Strategy Formulation

Yeos compete directly with one a nonher at what is c altogethered the business level of strategic counsel. Competitors may be individual business units of a larger corporation or they may be stand- alone businesses. Because competition takes place at the business level, strategic management here is crucial to the overall success for Yeos . Accordingly, the concept of belligerent advantage is both the focus of the three later(prenominal) on scheme formulation. There is three parts that reflect the three major considerations in formulating a business- level dodge.The first part is to discuss utility(a) competitive advantages (Overall cost leadership, differentiation and focus group) and the strength and limitation of each. Yeos confederacy has competitive advantage whenever it washstand attract customers and defend against competitive root for better than its rivals. Successful competitive strategies usually involve building uniquely strong or classifiable edge over rivals. Som e compositors case of distinctive competencies atomic number 18 top-flight technology and result features, better manufacturing technology and skills, superior sales and distri neverthelession capabilities and better customer service and convenience.Competitive system is about universe different. It means deliberately choosing to perform activities differently or to perform different activities than rivals to deliver an unique mix of value. (Michael E. Porter). The essence of strategy lies in creating tomorrow competitive advantages faster than competitor mimic the one you possess today. (Gary Hamel & C. K. Prahalad). Overall cost leadership strategy The classic cost leadership strategy involves offering a no-frills product aimed at the most typical customer in a large target market.Anything to do with cost which link up to money example raw material is cheap, workers salary is low facilities that Yeos can bite with the competitor. Because cost can usually be lowered as a pro duct become more standardized, low-cost manufacturing strive for long production runs and low- cost uniform packages. By targeting roomyly defined markets with standard products, production technique can be used to create the greatest possible benefits from economies of scale and experience curve effect. Such as price sensitive customer do non mind about the price but customer care about the adjudicate and uality like Maggie and Kraft. In this case Yeos should apply leadership strategy low- cost producers are protected from customer pressure to lower prices. Competitors cannot consistently price below what is kn hold as their survival price, that which allow profit margins near adequate to maintain a business. The low- cost leader has a lower survival price than other competitor does, so customer will not be able to play one competing supplier against another to force prices below a level at which the cost leader can understood make profit.Yeos would force less efficient suppli ers out business, leaving the low-cost supplier with a monopoly. New entrants competing on the basic of price essential face the low-cost leader without having the experience necessary to become efficient. Yeos caller-out cumulative volume of production increase and the company gains experience in providing a particular approximate or service, production costs tend to decrease the experience curve effect. To the extent that experience affects costs in a particular persistence, the low-cost leader is likely to accommodate already moved far down its experience curve.New entrants lacking this experience will not enthral a comparable cost reduction benefit and may be forced to enter market using some of the competitive advantages not related to low pricing. Holding the low-cost position may convince rivals not to enter a price war. Price wars can be ruinous to all competitor involved. Customer do not mind of the price whether is cheap or expensive, they only care about good qualit y and good taste which they trust on Yeos product. Differentiation Differentiation strategies can help the company to differentiation their products offering by customizing product to suit consumer specific requirements.Appealing to broad cross- section of the market through offering differentiating features that make customer willing to pay premium price. Example quality, prestige, special features, service and convenience. Success with this type of strategy requires differentiation features that are hard or expensive for competitor to duplicate. Sustainable differentiation usually comes from advantages in core competencies, unique company resources or capabilities and superior management of value chain activities. Some condition that tend to favor differentiation strategies by Yeos company * There are ninefold ways to differentiate the product and ervice that buyers recall admit substantial value. * Buyers have different need or uses of the product and service * Product innova tions and technological change are rapid and competition emphases the latest product features. Corporate Level Strategy In this aspect of strategy, we are concerned with broad decision about the centre organization scope and direction. Basically, we consider what changes should be made in harvest-festival objective and strategy for achieving it, the lines of business we are in, and how these lines of business fit together.It is useful to think of three components of corporate strategy a) growth strategy b) portfolio strategy and c) parenting strategy. Growth strategy All growth strategies can be classified into one of devil fundamental categories concentration within existing industries or diversification into other line of business. When Yeos company current industries are attractive, have a good growth potential and do not face with serious threats, concentrating resources in the existing industries make good sense.Diversification tends to have a greater risk but is an appropri ate option when a company current industries have little growth potential or are unattractive in other way. When an exertion consolidates and becomes mature, unless there are other markets to seek, a company may have no choice for growth but diversification. Portfolio Analysis The experience curve is establish on the concept that costs are a direct function of accumulated market share. Market share equates to positiveness and cash in flow.Market share equates to profitability and cash flow. Yeos company that successful in sub business unit and product lines will generate large cash flow as the sub business or products move toward maturity as contrasted to large cash requirement of sub business units and product lines in Yeos growth and development stages. As sub business units and products lines decline, cash flow will diminish and fade away. Effective utilization of cash flows and the nurturing of the most productive units requires management constant surveillance.The diversifie d company with multiple product lines has the opportunity to balance cash flows and channel investment into the most promising areas of its portfolio. Diversified portfolio enables a company to control its internal allocation of resources. The ability to utilize tax losses from one units as an offset against a profitable one is an important advantages. place funds from a profitable maturing unit and product into the growing and cash- demanding part of Yeos, which show a tax loss, effectively lower the cost of the capital and provides an thoroughfare for future growth through internally generated funds.The basis for portfolio analysis and the channeling of available investment funds into the most promising and productive units of the firms is based on the complex body part and philosophy of management. Its approach to control sub business unit and product lines, its attitude toward risk and growth and its interpretation of its life- cycle position are factors which have an impact on the effective use of portfolio management.Yeos which structure its diversified units into separate independent profit center entities with each area depending on its own resource may factors out the flexibility and advantages inherent in its diversification. Concentration on short-run profit and ignoring the potential growth sectors of the portfolio because of the initial lack of cash flow and profitability can lead to cash-draining in the defensive stage of the company Yeos life cycle and eventual movement into the decline. International strategy Mergers The threat of takeover was management of companies targeted for acquisition.The threat of takeover was more likely for companies which had low price and earnings ratios. The relatively low prices of the stock of Yeos company in relation to earning was attractive to aggressive expanding enterprises, particular the conglomerates. These predicated Yeos growth mainly on effecting financial synergy by trading the stock, which had hig h multiple of price to earnings, for the stock of Yeos company with significantly lower price. Many effective strategies were developed by vulnerable companies to prevent unwanted takeover.Compatible mergers in such(prenominal) instances may provide an increase in the economies of scale and an increase in market share for the combined unit without the fear of cutthroat competition. The nature of the diligence is an important factor determining the likelihood of acquisition and mergers. The mature industries which are generally dominated by large companies are less likely to have industry acquisitions and mergers. The new industries, which still lack dominant size in individual companies and are technologically oriented and most likely to have industry acquisitions and mergers.