Organisational Strategy refers to all those action plans and effective steps that are performed by companies of various sectors to achieve their long-term goals in an appropriate manner (Ackermann and Eden, 2010). It is essential for companies to keep revitalizing their strategies to ensure a long-term run in the business. The following report is based on Bridgestone Corporation, which is a Japanese manufacturers of truck and auto parts, specifically tyres. The report is based on its current strategic position in the market. It includes its macro-environment factors, industrial position, internal resources and capabilities and its stakeholder perspective.
These factors are pointers in the external environment of a business organisation which influences the company's working and its operations. These factors have major impacts on the business practices and specifically affects its macro-environment (Kimball, 2018). These factors for Bridgestone are explained below:
- Political:These factors include political position of a country and the way it is supportive towards the company. For Bridgestone, this factor has been an advantage where political stability is concerned. The firm receives stable policies and regulations in majority of its operating zones like China, Asia Pacific, Japan, etc. Such stability is an opportunity for the country. However, the company is subjected to high tariffs on steel in the US which affects the sales of its tyres adversely.
- Economical:The overall economic performance of a nation, i.e., interest rates, economic growth, currency fluctuation affects the infrastructure and operations of an organisation. Quite recently, the Wilson Country branch of Bridgestone is promised a grant of approximately $30 million by the state of North Carolina to keep jobs of 2,000 people. This would be an opportunity the organisation to invest approximately $266 million to improve this plant effectively (Wilson Bridgestone tire plant could get $30M to keep 2,000 jobs, 2019). On the other end, Brexit had a negative impact on the companies import and sales due to fluctuations in Pound.
- Social:These factors are concerned with the cultural aspects, trends and all the social factors that are necessary for a firm to adopt in order to ensure consistent demands of their tyres. The world is witnessing a substantial shift in global demographics. The number of middle class people is increasing and this number is likely to reach up to 25 percent of the total world population by 2030 (Bridgestone: 6 'agents of change' affect tire design, 2019). This is a major opportunity for the organisation as more people would be able to afford vehicles in the future. The future, however, holds another threat for the company as the number of millennials are also growing. These people use non-driving transportation forms and tend to drive less than the current generations. This is affecting the current demand of Bridgestone tyres and is likely to remain constant in the future.
- Technological:One of the major factors that could influence a company to adopt ways in which it could gain a competitive edge in the market. These factors could also help a firm fulfil the technological demands of customers effectively. The rise of AI and automation could be major opportunities for Bridgestone as the organisation could adopt these methods to produce their tyres as well as to test their efficiency. The company is also planning to adopt fuel-efficiency technologies like “Ologic”, which would substantially increase its demand.
- Legal:This factor includes the policies and regulations that are imperative for the company to comply with to ensure long term legal support in all of its operating zones. In major countries where the company operates, like Japan, America and China, there is a very keen emphasis given on the health and safety laws. This could be an opportunity for Bridgestone as the firm produces tyres which provide stability and safety to vehicles in any situation as well as any terrains. However, various entities like National Highway Traffic Safety Administration (NHTSA) have various regulations regarding emissions and fuel economy standards that are causing heavy burden on the organisation to comply.
- Environmental:With rise in environmental concerns, there are various factors associated with it that have a direct impact on the company's tyre manufacturing. Bridgestone, in order to comply with the environmental standards, is using soy bean oil to make their tyres sustainable. It is also working towards making them light weighted in order to enhance their performance under any environmental condition. One of the major threats faced by the company is the waste that is produced to manufacture tyres . It is because the governments like that of the UK are emphasising on waste reduction of scrap tyres (Ruj and Ghosh, 2014).
After determining the external pointers, it is imperative that a firm determines its industrial position to effectively identify strategies that are necessary for the company to ensure its long-term sustainability in the market (E. Dobbs, 2014). For this purpose, the most appropriate approach would be to apply Porter's Five Force analysis which is discussed below:
- Buyers' Power:The buyers of the organisation are mostly auto-mobile companies like Toyota, Land Rover, Chevrolet and so forth. Automobile industry is connected globally and hence, the company supplies its tyres worldwide. There are many firms that act as a customer of the firm. From standard quality tyres to Formula 1, Bridgestone is trusted and preferred over very prominent companies. Such unique product quality reduces the bargaining power of customers. Moreover, with availability of less substitutes in the market, the firm holds the pricing of its tyres. Thus, the bargaining power of buyers is low in case of Bridgestone.
- Suppliers' Power:Automobile industry have various small as well as large scale suppliers on a global level. Bridgestone too has certain prominent suppliers of rubber, alloys and effective technology required to build tyres. The power of the pricing lies with the company as it could effectively switch suppliers without incurring much cost which could be threatening for suppliers' profit margin. Thus, the bargaining power of suppliers is low for Bridgestone.
- Threat of Substitutes:These are the products that could be effectively be used in place of the existing offerings (Misangyi and Acharya, 2014). For Bridgestone, this threat is negligible as the technology that could replace tyres in the automobile industry is still in the process of development. There could be modifications and innovations associated with the tyres, but currently there are no substitute products for the same which could completely replace the its existence in the automobile industry. As for the company, it faces no threat regarding any substitute in the market.
- Threat of New Entrants:Bridgestone is an established company and one of the market leaders in the tyre industry. However, automobile industry is one of the most profitable industries in the world which could attract various investors from all over the world to support companies having strong business plan and use of innovative technology. This increases the threat of new entrants for Bridgestone.
- Existing Competition:Bridgestone is one of the biggest and the most successful tyre companies of the world. However, there are few companies like Michelin and Good Year in the automobile industry that somehow give a tough fight to the firm. This threat is high as these companies aim at giving enhanced services to the customers effectively. Following is the graph which positions these companies on the basis of tire-related sales.
Illustration 1: Revenues of Tyre-manufacturing companies (in billion U.S. dollars)
(Source: The world's largest tire manufacturers in 2017, based on tire-related sales (in billion U.S. Dollars), 2019
As per the graph, few companies, especially Michelin is effectively catching up to the sales of Bridgestones. This reflects that the threat of existing competition for this company is relatively high.
Internal Resources and Capabilities
With the generic purpose to identify the internal resources and capabilities, VRIO model is the basic strategic process that any business entity goes through begins with a vision statement and continues onto the defined objectives, internal & external analysis, strategic choices along with the strategic implementation. VRIO is an acronym for four-question framework which includes Value, Rarity, Imitability and Organised. This model is perfect for evaluation of the company's existing and future resources and competitive advantage along with complete potential identification (Knott, 2015). In context with Bridgestone, there are various resources that will be evaluated under this analysis like low-aromatic oil, hard rubber, manpower, data-based human capital management, materials, labour, machinery and facilities. The strategic analysis of its internal capabilities and resources is as follows:
Value: It basically tells how expensive is the resource and what is the accessibility of the given resources. If such resources are not easily available, it means that they need to be out-sourced from other entity. For Bridgestone, there valuable resources are environmental friendly material which are very expensive such as low-aromatic oil and hard rubber. Competitors such as Michelin, Good Year, etc., are struggling hard to get it. Thus, these resources could easily be segregated under this category. This is because Bridgestone could have unique competitive advantage and brand image in the market which is because the firm has access to these valuable resources.
Rarity: It says how rare or limited the resources are. This means that if resources are valuable, but not rare, then in that case, company is in the competition conformity. If they are rare, it means that company have temporary competitive advantage. In context with Bridgestone, it is very crucial for them to acquire well-informed manpower with right skills and knowledge to produce effective products for the firm. Not every manpower is equipped with right capabilities and potential and needs effective training and development. Whereas some employees are naturally equipped. In automobile industry, these kind of individuals are quite rare to find which saves cost of training for the firm and enhance their value. Thus, such skilled manpower could be appropriately positioned in this category.
Imitate: It reflects the difficulty to imitate the resources. If the resources are valuable, rare but not expensive to imitate, it means that business entities are in temporary competitive advantage stage and also, if resources are expensive to imitate, hence, company wouldn't able to organise itself. As Bridgestone is engaged in tyre-industry, where there are large number of competitors. Hence, resources are not much expensive to imitate, in this Bridgestone have temporary competitive advantage. Imitative resources such as marketing strategies and promotional tools are common for every tyre company. On the other hand, it was noticed that data-based human capital management which company has adopted recently is considered costly and difficult to imitate. By such management, human resource and manpower regulations are effectively complied by the company which has enhanced its perfection and competitiveness in comparison to their competitors. This makes Human capital management as a non-imitative and a crucial resource for Bridgestone.
Source: VRIO Analysis, 2018)
Organized: It says how resources are supported by existing arrangement or business entity use it in proper and utilized way. In context with Bridgestone, resources such as people skills, knowledge and information are used by this tyre giant in a proper and utilized manner. Bridgestone is using these resources with old and new work regulation practices and also utilising them in an effective way. Along with skills and information, Bridgestone is also using raw-materials, facilities, machinery etc., which are well-optimized to led the production process. The positive effect is that Bridgestone do not look for limited scope for arranging the resources and raw-material may be in case of emergency. They have easy access to resources such as rubber, moulding machine etc. Thus, all these resources are organised for the firm and could effectively add to its competence in the market.
Bridgestone have all above given resources, which says that they have long-term competitive advantage in the market.
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For a company as large as Bridgestone, it is imperative that the perspective of each stakeholder be taken into account to ensure effective support that would help the firm to strengthen itself internally (Missonier and Loufrani-Fedida, 2014). There are various stakeholders whose perspectives influence the company's working which are mentioned below:
- Customers:These are the individuals or organisations that buy a company's offerings. For Bridgestone, the firm operates in a customer-oriented market. Majority of its customers are auto-mobile companies. These companies and even the end users expect the company to build effective quality tyres that could be used for multiple terrains effectively without wearing and tearing. They also expect the firm to deliver superior quality products at affordable prices that eventually keep the price of their products, i.e., cars/trucks appropriate as per the expectations of their target customers.
- Employees:These are individuals that support a firm internally and help it achieve its organisational objectives. Bridgestone had more than 1,40,000 employees in the year 2017 and this number is constantly increasing seeing its employee specific practices (Financial Data : Production Volume and No. of Employees, 2019). These employees have various expectations from the firm. They give value to communication and expect that the organisation has their best interest in achieving their objectives (Why is the Employee’s Perspective of Performance Management is important?, 2018). Moreover, their perspective towards the brand is that it complies with employment legislation and ensure its employees' safety, discrimination-free environment and personal growth.
- Shareholders:These entities have a direct connection with the operations of the firm as they are involved for their financial benefits. Their perspective towards Bridgestone is that it works to maximise their value up to what is permissible legally. In addition to this, they require the company to prioritise their economic interests above all the activities.
Thus, it is concluded that organisational strategy is quite imperative to determine the current position of the company internally as well as externally. PESTLE analysis allows the firm to analyse external environment that could affect its working and effectively could influence the firm and its operations. Porter's five forces effectively allows the company to determine its industrial attractiveness that could help the firm to develop strategies to gain a competitive edge. VRIO analysis effectively allows to judge its internal capabilities on the basis of which the firm could adopt methods to ensure better sustainability. Lastly, stakeholders' perspective is very important for the firm to effectively comply as to ensure the inner support to the firm which would enhance its effectiveness in achieving its target goals.
- Ackermann, F. and Eden, C., 2010. Business Strategy
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- Misangyi, V.F. and Acharya, A.G., 2014. Substitutes or complements? A configurational examination of corporate governance mechanisms. Academy of Management Journal. 57(6). pp.1681-1705.
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