Article Review #1: Location, Location, Location: a Strategy of Place - Business Essay Example
Article Review #1: Location, Location, Location: The Strategy of Place SEC 1: SUMMARY In this article, a teacher in Strategy Unit at Harvard Business School whose name is Professor Juan Alcacer talks about the necessary function of taking and considering a long-term geographic strategic view in expanding business whether in a nearby town or around the world expansion - Article Review #1: Location, Location, Location: a Strategy of Place introduction. This article also highlighted the tactical checkers, discusses the importance and essential role of time consideration to open a new operation and the factors that needs to be consider in expanding operations internationally.
Within the article are some companies and business firms that act as an example in explaining further the ideas presented such as the Walmart Company, Pixar Company and others. Professor Alcacer mentioned the three things that pertains the company’s strategic value; company who plays strategic chess is better than of those who plays tactical checkers; and says that the decision to expand is sometimes driven by the wrong reasons.
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True enough that many companies today are tempted to expand their operation to a new locations because they think and believe that geographic strategy is a short-term checkers match and not as a long-term chess game. This is what Professor Alcacer emphasizes that a company should consider geographic strategy as a long-term chess game because many companies of today assumes that when their business is at its best performance in their base location it will also be in its best performance in other location that is why they engaged in expansion.
The Walmart Company is the best example of being a strategic player, which is considered the best expander. This variety store was owned by Sam Walton, which expands the business strategically by opening branch first in small rural towns and later in urban areas. In the article the author have had mentioned how important not just money but the time and energy of managers in expanding business, making sure that the company is going to the right path. It made mention also the importance of internal linkages in expanding business whether in local areas or in other countries.
SEC 2: LEARNING, COMMENTS AND REACTIONS In our community, I noticed some companies and other restaurants, which expands their business operation in local areas. Some companies are successful but many companies also are unsuccessful. Being a 17 year-old teen-ager I don’t really have the idea of what things should be put into consideration in expanding operations in different locations. Upon reading the article, I’ve gained something and that something is the importance of considering geographic strategy as a long-term chess game and not as a short-term checkers.
To explain further why I said it’s very important to consider it as a long-term chess game is because just like a chess game it takes time for the player to decide what chip is he going to move in order to taste victory and major success over the opponent. Same also in business, before taking the road of expansion a company must also consider time in order to arrive in a right decision in choosing location for the expansion of the operation in order for the expanded operation to be successful.
If we take again the chess game, if the player will have the wrong move then great chances for him to lose and for the opponent to win. If we apply it in business expansion, if the company happens to choose the wrong decision that is choosing a location to be used where the operation should be put up and back up with a definitely wrong reason then probably, the company itself may lose focus thus resulting into failing to attain success. Companies should have good strategic choices on location with their opening move.
Companies need to understand that what may work in rural areas, will not necessarily work in urban communities or the other way around that the company wants to reach out to. This is what I thought of, being in the right place and in the right time the company will surely achieve major success in their business coupled also with the acts and deeds of the company or basically the company must do something about it. Companies should also consider the long-term risks of doing expansion.
What I’m talking about is that the operation that the companies expanded might make the organization weak thus resulting to lose of focus and then eventually the expanded operation may not work at its best performance. Companies must be flexible enough so that when consequences strike, they can bend and adapt to whatever problems may occur. I do agree of what Associate Professor Juan Alcacer says that the decision to expand of many companies is sometimes driven by wrong reasons. What I want to emphasize is that being the one or company that plays strategic chess is better than a company who plays as a tactical checkers.
When a company wants to expand their operation the company must think strategically and not tactically. The company should not only think that such location is best in expanding operation because the location or place that the company is about to use is cheap and therefore the labor is also cheap. This idea should not be practice by the company because reducing costs of the company to expand is not basically one hundred percent in providing competitive advantage over competitors.
Professor Juan Alcacer is also right in saying that it is a mistake to allow low costs to completely override other factors. As a strategic player, my overview is that the company must also consider what other companies in that place are doing in order for the company that engages in expansion would have competitive advantage. Prior to expansion, I give emphasis in the study of culture of such place. “Countries are different; consumers are different. People in India are different than the people in the United States.
” this statement caught my attention. Once a business wants to expand its operation I think business should customize their services and products to suit the local culture such as taste and lifestyles. Company must know what the person in that place wants to. Just like for instance when a restaurant wants to expand internationally and locally, they need to learn the local culture and other factors such as the tastes that suit the consuming people in that location for success.
As I say in the previous parts company that expands should be flexible enough. Flexibility adds to its competitive advantage and also the quality and services offered by the company. I think the best example of a company who best shows flexibility, best quality and services is the well-known fast food restaurant, McDonald’s, which is founded by Ray Kroc. The McDonald’s is so successful in expansion and has a high competitive advantage.
McDonald’s are known globally for high quality of food, best in quick service and has enjoyable environment that are catered to all their branches all over the world. Thus, McDonald’s was able to adjust and improve their products and services in order to fit costumer’s needs of every place in which competitors cannot achieve and accomplish. I also agree of what Professor Juan Alcacer says that available resources in that particular location, available support and company’s capability to have competitive advantage are the important things in strategic location assessment.
SEC 3: PROVOKING QUESTIONS 1. What is the most effective strategy that a company must do prior to global or international expansion? 2. In targeting a location prior for expansion, what do companies need to consider so that by the time the shop has been established their efforts and sacrifices will not go into nothing? 3. How do expanded operations of companies maintain competitive advantage over other companies?