are supplied to the various shops with ease. There are also many other retail shops where Canon products can be bought from.
Canon has a well and planned and designed website where purchases can be made. Every detail is handled efficiency. Information about camera specification, latest models, and updates are provided in this website in a professional way. Consumers have an ease of looking at the products and making proper decisions without interference from other people. This helps greatly in making satisfying choices. E commerce retailers have greatly influenced the distribution of Canon products. On Amazon, for instance, cameras and accessories are available at fair prices. The rate of turnover has increased further as a result. On the other hand, Canon has several plans for the distribution of its products. Promotion in the marketing mix is another aspect of marketing. Canon, in order to sell its products, uses trade shows, advertising and public relations. Canon maximally employs advertising as it is a significant tool. All the detailed description about a particular product is available through websites, Facebook, television, radio, and other social media platforms (Scott et al., 1981). It is the responsibility of the marketing team to identify the websites with the most products, and try to in incorporate their product in the site for advertisement, and canon has done remarkably well in this way.
The knowledge helps in building awareness about the brand and its ability to satisfy human wants. In other cases, Canon conducts promotional displays on malls exhibiting its product and advantages. Promotion is evidently the most successful tool for selling a brand (Scott et al., 1981).Canon also provides workshops for interested individuals. Information, and lessons about photography are provided thereby proving benefits to the individuals in the long run. Most of the people who attend these workshops are armatures, they are taught concepts of photography and later on they become the potential buyers. They have promoted their sales by offering gifts upon buying canon products; also provided discounts for their services and lucky coupons for those who win.
Canons’ target market can be categorized into two major groups. These groups will take into consideration the age, gender, income level, and education of its customers. The two segments are those who buy camera for personal and family use, while the other segment is for professional and armature use in art. A secondary consumer is a student in college of any race and gender. An average student has a social media account, which largely involves sharing of pictures in their daily livelihood. Since Canon has a wide range of camera prices, there is one that fits a college student. As Canon develops cheap cameras, its target market will be the middle class, which entails individuals between thirty and forty years of age. Nevertheless, the target markets for Canon have been noted to be Similar to those for Nikon (“Canon CR6–45NMf Retinal Camera Adds Digital and Fluorescein Capabilities”, 1999). These are the parents who want to keep records of their children’s lives. Evidently, this has become a trend for most parents, to keep record of their children’s childhood life for later references.
The marketing strategies for Canon include the establishment of a new production system to achieve a cost of sales ratio of forty five percent and expansion of new business (“Canon CR6–45NMf Retinal Camera Adds Digital and Fluorescein Capabilities”, 1999. Additional marketing strategies include creating future businesses, restructuring network in global sales, and enhancing proper R&D capabilities by opening new innovations worldwide (“Canon CR6–45NMf Retinal Camera Adds Digital and Fluorescein Capabilities”, 1999).This is meant to make sure that the three regional headquarters management system is competed, thus capturing the worlds dynamism and re-instillation of the Canon spirit.
Nikon, on the hand, has contrasting strategies for its products. It has set an e-business strategy via the website based in USA, Europe, and Japan. This website will provide a platform for users, which will take place seven days a week. Nikon will also provide a wide range of information about its products on this website. Using the marketing mix, the 4Ps will be the product, pricing, place, and promotion. Consumers will access information about the specifications of the camera online, unlike previously when they obtained it from shops. Each product will be categorized with the aim of satisfying the market segment demands. Nikon will make prices more competitive for new cameras, as it will not incur costs of storage. Under the place, the main area of making purchases will be through the internet. Nikon will make sure that once a product has been bought, it will reach the customer in the least time possible. The promotion strategy will include banner and web promotions. All these are provided in detail on the Nikon website.
Canon CR6–45NMf Retinal Camera Adds Digital and Fluorescein Capabilities. (1999). Retina, 19(6), 582
Doyle, P., & Stern, P. (2006). Marketing management and strategy. Pearson Education.
Lin, C. F. (2002). Segmenting customer brand preference: demographic or psychographic. Journal of Product & Brand Management, 11(4), 249-268.
Li, T., & Calantone, R. J. (1998). The impact of market knowledge competence on new product advantage: conceptualization and empirical examination. The Journal of Marketing, 13-29.
Pandey, A. Kellogg’s K Strategy: Tapping New Market Segment. SSRN Electronic Journal. Retrieved from http://dx.doi.org/10.2139/ssrn.1444672
Roberts, K. (1986). How to define your market segment. Long Range Planning, 19(4), 53-58. Retrieved from http://dx.doi.org/10.1016/0024-6301(86)90270-0
Scott, C., Engel, J., Blackwell, R., Kollat, D., Hawkins, D., & Coney, K. et al. (1981). Consumer Behavior. Journal Of Marketing, 45(1), 160
Shankar, V., Venkatesh, A., Hofacker, C., & Naik, P. (2010). Mobile marketing in the retailing environment: current insights and future research avenues. Journal of interactive marketing, 24(2), 111-120.
Introducing Accounting Business in Oman
Description of the Potential Opportunity Identified
The favorable Oman business environment is the main factor for the continued growth is businesses performances and increasing business innovations (Kechichian 2010). With the increasing product innovation and significant inventions within the Oman service industry, individuals, small businesses, middle-sized firms, and large companies consider opportunities to outsource their accounting and bookkeeping services to a group of accountants with relevant skills in auditing (Bailey 2005). The Accounting and Bookkeeping Industry possess viable opportunities that can be explored for possible investment decisions. It is true that the Oman labor market keeps regular supply of experienced accountants and qualified tax editors who at times fail to get permanent employment in relevant organizations (Bailey 2005). By establishing a bookkeeping and tax audit business, the bulk of underemployed or unemployed accountants will be reduced and their unexplored skills or expertise converted into resourceful human capital.
Other than the favorable business environment, the corporate law in Oman is also a driving force for more business inventions in the sense that the law allows businesses to be run on unlimited corporate regulations (Bragg 2011). Currently, the cost of starting and running a business in Oman has reduced significantly following the government’s decisions to eliminate the bulk of formal registration requirements that for a long time has impeded growth in businesses (Gonzalez, Rand Corporation., Rand-Qatar Policy Institute, Rand Education & Labor and Population Programn2008). The more flexible corporate laws and other factors discussed in this paper may make it possible for a group of individuals to start and operate a bookkeeping and tax audit business.
Market analysis (Industry, Competitors and customers)
- In what industry does this idea come from?
The idea comes from the Oman bookkeeping and auditing industry, which provided services like recording commercial transactions on behalf of other firms and business organizations (Kelly, Barrow & Epstein 2011). In this service category, the business idea is more concentrated on the small and medium sized firms, which will account for over 50 percent of the company’s businesses. With the introduction of technology and internet services, the industry bookkeepers and consultants are expected to explore online services in order to improve their communication and interaction with customers (Marshall 2003). The available industry statistics and trends allow business planners to identify unexplored products, services and markets, and use every available opportunity to increase profitability. In other words, business positioning in the industry provides the basic plans that can be used to analyze the key factors influencing market operations, and how best the business management can counteract such factors and improve on the most needed bookkeeping services (Price, Waterhouse & Co 2006).
- Who would be the target market?
The business idea targets from small to medium-sized firms who require bookkeeping and tax auditing services. It is very true that target market is highly segmented into small, medium, and large firms each targeting the same services provided by the few available bookkeeping and auditing firms. Among the many firms, the company’s target firms are defined based on annual revenues, distance from the business location and expected expenses (Saba and Co 2009). On the side of revenues, the business targets those firms with revenues exceeding 300, 000 dollars. In addition, annual revenue of 300,000 dollars at the minimum count qualifies a business organization to be recognized for the services the accounting firm will be offering. As a start, the business will concentrate on organizations at close distances in order to reduce the cost of travelling, which may add to the initial costs of operation (Saba and Co 2009). The targeted business organizations should also be ready to part with close to 250 dollars for the basic accounting services; an amount that will be increasing based on the type of bookkeeping or auditing services required.
- Who are your competitors?
Even though the Oman market has few bookkeeping and auditing companies, the industry is known to attract the interest of many accountants and tax auditors. The fact that the industry is at its initial stages of growth is an indication that there are still opportunities to be explored, and since there are no restrictions to market entry, it is predictable that the market will continue to experience new entries (Taylor 2008). As at current, most business organizations and individuals concentrate on hiring professional accountants and auditors. Since exiting firms highly require bookkeepers, accountants and auditors, it is not by chance that nearly all graduates find their ways into the service industry each year and filling the job market (Taylor 2008). The increasing undergraduate and graduate employment in newly established firms is a challenge to the bookkeeping and auditing industry. At the same time, the high demand for the undergraduate and graduate students in various organizations make the increases labor costs making its hard for bookkeeping companies to maintain lower prices for the services they provided.
In general, the demands for business accounting services are known to be dependent on new business formations, the increasing complexities to existing businesses and the revenues earned over the periods of accounting (Taylor 2008). It is common to see clients scrambling to secure the services of the fewer accounting firms since these firms provide wide range of services that best serve the interest of clients. In most cases, large accounting firms are the main targets of these clients since they operate from many locations and can serve customers within the shortest time. The fact that large accounting firms have the advantage of providing many services at the same time make small firms to specialize and always struggle to provide superior services in order to compete effectively (Taylor 2008). Even after taking such a prolific step and investing specific accounting activities, large firms still gain competitive advantage because most business aiming at outsourcing their accounting services have more trust in large firms.
The business financial plan will be entirely financed by the positive cash flows from the projected operations. The business will also rely on outside investments and additional owners’ investment as other sources of finance. The fact that business is capital intensive does not limit owner’s intentions to increase the fixed costs, which must be recovered from sales of the services. The projected financial plan as presented by the one year cash flow below shows that the business idea is feasible and worth investing.
|Cash from Operations|
|Cash from Receivables||$105,612|
|Subtotal Cash from Operations||$214,662|
|Additional Cash Received|
|Sales Tax, VAT, HST/GST Received||$0|
|New Current Borrowing||$0|
|New Other Liabilities (interest-free)||$0|
|New Long-term Liabilities||$0|
|Sales of Other Current Assets||$0|
|Sales of Long-term Assets||$0|
|New Investment Received||$0|
|Subtotal Cash Received||$214,662|
|Expenditures from Operations|
|Subtotal Spent on Operations||$205,243|
|Additional Cash Spent|
|Sales Tax, VAT, HST/GST Paid Out||$0|
|Principal Repayment of Current Borrowing||$0|
|Other Liabilities Principal Repayment||$0|
|Long-term Liabilities Principal Repayment||$0|
|Purchase Other Current Assets||$0|
|Purchase Long-term Assets||$0|
|Subtotal Cash Spent||$205,243|
|Net Cash Flow||$9,418|
It is possible that the business can be established and expanded using the current balance reserves. It is also possible that with an increased marketing and set-up expenses, the business will register positive cash flow within the first quarter of its operations (International, 2013). Since the business will still be considered a new venture, the cash reserves can still be generated from subsequent operations to be used in acquiring additional service expansion so that the owners can get their dividends once the business has established.
The business will however start to break-even once there is an increase in marketing activities, business capacity to accommodate all the service requirements, improvement in employees and other stakeholders’ payroll and general benefits (International, 2013). At the break-even point, the business’s fixed costs and current costs will be in a position to finance all the activities, new expenses and also allow for maintenance of old business equipment like computers and software updates. The mentioned increased activities will move the break-even point higher meaning that the business will have to expand its services to meet the increasing fixed costs and other expenses as shown in the graph below.
Group evaluation of the business concept
The strength of the business venture lies on the availability of skilled and experienced employees with the relevant CPA knowledge. The extensive knowledge on issues of accounting, bookkeeping, and tax auditing is expected to allow the business to perform its activities and provide the most relevant accounting services (International Business Publications, USA 2012). The first requirement for any accounting business is compliance with the internationally recognized accounting standards, which according to the analysis conducted, are provided by various training institutions across the country.
The idea also recognizes the fact that the tax and bookkeeping business require relatively low start-up expenses, operating and overhead costs and this could result into higher profit margins (International Finance Corporation & World Bank 2014). From the analysis conducted, starting a bookkeeping and tax audit business is highly advantageous because the owners can still decide to make the businesses home-based. This means that the business does not necessarily require an office establishment or space to meet its operational needs (International Business Publications, USA 2012). On the same note, the business does not require expensive manufacturing operations or high maintenance costs. As a home-based service business, there is a reduction in the initial cost of establishment and subsequent rental costs. The owners are also assured of continuous operations even if the business fails to meet its expected monthly rental fees.
The third strength lies on the technological changes and the introduction of new accounting software that can be used to simplify the bulk of accounting and auditing work (International Finance Corporation & World Bank 2012). The software becomes an area of competitive advantage, especially if it is a proprietary and has features relevant to the basic accounting principles. The accounting software is an advantage to the business because most existing companies have not incorporate such software in their accounting systems.
Even though the business idea has numerous supportive strengths, it is also important to consider some of the weaknesses that may prevent the owners from meeting their profits objectives (Foster 2002). One of such weaknesses is that the business is highly seasonal and if affected by economic fluctuations. The business, especially on the part if tax preparation depends on the fix tax rates, which at some point may not correspond to market conditions. The tax adjustment methods will keep on shifting from time to time and this may affect the tax validity principles (International Business Publications, USA 2012). Such changes in tax evaluations systems may not be well understood by customers, and this may portray a bad image on the side of the accounting firm (Foster 2002). It is also important to understand that the tax auditing process require along tax time hour, and the available annual round-work may be limiting. The business may also find it hard to acquire and retain highly qualified staff within the short duration of tax season. This is because most of the accounting services tend to increase during year-end requiring higher number of personnel, and reduces during other periods of the year.
- Is the business concept feasible?
The success of a new business venture relies on certain factors like the market size (demographic description of a country), strategic location, and infrastructural development, the country’s economy, political and social systems. By accessing the most prolific factors like the market size, the competitive advantage, management ability, initial endorsement and the initial capital requirement of the business, we were able to determine that the business is feasible and worth investing.
On the side of market size, Oman has been slowly diversifying its economic operations into other sectors like banking, gas production, industrial processing, and tourism, which has been equally successful (Clark 2011). The numerous businesses cropping up within Oman constantly require related services like bookkeeping, financial accounting and tax auditing services, which they can outsource to another company or groups of professionals to meet their performance expectations. The fact that the country’s industrial sector is rapidly growing means that in the near future, the bookkeeping service industry will be among the highly performing industries in Oman (Clark 2011). In other words, Oman currently enjoys stable economic, political, and social systems, which offer a strong base for market expansion and improved service delivery.
On the side of competitive advantage, the Oman bookkeeping and accounting service industry holds unexplored opportunities and the few firms in the industry enjoy huge profits from extended operations and higher pricing (Business International Corporation 2005). Most clients find it hard to outsource their bookkeeping services to other firms or businesses because of the high costs involved. It is therefore important to note that an opportunity exists for the bookkeeping company to provide even better services to clients at relatively lower costs while maintaining regular contacts. With more efficient and effective services at relatively lower costs, the company is expected to gain a higher competitive advantage over existing firms.
The management roles and abilities are also important in determining the success of the business. Based on the service description of the business, the organizational management plan will consist of the position a senior manager, business administrative staff, customer service manager and an overall administrative staff (Al-Kharusi & Loughborough University 2003). The roles and responsibilities of the senior manager for the bookkeeping firm will include staff recruitment, controlling regular business operations and company finances as well as ensuring growth though remuneration. Apart from the senior manager, the customer service managers will play a crucial role in ensuring proper customer relations. This is because the business successful operations will retail around customer’s willingness to seek and pay for the bookkeeping and accounting services.
It is also important to note that bookkeeping business does not require high initial capital investment. The initial costs are those costs associated with the purchase of computers and related accounting software, the cost of establishing an online retail site where customers can bid for the services of the company as well as the cost of acquiring professional accountants and business managers (Al-Kharusi & Loughborough University 2003). On the part of professional accountants, the company can employ undergraduate interns and graduate students and still do better in its operations. Compared to the cost of employing a professional accountant, the cost of employing an undergraduate intern or a graduate student is lower. This means that even with the lower costs of operation, the company can still improve its bookkeeping services and meet the expectations of customers.
Apart from the above mentioned factors, the rapidly growing Oman population could also be an indication that the business idea is feasible (Jaumann 2010). Out of the 3.1 million people, about 570,000 people are experts in various fields. The huge proportion of the elite population provide endless workforce services to the labor market (Bizmanualz 2008). The country’s demographic information indicate that 54.7 percent of the population are between the age of 15-64 years indicating a lager section of the population in its most active years.
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This report is a profile of the top one hundred brands of 2013. It is not just a brand position list of the first to the hundredth but it also discusses how the companies built their brands and as such, improved their positions within the market. Apple is the brand that is best ranked. Following this discussion, the report has highlighted 6 basic principles successful brands have been using: anticipate, experience, share, good, truth and living. In anticipation, the report cites successful leaders are never afraid of defining markets, they never simply follow trends by explore what is required then they deliver it.
Leaders who are experienced should always be ready to develop experiences that are meaningful which readily cross all platforms and touch on points such that they are interwoven daily in the daily lives of people. Sharing entails creation of experiences where a company find approaches it can share with users. The next element, good, the report asserts audiences react in a positive manner to companies that craft citizenship which drives core identity not mere add-on. On the same breadth, they also love organizations that live and say the truth. Lastly, brands are also advised to move nimbly through technological and cultural developments.
Section I: Big Picture Trends
Strategies of successful brands in top positions
Brands that are highly successful and regarded have always released and developed products that are innovative which capture the fascination and imagination of users. These products are of creative and brilliant thinking with unparalleled execution. Leading brands also have the reputation of invoking behavior change by periodically remaking services and products as well as reinventing categories that eclipse competition. Such companies hold creativity in high regard above everything else and also employ designers who devise unique products. The company that presently epitomizes innovation is Apple and was named the biggest 2013 brand. To attain this position, the company puts customers at the nexus of everything it undertakes. This means it continually responds to their emerging needs, finds new ways to improve its products while at the same time breaking new ground in product performance and design.
Another element applied by successful brands is known as market research. These companies define possibility in every kind of research and also understand data that can be quantified by degree of impact it has on the lives of people. As a matter of fact, these brands are on the lookout for new needs and ensuring they meet them before their competitors. This makes it possible to enjoy the advantages of the first mover. It is dedication to continuous research that makes it possible for companies such as Coca Cola, IBM, Google and Apple to take leading positions within their industries despite the fact they face immense competition from different companies.
Another strategy these brands use in attempting to make their own rules is staying ahead of competitors. It is not possible for a company to stand out from competitors if it simply follows market rules that are laid down. By doing so, they simply end up being similar to other companies. In the contemporary business atmosphere that is characterized by digital dynamism, mobile and social, these organizations have changed conventional ways of conducting business for purposes of maximizing the potential of new technology. Potential customers in the past lacked much access to product information. As such, they ended up buying products that reached them first. Information technology however, has ensured customers are choosy ad wiser. In order to win them over, brands that are successful come up with products unequaled in a couple of aspects.
Missteps of Failing Brands
Among the biggest mistakes failing brands make is engaging in business practices that are unethical. Nowadays, people have the power to follow everything a company does. As such, if they perceive it engages in practices that are illegal, contribute to degradation of the environment or take advantage of populations that are at risk, they turn against it. Essentially, this is what happened when BP attempted to hide and deny its pipes were spilling oil.
Another common misstep is not recognizing and meeting customer needs. For any individual to buy a product, they should value its usefulness and functionality. Coming up with new products without analyzing the market comprehensively is a wrong move. For example, Microsoft’s Windows 8 flopped since it failed to meet customer needs.
Section II: Comparing Google and Amazon
Google established its position as one of the most dominant search engines on the web a decade ago. From that time, it has ventured into other service and product areas. For instance, it has ventured into computer, mobile, car and phone business. The reputation of Google is that of adapting its operations relentlessly. This has made sure it introduces new services and products while phasing out those operations that are not profitable. Its devotion to innovation has proven to be the major driving force.
Apart from excellence in business, Google also has extensive corporate social responsibility program. It has played a crucial role in addressing social needs of majority around the globe. Currently, the company is working on implementing Project Loon which aims to deliver 3G internet to rural regions using balloons that are solar powered in the atmosphere.
Another aspect setting Google apart is the company’s HR practices. For some time, the company has been identified as the best places to work. The employees enjoy a couple of perks that cannot be found in any other company across the globe. Additionally, the company has programs encouraging employees to share and explore innovative ideas. It is these ideas that are used as the driving force for the development of new products.
The best known e-commerce website that boasts of having millions of users as well as overseeing transactions amounting to billions of dollars is Amazon. In the past, it has consolidated its position through acquisition of Goodreads, a social book recommendation to the site, expanded its online book retail business. This has also helped in fostering community bibliographies.
Just like Google, Amazon has ventured into other areas of business to augment its e-retailing operations. In recent past, the company has produced original programs, TV set top boxes as well as 3D smartphones. Additionally, it has launched an online advertising program.
Contrasting Communication and Marketing Strategies of Google and Amazon
Google has managed to attain a dominant presence online thanks to its unparalleled email service and search engine. In recent past, it has created a social network platform that rivals Twitter and Facebook. These services make it possible for it to be in control of a third of its Internet activities. Therefore, it has used its position for purposes of marketing its products online. The company has also customized searches in accordance to a user’s location. What is more, it also has Google Translate service which translates information from one language to another. This means it appeals to all users regardless of their background. In recent past, the company has also ventured into the field of mobile advertising. Its product, AdMob is among popular mobile advertising platforms (Pearce 14). Its Android mobile applications as well provide a profitable platform for marketing. These marketing and communication strategies have made it possible for the company to outperform Amazon by a large margin.
Unlike Google, Amazon has mostly tried to consolidate its online retail business. While it begun as an online bookstore, it has diversified to electronics, furniture, clothing, music and software. The company also mostly advertises on the web (Bali et al.32). In recent past, it introduced Kindle e-book reader and Kindle Fiber tablet computer to expand its territory. Since then, it has followed the lead of Google by developing its own Appstore targeting users of smartphones. The company however needs to increase its mobile presence. The percentage of people with smartphones has significantly risen in the last couple of years. Majority of the leading companies have also taken their marketing campaigns to mobile devise. Amazon Appstore currently targets customers (from UK, Germany and UK) who have used its services already (Mathew 1). To increase revenues, the company needs to market to new customers. Additionally, it should target clients from other countries.
Bali, Rajeev, Nilmini Wickramasinghe, & Brian Lehaney. Knowledge Management Primer. London: Routledge, 2010. Print.
Mathew, Jerin. “Amazon Expands its Own Digital Currency to Android Devices Taking Cues from Bitcoin”. International Business Times, 2o February 2014. Web. 19 Mar. 2014. <http://www.ibtimes.co.uk/amazon-expands-its-own-digital-currency-android-devices-taking-cues-bitcoin-1437246>
Pearce, James. Professional Mobile Web Development with WordPress, Joomla!, and Drupal. New York: John Wiley & Sons, 2011. Print.
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