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Business Strategy Question
Use the Theory relating to Adaptation, Aggregation and Arbitrage to explain how companies from the following industries have used this theory for the pursuit of their businesses: ∙ Computer industry (hardware or software) ∙ Tourism / hospitality industry ∙ Pharmaceutical industry ∙ Food / Beverage industry ∙ Retail industry ∙ Car industry ∙ Airline Industry
You need to choose one industry from above, except car and food industry. It means you can chose from computer, tourism, pharmaceutical and retail. You need to choose one industry and 2 companies from that industry to explain the theory of Ghemawatt AAA global industry?
Business Strategy Solution
Ghemawat AAA is a strategy that defines the company’s approach to sustaining in the international market by making effective usage of its resources and responding to the business environment in a well manner. It also shed light on the business tactics of the companies to become cost-efficient and taking leverage of their strength. In this report, the theory of Ghemawat AAA has been applied to the retail industry. The major purpose of the report is to identify the relevance of such a theory in the pursuit of businesses by retail sector companies. Wal-Mart and Tesco are two companies on which this report has been constructed.
Explanation of the model:
In the model, three ‘A’ stands for arbitrage, aggregation, and adaptation. The theory of adaptation suggests that the companies need to be adaptive as per the preference and customs of local people along with the local business environment. The adaptation strategy is based on five major principles; variation, focus, externalization, design, and innovation (Hellström and Nilsson, 2011). Arbitrage is a way to exploiting the differences rather than adopting the differences or integrating with them. In such a technique, the business model is generally based on outsourcing and offshoring (Collis, 2015). It is an approach to bring economies of scale to business operations. The company tries to identify the similarities in the business environment of two countries but still avoid complete standardization (Ghemawat, 2015).
Nowadays the companies are facing challenges in establishing their business in the international market. The business environment has become so complex thus companies need to identify the ways that can enable them to gain competitiveness and cost-effectiveness. The major issue is that in changing the business world the decision making has become so tough and with the help of the Ghemawat AAA model the decision making regarding designing the strategies for international business operations can become simpler. Another issue is that the companies are facing issues related to identifying the best-entering strategy in any country. Thus, this model can help in finding solutions for the same…………….