BUSINESS STRATEGY FINAL ASSIGNMENT

1. Since long-run profitability requires that a firm is sensitive to the interests of

its customers, employees, suppliers, and society-at-large, whether a firm is run in
the interests of its shareholders, or its stakeholders makes no real difference. Do
you agree? Are there situations where shareholder and stakeholder interests
diverge?
Businesses are established with the primary objective of offering services and
fulfilling the essential requirements of their customers. In the past, the primary focus of
businesses was to serve the general public by providing them with their needs,
ensuring the availability of basic necessities, creating employment opportunities for
individuals to support their families, and developing innovative products to ensure the
stability of the company. I concur that whether a firm is operated in the best interests of
its shareholders or its stakeholders, it does not make a significant difference for
customers, employees, suppliers, and society as a whole. This is because all these
entities play an equally crucial role in ensuring the long-term profitability and
sustainability of the business. They are the driving force behind the success or failure
of the company. Customers are responsible for purchasing products or services in
exchange for monetary value. Employees cater to the needs of customers and ensure
their satisfaction. Suppliers provide the necessary raw materials for the production of
the company's goods. Shareholders invest their money in the company in return for a
share of ownership, while stakeholders have an interest in the company for reasons
other than financial gain, such as social or environmental impact. Although
shareholders and stakeholders may have divergent interests, with shareholders focusing
on maximizing shareholder value and stakeholders considering broader value
maximization, it does not imply that they cannot collaborate. The success of a business
ultimately lies in their hands, and their collective opinions and actions have a
significant impact on the company's performance.
2. In stable industries, where firms have similar resources and capabilities, offer
less opportunity for competitive advantage than industries where change is rapid
and firmsare heterogeneous. On the basis of these considerations, among the
following industries, in which do you predict that interfirm differences in
profitability will be small, and in which will they be wide: retail banking, video
games, wireless handsets, insurance, supermarkets, please explain with examples.

Due to increased rivalry in practically every industry, relatively few can provide
stable profits. Creating a competitive edge for the company is the main objective of a
strategy. The disparities between banks in the retail banking industry can be rather
significant. This is true because banks are able to provide their clients with a wide range
of products and services. Retail banking may become more profitable by choosing a
location in a desirable sector of the market or by outperforming its competitors. The
retail banking sector is competitive in terms of both costs and non-costs. Consumer
demand and technological advancements have been pushing innovation in the provision
of goods and services. The rivalry for deposits has become more intense because to the
increased reliance on deposit funding.
In industries marked by stability, such as retail banking and insurance, where firms
share similar resources and capabilities, the potential for significant interfirm
differences in profitability is anticipated to be relatively small. In retail banking,
regulatory constraints and standardized services contribute to a stable environment,
limiting opportunities for firms to gain a competitive advantage through differentiation.
Similarly, in the insurance sector, where core services are often standardized and
subject to regulation, companies are expected to have comparable profitability with
minor variations.
Contrastingly, industries characterized by rapid change and firm heterogeneity, like
video games and wireless handsets, offer more room for varied profitability among
companies. The video game industry, with constant technological advancements and
diverse gaming platforms, allows innovative firms to outperform competitors by
adapting to evolving trends and consumer preferences. Similarly, in the wireless handset
sector, where technological innovation and varied consumer demands drive
competition, companies embracing new technologies and delivering innovative products
are likely to experience wider differences in profitability.
Supermarkets, operating in a stable industry with established business models and
similar product offerings, are expected to exhibit smaller interfirm differences in
profitability. These businesses often compete on factors like pricing and convenience,
with limited room for differentiation. Overall, the degree of industry stability and the
extent of heterogeneity among firms play crucial roles in determining the breadth of
interfirm differences in profitability across different sectors.
Q3. Select a high-profit industry and a low-profit industry. From what you know
of the structure of your selected industries, use the five forces framework to
explain why profitability has been high in one industry and low in the other.

1. Competition from Substitutes:

The tobacco corporation, in my opinion, makes a comparatively large profit since there
aren't many alternatives to its goods. To put it another way, the only e-cigarette that
tobacco corporations have to contend with is the widely used vape. However, as
everyone knows, the younger generation is the only one who enjoys "vaping." Since
adults make up the majority of cigarette users, we may infer that conventional cigarettes
are used by most smokers instead than electronic cigarettes. On the other hand, because
passengers have a lot of options, airlines make very little money. In comparison to land
transportation and marine vehicles, airlines are a little more expensive. This explains
why the airline sector has minimal earnings.
2. Threat of Entry:
I believe that there is a considerable risk of entrance for tobacco businesses. Why? due
to its tremendous profitability. The majority of entrepreneurs aim to launch a company
that will bring in a sizable profit. I mean, who wouldn't? They naturally select a very
lucrative business as making money is the primary motivation for starting a business.
Tobacco use is also not prohibited nor promoted. Because of this, issues arise when
governmental and legal hurdles are met. Conversely, aviation is a very intricate and
dangerous industry. Few people would be brave enough to work in the aviation sector
without successful firms.
3. Rivalry between established competitors
While the government did not outright forbid tobacco smoking, they did raise the price
in an effort to reduce the number of users. Tobacco firms make a large profit when they
set a high price. Its large profit margin comes at the expense of competition in that
market. The same holds true for aviation firms. Low earnings are produced by airline
firms due to competition.
4. Bargaining Buyer Power:
As I previously stated, tobacco usage is neither prohibited nor encouraged. Despite this,
adult users of tobacco continue to be widespread. In addition to being the most lucrative
sector, tobacco corporations claim to have a large client base. Unlike airplanes, it seems
to be made for a large market, meaning that not everyone can afford to ride it.
5. Suppliers' Bargaining Power
The tobacco firm has a significant number of suppliers. Why? Tobacco is a very
profitable industry that many farmers choose to cultivate since it is grown in many
areas as a means of subsistence. In contrast, airlines have a rather small pool of
suppliers. Not every component of an airplane is made locally. Resources are restricted
because the majority of the parts are imported.

Q4. How would you segment the restaurant market in your hometown? How
would you advise someone thinking of starting a new restaurant which segments
might be most attractive in terms of profit potential?
Market segmentation is a business strategy used by brands to maximise their
marketing, advertising, and sales efforts by breaking their target market into smaller,
more manageable groups of people based on shared interests.
To put it plainly, firms can use the similarities among clients in each market
category to further their endeavours. Introducing a message that is specifically
designed to be successfully accepted is the goal of market segmentation. This is
beneficial for businesses that might offer a good or service that has several uses or
benefits for various kinds of consumers.

There are several varieties of market segmentation, including:

1. Targeting clients according to a predetermined geographic boundary is known
as geographic segmentation. Cities, states, and nations differ greatly in terms of
interests, attitudes, and preferences, therefore it's critical for marketers to
acknowledge these variations and adjust their advertising appropriately.
2. A market is segmented based on factors like age, gender, income, family size,
education level, occupation, ethnicity, and more. Because certain items clearly
address particular individual requirements related to at least one demographic
feature, this type of segmentation is extensively employed.
3. The focus of psychographic segmentation is on the inherent qualities that your
target client has. Values, personalities, interests, attitudes, conscious and
subconscious motivators, lifestyles, ideas, and more can all be considered
psychographic qualities. Techniques like focus groups, questionnaires,
interviews, audience testing, and case studies may all be effective in gathering
this kind of conclusion if you have a thorough understanding of your target
audience.
4. Behavioural segmentation is comparable to psychographic segmentation in
terms of measures; however, it concentrates on particular responses and the
manner in which customers make decisions and make purchases.

Compared to other business models, restaurants confront a unique set of challenges

since they must be able to cater to a variety of demographics, including families, single
gals out on the town, couples, and groups of guys getting fuel before heading to the
game. How can restaurant operators serve this distinct but varied clientele? Which best
practices should they follow before focusing on particular market niches? The best
place to start is by learning about the state of the restaurant industry as a whole, rather
than delving into data about your particular establishment. This will not only help you
interpret the results of your consumer demographic research more effectively, but it
will also better prepare you for what you could discover. Identifying your target
demographics will help you avoid one of the most common mistakes businesses make,
which is attempting to appeal to everyone. This is especially true when it comes to the
restaurant sector. As stated to QSR Magazine by Arby's senior vice president of
strategy and customer analytics, “obviously we want every person in America to eat at
Arby’s more often, but part of designing your target and who you want to talk to is
about making some choices, and you’re going to prioritize some people over others.”
Rather than attempting to appeal to everyone under the sun, the secret to success is to
focus on the customers who would most likely relate to and desire to dine at your
restaurant. Since most customers like to dine in restaurants during busy hours, I would
counsel anybody considering starting a new restaurant to locate it in a very corporate
area with room for offices or university buildings. The population, sales, and income
all affect profit potential. A greater population will result in more sales. Therefore,
population is also very important. Competition is increasingly common in today's
environment, and we need to be conscious of it. Hence, the goal of competition is to
serve the greatest meal in the smallest amount. Opening restaurants in malls would be
more successful because they are the locations where we can find any sort of
merchandise. Thus, by opening a restaurant with attractive interior design in shopping
centers, it provides more profit.