What is Strategy: Pandora Case Study
Differences in Business Models
Pandora radio station, Verizon, and AT&T adopt different strategies. Pandora radio station uses a music genome project to market itself to consumers (Ringnes). By so doing, it has to establish a competitive edge in a market that has competitors such as Microsoft and Spotify. Pandora radio station deployed the combined-method strategy. It has millions of free users but faces the challenge of converting them into subscribers. A monthly fee by subscribers constitutes an important revenue stream for the company. A large portion of Pandora radio station’s income comes from advertisements and hence its combined-method strategy.
While Pandora radio station focuses on Internet radio services, Verizon emphasizes high-definition TV services. Verizon’s model, which is based on monthly subscriptions, pursues the strategy of commercial-free entertainment and monthly fees by consumers. AT&T bases its business model on IP-based communication services. It has an extensive broadband network, which allows it to have international coverage and a major wireless carrier in the U.S. Its main strategy is focused on three-screen integration. In other words, it delivers services to three main screens, namely, personal computers, TV, and mobile devices. It pursues the strategy of monthly fees by consumers.
Meaning of the Differences
Differences in business strategies for Verizon, AT&T, and Pandora radio stations imply companies’ need for defining their target customers and looking for the best methods of securing a market share. The differences denote the respective companies’ attempts to differentiate their items from those offered by other businesses. Here, customers can have varying utilities to consider when making loyalty decisions.
How the Differences Enhance Competitive Advantage
The above differences are important in the attempt to develop a company’s competitive advantage since they create partnership avenues. Here, a partnering company such as Pandora can take advantage of synergies possessed by each business. According to Thompson et al., a company can only build a competitive advantage based on unique resources and capabilities that underline the necessity for an exclusive business model (4). In other words, for the Pandora radio station, the above differences establish strategic points that act as growth opportunities for the company.
The Company Likely to Gain more Competitive Advantage and Sustainability
The degree of success in terms of establishing a sustainable competitive advantage between the three companies depends on their ability to maintain consistency in the strategies and utilities they deliver to customers (Thompson et al. 14).
A combined-method strategy provides more avenues in which consumers’ needs are met while increasing revenue streams. Pandora radio station is more likely to have a sustainable competitive advantage when it taps into the strengths of Verizon and AT&T after partnering with them. For example, AT&T has a competitive pricing strategy. Therefore, a partnership between Pandora radio station and AT&T allows Pandora to offer services at much lower costs, hence increasing its subscription levels. A partnership with Verizon also paves the way for Pandora’s services to be accessed through the former company’s home entertainment systems.
Mission, Vision, Objectives, and Strategy
The Value of Mission and Vision Statement to a Manager of an Organization and Stockholders
The vision and mission statements of an organization reflect its business excellence strategies. A vision statement bears information acknowledging that the strategy may not be achievable without the efficient use of critical resources such as people and technology. The mission statement captures activities to be accomplished to realize an organization’s strategy and, consequently, its vision. Hence, the two statements are valuable to managers since they set the desired outcomes. They guide organizational managers in leading towards attaining a future desired outcome. Stockholders learn about the purpose of an organization from its mission and vision statements.
The Difference Between Mission and Vision Statements
A mission statement describes what an organization currently does. Therefore, it spells out current short-term goals and objectives. A mission statement influences an organization’s vision because it points out what the strategy deployed should do to help a company achieve success, including the mechanisms for achieving the desired position. The vision statement contains information outlining a company’s desired future objectives and goals. On the other hand, a vision statement contains a vivid description that paints a picture of the mid-term or long-term goals of an organization. However, both statements are meant to inspire and energize all stakeholders, including employees, shareholders, and management.
Judging if a Statement is Good or not
A good mission or vision statement should be functional and consumer-centered. It should also focus on values and issues such as technology, employees, and a company’s strategic positioning in line with its financial objectives. Anatomy of a good mission or vision statement reveals that an organization uses its business performance strategies and people in securing increased value for its operations in its industry of operation. Mission and vision statements should be concise, comprehensible, and conceptual.
Examples of Strong and Weak Vision and Mission Statements
An example of a very strong mission statement for Company X is, “We are a performance-focused institution utilizing the novelty and the involvement of employees and stakeholders in fulfilling present and future electricity demands.” This mission is strong because it not only indicates the anticipated future position of Company X but also reveals how to arrive at such an anticipated end through the effective deployment of its business excellence strategies.
Company X’s strong vision reads, “Endeavoring to act as the source that supplies electricity to our country to facilitate the continued economic growth and sustainability of its powered industries and human resources.” This vision reflects the strategy of using energy resources as the mechanism for attaining a country’s economic prosperity. It has all the essential elements of good vision as discussed above.
A weak mission statement for Company Y may read, “We endeavor to be a global brand that focuses on children.” Compared to the one above, this mission is not clear on what the brand entails and/or the strategies it seeks to adapt to attain the anticipated global standing. A weak vision statement may read, “To be a top-notch brand in the sector.” Compared to the previous one, this vision statement leaves many interested partners dissatisfied because it not only fails to clarify the company’s anticipated outlook but also does not appreciate the role of its human resources and clients in facilitating the attainment of its future standing.
Evaluating a Company’s External Environment
Problems in Applying the 5-Force Model in the UAE’s Airline Industry
Porter’s 5-Force Model can help to identify the industry’s intrinsic and extrinsic factors. For instance, the UAE’s airline sector has low threats of new entrants due to patents and rights. Consequently, the national carrier, Emirates Airlines, enjoys many state benefits, including funding and protection (Stuhlfaut and Yoo 84). Government interventions, for instance, the provision of discounted fuel and the removal of levies drive the victory of Emirates airline (“Emirates’ Response” 1).
The power of buyers is weak. Boeing and Airbus are the main suppliers that compete intensively with little probability of vertical integration. Substitutes to air travel are also low because of issues such as the distance traveled and the fact that air travel services are regarded as symbols of development in the UAE. The competitive rival situation favors Emirates Airlines (Wafik et al. 3). Here, some airline operators can incur huge losses if they do not manage their operational costs effectively.
Indeed, applying the 5-Force Model in the UAE’s airline industry introduces problems. The model seeks to establish a competitive structure for an organization. However, Emirates Airlines embraces protectionism, which hinders the free functioning of the sector’s operational dynamics (“Emirates’ Response” 70). For example, while prices form an important factor that helps to shape competition amid charging customers premium prices compared to the cheaper Fly Dubai, Emirates airline’s protectionism ensures that the company remains dominant in the UAE, contrary to what the 5-Force Model would reveal.
Also, since prices vary based on the prevailing operational environment, deploying the 5-Force Model may give different results based on the time it was applied for analysis. In other words, Emirates Airlines’ strategic advantage and protectionism make its competitive structure difficult to analyze using the 5-Force approach alone.
The PESTEL Approach
At domestic and national levels, protectionism allows Emirates Airlines to face fewer political challenges compared to its competitors. For instance, it can establish policies that homogeneously comply with the established legal business guidelines. In the international arena, nations may have different policies, rules, and regulations. However, since protectionism does not apply in the international market, all airlines compete equally, with service quality and pricing being key factors that determine their competitiveness.
Currently, different airlines in the UAE have operational routes that include Arabic nations, which face political and, consequently, economic instabilities, for instance, Yemen. This situation has led to the scheduling of flights. An intensive analysis of the economic and security atmosphere of all destinations is required to guarantee profitability and the safety of planes and people onboard. This situation sometimes leads to delayed flights. Hence, operating in a region with political instabilities may increase the cost of doing business.
Social factors shape market trends for the UAE’s airline industry. Such factors influence the target market’s buying options. In the airline industry, the Internet and mobile phone applications have been instrumental in enhancing customers’ purchasing processes. Hence, the UAE’s airline industry has an opportunity to deploy mobile and Internet-enabled applications to portray air travel as a social activity that does not involve tiresome and bureaucratic processes when making booking arrangements.
In the airline industry, technology is an important factor that functions as a service delivery enabler and solution to other challenges that lead to high operational costs. Virtually all UAE-based airlines deploy the Internet to accomplish tasks such as booking and checking services. The fluctuation of oil prices is a major challenge, which leads to alterations in variable costs. Technology provides an important platform for addressing this challenge. For example, the UAE’s airline players can paint their planes with a nano-technology polymer coating to reduce frictional drag. This strategy cuts the amount of fuel consumed. Technology entails a factor that equally influences the operations of all UAE-based airlines.
In terms of environmental factors, the operational financial setting of the UAE’s airline industry is characterized by rapidly fluctuating prices. For instance, the increasing cost of fuel introduces barriers to the profit margins in which airlines can reinvest to attain growth and CSR agendas. Although the UAE has a relatively stable economy, the playground is not leveled since Emirates Airlines is highly funded by the government. Nevertheless, economic instabilities in some of the carrier’s destinations pose environmental challenges to all UAE-based airlines.
All players in the UAE’s airline industry need to comply with the prevailing regulations, tariffs, and employment laws. In the airline industry, the business of an organization faces different legal factors. These diverse and sometimes inconsistent forces shape how the UAE’s airline industry players execute business activities.
Hence, the problems associated with the application of the 5-Force Model are eliminated upon using the PESTEL framework. An airline organization in the UAE can only establish a competitive advantage based on how its strategies respond to political, environmental, social, technological, and legal factors that influence its operations.
Evaluating a Company’s Resource Capabilities and Competitiveness
Resources and Capabilities
According to Stuhlfaut and Yoo, the degree of any organization’s success depends on its effectiveness in strategic decision-making, specifically it’s capacity to tap resources and/or align them with its mission and vision (82). The resource base theory holds that when a company has resources that are valuable, rare, and not substituted, it stands a better chance of realizing and sustaining its competitive advantages in any given market.
Competing with other students as an MBA student may be visualized as a firm operating in a competitive marketplace. Therefore, my capabilities entail inner resources that act as sources of my competitive edge, which is linked to my superior performance. Indeed, my knowledge, expertise, experience, and background in research skills are critical resources that drive my sustainable competitive advantage.
Resources owned and controlled by a firm are necessary competitive assets. While a company may have a resource such as a fleet tanker, I possess unlimited access to a variety of books and personal computers. Also, I have unrestrained access to various online academic websites. Such websites contain current research articles, periodicals, and books that are highly applicable to my area of specialization. My strong background knowledge in research methods and expertise in the use of computer applications ensures that I always have a competitive advantage in terms of access and possession of updated information pertinent to my area of specialization.
Analyzing My Resources and Capabilities Using the VRIN View
Birger Wernerfelt developed the resource-based framework, namely, VRIN (Stuhlfaut and Yoo 83). The value, rareness, imitability, and non-substitutability (VRIN) approach helps in identifying the characteristics of an organization’s resources and capabilities. Accessibility to updated books and online academic sites entails resources that bring value to the market (classroom). However, these resources are not rare. They are accessible to my competitors (other students) who can pay for subscriptions and have unlimited access to them.
Bearing in mind that no two people can have the same expertise and knowledge levels depending on one’s unique capabilities to comprehend and criticize information, my strong background and expertise in research entail capabilities with low imitability. Also, the inability of other students to have the same level of mastery and critique of information implies that this element is non-substitutable. Thus, apart from being a capability, it also entails an ideal intangible resource that enables me to have a sustainable competitive advantage.
Works Cited
“Emirates’ Response to Claims Raised about State-Owned Airlines in Qatar and the United Arab Emirates.” Emirates. 2015. Web.
Ringnes, Isabelle. “Pandora Media Case Study.” Pandora, 2013. Web.
Stuhlfaut, Mark, and Yun Yoo. “Tool for Evaluating Advertising Concepts: Desirable Characteristics as Viewed by Creative Practitioners.” Journal of Marketing Communications, vol. 19, no. 2, 2013, pp. 81-97.
Thompson, Arthur, et al. Crafting and Executing Strategy: The Quest for Competitive Advantage. Concepts and Cases. 21st ed., McGraw-Hill, 2018.
Wafik, Ghada, et al. “Airline Passenger Travel Cycle, Satisfaction and Loyalty: A Comparison of EgyptAir and Emirates Airline.” International Journal of Hospitality & Tourism Systems, vol. 10, no. 1, 2017, pp. 1-12.