This report is focused on the chapters eight and seven of ‘Strategic Management and Business Policy’ course book by Thomas L. Wheelen and his counterpart J. David Hunger. The two chapters of this book are focused on strategy formulation and related managerial decisions aimed at ensuring that a business corporation achieves maximum return on investment. This paper is meant to relate business terms, decisions and strategies in the textbook to the current business situations in the modern world. Through this, I will be in a position to boost my comprehension and evaluation of materials related to this course. In addition to that, this process will equip me with the necessary skills to understand the fundamentals of our economy as far as growth of the GDP is concerned.
Since this assignment draws its arguments from chapters eight and seven of our book, it is imperative to highlight the strategic points discussed in these chapters. In chapter seven, for instance, Thomas and his counterpart discuss corporate strategy as a sub brunch of strategy formulation that encompasses both chapters. In chapter eight, on the other hand, the two authors incline their thoughts towards functional strategies and strategic choices meant to improve the performances of business institutions by broadening the thoughts of managers.
- Tesla CEO Musk confirms talks with Apple, Sarah Drake, February 20th 2014 (Drake)
- Bill Gates meets Indian top business heads including Azim Premji, Narayana Murthy and Ratan Tata, PTI June, 08th 2012 (PTI)
After a meticulous analysis of these two articles, we will be in a position to relate real world happenings with concepts learned from our book. From chapter seven, for example, we learnt of concepts such as aspects of strategies, vertical growth, horizontal growth, strategic measures for entering foreign markets and growth strategies. Concepts learnt in chapter eight like functional strategies needed for meeting organizational goals, strategies needed to achieve competitive advantage and dangerous strategies will all be exhibited in these real life occurrences as portrayed by the articles.
Tesla CEO Musk confirms talks with Apple, Sarah Drake, February 20th 2014 (Drake)
During the spring of 2013, it was alleged that Musk, the CEO of Tesla Motors Inc (an electronic car manufacture and assembly company) met with a top managers of Apple, Adrian Perica. This meeting was thought to have been arranged for the purpose of discussing a sort of corporation between the two major companies. On the 20th of February 2014, Musk confirmed to the press that a secret meeting was held between the two (Sarah, 1). However, he denied allegations that his company was on sale and categorically stated that the sale of Tesla Motors Inc was not going to take place any time in the near future. Moreover, the CEO gave no comments on whether the two multibillion companies have plans of merger or acquisition as speculated by the press. He, however, said to Bloomberg TV that the sale of the electric car company was unlikely and that no such discussions were underway. The CEO again noted to the press that his company was expecting a revenue growth of up to 55% by the end of this year’s financial year (Sarah, 1).
Bill Gates meets Indian top business heads including Azim Premji, Narayana Murthy and Ratan Tata, PTI June, 08th 2012 (PTI)
This article is focused on the talks held by Microsoft founder, Bill Gates, on philanthropy and the consequences it has on the society. These discussions were held with India's top entrepreneurs. It is indicated in the article that Mr. Bill Gates spoke his thoughts with top business men like the Chairman of Wipro, Mr. Azim Premji, the Chairman of Infosys Mr. Narayana Murthy, the Chairman and managing director of Biocon Mr. Kiran Mazumdar and the chairperson Tata Group Mr. Ratan Tata. Sources say that this meeting was aimed at setting parameters and formulating correct frameworks that would enable Indian companies together with other foreign companies to join hands towards bettering humanity. The meeting was intended to encourage both local and foreign companied to use their resources to give back to the community as a mode of improving the lives of the poor Indians (PTI, 1).
Chapter 7 concepts
- Long-term contracts: - these are arrangements between two or more firms to supply each other with goods agreed upon for a relatively long period of time. This association allows companies to depend on one another as agreed in order to achieve certain organizational goals.
- Horizontal growth: - a firm is said to have achieved horizontal growth if it has successfully expanded its production and supply of goods or services in other geographical regions far away from its original region of inception. The achievement of horizontal growth may also refer to the successful increase of the range and quantity of products produced by a single firm and their subsequent supply.
- International entry options: - these are the strategic measure a firm may use in order to expand its business in other countries. They include;
- Exporting of goods: - this involves shipping goods to other countries for sale. This is one of the most important measures of achieving minimum risks when carrying out experiments on marketing and sale of new products in new markets.
- Joint venture: - this is when a foreign company merges with a domestic company with the aim of producing goods and services jointly. They combine their resources and skills in order to come up with totally different products from the ones each company produced independently.
- Acquisitions: - foreign companies are better positioned to enter into a new market when they purchase and own local but related companies with adequate product lines and impeccable distribution networks. Therefore, acquisition of firms helps introduce a new company into a market (Gasparski, 100).
Chapter 8 concepts
The concepts in this chapter are mostly focused on functional strategies and strategic choices one ought to take in order to push his or her company to the next level. They include:
- Financial strategy: - this involves a meticulous examination of financial repercussions of certain decisions and identification of the most appropriate financial courses of action. It is through this that a firm may be able to evade losses and emerge at the helm of organizational success.
- Research and development strategy: - this deals entirely with not only product but also process innovations that are channeled towards getting better products or services. It is also important to note that this strategy involves amalgamating varied types of research and development methods and the inclusion of modern technology in order to improve the quality of products or services released into the market.
- Information technology approach: - the aim of this strategy is to come up with business units that have competitive advantage over their competitors. This is mostly achieved through the inculcation of modern technology in the production and supply of goods.
- Sourcing decisions: - this simply involves the mode of attaining raw materials needed for the production of goods. Such materials may either be outsourced or off-sourced (Drucker, 194).
Musk’s Tesla Motors Inc is trying to establish a relationship by getting into a long-term contract with Apple. This is a business strategy that aims at introducing Tesla products to the larger Apple market. By doing this, it is important to note that Tesla as a company is trying to safeguard its position in the relatively comparative market of electronic cars. In other terms it is aiming at having a comparative advantage over its competitors. Subsequently, Apple is trying to get into long-term contract with Tesla by proving iOS for installation on cars’ dashboards in order to infiltrate the foreign market (Sarah, 1).
Exporting of goods
As already learnt in our textbook, one of the ways of infiltrating a foreign market is by exporting goods to that particular market. In this case, Apple is a good example of a company that is using this technique to infiltrate a foreign market. It is exporting its iOS gadgets used in Tesla cars as a mode of ensuring that it not only has control over its local markets but also markets across its borders (Drucker, 262).
Certainly, Apple and Tesla Motors Inc are venturing into a joint business where Tesla provides electronic cars while Apple provides its iOS gadgets (Sarah, 1). Through this, these companies will have to sell their products in each other’s markets as a result of the joint venture. It is worth noting that when companies jointly venture in business they introduce one another to each other’s markets.
In the article that talks about Apple and Tesla Motors Inc, it was rumored that Tesla was on sale and it would be acquired by Apple. Despite the fact that Musk vehemently denied these allegations, it is clear that this would have meant good business for Apple is it acquired the company. This is because Apple is a foreign company and it would have gained a great deal from buying local company in its prospective market.
It is unclear why Bill Gates decided to champion for humanitarian aid for poor Indians through top entrepreneurs in the country. What is clear, however, is that the Microsoft founder must have carried out a meticulous examination and evaluation of the financial consequences of this action on his company before going on with it. It is wise to say that this project was in line with his organizational prospects and this is the reason why he proceeded undoubtedly.
Sourcing decisions are very important. A competitive manager ought to know when to use what method of sourcing in order to achieve maximum organizational success. It is important to recognize how Tesla is off-sourcing iOS gadgets from Apple. This implies that Tesla as a company must have found this the best method to obtain iOS gadgets even though they might have been in a position to acquire others from other sources. As a result, competent managers are supposed to be careful when selecting sourcing decisions (Sarah, 1).
Information technology approach
The use of technologically advanced materials and gadgets is highly evident in the article that talks about Apple and Tesla. This is because of the iOs gadgets and electronic cars that are obviously made from recent technology. It is worth noting that the current markets are very conscious of technologically advanced goods. As a result, companies need to advance their services and goods in order to draw audience (Wormser, 532).
This exercise played a vital role in boosting my comprehension and evaluation of materials related to this course. In addition to that, the exercise equipped me with the necessary skills to understand the fundamentals of our economy as far as growth of the GDP is concerned. Throughout the exercise, I was able to comprehend the underlying meanings of every article reviewed for the purposes of this study and comfortably relate their themes to the concepts learnt in chapters eight and seven of our book (Drucker, 242). That notwithstanding, I had a widened scope of knowledge after relating the book concepts to real life situations. In conclusion, therefore, it is imperative that students relate their theoretical class work to real world situations in order to be is a position of interpreting real world situations using theoretical information.
Drucker, Peter F. Concept of the Corporation. New Brunswick, N.J., U.S.A: Transaction Publishers, 1993. Internet resource.
Gasparski, Wojciech W. Entrepreneurship: Values and Respinsibility Praxiology. New Brunswick: Transaction, 2011. Print.
PTI. “Bill Gates meets Indian top business heads including Azim Premji, Narayana Murthy, Ratan Tata.” The economic times. 1 June 2012. Retrieved on 21 February 2014. http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/bill-gates- meets-indian-top-business-heads-including-azim-premji-narayana-murthy-ratan- tata/articleshow/13707655.cms
Sarah, Drake. “Tesla CEO Musk confirms talks with Apple.” Silicon Valley Business Journal. 20 February 2014. Retrieved on 21 February 2014. http://www.bizjournals.com/sanjose/news/2014/02/20/tesla-ceo-musk-confirms-talks- with-apple.html
Wormser, I M. Disregard of the Corporate Fiction and Allied Corporation Problems. Washington, DC: Beard Books, 2000. Print.