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Differentiation Strategies


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This is a project that I worked on with a group for my "Marketing Strategy" module in my masters of International Marketing and Communications. The main focus is on the process of differentiation. This report answers the following questions:

- Is it necessary to differentiate?
- What are the various ways of differentiation?

Published in: Business, Technology
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Differentiation Strategies

  1. 1. Cases of Diversification<br />Kristina Schweigert, Laura Perenz, Valentine Bitouzé, Vanessa Levrat, Stephanie L. Webb<br />
  2. 2. Lagardère: Company Context<br />Who is Lagardère? French conglomerate specializing in aerospace and media technologies throughout France, US, Germany, and Asia since the 1960s with a goal to be in the top 3rd of international media groups transitioning from unrelated to related diversification.<br />Internationalization: International expansion program (US and Spain)<br />
  3. 3. Lagardère: PESTEL Analysis<br />Politics<br /><ul><li>Stable French and American Governments with minor political party changes (Socialist and Democratic)
  4. 4. EX: French government supported multiple company acquisitions.
  5. 5. Nationalization
  6. 6. EX: Government’s ruling for nationalization in the case of Matra’s involvement with aerospace technologies.
  7. 7. Privatization
  8. 8. EX: Matra is able to maintain their balance with the aerospace industry, as well as expand into other industries.</li></ul>Economy<br />Sociocultural<br />Technological<br /><ul><li>Interest is high based on entrance into various media sectors
  9. 9. Book Publishing
  10. 10. Print Media
  11. 11. Distribution Services
  12. 12. LagardèreActive
  13. 13. Emerging technologies
  14. 14. EX: Terrestrial digital TV channels
  15. 15. EX: Internet  .com boom</li></ul>Environmental<br />Legal<br /><ul><li>European Competition Commission (ECC); French and US Commissions
  16. 16. EX: Had to come to an agreement because of antitrust issues.
  17. 17. Conflicting interests between government and legal regulations
  18. 18. EX: Vivendi Universal Publishing Case, 2004 </li></li></ul><li>Lagardère: Management Issues<br />Problems<br />Government nationalizing defense interests within Matra. (external threat)<br />Unrelated diversification created restructuring issues (management and profitability margins) and “recentering policy”. (internal issue)<br />Solutions<br /><ul><li>Diversify into profitable market (i.e., Media).
  19. 19. Began restructuring program to diversify into two core businesses – aerospace (EADS) and media (Lagardère Media).</li></ul>EX: 2000/1, Releasing non-profitable activities, such as the Avantime vehicle.<br /><ul><li>Internal mergers developed to reduce expenses and management problems.</li></ul>EX: 1994, Lagardère and Matra Hachette merged.<br />
  20. 20. Company Context<br /><ul><li>Malaysia’sleading conglomerate company created by Tan Sri Lim Goh Tong in 1964
  21. 21. Business sectors  High level of diversification
  22. 22. Originally: famous for holiday resorts, hotels & entertainement centers
  23. 23. Evolution: power generation, paper manufacturing, oil and gas exploration, property development, IT, e-commerce, plantations
  24. 24. More than 14.000 employees
  25. 25. 11.000 acres of resort land, 40.000 acres of plantation land
  26. 26. Contributed to Malaysia being one of the very popular holiday destination in ASEAN region
  27. 27. Sustainable growth for 38 years, from 1994 to 2002  n°1 among Asia‘s leading companies
  28. 28. Sudden drop in company’s performance in 2003 (from 1st to 4th place in FEER rankings, 2003)</li></li></ul><li>PESTEL Analysis<br />Political <br /><ul><li>Malaysia was newly independent at the company’s outset
  29. 29. Government’s aim to develop the region, to promote tourism sector and to transform country to modern, industrialized nation
  30. 30. Global terrorism: September, 11th, bombings at Bali islands, Iraq war</li></ul>Economic <br /><ul><li>Global economic slowdown after 2000 in Southeast Asia </li></ul>Sociocultural <br /><ul><li>SARS epidemic</li></ul>Technological<br /><ul><li>Poorly developed infrastructure, water supply and sewage systems </li></ul>Environmental<br /><ul><li>Hot climate throughout the year
  31. 31. Landscape providing great potential as holiday destination </li></ul>Legal <br /><ul><li>5-year pioneer status exemption of taxes
  32. 32. Casino Licence limited to Genting only </li></li></ul><li>Management Issues<br />Problem 1: External<br />Lack of facilities: poorly developed infrastructure, water and sewage systems <br />SARS epidemic in 2003<br /> Economic slowdown <br /> Asia’s financial crisis <br /> Terrorist attacks <br />Solution 1:<br />Development of infrastructure and supply systems; construction of roads<br />Consolidation of new facilities and recreational services to attract tourists <br />Supported by aggressive promotional activities <br />Problem 2: Internal<br />Too high dependence on leisure and hospitality businesses<br />Solution 2:<br />Related Diversification Strategy into many businesses since 1970s (as further income source)<br />Suggestions<br /><ul><li>Push abroad: Further expansion into (neighboring) countries
  33. 33. Further expansion with more middle-class facilities</li></li></ul><li>Lagardère: Company Context<br />Position<br />2nd largest oil marketing company in India<br />CoolOne: <br /> Largest organised convenience store retailing chain in the country<br />Competitors: <br /> Two national and several international oil companies with same organised retailing concept<br />Evolution<br /><ul><li>In 90s preparation for post-deregulation competition
  34. 34. Expansion in fuel and oil retail business was limited due to the retail network expansion norm
  35. 35. Not enough business opportunities from the neutral growth in fuel and lubricant
  36. 36. RESULT: </li></ul> Related diversification to organised retailing<br />Diversification and Development<br /><ul><li>CoolOne brand was introduced in 2001, 2007-2008 there were 370 CoolOne stores across India
  37. 37. Retail stores offer FMCGs and wide range of services</li></li></ul><li>Lagardère: PESTEL Analysis<br />Politics<br /><ul><li>Government liberalized the fuel and oil market </li></ul>Economy<br /><ul><li>Higher competition after APM
  38. 38. Organised convenience retailing is key business area for petroleum companies
  39. 39. Upcoming of organised retailing formats
  40. 40. 7-8% growth in GDP is predicted to organised retailing </li></ul>Sociocultural<br /><ul><li>Petrol stations are one of the highest traffic aggregators.
  41. 41. Location of petrol stations is very important to fit customer needs.
  42. 42. Bad reputation of retailing with regard to quality and quantity
  43. 43. Changes in customer orientation and needs: Want convenience and choice</li></ul>Technological<br />Environmental<br />Legal<br /><ul><li>Retail network norm
  44. 44. Administered Pricing Mechanism</li></li></ul><li>Lagardère: Management Issues<br />Issue 1: External<br /> Higher competition on the market after deregulation<br />Solution 1:<br />Creation of long term strategic assets to ensure uniqueness<br /><ul><li>CoolOne brand
  45. 45. Dealer training and loyalty
  46. 46. Supplier relationship
  47. 47. Quality and Quantity assurance initiative</li></ul>Issue 2: Internal<br /> Internal processes need to be integrated to create synergy<br />Solution 2:<br />Restructuring of internal processes<br /><ul><li>Initiatives in retail strategy were monitored with Balances scorecard format
  48. 48. conventional coordination (hierarchy)  coordination by mutual adjustment
  49. 49. Limited standardization at the operating core</li></ul>Suggestions <br />PL is easy to imitate/copy  new external issue is to create additional differentiation<br /><ul><li>Further related diversification in more services
  50. 50. Unrelated diversification in supplier business </li></li></ul><li>