Discussion Questions About Companys Marketing Strategies

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a. Analog Devices, which develops specialized applications for analog semiconductors, has invested counter cyclically to cash in on business upturns. The results: 80% faster growth and 50% higher profitability than the rest of the semiconductor industry.

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Using the Michael Porters diamond, this company, the company is venturing into a very attractive venture meeting with great satisfaction the customers demand in the analog device market. 80% prospective growth rates is beyond the industry growth rate, therefore the strategy is commanding high competitive advantage over the semiconductors industry.

b. Nike's leadership in athletic shoes is built on cheap Far Eastern labor and massive investments in product development and marketing. Over the five years between 1981 and 1986, Nike averaged three times the profitability and four times the growth of the rest of the U.S. shoe industry.

Factor conditions: Nike has superior access to cheap labor which lowers the companys production cost relative to the rivals. Therefore can use the pricing strategy to gain larger market share in the athletic shoe market.

Demand conditions: Nike produces athletic, has significantly customized its products to meet the most current athletic market users preferences, taste and needs, this is through heavy investment in product development and heavy marketing.

c. Lincoln Electric has been the leader in the electric welding industry ever since John Lincoln invented the portable arc welder in 1895. Since then, technological change has been incremental. Lincoln has integrated backward, customizing its production machinery and holding annual worker turnover to under 3%. It has grown more rapidly than its competitors, partly by sharing its cost reductions with customers.

Structure and strategy: Lincoln Electric has invested into backward integration, taking control into the other supporting industries, the backward integration also might reduce the cost of production per unit (Chung, n.d.).

Factor conditions: the company has backward integration, translation to low cost input factor cost. Heavy automation of the production and operations have reduced the firm from the labor market risk compared to the other industry counterparts.

d. DuPont is a leading producer of titanium dioxide, largely thanks to a production process based on low-cost feedstock that gives it a 20% cost advantage over competitors' processes. Mastering the cheaper feedstock technology can be accomplished only by investing $50 million to $100 million and several years of testing time in an efficiently scaled plant.

Rivals bargaining powers: the DuPont state-of-art technology, places significant market controlling powers over its rivals. The company enjoys extreme low production costs, not feasible for its rivals. This leaves then the opportunity to rule the titanium dioxide world market (Puska, 2013).

e. Tandem Computer pioneered fault-tolerant computers for processing transactions. Although the cost of adding additional processing capability once a system is up and running is relatively low, customers must first make sizable and irrecoverable system-specific up-front investments in software and training.

Demand conditions: Tandem brought to the market a computer product serving the consumer needs with satisfaction than the other rivals. The product has capability of consumer customization, and allows additional capabilities installation at low cost even where the system is running. This reduces the customers bargaining power against Tandem, compared to other market players.

1. Suppose the United States imposes a $10 per barrel tariff on imported refined oil products.

a. What is the short-run profit outlook for American refineries? What is the long-term profit outlook?

Short term outlook; Increase the market price of gas in America, since gas a fairly inelastic price elasticity of demand. This is a reaction to the companys forecasts and maintain their profits margin (Puska, 2013).

In the long run the gas market price will increase and stabilize, some refineries may close down, absolutely, entries are expected to be equal to exiting refineries, and The America gas industry companies will have adjusted all other factors. However the price is likely to be slightly higher than the prevailing price before the import customs tax impose.

b. Suppose that eight years after imposing this tariff, the United States revokes it. What is likely to happen to the refining industry at that time?

There may be more refineries entries than exiting firms, are expected to join the gasoline refining industry. Gas price prices might remain unstable for a while

In the long run the gas price will level and stabilize. The number of industry entries will be equal to exits.

2. Wal-Mart, the discount merchandiser, began by putting large stores in small Sunbelt towns that its competitors had neglected. The company then wrapped its stores in concentric rings around regional distribution centers.

a. What was Wal-Mart's original strategy for creating value?

Reaching new market segments. Increasing the market share.

b. How sustainable is the company's competitive advantage?

In the short run the company sales, and market share will be favorable. In the long run, the sustainability of the strategy is infeasible since, wrapping up stores in centric rings empowers the rivals reducing Wal-Marts market share adversely in favor of its rivals.

c. How is growth in its markets likely to affect Wal-Mart's strategy?

Wal-Mart might enjoy the price reducing marketing strategy since its production volume has increased reflecting lower cost per unit, the company sales and profit margins are likely to increase significantly (Chung, n.d.). They are likely not to wrap up the centric stores, since its jeopardize the greater market share strategy.

d. More recently, Wal-Mart has invested huge sums of money in a telecommunications system that links its stores together and accumulates information instantaneously on store-by-store sales of each item in stock. How might this investment create a competitive advantage for Wal-Mart?

The telecommunication system mighty increase the integration of the stores, this may increases the synergy of the company, reflecting lower operations costs and higher revenues as a result of horizontal integrations synergy. The company might increase the market share due to the efficiencies achieved.


Chung, H. Marketing Control and Marketing Standardisation Strategies: An Integrated Typology. SSRN Electronic Journal. http://dx.doi.org/10.2139/ssrn.1071192

PuAka, A. (2013). KONKURENTNE MARKETING STRATEGIJE // COMPETITIVE MARKETING STRATEGY, 1(8). http://dx.doi.org/10.7251/ape0813025p

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