A strategic group
A strategic group is a concept that describes companies that operate in the same industry with the same business model and specialization of business strategies. Typical examples are companies that operate in the automobile industry. The first group is characterized by “broad product lines, heavy advertising, medium integration, extensive distribution, mass-market appeal, and widely available service” (Bakker 2010, p.2). The second group is characterized by “extremely narrow product lines, minimal or no advertising, high integration, selective distribution, and service, as well as superior performance” (Bakker 2010, p.4). Some groups are more profitable than others operating in the same industry. According to Grant (2010), the key elements that define strategic groups include mobility barriers.
Companies in the strategic groups
The two automobile firms that were selected that belong to the two strategic groups include Mazda and Nissan companies. Mazda manufactures different models of vehicles such as the Fiesta, Mazda eco-Sport, and Mazda Endeavour.
The company is ranked fourth in the list of the strategic group of companies, which manufacture different models of vehicles for different purposes. The CEO is the most senior executive in Mazda’s organizational structure followed by middle-level executives and lower-level employees (Grant 2010). On the other hand, Nissan manufactures automobiles in Japan and sells them worldwide. The company is the third in automotive sales in the world.
Both Mazda and Nissan fall under different resource groups. The difference between Mazda and Nissan’s strategic groups is that Nissan manufactures large cars, pickups, and luxury cars while Mazda manufactures vehicles that are customized for specific markets. According to Bakker (2010), Nissan’s strategy is to manufacture smaller and more fuel-efficient engines by investing over 550 million dollars in its manufacturing plants by introducing hybrid cars using technology from Japan. On the other hand, Nissan is the first company to invest in hybrid technology that is used in 73% of the vehicles in the USA offers widely available services compared with Mazda.
Resources and capabilities
The differences in the resource groups of the two companies are that Mazda focuses on one team and lean manufacturing and one plan for aggressively developing new markets and products. The company emphasizes the use of resources to manufacture universal models. However, the company does not have the strength to alter work practices and compensation for employees. On the other hand, Nissan encourages employees to work for the company whilst building a career path, and the employees are always protected by very strong trade unions in Japan.
Driving competitive advantage
Different companies drive competitive advantage in different ways. For instance, employee empowerment in Nissan plays a significant role in developing their skills, knowledge, commitment, and participation at work to position the company on a competitive edge compared with the rival firms. The Japanese work longer hours and undergo better training compared to their counterparts who work for the Mazda company.
Both firms have modern equipment for the production of vehicles, which is a core competency in both cases. Despite that, Nissan has a better competitive advantage compared with Mazda because the company manufactures hybrid cars and enjoys a bigger market share for its luxury cars in the USA. Mazda has limited employee empowerment and development programs, a strategy that does not provide opportunities for employee development and competitive advantage.
How resources lead to core competencies
Mazda and Nissan have employed well-trained, skilled, and experienced people to work on strategic, tactical, and operational levels. The empirical evidence presented by John (2006) shows that Nissan leases to Mazda some of its physical resources, which makes the manufacturing of vehicles more expensive for Mazda. John (2006) has established that Nissan has enough physical, human, technological, and financial resources for sustainability that places the company at a competitive advantage compared to Mazda.
According to John (2006), Nissan’s competitive advantage has resulted in the company protecting itself from the initiation, transfer, and substitution of resources. On the other hand, Mazda leverages the innovation of new models that takes the customer’s experience to better experience in low fuel consumption and aesthetical features than Nissan.
References
Bakker, S 2010, The car industry and the blow-out of the hydrogen hype. Energy Policy, vol. 11, no. 38, pp. 6540-6544.
Grant, R M 2010, Contemporary strategy analysis and cases: text and cases. John Wiley & Sons, New York.
John, S 2006, Leadership and strategic change in outsourcing core competencies: lessons from the pharmaceutical industry. Human Systems Management, vol. 2, no. 25, pp. 35-143.
Kumar, S & Eickhoff, J H 2005, Outsourcing: When and how should it be done?. Information-Knowledge-Systems Management, vol. 4, no. 5, pp. 245-259.