How Should HP, ZARA, &Nbsp, Airtel And Other High Performance Enterprises Respond To Market Changes?

Over the past two years, the world market has undergone great upheavals and profound changes: the bankruptcy of Lehman brothers, the United States

We conducted a questionnaire survey of the senior executives of nearly 600 large enterprises in the world to understand how these enterprises view the changes in the world market and how they deal with the challenges.

Based on the empirical analysis of the survey results and the relevant case studies, we find that high performance enterprises have successful operation strategies and promotion strategies, and can successfully implement these strategies.

Taking HP, ZARA and India telecom operator Airtel as an example, this paper analyzes how high performance enterprises successfully use operation and marketing strategies to cope with the complex and changeable external environment and improve their performance.

When the environment changes dramatically, enterprises often have to explore new fields to create new competitive advantages, which is what we call "innovation".

In the process of innovation, enterprises should explore in different fields at the same time and discover new operational advantages: enterprises should not only focus on their core business activities, but also focus on their operation processes and supply chains, so as to ensure that they can efficiently provide products or services.

It is found that enterprises that explore and develop new competitive capabilities in multiple fields are more likely to create high performance.

HP: organic combination of operation strategy

HP is one of the largest technology companies in the world.

However, HP's performance was not ideal at that time, especially the non printer departments (personal computers, servers and storage, pocket computers, etc.), accounting for 50% of the company's annual revenue, but not profitable (annual profit margin -1%).

Printers and imaging departments were very successful, accounting for 31% of the company's revenue and 72% of its profits.

So the company decided to extend the successful operation strategy of printers and imaging departments to other departments.

These operational strategies include:

Design for reducing supply chain cost and complexity

HP relied on the four principles of simplification, standardization, modularization and integration, simplifying the procurement process and integrating the procurement and trading system.

In the past, HP had more than 50 product supply chains, and now it has been reintegrated into 5 customer based supply chains, and the electronic label labels are applied to the inventory in the supply chain, and each package and tray are tracked in real time.

These measures greatly simplify the supply chain and reduce the cost of supply.

The abolition of only 84 procurement systems has saved 600 million dollars for HP.

Global sourcing, training suppliers and developing with them.

HP spends about $16 billion 500 million a year on the purchase of indirect materials and services, including indirect labor, technology products (hardware, software, telecommunications, R & D), sales and marketing, tourism, conferences and activities, as well as business services (Finance and administration, law, safety, etc.).

Because of its large purchase volume, HP can choose the best suppliers worldwide and get very favorable prices.

But HP believes that the preferential price is not the only goal, but to develop HP's sustainable competitive advantage through joint development with suppliers.

HP global procurement department and suppliers jointly formulate supply strategy, optimize the speed of supply and save costs.

On the other hand, HP continues to use "scorecard" to measure suppliers' indicators to help them improve their performance.

These indicators include: cost, performance, quality, scale, technology and flexibility.

HP believes that the relationship with suppliers is not just a purchase, but a long-term partnership.

In the unstable high-tech market, this long-term cooperative relationship can make the two sides achieve long-term win-win results than the pure purchase relationship that pays attention to the price of each paction only.

Postponing final assembly and minimizing inventory.

In order to reduce the inventory caused by the diversity of products, HP took the strategy of postponing the final assembly of products as far as possible.

For example, in the final packaging of the printer, different manuals are often required, and the manuals have many versions according to the countries in which they are sold.

The usual practice is to package the operation manual and then send the finished product to the warehouse.

In this way, if there is a shortage in a country, it is impossible to use inventory to meet the demand because of the different language of the printer in the inventory.

It is possible that some countries have large inventories, while others are in short supply.

Aware of the waste generated by this mode of production, HP postponed the final assembly of the product.

For example, the printer's operation manual is not added before it is sent to the warehouse, but it is postponed until the customer orders are received, and the corresponding operation manual is added to the customer's country to seal the box.

Multi channel innovative marketing strategy

In the face of declining PC prices and huge product mix, HP actively adjusts its marketing strategy.

The integration effect of its advertising strategy and sales strategy has led HP to have a clear and unified market positioning in the computer market and take the lead.

HP split the previously merged printers and personal system products business, and made clear the organizational responsibility and performance evaluation.

The market of personal computers is further subdivided to provide corresponding services for different needs of individual consumers and small business customers.

These measures make HP's global sales and market share rank ahead of the industry.

HP has used its vast retail network to encourage consumers to experience products in retail stores before buying, which has been a great success.

But as competitors emulate, HP needs to keep up with market changes and innovate.

HP actively uses the synergy between e-commerce and traditional retail systems to improve performance and stay ahead.

At present, HP's advertising strategy includes: let consumers make personalized advertising online, share with others through e-mail, blogs, online videos, and increase the visibility and cohesion of products.

In the international market, HP partly adjusts the content of advertisements according to the characteristics of local cultural consumption, and communication with local consumers is very effective.

The progress of science and technology has prompted the change of marketing strategy, which makes industry competition and seller relationship change.

From the results, HP's current operation and marketing strategy is very successful.

Now, its non printer Department has created 53% of the company's turnover and 35% of its profits.

From the example of HP, we can see that the successful operation strategy is an organic and coordinated system.

ZARA, known as the "Spanish legend", is another very convincing example.

ZARA and Harrah 's: high performance is a systematic project.

First of all, ZARA's overall strategy is "fast fashion mode": to provide consumers with the latest fashion of low price fashion.

This determines that ZARA's operation system must be fast and responsive. Its logistics chain integrates design, manufacturing and marketing: its own designer, its own manufacturer and its own retail store.

ZARA will rarely manufacture outsourcing, especially trendy products, and its purpose is to control the entire supply chain.

From developing new products to retail stores, ZARA takes only two weeks, and the industry takes six months on average.

This requires that the information system must be very developed and always watch the market changes and sales demand.

In order to adapt to the market changes, the manufacturing and marketing strategies are in harmony with each other.

In this way, consumers will not wait to see the style they like, because waiting means selling out.

In ZARA, a style is usually placed on shelves for no more than four weeks.

This makes ZARA do not need to advertise in large quantities, nor does it need to rely on price cuts to stimulate sales and save marketing expenses.

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According to statistics, ZARA consumers visit ZARA retail stores 17 times a year (the average of the whole industry is only 3 times).

From the operation of ZARA, we can see that its product strategy, logistics strategy, marketing strategy and information strategy are interlinked, supporting each other and promoting together.

At the same time, high performance operation strategy is inseparable from excellent market understanding and strategy execution ability.

For example, the Harrah 's Casino Hotel in Las Vegas, USA, is facing increasing competition in the mid 90s of last century, and its performance has been declining.

New competitors often have more capital and more luxurious hardware facilities.

Harrah "s" in the severe form, first of all, analyze the core strengths of enterprises and formulate corresponding brand strategies.

Compared with competitors, Harrah "s has more chain businesses nationwide."

Therefore, the updated advertising strategy begins to emphasize that it is the only national chain casino and emphasizes customer's personal consumption rather than just rendering hardware facilities.

Secondly, they use the results of market research to improve customer service quality and customer loyalty.

Harrah "s realized that if we want to defeat our competitors, we must satisfy the customers and have enough loyalty to the enterprise brand, so the company has set up a national customer database, analyzed the paction information, formulated different marketing plans for different consumer behaviors, and implemented the customer incentive plan.

This analysis system allows the company to accurately predict the consumption of each customer, thereby providing food, accommodation, travel and other preferential treatment.

The effective implementation of these strategies has greatly improved the performance of Harrah 's and eventually became the highest profit margin enterprise in the industry.

In order to give full play to the real competitive advantage of enterprises, in addition to grasping the core strengths, truly understanding the needs of customers and the market, and effectively implementing the business strategy that meets the needs of the market, enterprises must consider the comprehensive capabilities of the entire value chain: products, processes and supply chains.

Product changes not only affect consumer demand, but also affect manufacturing technology and technology, pportation and storage of products, and may affect the entire supply chain at a deeper level.

There are many examples in history.

For example, the rise of Intel and Microsoft Corp has a lot to do with a product decision made by IBM company.

IBM was one of the companies with the highest profit margins before 80s, which dominated the Mainframe world, and integrated product design, production, sales and service.

In 1981, IBM launched the IBM PC. The hardware of the product adopted the 8088 chip of Intel company which was just started at the time, and the software used the BASIC operation system of the Microsoft Corp which was unknown at that time.

Although this decision has made IBM computers popular among consumers, it has completely changed the value chain of the entire computer industry. It has become a decentralized modular structure from the integrated structure of IBM monopoly in the past.

Many companies can specialize in the production of a standardized component to supply IBM compatible microcomputers, prompting the rapid rise of Intel and Microsoft, and also lay the foundation for the establishment and growth of other computer companies such as DELL.

In the whole process, IBM not only made no profit for itself, but also the market value of the company went down all the way, eventually withdrawing from the manufacture of personal computers.

The deep relationship between products and supply chain is evident.

Therefore, when enterprises adjust products or update processes according to the market, they must consider the interactive relationship between products, processes and supply chains and the comprehensive ability of the entire value chain, so as to gain a real competitive advantage.

Airtel and Eli Lilly: innovative business models to enhance performance

In a changeable environment, enterprises should break through traditional thinking, find new business models, and even innovate business models.

Airtel is the largest telecom operator in India and has 200 million subscribers.

Although customers are growing fast, Airtel is short of funds to buy expensive telecommunications equipment and other infrastructure needed for growth. So Airtel broke the Convention and set up a new path instead of initial fixed asset investment. Instead, it leased the network from Ericsson and NOKIA, and outsourced IT management to IBM.

In this way, Airtel converts fixed costs to variable costs, and the greatest benefit is that it can be expanded rapidly (or narrowed).

This agility is extremely beneficial to enterprises in an unstable economic environment.

At present, Airtel is the lowest price operator in the world (less than 1 cents per minute) and the most profitable telecom operator.

Another example of business model innovation comes from Eli Lily Inc.

Company.

Eli Lilly is one of the largest pharmaceutical manufacturers in the world with an annual sales volume of US $20 billion.

Eli Lilly has never stopped looking for new and more efficient business models.

In the United States, the approval of each drug is controlled by the Federal Food and Drug Administration (Federal Food and Drug Administration), which is time-consuming and energy intensive.

Pharmaceutical companies often believe that drug testing and reporting are the core businesses of an enterprise and need to be pro active. Therefore, every pharmaceutical company needs large-scale clinical patients to test drugs, and experienced personnel to guide the approval process of the government.

However, the frequency of utilization of these two resources is very irregular: in the absence of drug testing, resources are idle, and a lot of resources are needed when the product is booming.

In the face of this wave of resource utilization, Lilly, in collaboration with Quintiles Transnational Corporation, a top contract research institution specializing in providing clinical trial management services, has handed over test monitoring and drug approval to quintiles, and has established a broad and stable partnership.

The benefits of this innovation are numerous: Lilly reduces the resources required for clinical trials to concentrate resources on the core areas of early drug development and final product allocation; it uses the sales team of the company to gain flexibility in the workforce and to save unnecessary sales costs; it also takes full advantage of the expertise of quintiles drug developers and accelerates product development.

In short, the innovation of business mode has made Lilly buffer the cost and risk of management.