Question

Why are so few companies able to use adaptation, aggregation, and arbitrage all at the same time? Can you think of a company that uses (or comes close to using these strategies simultaneously)?

Answer 1

In order to understand why so few companies able to use adaptation, aggregation, and arbitrage all at the same time, we have to understand all the three strategies:

Adaptation strategy: Companies uses adaptation strategies in order to increase revenue and market share by reducing the cost through innovating and design the production process as well as the product.

Aggregation strategy: Aggregation strategy are used by companies to reduce the cost of production by increasing the level of production or by producing a variety of products. This also helps them to gain a competitive advantage over their competitors.

Arbitrage Strategy: Arbitrage Strategy are used by companies to exploit economic and other differences between the national and global market. Companies use Arbitrage strategy to enhance their performance by minimizing the risk and cost.

There are many companies who are adopting one of the above strategies. But it is not possible for all the companies to adopt all the above-mentioned strategies. A company which adopts all the three strategies is P&G. Initially, they started expanding globally by using Adaptation and Arbitrage strategy. Their main focus was on creating mini branches of P&G at various locations. They also decided to outsource their production process at a location which is quite cheaper than the rest of the locations. After gaining more customers in each location globally, this company started using aggregation strategy to increase their level of production as well as to produce a variety of products for their customers.