Competitive strategy - Assignment 1 AAA Theory Introduction The contemporary time is called the globalization era as it has brought economies and people

Competitive strategy - Assignment 1 AAA Theory Introduction...

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Assignment 1: AAA Theory
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Introduction The contemporary time is called the globalization era as it has brought economies and people from varied countries closer and thereby offering different business opportunities across the globe. While it has brought positive effects on the people with a few negative impacts, it has exposed many businesses to unforeseen challenges that have made it necessary to create a global framework that will enable businesses to achieve a global competitive advantage. To manage the complexities and challenges, Ghemawat developed the AAA theory that denotes Adaption, Aggregation and Arbitrage. Adaption strategy helps companies to adjust their products so as to meet the needs, preferences, tastes and expectations of all their consumers across the world (Ghemawat, 2013). Aggregation on the other hand helps companies to increase their economies of scale by expanding globally while remaining receptive to the local needs. Arbitrage, on the other hand, helps companies to take advantage of the costs, currencies and price differences while deciding on the markets to venture into. Therefore, this paper explains how companies utilize the AAA theory as a growth strategy. It will, specifically, focus on McDonalds and Coca Cola companies in the food/beverage industry and Sun Pharmaceutical and Pfizer Inc. companies in the pharmaceutical industry. Adaption 1
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Adaption is the most influential and obvious strategy of managing differences. According to Ghemawat (2013), if local markets have varied differences, companies should offer them differing products and services. Product adaption is primarily the most influential strategy of coping with differences. Lapierre (2000) states that a product must be manufactured according to the expectations and needs of the customers. According to Loukakou & Membe (2012), a product’s function, appearance and support constitute what a consumer will buy. Managing a products components thus entails product planning and developing that involves careful planning while taking account of the customer. McDonalds and Coca Cola companies are very specific in addressing their customers’ needs as shown in table 1 below. McDonald, for instance, differentiates its burgers in all its market countries. It also includes all products that its customers seek such as the salads and fish in its menu. Coca cola, on the other hand, offers a different taste in Europe from other countries to meet the expectations of the consumers. It also has different packaging and branding strategies for particular countries. Sun Pharmaceutical also considers its medication ingredients and chemical formulae to ensure that its products match the needs of each of its markets. This include production of different versions at different prices to ensure that all its markets have the specific products that match their needs. Pfizer also considers factors such as the culture of the people of the market it is penetrating and relies on locals to aid in selling the appropriate medication according to the needs of the local people. Subsequently, these companies are able to satisfy their customers by
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