CORPORATE STRATEGIES THAT WORKS DURING ECONOMIC CRISIS: A COMPARATIVE CASE ANALYSIS
Some companies are strong and resilient enough to be even profiting during hard economic times. These are companies with a firm foundation and well-established organizational and marketing strategies that survives tough economic times.
In this paper three organizations that have successfully survived and withered the economic crisis are examined using two theoretical principles: the five forces competition model and the balanced score card.
The Five Forces Competition Theory Model
This model is used to analyze the competitive environment of a business industry. The five forces referred to in this model are: competitive rivalry, power of suppliers, power of buyers, threats of substitutes and threat of new entrants. (Wikipedia, n.d.) Rivalry among competitors is natural as each firm strives for competitive advantage over the other firms. Price, product differentiation, channels of distribution and supplier relationship are the competitive moves that each firm may drive for a competitive edge. The power of suppliers also influences a firm’s competitive edge. Most firms establish a relationship with suppliers to gain a competitive advantage over lower prices of raw materials. The buying power of buyers affects the products demands in as much as the price of a substitute product affects the price and demand of the firm’s product. Possible entry of new entrants in the same market affects the competition among the firms. (QuickMBA.com, n.d.)
The Balanced Scorecard
The balanced score card is a comprehensive set of performance measurement system used in strategic planning and management systems of almost all types of organizations. The four realms of a balanced score card are the financial perspective, customer perspective, business process perspective and learning and growth perspective. (Wikipedia, n.d.) They are logically connected to each other such that learning and growth contributes to a better business perspective, which leads to enhanced customer satisfaction and which eventually results to better financial performance. (QuickMBA.com, n.d.)
COMPARATIVE ANALYSIS OF THREE COMPANIES
The three organizations to be assessed are Nordic Offshore, ARCOM Group, and Exxon Mobil. Nordic Offshore a maritime industry, is one of the most successful companies during the financial crisis. Nordic places a high value on their employees which is its competitive edge against competitors. (Snedker, 2009) While Nordic supports their highly qualified employees through thick and thin, their employees return their commitment with loyalty and greater determination inspite of the crisis. This strategy falls under the learning and growth realm of the balanced score card. Their business strategy is fast response time and quality service. The learning and growth realm and the business strategy are the foundations upon which the other realms are built upon.
ARCOM Group is a supplier of innovative technological solutions in the banking and financial industries in Russia. ARCOM Group’s client-oriented strategy has kept its leadership position in the market in times of crisis. The five factors model does not justify ARCOM’s group success during the crisis. ARCOM however recognizes that its people are the most important resource in the industry, hence it maintains a pool of highly qualified and dynamic experts in information technology who also trains clients in the new technology that they introduce and serve to their clientele. (Arcom.com. n.d.) The value for its employees is the company’s learning and growth strategy and its focus on the satisfaction of their client is a business strategy which serves as the foundation for the success and achievement of the higher realms, which is customer satisfaction on the next rung and the ultimate of which is financial performance.
Exxon Mobil is the most successful company that made the most money during the 2009 economic crisis. Exxon Mobil has earned a reputation for its cost-cutting measures which explains why it is able to rake in huge profits even during economic crisis. Exxon Mobil also has leveraged on partnerships to achieve its financial goals better. Employees in Exxon Mobil are also the priority and are well motivated. Aside from receiving a very good compensation, they also enjoy financial incentives such as dividends, certificates and recognition (MBA Knowledge, n.d.). Exxon Mobil s also a well established company with a very good foundation that has stood the test of time. This foundation and their innovative strategy of putting their human resources first, its networking and partnership strategy and cost-cutting measures assured Exxon Mobil success in the oil industry.
Indeed it is true that while a healthy economy fosters a good business environment, “opportunity knocks during economic crisis” (Brown, 2009).
REFERENCES
Arcom Group, n.d. A Key to Success in Crisis – Client-Oriented Strategy. [online] Available at:< http://www.arcom-group.com/eng/news.asp?pid=36&sid=59> [Accessed 4 June 2011].
Brown, 2009. Opportunity Knocks During Economic Crisis. [online] Available at:< http://maysbusiness.tamu.edu/index.php/opportunity-knocks-during-economic-crisis/> [Accessed 4 June 2011].
Exxon Mobil Business Success Strategies. [online] Available at:< http://www.successprinciplesonline.com/business-strategies/exxon-mobil-business-success-strategies/431.htm> [Accessed 4 June 2011].
Jordan, M., n.d. How to Win in a Financial Crisis – Tips on Identifying Opportunities in a Down Economy. [online] Available at:< http://ezinearticles.com/?How-to-Win-in-a-Financial-Crisis—Tips-on-Identifying-Opportunities-in-a-Down-Economy&id=2250385> [Accessed 4 June 2011].
MBA Knowledge, n.d. Case Study: Success Story of Exxon Mobil. [online] Available at:< http://www.mbaknol.com/management-case-studies/case-study-success-story-of-exxon-mobil/> [Accessed 4 June 2011].
QuickMBA.com, n.d. Porter’s Five Forces: A Model for Industry Analysis. [online] Available at:<http://www.quickmba.com/strategy/porter.shtml> [Accessed 4 June 2011].
QuickMBA.com, n.d. The Balanced Score Card. [online] Available at:< http://www.quickmba.com/accounting/mgmt/balanced-scorecard/> [Accessed 4 June 2011].
Snedker, D., 2009 Nordic Offshore – Most Successful During the Financial Crisis. [online] Available at:< http://www.nordicoffshore.com/63.html?&tx_ttnews[tt_news]=3&cHash=ea723728ac8fb2760e14eebbf129ec2f> [Accessed 4 June 2011].
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