Strategic Management. Analysis of the Business Model and Competitive Advantage of Bionade GmbH

Table of Content

Executive Summary

1 Introduction

2 Theory
2.1 Porter'sFiveForcesModel
2.1.1 Description
2.1.2 ContextandEvaluation
2.2 The Positioning-View
2.3 The Resource-Based-View (RBV)
2.4 Consequence

3 Case study "BIONADE"
3.1 InternalAnalysis
3.2 External and Competitive Analysis
3.2.1 Opportunityand Threat
3.2.2 The Five Forces
3.3 Strategy
3.3.1 Resource-Based-View
3.3.2 Positioning-View

4 Conclusion
4.1 Theoryand Praxis
4.2 Recommendations

References

Table ofFigures

Figure 2: Five Forces (Porter, 1980)

Figure 3: resource-based modelof competitive advantage

Executive Summary

This report examines various theories and models, with the objective to ascertain sources of competitive advantage. In this regard the two major theories, the positioning- view and the resource-based view of strategic management, are discussed in detail. Michael E. Porter's well-known Five Forces Model, it's utility in the field and views ofthe implementer play a vital role of evaluation.

Furthermore, the report discusses the role of the successful German organisation BIONADE GmbH, an innovative manufacturer and distributer of privately brewed and organic refreshment drinks, in the German market. Inventor and patent holder is Dieter Leipold. In the German refreshment market, BIONADE is the third strongest brand following Fanta and Sprite. The organisation possesses of 6% market share ofthe entire non-alcoholic beverage market in Germany (Mitchell, 2014)

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Thus the report addresses to BIONADE'S strategy, position in the market and sources of competitive advantage and profitability. With the help ofwell-known models, an analysis of the organisation's resources and environment clarifies attractiveness of the industry and beneficial, as well as unfavourable conditions. The stated models and theories are adapted to explain and identify sources of the organisation's success. In this regard, a significant aspect is the organisation's differentiation strategy due to invention and uniqueness, which describes the main source of competitive advantage.

Finally, the report shows that analysing the case of BIONADE, sources of competitive advantages can be explained through both points of view, whereas one seems more favourable by comparison. Before analysing competitive advantages, the Five Forces Model in combination with a SWOT-analysis provides a good basis concerning to the following analysis of strategy. Relating to this, continuous long-term success of BIONADE can be achieved by further improvement and reinforcement of differentiation.

1 Introduction

The strategic management of an organisation is vital and mainly addresses to the reasons of different fundamental conditions. "What is the secret strategy of a successful organization?", "What is the source of an organization's competitive advantage?", "Why are certain organisations more or less profitable than others?". For decades researchers and analysts concentrate on figuring out the reasons for failure or success. (Johnson et al., 2014, p.8) The analysis of successful and unsuccessful organisations should give some indication of the management style and the pursuit of various strategies. Moreover, strategic management refers to the identification of competitive advantages and the analysis of the environment of an organization (Murtagh, 2014, pp.2-4). This considered in a strategic way, therefore means that strategic management is rather related to long-term objectives. Consequently, the sources of competitive advantages, profitability and success have to be evaluated and analysed. In the following process, models and theories that repose on this criterion are being discussed.

2 Theory

According to various sources, an organizations sustainable competitive advantage (SCA) is the reason behind success. The sustainable competitive advantage is furthermore connected to strategic positioning (SP). Michael E. Porter again states that strategic positioning (SP) is the basis of competitive advantage (Porter, 2001), whereas Scott Keller mentioned that the strategic positioning rather refers and can be assigned to differentness, which resemble the concept of unique selling propositions (Keller & Price, 2011, p.4). Different views see different sources of competitive advantage. In this respect, the resource-based-view (RBV) and the positioning-view differ in their explanation of incurrence. However, before analysing the sources of SCA, organisations have to analyse the competitive forces of their industrial and competitive environment.

2.1 Porter's Five Forces Model

2.1.1 Description

Michael E. Porter's well-known "Five Forces Model" (1979) is a method to analyse the competitive forces ofthe organisation's environment, with the result that an analysis of potential opportunities and threats can be realised. It is divided into five major forces that influence and have significant impact on the performance of organisations within an industry (Partridge & Sinclair-Hunt, 2005).

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Figure 2: Five Forces (Porter, 1980)

Source: (Partridge & Sinclair-Hunt, 2005, p.66)

The stronger one of those forces appears, the more it can be seen as a threat, whereas a weaker force can be rated as an opportunity. In this regard, strategic responses can be developed and realised (Hill & Jones, 2008, p.45). The strategic objective therefore is to station the organization inside the particular industry in a way that guarantees best chances of profit and defence in relation to the forces. The analysis and awareness of the competitive forces provide the basis of strategic actions and can give some indication of potential strength and weaknesses, as well as potential opportunities and threats (Porter, 1979). Furthermore, Porter stated the related theory of generic strategies in his publication "Competitive Strategy" (1980). The generic strategies explain ways to satisfy customers at a lower price, as well as more dynamically than competitors. Porter defines three areas of competition combined with the competitive scope: cost leadership on price, differentiation and laying the focus on specific customers (Porter, 1980, pp.61-78). Moreover, he argues that being everything for everyone, will lead to poor performance and organisations may "stuck in the middle" (Murtagh, 2014, p.24). The theory of generic strategies is linked with the positioning- view of competitive advantage.

2.1.2 ContextandEvaluation

One of the reasons for the popularity of Porter's five forces model is the fact that it can be adapted for nearly every industry. Furthermore, it is useful to get an overview of potential forces and to determine if an industry can be seen as worthwhile and profitable. Moreover, the model can be combined for analysis with other methods, such as SWOT-analysis or PESTLE (Henry, 2011, pp.66-67).

Nevertheless, the model isn't without critics. For instance, the former CEO of Intel Andrew Grove mentioned that the model neglects the extended sixth force of competition: "power, vigor and competence of complementers" (Hill & Jones, 2012, p.60). However, the five forces model is still considered as one of the basic methods of analysing the environmental forces and industries and organisations continue making use of it, despite of its early publication in 1979.

Michael E. Porter can be seen as a supporter of the positioning view, which is represented in the next section.

2.2 The Positioning View

According to Keller, strategic positioning in respect of strategic management refers to the customer's superior brand impression, which describes the ability of strategic positioning to advert to differentness to competitors and to persuade customers of advantageousness, next to the function to lower the concernment about potential disadvantages (Keller et al., 2008, p.38). To ascertain the source of an organisation's profitability, an appreciation of the position in the industry and market, therefore it's positioning, is needed (Murtagh, 2014, p.22). Thus, effective strategic positioning is seen as the reason for an organisation's sustainable competitive advantage. By developing strong connections with suppliers and customers, improved positioning can be achieved, which therefore offers the possibility of sustainable competitive advantage (Johnson et al., 2014, pp.8-12).

According to Porter, effective strategic positioning can be defined as developing unique and special offers that differ from those of competitors and accomplishing activities that are similar to the activities of competitors, in a better and more efficient way, so that organisation's stand out from competition.

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