1. NEWS COMMENTARY 1
“Piceline will have to keep going where no retailer has gone before.” The vision of
Priceline.com, quoted by William Shatner on their TV advertisements, is an accurate
predictor of where Priceline.com wants to grow into the future. The success of any firm
depends on how they can accurately determine their internal capabilities and their
external threats. Once firms determine this information, they can use it to their advantage,
or if not fully thought out, could be to their disadvantage. This paper will discuss the
following: (1) summary of the article, (2) corporate vision, (3) product diversification.
Letting the people name their price is the name of the game for Priceline.com.
They have found their niche within the industry of airline tickets, grocery products and
gasoline prices. The article, written by Heather Green of the magazine Business Week,
shares two basic strategic issues with readers. One is Priceline.com’s corporate vision of
leading the firm into the future by entering the retail industry through the competitive
advantage of the Internet. Number two is the product diversification of the firm from just
letting customers name their price for airline tickets to letting them name their price for
groceries and gasoline. The article also states that Priceline.com will be increasing their
diversification into insurance, business-to-business services, telecommunications
products and expansion into the global market starting in Japan and Europe.
A part of strategic leadership is the ability of the firm’s executive to articulate a
vision which would energize the employees and becomes the corporate culture. The
article never stated an official corporate vision of Priceline.com, however; the reader
needs no help understanding the direction and goals which are predominant in the
corporate culture of this firm.
The vision of the corporation is important to the overall strategic positioning of
the firm. A vision allows the employees, upper management and shareholders understand
how they can help the firm progress and how the firm will best suit the growing needs of
its customers. Priceline.com’s vision, brought about by its founder Jay Walker, moves the
company forward capturing more and more customers fed-up with the lack of customer
service exploitative prices in the traditional retail industry. Priceline.com’s philosophy is
to leave more money in the hands of its customers which will help increase customer
satisfaction and help maximize Priceline.com’s profitability.
A good strategic philosophy is to be prepared to move into another product line
called product diversification. Moving into another product line is a good way to
increase a firm’s profitability and competitive advantage for the future. For example,
Priceline.com began its success in the online retail business by offering airline tickets at a
price which their customers would determine. In order for Priceline.com to increase its
competitiveness, it has begun to diversify its product line to include groceries and
gasoline. Companies in the traditional retail industry need to be aware of the new
opportunity which online retail presents. If they neglect to advance into this area, they
could see Priceline.com capture a majority of their market share.
We can learn from Priceline.com’s example of a corporate vision and product
diversification. When a firm takes advantage of no entry barriers, as Priceline.com has,
2. the profits and success of the firm could be endless. Priceline.com needs to be aware of
new entrants into the industry which could potentially takeover part of their market share.
Priceline.com’s success is its strategy.
NEWS COMMENTARY 2
“If you can’t beat’em, buy’em.” DaimlerChrysler, Ford and General Motors have
determined that the only way to successfully compete with Korean small-car
manufacturers, in the United States, is to buy them out. The main reasoning behind the
buy-them-out strategy is to take advantage of the Korean automakers financial woes and
to eliminate them as a threat in the inexpensive small-car market segment. This paper will
discuss the following: (1) summary of the article, (2) market segmentation, (3) business-
Automakers from Korea have found their way into the very competitive American
car industry with hopes of increasing their competitive advantage. They have found their
niche in the affordable small-car market segment selling their cars between $9,000 and
$15,000. The article, written by Robyn Meredith of the magazine Forbes, shares two
basic strategic issues with readers. One is the importance which the “big three” car
manufacturers place on market segmentation and maintaining a competitive advantage in
their market segments. Secondly the article illustrates two distinct generic business-level
strategies adopted by the “big three” and the Korean automakers (Daewoo, Hyundai and
In order for a company to fulfill customers’ needs, they may want to consider
focusing on specific market segments. Market segmentation is how a firm divides its
customers as to their wants, needs and preferences. This type of analysis helps the
company allocate resources for research and development, production and distribution.
The article states that the Korean auto manufacturers focus their efforts on selling their
cars cheaply. They cater to the customer who is not willing to spend more than $15,000
for a vehicle. GM and the others are also in that market segment, however; Korea can
produce and sell their cars cheaper in the United States than can the Americans in their
own country. Consequently; the Americans are aware of the growing market share which
the Koreans have gained and have decided that the best way to compete is not to lower
their prices but to buy the Korean companies. This would allow the “big three” to satisfy
the needs of that market segment, regain their lost market share and sustain their
Firms can gain for themselves a competitive advantage by implementing a
business strategy. Business-level strategies can help companies satisfy their customers’
needs and crush their competition. In the article, the “big three” pursue a business
strategy called differentiation. This means they cater to several market segments or
niches. Their customers purchase their products because of their uniqueness of quality,
price or prestige. Production costs for the “big three” are high, however; their uniqueness
allows them to charge a premium price which their customers are willing to pay. The
3. Koreans employ a cost-leadership strategy which allows them to produce cheaply and
charge a low price.
If the “big three” really tried hard enough, could they have beaten the Koreans
from gaining 14% of their small-car market share? To the Americans that market never
really was profitable and they were not willing to spend “billions” to make it successful.
It was easier to take advantage of the Koreans’ financial weaknesses and “buy’em.”
However; the “big three” need to be aware that they will not always be able to buy out
their competitors and they need to find successful ways of competing with new entrants.
But if you have the money, why not just take the opportunity and “buy’em,” and let them
work for you.
NEWS COMMENTARY 3
Oshkosh Truck Company is finding their way through a difficult time for the
truck manufacturing industry. While the competitors of Oshkosh are experiencing a
slump in sales and growth, Oshkosh is strategically positioning themselves to increase
their competitive advantage. The success of any firm depends on how they can accurately
predict a downturn in the economy and strategically position themselves to weather out
any possible financial struggles. Oshkosh is a good example of a firm which uses their
instincts to strengthen their capabilities and increase their resources to conquer rivals and
elevate sales. This paper will discuss the following: (1) summary of the article, (2)
acquisitions, (3) business-level strategy.
Oshkosh truck company is focused on a new vision and are experiencing
increased growth as their industry goes through a decline. The article, written by Mark
Tatge of the magazine Forbes, shares two basic strategic issues with readers. First, the
Oshkosh company shifted their focus away from U.S. government contracts, which made
up 60% of sales, to more stable markets. Their main fear was that government cutbacks
would hurt future expected sales. Lastly, the Oshkosh company was able to change its
business strategy to respond to customers’ needs.
Through acquisitions firms can diversify themselves and increase their
competitive advantage over their rivals. When a firm acquires another company, they
should choose a company which can increase their market share and decrease threats
from competitors. Oshkosh is a great example of a firm which, by means of acquisition,
was able to shift their main “bread and butter” sales to a more diversified group. This
allowed them to receive revenue from several different product lines which would ensure
a more stable cash-flow. For example, Oshkosh company acquired Pierce Manufacturing
(fire truck manufacturer) and McNeilus Co. (concrete and garbage truck manufacturer).
These two acquisitions would leave Oshkosh (military vehicle manufacturer) less
vulnerable to government budget cuts. Now military contracts are only 19% of revenue,
fire trucks are at 27% and concrete and garbage trucks make up the rest.
4. As the industry began to decline, Oshkosh was able to grow because of their
business-level strategy. They implemented the strategy of cost leadership and
differentiation within their market. It would not be easy for a firm to utilize a cost
leadership strategy and a differentiation strategy all at the same time. However; Oshkosh
was able to do this through mass customization which is a combination of “high volume
production with options.” Oshkosh effectively “streamlined” their factories which
decreased the time it took to manufacture their trucks and they reduced their inventory
costs. By decreasing operational costs and responding to customers’ needs, Oshkosh is
able to perform the cost leadership function and differentiate themselves from their
competition through mass customization.
Firms and managers can learn a lot from the Oshkosh company. This company
was successful in many areas of strategic management. They were able to predict a
possible downturn in the industry and implement a plan to diversify the proportion of
their sales to other stable product markets. Through mass customization they responded
to their customers and differentiated themselves from the competition. The
implementation of a cost leadership and differentiation strategy is the major reason for
the increased growth and a strong competitive advantage being experienced by Oshkosh