Strategic Choice and Evaluation Paper
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Growth is something that both large and small companies strive to achieve. While large companies want to become bigger, small companies want to get big. As Barney (2007, p. 45) observes, companies must grow to accommodate growing needs of customers and to cover the expenses that emerge through the years. It is asserted that as years pass, salaries and cost benefits raise and companies find it difficult to take anything back, particularly when they are profitable. Although Atlas Air Worldwide is among the leading companies in the freight transportation and logistics industry, it has to grow in order to survive. Therefore, for this company to grow it has to incorporate strategies that will enable it to increase sales and revenues, beat the competition, capture market share, and exploit the existing demands.
A combination of Porter’s focus and differentiation generic strategies may foster the growth of Atlas Air. At the moment Atlas seems to be providing numerous services which include air freight, logistics, and cargo delivery services. A focus strategy will ensure that the company narrows down its services to a specific market segment that is more profitable than the rest. By focusing its effort on a specific market segment e.g. its air freight customers, Atlas Air will end up providing better services. It has been proven that better services often culminate to higher degree of customer loyalty. There are four tactics that Atlas Air must consider after adopting this strategy. These tactics include improving its operation efficiency, providing excellent customer services, providing extensive training to its front-line personnel, and controlling the quality of services being offered (Davenport, Leibold & Voelpel, 2006, p. 178).
On the other hand, a differentiation strategy will allow Atlas Air to develop other services that provide unique attributes that are not only appealing to, but also valued by its customers (Pearce & Robinson, 2010, p. 98). By introducing unique services the company will be able to charge a higher price than the competitors. The higher price shows that with a differentiation strategy, the production cost is likely to be higher and the target market will be smaller. This may result to some of the costs being passed on to the customers. For Atlas Air to succeed with this strategy, it is important to put in place its unique internal strength.
The best value discipline that Atlas Air can embrace in order to enhance growth is customer relations. This value discipline will ensure that the company focuses on delivering services not only to the market in general, but to each customer in particular. Atlas Air should establish itself as a customer friendly company by cultivating relationships with its seasoned customers rather than pursuing one time transactions. Once the company becomes customer friendly, it will specialize in satisfying the unique needs of specific customers. This will create close relationship beneficial for both: the company and customers.
In this regard, Atlas Air Worldwide should diversify its operations and services. At the moment Atlas Air Worldwide is mainly focused on providing air freight and logistic services to its customers. In order to grow the company must pursue other alternative markets, including venturing into passenger flight services. Davenport, Leibold & Voelpel (2006, p. 156) believe that introducing new products and services is the linchpin of most companies’ growth strategies. However, it has been proven that diversification is a risky growth strategy due to the fact that both the services and the market are unexplored territory for many companies. Therefore, to achieve growth through this strategy, Atlas will have to be realistic about the possible risks and be clear on what it intends to achieve.
Apart from diversifying its operations and services, Atlas can enhance customer relations by embracing innovation as a growth strategy. Atlas should find a way of reaching untapped markets and customers and meet their expectations. Leaders of this successful firm must understand that innovation is what drives growth. Pearce & Robinson (2010, p. 182) assert that innovation can only be achieved by individuals who exhibit shared passion for problem solving and can transform ideas into reality. There are many employees at Atlas who posses these qualities, thus being innovative will not be a problem. It has been established that companies that remain innovative will always create and re-invent new products, services, markets, and business models. All these developments lead to unwavering growth (Davenport et al, 2006, p. 218).
It is imperative to understand that innovation is founded on a company’s ability to recognize market opportunities, build internal capacity to respond innovatively, and develop knowledge base. The air freight and logistic industries present numerous opportunities that the company can explore. There is still enough room and capability for the company to expand in this industry. Barney (2007, p. 145) believes that the only way of capitalizing and exploring this opportunity is being innovative. Therefore, Atlas Air Worldwide should always ensure that it is ahead of the competition by coming up with new ideas and services. In order to achieve sustainable growth Atlas must build a sustainable innovation company around the following activities:
- Promoting a culture that supports innovation;
- Initiate a vision and strategy for innovation;
- Develop a top management team that embraces innovation;
- Empower employees to drive innovation;
- Create cross-function team that will map the innovation road.
Pearce & Robinson (2010, p. 87) argues that a grand strategy directs a company on what strategic actions to take as well as the timeframe within which its long-term goals and objectives are to be achieved. Currently, there are several grand strategies that Atlas Air can use in order to achieve its long-term goals and objectives. For example, Atlas Air can achieve its long-term goals through intensification grand strategy variants such as product development, market development, and market penetration. Barney (2007, p. 56) contends that growth strategy that is founded on product development serves as a mirror image of a market development strategy. Rather than implementing a traditional practice of pioneering new markets with existing products and services, Atlas Air should attempt to introduce new products and services to markets which it is familiar with. For example, rather than introducing air freight and logistic services to untapped markets, Atlas Air can roll out a new service such as passenger transportation in familiar markets. This grand strategy will enhance growth because the company already has loyal customers who are more than willing to use these services. Moreover, Atlas Air will be comfortable working in this environment because it is aware of the prevailing market conditions. However, the company should be cautious with this strategy. This is because it is as challenging as market development strategy due to the fact that it often requires the company to create new abilities and constantly adapt the service until it achieves marketplace success.
Considering that Atlas Air finds it difficult or challenging to grow through implementation of diversity, innovation, or product development strategies, it should initiate growth through market penetration strategy. This strategy is designed to give any company a greater market share. Atlas should, therefore, seek to gain a competitive edge through marketing, pricing, and other initiatives. The company can achieve market penetration by increasing demand for its services through incentives and loyalty programs that target the existing customer base.
In conclusion, this paper has indicated just how important organizational growth is important to Atlas Air. However, this growth can only be achieved if the company adopts the best strategic alternatives, and as the paper highlights, a combination of Porter’s differentiation and focus generic strategies can foster the company’s growth. Moreover, the paper indicates that customer relations is one of the best value discipline that the company can use to drive its growth strategy. Finally, product development, market development, and market penetration are some of the best grand strategies that the company can use to achieve growth.