Effects Of Hybrid Strategy On Organizational Performance (A Case Study Of Nestle Plc)

Project and Seminar Material for Human Resource Management (HRM)

Effects Of Hybrid Strategy On Organizational Performance (A Case Study Of Nestle Plc)


Chapter One


Introduction

1.1 Background of the Study

According to Porter Generic (1980). Low cost and differentiation strategy constitute and effective strategy in overcoming strong competition and postulated the pursuit of the hybrid or ‘combination ‘strategies which involves the adoption and implementation of two strategies at the same time as against the adoption of a single strategy. (Kim et al., 2004; Spanos et al., 2004). The hybrid’ strategies combine the feature of both low cost and differentiation elements (Gopalakrishna & Subramanian, 2001; Proff, 2000).

A combination strategy provides the advantage of viability profitability .Consequently firms that pursue the hybrid strategy achieve higher performance than t firms with singular strategy. Pursuit of a differentiation strategy for low-cost (Yasai-Ardekani & Nystrom, 1996). International Journal of Business and Management Vol. 7, No. 20; 2012 124

A hybrid strategy fundamentally seeks to attain differentiation and low price over its competitor. This is aimed at delivering enhanced benefits to the customers with low price profitably to provide a margin for reinvestment

The hybrid strategy facilitates the sale of product at lower prices than the competitor while at the same time offering higher quality for the product. The hybrid strategy blends the elements of differentiation and low-cost to offer products to customers with a competitive edge. (Thompson et. al, 2012). Most consumers do their purchase of product with high expectations to pay less price for products with somewhat highly differentiated features. As a result, the hybrid strategy is considered most suitable to meet this customer expectation. The, hybrid strategy has become highly essential in the face of global competition when Compared to the single generic strategy. The hybrid strategy facilitates the production of products with differentiated features or characteristics that customers’ value at an additional benefit of low cost compared to competitors’ products.

The implementation of the hybrid strategy provides multiple sources of competitive advantage which include economies of scale, customer loyalty) as against the single strategy.

They also emphasize efficiency in creating value for the customers which enhances customer loyalty. Example of organizations with the hybrid strategy are IKEA (differentiate in design + low cost), Toyota (quality – although under pressure + price) and Ahold (quality + price). Just competing on price is not good enough anymore (Learning, D.A., 2010).


1.2 Statement of the Problem

Acquaah & Ardekani (2006) justified that the implementation of a combined competitive strategy is not only feasible, but will also generate superior incremental performance over the implementation of single competitive

Strategies. The implementation of a combined competitive strategy results in multiple sources of competitive advantage (e.g., economies of scale and brand/customer loyalty) as compared to advantages gained through pursuit

of single competitive strategies.As the pressure of international competition has grown, so too has the demand for hybrid business unit strategies. They combine the competitive advantages of low costs and differentiation. However some challenges exist that need to be addressed otherwise the adoption of the hybrid strategy may result in a colossal loss of investment to the organization.

Some of the envisaged problems include the challenge of managing the hybrid policy effectively to yield the needed objectives. Managing the hybrid policy without proper understanding of its workability could lead to confusion. It could also lead to high expenditure cost in adopting the implementation of two strategies which the hybrid strategy entails. Other challenges include the efficient management team to implement the hybrid policy as well as building and maintaining effective communication network to address issues arising from the adoption and implementation of the hybrid strategy.

The problem confronting the research is to appraise the Effects of hybrid strategy on organizational performance (a case study of nestle Plc.)


1.3 Objectives of the Study

  1. To determine the effects of hybrid strategy on organizational performance.
  2. To examine the level of application of hybrid strategy in Nestle PLC.
  3. To examine the challenges to the application of hybrid strategy in Nestle PLC.

1.4 Research Questions

  1. What are the effects of hybrid strategy on organizational performance?
  2. What is the level of application of hybrid strategy in Nestle PLC?
  3. What are the challenges to the application of hybrid strategy in Nestle PLC?

1.5 Significance of the Study

The study shall appraise the Effects of hybrid strategy on organizational performance (A case study of Nestle Plc).


1.6 Research Hypothesis

Ho: The Effects of hybrid strategy on organizational performance of nestle Plc is low.

Hi: The Effects of hybrid strategy on organizational performance of nestle Plc is high.


1.7 Scope of the Study

The study focuses on the appraisal of the Effects of hybrid strategy on organizational performance of nestle Plc


1.8 Limitations of the Study

The research was confronted by some constraints including geographical factor and logistics.


1.9 Definition of Terms

Differentiation Strategy

According to Pearce & Robinson (2011), The differentiation strategy is adopted as a competitive measure to provide for product or service differentiation based on features, performance, or other factors not directly related to cost and price. The strategy ensures that it is hard for the differences to be copied and imitated

.Consequently Firms in developing countries implementing differentiation strategy focus on several dimensions than on one dimension such as quality, image, innovation, gain customer loyalty, and level of service, all at the same time (Kim et al., 2004). Therefore a differentiation strategy may be based on product image, creating customer loyalty through intensive image and marketing management (Miller, 1988), and creating products that are dependable, durable, innovative, and serviceable (Beal & Yasai-Ardekani, 2000).

Hybrid Strategy

According to Porter Generic (1980). Low cost and differentiation strategy constitute and effective strategy in overcoming strong competition and postulated the pursuit of the hybrid or ‘combination ‘strategies which involves the adoption and implementation of two strategies at the same time as against the adoption of a single strategy.


Chapter Five


Summary, Conclusion and Recommendations

5.1 Summary

This study focused on the Effects of Hybrid Strategy on Organizational Performance (A Case Study of Nestle Plc). The study was set to address three objectives which include;

  1. To determine the effects of hybrid strategy on organizational performance.
  2. To examine the level of application of hybrid strategy in Nestle PLC.
  3. To examine the challenges to the application of hybrid strategy in Nestle PLC.

Based on the above stated objectives and the study carried out, the following findings were made:

  1. That the effects of hybrid strategy on organizational performance include that it helps in promoting productivity in the organization; it helps in ensuring employee satisfaction; it develops the physical, social, emotion and cognitive domains of the employees which increases performance; it develops and equips the employee with the knowledge and the requirements needed for the job delivery and it promotes performance in the industry.
  2. That the level of the application of hybrid strategy in Nestle PLC is low.
  3. That the challenges to the application of hybrid strategy in Nestle PLC include lack of trained personnel; lack of motivation from the management; lack of political will and lack of enabling infrastructure or equipment to implement the plan.
  4. That the effect of hybrid strategy on organizational performance of Nestle Plc is high.

5.2 Conclusion

The main purpose of this study was to assess the Effects of Hybrid Strategy on Organizational Performance (A Case Study of Nestle Plc). All the employees of Nestle PLC, Lagos, Nigeria were selected for the study. Three research questions guided the study with one research hypothesis.

In this study, a survey research design was adopted, the population comprises all the employees of Nestle PLC, Lagos, Nigeria, a simple random sampling technique was used to select 100 respondents from the population and a questionnaire was the instrument for data collection. Relevant literatures were reviewed which guided the objectives and methodology of this study. As result of the field study and analysis of results, the following findings were made:

  1. That the effects of hybrid strategy on organizational performance include that it helps in promoting productivity in the organization; it helps in ensuring employee satisfaction; it develops the physical, social, emotion and cognitive domains of the employees which increases performance; it develops and equips the employee with the knowledge and the requirements needed for the job delivery and it promotes performance in the industry.
  2. That the level of the application of hybrid strategy in Nestle PLC is low.
  3. That the challenges to the application of hybrid strategy in Nestle PLC include lack of trained personnel; lack of motivation from the management; lack of political will and lack of enabling infrastructure or equipment to implement the plan.
  4. That the effect of hybrid strategy on organizational performance of Nestle Plc is high.

5.3 Recommendations

Based on the findings of this study, the following recommendations are made:

  1. One of the findings of the study revealed that the level of the application of hybrid strategy in Nestle PLC is low, therefore, this study suggests that the management of Nestle Plc should fully adopt hybrid strategy in the runnings of the organization.
  2. Organisations must possess appropriately skilled production coordination competences in order that factory efficiencies are maximised and client orders completed in a timely manner.
  3. Management of Nestle Plc should enroll its staff on periodic training that will help improve the application on hybrid strategy in the organization.

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