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HI 6006 Competitive Strategy

Published : 06-Sep,2021  |  Views : 10


Explain the theory relating to Adaptation, Aggregation and Arbitrage to explain how companies from the following industries have used this theory for the pursuit of their businesses:
White Goods
Tourism / Hotel Industry
Pharmaceutical industry
Beverage industry
Agricultural industry
Meat Industry
Car industry
Airline Industry.


In the modern business environment, investors experience numerous challenges to operate their investments successfully. In fact, all industries faces business challenges as the owners pursue profits and success. For these businesses to succeed in their endeavours, they have to define their business strategies efficiently thus make their global presence unquestionable as reiterated by De Kluyver (2012). This report uses few case studies on how industries and their relevant companies use the AAA framework, SWOT analysis, and GAP analysis to maximize the opportunities as presented by globalization. The growth of a business depends on the clear definition of policies and people. Rumelt (2011) affirms that the globalization era has brought the economies and people together and closer than before. It has thus made positive impact on people’s lives worldwide (Johnson, Scholes and Whittington 2008). Apart from these positive impacts, globalization has presented a lot of challenges and complexities. This paper focuses on the pharmaceutical industry and airline industry on how they use the AAA framework, SWOT analysis, and GAP analysis to succeed.

Pharmaceuticals Industry

The pharmaceutical industry is among the rapidly growing industries in the modern world. The Pharma companies seem to have taken this rapid growth due to advanced research programs that have helped these firms to introduce new drugs into the market. The patenting and researching processes involved in the new drugs compel the companies to do it right by undertaking proper process of efficacy, safety, testing, patenting, and marketing as explained by Motohashi (2015). The companies in this market have to develop products that customers need and expect in their respective markets. This is because, each countries they operate has different laws that the companies have to consider. With the case studies provided in this section, it is possible to get the glimpse of how these companies use the AAA Framework, SWOT analysis, and GAP analysis to enhance their operations in the international markets.


Operating in a foreign country has proved difficult for many companies. To Pfizer, it has recognized the significance of modifying the products to meet the expectations of every market and country (Silbermann 2012). Through modifications, the pharmaceutical companies have managed to survive. Indeed, Pfizer has adopted sales strategy that befits every market like Latin America. The company has discovered that any successful operations in Latin America would call for an alternative strategy. This strategy has to accommodate regulatory, economic, and cultural diversity. It has accommodated this diversity in its product manufacturing efforts. In this regard, the company use extensive brand building using the outreach programs in the community. The pharma company has invested in partnership efforts with various pharmacists thus help patients to identify the best medications.


Pfizer is a successful administrative aggregation. Importantly, the company has qualified to sell its products in different markets and regions. For instance, it has marketed its products in Europe because it has met the European regulatory requirements. By meeting the requirements in some countries, it has the potential to sell it in the entire European region (Silbermann 2012).


This pharmaceutical company has become an important example of tax arbitrage. For instance, it has incessantly relocated into the emerging markets to cut taxes. In fact, it acquired the UK’s AstraZeneca to gain business edge. This is because, in the United Kingdom, their companies are prohibited from paying taxes, especially on the overall overseas earnings. Similarly, the UK’s tax rate is less for the UK-patented products thus making production in the United Kingdom profitable, as the tax rate is low (Silbermann 2012).

SWOT Analysis


  • Pfizer is among the largest pharmaceuticals in the modern world that has spread its tentacle across 50 countries worldwide (Dua 2014)
  • Intense mergers and acquisitions efforts have strengthened the pharma’s brand thus improving its brand image
  • Low recall globally leading to strong brand name and identity
  • Excellent R&D thus creating breakthrough and innovative products
  • Employs over 100,000 workers across the world


  • The company suffers from negative brand image due to healthcare fraud regarding its illegal drug marketing
  • Fierce competition from the major pharma brands limits its growth in market share


  • Mergers and acquisitions offer it the best global penetration strategy
  • Strategic agreements with the leading pharma companies will boost its research
  • Increasing demand for healthy and quality medical solutions
  • Increasing awareness regarding the emerging needs in health care


  • The economic downturn in the European market affects its revenue
  • Stringent regulatory environment
  • The possibility of the new products becoming unsuccessful

Gap Analysis

  • Pfizer is an important company involved in discovering, delivering, and developing innovative medicines that helps it to treat and prevent disease. The firm achieves its goals by improving research and development productivity and improve drug safety monitoring.
  • In an effort to improve its performance, the company completely avoided breaking up itself because the analysis had indicated that gap between the projected valuation and the market value was narrow (Samson 2016).
  • Pfizer has already spent $600 million to prepare for the possible split. However, it has found its possible to use Merger and Acquisition strategy to expand its operations and improve performance.
  • Samson (2016) found that the company agreed to buy Medivation at $14 billion to expand into the cancer drugs market. The acquisition will increase the firm’s revenues to $53 billion.

Sun pharma industries


Sun Pharma is among the leading pharmaceutical companies worldwide. The Indian company has made its presence felt by accommodating the diverse needs of customers in the market (Kumar and Puranam 2012). Sun Pharma is known for making changes to fit the needs and expectations of every market or country. This is evident in their packaging designs, ingredients, and chemical formulae that suit the targeted customers in a particular country. Hebert (2015) argues that the company has to implemented strong country-specific and research strategy to earn it a competitive edge in the market. In the last decade, Sun Pharma has maintained a positive approach in the market where it has challenged patents on its high-value products successfully, especially in the United States market. With these efforts, it has managed to introduce high-quality generic products at affordable market prices. In fact, it has gained the needed market share because of its generic versions of the drugs.


Sun Pharma has acknowledged the significance of pursuing a global presence. The company has continued to pursue global presence for growth. In an effort to expand in these markets, it has opted for acquisition, especially of the competing businesses in different geographies and countries (Rodriguez 2002). Since its inception, the company has made over 19 acquisitions successfully. To this effect, it has increased its reach to many countries beyond the reproach.


The Sun Pharmaceutical industries Ltd is a firm that has incessantly invested in research and development. The company values its research capabilities, especially in the emerging economies, where it has substantially minimized its costs (Ghemawat 2007). It has taken advantage of the reduced costs to improve its capabilities immensely in providing the products at affordable prices. The pharma has also established most of its manufacturing plants in the emerging countries, notably in Asian countries. In these Asian countries, the costs of production is manageable in these countries thus opt to produce and export to the developed economies where the sell at higher prices.

SWOT Analysis


  • Strong brand dominating the US and Indian markets
  • Strong sales and marketing force with over 12,000 workers
  • Strong growth and market positioning in the emerging businesses and economies
  • The acquisition of Taro pharma helped to consolidate its Indian market position successfully (U.S. Internal Revenue Service 2015)
  • Its new Eloxatin and Pantoprazole products has the limited competition in the US market


  • Fierce competition from different global and local brands limits its market share
  • Limited presence in many European and emerging markets is its undoing


  • Increasing demand for healthcare services and products in India
  • The firm can leverage its acquisitions to increase its growth
  • Diversifying into the contract manufacturing guarantees the company growth potential


  • Stringent patent regulations
  • High competitive pressure in generics market
  • Consumers are highly price sensitive

Gap Analysis

  • Sun Pharma faces unprecedented regulatory issues as reported by the US FDA. The acquisition of the Israeli company attracted class suits because of its pricing policy. Price collusion is serious offense that can cost the company its fortunes in the United States (Asthana 2016).
  • Sun Pharma operates Taro as a subsidiary that posted about $244 million in sales. However, Sun Pharma posted a lower sale than expected. The prospects of the company are becoming negative following the price erosion in the United States market. The key risks the firm has to handle include delay in approval of the product, adverse currency movements, and intense competition in the derma market (Disclaimer 2015).
  • The company needs to conduct risk analysis to avoid future challenges regarding the risks to boost its market position.

The GM has embraced this strategy for decades. Currently, it intends to establish a core global architecture where it will produce its products and ship to the local plants (Gong 2013). Currently, 90 percent of its automobiles are manufactured centrally. The shipped cars to the local plants, where they are designed to meet the tastes and needs of the local market (Ghemawat 2007). For instance, the company’s architecture is flexible to handle the poor roads in India. Similarly, it has designed local cars that are adapted to the smooth highways in the developed countries like America.

The American leading automobile manufacturer has embraced economies of scale. This has enabled it to exploit similarities (Friedman 2005). In fact, it introduced the economies of scale without compromising the local responsiveness.


As explained by Ghemawat (2005), arbitrage strategy ensures the company exploits differences between various markets. For instance, this may involve moving some parts of operations or supply chain to various places. In fact, GM has adopted the China’s unique combination that involves the use of innovation, inexpensive labour, and strong work ethics to serve its export market. Indeed, the arbitrage strategy has enabled GM to produce cost-effective cars.

SWOT Analysis


  • Strong brand image because it owns other brands like Cadillac and Chevrolet with strong image (GM 2016)
  • GM products have global presence despite the U.S being the core market
  • The company has strong product portfolio with the new product pipeline remaining fresh like the Chevy Volt, Sierra, and Silverado (GM 2016)
  • The GM vehicles are loaded with comfort and safety features like Apple CarPlay, OnStar, Android Auto, 4G LTE wireless, and SiriusXM radio (GM 2016)
  • GM has invested in care sharing programs through automated technology
  • Improving financial performance in post economic turmoil that reached $9.7 billion in 2015
  • Acquisition of cruise introduced an automated driven brand
  • Growing demand for GM products in the Asian markets


  • Product recalls because of the faulty ignition switches and airbags was a shocker to the brand in 2014
  • Drop in foreign exchange rates on dollar caused huge losses
  • Dependence on the American markets where it generates the most of its revenue and margins (GM 2016)


  • The growing demand for electrical and fuel-efficient vehicles present significant opportunity to the company
  • The Asian markets offer the greatest growth opportunities as the demand for the brand image is growing (GM 2016)
  • Invested in the automated driving that offers big opportunities for its automated vehicle technology potential
  • The continued partnerships with the leading local brands like Lyft and taxi brands promises growth in its services (GM 2016)


  • Increasing competition in the automobile sector thus threatens the dominance of GM
  • High U.S dollar exchange rates leading to loss of profits (GM 2016)
  • Product recalls threaten the brand image
  • High costs of inputs and manufacturing (Haile and Krupka 2016)

Gap Analysis

  • The currency fluctuation in the global market seems to affect the company’s profitability. As the largest U.S automaker, the currency fluctuation risks require redress.
  • The company responded to these issues by cutting down its fleet sales to protect the company’s profit margins (Parker 2016).
  • The company has also become a financial engineering victim as its key rivals like Ford and Toyota are minting millions of dollars in profits (GM 2017)

The Japanese automobile giant has adopted country-centric approach to shake the international market. It has used this strategy since its inception thus defining it success. Initially, the company had invested in the economies of scale as the only way to benefit from the expansion into the foreign market (Toyota 2012). However, it experienced various problems regarding the localization matrix because the local demand was skewed towards the local products. The company responded efficiently by adopting a transnational strategy. This strategy has kept Toyota at bay with its rivals like Ford and GM. Without a doubt, the company became responsive to the needs and tastes of the local market.

The local responsiveness saw the company differentiate its automobiles to befit each targeted markets. The localization strategy has ensured the company benefits from cost competitiveness thus achieve success thorough localization (TME 2008). With its localization initiatives, Toyota has continued to pursue its extra- and intraregional exports. It maximizes its local R&D functions and focus on the regional and local procurement rates. Toyota employed the Americanisation strategy to serve the American market (Parker 2016)

Toyota has also earmarked the emerging markets including Africa, Asia, India and Russia. In Russia, Toyota has recognized the greatest potential because the Russian customers have gained relevant experience based on its core models like Land Cruiser Prado and Camry ( editorial team 2007). The company is making efforts to achieve the best localization. It plans to increase its investment in the Russian auto industry by intensifying the Camry production. This will see its Toyota Motors Manufacturing Russia plant serve the market. It further intends to establish the Land Cruiser Prado assembly in Vladivostok (Toyota 2012). The company has also recognized the market potential in Africa because of the growing population. It is starting the production base in South Africa to serve as part of its vehicle supply system in Africa. It is adopting sales measures that are in tandem with each region.

The company is also considering invading the Indian market by developing products that meet the expectations of customers. Shivam-goyal (2016) has noted that in 2007, the automobile opted for the Toyota Technical Training Institute that has helped the company to offer specialized technical training for its plants. In Asia, Toyota has recognized the growing demand thus found it prudent to expand into the regional economy (Hill, Wagner, and Wong 2016). It has expanded its production facilities in Indonesia and Thailand as indicated below. Recently, the company established Sorocaba manufacturing plant in Sao Paulo to produce new compact model. The localized production has benefited the firm. The same localized production is evident in Europe and America.


This strategy focuses on standardization. Toyota has invested in aggregation, where it utilizes its economies of scale to maximize production. Toyota (2012) highlighted that aggregation ensures the company leverages its established expertise and products. It can thus market the products to the targeted locations using active advertising. With the fierce competition experienced in the automobile industry, management and R&D is essential especially where the company has to manage from different countries (De Kluyver 2012). Nevertheless, many companies centralize their operations at a global or regional level.

Toyota has mastered the aggregation strategy because it has concentrated its production in Japan. It has localized its production to maximize its economies of scale. In 2015, the Japanese automobile produced over 8.9 million cars worldwide (Hill et al. 2016). Interestingly, 4.1 million of the total production came from its domestic manufacturing plant. According to the company, the economies of scale allowed it to enjoy higher efficiency, lower cost, and quality control. Similarly, the concentration of the manufacturing facilities has made it possible for Toyota to push out series of cost-effective programs (Peng 2014).


This strategy has seen the company exploits differences instead of De Kluyver (2012). Ghemawat (2005) maintained that an arbitration strategy gives the original global advantage. For instance, businesses traded luxuries with vast differences in value from country to country. For instance, offshoring and outsourcing are the modern day strategy. As a multination corporation, the company has used different global strategies to expand its market. For instance, Andreff (2009) identified that continued partnerships and alliances between mother companies like GM and Toyota.  Nonetheless, the company opted to invest in localization and regionalization of its operations (Ghemawat 2005). Contractor, Kumar, Kundu, and Pedersen (2010) affirmed that the company has built a strong network of partners and collaborators using social tools that have enhanced adaptation, increased flexibility, reducing costs, and innovation.

SWOT Analysis


The strengths of the automaker justify its ability to sustain competition and retain its position in the global market (Toyota 2015).

  • Toyota enjoys strong brand image in the industry
  • Toyota’s global supply chain is also efficient and strong thus help it to minimize market-based risks (Ferguson 2017)
  • The automaker’s organizational culture promotes rapid innovation capabilities thus make it competitive (Toyota 2015)


The possibility of inefficiencies points to the automaker’s weaknesses.

  • The company’s global hierarchical organizational structure has made it difficult for the firm to maximize regional operational flexibility (Ferguson 2017)
  • The organizational culture of secrecy cuts its response time to the emerging issues
  • The 2009 massive product recalls weakened its consumer business capacity (Toyota 2015).


The automaker’s opportunities are attributed to the economic and technological trends in the market.

  • Market opportunities in the developing economies will increase its revenues if it penetrates the markets (Ferguson 2017)
  • The increasing interests and demand for advanced electronics and fuel-efficient automobiles offer an opportunity for growth
  • The growing interests in new and advanced electronic cars will boost the firm’s market (Ferguson 2017)
  • The weakening Japanese Yen against the U.S dollar increases the competitiveness of the Japanese products


  • The company’s threats emanate from the competitive landscape that reduces its performance including rapid innovative efforts by rivals like Ford, Honda, and GM
  • Increasing market presence of its low-cost vehicles from Indian, Chinese, and Korean manufacturers (Ferguson 2017)

Gap Analysis

  • Toyota remains exposed various risks emerging from the changes in the currency exchange rates, price changes, availability of inputs, and interest rates.
  • The automaker has to protect its operations from these risks that pose threat to its success. The instruments it should use include swaps, forward contracts, and interest rate and currency options
  • However, Toyota has failed to protect itself from the input supply changes and price changes. The protection should help the automaker to maintain its reserves of a few inputs.


Based on this article, the aspects of globalization have incessantly addressed issues in the business sector. The article has focused on how airline industry and pharmaceutical industries apply the AAA Framework, SWOT analysis, and GAP analysis to balance their strategies and trade-offs.

This strategy involves the managing the cross border diversity because each of these industries benefit from globalization as they restructure to maximize relaxed trade policies and technology. Given the challenges experienced by companies in the pharmaceuticals and airlines industry, the AAA framework, SWOT analysis, and GAP analysis provide a platform for analysing the impact. The AAA model provides the best opportunities and the scope of techniques that can help these firms to expand, open new doors, and upgrade their global execution. In fact, these businesses have enveloped the elements of aggregation, arbitration, and adaptation to achieve a globalization of production. Therefore, based on this article, it is evident that pharmaceutical firms prefer to use all the strategies while the Automobiles use different strategies.


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