Strategic Management assignment on the important of strategy planning for businesses to achieve a competitive advantage
Question
Task: How can businesses use Strategic Management assignment research methodology to achieve a competitive advantage?
Answer
Introduction
This Strategic Management assignmentexplores the importance of offering a company and its people direction, strategic management.Strategic management gives overall direction by formulating plans and policies intended to accomplish goals and then assigning resources to execute the strategies (Makadok, Burton, & Barney, 2018). Essentially, strategic management is for businesses to achieve a competitive advantage over their rivals.Effective strategic management, in contrast to one-and-done strategic plans, is the ongoing process of planning, monitoring, and testing an organization's actions in order to improve operational efficiency, customer base, and profitability.
Global strategic management is predicated on an all-encompassing worldview that sees every region for what it may be: a market and a potential source of competitive advantage, both individually and in concert with the rest of the company (Dzhumaev& Roberts, 2018). Several digital start-ups have emerged in the last several years to become major forces in the world economy. This Strategic Management assignmentuses a LYFT case study and includes a discussion of the external and competitive issues that will affect LYFT's worldwide development in Vietnam. Integration-Responsiveness Grid is also used to determine the best worldwide approach for LYFT.
External Environment Analysis using PESTEL
A PESTEL analysis is an external environmental tool, which is used to assess the external environment of Vietnam.
Strategic Managementassignment -Political factors
The Strategic Management assignment research shows Like “China, North Korea, and Laos, Cuba, the Socialist Republic of Vietnam” is one of the world's five surviving communist one-party governments (Dzhumaev& Roberts, 2018). Human Right Watch Organisation reports that the human rights situation in Vietnam is continuing to deteriorate and is one of the country's most pressing issues. The government imposes rigorous censorship and controls on the press. As of now, Vietnam has diplomatic ties with more than 178 nations. She has built relationships with international such as the World Trade Organization, the Asia-Pacific Economic Cooperation Forum, and others.
Economic Factors
The Strategic Management assignment research shows the average person in Vietnam has a buying power of USD$2072.70. This nation is considered to be of lower-middle income. It is among the most active growing economies in East Asia, with GDP growth rates in the range of 5%-7% in recent years (and as high as 7% prior to the economic crisis of 2008) (Ernawati& Lutfi, 2022). Therefore, it is fair to state that Vietnam is an attractive market for any company. The market for ride-hailing services in Vietnam is projected to expand at a CAGR of 16.81% during in the 2020-2025 analysis period. The passage of a new Decree (Decree 10/2020) inside the transportation sector in Vietnam, among other factors, is likely to boost the ride-hailing market throughout the forecast period (Linhet al., 2019).
Socio-cultural Factors
Vietnamese culture is known for its laid-back attitude, deep social bonds, and casual dress. The wealth disparity in Vietnam has been widening, and the country's aging population is only one of the country's many social problems. Despite the country's economic progress, inequality between the affluent and the poor remains stubbornly high.Ride-hailing services provide the linking of riders and drivers for the provision of on-demand transportation services under temporary agreements. Ride-hailing functions using digital interfaces including such smartphone applications, whereas conventional taxi services operate via physical telephones (Newburry, Deephouse, &Gardberg,2019).
As per the Strategic Management assignment results for the applications, users may save time and money by not having to spend as much time looking for a service provider and negotiating a price. The success of ride-hailing companies depends on their capacity to build and maintain a network of customers and drivers, much like other sectors of the digital economy. Quality, usability, and creativity in digital banking all contribute to the value that is delivered to the customer. It is further evident that the growing usage of mobile usage in Vietnam in turn shows that people are digitally advanced, which in turn provides opportunity for ride-sharing services to grow its business in Vietnam.
Strategic Management assignment- Technological factors
The potential importance of digitalisation in promoting economic progress and social welfare is being more acknowledged in Vietnam. Thus, the government, businesses, and individuals are all embracing the Internet and digital technology with open arms. Despite its current modesty, the infrastructural base is expanding to meet the increased demand of stakeholders. Additionally, Vietnamese consumers showed a lot of interest for digital products and services. Since 2003, the number of Vietnamese people who have access to high-speed Internet, smartphones, and other mobile devices has expanded dramatically, surpassing that of neighboring nations like India and Indonesia but falling short of the Philippines (Wakhu& Bett, 2019).
The Strategic Management assignment findings further show that while 52% of the population had access to the Internet in 2016, this percentage was much lower in rural and isolated places. It has been determined that the introduction of digital ride-hailing applications like Uber and Grab has altered the competitive environment of the urban passenger transportation sector in Vietnam, reducing the country's previous taxi monopoly (Wakhu& Bett, 2019). On the customer side, this competition led to lower prices, more options, higher convenience, quicker service, more reliability, and more effective complaint resolution. More opportunity to earn money in a variety of ways and greater average net income were both positive outcomes for the drivers.
Environmental Factors
High population density and extensive traffic contribute to Hanoi's status as one of the most polluted city in Vietnam and one of the most polluted cities in Southeast Asia (Newburry, Deephouse, &Gardberg, 2019). To this day, neither the public nor the government has discovered a successful solution to the issue of pollution. However, Vietnamese citizens are becoming more conscious of their ecological footprint. Nonetheless, the author has seen that, despite the growing consciousness of the public on such obvious environmental concerns, most individuals still fail to appreciate the significance of their immediate surroundings in their daily lives. The Strategic Management assignment findings show, it's quite unlikely that people would appreciate the positive effects the sharing economy might have on the environment.
Legal Factors
Both Ha Noi and Ho Chi Minh City have proposed creating metropolitan transport administrations to coordinate the various kinds of transportation. Investors have a negative impression of Vietnam's legal climate. An absence of openness, consistency, and reliability in the legislative framework in Vietnam is seen as a massive issue for foreign investors (Dzhumaev& Roberts, 2018). Foreign and domestic investors alike worry most about Vietnam's unpredictable as well as unstable legal environment. When it comes to the sharing economy, there are currently no laws or regulations in place in Vietnam. Companies' tax responsibilities and consumers' privacy and safety in the sharing economy are still problematic areas.
Key external factors which would impact the company
Economic factors:The market for ride-hailing services in Vietnam is projected to expand at a CAGR of 16.81% during the 2020-2025 analysis period. The passage of a new Decree (Decree 10/2020) in the transportation sector in Vietnam, among other factors, is likely to boost the ride-hailing market throughout the forecast period. This in turn provides opportunity for Lyft to enter the Vietnam market and expand its market.
Technological Factors:While traditional cab services rely on real telephones, ride-hailing relies on digital interfaces like these smartphone apps (Ngoc, Tien, and Trang, 2021). The time and effort spent identifying a service provider and haggling over cost may be reduced if more people used these apps. Like other parts of the digital economy, the success of ride-hailing businesses is tied to their ability to cultivate a community of users and drivers. In past years, there has been growing recognition in Vietnam of the potential significance of digitalization in fostering economic growth and social wellbeing. Therefore, it's encouraging that the Vietnamese government, companies, and citizens are all welcoming the Internet and digital technology with open arms, which in turn provides opportunity for ride-sharing companies like LYFT to grow in Vietnamese market. Legal Factors:It has been demonstrated that digital ride-hailing programs like Uber and Grab have transformed the competitive environment of the urban passenger transportation industry in Vietnam, therefore decreasing the country's prior taxi monopoly. As a result of increased competition, prices were lowered, consumers were given more choices, response times were sped up, services were made more reliable, and complaints were handled more efficiently. TheStrategic Management assignment shows the drivers benefited from an increase in both their average net earnings and the number of methods they might make money (Ngoc, Tien, & Trang, 2021). Opportunities for LYFT to operate in Vietnam have arisen as the cities of Ha Noi in Ho Chi Minh City have recommended the establishment of metropolitan transport authorities to coordinate the different modes of public transportation.
Industry Attractiveness using Porter’s Five forces
Bargaining Power of Buyers The availability of competition in the sector is mostly responsible for the negotiating power of the buyer. Consumers who use ridesharing services tend to be very cost-conscious (Ernawati& Lutfi, 2022). The conventional motorcycle taxi, often referred to as a "xe om" in the nation, has had a significant portion of its market share eroded by the advent of app-based motorbike taxi services. After being launched in Ho Chi Minh City (HCMC) beginning in November 2014, Grab was the first firm in Vietnam to debut GrabBike, an app-based motorcycle taxi that has since extended across the nation in 2015.The more specialized and tailored a company's service is to the desires of its clientele, the less negotiating leverage that clientele has in the marketplace.
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Bargaining Power of Buyers |
The availability of competition in the sector is mostly responsible for the negotiating power of the buyer. Consumers who use ridesharing services tend to be very cost-conscious (Ernawati& Lutfi, 2022). The conventional motorcycle taxi, often referred to as a "xe om" in the nation, has had a significant portion of its market share eroded by the advent of app-based motorbike taxi services. After being launched in Ho Chi Minh City (HCMC) beginning in November 2014, Grab was the first firm in Vietnam to debut GrabBike, an app-based motorcycle taxi that has since extended across the nation in 2015.The more specialized and tailored a company's service is to the desires of its clientele, the less negotiating leverage that clientele has in the marketplace. |
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Bargaining Power of Suppliers |
Taxi drivers only act as middlemen, connecting customers who otherwise wouldn't have met, and take a percentage of the fares they earn. By banding together as a union, these drivers have strengthened their position in worldwide negotiations and prompted the company to alter its practices (Wakhu& Bett, 2019). The platform's price tag has been questioned, and drivers have requested for more job security and benefits like health insurance. The drivers' bargaining position has therefore improved, with potentially far-reaching ramifications for the company's long-term strategy and operations. |
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Rivalry |
Lyfts competitors includes Curb, Uber, Grab, Didi Chuxing, and Ola, all of which are eating into Uber's market share and profit margins (Ernawati& Lutfi, 2022). Regulatory constraints and existing cab-hailing firms like Didi make penetrating Asian countries like China difficult. Because of this, the corporation is subject to a substantial force from its rivals. |
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Threat of Substitute Products |
Subways, vans, trains, and trams are all viable alternatives to taxi services. Government spending on infrastructure construction is at an all-time high in several countries throughout the globe, a positive indicator of economic recovery following the coronavirus outbreak. Reduced demand for taxis is expected over the next years as a consequence of increased access to other modes of transportation, particularly in developing nations (Ngoc, Tien, & Trang, 2021). That's why there's been a huge surge in automobile ownership as opposed to taxi usage. The Strategic Management assignmentshows there has been a dramatic increase in the worldwide demand for used automobiles, which may indicate that more individuals are either getting their first vehicles or adding to their current car collections. |
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Threat of New Entrants |
It is possible to create a company with similar features to Lyft. Any interested party with the capital to do so may now launch a ride-hailing business under the streamlined regulatory constraints. Once individual cabs are up and operating, only then can the back-end procedures take advantage of economies of scale (Tienet al., 2020). Making a profit, however, is difficult, especially in the beginning when more money is spent on a variety of investments. Consumers' desire to get the best possible airfare deal keeps the cost of switching between carriers to a minimum. However, Lyft's dominance in the industry might be attributed to two factors. |
Appropriateness of international strategy using the Integration–Responsiveness Grid The integration Responsiveness Grid is used to select the international strategy that can be used by Lyft.
Lyft is rapidly expanding its operations outside the United States. However, the integration responsiveness framework reveals that Lyft may adopt a global approach while operating abroad. This is because their fundamental business modelproviding taxi services through smartphone applicationsis consistent and uniform across all of the countries in which they operate (Wakhu& Bett, 2019). The fleets, prices, and elements of their services vary greatly from country to country. This is being done in response to the needs of the regional market. As an example, Lyft's fleet in India and China consists of different makes and types of cars than those utilized in the United States. Additionally, the South Asian nations will not be subject to the inflated prices that are common in the United States. As a result, Lyft is able to provide its main services in Vietnam with certain modifications owing to its international strategy (Newburry, Deephouse, &Gardberg,2019). Thus, transnational strategy is best suited for market entry in Vietnam for Lyft.
Conclusion
To sum up the Strategic Management assignment, it can be concluded that to decrease the country's once-dominant taxi monopoly, research shows that digital ride-hailing apps like Uber and Grab significantly altered the competitive landscape of the urban passenger transportation market. Higher levels of competition lead to cheaper costs, more options for customers, faster response times, more consistent service, and better resolution of customer complaints. The drivers saw a rise in both their potential income streams and their average net earnings. The cities of Ha Noi and Ho Chi Minh City in Vietnam have proposed the creation of metropolitan transport authority. As per the Strategic Managementassignment this is aimed to improve coordination of the various forms of public transportation, opening the door for LYFT to set up shop in the country.
References
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