Strategic management

DIGITAL ANSWER SCRIPT

2019

INDEX

1. Introduction --------- P 1
2. Porters five force analysis --------- P 1 - 3
3. Value Chain, VRIN, and BCG Matrix --------- P 3 - 6
4. Strategic Map to assess the market position of the competitors --------- P 6 - 8
5. Preparing a strategy canvas and identifying the Blue Ocean --------- P 8 - 11
6. Core and distinctive competencies of BIMPOS UAE --------- P 11 - 12
7. Organizational culture  --------- P 12 - 13
8. Two feasible Internationalization strategies  --------- P 13 - 14
9. Business strategy to be adopted for the new product – Hybrid strategy  --------- P 14
10. Sources   --------- P 15

Introduction

For this assignment, I will choose the POS software for restaurants. I had the chance to work in this industry for almost 2 years in UAE, which gave me a great insight about the UAE market.

This business is flourishing in Dubai and other emirates. The demand is extremely high and the competition is fierce, which can be a rich source of material for this assignment. I will focus on the well-known regional and international brands. The POS software is usually associated with the hardware devices. In this assignment, I will only discuss the software part. The company I’m choosing for this assignment is BIMPOS UAE, selling a well reputed POS system in the Middle East called BIMPOS, and happens to be my brother’s. BIMPOS is well known in Lebanon, and newly introduced to UAE. Major competitors are: Micros, Squirrel, eZee BurrP, Pixelpoint, Omega POS, Cubes, G5, Epos.

1. Porters five force analysis

Michael Porter, Professor of strategy at Harvard, suggests a model for conducting an analysis of the competitive forces at play in a market. The target of the model is to evaluate the forces involved. A tool that is part of the classics taught in business schools.

Description of competitive forces:[pic 2]

1. Internal rivalry

Internal rivalry depends on a number of factors characterizing the market studied such as:

• The number of players involved and their size: the more numerous they are, the higher the competition. Similarly, large firms exert a strong domination. The POS solutions industry in UAE is mainly dominated by 7 – 8 big names, with some other medium size companies trying to make it to the top.
• Predominant fixed costs: To survive, these companies will engage in violent price wars. That’s why no one can have a fixed price when it comes to POS solutions. Every company is tailoring its prices to meet the customers’ requirements, who are in majority price oriented, especially following the recession of 2016.
• Low differentiated offers: another factor causing intense rivalries on prices. Features are almost the same everywhere. Customers are more focused on price.
• Market growth: it’s a known fact that the UAE market is expanding on a daily basis, which creates many opportunities and space for competition between the existing companies and the new comers.

1. Threat of new entrants

Since it’s an attractive market with high demand on POS solutions, new entrants became a daily threats to big names. Depending on their size, service, technology and the features they offer, every one of these entrants is able to take a portion of the market, proportionally to his volume and capital.

1. Buyers bargaining power

Since the demand is elevated, it’s completely normal to have a high offer, which gives the buyer a variety of choices, thus a bigger bargaining power. Buyers can bargain prices, features, service, maintenance contracts conditions, and even special features. Once purchased, the buyer can easily switch to another system if the after sales service does not meet his requirements, obliging the seller to be as close to perfection as possible. Switching from a system to another is very easy. Some companies might go as far as switching the system for free if the client is considered a key account, and is an added value to its portfolio (Ex. Big restaurants names and chains are considered important for the POS supplier’s portfolio).

1. Suppliers bargaining power

Most of the POS companies in UAE are resellers / franchisees / branches, with HQs / franchisers (supplier) based in other parts of the world (US & Canada, Europe, Lebanon, etc.). It’s not in the advantage of the supplier in this case to make it difficult for the reseller to sell. On the contrary, he will have to offer every support possible to help the reseller.

However, the latter will have to abide by the suppliers rules, especially that the cost of making versus buying is extremely high, not to forget that developing a POS software is risky and time consuming. A supplier who owns the uniqueness of a source of supply has a strong power of domination over its customers, or in this case, resellers.

1. Threat of substitutes

With a rapidly evolving market such as UAE’s, substitutes are always ready, anytime, anywhere. Suppliers are competing over who provides the best features, service, technical support, and so on. As mentioned earlier, switching from one system to another is easy, as prices are flexible and offers are flooding the market.

1. Value Chain, VRIN, and BCG Matrix

Value chain

This tool focuses on a fundamental question of a company's performance: how is value created within the organization?

The exploitation of this data highlights cost behavior and sources of differentiation. This type of analysis is the basis of a successful strategy. It directs the allocation of resources to develop competitive advantages and impose itself on its markets.

...