RoundUp of AUS MBA Student Blogs
Self-Selected Stories
Dubai Ports World
Ola , the Late Night Blogger, places importance on DPW's core strategy:
The one thing I did find interesting though is that DP World is still looking at expanding further, thus indicating an aggressive core strategy of providing large scale shipping services coupled with rapid expansion, i.e. growing their most important strategic asset – ports. Nevertheless, they do not intend, at least in the eyes of the media to become a monopolistic port operator, as mentioned by Bin Sulayem: “We respect PSA and are aware of the competition… I think it is healthy for the industry”.
Rana saw plenty of upside in the initial announcement of the deal:
The beauty of this deal is that there was very limited overlap between DPW and P&O. With the CSX acquisition last year and this current acquisition, this will create much value to DPW as well as customers. DPW can now service customers with an end-to-end solution from Asia to the Middle East to Europe to the US. There is a strategic fit between the two and DPW is now truly global. It will be difficult to overtake DPW as No 3 as another major acquisition would have to take place and this would be difficult without triggering regulatory hurdles as well as port overlaps.
Was it a right decision for DP World to buy P&O? Nobody know the right answer yet, but lets look at it from David Porter’s 5 forces framework – barriers to entry which might give us some insight in what could be the right answer:Economies of scale: DP World/ P&O can benefit from the economies of scale since it will have a wide network around the world, which will give them the ability to reduce their prices and making high profits at the same time. This will allow the major ports operators such as DP World to increases the barriers to entry at selective ports that has potentials in the future by reducing their prices.
Product differentiation: DP World established its name and reputation around the world by operating in several ports around the world successfully and currently by buying P&O DP World will by the second largest operator in the world.
Capital Requirements: DP World is government owned by a wealthy Emirate, DP World was successful in offering the world’s largest Sukuk issue to provide USD 6.8 billion to purchase P&O. the new acquisition will increase DP assets and its capacity.
Government policy: DP World and P&O are operating in foreign countries and dealing with foreign governments. All international ports operators are facing the risk of changing government policies against the foreign interests. But governments noticed the benefits of relying on large port operators in terms of efficiency and reliability. DP World received the approval from the US government to buy P&O which operates 6 ports in USA, national security and interest can work against the international operators at any point in time.
Airline Industry
Mohammed al-Thani concludes that Air Arabia's "low cost" model is a source of competitive advantage:
This model was planted in the corporate culture since day one, the CEO Adel Ali was very clear in his views. The low cost model is applied from front-line employees up to top management, the CEO uses both faces of paper instead of just one side. This made the employees aware to be a truly a low-cost carrier we have to start to save in every possible way. Air Arabia's head office is known for having chairs for employees only, so you'll always find chairs moving across the isle. This again passes the low-cost culture to all employees, that helps them always remember to save.
Alia asks an important question: "So, how could a small carrier like Emirates Airlines hit its target while giants like BA are loosing cash ?" Here's part of her answer:
Using Jay Barney’s VRIO Frame work, we can better understand the competitive advantage of Emirates Airlines and the reasons behind its success:Value: Emirates Airlines has valuable human resources and a well experienced staff. The vice-chairman of the airline has more than 50 years of experience in the aviation industry. The airline provides excellent training to its staff and is keen on improving their skills regardless of the costs. In addition, Emirates Airlines is the international carrier of Dubai which is a politically stable area and has a strategic location especially for transit passengers. Human capital and the location of the airport play an important role in helping the airline exploit opportunities and avoid threats.
Rareness: I would consider the strategic location of Dubai a rare resource that provides the airline with an excellent demand for its services. Human capital is a rare resource too. For example, Sheikh Ahmed is a valuable and a rare resource and his image has a great contribution to the airline’s success.
Khulood's blogNothing is Crystal Clear, contains an application of Hamel's Business Concept Innovation framework to SouthWest Airlines.
Southwest airlines is known to be a creator for the new business concept of traveling economically. The company made it possible for customers to fly with affordable prices that are lower than prices offered by other airlines carriers. While applying the business model to Southwest, we can relate to a number of components from the model.
Here's her analysis of the Core Strategy, i.e. how the company wishes to compete:
1)Southwest’s business mission, as implied from the article, is to be the price leader in the airlines industry. They are able to achieve this mission through their pricing strategy that even forces other competing companies to follow.2)Product/Market Scope: This describes which customers is the company trying to capture. The article explains that Southwest is targeting price-sensitive customers, and customers that travel to areas that are reached already through a number of other carriers.
3)Basis of differentiation: This factor definitely applies to Southwest. This company was able to differentiate itself from the other companies by creating a pricing structure that is hard to imitate by other airlines. It was able to be and remain the pricing leader in the industry.
Miscellaneous
Wassim S. analyzed Showtime's "new move", ShowBox, "a new receiver that has a built in hard disk that is capable of letting you watch two channels and record the third at the same time." Here's his conclusion:
So, congratulations for Showtime to bring out to their customers the huge innovation in TV industry, they may win some competitive advantage, but they need to work faster, it is only the beginning and winning the lead is tough, but staying there is tougher, which our Showtime guys failed in doing.
Lynn examines Nokia's entrance into the VoIP market. She doesn't see much basis for the firm gaining competitive advantage:
VoIP has been around since mid-1990s with personal computer to personal computer phone calls (Belanger, Slyke) to internet phones (PC to regular phones). Nokia’s VoIP enabled handsets seem to be a new way of differentiating its existing business concept by adding the usage of internet to its standard mobile phone network. Though already beaten by BT with its [VoIP] mobile phone version – BT Fusion, Nokia is still among the first movers into this market. But does this concept provide potential for wealth? Some analysts believe that users are unconvinced by the latest 3G phone services (VoIP handsets included) since these services are complicated and require extra payment from users. If what analysts think is true, then Nokia’s VoIP handsets though valuable and rare for the time being might not allow the company to benefit from the competitive advantage it tries to build with its business concept.
Sahli thinks Microsoft is sending Research in Motion (RIM) a message. And it's not the kind you send via a Blackberry:
Research In Motion, the producer of the popular Blackberry devices and the market leaders in mobile e-mail services are being challenged by Microsoft’s announcements of four upcoming devices to be shipped with its new "push" e-mail function built in. Applying Barney’s VRIO framework on RIM to analyze the strengths and weaknesses of RIM based on it’s resources and capabilities, we have to first answer the question of value. Was their push email services valuable and is it still so? To my understanding of the question of value, I would argue that is was indeed and still is. They were the market leaders as the article indicates which proves that they saw an opportunity and took full advantage of it.
Talal, also known as "StratMan", applies the VRIO framework at the "Emirate-level", comparing how Dubai and Sharjah gain value from their solutions to the region's increasing traffic problem.
According to Barney, Value is the ability to face environmental threats and opportunities. Traffic became more and more with the increasing amount of people entering Dubai. This will strategically added value to Dubai Emirate compared to other Emirates because people will be more satisfied with transportation in the city, were as other nearby emirates might have difficulties developing and solving traffic problems. It ends up by giving Dubai a competitive advantage over others. However, one problem facing Dubai to stand under the umbrella of Barney’s VRIO framework is rareness. Sharjah as well started solving its traffic problems by building new bridges and expanding roads and that is mainly because people started thinking and seriously searching to live in Dubai since the majority of people work in it, which of course will end up in an economic tragedy. However, the speed, quality of work done and the enthusiasm is definitely the best in Dubai amongst all other cites in UAE which in my point of view will sustain Dubai of having a competitive advantage over other emirates.
Qais examines the curious situation of a winery named MetroKane and wine called "Rabbit". Here's his summary:
The article demonstrated to me that understanding how a company’s resources and capabilities can act as strengths can lead to a better realization of what needs to be done in order to gain and/or maintain competitive advantage. Although I’m not sure if Metrokane can consider itself having achieved sustainable competitive advantage, I believe that widespread adoption of its Rabbit product has added a certain degree of competitive advantage that would be costly to imitate due to a patent on the product’s design. The numbers are surely impressive, as Metrokane’s annual sales increased more than three-fold in the year following the introduction of the Rabbit. Profits soared even more and have quadrupled in the same time frame. It seems that money at Metrokane is multiplying, dare I say, just like rabbits.
The topic of Ahmed K's blog is "Buying & Selling Shares via Internet in The Saudi Stock Market". He tell us:
The stock market in Saudi Arabia has become the talk of town. People are talking about someone who made SR. 13 Million in only 6 months another are taking about someone who even made 20 million in 3 months only. The fact says that the Saudi Stock index was 8600 points one year ago and it is 19,800 now. What might be the reasons behind such increase?
Here's part of his answer:
If we examined The Saudi market we will find that there is almost no entrant’s barrier for any company to go for an IPO. All what a company has to have is a capital that is more than 200 Million and a record of more than three years of net income.
Selfishness Has its Value to the Economy
Tariq analyzed this article through the Business Concept Innovation perspective:
Thus from Hamel’s Business Concept Innovation (BCI) model, we can state that Wal-Mart’s core strategy is to provide large retail outlets selling consumer products at low prices (which also relates to their pricing structure), yet its “relationship dynamics” component is a combined love-hate relationship, since Wal-Mart relates to its customers thanks to its aggressive pricing strategy but its customers disassociate themselves from it because of its poor employment practices, hence exhibiting unique relationship qualities.
Mohanad N. read the same article and linked success in today's retailing environment to Porter's Five Force's:
In addition, Globalization decreased the barriers to entry in the trading business, where businessmen from all-over the world can export and import almost anything from anywhere to any place they want. As a result, competition become very intense, and finding new markets, differentiating customers to different segments, understanding each segment needs and wants, match the company strength with satisfying those needs and wants, and come up with different products and services is now the main concern for companies all over the world.
Maryam sees 'value" in the way top MBA programs in the US are helping their students prepare for their futures:
In an increasingly global competitive environment, it is extremely important to train high potential M.B.A students with the capability of using new knowledge to be leaders in business development activities worldwide. Indeed, in their future, they will serve in key managerial position across the organizations, but at the same time they will be required to deeply understand the societal problems from different perspectives. In order to get these ambitious results, many Business schools conduct “valuable” strategies to be top-tier ones in the today competitive work environment, such as, Fuqua University, Babson College, Depaul University and Wake Forest University sine they enable students to respond to environmental threats or opportunities. So, at the end of the two-year trip, students know what they will be able to obtain a job in their chosen field.
Wasim examined the question of the potential value that seniors can bring to a firm. For him it is not a simple yes or no.
Other disadvantages that seniors could face are the ability to understand and apply the new technology changes, technical changes, new world economy approaches, new management theories and applications and others. The question of value of the Senior to the firm depends on the relationship between him and the nature of the firm's work.We should always ask ourselves: "why such a man or women in this age is still willing to go to work while he should be thinking about how to enjoy and spend the rest of his or her life?" It is a very critical question which you won't easily find two similar answers to.