Porter’s Diamond Model, Research Paper Example

Abstract

Entrepreneurial orientation (EO) can aid in evaluating the performance of an organization in terms of business ventures and the approaches employed to ensure all the objectives have been met. EO is a developed research sector that critically focus on fundamental segments of a conglomerate, including the company’s leadership, and the various leadership strategies applied (Lee & Peterson, 2000). Following the principles of management and leadership will be evaluated and analyzed regarding the labor union Gewerkschaft Nahrung-Genuss-Gaststätten (NGG) in Germany. Cultural differences and the ways of living within the organization while running the business are the second areas. A strategical analysis is the third sector that involves strategic orientation, strategy application, and the strategy formation that the company uses to ensure they achieve more members. The structure is the fourth sector which focuses on the company’s framework and how the leaders and power flow downstream style in the company from the head to the employees. EO thus is applicable as an analytical point. This is where the organization’s entrepreneurial duties are assessable. The assessor can recognize the enterprise’s weaknesses and strengths while also giving recommendations of the fields that require changes to help propel growth and play the role of a formal summative report.

NGG Case Study

Executive Summary

The NGG is a non-profit organization, and is the oldest German trade union. Its main mandate involves representing laborers in various catering, hotel, food, and beverages. Among the products in the union’s inventory include fixed products, such as social law and labour law protection for members. The paper will analyze the outside and inside aspects that impact and shape NGG’s management processes about strategic thinking, strategic business management, and strategic planning. Moreover, the paper entails an introduction and a discussion of strategic management analysis, comparing between radical and incremental frameworks with an emphasis on funds required as well as the risk encountered. These models are discussed on how they apply in NGG to maintain a good strategic position. The role of leadership in strategic management will also be discussed. The value of strategic planning is included in the analysis. The report aims to create an understanding of the financial forces and how NGG as an organization can leverage its strength to its advantage.

Problem Statement

The labor union Gewerkschaft Nahrung-Genuss-Gaststätten (NGG) in Germany is a social-political outfit responsible for the welfare of its wide member-base. Among the aspects that contribute to its popularity is the aspect that the membership cost was set at 1% of one’s brutto income. Moreover, if one is retired or unemployed, the membership fee is lower. More pertinent, though, is the union’s expansion, they have already undergone gobbling up their finances resulting in drier coffers. They have to consider the issue of funds before making a decision.

Value of Strategic Planning

Any flourishing organization has a roadmap and understands where it might go in the future (Kryscynski, 2015). Before focusing on a venture, a schedule must be developed with priorities, action plans, and targets. Taking a moment regularly to study the company’s previous success and forecast its potential performance offers it a path to pursue. An organization is interested in strategic planning since it gives guidance and outlines performance targets. Tactical preparation is an instrument to direct everyday actions and measure success and evolving strategies in progress (Mind Tools Videos., 2014). In order for NGG to benefit from strategic planning, the company provides careful thoughts to the outlined strategic objectives. NGG also supports its goals with systematically researched, quantifiable and realistic benchmarks for results evaluation. The regional office is the first instance; the second is the state district. The last and main instance is our nationwide headquarter in Hamburg. We have five state districts with a total of 50 regional offices.

Strategy Alignment

For the trade union to efficiently use the strategy to create value innovation, it should have complementary qualities that guide it into attaining the desired results. The organization should have qualities such as a compelling tagline, lucrative packages, divergence, and focus. Such qualities will lead the company to make the right decisions.

The strategy proves to be vital for the company since it will aid the company to tap into potential new members without struggling for the infested market with competitors. Identifying a new market segment will help the company establish itself without worrying about the competitors.

Strategy Applied in Marketplace Approach

To penetrate a market, a company must have a marketplace approach. The strategy that a company uses to penetrate its market must be relevant to the target customers and in line with the overall business strategy of a company. The approach also needs to be unique such that customers do not have alternatives with the company competitors. Overall, the business strategy for the marketplace approach must help the company gain a competitive advantage (Rothaermel, 2021).

The company has also employed aggressive marketing campaigns that inform customers about their services online and in their outlets. Through aggressive marketing campaigns, the customers can learn about the low prices and purchase from the company.

Customer Value Proposition

If the value proposition attracts and meets the customers’ needs, customers’ purchases from the company increased its revenue (Porter, 1987).

The customer value proposition for NGG is better selection, lower prices, and convenient services. The wide selection proposition involves a wide range of product options for members and a wide selection of products that interested parties can benefit from. The services provided by NGG are also convenient such that a client cannot find such services being offered by any of the rival trade unions. Additionally, the convenient and varied services are also packaged at considerably low prices that attract more customers. The low prices of products at NGG are based on the generic business strategy of the company. Therefore, any client on NGG’s platform is guaranteed a wide selection, convenience, and low prices.

Corporate Strategy 

The organization’s corporate strategy is based on selection, and convenience. To achieve the goals in both its offerings and areas of operation, the company is guided by four major principles. NGG have a fixed number of eight together working unions under the roof of the DGB “(Deutscher Gewerkschaftsbund – German Trade Union Confederation).”

Customer obsession is one of the major principles that form the corporate strategy of the union. The company understands that the customers mean a lot to their business operations. Therefore, instead of focusing on the competitors, the company strives to provide a wide range of products to customers conveniently and at low prices.

The other principle that guides the company is the passion for invention. Therefore, the company values invention and does not rely on products it started with but continues to invent more products to meet customer demands. The union has also committed itself to operational excellence. Since its operations are effective, the convenience of products is guaranteed.

Another principle that guides the union is long-term thinking. For NGG to provide services and packages that meet members’ needs, the organization predicts the changes and preferences of its members. The company also focuses on its members’ future and not competitors since it aims to retain its customers for the long term.

Factors To Consider When Creating Value Innovation

Cost is a major factor that affects the efficiency of the company. The managers may use value innovation to surpass problems faced during cost control. Using the strategy, the company can manage to use both the low cost and differentiation methods.

Price another significant determinant worthy of consideration. Offering customers with an affordable market is a great factor that can attract a new market segment. Use of prices has been used by many companies to attract customers for a long period.

Adoption is a key consideration the company should use when using the strategy to tap into a new market. The management should consider how they will adapt to the new market and differentiate it from the current clients.  Understanding the new markets and adapting accordingly is a key factor in achieving value innovation.

Making the Concept Work in Practice

To prevent a company from failing, clear systematic steps should be set that should be followed into every detail.

Selecting the target demography

Identify the products or services which will be involved by the business. Identifying an untapped market should mostly focus on the area where there are more gains and little use of resources. When the right area is identified, putting a team together to research the new market is the best way to build their confidence. Entrusting the team with such responsibility will increase their morale since the task is the most vital in determining whether the company will fail or succeed.

A clear message on the present state of play

A clear message and communication should be set where even an illiterate person will understand easily. The message of the new market and the innovation should be easily understood by every person putting them on the same page as the company. The team which is formulated should be the first to understand what is being driven. When the team members are on the same page, it becomes simpler to achieve the desired results. Also, the comprehension of the message by the team will lead the team into explaining the intended intention of the company to the targeted customers. A clear message will enable the company to evaluate its strategies with that of the competitors.

Identifying unseen limitations usable as opportunities

Once a concise message is sent, constraints and assumptions of the trade ought to be highlighted. Identifying the boundaries and limitations of the industry may help pinpoint out where the market is untapped. Identifying the limitations is the best way to get away from ruthless competition facing the current market. The limitations may work as a breakthrough for discovering new solutions to the problems in existence. When the solution is identified, looking for the customers is the next step to put the strategy into action. Identifying non-customers who have potential will enable predict the company’s direction into the new market. The step helps the company to analyze the situation widening their vision and converting hidden demand into actual demand in terms of new customers.

Challenges Facing the Organization

Competition

Following the company’s bewildering growth and insane rise to popularity in Germany, rival firms have been upset since a huge slice of their pie was taken away. Word has it that majority have restructured their management setups, with Gewerkschaft der Polizei particularly being involved in poaching personnel from trade unions with much smaller market share such as Eisenbahn- und Verkehrsgewerkschaft (Railway Workers), with the most high-profile acquisition being their former Vice President being poached and made the Executive Manager. It is expected that NGG is going to face a lot of competition. It is only human nature for others to try and flourish from the blueprints established by another.

Funds

As earlier stated, the struggles NGG has already undergone has gobbled up their finances, resulting in drier coffers, and they have to consider the issue of funds before making a decision. Their ambition commendably oversaw their successful introduction and eventual success to close to eighteen foreign markets.

The most advisable move would be to outsource funds, be it from interested investors or even loans. However, before plying down such a volatile route, it is imperative that the potential targeted markets are comprehensively analyzed so as to increase the awareness of the viability. Also, by so doing, the management can tell if taking a loan would be advisable and if the projected market’s generations would be sufficient to pay off the debt.

Possible Remedies

They should rather use local resources which are available, which will lower the operating costs. With a lower operation cost, NGG may be able to provide memberships at lower prices.

Quality of the services offered ought to be enhanced as well. The services provided should be of international standards that entirely involve the locals. With quality services, the company’s standard is raised, increasing the value of the customers’ experience. Moreover, the company should introduce services that are not offered by other competitors.

Environmental Scanning

Introduction

Environmental scanning is an approach that aids administrations study, survey and evaluate different forces that affect the processes of their company and fabricate techniques that will assist them handle those forces. These forces could either be internal or external. They can be handled using the SWOT analysis, which identifies an organization’s weaknesses and strengths, and develop strategic planning to attain organizational objectives. An example is the health care industry which has several forces that affect its operations.

External Influence

External scanning is essential in helping trade unions to perform in an exemplary manner. Different institutions conduct external scanning to help them determine what is needed to be changed for the institution to improve. External scanning may use different methods of collecting data such as observation, filling out a questionnaire by random people who are beneficiaries of the institution or workers within the institution. The collection of such vital data is a method used by many organizations to improve their services into world-class status.

The purpose of an internal scan is to determine whether the external factors are affecting the institution and what changes can be made for a positive impact. The internal scan majorly concentrates on members and the working staff. The internal scan usually researches factors that affect the workers within the union, and those factors are easy to change when compared to external factors. The internal factors usually take a short period to resolve and identify. The external factor usually takes a long period to identify and change since it usually involves lots of parties for the change to be accepted and implemented.

The above external factors have affected the institution positively and may tend to help the institution be competitive for a long period. The above factors have proven to help NGG be among the top trade unions in Germany.

Conclusion

NGOs’ business and corporate strategies are fit for the company’s operation. The generic business strategy of the company is cost leadership. Low prices for services fit the strategy of customer obsession as customers always look for the value of their money. Passion for invention strategy also helps the company to continue keeping customers’ needs ahead and not the competitors. Moreover, NGG’s excellence fits the cost leadership technique since lowered cost means that effective operation methods are applicable by the trade union to reduce expenses hence selling at low prices. Lastly, I would recommend that the organization improve its organizational structure by allocating time for training and learning by the employees, which will help reduce managerial problems and enhance its performance (Greiner, 1989, pp. 373-387).

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