SEMINAR

Seminar

Seminar

Question1 Discuss how market-led strategies can help businesses to drive growth and sustain competitive advantage, using examples from US, European and/or Far Eastern businesses.

Competitive Advantage in the Changing Market Environment

By understanding how the industry structure affects competition and profitability it is also possible to identify how a company can influence the structure in order to improve the balance of competitive forces and possibly enhance its profitability. In the pulp and paper industry one of the most intractable structural problems have arisen from excess capacity from time to time. Acquisitions and mergers has represented a direct an effective way eliminating over capacity, but also for getting access to the local market place by taking over existing sales and distribution channels. In the process of creating a competitive advantage (Asch & Bowman, 1994) a company needs to understand the key success factors in the particular industry (e.g. end-use of the product) but also have the resources and capabilities to fulfil them.(Strange,1993)

A competitive advantage is the combination of these two components. A competitive strategy will be successful when a company can deploy the resources and capabilities to match the key success factors within the industry environment. As long as a firm adopts a competitive strategy where it utilises these resources and capabilities in a superior way of its competitors it should be possible for it to establish and keep a competitive advantage. The sustainability of the competitive advantage will depend on different factors eroding the advantages within different areas of the company's activities. The sustainability will depend on e.g. durability (cost of raw material, product innovation, product brand), transferability (transfer of technology or knowledge) and replicability (complexity of capabilities). In the traditional Nordic paper producing companies the competitive advantages has been built on a high technical vertical integration supplied by domestic raw materials in the form of wood and electrical power. The vertical integration has also been in the form of a commercial integration by mergers and acquisitions of converting plants or sales or distribution networks in the local market place in Western Europe.

Due to different disturbances within the market place (different driving forces) the paper producing companies have also come under pressure from stakeholders since the value of the stocks is below the development of the general index in the stock market place. To some extent the Swedish paper producing companies have chosen to concentrate on the core business by selling out activities which not are fitting to the core business but also in the form of outsourcing e.g. harvesting of wood. The traditional way of doing business will also be in focus due to the increased use of information technology e.g. the strategic challenge of electronic commerce. In order to stay competitive the paper producing companies need to reconsider there competitive and marketing strategies.(Strange,1993)

The Strategic Challenge - An Industry in Change

Due to the increased globalisation there are many factors influencing the pulp and paper industry. The main emphasis in this paper is to discuss how external changes and different driving ...