Passive Activity Losses Case Solution

The Harvard Business Review published a case study that primarily focuses on Passive Activity Losses. The following case solution has been designed to give the reader an overview about the business world along with a clear understanding of its growth dynamics. Recently, Passive Activity Losses has been subjected to strategic as well as managerial problems that require immediate attention so that they can be resolved to allow future growth, expansion, and competitive edge within the marketplace. This case study solution is being written to provide a strategic solution to Passive Activity Losses using various appropriate tools and frameworks. Harvard Business Review’s case studies involve a central problem that is faced by a particular company. The problem identified involves strategic and managerial implications for the company. Therefore, it is important for readers to critically identify the problem Passive Activity Losses faces. Moreover, it is also essential to highlight the key stakeholders that are impacted and influenced by the problem identified.

External Environmental Analysis

The external environment holds significant importance for Passive Activity Losses to ensure that the company is able to respond to all the changes in the macro-environment. This is because Passive Activity Losses cannot control the factors and thus can directly influence the company's operations (Indris & Primiana, 2015). The external environment of Passive Activity Losses will be assessed using PESTLE Analysis.

Political

• A stable political environment provides a favorable market growth trend for Passive Activity Losses.

• It is important for Passive Activity Losses to analyze the pressure groups, and social environment activists. The company can make close collaborations with these groups to achieve company goals (Wang, Wang, & Shi, 2022).

• High restrictions on trade and high levels of taxes can contribute to the complex business environment for Passive Activity Losses by impacting imports and exports.

Economic

• Passive Activity Losses can benefit from wide-range opportunities in business growth by operating in developing economies (Munro, 2017).

• High GDP can determine the long-term growth strategies of Passive Activity Losses, signaling the ability of consumers to spend on more products.

• Higher rates of interests can provide Passive Activity Losses with more investment opportunities.

• The flexibility in the labor market allows Passive Activity Losses to take advantage of higher workforce productivity.

Social

• The selection of appropriate demographic segments has allowed Passive Activity Losses to select the right segments of the market that have high growth potential.

• The research on gender roles has helped Passive Activity Losses to develop and align communication as well as marketing strategies accordingly.

• Passive Activity Losses has been successful in understanding the norms and cultures of different countries by developing local teams and partnerships (Hueske, Endrikat, & Guenther, 2015).

Technological

• The adoption of innovative marketing techniques that involves communication technologies has allowed Passive Activity Losses to collaborate successfully with consumers.

• The company has stayed ahead in the market, and can significantly increase its market share by placing its major focus on emerging technologies (Akpoviroro & Owotutu, 2018).

• Passive Activity Losses should maximize its profits by investing in disruptive technologies.

Environmental

• It is crucial for Passive Activity Losses to adopt effective waste management practices to reduce environmental pollution (J. K, W. J, & D., 2016).

• Passive Activity Losses should adopt eco-friendly products to establish better relationships with the stakeholders.

• Passive Activity Losses can take advantage of subsidies offered in renewable technologies to achieve the long-term goal of sustainability.

Legal

• Passive Activity Losses should follow proper laws concerning employee health and safety, and anti-discrimination laws to effectively develop HRM.

• Consumer protection laws are also important for Passive Activity Losses as it involves the consumer protection from fraudulent marketing (S. Samusenko, S. Plaskova, & A. Prodanova, 2020).

• Passive Activity Losses can gain a competitive advantage, and can position itself strongly in the market by protecting intellectual property laws.

Porter’s Five Forces Analysis

Threat of New Entrants

• It is difficult to achieve economies of scale in Passive Activity Losses’s industry, making it a weaker force for new entrants.

• There are high capital requirements in the industry. This makes it difficult for new businesses to set up their companies, and compete against Passive Activity Losses.

• The industry has a strong product differentiation, and heavy investment is needed for customer acquisition. Thus, Passive Activity Losses can focus on innovation to differentiate itself from its competitors (H. Th. Bruijl, 2018).

• There are strict legal requirements to join the industry in which Passive Activity Losses operates, making it difficult for new entrants to enter the market.

Bargaining Power of Suppliers

• The bargaining power of suppliers in the industry is weak.

• Passive Activity Losses operates in an industry with a higher number of suppliers. This means that suppliers do not have much control over their prices.

• Standardized products that have low switching costs are provided by suppliers allowing buyers like Passive Activity Losses to easily switch their suppliers (Fabbri & F.Klapper, 2016).

• Raw materials can be purchased at lower prices by Passive Activity Losses. The company can also switch suppliers for more reasonable pricing.

• Passive Activity Losses can benefit from a variety of suppliers as it can have multiple suppliers for its various geographical areas (Cho, Ke, & Han, 2019).

Bargaining Power of Buyers

• The bargaining power of buyers in the Passive Activity Losses industry is weak.

• There is a high product differentiation in the industry, making it difficult for buyers to switch to alternative firms.

• Passive Activity Losses can come with differentiated and innovative products to attract more buyers of the industry (Zhao, Zuo, & Wu, 2016).

• Buyers of this industry has low incomes. This means they prefer to purchase items at lower prices, making them more price sensitive. Organizations like Passive Activity Losses can offer lower prices to attract customers.

Threat of Substitute Products or Services

• There are few substitute products available in the industry in which Passive Activity Losses operates.

• Expensive substitutes are available in the industry of Passive Activity Losses, making it difficult for buyers to switch to those substitutes (Aithal, 2016).

Rivalry Among Existing Firms

• The rivalry among existing firms is moderate to weak.

• There are few competitors in the industry in which Passive Activity Losses operates.

• A large market share is enjoyed by fewer firms in the industry. This means that more competitive actions will be made to become leaders in the market (Seema, 2016).

• The industry in which Passive Activity Losses operates has highly differentiated products, making it difficult for companies to win each other customers.

• Passive Activity Losses can focus on making more differentiated products to gain a strong competitive edge in the market (Zhao, Zuo, & Wu, 2016).

Internal Environmental Analysis

Passive Activity Losses can use internal environmental analysis to identify and evaluate the competitive positioning of a company in the business environment. This involves conducting a SWOT Analysis that can help Passive Activity Losses to identify the company’s internal strengths, weaknesses, opportunities, and threats (Halmaghi, Iancue, & Băcilă, 2017).

SWOT Analysis

Strengths

• Passive Activity Losses has a strong distribution network that has allowed it to make its products available to large customers within the given timeframe.

• A strong presence on social media platforms has allowed Passive Activity Losses to have a high level of customer engagement (Rizaldi, 2015).

• Passive Activity Losses has been successful in building a large product portfolio, so unique and distinctive products can be offered to consumers.

• Passive Activity Losses has a strong brand image in the market.

• A low-cost structure of Passive Activity Losses has allowed it to manufacture products at lower costs, so they become affordable for consumers to purchase.

• The financial position of Passive Activity Losses is strong as the company has generated higher profits over the past years (Phadermrod, M.Crowder, & B.Wills, 2019).

• Passive Activity Losses has invested in the training and development of its employees to keep them motivates, leading to higher efficiency and productivity.

Weaknesses

• The expenditure of Passive Activity Losses on its research and development is comparatively less to other competitors of the market.

• Passive Activity Losses uses a centralized decision-making process that takes time and reduces operational efficiency (Ahmadi, Dileepan, & K. Wheatley, 2016).

• There are high rental costs because Passive Activity Losses operates on more of the rental properties rather than purchasing them.

• There is no workforce diversification in Passive Activity Losses. This makes it difficult for the employees to adjust with the different workers who belong to different backgrounds.

Opportunities

• Since the online shopping has increased significantly, Passive Activity Losses can take it as an opportunity to expand its online presence.

• Passive Activity Losses can make use of social media platforms to market its products, with more customers interactions.

• Due to more technological developments, Passive Activity Losses can make its operations more automated so that overall company costs can be reduced (Ahmadi, Dileepan, & K. Wheatley, 2016).

• Globalization provides an opportunity to Passive Activity Losses to expand its operations in multiple countries.

• Passive Activity Losses can enter in a niche market and sell distinctive products to gain a competitive advantage.

• The increase in the demand of environmentally friendly goods, Passive Activity Losses, can place its major focus on making such products (E.Quezada, A.Reinao, & I.Palominos, 2019).

Threats

• In recent times, there has been an increase in the bargaining power of suppliers, making it difficult for Passive Activity Losses to buy raw materials at lower costs.

• Numerous players are entering the industry, posing a major threat to Passive Activity Losses.

• There has been constant pressure on Passive Activity Losses to conduct frequent research to understand the changing customer tastes and preferences (Kolbina, 2015).

• Technological advancements require workforce training. This adds to the costs of Passive Activity Losses.

VRIO Analysis

Passive Activity Losses uses VRIO Analysis to assess and evaluate the company resources to determine the competitiveness, and strategic advantage.

Valuable

• Passive Activity Losses has a strong brand image and engages in corporate social responsibility.

• Passive Activity Losses has a high brand recognition because of the quality of products it offers to its customers (Ariyani & Daryanto, 2018).

• The distribution system of Passive Activity Losses is valued all round the world. The company has been able to successfully establish strong relationships with its suppliers.

• Passive Activity Losses focuses on continuous innovation in its business. The company has expanded this innovation in its multiple functional areas.

• There are potential growth opportunities in the market, and Passive Activity Losses has been able to penetrate the market through its ability to raise large funds.

Rare

• Passive Activity Losses operates globally. This global presence has allowed the company to increase its customer base (Miethlich & G. Oldenburg, 2019).

• Passive Activity Losses has an organizational culture that promotes more teamwork, innovation, and creativity among its employees, that leads to a competitive advantage.

• Since Passive Activity Losses has a global presence, it allows the company to easily adapt to different cultures, norms and values.

• The risk-taking ability of Passive Activity Losses is strong. This provides more opportunities to the company to penetrate different markets.

Inimitable

• The inimitable resource for Passive Activity Losses is its high-quality products. These products have allowed consumers to make repeat purchases.

• Passive Activity Losses operates through multiple locations of stores in different companies, allowing easy access to products.

• Strong marketing communications have been used by Passive Activity Losses to attract more customers.

• Passive Activity Losses has been using integrated technology that has allowed it to offer competitive pricing to its customers (Ariwibowo, Saputro, & Haryanto, 2021).

• Passive Activity Losses maintains an excellent customer service that has enabled it to have a high brand engagement.

Organization

• Strong financial position has allowed Passive Activity Losses to explore more product development opportunities.

• Passive Activity Losses is successfully maintaining the efficiency and effectiveness of its business operations with the help of more integrated and advanced technology.

• Employees are given both in-house and off-the-job training opportunities by Passive Activity Losses that allow more skills development (Adnan, Abdulhamid, & Sohail, 2018).

• The strong value chain and distribution network has enabled Passive Activity Losses to increase its revenue through the sale of its products.

Marketing Mix

Marketing Mix is needed by Passive Activity Losses to formulate effective strategies to achieve the company objectives.

Product

• Passive Activity Losses has five product categories. Each of these categories has a product line that involves more variety of products (Išoraitė, 2016).

• Highly differentiated products are offered by Passive Activity Losses to its customers. These distinctive products are not easily available at competitors.

• The products of Passive Activity Losses are of higher quality, and thus, customers pay more prices for these products.

• Passive Activity Losses designs products with traditional designs giving customers more product variety.

• Passive Activity Losses offers multiple sizes for its every product to make it easy for its customers to select the right product.

• Warranty and same-day delivery option if also provided by Passive Activity Losses to its customers.

Price

• Passive Activity Losses follows a competitive pricing strategy.

• To attract more customers, bundle pricing has also been used by the company.

• Little higher prices are charged for products that are sold online because of the delivery costs (Thabit & Raewf, 2018).

• Optional product pricing strategy is also adopted by Passive Activity Losses for some of its products, such as a base product is offered for a certain price, and there are separate prices for its accessories.

• Regular promotional prices are also offered by Passive Activity Losses to its customers.

Place

• Passive Activity Losses uses two channels for its product distribution. This includes online selling and through own stores.

• There are more than multiple stores owned by Passive Activity Losses globally. This ensures easy product availability to customers (Pogorelova, Yakhneeva, & Agafonova, 2016).

• Passive Activity Losses has partnered with delivery service companies to distribute its products effectively to consumers.

• Passive Activity Losses has also adopted an omni-channel distribution system.

Promotion

• Passive Activity Losses uses a traditional promotional strategy that involves TV advertisements (Fan, Y.K.Lau, & Zhao, 2015).

• Social media advertisements are also adopted by Passive Activity Losses to increase brand awareness.

• Passive Activity Losses takes part in various events and exhibitions as a way of promoting its products.

• Large sales force is used to provide the customers with a more personal experience.

• Passive Activity Losses also makes use of influencer marketing to increase the demand for its products.

• Regular content and deals are posted on the social media pages of Passive Activity Losses to attract and retain customers.

Value Chain Analysis

Passive Activity Losses can use Value Chain Analysis to identify and assess inter-relationships as well as interdependencies.

Primary Activities

• Passive Activity Losses’s primary activities involves the production and selling of products to the final consumers (Mintz, J.Gilbride, & Lenk, 2021).

• Passive Activity Losses has a strong relationship with the suppliers. This ensures that the product is received, stored, and distributed in a timely manner.

• Operational activities of Passive Activity Losses are effectively aligned.

• For inbound logistics, after the arrival of raw material, the company processes it to manufacture the final product (Hasan, Nekmahmud, & Yajuan, 2019).

• In terms of outbound logistics, Passive Activity Losses has been able to set up optimal costs as well as efficient delivery processes to deliver the product on time.

• Passive Activity Losses invests in its sales and marketing activities to build relationships with customers.

• Marketing funnel approach is used by Passive Activity Losses to effectively devise and build sales and marketing activities.

• Passive Activity Losses offers both pre-sale and post-sales services to its customers.

Secondary Activities

• Passive Activity Losses has an effective infrastructure that has allowed the company to successfully optimize its value chain.

• The competitive pressure in terms of employee skill development, motivation, and commitment is reduced as Passive Activity Losses has developed a strong HRM (Linkov, Carluccio, Pritchard, & Bhreasail, 2020).

• Passive Activity Losses uses a cost minimization approach to reduce its costs by analyzing the costs associated with training and hiring the employees.

• Passive Activity Losses has been using integrated technology in its value chain activities. This includes technological customer support, research and data analytics concerning product design, and automated software.

• The procurement activities of Passive Activity Losses are effectively optimized with its inbound, outbound, and operational activities (Maheswari, Yudoko, & Adhiutama, 2019).

Market Penetration Strategies

• Passive Activity Losses can increase the capacity of its production so it can reach more of the customers in its existing market.

• Passive Activity Losses can focus on controlling the overhead costs so that it can offer competitive pricing that can attract customers of the market (Dawes, 2018).

• Investments can be made by Passive Activity Losses in marketing and sales activities to increase the chances of successful market penetration.

• Passive Activity Losses can design and develop a content that increases customer engagement within a particular marketplace.

• Passive Activity Losses can assess and identify more enhanced distribution networks (Radpour, Mondal, & Kumar, 2017).

• Improved distribution systems and supply chains can improve the product accessibility for the customers, making it easier for Passive Activity Losses to penetrate the market.

• Passive Activity Losses can adopt price cuts in its products to compete in the market. This will give a company a competitive edge over its competitors.

• Passive Activity Losses can plan strategies where it can focus on acquiring the leading players of the market. Such acquisitions will give the company an opportunity to reach more customer segments.

• Strategic partnerships and joint ventures agreements can be signed by Passive Activity Losses to mitigate the risk factors, and to gain customer groups of the market.

• Passive Activity Losses can come up with new and innovative features in its already existing product for the market (Daouda, Barth, & T. M. Ingenbleek, 2019).

Market Development Strategies

• It is important for Passive Activity Losses to invest in the research and development department so potential markets can be identified (Hilman, Bohari, & Abdullah, 2018).

• Regional expansion strategy can be used by Passive Activity Losses for growth purposes. This will also take into consideration the cultural differences.

• Passive Activity Losses should also consider to expand its business operations in the international market. This will allow access to a larger customer base.

• New customer groups and segments should be explored by Passive Activity Losses.

• Passive Activity Losses should also invest in brand-building activities as it will give an opportunity to reach more potential customers (C. Koks & M. Kilika, 2016).

• Passive Activity Losses should consider the market education in terms of its product. The company can significantly increase its sales by giving product awareness to new segments.

Product Development Strategies

• Passive Activity Losses can come up with new improvements and modifications in the existing products to attract the market.

• Passive Activity Losses should undergo the NPD process, so the company is able to assess and identify new points for its customers.

• Regular investments in the research and development will help Passive Activity Losses to develop something new and innovative that can give a competitive advantage (Kalogiannidis & Mavratzas, 2020).

• Passive Activity Losses can develop new products by getting into more strategic partnerships.

Diversification Strategies

• Passive Activity Losses can adopt vertical diversification to develop business. This can be done by adding more products to the existing portfolio (Kalogiannidis & Mavratzas, 2020).

• Horizontal integration can also be adopted by Passive Activity Losses, where the company can enter into a completely new product development phase that does not exist in the current product line.

• Passive Activity Losses can also consider to conglomerate by starting a different business.

Conclusion

Based on all the models and frameworks discussed above, it is concluded that Passive Activity Losses should focus on widening the existing product portfolio. Moreover, the psychological pricing strategy can be adopted. Passive Activity Losses should also maintain close relationships with its suppliers to benefit from lower prices. Similarly, Passive Activity Losses should develop more integrated outbound logistics for its perishable items. It is also important to continue producing quality and innovative products, so Passive Activity Losses is less affected by the new emerging competition in the industry.

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