Assignment on Business Strategy (sample-3)

 
Introduction:

1. 
   
   We live in modern era where every company is competing with other companies for its existence. For getting the competitiveness company should give importance on business strategy and they will modify this with time. Strategic business planning is very vital.
   Either business owners or top management will determine business strategy. At the beginning of the business owner select the business strategy. Business strategy doesn’t keep same all the time and it changes with time and situation. Business owners will do the market research and prepare the plan. Big organizations invest huge amount of money on preparing business strategy and they are very much concern about the present and future market of their respective field. Sometimes they take help from expertise or specialist or consultant. Without a proper business strategy it is quite tough to attain organizational goals and objectives. Organization can divide its business strategies on basis of short-time, mid-time and long-time [1].
   
   

2. Understand the process of strategic planning

   1. Explain strategic contexts and terminology missions, visions, objectives, goals, core competencies

      
      
      

      Vision:

      Vision has been defined in several different ways.
      
      
      El-Namaki considers it as a "mental perception of the kind of environment an individual, or an organization, aspires to create within a broad time horizon and the underlying conditions
      for the actualization of this perception". Vision is the common stand of thought and it is the future aspirations which lead to become best in one’s respective field [2].
      
      

      Mission:

      In brief, the mission illustrates the technological areas, market or product of the business. It can be defined as the basic and unique purpose which differentiates the business organization from others in terms of product and services. It contains the business philosophy; reflects the organization’s self-concept; identify the main services and products and customer needs the organization will try to convince [2].
      
      

      Objective:

      For accomplishing the organization’s mission it requires different set of objectives. For gaining the organizational objectives, it is needed to attain departmental objectives. There are different kind of objectives like short-time, long-time and mid-range objectives. Long term objectives focus on organization missions and short time objectives concentrated on performance targets. Short term objectives are prepared on basis of long term objectives [2]
      
      

      Goals:

      Goals are the definite intervening or eventual time-based estimations to be gained by implementing business strategies in pursuit of the organization’s objectives. It should be achievable, realistic, consistent and quantifiable. They can relate to aspects like efficiency, utilization, profitability, finance, product and market share and market size.
      
      

      Core Competence:

      Core competence means a set of skills which applied to the worker and the companies they constitute are the foundation for what the business possesses that set it apart from its peers. Those skills have a great influence on decision making and strategic planning.
      
      

   2. Review the issues involved in strategic planning

      
      
      Strategic planning depends on some issues. Those issues are very important and those factors have major impact on future business. Those issues probably relate directly to one or more of the fundamental “Three Strategic Questions”:
      What are we going to sell?
      To whom are we going to sell it?
      How will we beat or avoid our competition?
      • 
        
        Strategic Issues lies right at the heart of Simplified Strategic Planning. Very few Strategic Issues come out of thin air. They are the products of hard digging. Strategic planning will focus on those issues which are related to organizational threats, opportunities, weaknesses and strengths. Strategic issues may vary from company to company and year to year. But there are some general issues which have great impact on strategic planning and those are:
        
        
      E-commerce product
      Strategic joint ventures/ mergers/ acquisitions/ alliances
      Resource limitations
      Organizational change
      Culture modification
      Strategic competencies
      Strategic focus
   3.  [3]
      
      

   4. Explain different planning techniques

      
      
      There are different planning techniques among them SWOT analysis is more popular and widely used. Some other techniques are MOST and STEER etc.
      SWOT: SWOT analysis measures the organizations strength, weaknesses, opportunities and threats. It examines both internal and external factors which affect organization’s current success. Strengths identify what is already in operation and how to gain success. Weaknesses find out those factors which is disadvantageous for the organization and how to minimize those factors. Opportunities examine the improvements like assets, labour and capital. Threats find out internal and external threats.
      
      
      MOST: This is very much effective for medium to large sized enterprises and MOST stands for mission, objectives, strategies and tactics. MOST is a top-down holistic approach which frees a company from internal analysis trap and keeps a true reflective strategy in view.
      STEER: it is the newer version of PEST analysis and it concerns about ecological and environmental factors of business in the 21st century. It covers socio-cultural, technological, economic, ecological and industry regulation.
      All of the above techniques are very effective and efficient and an organization may follow any of the technique for their strategic planning.
      
      

3. Be able to formulate a new strategy

   1. Produce an organizational audit for a given organization Organizational audit for Sports Direct:

      Sport direct is currently doing profitable business. The internal condition is quite good enough. Management and stuffs have good relations and they are working together to attain organizational goals. Their goal is to provide good products with reasonable price. They always maintain high standards. They are always committed to provide good customer services. They did the organizational audit to justify their present condition. Auditor’s activities help an organization to grow properly and to gain success. Auditors checks different issues and factors which is directly related to the organizations aim and objectives. Auditors inform the governors and managers about the organizational system or process are working properly or not. Organizational audit of Sports Direct help managers to improve various operating systems and process where necessary. Audit report is very vital as it shows the strength and weakness of the organization. Audit report is examined by the audit committee, the accounting officer, the board of trustees or the board of directors and so on.
      
      

   2. Carry out an environmental audit for a given organization Environmental report of Sports Direct:

      •  Group revenue up 10.2% to £1,599m (2010: £1,452m)
      • UK Retail up 11.3% to £1,245m (2010: £1,118m)
      • International Retail up 10.3% to £132.3m (2010: £119.9m)
      • Brands division down 1.5% to £187.7m (2010: £190.5m)
      • Underlying EBITDA up 24.9% to £200.4m (2010: £160.4m)
      • Underlying profit before tax up 32.7% to £135.5m (2010: £102.1m)
      • Reported profit before tax down 0.6% to £118.8m
      • (2010: £119.5m)
      • Group gross margin increased by 60 basis points to 41.2% (2010: 40.6%)
      • UK Retail gross margin increased to 41.9% (2010: 41.3%)
      • Underlying earnings per share up 35.9% to 16.83p (2010: 12.39p)
      • UK Retail like-for-like gross contribution increased by 6.6%
      • Substantially reduced net debt by 52.3% to £148.9m (2010: £311.9m)
      • Net debt to underlying EBITDA of 0.74 times
      • The Board decided not to recommend a final dividend
      • Growth in Brands Licensing - 95 new licensees during the year
      • Nike Academy - training nearly 1,000 employees
      • Continued International expansion with our first stores opening in Portugal
      • Continued to strengthen our UK market leading position [5]
      
      

   3. Explain the significance of stakeholder analysis

      
      
      Stakeholder analysis needs to be undertaken in every stages of the project cycle but it should be undertaken at the outset of a program or project. In Define phase, stakeholder analysis is very important element of situation analysis. Stakeholder analysis gives details information regarding major stakeholders and most important stakeholders and who is the most influential stakeholder and how they are contributing in the program and process. Stakeholder analysis will shape the strategic development and inform risk analysis. In implementation phase, stakeholder analysis will identify when, how and who will be involved in program or project activities. In the analyze/ adapt and share phases, the stakeholder analysis works as a reminder, giving a standard against which programs can monitor and assess the usefulness and efficiency of their adjustment with stakeholders, both opposing and supportive [6].

4. Understand approaches to strategy evaluation and selection 4.1Analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment

In common with other popular strategy models, it is build around a two by two matrix.

• Current products or new products.
• current markets or new markets

  The Four Growth Options Of The Ansoff Growth Matrix

• Market penetration strategy – current products and current markets.
• Product development strategy – new products and current markets.
• Market development strategy – current products and new markets.
• Diversification – new products and new markets These are best seen in a diagram.

Option 1 In The Ansoff Growth Strategy Matrix – Market Penetration

Market penetration strategy is the preferred route to growth for many businesses because it appears safe.

Focus is on selling more of the existing products to:

1. Existing customers.
2. Customers similar to your existing customers who are buying from your competitors.
3. Customers similar to your existing customers who should be buying buying the product because they have a clear need but aren’t doing so.

Option 2 In The Ansoff Growth Matrix – Product Development

In product development, businesses continue to focus on the needs of current customers and the wider customer market they represent but they seek to understand their underlying needs and wants better so they can see opportunities for new products:

1. To replace existing products with something better.
2. To provide complementary products that customers need to buy before, during or after purchase of the main product sold by the business..
3. To sell other products the customer buys as a way to strengthen or leverage the relationship and to provide added convenience. Think “one stop shop”.

New products in the product development option of the Ansoff Growth Matrix don’t need to be “bleeding edge” new developments to the world although they can be. The business can work with existing supplier businesses with established resources and capabilities and offer them new routes to market.

Option 3 In the Ansoff Growth Strategy Matrix – Market Development

The third option suggested by Ansoff is to take the current products and find new markets for them.

There are different ways to do this

1. Opening up previously excluded market segments through pricing policies e.g. discounts for students and old age pensioners at theatres..
2. New marketing and distribution channels. Making a product available on the Internet with the necessary search engine optimisation means that anyone looking can find it, rather than rely on your marketing message to reach them by convention means. The supermarkets sell financial services to people who wouldn’t contact a broker or agent.
3. Entering new geographic markets by moving from local to regional to national and finally international. This may require the business to acquire new capabilities including exporting, understanding different cultures and language skills.

The strength of this option from the Ansoff Growth matrix is that it puts the pressure on the marketing and sales functions of the business and leaves the operations/supply side to concentrate on what it does best.

Option 4 In The Ansoff Growth Matrix – Diversification

This option is the most controversial since diversification involves taking new products to new customers.

There are three levels of diversification:

1. Diversification into related markets.
2. Diversification into unrelated markets using existing resources and capabilities
3. Diversification is the most risky growth strategy in Ansoff’s growth matrix and especially if it requires the development of new resources and capabilities. It has even been referred to as the “suicide cell”. [8]

4.2Select an appropriate future strategy for a given organization

Sports direct future growth strategy under the banner "2020 doing the RightThing"

• Improving its operations to save costs,
• 
  
  Expanding the options for customers to buy products - especially online
  
  
• Online sales are expected to almost triple to GBP57 billion in 2020 from GBP21 billion this year according to research by Verdict, Forrester and Javelin Group
  
  
• Driving its business outside of the U.K.
• 
  
  It would improve its supply chain.
• 
  
  Implement new IT systems which would save it GBP250 million by 2015/2016through capital expenditure over the same period of GBP1 billion.
  
  
• Consolidating distribution sites which would mean further warehouse closures on top of the 21 already closed,
• Sending products directly to the country of sale rather than routing everything through a central U.K. hub, and refreshing stock systems and data collection.
• Store sales are expected to shrink slightly by 2020 to GBP206 billion fromGBP212 billion this year
• The final plank in ITV's strategy is to grow its international.[7]
• Diversification into unrelated markets which require new resources and capabilities.

1. Understand how to implement a chosen strategy

   1. Compare the roles and responsibilities for strategy implementation

      
      
      The success of strategy implementation in the modern business environment strongly hinges on strong managerial leadership .Strategic leadership requires that the Chief Executive Officer embraces and implement change. In so doing, the leader must do the following i.e. he or she should clarify strategic intent .Strategic intent refers to the future goal of an organization i.e. the purpose to which an organization exists. With this regards, the leader should set out a clear vision. Organizational leaders should be aware of the shareholder’s expectations while clarifying the strategic intent. Sports Direct International which is a leading sports retailer has a strategic intent of serving the society through providing customers with quality products at affordable prices. With this regards, the Chief Executive Officer has the role of clearly communicating this strategic intent to the employees before a new strategy is implemented. The strategic intent of JD Sports is to place its product within an arm’s reach of desire i.e. it aims at placing its products within consumers reach globally. Thus, the Chief Executive Officer of JD Sports company should be clear about the organization’s strategic intent before implementing a new strategy. This will help him or her to plan ahead and avoid reacting to changes as and when they arise. Setting a clear vision is important as it facilitates the controlling function and also increases motivation and performance amongst employees (Lapovsky, & McKeown-Moak, 1999, 66).
      The organizational leader should shape the organizational culture i.e. he or she must build values and believes that shapes the organizational positively. Organizational culture refers to the basic believes that are held by staff remembers within the organizational. The organizational culture plays an important role of defining a company’s view of itself as well as its environment. JD Sports Company is a multinational company and thus diversity forms a fundamental part of the organization. Sports Direct International Company which is a global business faced challenges while during the implementation of an Information Technology strategy as a result of its organizational culture (Lapovsky, & McKeown-Moak, 1999, 66).
      Organizational leaders should be able to implement a new strategy effectively without necessarily disrupting their organizations’ daily operations. With this regards, they should be able to manage change. Organizational change refers to the modification of a company’s activities and process in order to deal with the environmental changes and problems that may arise. There are various reasons why people resist change in an organization. Some of the reasons include the following; employees fear the uncertainty once a new strategy is implemented, they may not be ready to give up their current beliefs, they might be readily aware of the weaknesses that a new strategy poses once it’s implemented among others. In order for the organizational leaders to overcome resistance to change, they must do the following i.e. they should engage their employees when the new strategy to be implemented affects their work, reduce fear of uncertainty by informing their staff members about their new roles once the strategy is implemented and adopt a systematic approach while implementing change. Top management support is also crucial as far as overcoming resistant to change is concerned. The management can also use coercion while implementing a new strategy to force the workers to change. However, this method works best in crisis situations when a quick response is required. For example, several senior managers at JD Sports Company had to be reassigned after they resisted the new changes that were proposed by the new Chief Executive Officer. The Toyota company senior leadership team decided to pay its employees at the United States plant huge bonuses in order to compensate those who suffered financial loss during the change process
      
      

   2. Evaluate resource requirements to implement a new strategy for a given organization

      
      
      For implementing the new strategy various resources are required like new product, more outlets, people, leaders and capital. All those resources are illustrated in the following part: Product – it is very important resource to implement new strategies. Sports Direct will justify present and future market and customers needs and demand and produce products according to the market condition. They will prepare products which will satisfy traditional demand and future aspirations. They will mainly give importance on dresses and shoes to develop and consolidate.
      Stores: most of the stores of Sports Direct are relatively small and they are very intended to increase the store spaces. Most of the customers like big space for shopping rather than
      congested space. In future they will nurture their brand names, develop the distribution channel and use more store space.
      People: they will recruit some talented and hard working person to implement their future strategy. They will recruit people to maintain the values that the founder installed into Sports Direct. All the people will be dedicated to maintain the values, services, quality, innovation and drawing to enhance trust and loyalty among the customers.
      Leaders– managers and leaders play very vital role to implement new strategies and their synergy help the organization to reach its destination. Manager will focus on the means whereas leaders will focus on the ends and their combined effort will boost the performance of the organization. Leaders will show the vision and mission and manager will execute those missions.
      Capital – capital is badly needed to implement new strategies because Sports Direct wants to change its production, operation and brand image. To implement new strategies they need huge amount of money but they need to invest that money wisely [7].
      
      

   3. Discuss targets and timescales for achievement in a given organization to monitor a given strategy

      
      
      Sports Direct International is one of the leading sports retailer .In a move to increase its customer base, Sports Direct International is betting on a global expansion strategic plan. This move is informed by reaching the apex as the company of choice. The corporation has more than has operations in 12 countries across the globe. The company aspires at opening new store in South Africa and Asia. Sports Direct International is guided by six main principles i.e. the sports products , partners, customers ,its stores, neighborhood and shareholders. The company’s main target is to increase its market share over the next two years while enhancing customer’s loyalty. The company can achieve its objectives by offering new incentives to existing customers. This will enhance their loyalty and also attract new ones. Sports Direct International could offer its customers with vouchers as an incentive. The corporation could consider setting up special offers during the month of December with an aim of attracting new customers. The senior leadership team at Sports Direct International should break down the company’s strategy into lesser and achievable targets. This is important because it provides the management team with an opportunity of stepping back and analyzing the most ideal method to use. Breaking down targets allows the management team to find out the best way to achieve more. The company should consider adopting a mass
      marketing approach. This approach will enable the corporation to reach out to both big and smaller customers. New products should also be introduced in order to enhance the company’s growth. The company should also consider lowering prices in order to attract new buyers.
      
      

2. Conclusion

Strategic planning is a fundamental business process, and one that all business owners must go through at some stage of their business lifespan. From day one onwards, business strategic planning is crucial to your business's growth and success and without an eye to the long term, it would be impossible to increase the size and stature of your business. While strategic planning time doesn't result in a direct return to your business, it is time well spent, given the long term advantages that arise from having a solid strategic plan and planning your next moves in a business sense.

Reference:

1. Articlesbase website, The importance of business strategy planning, (July 25, 2008) , Retrieve on: 13/05/12, Available at: http://www.articlesbase.com/strategic- planning-articles/the-importance-of-business-strategy-planning-496641.html
2. NVS. Suryanarayana, Vision, mission and objectives of Business, (September 2010), Retrieve on: 13/05/12, Available at: http://www.articlesbase.com/business-ideas- articles/vision-mission-and-objectives-of-business-3187165.html
3. Thomas E. Ambler, Strategic Issues: The Pivotal Process for Strategic success, Retrieve on: 13/05/12, Available at: http://www.strategyletter.com/cp_0799/FeaturedArticle.php
4. Business analysis for strategic planning, Retrieve on: 13/05/12, Available at: http://www.kbmsglobal.com/2011/12/15/business-analysis-techniques-for-strategic- planning/
5. Annual report of Sports Direct-2011, Retrieve on: 13/05/12, Available at: http://media.sportsdirectplc.com/App_Media/SportsDirect/pdfs/2011_Annual_Report. pdf
6. Cross cutting tool, Stakeholder Analysis, October 2005, Retrieve on: 13/05/12, Available at:
   http://assets.panda.org/downloads/1_1_stakeholder_analysis_11_01_05.pdf
7. Business Strategy, http://www.scribd.com/zain_lakdawala/d/73278045-Business- Strategy-23-33
8. Paul Simister, Ansoff Growth Matrix- Four Ways to grow a Business, Retrieve on: 13/05/12, Available at: http://www.differentiateyourbusiness.co.uk/ansoff-growth- matrix-four-ways-to-grow-a-business