Adidas Five Year Business growth StrategyAdidas is a leading sports shoe brand, headquartered in Herzogenaurach, Germany. Apart from being, one of the largest and most popular sport shoe brands, the company is also a leading competitor of Nike, the world’s biggest sports shoes and apparel brand. While the company experienced a decline in sales and revenue in 2020, compared to the previous year, its eyes are set on faster growth in the future. Adidas has turned its focus towards customer experience and technology to achieve after growth. Apart from that, sustainability also features as an important factor on its agenda for the next five years. The sports shoe industry is experiencing higher competition driven by several factors including technology and demographic factors as well as marketing. Nike is currently the leading player in the industry, which has strategically been investing in technological innovation to grow its sales and strengthen the company’s brand image. However, Adidas is Nike’s leading challenger and it has also made some important changes to its business model and strategy over the past few years to improve its competitive edge against Nike. In 2021, after having faced a highly challenging 2020, Adidas is planning to invest in long-term growth. The company experienced a decline of 16% in its net revenue in 2020 compared to the previous year. Digital technology is driving several major changes across the sports shoe industry and Nike is ahead of the others in this area. For Adidas to maintain its competitive position and market share, it is essential to undertake a complete digital transformation. This will enable the brand to achieve superior results by growing its efficiency and customer connection. In any industry, success comes from maintaining a central focus on the customers. In the shoe industry too, customer experience has become central to maintaining growth momentum and gaining a stronger competitive edge. Adidas has set aggressive growth plans and termed its 2025 growth plan ‘ Own the Game ‘. Rather than a strategic plan of action, it sounds like a slogan but demonstrates the brand’s commitment to snatching market share from its leading rival Nike. In this post, we will discuss the latest business strategy of Adidas and how it can enable faster growth for the company over the next four to five years. Highlights of Adidas’s latest business strategy:
In any industry sector, the picture revolves around the customer, and formulating a customer-centric strategy is key to achieving growth and remaining the customers’ favorite in the longer term. While Adidas has remained customer-centric in the past, it seems with changing times and changing customer preferences and needs it might be time to revive its strategy and show more customer dedication. A higher focus on innovation will also require the company to make it an intrinsic part of its organizational culture. The company is ready to steer itself in a new direction. Nike has substantially grown its edge over the past few years through strategic investment in research and development and making a digital transformation possible that made it the formidable leader in the sports shoe industry. Adidas is also ready to undertake a similar transformation. The future is going to be more full of competition. Unless companies put more effort and investment into the strategically important areas, they may end up losing the game to the best players in the industry. Building Credibility:Adidas’s new strategy begins with an increased focus on building the credibility of the brand. The company is already a well-recognized brand that enjoys strong demand. However, based on the level of competition in the industry, and how it is intensifying day by day, Adidas will need to focus more on growing its credibility. The question is how to build a grow credibility. This will depend on growing the brand’s and its products’ distinction in the market. Apart from drawing a clear brand architecture, the company will also focus on specific product segments that are expected to drive the highest growth in the near future. The growing relevance of athleisure trends demands that the company focuses on sports-inspired leisurewear. As a part of its plan, the company will primarily focus on the following five categories: Football, Running, Training, Outdoor, and Lifestyle. Adidas expects that these categories will drive 95% of its total revenue growth until 2025. The company is also planning to grow its focus on the women’s segment. It will execute on a cross-category plan to achieve product excellence and to elevate the women’s experience with the goal to grow currency-neutral net sales for its Women’s business at a mid-teens rate on average per year between 2021 and 2025. Improving consumer experience:While companies are utilizing an omni channel strategy to reach their consumers and achieve higher sales, the importance of managing a superior customer experience along all these channels has also grown a lot. Consumers’ expectations from brands and their preferences have undergone a sea change over the past few years. So, whether along the physical channels or the digital channels, the companies need to provide their customers a shopping experience that is tailored to the customers’ preferences including personalized offers. Adidas plans to change its business model into mainly a direct to consumer business. This business model will be built around membership, enabled by a network of own-retail stores and e-commerce. The company expects that by 2025, more than half of its sales will be achieved through its direct to consumer sales channels. These channels will also drive 80% of the sales growth for the company until 2025. The company also expects its e-commerce sales to double its current by 2025. Adidas will continue to invest into its e-commerce capabilities and expansion of its membership program. The company expects that the number of its members will have more than tripled the current by the year 2025. Currently, the number of Adidas members is around 150 million which it expects to grow to 500 million by 2025. To improve customer experience further, the company’s physical stores will be equipped with full-fledged omnichannel capabilities. The company’s wholesale partners will also be included in its digitalization plan to ensure a seamless experience for consumers across all the touchpoints. Megacities still feature on the top of Adidas’ growth agenda. The company will seek to drive membership growth through its focus on megacities. The company will continue to build on its existing Key Cities portfolio of Tokyo, Shanghai, Paris, London, New York, and Los Angeles, by adding Mexico City, Berlin, Moscow, Dubai, Beijing, and Seoul. Apart from the twelve megacities, Greater China, EMEA (Europe, Middle East, and Africa), and North America have also continued to grow in strategic importance as leading markets of Adidas products. Adidas will continue to grow its investment in these markets in a higher proportion compared to the others since they are going to account for 90% of its net sales growth until 2025. Sustainability:Adidas had made sustainability a key part of its business strategy around two decades ago. While the company has gained substantially in this area and successfully advanced its sustainability agenda over these years, in the future it expects to grow its investment and focus on sustainability. Currently, six out of the ten products that Adidas makes are made from sustainable material. However, by 2025, the company plans to grow this limit to 9 out of ten. To achieve this, the company will further expand and innovate its three-loop system: recycled loop (made from recycled materials), circular loop (made to be remade), or regenerative loop (made with natural and renewable materials). Over the past several years, Adidas has been researching fully biodegradable or recyclable materials. It plans to use only recycled polyester in every product in every product that it makes. Apart from that, the company will also intensify the marketing efforts behind the sustainable products it makes. Sustainability will be a key part of its product strategy but apart from that, it will also occupy an important space in marketing. Adidas is planning to project the image of a highly sustainable or sustainability focused brand in the coming years. The company will also roll out its take-back program at a larger scale to take products from consumers for recycling. The shoe brand has committed itself to reducing CO2 footprint by 15% for each product by 2024. Adidas is also working with its global supply chain patterns to expand the ambit of its sustainability programs. This will help the company reduce energy and material consumption and make greater use of green energy sources in its system. The company plans to achieve climate neutrality in its operations by 2025 and overall carbon neutrality by 2050. Digital TransformationIn order to get ahead of the others and emerge as the leading player in the game, Adidas would need to invest heavily in digital transformation. One of the leading factors that have helped Nike, the biggest competitor of Nike maintain its leadership position is its investment in digital transformation. The balance is tilted heavily now in the favor of digital technology. Since the pandemic, the use of digital channels for shopping has grown among customers worldwide. People are now shopping more from Amazon and other eCommerce websites or the direct-to-consumer digital channels owned by brands. As a result, companies are now investing more in providing an omnichannel experience with a central focus on digital technology. Digital does not just attract more consumers but it also helps grow the efficiency of businesses and generate superior results. Adidas has also planned to invest heavily in digital technology for superior performance and to accelerate its sales growth. It plans to invest more than 1 billion Euros in digital technology by 2025. It plans to digitalize all the core processes across the entire value chain including the creation process with 3D design capabilities, via the sourcing of its products to selling it to customers and consumers. By 2025, the company expects to generate the vast majority of its sales through digital channels and from products that were created digitally. The company also plans to expand its data and technology expertise internally and expanding the size of its tech team. Adidas plans to hire at least 1000 people with expertise in technology and digitalization in 2021. It will also invest in digital resources to streamline its business operations including the new ERP system S/4HANA. Mindset and culture of innovation:The success of an organization is mostly rooted in its organizational culture. If you want to create an innovative organization, you must try to create an organizational culture of innovation first that drives a mindset of innovation organization-wide. In recent years, the company has intensified its focus on innovation and struck several partnerships that can help grow the pace of innovation happening inside the organization. Adidas has stated that it will continue to focus on strengthening the innovative mindset across the organization to ensure that groundbreaking innovations continue to flow. In the past, it has brought several groundbreaking innovations including Boost technology and the partnership with the Parley for the Oceans. The latest such example is its Future Craft technology. Other examples include a running shoe with an upper based on athlete data to be released in 2022 or new vegan and recyclable versions of the popular lifestyle silhouette Stan Smith. Apart from that, Adidas is planning to make one of its most successful franchises, the most sustainable in its entire portfolio. Other innovations that Adidas is planning to bring include new tech platforms in running, a swipe mechanism for product feedback incorporated into the Adidas app as well as dedicated and sustainable Outdoor stores in the Alps called Terrex Mountain Lofts. Adidas also plans to launch Adizero Adios Pro 2, whose first generation it launched in the second half of 2020. Apart from these, the company already has several innovations in the making. The company also plans to launch the Ultraboost DNA Loop in larger quantities for the first time in 2021. Originally published at https://notesmatic.com on May 17, 2021.
1 Comment
The QSR industry globally is populated by several small and big brands. Apart from the industry-leading global brands like McDonald’s, KFC, Domino’s, Burger King, Subway, and others, there are several local brands catering to local demand across various markets. There are a very large number of brands operating in the QSR sector in the US alone. Demand varies globally depending on various factors like people’s eating habits, preferences in terms of food, and other factors including technological, economic, and social factors. The size of the QSR industry in the US was estimated to be $279 billion and is forecast to grow to $282 billion by 2021 according to market research and statistics website Statista. The industry was hit particularly hard during the pandemic. While some QSR businesses in the United States were forced to declare bankruptcy, millions of workers employed in the US QSR sector were left unemployed. However, at the same time, some pizza chains also experienced growth in demand. The pandemic required these businesses to make changes to their operating model. Even as restaurants were empty and people were forced to remain inside their homes, demand was not dead. People still needed food delivered to their homes or could pick up from the restaurant stores. Companies like Domino’s pizza experienced growth despite the pandemic due to two factors mainly. They were quick to respond to the changes brought about by the pandemic by making changes to their operating model which apart from ensuring staff safety also ensured consumer safety and efficient operations. Several restaurant stores had to be shut down but in the meanwhile, new demand patterns emerged and particularly take away and home delivery categories experienced growth. Another important factor that enabled some leading brands to achieve growth during the pandemic in the US market was digital technology. The pandemic showed that the QSR brands needed to focus on making their business models resilient to not crumble when a disaster or pandemic struck suddenly. There are many factors that can alter the existing demand patterns in the QSR industry. QSR brands are not there just to satisfy people’s hunger. People do not like to buy from QSR brands just because they serve food. The consumers’ focus has instead shifted towards the entire experience and that’s how they select their favorite outlets. While food quality and staff friendliness are still among key drivers of demand and popularity for the QSR brands, there are many more factors that customers value including brand image and availability. In this post, we will discuss some of the key factors that can drive higher popularity and demand for brands in the QSR sector. Factors that drive higher demand and popularity in the QSR sectorFood quality:Food quality is considered to be the most dominant factor affecting consumers’ choice of a fast-food brand. Every consumer wants value for money and good quality food. Consumers are health conscious and lower food quality deters them from making repeat purchases from a brand. If they like the food quality offered by a fast-food brand, the probability of making repeat purchases is higher. Food quality and flavor attract customers and grow brand loyalty. Food quality also affects the consumers’ perception of the QSR brand and customer loyalty. It is a key factor affecting both popularity and growth of the QSR brands. QSR companies often maintain a heavy focus on sourcing and supply chain management to maintain superior food quality. Some of them like Domino’s have established their own supply chains in leading markets. Even the brands that have around 98% of their stores operated by franchisees like McDonald’s or Domino’s maintain a strong focus on product quality since it is the main factor that draws customers to their stores. Moreover, food quality offered by a brand affects the brand image and sales and therefore market share and revenue. Product variety:QSR brands are trying to bring more variety to their menus since customers can grow bored by limited offerings and their chances of switching to other outlets will grow. Customers can grow bored if they are offered the same or similar food repeatedly. However, if the menu is large enough, and there are new items for customers to try, they will stick with the brand and make repeat purchases. It is why the leading brands like McDonald’s, Domino’s, and Burger King have large and diversified menus that include a large variety of items for both vegan and nonvegetarian customers. Apart from that, these brands also release new items to attract and engage customers. While Domino’s is mainly a pizza brand, it still has a large and diverse menu that also includes chicken items. This helps the company grow its competitive advantage that comes from higher variety as well as encourage customers to switch to its brand. Pricing:Pricing is also a key factor that affects demand and customer loyalty in the QSR industry. In fact, the QSR industry is experiencing a price war. There are several QSR brands in the United States. However, the level of competition has grown so intense over the past several years, that fast food has kept growing cheaper. Apart from the leading brands from McDonald’s to Wendy’s, there are several smaller local outlets that are competing with the QSR leaders in terms of prices and food quality. The leading brands keep reducing prices or introducing highly competitively priced items in order to maintain their marketing dominance. QSR brands generally adopt competitive pricing strategies to grow market share and for market expansion. However, competitive pricing also draws customers in large numbers and can be good to encourage brand switching. Customer service:While food quality, pricing, and other factors including menu variety are important to draw and retain customers, the customers are not drawn only toward good quality food, but instead, their focus is on the entire experience. As a result, the focus on customer service and everything else that affects customer experience is higher compared to years ago. Customers do not just want good food but they are shopping for an experience. Anything that can spoil their taste will result in brand switching. Leading companies in the US QSR industry focus heavily on customer service and use online as well as offline channels for customer service. Superior customer service translates to higher customer loyalty and superior growth. Customer service is also related to popularity and considered an important pillar of marketing. QSR companies that want to strengthen their brand image, focus heavily on customer service. Store environment:As already discussed, customers do not just shop for food but their focus is the entire experience. While several brands closed a large number of stores during the pandemic, the importance of cozy and attractive stores has not diminished. Nice-looking and cozy stores draw customers for dining. Once the impact of the pandemic is over, the customers will again start flocking to the restaurant stores for dining in. It is why industry-leading brands like Domino’s, KFC, Pizza hut and McDonald’s have attractive stores in prime locations where the footfall is higher. Starbucks is known for its customer-friendly store environment and service. Other brands that operate restaurant stores like Subway and Burger King also maintain attractive stores in prime locations, which are among their leading drivers of sales and revenue. Brand image:Brand image is a critical factor in the QSR industry that affects demand, popularity, and brand loyalty. It is why every critical customer-facing function including store operations and marketing matters. Companies in the QSR industry have to focus on customer service, food quality, store operations and marketing to maintain a strong brand image. Marketing is a critical factor that helps companies differentiate their image from the rivals in the industry. QSR brands run marketing campaigns regularly using online channels and social media. Apart from driving sales, the focus of these marketing campaigns is to maintain a superior brand image. QSR brands also invest in CSR and sustainability to maintain a strong image. Brand image is related to the customers’ perception of a QSR brand and a stronger image leads to superior word of mouth and higher customer loyalty Customers like to buy from brands having a customer-friendly image. If the company takes any action that hurts its image, it can lead to a drop in sales and customers switching to other brands at least temporarily. So, companies do not just do everything that can help strengthen their image but also work to combat any negative news in the online environment through the use of social media and other methods and tools. Marketing:Marketing is critical for any leading QSR brand that intends to maintain its market share and expand its market size. Since the QSR industry is marked by heavy competition, companies need to invest heavily in marketing to attract and retain customers. Customers switch brands easily since it is not very costly to do so. Apart from that QSR businesses run marketing campaigns and promotions to encourage brand switching. QSR brands are mostly using digital marketing channels for promotions and customer engagement. Apart from paid digital advertising and in-app promotions, they are using social media for promotions and customer engagement. However, the role of marketing is not limited just to growing sales by attracting customers, but to encourage brand recall, brand switching, and maintain market leadership too. Brands also use marketing to differentiate themselves from rival brands. In the QSR industry, marketing does not just drive sales but is also a critical source of competitive advantage for businesses. The heavy price wars in the QSR sector also demand that brands continuously run marketing campaigns to avoid losing market share. Availability:Higher availability can also be a driver of higher sales and popularity in the QSR industry. It is why several brands have focused on growing their number of outlets in key markets to grow sales and popularity. Despite the growing popularity of delivery and pick-up models, a large number of customers like to visit the restaurant outlets for dining. In such a case, a larger number of stores can drive higher sales in various markets. The industry-leading brands like McDonald’s, KFC, Dominos, and Burger King have expanded to several international markets. They are providing their customers an omnichannel experience which means they can dine in their nearest outlet, order from their homes, or pick up from the nearest store location. Imagine a scenario. You are returning from the office in the evening and want to grab a pizza or a burger on the way. You know that on your way back, you come across a Domino’s outlet and you can get a pizza from there without having to wait for long. So, you just bring out your smartphone and order a pizza. If you want to grab a burger but there is no outlet nearby on your route, you will need to wait till it is delivered to your home or change your route to go to a Subway or Burger King. So, availability matters. Several leading brands have grown the density of stores in the larger cities and apart from that also make sure that online orders are delivered in a timely manner. This drives up sales and popularity since customers will buy from the brands if they find it more convenient to order from them. Technology:Technology has emerged as a key source of competitive edge for QSR brands, helping them offer superior service to their customers, delivering superior ROI on their marketing dollars, and growing their popularity through higher customer convenience. A larger number of customers are now ordering fast food online. Further Reading: https://ginzerr.com/mcdonalds-swot-analysis/ https://ginzerr.com/mcdonalds-pestel-analysis/ https://ginzerr.com/mcdonalds-five-forces-analysis/ Originally published at https://cheshnotes.com on June 9, 2021. Allstate Corporation is a leading insurance provider in the United States that offers an extensive range of insurance covers for various consumer segments and their different needs. The company conducts its business through Allstate Insurance Company, Allstate Life Insurance Company, and other subsidiaries. The number of Allstate’s proprietary policies is higher than 113 million and provides insurance products and services to around 16 million households. The company offers a broad range of products that it sells through its multiple brands and diverse distribution channels. The types of insurance covers sold by AllState include auto, home, life, and other insurance offered through its Allstate, Esurance, Encompass, SquareTrade, and Answer Financial brands. The company is also recognized in the US and other leading markets by its business slogan, “You’re in Good Hands with Allstate.” Allstate was founded in 1931 as a part of Sears, Roebuck & Co, and became publicly traded in 1993 and then an independent company in 1995.
Apart from its extensive range of affordable and straightforward insurance products, the company is also investing in marketing and technology for superior customer service. In the near and long term, the company is focusing upon increasing personal property-liability market share and expanding protection businesses, including Service Businesses, Allstate Life, and Allstate Benefits. Apart from that, the company focuses on growing the availability of its products, the attractiveness and competitive strength of its portfolio, simplifying its portfolio, and offering more connected services. Seven P’s in the Services Marketing Mix of AllstateIn this article, you will read about the seven Ps of Allstate Corporation’s marketing mix and how it is working to achieve faster and superior growth (with a particular focus on the product, pricing, and promotion components). Product:Allstate Corporation has divided its business into following reportable segments: Allstate Protection: This segment mainly includes the Allstate, Encompass, and Esurance brands and Answer Financial. It offers private passenger auto, homeowners, other personal lines, and commercial insurance through agencies, contact centers, and online. In 2020 AllState plans to integrate Ensurance into the Allstate brand as it is repositioning Allstate for broader customer success. Service Businesses Includes Allstate Protection Plans, Allstate Dealer Services, Allstate Roadside Services, Arity, and Allstate Identity Protection, which offer a broad range of products and services that expand and enhance our customer value propositions. Allstate Life This segment offers traditional, interest-sensitive, and variable life insurance products mainly through Allstate exclusive agents and exclusive financial specialists. Allstate Benefits This segment offers voluntary benefits products, including life, accident, critical illness, short-term disability, and other health insurance products that the company sells through independent agents, benefits brokers, and Allstate exclusive agents. Allstate Annuities This segment consists of deferred fixed annuities and immediate fixed annuities (including standard and sub-standard structured settlements) in the run-off. Discontinued Lines and Coverages This segment relates to property and casualty insurance policies written during the 1960s through the mid-1980s with exposure to asbestos, environmental and other claims in the run-off. Corporate and Other This segment includes holding company activities and certain non-insurance operations. The company offers a large range of insurance products that include auto insurance products, products for homeowners, as well as specialty auto insurance products that include motorcycle, trailer, motor-home and off-road vehicles. The company also offers other personal lines insurance which includes the following categories — renters, condominiums, landlord, boat, umbrella, manufactured home, and stand-alone scheduled personal property. Allstate also offers commercial lines insurance. The Allstate, Ensurance, and Encompass brands of Allstate Corporation offer the insurance products, whereas Answer Financial provides comparison quotes and sales of non-proprietary auto, homeowners, and other personal lines (condominium, renters, motorcycle, recreational vehicle, and boat). In 2019, the number of Allstate’s total policies in force reached 145.9 million. Place:The Allstate Corporation is headquartered in Northbrook, Illinois, United States. The company has maintained an extensive presence in the North American region through a large network of administrative, data processing, claims handling, and other support facilities. The company has around 450 facilities located throughout North America. Outside North America, the company has three facilities in Northern Ireland, two in India as well as two in London. The company has placed a special focus on establishing a strong and extensive distribution network. It is also one of the core pillars of Allstate’s business strategy. Allstate has established an innovative and integrated distribution system providing consumers with broad points of presence across all channels. Here is a short description of the distribution channels adopted by Allstate. Allstate has 10,800 Allstate exclusive agencies operating in 10,700 locations in the United States. The company uses this distribution channel to sell its products in the United States. The AllStates sales and distribution channels in the United States are supported by 27,100 licensed sales professionals, and 1,000 exclusive financial specialists. Allstate also uses 3400 independent agencies, contact centers, and online sales and distribution channels for selling products in the United States. AllState mainly operates in the United States and Canada and its top markets based on premiums earned include Texas, California NewYork and Florida. Price:The US insurance industry is marked by heavy price competition and the pricing strategy followed by an insurance provider affects his competitive position directly. Prices do not just affect the popularity of insurance products but also the overall image of the brand. Allstate as well as other players in the US market are increasingly adopting sophisticated pricing models to attract customers and beat the competition. Apart from marketing, pricing is the most important factor on whose basis insurance firms across the US compete heavily. Promotion:Insurance brands advertise and promote their products heavily in the United States as well as in other parts of the world. While heavy competition is one of the major drivers of heavy spending on advertising in the insurance industry, other factors like low consumer awareness also tend to drive higher spending on ads and promotions. Some of the common channels that brands including AllState use for marketing and sales include digital advertising channels like paid online promotions, email marketing, use of websites and apps, direct marketing as well as social media marketing. Allstate also uses consumer awareness and education initiatives to drive higher brand awareness, sales, and faster growth. It has increased its investment in technology to provide superior customer experience and increased access to various AllState products since customer experience is a major driver of popularity and growth in the US insurance industry. Moreover, AllStates and other insurance companies are using social media channels to reach their customers and grow their awareness of insurance products and related services. The company has also focused on building a strong reputation since the brand image is a major source of competitive advantage for the company. Over the past several years, the company has won several rewards and recognitions in various areas including philanthropic, employee volunteerism, and diversity efforts. There is heavy competition in the US insurance market and some of the leading competitors of Allstate include Geico, Progressive, and State Farm. People:The Allstate Corporation had 45,780 full time and 510 part-time employees as of 2019. Its seven reportable segments use shared human resources. Thomas J Wilson is the president and CEO of Allstate Corporation and AIC. There is intense competition in the finance and insurance industry for talented and qualified employees. Allstate hires qualified people with specialized knowledge in various areas including underwriting, data and analytics, technology, and e-commerce. Apart from competitive compensation and other benefits, the company has many training and retention programs in place for retaining key employees. Processes:The company uses both online and offline processes for providing insurance and other services to its customers inside and outside the US. With the growing use of digital technology, a larger number of people are using online resources to compare and purchase insurance plans. It is why Allstate has grown its investment in technology to grow the accessibility and availability of its products and services and is dedicating more technological resources to customer service as well. Allstate also employs 27,100 licensed sales professionals and 1,000 exclusive financial specialists to interact with customers directly and provide their support where needed. Physical Evidence:Despite the growing use of online resources for selling and buying insurance products and services. It is not difficult to come across paper-based physical evidence in the insurance industry. However, due to the growing use of digital technology and services, a lot of business is carried out online. Customers can use the AllState website and app to check out their insurance records and documents. There are a large number of forms and documents that can be accessed online easily using the AllState app which customers can download to their mobile phones. However, they can also print hard copies of their insurance cards as proof of insurance. Moreover, AllStates offers a large number of educational resources related to its products and services on its website and app that guide customers over how to use the various services available to them. Read more @https://notesmatic.com/ Tesla is a US-based automobile company that makes electric cars and a wide range of other energy products that help individuals and businesses reduce their carbon footprint through the use of renewable sources of energy. Elon Musk is the CEO of Tesla. Its headquarters are in Palo Alto, California, United States. In 2019, Tesla experienced a sharp rise in vehicle sales and revenue. This happened following the release of its most affordable car model — model 3. Otherwise, it only sold luxury car models.
The company is well known for its focus on innovation. Tesla cars are loaded with several smart technological features including autonomous driving technology and several more security features. The company strives to provide its customers pollution-free and unique while also a luxurious driving experience. Tesla has managed its supply chain and production network very well. China is an important market where the demand for Tesla products has grown. The company is optimizing its value chain for higher efficiency and to deliver higher satisfaction to its customers in China as well as the other parts of the world. The value chain model:Michael E. Porter of the Harvard Business School introduced the concept of the value chain. This model includes the entire range of activities from the procurement of raw material to the production, marketing, sales, and after-sales service. Each of these stages adds value to the final product. Analyzing the value chain and optimizing it helps achieve superior results. Through the optimization of their value chains, companies can increase their operational efficiency as well as build new sources of competitive advantage. The value chain includes two kinds of activities — primary activities and support activities. Read an analysis of Tesla’s Value Chain and how the company has optimized it for higher agility and stronger competitive advantage. Primary Activities: The primary activities in Porter’s value chain bear a direct relationship with the creation of products or services. Inbound logistics: Inbound logistics refers to the inward flow of goods into business which includes transport, storage, and delivery. Tesla has a large number of warehouses located in the United States (one in Taiwan), most of which are leased facilities. The principal manufacturing facility of Tesla which is owned by the company is located at Fremont, California, United States. This facility is used for warehousing as well as manufacturing. The approximate size of this facility is 5.5 million square feet apart from the other warehouses which the company uses for storage as well as delivery are located at the following locations:
The warehouse in Taipei City, Taiwan is used for storage as well as administration and service. The company has also leased several other facilities and warehouses in other corners of the world including North America, Asia, and Europe. Operations :Tesla was founded in 2003 by a group of engineers who dreamt of making electric mobility possible for everyone. In 2008, Tesla launched its Roadster and then later Model S. The company has its headquarters in Palo Alto, California, United States. However, the company has expanded its operations as well as manufacturing, sales, and supply chain network to various corners of the globe. Its European headquarters are located at Amsterdam in Netherlands, Europe. Tesla also has a manufacturing facility at Tilburg, where its operations include final assembly testing and quality control for Model S and Model X delivered to the European Union. Tesla’s Gigafactory 1 is located outside of Reno, Nevada. The company uses the battery packs manufactured at Giga factory 1 in its vehicles and energy storage products. It also manufacturers model 3 drive units at Gigafactory 1. Gigafactory 2 is a 1.2 million square foot facility in Buffalo, New York. Giga factory 3 is located in Shanghai, China. Tesla also has administrative offices in other corners of the world including North America, Europe, and Asia. Outbound logistics:Gigafactory one outside of Reno, Nevada is a leading manufacturing facility in Tesla’s manufacturing network. The Fremont, California facility of Tesla Motors contains several manufacturing operations including final vehicle assembly and end of line testing. Operation in Tilburg includes a parts distribution house for the company’s European service centers. The company has several warehouses in the United States, many of which are leased facilities where the company stores or ships parts and completed vehicles from. Production has begun at Gigafactory 3 in Shanghai, China as well from where Tesla ships completed Model 3 cars to its Chinese customers. Marketing and sales:The automobile industry is marked by heavy competition. Most companies use several marketing channels including both traditional and digital channels of marketing for the promotion of their products and brand. However, compared to the other leading automobile brands in the industry, Tesla invests a lot less in marketing. The company uses its website as well as other digital channels for marketing and promotion. Elon Musk also uses social media ( Twitter) to engage Tesla fans and followers from all over the world. Tesla has established a large network of company-owned stores and galleries. These stores are used for marketing as well as sales and service. While on the one hand, these stores help the company promote and strengthen the Tesla brand, on the other they enable it to obtain customer feedback faster. These stores and galleries are premium outlets located in major metropolitan markets where they enjoy higher visibility. Many of the stores combine retail sales with after Sales Service. Moreover, the company is growing its network of service centers since it was found that opening a new one in a new geographic area could increase demand. Tesla has also established a large network of superchargers and destination-chargers. The company continues to grow this network throughout North America, Europe, and Asia. By focusing on product innovation and after-sales service, the company has maintained a strong image in the global market. It has always maintained a strong focus upon building the image of a customer-oriented and innovative brand that sells high-quality products and invests in maximizing customer satisfaction. China is a leading market of Tesla products and the company has established several retail outlets there in the metropolitan cities including Beijing, Shenzhen, Guangzhou, Nanjing, and Shanghai. In the United States, Tesla has established an extensive network of company-owned stores and galleries. California, Florida, and Texas have the highest number of Tesla stores. Products and services:Tesla introduced its first product, Roadster in 2008 which was followed by the launch of Model S. The company launched model X in 2015 and then Model 3 in 2016. The products and services portfolio of Tesla includes the following products - Model S, Model 3, Model X, Model Y, Cyber truck, and Roadster as well as energy products. The Cybertruck is a newly released truck model from the house of Tesla which looks a lot like a Sci-Fi vehicle. The truck is powerful, environmentally safe, and made for a safer driving experience. Tesla also offers a large range of power products including storage products and solar tiles among others. The company offers after-sales service through its large network of retail stores and service stations located in various corners of the world. Support activities:Primary activities in Porter’s value chain are linked to support activities. The support activities improve the effectiveness or efficiency of the primary activities. Technology:Worldwide, the automobile industry has is experiencing intense competition. The market for alternative fuel vehicles has also evolved a lot. Several of Tesla’s competitors including BMW have brought fully electric cars to the market and plan to expand the range of fully electric and hybrid vehicles. Technology is the main source of differentiation in the global automobile industry. Autonomous driving technology and electric mobility are currently the hottest technological areas in the auto industry. Tesla is one of the leading firms at the helm of research and development in both of these areas. In fiscal 2018, the company invested $1.46 billion in research and development. Compared to the previous year, the R&D expenses of Tesla increased by $82.3 million or six percent. Investing in technology has helped Tesla continuously improve its products and grow its attractiveness in the global market. InfrastructureTesla is organized into two main divisions based on product categories. They are the automobile segment and the energy product segment. The administrative structure of Tesla is different. Elon Musk is at the top as the leading decision-maker. Tesla’s chief financial officer (CFO) is Zachary J Kirkhorn who leads the accounting, finance, and other related areas. Tesla also has vice-presidents to lead the other several divisions including production, engineering, sales, finance, etc. HRM:As of 2018, Tesla employed 48,817 people full time. The company depends upon thousands of its talented employees for running the organization and maintaining high operational efficiency. HR management has emerged as an important area of focus for most technology organizations since it is important to attract and retain talented employees to stay competitive. Tesla is now placing a higher focus on HR management to find faster growth and to increase its competitive strength. Procurement:The vehicles manufactured by Tesla use thousands of parts that the company sources from thousands of suppliers worldwide. Tesla has developed strong relationships with several key suppliers. There are some important parts like cells and other key system parts for whose procurement, the company has built close relationships with their suppliers. While Tesla has several suppliers of some raw materials, for many others, it depends on single sources. Panasonic is one of the leading Tesla suppliers. It has been a long-term supplier of battery cells for Tesla vehicles. Other Sources: Tesla Annual Report 2018 (ir.tesla.com) Learn more wonderful facts about Tesla. Visit notesmatic.com The importance of ethics for businesses has been a topic of debate for long. At the turn of the 21st century the Enron scandal added fresh heat to the debate. Enron went bankrupt and left behind a lesson for other businesses. Moving away from ethics can cost businesses everything from your business image to your profits. Enron became a case study cited in the business and academic circles whenever there was a mention of corruption and lack of ethics in the corporate world. The focus of governments and businesses both has increased on ethical practices.
While the introduction of SOX was mainly meant to regulate the financial businesses, other companies too have focused on ethics in the following years. Prima facie, it appears that businesses are now more concerned about their image and maintaining their ethical standards. However, the real answer lies deeper. It is not just your image but your business performance and profitability also depend on ethics. Businesses are not doing it out of pressure but there is also a motivation behind it. Several of the big brands have shown that being concerned for your ethics can improve your brand’s image and sales. The root of ethical practices lies in the organizational culture. If you want to adopt ethical practices in your business then you must first focus on the creation of an organizational culture that is rooted in ethics. Starbucks is a well-known name in the world of business. However, it is not just its premium coffee and the style of customer service that has made it famous. More than that, it is known as an ethical company that maintains ethical practices internally as well as externally down its supply chain. Ethics and compliance are made a part of the organizational strategy and the employees are trained at Starbucks to behave ethically and remain compliant. The brand has created awareness material for the purpose of training its employees. As a part of its awareness program, it regularly investigates and resolves any type of ethical issue arising inside the organization. It has set standards of business conduct that guide everyday behavior inside the organization’s offices and stores. Regarding legal compliance also Starbucks is very clear in its rules and strategy. All the relevant laws are to be adhered to and it is set out clearly in its standard of business conduct. However, it is the inside story. Down its supply chain also Starbucks has ensured that it sources all of its cocoa ethically. It has already achieved the 99% milestone in the ethical sourcing of raw materials. Apart from ethics, CSR is another major concern for businesses and particularly the big brands. Starbucks is also focused on community involvement and investing in projects that help the community and the resourceless. Several of the big companies including Pepsi are investing in the environment and community. It does not have a huge environmental impact like the several other brands and still if Pepsi is focused on environmental leadership and water stewardship then it is because the brand is focused on environmental protection. Investing in CSR has its own benefits for the brands. It is not just for generating publicity. Research has found that it leads to better brand image and an increase in customer loyalty. Pepsi spells out these key focus areas in its mission and vision statements too. It calls it performance with purpose. “ At PepsiCo, we aim to deliver top-tier financial performance over the long term by integrating sustainability into our business strategy, leaving a positive imprint on society and the environment. We call this Performance with Purpose”. Brands need to care for the world they live in. Business is not just about making profits. It is because both the community and environment are key stakeholders and unless you can handle their concerns too and invest in CSR, you cannot expect a great brand image and loyalty from your customers. Even the customers are watching which brands are investing in the environment. It leads to a positive outlook on the brand. So, the brands must not lose the focus of either in the 21st century — ethics and CSR. Apart from that, customer orientation is important. Read more @ notesmatic.com https://notesmatic.com/
Core competencie s Valuable Rare Inimitable Organized Advantage Brand Image Yes Yes Yes Yes Competitive Advantage Marketing Yes Yes Yes Yes Competitive Advantage Customer experience Yes Yes Yes Yes Competitive Advantage Product Innovation Yes Yes Yes Yes Competitive Advantage Product range Yes No No Yes Temporary advantage Product quality Yes Yes Yes Yes Competitive advantage Technology Yes Yes Yes Yes Competitive advantage Brand image: Any firm’s brand image is a significant source of advantage for it. Let’s take for example Walmart, which is known for its lower prices and has a customer friendly image. Its brand image is a key driver of sustainable competitive advantage for the firm. In the case of Nike too, the firm’s image drives higher popularity and loyalty worldwide. Nike has also maintained the image of a customer friendly, innovative, and quality focused brand. Its image is a significant driver of competitive advantage for the brand. The company’s image is superior compared to its rivals and has been strengthened by the company’s continued focus on quality, innovation and customer experience. The stronger a brand’s image in the market, the more customers feel drawn towards it. Nike’s marketing strategy has also played a key role in strengthening its image worldwide. Its brand image is a source of sustainable competitive advantage for the firm. Marketing: Marketing has helped several firms beat the competitive pressure and gain a significant edge over their rivals. Successful marketing strategies have helped firms differentiate their brand from the rivals and grown their market dominance. Nike is one of the most well known marketers https://notesmatic.com/ globally. Its marketing strategy has a central focus on encouraging athletes to achieve the impossible. Its swoosh logo and the Just Do It slogan have made it a leading name in the worldof marketing. However, apart from advertising, promotions, and sponsorships, there are other elements in its marketing strategy too including a strong focus on product quality and athlete friendly innovation. Nike’s market dominance however, is not a result of excellent quality or great products only but marketing has played a significant role in helping it win the global market. Overall, it is one of its leading core competencies that have helped it build a sustainable source of competitive advantage and a unique market position. Customer experience:- Read a detailed analysis @ notesmatic.com https://notesmatic.com/vrio-analysis-of-nike/ |
AuthorAbhijeet Pratap Archives
October 2021
Categories |