Introduction
The changes that are taking place in the world today can have a direct impact on organizations both domestic and international. These changes are leading businesses to create innovative strategies that will help them survive and evaluate their competitive environments. Over these years we have seen the role Innovation strategies plays in organizations and how vital they are for businesses to succeed. One of the easiest ways to grow a firm is through diversification, especially unrelated diversification through mergers and acquisitions.
METRO GROUP is an international retailing company with Head quarter in Germany. The company has over 280,000 employees in 180 nations around the world with over 2,200 outlets in 32 countries in Europe, Africa and Asia. Metro Group’s expansion into Canada is the company’s goal as it seeks to grow its retail operations.; the purpose of this research is to identify two new strategies that will be implemented by Metro Group and explaining in detail why I recommend these two strategies.
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Two new strategies identify
Firms vary in the extent to which they diversify the mix of businesses they pursue, in order for corporate diversification to be economically valuable to Metro Group, two conditions must hold. First, there must be some economy of scope among the multiple businesses in which a firm is operating. Second, it must be more efficient to manage these economies of scope through hierarchical forms of governance than through alternative intermediate or market forms of governance (Jay Barney, 2007). The two new strategies for Metro Group will be; unrelated corporate diversification because less than 70% of Metro Group’s revenues come from a single line of business, the other new strategy that must be implemented is forming a strategic alliance with a local organization in Canada that shares the same views and values as the company.
Sustainable competitive advantage
Notwithstanding the number of challenges facing Metro Group, opportunities for growth are plentiful particularly through expansion of the new market in Canada. For the company to develop a sustainable competitive advantage in the new market, it must improve value-creating products, processes, and services that cannot be matched by competitors now, and plan content to maintain that position in the long-run. For a strategic alliance to be a source of sustained competitive advantage, the company must evaluate the venture and make sure it is rare and costly to imitate. Also, VRIO framework can be used to analyze the alliance to see if it is a source of competitive advantage.
Organizational structure and leadership changes
In recent years, organizations begin to realize how globalization has brought about both previously unimaginable opportunities and significant and complex challenges for many organizations. Culture is the most subtle aspect of organization, it can play a formidable role in helping Metro Group developed a global strategy that will be successful in Canada. The goal is, leveraging all the company’s leadership talent to do this right. Senior management at the company must constantly restate that intention and to act in accordance with it. With the unstable market environment, organizations are finding it difficult to predict their future. It must be the top priority of the company to make sure that the employees are well informed about the organization policies and regulations, what are the obligations of each employee, and a detailed structure of the changes which are to be implemented in the new market.
Cultural consideration
As organizations have become more culturally diverse, the possibility of culturally based communication barriers has increased. Developing a strong corporate social responsibility will be an added advantage; Metro Group will have to behave responsibly as regards both society and the environment. As the most international retail and wholesale company, Metro Group features in the daily activities of millions of people globally. Metro Group is a member of the world’s largest corporate social responsibility network, the UN Global Compact. Having a clear understanding about the cultural circumstances about the targeted market which is Canada in this case is imperative, it will not only help Metro Group save money, but will also prevent the company from making avoidable mistakes.
Conclusion on Metro Group’s expansion into Canada
The complexity and interdependence of the global economy increases the need for firms to plan strategically. Making strategic decisions and implementing them in Canada will drive the company’s profitability curve upward. Understanding customer demand, market niches, new product production while monitoring the current economic status will be essential to building an effective and successful strategic marketing plan. Forming a strategic alliance will help in identifying the demographic makeup of consumers. To gain competitive advantage in the new market, Metro Group has to ensure that it manages its core business in a sustainable manner, providing exceptional customer service and producing world-class products that are difficult to imitate will give a competitive advantage against other competitors in the market.
References:
http://www.businessinsider.com/the-6-keys-to-sustainable-competitive-advantage-2010-6?op=1#ixzz27Pktocwj
http://www.metrogroup.de/internet/site/metrogroup/node/10781/Len/index.html
Pearce, J. A., II, & Robinson, R. B., Jr. (2009). Strategic management: Formulation, implementation, and control (11th ed.). New York, New York: McGraw-Hill.
Yip, G. S. (2003). Total global strategy II (2nd ed.). New Jersey: Prentice Hall.
Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (2003). The strategy process: Concepts, contexts, cases (4th ed.). New Jersey: Pearson-Prentice Hall.
http://www.statcan.gc.ca/daily-quotidien/080522/dq080522c-eng.htm
