Adoption of Blue Ocean Strategies in Business

Strategy involves standing out from the competition and making choices that give the company a unique and valuable position by offering distinctive products and services. Competitive advantage and profitability can be achieved simultaneously by approaches that create consistent internal synergies and combine a company’s operational activities efficiently. Strategies are formed at various levels of the organization. However, a typical organizational structure incorporates strategies at 3 specific levels: corporate, business and functional. Corporate strategy defines a company’s holistic growth and management direction pertaining to its various businesses, products and services. Business strategies, on the other hand, are established at the divisional levels and typically focus on enhancing the strategic business unit’s competitive position in its industry. Functional strategies aim to maximize resource productivity and are typically set by functional departments within each SBU to improve competencies and performance.

Blue Ocean strategies are a form of business level strategies that enable firms to achieve sustainable competitive advantage by tapping uncontested market space. Developed by INSEAD professors, W. Chan Kim and Renee Mauborgne, Blue Ocean strategies were derived from analyzing winners and losers of more than 150 strategic moves across 30 industries, including hotel, cinema, automobile, retail, airlines etc., over the course of several years. Read More About: Blue Ocean Strategy

Conventional competitive or red ocean strategies encourage firms to choose between value and differentiation to compete in prevailing markets with clearly defined boundaries and conditions. In red oceans, firms aim to gain market share by exploiting existing demand and overtaking competitors. Ruthless competition in red oceans confines companies to benchmark against competitors, and make incremental improvements that increase costs without increasing revenues or having much impact on demand.… Read the rest

Four Types of Businesses for Entrepreneurs to Start With

Entrepreneurship is the process of bringing together factors of production, and organizing profit oriented activities, or the process of distributing economic goods and services for profit. An entrepreneur is a risk taker who possesses skills, such as knowledge and self-confidence. This individual bears the risk of starting a business venture, in the face of uncertainty about future conditions. Most successful entrepreneurs are self-motivated. Entrepreneurs start their own businesses because they do not like to work for others, but prefer to be their own boss and be responsible for the decisions they make. Entrepreneurs have the ability to spot a business opportunity and utilize it, with the hope of succeeding, rather than failing.

Entrepreneurship is a creative activity, as it tries new methods, rather than following routine methods. Entrepreneurship is closely related to innovation, as the success of entrepreneurship, largely, depends on the ability to respond to innovation. It has its objective of economic success, based on the utilization of new means of production. Entrepreneurship is a result-oriented activity, since it emphasizes high levels of achievement and performance. The qualities of an entrepreneur are acquired; thus, an entrepreneur need not be born as one, but can become one through progressive learning.

When selecting the type and size of a business venture, an entrepreneur should consider and conduct analyses on the factors below.

  • Raising capital – most entrepreneurial activities, normally, depend on the availability of capital.
  • Market research – it is the systematic collection of data regarding the consumer levels of demand for the product and cost.
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Risk Management Within an Organization

Risk management is a identification process of upcoming threats and danger to an organization. In an organization risk can enter through many ways, it can come from project failure, financial market, an accident in organisation such as flood, earthquake, cyclone, power failure, public health and safety and legal risk etc. Risk can be low to medium, or medium to high. It is difficult to say that an organisation can solve all the upcoming risks to the organisation like earthquake, we can just assume that earthquake can damage the business, but we cannot say how much, but there are some alternatives of upcoming threats like in power failure we can use generator to keep running the business.

The purpose of risk management within an organization to identify problems before they enter and create problems in the organisation, so that risk management handling process may be planed. It is a continuous looking ahead process so it is an important part of a business. Early detection of risk is important because it is easier, not much expensive, and changes can made easily in the planned process. It is easy to maintain a strategy and solve the risks when they are in early stage. A successful manager can monitor risks before they create problems in a business. The lack of information can is dangerous in a business so the staff of the organisation should be well training so that they can assume the risk when it is in early stage and report to the management as soon as possible.… Read the rest

Case Study: Merger Between US Airways and American Airlines

On December 9th, 2013 the two airlines, US Airways and American Airlines merged to form the American Airline Group that turn out to be the major airline in the world. This merger was structured by the enlarged competition that airlines are countenancing in the business at present. The merger offered a prospect for both airlines to make use of the benefits of an extensive network that would effect subsequent to merging as countered to when each one operates separately. One of the foremost circumstances that encircled the merger was the imminent insolvency of American Airlines. The company in 2011 had filed for bankruptcy even though it relapsed to profitability the same year in July. The merger would enhance admission to opportunities of business for both airlines, particularly American Airlines that would decrease its coverage to financial risks, which were the preliminary grounds for the corporation filing for bankruptcy. The merger would generate enhanced synergies that would be apparent in the course of increased flexibility and financial strength in the market.

Each of the entities merged would have admission to further destinations and bigger clientele. Each of them would admission to a bigger destinations network i.e. 300 destinations all around the world. They as well had a code share contract where customers would impeccably book their flights from any US Airways or American Airlines networks. Such controls are an enhancement to each of the airline’s ability and results to bigger business and performance.

There are a variety of positive traits of this merger.… Read the rest

Different Types of Risks Faced by Banks Today

All companies which have a profit maximizing objective hold a certain degree of risk whether through microeconomic or macroeconomic factors. Banks also face a number of risks atypical of non financial companies due to the payment and intermediary function which they perform. Recent changes in the banking environment has lead to an increased pressure to maximize shareholder value, this means that banks take on a higher risk in order to gain a higher return. It is due to this increased pressure and market volatility that banking risk needs such effective management to ensure the banks continued solvency. Risk can be defined as an “exposure to uncertainty of outcome” measured by the volatility (standard deviation) of net cash flow within the firm. Banks aim to add equity to the bank by maximizing the risk adjusted return to shareholders highlighting the importance of fully considering the risk and return business equation. Exposure to risk does not always lead to a loss, pure risk only has a downside from the expected outcome but speculative risk can produce either a better or worse result that expected.

Credit risk is the risk that the counterparty will fail to repay the loan in part or full. This includes delayed payments or any default on the loan agreement. It is widely know that credit risk is one of the most damaging risks to banks, for this reason there is usually a separate credit department run around a credit culture of the management’s views. The objective of the credit department will be to maximize shareholder value added through credit risk management.… Read the rest

Electronic Human Resource (e-HR)

e-HR stands for Electronic Human Resource. The term e-HR refers to deal Human Resource Management transactions using an internet. E-HR aims to keep information available to employees and managers at anywhere at any time. E-HR may include organizations HR portals and web applications, Enterprise Resource Planning, HR service centers and interactive voice response. There are three identified levels of e-HR such as publishing of information (delivered by intranet medium), automation of transactions with integration of workflow (intranet or extranet used) and transformation of the HR function (redirect HR function towards a strategic one). E-HR is characterized in field of HRM as having numerous innovations in Technology and it provides wider potential in term of usages including employee self service, information sharing, functions administration and production of reports.

e-HR make use of technology to create a real-time, information-based Self-service, interactive work environment. With e-HR, managers can access relevant information and data, conduct analyses, decision making and communicate with others and employees are able to control their own personal information like update their records when it changes and make any decision on their own without consulting with any professionals help.

e-HR will effect both efficiency and effectiveness of Human resources function in such a way that the efficiency of the human resource process can be effected by reducing cycle time for paperwork, improvements is data accuracy and reducing manpower requirement. In similar way the effectiveness of human resource process will be effected by improving the capabilities of both employees and managers to make a better and accurate decisions.… Read the rest