Activity 4 Strategy Implementation and Control

Activity 4: Strategy Implementation and Control

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Institution’s Name

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Activity 4: Differentiation vs. Cost Leadership

Part A: Companies Identification

The two selected companies include Amphenol Corporation which employs diversification strategy and Wal-Mart Incorporation that employs cost leadership strategy. The two companies are selected because they are public companies with American origin, and thus, they suit the paper requirements. Amphenol is an American company that was established in 1932 and it is the main interconnect products manufacturer in the world. Amphenol markets, manufacturers, and designs specialty, coaxial and power cables, fiber optic connectors, antennas, sensor-based products, sensors and antennas. It also produces electronics components employed in communication, aviation, and military equipment. Amphenol contains a diversified presence in markets of high growth which include mobile networks, automotive, mobile devices, broadband communications, military, commercial Aerospace, data and information technology communications, commercial aerospace and industrial communications (Amphenol.com, 2017).

Wal-Mart Incorporation is the world leading discount retail stores with over 2.3 million workers. It was established in 1962 in the United States with it headquarter being located in Bentonville, Arkansas. It operates over 5300 stores which include 655 Sam’s Club warehouses and 4570 Wal-Mart stores, and a developing population of smaller format stores. The Company has a swift growing multinational division which is currently found in over 6100 locations. Wal-Mart has adopted cost leadership strategy in its selling and pricing operations (Forbes.com, 2016).

Part 2: Why the Company Preferred the Opted Strategy

Wal-Mart adapts to cost leadership strategy. This gives the company a higher competitive advantage over its competitors. This strategy gives it the lowest operation cost in the industry. By getting the least costs in the industry, the retailer also provides least prices to its customers in the market, and hence it also implements price leadership. Wal-Mart reinforces its competitiveness by employing low-cost leadership strategy. This makes the company to attract a wide customer’s spectrum by offering an extensive selection of the general merchandise and lowest cost. The company attains a cost advantage by managing its cost drivers and persistently wringing efficiencies of cost beyond its supply chain. The company manages to make superior profits by use of this strategy compared to its competitors, specifically due to its efficiency in the supply chain and large size. This has earned the company the greatest market share internationally. The company also sources its products from cheap domestic suppliers and low-wage workers from foreign markets. Its products come with slightly high or same quality as that of its competitor and thus, making more preferred by customers due to its advantage of cheaper cost. This gives the company the ability to sell its products at low costs and to earn thin margins profits at a high volume. The cost leadership strategy is feasible in many industries. However, it is highly used in this company due to the likelihood of attracting a huge number of consumers especially for most commonly used products by all individuals. Its prices attract buyers from all social classes and hence increasing its sales volume (Wei et al., n.d.).

Amphenol employ diversification strategy where by it currently operates in eight different market segments. The company consistently drives to augment the diversity of its products, markets, applications and consumers. Because of the wonderful different chances in electronic industry, the company’s management believes that it is very significant to guarantee participation in every area where substantial growth chances are available. The company is positioned by this diversification to proliferate its technologies around the extensive array of chances and lower exposure to any specific market, thus, lowering the company’s financial performance variability. Diversification can fit in different industries. However, it is commonly done in electronic industry. Diversification, especially to unrelated business surrenders the company competitive advantage potential. Most electronic companies try to diversify due to extensive range of the customers in need of varying electronic products for their specific unit. These companies try to diversify to address customers of all niches (Amphenol.com, 2014).

Part C: Continue with the Current Strategy or Change

Wal-Mart demonstrates a great level of success in this industry internationally. Thus, it can be said that the strategy chosen by this company suits it perfectly for it has enhanced daily operations and exponential growth. Thus, Wal-Mart should retain its strategy of cost leadership. Wal-Mart has been employing this strategy for a while now and it has enjoyed its great success in its profits. Wal-Mart has never tried to change its strategy. However, it tried to integrate other strategies that work in complementing the cost leadership strategy. These strategies include distribution center operations, technology, sales and marketing, and backward expansions. This enhances effective operation of cost leadership strategy (Walmart, 2016).

Amphenol on the other had has been depending on diversification. Although this has enabled the company to grow in terms of revenue and profits, it has not gained a distinguished position in in the market in any of its segments. Thus, the company is highly outshined by its competitors in the market. The company may consider changing its strategies to uplift its competitive advantage. Amphenol has not experienced any recent change in its strategy, however, has tried to expand its lines of diversification even further, to reach more customers.

Part D: Impact on Performance

Wal-Mart is documented as the world leading discount retail store. This means that Wal-Mart has managed to outperform its competitors who include McDonald. The company has been recording growth in its total sales since 1980, and it only registered a decline for the fast time in 35 years in 2016. Wal-Mart has been leading in its industry worldwide for a while. This means that the current strategy has been very successful to the company operations and it has helped the company to grow to a great height (Forbes.com, 2016). Amphenol is also documented as the largest electronic company in the world. The company has been documenting a steady positive curve on its revenue for the last four years. It also demonstrates a steady positive growing net income curve for the last three years. This means the strategy is contributing a great deal in the company growth and profitability and thus, it is highly suitable for this company. Amphenol however experience stiff competition from its competitors from each category. The main challenge is that the company segmentation makes it hard to define its concrete domination in the market, and in the contrary, one must evaluate performance per segment. The company does not show dominance in any segment, in the market. This means that this strategy does not give the company the opportunity to exploit its maximum potential (Amphenol.com, 2014).

References

Amphenol.com. (2017). Retrieved from < https://www.amphenol.com/about>

Amphenol.com. (2014). Amphenol annual report. Retrieved from < https://www.amphenol.com/fr/2014_APH_Annual_Report.pdf>

Forbes.com. (2016). #15 Wal-Mart stores. Retrieved from < https://www.forbes.com/companies/wal-mart-stores/>

Walmart. (2016). Wal-Mart annual report. Retrieved from < http://s2.q4cdn.com/056532643/files/doc_financials/2016/annual/2016-Annual-Report-PDF.pdf>

Wei, L., Wang. S., Zhang, J., & Ao, Y. (n.d.). Strategic analysis for Walmart: save money. live better. Retrieved from < https://www.sfu.ca/~sheppard/478/syn/1137/G_6_1137.pdf>