Digby's Company Strategy Annual Report Term Paper
- Length: 9 pages
- Subject: Business - Advertising
- Type: Term Paper
- Paper: #87236543
Excerpt from Term Paper :
Digbly has been using the broad differentiation strategy for a long period of time and its tactical and operational planning is properly devised to accommodate this type of strategy. The broad differentiation refers to competing especially in the top premium areas of each product, bringing something new each time a product is launched and addressing customers who are less price sensitive and more quality sensitive. As I have said, the broad differentiation strategy created an emphasis on departments such as research and development or marketing, where the top management has invested heavily and which actually guide the product's evolution towards success.
As such, the company's vision statement clearly points out that Digbly "wants more, shows more, creates more, offers more." The maximal situation in which the company sells top quality, high tech products to the market is requiring a department network capable of facing such a situation. The vision statement creates the proper introduction to the market: this is our company, this is what you can expect of it. The maximal factor, a company always offering more, is what we want to pass on to our customers.
The external analysis comprises an overlook both on the political, economical, social, demographical or technological factors that affect the sensor industry, but also on the factors that affect the industries in which Digbly sells its product, namely the armament industry or the medical/health care one.
The political factors refer to political or military actions that the current government and the administration are taking in order to pursue certain goals. We need to point out that a political move that may encourage the development of the industries in which Digbly operates is a clear sign that the sensor industry and market may be expanding as well. The reason for this is quite simple. As we have seen in history, some administrations tend to encourage the development of such industries. The Bush Jr. administration, for example, has favored large armament producers, not only because of the political, international actions it had pursued, namely the war on terrorism, in Iraq and Afghanistan, but also because several members of the administration have close connections with large corporations that operate in the industry. This has led to a certain spending in the armament industry and the impact was well received on the sensor market as well, with sales increasing gradually in the last couple of years.
Referring to the economic factors, we should briefly enumerate some of the factors that may impact any industry and the sensor industry as well, such as the variation of the interest rate, inflation, the evolution of the currency rate, but the most important issue to debate in this case is the governmental spending. The more the government decides to spend in the markets and industries that are closely linked to the sensor industry, the more this will prosper as well. On the other hand, Republicans or Democrats tend to have, in their economic and political programs, different targets. The Democrats have always concentrated more on the development of educational, medical or health programs, which also positively impacts the sensor market.
One of the very important issues we need to mention in the analysis of the external environment and its most important factors is the technological factor. As I have previously stated, the development of the company greatly relies on its technological competitive advantages over other companies. We always aim to bring out high tech products and new technologies before other companies have the chance to. On the other hand, such an approach provides for a serious challenge, because it means that the research and development department, but also departments in charge with the market's overlook and supervision (analysis, marketing), needs to be able to always provide the appropriate solutions in given cases. Because spending in research and development is high, we may be faced with a situation that a rival companies offers a new product or new technology before we do, which may prove disastrous in some cases.
The demographical factors, most importantly, the socio-psychological factors are not to be neglected either. We are referring here to the customers' propensity towards the new, new products, new devices, new technologies. Certainly, the fact that we are currently working in general with other companies helps out, because it means that we encounter the same willingness towards using new sensors in their line of work. On the other hand, the technological factors is something worth considering and to be kept in mind for future analysis.
As I have pointed out previously, the company's strategy, broad differentiation, implies, first of all, the offer of high quality, high technology products on the market, with the direct aim of being the first to offer such things. The strategy we are approaching is mainly a proactive strategy, which means that we tend to model the market and its requirements rather than wait for the market to produce results and expressions and base our reactive decisions on such factors.
A SWOT analysis may point out perfectly towards the internal manifestations of such a strategy. First of all, in terms of strengths, the company's main asset is its brand. High investments in brand and brand recognition campaigns have led to the Digbly being widely recognized throughout the sensor market, globally, as well as locally. The brand in itself is an asset and is worth every cent invested in it originally.
A second strength worth mentioning is the fact that the company has fixed its goal and strategy (broad differentiation), operating then in order to reach it with all its structures. The company's internal structure is excellently adapted to provide the best solutions for the fulfillment of the final goal.
However, this last positive aspect I have mentioned in the previous paragraph has a certain downfall that can be mentioned when referring to the company's weaknesses, namely the fact that, in order to reach its goals and to produce a proactive strategy for the market, the company is somewhat neglecting some of its other departments. Indeed, most of the company's budget has been directed towards those area of expertise and departments that produce immediate added-value for the company and less towards others.
Additionally, in terms of weaknesses, a proactive strategy, especially a costly one like we are using now (broad differentiation) has a wide range of different risks, many of them extremely costly. An example is best to explain what I am referring to. If one of the products in which the company has heavily invested (R& D, marketing and promotion, advertising campaigns) fails on the market, namely it is not a success with the company's customers, then the money that the company has lost will probably weigh heavily on the financial situations.
Further more, a company that wants to always keep its products fresh and to always bring about something new on the market is bound to spend quite heavily, which may harm the short and medium term financial stability of the company. Unless the company is able to finance its operations and costs, a broad differentiation strategy that the company has implemented will not be sustainable.
It doesn't seem realistic that the company is currently aiming at participating in all market segments, because the broad differentiation strategy assumes the company is participating only in the high tech, high quality, high priced segments of the market and successfully competing in all market segments will not only unnecessarily burden the company's financial situation, but it will also be a negative incentive for the company's brand. Given the fact that the company has invested so much in brand recognition campaigns and in creating an identity for the brand as a high quality offer, it would be useless to compete in the lower priced area of the market, with the risk of completely confusing the market as to the products' identity.
The market provides opportunities in its very existence and a positive aspect is the fact that these opportunities come from within the company itself, projected on to the market. Because, as I have shown, the company is a proactive player with a proactive strategy and is actually creating new market segments through the new technologies and products it is launching. The proactive strategy goes hand in hand with the creation of new opportunities.
In terms of threats, on the segment that the company is competing, the threat comes from competitors who are able to offer new technologies (1) faster and (2) cheaper. In the end, the price/cost factor may play an important role in determining and influencing the customer's choice, because it is obvious that at the same level of quality, the choice will go towards the cheaper product rather than the more expensive one. As such, the company needs to be able either to financially support its financial burdens or provide cost-efficient solutions in the future.
However, in term of strategic problems, the most important issue at hand in the present seems to be determining what segment of…