LSST Unit 7 Business Strategy

This is a solution of LSST Business Strategy Assignment given in London School of Science and technology. It discuss the process of strategic planning, and key issues issues faced in strategic planning. It includes PESTEL analysis to evaluate business environment.

LO1: PROCESS OF STRATEGIC PLANNING

Q 1.1

Define the terms and state the mission, vision, objectives, goals and core competencies of your chosen organisation.

TERM DEFINITION CORPORATE STATEMENT
Mission   mission statement is written statement of the core purpose and focus of a company, organization or person. It normally remains unchanged overtime.   It was widely reported that a famous quote from Steve Jobs in the 1980's was the Apple company mission statement: "Man is the creator of change in this world. As such he should be above systems and structures, and not subordinate to them."
Vision   It’s a position what an organization would like to achieve or accomplish in the long term future. It is clear guide core choosing the course of action. Apple is committed to bring the best personal computing experience to students, educators, creative professionals and consumers around the world through its innovative hardware, software and Internet offerings.
Objectives   A specific result that an organization or a system aims to achieve within a time frame and with available resources. It is more specific and also easier to measure the goals. Objective has fixed time frame. It also serves as the basis for creating policy and evaluating performance. Customer satisfaction is the main objective of the company.
Goals   It is the result that you want to achieve within a more or less fixed time frame. It is a reason to which endeavour is directed. The Goal of Apple is to manufacture new mobile with innovative technology. According to Sir Jonathan Senior Vice President, “Apple’s main goal is to make great products, not money”. (Ray, 2012)
Core competencies   It’s the unique capability of a company which it had acquires from its founders or develops and that cannot be easily imitated. It provides the company competitive advantages, in creating and delivering value to its One of the most important competencies of Apple is Innovative design and Technology. It always thinks different and bring new product in the market.

Q.1.2  

For your chosen organisation, describe the key issues encountered in strategic planning.

Strategic planning is a process of defining the business strategy, direction, and making decisions on allocating the resources of the organization to implant this strategy. It plan out the future direction of the organization. It is important to study and understand the current position of the organization while doing Strategic planning. It include 5 steps as explained below:

Internal Strategic Problems:

  • Partial commitment of the workforce due to which company faces strategic problems.
  • Required right person at the right job and inappropriate employee will create strategic issue.
  • Management need to implement different leadership skills as per the requirement.
  • Proper communication among management & employees in an important aspect
  • Change is the only thing which is static so companies need to adopt the changes in order to beat its competitors.

 External Strategic Problems:

  • External environmental factors are the uncontrollable factors for any organization so while doing strategic palling the organization need to make the required changes as per the environment it is working in.
  • It should align with the political, legal formalities of the country it is working in.
  • It ignore its critics and market place reality, information and facts which leads to poor strategic planning.

Other electronics companies are giving the tough competition in the market to Apple products. Companies like Samsung, Sony and Panasonic are the most important t competitors who have covered big portion of market and offering similar features at economical rates as compare to Apple products. (Lynch, n.d.)

Cannibalisation of sales and decision making has become the strategic problem with Apple. It has observed that Apple is facing problems with BRIC where China has predominant the market of smart phones but Russia and India are still in the transition phase. The Transition period is pretty much. Apple needs to strategies its product at some low rate as compared to others. But lowering the price is losing out with niche market and premium brand. (Worstall, 2013)

A legal dispute between Apple and Microsoft is other strategic issue because Windows has many on-screen similarities. Due to which Apple faced threat of reduced sales as both the company providing complete range of applications.

Q.1.3

Compare and contrast two different planning techniques which you could apply to your chosen organisation.

BCG matrix

The BCG matrix also known as growth share matrix was invented by the Boston Consulting Group, it is a tool that allows to classify and evaluate the products and services of a business. It has a the chart where the  analysts plot a scatter graph to rank the business units, products on the basis of their relative market shares and growth rates.

 It Place the products of a strategic business unit in 2 dimensions (market growth and market share) which  creates 4 quadrants and corresponding investment

Question marks:

Here there is high market growth and low market share

Apple TV is a question mark position. It is earning morning but it’s wet to reach the potential. If Apple could solve some of the problem in it then it can really take the market of TV.

Stars:

Here there is high  market growth, high market share

iPhone and I pad are rising star at present. It is very successful at present and the exact growth potential is unknown.

Cash- Cows:

Here there is  low market growth and high market share

 Mac Book is in Cash cow position.

Dogs:

Here there is  low market growth and low market share

 Big Multipart Desktop is in Dog place. As it is not the market leader and its competitor has the market monopoly.  (Apple Inc.)

This is demonstrated in the figure below:

LSST Business Strategy Assignment

  1. Space Matrix: SPACE matrix is an acronym for Strategic Position And Action Evaluation matrix. This matrix has four distinct dimensions that show if the strategies of an organisation must be any one from the four – competitive, conventional, forceful, or defensive.

There are two axes in this matrix. One of these axes shows the internal dimensions of financial (FS) as well as competitive (CA). The second axes show the two external dimensions - stability (ES) as well as position of industry. Apple Inc. currently falls in the quadrant that has competitive and financial dimension. It can hence be derived that the company works on competitive strategy  (Simister, 2011).

Comparison:

It can be said that for comprehensive analysis, BCG matrix would follow the SPACE matrix. This is so because SPACE matrix could effectively be used as a basis of forming model of BCG matrix. While the SPACE matrix discusses about the strategies – competitive, conservative, defensive, or aggressive, at the same time, BCG matrix advises on the products or services that serves the maximum advantage to the organisation. Together with the ones that have weak position - externally & internally.

LO2:  BE ABLE TO FORMULATE A NEW STRATEGY

Q 2.1

Conduct an organisational audit on your chosen organisation by carrying out a SWOT analysis.

Write your answers here

NAME OF COMPANY -

STRENGTHS Innovative and new design of mobile is one of the most important strength of Apple. It is one of the best brands in the market today. Apple is loyal to its customer and also fulfils social responsibility by producing eco-friendly products. It has a huge strength of employees and also strong marketing and advertising team. “Customer loyalty combined with expanding closed ecosystem. Apple is a leading innovator in mobile device technology” (Jurevicius, 2013) OPPORTUNITIES   Increasing demand of the product like iPad mini and iPhone 5. The launch of of iTV will support the Apple TV sales  (Jurevicius, 2013)
WEAKNESSES It is an expensive products and it taps niche market. It is incompatible with all operating system. Reduction in market share, and patent infringements.  (Jurevicius, 2013)         THREATS One of the most common threats faced by all technical companies is rapid technological change. (Jurevicius, 2013) Tax increase in USA 2013 will adversely affect the company. Apple earns its large profit from outside US so appreciation of Dollar may reduce potential profit of the company. IP rights being breached, and moves of competitors in online music market are also threats posed to the company.

Q 2.2

Evaluate the business environment for your chosen organisation by doing a PESTEL analysis.

PESTEL ANALYSIS 

Factors   Description Company example i.e. how your organisation is affected by this factor
POLITICAL     These factors determine the extent to which a government may influence the economy or a certain industry government may impose a new tax or duty due to which entire revenue generating structures of organizations might change  Apple operates in various countries; so the company has to make sure that it follows the specified rules and regulations in the various countries in terms of tax rates to be paid, employment rules, business rules and many other aspects.
ECONOMIC     These factors are determinants of an economy’s performance that directly impacts a company and have resonating long term effects. A rise in the inflation rate of any economy would affect the way companies’ price their products and services. Adding to that, it would affect the purchasing power of a consumer and change demand/supply models for that economy. Economic factors include inflation rate, interest rates, foreign exchange rates, economic growth.   This is the most crucial factor of the company as company has to be economically viable to both investors/stake holders and customers. Apple always keeps eye on pricing of the products in consideration of increasing inflation and foreign exchanges and taxes to respective markets. Apple has been able to generate good return on investment to its shareholders and also value to its consumers.
SOCIAL     1.    These factors study the social environment of the market, and determinants like cultural trends, demographics, population analytics etc.   2.    Apple products have proved to be successful in various cultures basically due to the fact that the products are dependent on advancement of technology something that has been accepted in almost all the countries of the world.  Apple needs to consider each market as an individual market and develop marketing principles accordingly
TECHNOLOGICAL     This factor is concern to innovations in technology. Technology affects the operations of the industry and the market as favourable or unfavourable. This refers to automation, research and development and the amount of technological awareness that a market possesses. (Matthew, 2010) Apple is widely considered to be among the most technology innovative company in the world. The company’s products are seen as market leaders in the various sectors that Apple serves and competitors have to be always on their toes in order to make sure that they have products that can compete with Apple’s product offerings at all times.  (Indra, 2010)
ENVIRONMENTAL      These factors include all those that influence or are determined by the surrounding environment. Factors of a business environmental include but are not limited to climate, weather, geographical location, global changes in climate, environmental offsets etc. (Indra, 2010)   Apple (2012) states that the company thoroughly considers the impact that the company’s products have on the environment when been used and after they have stopped been used. The company states that less material is now been used in all aspects of the products to make sure that the impacts that the company has to the environment is minimized to the lowest level possible. (Mathhew, 2010)
LEGAL     These factors have both external and internal sides. There are certain laws that affect the business environment in a certain country while there are certain policies that companies maintain for themselves.  (Mathhew, 2010) As a company Apple needs to take care many legal aspects as Products Patenting, Piracy Policies, abide the labour and business laws of certain country in which Apple is operating.  (Indra, 2010)  

Q2.3

Define and explain the significance of stakeholder analysis.

A person, corporate, an account, group member or organization that has interest or concern in an organization. Stakeholders can affect or be affected by the organization's results, actions, objectives and policies. Examples of stakeholders are creditors, directors, employees, government (and its agencies), owners (shareholders), suppliers, unions, and the community from which the business draws its resources. It can be divided in two parts

Primary: those who are directly affected, either positively or negatively, by an organization's actions.

Secondary: those who are indirectly affected by an organization's actions.

Stakeholder analysis is a term that is used to the action of analysing the attitudes of stakeholders towards the project or the action of the organization understanding where stakeholders stand, and developing cooperation between the stakeholders and the project team. The main objective is to ensure successful output for the project or the changes that are to be made. (Stakeholder Analysis, 2010)

The benefits of using a stakeholder-based approach are that:

You can use the opinions and ideas of the stakeholders to your projects at an early stage. It is   more likely that they will it support you, their input can also improve the quality of your project.

It will help to Gain support from powerful stakeholders and gaining support from them can help you to win more resources – and chances of project success will increase.

It will help to increase the communication with the stakeholders and by communicating with the stakeholders early and frequently, it can ensure that they  understand what you are doing and the benefits of your project – this will also ensure  support from the stake holders when necessary

It will also help to anticipate the  people reaction to your project  (Mind Tools, 2010)

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LO3: UNDERSATND APPROACHES TO STRATEGY, EVALUATION & SELECTION

Q 3.1

Define four strategic options available and explain how they may be implemented within your chosen organisation.

Market entry strategy is a process by which an organization enters the foreign market.

There  are variety of ways  to enter the foreign market

Export:

Exporting is one of the most traditional and well established form of entering in foreign markets. Exporting can be defined as the process of marketing and selling the goods produced in one country to another country. Exporting does not required direct manufacturing in an overseas country, significant investments in marketing are required.  (Trade Start)

Merger:

A merger is the process in which two companies become one by coming together. The companies join together to achieve greater efficiencies of scale and productivity. (Mergers, 2010)

Acquisition:

An acquisition is the processes in which one company buys the other company. In such a situation the buying company combines the purchased company into the existing company. Acquisitions can be carried out either to eradicate competition by combining the competing company with the existing company. Acquisition is also done to expand the corporate portfolio by retaining the acquired company as an independent entity under the overall corporate management.

Alliance:

Alliance is a process in which in which two or more companies agree to share their resources to form a combined force in the marketplace. Alliance does not form a new entity like merger. Each company in alliance maintain their individual identity but with the combine effort they give a tough competition to their competitors. (Roll, 2009)

Q3.2

Using your analysis from Q3, recommend an appropriate future strategy for your chosen organisation

Introduction

Apple Inc. is the manufacturer and seller of iPad, iPhone, iPod, Mac, and Apple TV, as well as several software applications. It is possible to make entry in additional markets by means of  can be done by exporting, Joint Venture, strategic alliance, licensing, franchising, etc.

Recommended Strategy

Apple Inc. can undertake the strategy of diversification or Inorganic Growth. 

Inorganic Growth

This strategy involves external growth by means of joint ventures and mergers.

With the augmented success that Apple Inc. has demonstrated, there is a lot of potential in the company to be able to penetrate and hold large share in the market all across the world. Through this medium, there can be high sales and increased expansion The only requirement is to use the strategy extensively because the company has made use of this strategy to gain success, however, the span of the strategy was quite limited. Apple has a great brand value and trust of the customers and hence it will become easy to make greater space in the international market by strategies of mergers, strategic alliance, or joint venture. Product diversification is also one of the ways for increasing revenue.

There is a lot of spending being made by the competitors of Apple in the field of research and development, and mergers, however, the focus of Apple Inc. is more on innovation, with less than 1% per year spending in acquisitions. Therefore, strategy of inorganic growth is significant for the company.

Diversification

Diversification refers to introduction of new products in the market, either in the same field or in another new field. While Apple Inc. has a lot of hold in the electronic and gadgets market, it can diversify and add itself to another significant market of automobiles, while sticking to its field of electronics. For example, the company can diversify in production of electric cars, with a famous car manufacturer – like, Tesla.

Advantages

With Apple Inc. going in for inorganic growth and diversification, the following benefits can be achieved:

  1. With increase in export, the sales of the company would increase, together with raise in profitability and market share
  2. The organisation would grow faster
  3. The company will be able to enjoy economy of scale with merger, which would also assist in controlling competition.
  4. Strategic alliance would assist in offering the resource benefits, like, products, channels of distribution, project funding, capability to manufacture, knowledge, intellectual property, and expertise.
  5. Strategic alliance assists in providing opportunity to every party for concentrating on their competencies

Disadvantages

  1. With increased exports in all the markets, there is a possibility that certain markets do not accept the products
  2. Merger can cause strain on Apple’s capital structure, as well as management of issues and disagreements amid partners.

Recommendations

It is recommended the Apple Inc. undertakes the following to implement strategy effectively:

  1. With regards to Tablets, Samsung has been stealing the show and hence it is required that Apple Inc. pays attention on product development and novel features that are user friendly.
  2. For entering in the new market worldwide, the company must engage itself in strategic alliance, mergers, or joint ventures, which would provide competitive edge to Apple Inc. for product innovation in upcoming times. (Anon, 2005)

LO4: UNDERSTAND HOW TO IMPLEMENT A CHOSEN STRATEGY

Q 4.1

Focusing on your recommendation in Q3.2, compare the roles and responsibilities needed to implement the suggested future strategic plan.

Every department would have different roles and responsibilities for strategic implementation. Some of the roles and responsibilities for Apple Inc. are mentioned below:- 1)    Function of Department of Human Resource:- a)    Evaluation of every employee to be done in the investment arm and sit should be observed that the efficient and deserving employees in the arm might be retained and they can be provided with different roles in different businesses, b)    The Department of Human Resource would also have to notice that there exists no demonstration amid the employees that leads to losses to Apple Inc. c)    It should be taken care by the Human Resource Team that the employees’ sentiments are not hurt in all organisational arms. The employees should not lose confidence in the organization because if they do, there will be high employee turnover. 2)    Marketing Department: - In Apple Inc., the marketing department must ensure that the confidence and sentiments of the customers must not be shaken. The industry of Apple Inc. is one which might fail in case there are negative sentiments surrounding the customers. 3)    The fiancé department of Apple Inc. should ensure that saved money of Apple Inc. is utilized in the best manner which is effective and best suited to Apple Inc.  (STEINER, George A., 2010).

Identify and evaluate resource requirements you will need to implement a new strategy within your chosen organisation.Q 4.2

The strategy that has been selected is the Divestment strategy. The resources, which will be required are;-

1)         Analysts and Legal Advisors – For conducting an implementing the divestment legal advisors and analysts will be required because this requires a comprehensive study of the market and the financial status. The management of human resource management would be a matter of concern to Apple Inc. since the divesting department’s employees would will have to be taken care of and the best interest of the organisation will have to be decided – what is good or bad for the business.

2)         Financial Resources: - Financial resources would be required for paying off the various expenses including legal issues, paperwork, as well as paying the employees for the promised amount to settle account completely.

3)         Time and Material: - Time and material would be the most significant resource in this context. This is so because Apple Inc. would be required to study the entire strategy also implement the legal issues. Also Apple Inc., will have to understand the repercussions of the strategy on the other businesses and its existing market and customer bear and it will take time to cope it the changes.

On the material front Apple Inc. will need lot of legal materials like laws, bylaws etc. Thus time and material will be the most important resource require by the company for strategy implementation. (STEINER, George A., 2010)

Q4.3

From your responses in Q4.1 & Q4.2, create a Gantt Chart that shows the activities required and timescales for the implementation of your recommended strategy. Discuss the activities and targets to monitor your strategy.

Below is the Gantt chart that shows recommended strategy implementation by APPLE Inc.:

The strategy would be completed in a span of 750 days.

The main tasks to be completed include:

Activities start date Duration
Initialisation of strategy March 15 15 days
Strategy development: 1s April 2 months
Setting objectives 1st June 3 months
Conducting environmental audit 1st August 6 months
Studying alliance’s feasibility 1st Feb 2015 2 months
Development of resource strategy for technology, people and production. 1st April 2015 4 months
Meeting with strategic partner 01st August 2015 3 months
Arranging resources 1st Nov 2015 3 months
Contract formation and negotiation 1st Feb 2016 2 months

LSST Business Strategy Assignment

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References

  • Apple Inc. 2013. Annual Report 2013. New York.
  • Business, 2010. Mission Statement. Available at: http://www.businessdictionary.com/definition/mission-statement.html
  • Apple Inc. (n.d.). Available at: http://strategicplanning13.weebly.com/bcg-matrix.html
  • Simister, P., (2011), SPACE Analysis - Strategic Position and Action Evaluation Matrix, , Available: http://www.differentiateyourbusiness.co.uk/space-analysis-strategic-position-and-action-evaluation-matrix
  • Jurevicius, O., 2013. Apple SWOT analysis. Available at: http://www.strategicmanagementinsight.com/swot-analyses/apple-swot-analysis.html
  • Indra, M., 2010. Category P.E.S.T Factors. Available at: http://applemanagement.wordpress.com/category/p-e-s-t-factors/
  • Mathhew, J., 2010. Apple Case Study. Available at: http://www.thebestwritingservice.com/wp-content/themes/twentyeleven/samples/Case%20Study%20of%20Apple.pdf
  • Mind Tools., 2010. Stakeholder Analysis. Available at: http://www.mindtools.com/pages/article/newPPM_07.htm
  • Stakeholder Analysis, 2010. Available at: http://asq.org/service/body-of-knowledge/tools-stakeholder-analysis

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