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Air Deccan: Low Cost Provider Strategy (Essay Sample)


Answers must be written and typed in a clear, concise manner. Don’t forget to address all sections of each question. As a general rule, answers that effectively utilize sources other than the textbook will be more favorably received than those that do not. In any case, properly reference any source used. Each response should be no more than 2 pages in length (about 500 words). 1. Identify and (very) briefly discuss a company from each of the five basic strategy types discussed in Chapter 5 of the text. Be sure to describe how the company embraces/approaches the strategy. DO NOT use as your examples any company discussed on that Chapter (I will provide chapter 5 later). 2. Discuss the strategic issues and rationale for PepsiCo’s decision during the 1970s and 80s to purchase food chains such as KFC and Taco Bell. Were these acquisitions related to value chain enhancements or a general diversification strategy? Why? (These companies were eventually spun off to become, what is now, Yum Brands. Was PepsiCo able to realize its strategic goals, despite this spin-off). 3. Take a look at the Syngenta AG (Symbol: Syt) and discuss and critique their current strategy as it relates to the concepts discussed in the class. See, for example (but not solely), their half-year report (I will provide it later). What are their methods for dealing with competitive threat represented by their rival Monsanto? 4. Describe the general thesis or central message of the article. (I will provide the article later)


Short Answer Questions
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Question 1
Air Deccan: Low Cost Provider Strategy
Air Deccan is one of the first low cost airlines in India launched in 2003. It started off with only two aircrafts and provided services to 8 cities in India. Its main business objective was to make air transport in India affordable and thus sought to provide services almost half as much as full service airlines (ICMR, 2004). This model had been inspired by South West’s low cost model that saw it rise to industrial leading levels. Moreover, since one way of maintaining a low cost strategy was by keeping the overall costs of the company as low as possible, Air Deccan sought to provide snacks on the plane as opposed to serving rich content foods. This helped the company reduce its fares to roughly Rs 700 and thus became one of the most sought after airlines in India (ICMR, 2004). One of the main challenges it faced under this model was that it often experienced overbooking and in 2004 for example, it reported to have sold out tickets under that category. Nonetheless, it is worthwhile noting that adoption of this model was not entirely due to the success of the South West Airlines but had been necessitated after Deccan Airlines hurt consumer sentiments, a month after its launch, when one of its aircraft engines caught fire before takeoff. Therefore, this model also served to bridge the gap that had been as a result.
Dunkin’ Donuts: Broad Differentiation Strategy
Broad differentiation strategy requires that a company should study its customer’s behaviors, needs and values and incorporate such features in order to sustain them (Bordes, 2009). This is a feature that Dunkin Donuts has been exploiting over the years through its menu. Over the years, the company has been differentiating its products through which it has come to be known as the best with its breakfast menu. Prior to July 7 2013, the company was well known for its breakfast sandwiches which appealed to its customers immensely (Schroeder, 2013). Nonetheless, on July 7th, the company adapted a new menu item, slightly differentiated from its sandwiches, glazed donut breakfasts. Glazed donut sandwich features cherry-wood smoked bacon, with fried eggs and with a glazed yeast ring over it. As a consequent, the company has enjoyed customer loyalty, increased sales and charged premium prices for its products. This new addition to their menu comes after more than1000 more variations of the sandwich, all meant to target different customers with different health or dietary needs.
Family Dollar: Focused Strategies (Based on Low Costs)
For the focused strategies, there is Niche Market. This is a customer group that is even more narrowly defined. This group needs a distinct mix of benefits. Family Dollar targets American families who live in the urban area and that are poor. These are the kind of families that cannot be able to drive up to Wal-Mart because they don’t have a car.
Gucci: Focused Differentiation Strategy
The aim here is to secure an advantage in competition where a product is offered which is carefully designed so that it appeals to selected preferences which target a very narrow group of buyers who are well defined (Debrizz, 2013). Gucci targets these groups of buyers who need world class attributed goods.
Best Buy: Best Cost Provider Strategy
Best cost provider strategy works on the notion that most buyers prefer midrange products, a factor that has come up as a result of value consciousness (Bordes, 2009). Best Buy stores provide a number of products in office-home products, electronics, mobile phones, entertainment among others (Broens, 2012). The store offers relatively high valued products at attractive prices and due to its product differentiation, has a wide range of products on offer. Consumers, being value-conscious, need value for their money (CAB Tutorial, 2009) and therefore they have resulted to products or services which exhibit this trait. Having discovered this, the Best Buy stores went ahead to secure revenue margins of approximately $50.27 billion in 2011 alone. This model has its target in mind while ensuring quality is maintained.
Question 2
Pizza Hut and Taco Bell were acquired by Pepsi during the 1990s. The objective of Pepsi was to become the biggest fast food vendor in the world. The acquisition of the two fast foods was a stepping stone towards achieving their objective and there were high expectations to expanding the fast food empire. Looking at the acquisition of the two fast food companies, the stock of Pepsi Co. was to automatically increase and there was room for even more synergies. Pepsi brought in experts in marketing and also to the development of new products into the Kentucky fried Chicken. There was also the capability to create a one stop area where customers would easily shop for fast food. This deal resulted in enhancing the shares of Pepsi in the fountain beverage sales because Kentucky Fried Chicken Franchisees changed from getting the products of Coke to getting Pepsi.
However, Pepsi did not manage to deliver all the benefits it had promised when they were acquiring the two fast food companies. Kentucky Fried Chicken failed to make a cut for itself in the market. This is because its competitors, the likes of Boston Market and grocery stores were able to introduce roasted chicken was far healthier than what KFC provided (MBA Knowledge Base, 2013). Pizza was not in any honeymoon either. It was engaged in a war where by the competitors; Domino’s and Little Caesar’s also wanted to win. Taco Bell’s was also subject to competition because all the products it launched did not enjoy 100% success. Taco Bell’s also targeted consumers who were conscious with the price of goods through coming up with a 59 cent tacos. This also failed because McDonalds and Burger King were on the other end of the war. In general, Pepsi as a restraint did not enjoy much of profits. This failure can be attributed to the kind of strategy that they engaged in. the company used general diversification because it was engaged in both soft drinks and fast food. If it could have specialized in soft drinks or fast food, there could have been profits enjoyed because all efforts are dedicated to the same company. In this case, efforts were divided and this could have been a major contribution to the failure of the company to make a cut for itself in the market.
Question 3
Syngenta AG is a world leader in agribusiness in areas like crop protection, seeds and lawn and garden markets. All these provide products like herbicides, provision of seeds like those of corn and oilseeds, turf and landscape products. The operations of Syngenta take place during the season of growing and before. It makes available products when they are needed so as to enjoy profits.
There are several strategies that the company has employed. For example, there are operational efficiency programs. These are dedicated to providing costs for completion of projects and outsourcing of IS (Information Systems). There are also integrated crop strategy programs that look at IS infrastructure projects, severance and pension costs, et al.
However, there is no business corporation that doesn’t face competition. For Syngenta, the main competitor is Monsanto (Open Learning World, 2011). However, Syngenta puts across strategies to ensure that their customers become aware of the broad toolbox that is inclusive of genetics and chemistry so that maximum yields improvement of the quality of crops is attained and also reliability. In addition to this, the company seeks for opportunities so that they can be able to it and also expand the wide range of technologies that are available to the growers. One of the places that make it possible to implement this strategy is Africa. This is where Syngenta is a step ahead of Monsanto. Syngenta has already acquired MRI white corn seed business that is found in Zambia. The aim of this is to ensure that their objective, building a business which is worth 1 billion dollars in Africa by the year 2022. Through this acquisition of MRI in Zambia, the company has improved...
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