Models for Competitive Dynamics | Free Essay Example

Models for Competitive Dynamics

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Topic: Business & Economics
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Comparing and Contrasting DyB and GyB Business Strategies

Sustainability of profits, retention of market share, and remaining relevant in the face of cutthroat competition has become problematic for many enterprises. In order to stand up to the challenge, businesses have developed various strategies used to ensure relevance and longevity in the competitive market. Destroy your Business (DyB) and Grow your Business (GB) are some of the strategies utilized by companies in order to sustain their market share, profits, and competition in the long-term perspective.

Destroy your Business (DyB) is a radical approach first introduced by Jack Welch, who integrated it into standard practices of General Electric. This approach requires the company managers to undertake the roles of competitors and find ways to disrupt or destroy the business through the introduction of new goods and services or by outmatching the initial company through other means, making it obsolete.

In many cases, the DyB strategy involves physically creating a competitor in order to reveal the weaknesses of the company. This approach is aimed at the long-term perspective and profitability, as it helps the company detect its own weaknesses and redundancies that cause a loss of profit and trim down expenses while promoting product innovation at the same time. It allows the company to remain competitive and retain its market share against any competition.

After Netflix disrupted its door-to-door delivery of DVDs and introduced the online streaming of videos, the sales of the new online products augmented significantly (Rayna & Striukova, 2016). Consequently, due to the level of innovation introduced by DyB and GyB strategies, the nature of products delivered changes because companies work hard to match the market dynamics.

GB, in comparison, while pursuing the same goals as DyB, utilizes a different approach. It puts an emphasis on innovation through the retention of the old customer base and finding new ways of attracting new ones. In the long-term perspective, it is an expansionist model, as it seeks to increase profits by increasing the company’s market share. This approach may utilize data gathered from the DyB, but mostly it is focused on capitalizing on existing strengths and not specifically on eliminating weaknesses. Hazlett (2016) explains that IBM, a company that deals with the production of computers and related accessories, has adopted the business growth approach in its quest to grow and become a leader in the industry.

Examining whether Cannibalization Is a Better Strategy as Compared to DyB

Business cannibalization is one of the strategies that companies use to increase their markets share in a competitive environment. In comparing the cannibalization strategy with DyB, it is clear that the cannibalization strategy is similar to the DyB strategy, as the former often stems from the latter.

While cannibalization helps companies introduce new products that eventually lead to a decline of the competing products, DyB is a strategy that sparks the motivation to introduce new products. Thus, product and brand cannibalization are strategies to be used with the DyB and not against it. One particular trait of cannibalization is that the introduction of a new product hurts the company’s own sales by reducing its own sales of the older products.

However, if the introduction of the new product hurts the competitors more than it damages the company’s own sales, it can be used as an effective tool to facilitate company growth by acquiring additional market share. Many of the current industry leaders have achieved market leadership by implementing this strategy. According to Hazlett (2016), examples of companies that have adopted and used cannibalization include Apple, which after introducing new styled iPads and iPods, witnessed a decline in sales of their low-end products and that of their competitors. Moreover, brand cannibalization occurred when digital cameras introduced by companies manufacturing smartphones ate up the market share of organizations such as Kodak (Rayna & Striukova, 2016).

Changes in Business Strategy Necessitates Reassessment of IS

The business strategy envisions the long-term objectives, mission, and vision of a company, whereas Information Systems (IS) is a conglomeration of the processes that entail the generation and passage of information using various communication media. According to Trainor, Andzulis, Rapp, and Agnihotri (2014), communication of the company objectives and its mission is an activity facilitated by IS, which effectively improves the company’s ability to maintain a competitive edge in the market.

The first reason for the reassessment of IS in accordance with the business strategy stems from the need to ensure the efficiency of operations and practices within a particular company. IS must always conform to the changes implemented in business strategies and practices, sometimes taking priority before full-scale implementation of such changes. Due to widespread digitalization of manufacturing, warehousing, and business processes, a failure of IS to conform to these changes means delays in production, a marked drop in product quality, and loss of clients, profits, and market share as a result.

The second important reason is the need to realign IS with the changes. The company and its employees must not be caught off-guard by the impending changes in IS. In order to prevent miscommunication and various incidents that stem from employee unpreparedness to handle and accept change, the use of the 5-step change acceptance process is required. This factor is often overlooked, which results in employees having difficulties with utilizing IS. In turn, their inability to use the optimized IS efficient leads to delays, errors, and dissatisfied customers (Hazlett, 2016).

The third reason why IS should be realigned to conform to the changes in a company’s overall business strategy is associated with a need for different functionality. Often, a change in business strategy involves delving into new lines of products, expanding the existing production lines, or going global. While the software utilized before the change may have been adequate for the business at the date of its purchase, the new requirements posed by the company’s expansion would normally solicit realignment as well.

Integrating Social IT with Organizational Strategy and IS

In the 21st century, social IT has become an important and vital part of both marketing and IS strategies. The integration of social IT implies that organizations should align their strategies and information systems in a manner that helps them connect with their clients, suppliers, and other stakeholders using social platforms. In the perspective of Trainor et al. (2014), when organizations fail to integrate IT systems into their operations, their market share and profitability can diminish significantly.

In an organization, all departments and stakeholders should use the integrated IT systems so that the process of production becomes seamless and efficient. Fundamentally, the stakeholders need to work collaboratively in order to ensure that the systems of IT enable them to interact with society and persuade them to consume their services or products.

References

Hazlett, T. (2016). Understanding the disruptive innovation wrought by computers and the internet: A review. International Journal of the Economics of Business, 23(3), 391-408.

Rayna, T., & Striukova, L. (2016). 360° Business model innovation: Toward an integrated view of business model innovation: an integrated, value-based view of a business model can provide insight into potential areas for business model innovation. Research-Technology Management, 59(3), 21-28.

Trainor, K., Andzulis, J., Rapp, A., & Agnihotri, R. (2014). Social media technology usage and customer relationship performance: A capabilities-based examination of social CRM. Journal of Business Research, 67(6), 1201-1208.