(a) The bargaining power of the buyer is one of the forces of Porter's five forces model. It refers to the force that a buyer can have on the business in terms of quality products, lower prices, and customer service.
(b) The reasons for selecting this force that assists in developing a competitive strategy for the companies are numerous. It is one of the essential forces that shape the competitive structure of the industry. Usually, the power of the customers in the industry influences the ability of the seller to attain profitability. It can be said that a strong customer can make an industry more competitive and minimize the profitability for the seller. On the other hand, a weak buyer who is at the sympathy of merchants concerning worth and excellence can make an industry less competitive and enhances the profitability of the seller. Moreover, this is necessary for the company as t determines the threats and opportunities of the business, and understands the competition in the industry. The company would be able to make more rational strategic decisions with analysis of this force. Certain factors are responsible for the extent of the bargaining power of the buyer. These are as follows:
Apple is an organization of America that designs, manufactures, and trades electronics personal computers, and its peripherals. The Apple Company adopts the differentiation generic strategy for gaining a competitive advantage in the industry. This concentrates on the chief features of
Apple that differentiate its information technology goods or products from the rivalries. This strategy enables the company to stand out in the market. Moreover, Apple Company usually differentiates itself by offering elegant designs and user-friendly goods that are responsible for successful differentiation within the technology business. It tries to reach numerous segments of the market through its exclusive designs including the continuous connectivity and leading-edge aesthetics. With the differentiation strategy of Apple, it aims for the continuous development in the company.
Certain benefits were gained by the company in respect of competitive advantage. The differentiation strategy is proved to be effective for the company as it developed brand loyalty of its products over the competitors. Moreover, it has created value for potential customers. Since Apple adopted a differentiation strategy, it means that there are no substitutes available for its product in the market and hence the company can gain more competitive advantage by being the leader in the market (Tansim 2018)
General Motors is the organization of America that makes and trade trucks, cars, automobile parts, and more in numerous countries globally. The generic strategy adopted by the company is of low cost means cost-leadership. It usually charges low prices of its products than its competitors like Mercedes Benz. It enables the company to attract more customers and thereby leads to build a competitive advantage in the industry. The main objective of the company behind the low-cost strategy is to improve its manufacturing practices productivities through robotics and continuous improvement to sustain its competitive advantage. There are certain benefits that the company has gained with its cost leadership strategy. These are as follows:
(a) From a case study showing the integration of continuous improvement projects with advanced technologies. This case belongs to Leyland Trucks that is the organization of Lancashire who manufactures trucks under the brand named “DAF”. It aimed for the continuous improvement strategy to achieve the aim of increasing its market share. It used kaizen for the continuous improvement that involves bringing together processes, administrators, and the proprietors of a specific event to debate on improvements. With the advancement in technologies, it has become the need for manufacturers to integrate advanced technologies into continuous improvement projects.
Keeping this in mind, the Leyland trucks implemented its continuous improvement strategy by introducing a robotics paint spray booth for the truck frames. It has used the robots that are the advanced technology on a stirring conveyor to paint its skeleton. Moreover, this integration of advanced technologies with continuous improvement has impacted the manufacturing strategy of the company positively. Its manufacturing division has adopted these techniques for meeting production and sales growth plans. Moreover, it made its strategies for meeting the customer demands for the more reliable trucks. With this strategy, the impact within the company was a reduction in the truck hours of 17% and a reduction in inventory by 20%. Furthermore, it was successful in adding value to the organization by involving all in decision making for the continuous improvement that furthers results in continuously solving the root problem (Marathe 2015).
(b) The impact of advanced technology on the original manufacturing processes of the Leyland truck was abundant. Their processes had become less complex with advanced technology like robotics in the field of artificial intelligence. They have led to more profitability and productivity of the company by reducing its inventory costs and streamlining of processes. One major improvement was seen in the form of quality in the original manufacturing processes.
Datta, Y. 2010. A critique of Porter's cost leadership and differentiation strategies. Chinese Business Review, 9(4), p.37.
Marathe, S. 2015. Analytical study of crisis management decisions in selected auto ancillary units.
Singh, P.E. 2019. Impact of Market Forces on Engineering Consulting Industry. International Journal of Management, IT and Engineering, 7(11), pp.190-193.
Tansim, M. 2018. An Organizational Analysis on Apple. European Journal of Business and Management, 10(11).
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