Assignment on Business Strategy (sample -5)

1.  

2. Introduction:

   
   
   Business strategy is very important for an organization as it help to attain a specific goals and objectives. It is one kind of management plan which helps to increase the performance of an organization. Former U.S. President and military commander, Dwight D. Eisenhower, stated that “A finished plan is generally worthless, but careful planning is absolutely essential.” Business plan may change according to the current trend of business, before making any kind of decision firm will examine the present and future market condition. 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. Strategic planning provides overall strategic direction to the management of the organization and provides a certain direction to areas like human resource strategy, organizational development strategy, marketing strategy and financial strategy, to achieve success.

3. Understand the process of strategic planning

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

      Process of strategic planning:

      

      Mission: it is the basic aim of a business or an enterprise or an organization. It describes why it exists and what it does to attain its vision. Mission statement is very important for an organization and it inspires employees to work together as a team and achieve the company’s vision. Mission statement must be in harmony with company operation. For an example, a mission statement of a charity is "providing jobs for the homeless and unemployed". [1] Vision:

      Vision is the common mental image and a set of mutually supported aspirations that serve to unite everyone’s efforts in an organization. In an organization everyone must share a common inspirational image which is called vision. Every member must concern about vision statement and they give their full effort to fulfill those vision. Vision statement must be injected into the veins of the organization. [1]

      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 [1] Goals:
      It is the targets what an organization needs to achieve over the life of the strategic plan. Goals are very important for an organization. Without a rudder a ship never reaches its destination, similarly without goals it is not possible to run an organization. The success of an organization clearly depends on the goals. Goals must be specific and measurable. Strategic goals must be either process oriented or result oriented but it is better to have result oriented goals. [1]
      
      

      Core competence:

      
      
      Coyne, Hall, and Clifford (1997) proposed that "a core competence is a combination of complementary skills and knowledge bases embedded in a group or team that results in the ability to execute one or more critical processes to a world class standard." Two ideas are especially important here. The skills or knowledge must be complementary, and taken together they should make it possible to provide a superior product." [1]
      
      

   2. Review the issues involved in strategic planning

      The main issues of strategic planning are:
      
      
      •      Planning should be more strategic rather than operational or tactical
      •         High expertise at local level.
      •      Must focus on new opportunities and threats.
            Need to focus on external factors like competitors and environment.
      
      •     All the members of an enterprise need to work together otherwise it is quite   impossible to attain organizational goals.
      •     For predicting financial forecast it is needed to know the present status of the organization and future market condition.
      •      Operation process will be easy and understandable by everybody.
      •       Must concern about all issues which has great impact on strategic planning process and output [2]
      • 
        
        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. Explain different planning techniques

      There are different planning techniques like:
      
      

      Basic Strategic Planning

      Normally small companies follow the basic strategic planning. Who has no or little knowledge regarding strategic planning also follows basis strategic planning. Generally it is executed in the first year to get an idea regarding strategic planning process and then it is expended in future years.
      
      

      Issues-Based Planning

      Normally those organizations have little transaction and profit, little success or limited resources to achieve goals, they follow issues based planning instead of goals bases strategic planning.

      Alignment Model

      This model has strong alignment between the organization’s mission and its resources to operate effectively. It is very useful for fine-tune strategic organizations as they try to know why strategies are not working. If any company experiences a lot of issues around internal efficiencies also use this model.
      
      

      Model Four - Scenario Planning

      This model being used with other models to make sure planners really have taken strategic thinking. It is really helpful in recognizing strategic goals and issues.
      
      

      Organic (or Self-Organizing) Planning

      It starts with the clear view of organization’s vision and values and then prepares plans to achieve those values

      Real-Time Planning

      Most of the expert prefers to use real time planning rather than conventional strategic planning because today’s world is changing very quickly and rapidly, so conventional strategic planning become obsolete very quickly. Real time planning is very effective and adjustable with the present circumstance [4]
      
      

4. Be able to formulate a new strategy

   1. Produce an organizational audit for a given organization Organizational audit of Adidas

      
      
      Adidas creates various internal rules and guidelines to observer its employees. It has good product cycle system from the supply chain to the final customer. In 2006, it introduced Code of Conduct for its business in all areas and regions to ensure standardized and exemplary actions and behavior. This code gives the guidelines of everyday’s work and various behavioral actions. The Code of Conduct provides internet training to its employees all over the world. All the employees need to report to their superior officers. It provides web-based training program to its all employees. They give training to their employees regarding to protect data when dealing with customers. Sales employees get regular training regarding
      competition activities and law. Before launching any product in the market, Intellectual Property department researches designs, logos, trademarks and technologies to recognize probable infringements of the rights of third parties.
      
      
      Adidas is committed to provide at least minimum social standards, healthy and safety working environment and other manufacturing facilities to its workers. At the moment Adidas is doing profitable business. The revenue of Adidas in 2010 is more than 11.99 billion euro. The total operating income in 2010 is 894 million euro and profit is 567 million euro. Total assets are around 10.62 billion euro and total equity is around 4.616 billion euro and the number of employees is around 42,540. They produce toiletries, sports equipments, sportswear, and footwear. They invest huge amount of money for research and development activities for inventing new products according to the customer demand. [5]
      
      

   2. Carry out an environmental audit for a given organization Environmental audit of Adidas:

      
      
      Adidas gives importance on environmental issues to run their long-term business successfully. It takes various actions regarding social and environmental issues and responsibilities. Its Social and Environmental Affairs department deals with the rights of employees in the supply chain and coordinating products safety standards. They prepare their environmental strategy for 2015. They do it to make every production stage more efficient. In their environmental strategy they give importance on IT system, logistics, development and sourcing, product design to make them more efficient. They want to improve environmental performance in the future. They initiate a program named “Green Company” which ensures climate protection and resource conservation to make the company as a carbon-neutral company on a global level. The main element of the “Green Company” is the introduction of uniform environmental management systems at specific Adidas Group locations. They want to improve the quality of life for local people by means of sports. They involved in humanitarian, science and education projects all over the world. Adidas is famous for its unique style, technology and quality but the price is relatively high but now for getting the competitive market they are producing goods with low price with optimum quality. [5]

   3. Explain the significance of stakeholder analysis

      
      
      A “stakeholder” can be defined as:
      “Any individual, group, or institution who has a vested interest in the natural resources of the project area and/or who potentially will be affected by project activities and have something to gain or lose if conditions change or stay the same”.
      Normally all projects select some stakeholders with whom they can work jointly to reach the destination and to reduce threats.
      There are some classifications of stakeholders and they are:
      
      
      •     Primary stakeholders: for an organizational action those stakeholders are affected directly either positively or negatively.
      •      Secondary stakeholders: or intermediates stakeholders and organizational actions affect them indirectly.
      •       Key stakeholders: (who can also belong to the first two groups) they have eloquent importance and influence within the organization.
      • 
        
        Stakeholder analysis assesses the activities and participation of stakeholders to attain organization goals and objectives. It also assesses the relationship between stakeholders and how to improve the relationship. 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.
        Stakeholder participation:
        •      Enhance responsibility and build capacity
        •      Provide learning opportunity to stakeholders and project team
        •      Gives sustainability
        •      Affects participant’s life [6]

5. Understand approaches to strategy evaluation and selection

   1. Analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment

      
      
      The key strategic alternatives are limited growth, substantive growth or retrenchment. Limited Growth:
      • Market penetration, either in a deliberate attempt to build market share or as a form of consolidation to protect a customer base
      • Market development-opening up new opportunities with different customers, possibly in overseas markets.
      • Product development- extending the range in order to expand the level of business with existing customers.
      
      Substantive growth:
      • Horizontal integration- generally merging with a direct or indirect competitor, again to increase market share.
      • Vertical integration-linking with another company in the same supply chain
      • Related diversification- moving into an area where either marketing or technology issues are similar, often by acquisition, merger or strategic alliance
      • Unrelated diversification- the higher risk strategy involving new markets, new products and new technologies
      
      Retrenchment: beginning with ideas of consolidation either
      • As a basis for turnaround of a company experiencing difficulties or
      • Lined to the divestment of non-core activities The key strategic means are:
      • Organic growth-internal investment to develop new competencies
      • Acquisition (friendly purchase), merger (two companies simply joining together) and take-over (hostile purchase).

   2. Select an appropriate future strategy for a given organization Future strategy for Adidas:

      To secure long-term sustainable growth for the Group, Global Brands is focused on driving the development of the Adidas and Reebok brands. The overall strategic goal is to achieve qualitative, sustainable growth by building desirable brands in customers’ and consumers’ perception. Global Brands played a central role in the creation of Route 2015, the Adidas Group’s five-year strategic business plan that was unveiled in 2010. The Adidas and Reebok brands are expected to deliver 90% of the targeted growth for the Group in this period.
      Areas within Adidas and Reebok that were identified as key contributors and game changers for the Adidas Group include:
      • Gaining sales and market share in the key global categories running and basketball with Adidas Sport Performance   
      • Expanding Adidas Sport Style into fast fashion with the Adidas NEO label
      • Establishing Reebok as the leading fitness brand
      • Leading the industry in the fields of customisation and interactivity across categories
      • 
        
        In addition, Global Brands is also playing a key role in our Driving Route 2015 programme, which is focused on speed, consistency and consumers focus. Among other things, we are striving to present Adidas and Reebok in a more consistent way around the world in terms of ranges and pricing. In the long term, this should lead to range size efficiencies and gross margin optimisation. One example of this is the creation of a “Global Foundation Range”, which will be mandatory for all of our markets and channels.
        The Global Sales function directs all local market organisations responsible for the distribution of the Adidas and Reebok brands. The key priority of Global Sales is to design and implement state-of-the-art commercial strategies that ultimately engage consumers with rewarding point-of-sale experiences.
        As part of our Group-wide strategic business plan Route 2015, the Global Sales function has defined three strategic priorities:
      • Increase the share of controlled space to 45% of Group sales by 2015
      • Implement an Integrated Distribution Roadmap to ensure further growth and maximize brand potential in key demographic locations
      • Support growth initiatives in the Group’s three key “attack” markets North America, Greater China and Russia/CIS [7]
      
      

6. Understand how to implement a chosen strategy

   1. Compare the roles and responsibilities for strategy implementation

      
      
      The senior team can create a strategic map (or theory of the business) by identifying and mapping the critical few ingredients that will drive overall performance. This can be tested (sometimes immediately, with existing data) through a variety of statistical techniques; regression analysis is frequently used, because it is fairly robust and requires relatively small data sets.
      
      
      This map can lead to an instrument panel covering a few areas that are of critical importance. The panel does not include all of the areas an organization measures, rather the few that the top team can use to guide decisions, knowing that greater detail is available if they need to drill down for more intense examination. These critical few are typically within six strategic performance areas: financial, customer/market, operations, environment (which includes key stakeholders), people, and partners/suppliers. Each area may have three or four focal points; for example, the people category may include leadership, common values, and innovation.
      
      
      Once the strategic map is defined, organizations must create measures for each focal point. The first step is to create these measures at an organizational level. Once these are defined, each functional area should identify how they contribute to the overall measures, and then define measures of their own. Ideally, this process cascades downward through the organization until each individual is linked with the strategy and understands the goals and outcomes they are responsible for and how their individual success will be measured and rewarded.
      
      
      Good performance measures identify the critical focus points for an organization, and reward their successful achievement. When used to guide an organization, performance measures can be a competitive advantage because they drive alignment and common purpose across an organization, focusing everyone's best efforts at the desired goal. But defining measures can be tricky. Teams must continue to ask themselves, "If we were to measure performance this
      way, what behavior would that motivate?" For example, if the desired outcome is world-class customer service, measuring the volume of calls handled by representatives could drive the opposite behavior. [8]
      
      

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

      
      
      Product: need to design, develop and manufacture products according to the customer needs and wants
      
      
      •      Satisfy traditional demand and aspiration
      •      Develop and consolidate sectors as dresses and shoes
      Stores – all stores will be extended to around two-third of our space to attract more customers
      •      Nurture brand names
      •      Improve the distribution channel
      •     More intensive to use space
      • People- recruit talented people to increase team strength
      •      Companies trust will be increased by improving innovation, services, values and quality
      •      Increase the values that the founder installed into the company.
      • Leaders– Leadership and management synergy
      •      Leaders will prepare vision and manager will execute the vision
      •      Leaders will concentrate on the end and manager will concentrate on the mean.  
      Capital – distribution should be effective and efficient. Should be wisely invested and monitored. [9]
      
      

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

      Adidas targets and timescales

      
      

      Strategic Priorities	Specific goals	Implemented through strategic initiatives	Time Scale
      Ensuring cost	Reduce product and	Optimize product creation	By the year

      competitiveness	supply chain costs	through efficient material and color selection Increase the level of automation in the manufacturing processes Pool supply chain activities at a central level	2015
      Providing industry- leading availability	Enhance existing logistics services to create a flexible and cost-efficient supply chain	Offer tailored replenishment models to customers, using improved planning processes and systems Develop flexible planning and production models Plan and build inventory buffers at different locations in the supply chain	By the year 2015
      Enabling later ordering	Allow customers to order products later, i.e. closer to the time of sale	Reduce production lead times for footwear and apparel to 60 days Establish a regional source base	By the year 2015
      Supporting the Group’s growth projects	Support the company’s Route 2015 priorities	Buildfast-fashion creation, sourcing and supply chain management capabilities Further roll-out of processes and systems	By the year 2015

      		Offer short lead time production models
      Modernising the Group’s infrastructure	Build the required operational backbone to support the Group’s growth plans	Consolidate legacy systems and distribution structures Buildstate-of-the- art systems, processes and distribution facilities	By the year 2015

      [7]
      
      
7. Conclusion:

The success of any good enterprise is based on the measures that are laid out by the various stakeholders. In commerce, business strategy is important for the achievement of the objectives set. In a commercial setting, the main aims normally revolve around making lots and lots of profits, growing and expanding, and most importantly, diversifying. 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. Business can grow in its own way but the growth will be intensified it the business has good strategies and planning. If a new entrepreneur wants to initiate a new business in this competitive world, he must start his business with professional sales closure and having good marketing structure and unique presentation techniques. At the moment, Adidas sells around 50% of branded athletic footwear. They are able to reach such a pick state only for their real time business strategy. Unique design, low price with good quality and regular development activities give them high competitiveness in the market. So business strategy is very important for an organization to success and it is the basis of profitable business. Every company should give extra effort to produce good business strategy for future prospers

References:

1. NVS. Suryanarayana, Vision, mission and objectives of Business, (September 2010), Retrieve on: 15/05/12, Available at: http://www.articlesbase.com/business-ideas- articles/vision-mission-and-objectives-of-business-3187165.html
2. Keregor P. G., Key issues in Strategic Planning, (June, 2007), Retrieve on: 15/05/12, Available at: http://www.msi.co.uk/key-issues-in-strategic-planning
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. McNamara C. Basic overview of strategic planning models, Retrieve on: 13/05/12, Available at: http://managementhelp.org/strategicplanning/models.htm
5. Corporate Governance Report including the declaration on corporate governance, Retrieve on: 13/05/12, Available at: http://www.adidas- group.com/en/investorrelations/corporate_governance/cg_report/default.aspx
6. Cross cutting tool, Stakeholder Analysis, October 2005, Retrieve on: 13/05/12, Available at:
7. http://assets.panda.org/downloads/1_1_stakeholder_analysis_11_01_05.pdf
8. Annual report of Adidas, 2011, Retrieve on: 13/05/12, Available at: http://adidas- group.corporate-publications.com/2011/gb/en/group-management-report-our- group/global-sales-strategy.html
9. Carolyn Ott, David A. K., Joe G. Thomas, Strategy Implementation, Retrieve on: 13/05/12, Available at: http://www.referenceforbusiness.com/management/Sc- Str/Strategy-Implementation.html#b
10. Business Strategy, Retrieve on: 13/05/12, Available at: http://www.scribd.com/zain_lakdawala/d/73278045-Business-Strategy-23-33