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Strategic planning is one of the most crucial aspects in organisations in the highly competitive market of today. While development of a well-designed strategy is essential for a company, it is not always easy to come up with the right strategy. Unit 7 business strategy assignment Mulberry Group plc. discusses the various factors that influence the process of strategy planning and the actions that can be taken by the organisation in order to devise a successful and well-planned strategy. The paper takes the example of Mulberry Group Plc., a UK based global brand of luxurious fashion accessories (Mulberry.com, 2015). The paper describes the strategy planning methods used in the company. In addition to the strategy planning and various factors influencing the process, the paper also performs organisational audit of the company as well as environment audit.
P 1.1 Asses how business missions, visions, objectives, goals, core competencies inform strategic planning
Strategic planning is the process within an organisation that is implemented to define a feasible strategy or a direction for the organisation, to move forward towards the goals set by the company. The process of strategic planning involves the decision making process and optimisation of resources available to the organisation(Barksdale and Lund, 2006). The scope of strategic planning sometime increases to cover the control mechanism in the business environment as well. Strategic planning approaches became popular back in the year 1960s and since then has been in use in many industries prominently.
For an organisation like Mulberry Group Plc., it is essential to have a business vision, mission statement, and organisational objectives decided beforehand to be able to successfully implement strategic planning (Chesters, 2014). The purpose of having a strategic planning process is to make sure that the organisation is capable of achieving the goals of it and meets the organisational objectives defined earlier. In turns, the strategic planning is a method of achieving the organisational objectives, vision and following the mission statement. In many scenarios, the strategic planning may only cover a part of the vision of the organisation. For example, Mulberry has its mission statement to become the top luxury accessories brand in the whole world. However, to achieve that it first needed to establish its brand in UK market, which would have required its own strategic planning. As evidenced by this example, the business strategy planning of any organisation is a process that assist the organisation is keeping its operations and resources aligned with the vision of the company, mission statement of the organisation, and the objectives of the company. The strategy employed by the Mulberry organisation is certainly in-line with the mission statement of the organisation, as the organisation quickly expanded its business to Asian countries which started with its licensing partnership with Toray Industries in Japan in 1999 (Referenceforbusiness.com, 2006).
The strategy developed by Mulberry can be viewed as a process that reflects how the objectives and goals would be met by the organisation(Christian, 2007). The strategic planning process can be observed by analysing the individual activities of the company by which the organisation attempts to adapt to the market environment and own objectives. Success of any strategic planning relies on the efficiency of its development phase and the implementation of the strategy. A strategic planning functions by dividing the company goals into numerous achievable and easy to manage isolated steps and then following a path to accomplish all the steps and connecting them.
P 1.2 Analyse the factors that have to be considered when formulating strategic plans
Organizations all over the world use the strategic planning process prominently to meet the goals and effectively use the resources available. These companies cautiously develops a company vision and mission and then formulate a strategy to make sure the organization achieves the mission. Among the large pool of organizations adapting to the strategic planning, many companies actually fail to achieve the target even with a strategic planning process in place(Elbanna, 2008). In such cases the planning process fails to deliver the expected outcomes for the organization. While the precise reason for failure changes depending on the organization, it is a common cause of strategic planning to fail if the planning phase did not consider all the relevant factors that influences the company operations and its strategy. With respect to the Mulberry Group Plc., following are the most important factors in strategic planning project:
- Engagement:Strategic planning in Mulberry organisation is not a select invitation only event which can gain success just by participation of some of the employees or departments. The planning phase depends on a vast number of factors and it is essential that the employees and all the departments within the Mulberry organisation make their contribution in developing the strategy (Ferrell and Hartline, 2014). It not only strengthens the strategy by providing additional information and input, it also ensures that the employees remain focused and dedicated towards the implementation and success of the strategy in which they made a contribution. Input and engagement of the employees is quite important for the success and direction of the strategic planning. It helps the company in:
- It provides important knowledge and information about the various issues and challenges and marketing opportunities which can only be fully explored and understood by the engagement and involvement of the company employees.
- Allows the employees to fully understand the scope and aim of the strategy in order to make them better comply with the planning and implementation.
- Communication: Communication is the essential component in development and implementation of any strategic planning method. Mulberry Group Plc. needs to implement the approach of top down and bottom up approaches of communication in the organization to fully implement the strategy and develop it. The development of the strategy should function as the company should inform all of their employees about the development phase of the strategy, its aim and the role of each individual employee in the development of the strategy(Gru?nig, Ku?hn and Ku?hn, 2005). This functions in a bottom up manner and all the employee get to provide their valuable input about the strategy. Various methods can be used to collect the ideas of the employees in a large company like Mulberry, such as: performing questionnaire tasks, feedback forms, meetings, etc. These are effective ways of gathering ideas of individuals in the company. The Mulberry organisation has its own apprentice program that functions as the training program for new employees of the organisation. The program takes place in Somerset based factory of Mulberry organisation, and includes the most experienced and senior employee of the company communicating and training the trainees. This is an approach that allows the new employees in understanding the legacy of Mulberry. Once this bottom up phase of strategic planning concludes, it is essential to perform the top down approach of communication. In this process, the senior management of the company reveals the strategy to be followed to the employees, and tells them their respective roles in the strategy(Hargie and Tourish, 2009). The senior management should also encourage the employees to contribute in the implementation of the new strategy and ensure their engagement.
- Innovation: Some strategies developed and implemented by the Mulberry requires development of new product to be launched in the markets in order to earn customer satisfaction or additional market share. For such tasks, the company allocated resources and formulates a team of employees to work on the project. However, over time the changes in product makes it easy to miss the original strategy. As a luxury brand of fashion accessories, Mulberry organisation management pays great attention to the details of quality and designing perfection of its products. While the organisation certainly makes use of latest technologies in its production line, the main focus of Mulberry organisation in on enhancement of craftsmanship among its employees.The government’s Regional Growth Fund also granted £2.5million towards recruitment and training costs (Mulberry.com, 2013).Such projects that rely on development of a product based on innovation requires the company to focus on having an innovation process strategy in place, instead of having an end product process that relies on the innovation that has not been performed yet(Heerkens, 2002). While most companies tell the employees to be innovation in the development of new product, they fail to establish the strategy and organizational structure to create a business environment that allows innovative thinking and remain highly bound by fixed deadlines and strict product policies. Such strategies mostly focus on the products and not on the ability of the company to deliver an innovative product.
- Project management: Once the company management at Mulberry has devised a strategic plan to implement within the organization, it is essentially important to pay attention to the critical elements of the project. This process is known as project management and it includes two essential factors- to identify the points that are important and influential in the success of the strategy and to develop a priority order of tasks based on their importance and resource requirements(Karami, 2007). The project management phase requires high contribution of the employees in gaining knowledge of the project and various issues related to it. Involvement of the Mulberry Group employees is also essential to make sure the employees fully understand the process of strategic implementation and its various tasks. Employees learn the understanding of how their respective work contributes to the project and how critical their work is for the success of the strategy implemented. This approach keeps the employees motivated towards their work and contribution in the company.
- Culture: Any strategic planning should account for its impact and influences on the business culture of the organisation. The working culture of every organisation is unique and has its own benefits and disadvantages (Maylor, 2005). What formulates the company culture of Mulberry includes the attitude of its senior management, organisational beliefs, company ethics and values, and behaviour of the Mulberry employees. These are factors that contribute to the new products and the organisational operations of the organisation, which needs to be in-line with the traditional legacy of the organisation. For example- being a luxury brand of fashion accessories, it wouldn’t be the best idea for the organisation to promote its products as inexpensive fashion accessories. The development of any new strategy should be based on the existing work culture of organisation for more probable success. For example- an organisation that has been developing products and strategies based on its traditional values should not attempt to implement an ultra-modern strategy by an aggressive strategy as the employees would not be prepared for it.
P 1.3 Evaluate the effectiveness of techniques used when developing strategic business plans
Regardless of the industry of the business organisation, the effectiveness of any strategic business plan decides the success potential of the business strategy. Mulberry has been quite successful with its strategies in the past and has implemented some good planning in its course of actions and has changed as per the changes in the industry. The various techniques Mulberry focuses on while developing a strategy are discussed below.
Before jumping into any new strategic action, Mulberry first prepares a foundation for the plan by means of research in the industry (Mazzarol, 2009). The various factors that contribute to the strategic planning phase of Mulberry include factors like the market study, product niche, assessment of the market competitors. A proper strategy is devised only after detailed study of the market and the market niche.
The technique that the Mulberry organisation uses in developing its business strategy follows SWOT analysis of any strategy that the organisation considers. Such a technique allows understanding the true impact of a strategy, for example- what are the strengths of a particular strategy and what are the weaknesses that are associated with it. This strategic technique further lets the organisation understand the business opportunities that the organisation is opening itself to with a strategy, and the threat being face in business environment. This kind of techniques are very effective, which can be suggested by the success charts of Mulberry organisation as well.
Figure 1: share price trends of Mulberry Group plc
As shown in the figure 1, the share price of Mulberry Group plc have been consistently going higher in the stock market. The one instance of a great low point in the share history of plc occurred in Oct’14 which was a result of Asian economy crisis, but the shares quickly recovered and achieved a new high. Developing a realistic and well-analysed strategy is the most crucial part of any organisation. The structure of strategic planning is that the development of strategy is done based on the knowledge of available scenario and resources. However, there are still various aspects of the strategy that needs to be discussed(Moore, 2002). To make the process of strategy making more accurate and informational, Mulberry uses both top-down and bottom up approaches to gather the knowledge and suggestions from employees.
An organisation like Mulberry relies heavily on its brand image of a premium and luxury accessories company. While developing a new strategy for its operations, Mulberry ensures that the new products or strategy follow in the tradition of old brand image of the company and its existing products. Any organisation that thrives to survive in this extremely competitive business market, needs to adapt to the changes in the industry (Ogbonna, 2006). Over the years, Mulberry has adapted to the advancement in the technology and new trends of marketing and sales to continue to survive and lead the market segments. With its ability to adapt to new technologies and trends, Mulberry is now paying great attention to its social media promotions as well as online selling of the products in global market.
P 2.1 Analyse the strategic positioning of Mulberry organisation by carrying out an organisational audit in Mulberry
Organisational audit is an important aspect of any organisation to understand its existing market reach and abilities. Performing a SWOT analysis allows insight into the company organisational structure by means of audit.
Value chain analysis:
Following is the value chain analysis for Mulberry organisation:
Mulberry plc has real-time inventory management and notification system placed to remain aware of out-of-stock products and to place orders of these products with suppliers.
Organisation manages real-time transaction detecting POS systems and RFID tags to carry out sales of the products and finding products in the warehouses and inventories.
Mulberry groups relies on own and partnered logistics services for the purpose of outbound logistics.
Organisation makes use of Conversion Attribution to optimize the marketing process of the organisation.
The organisation combines the data collected from own research, existing products sales and feedbacks, and social media to identify need for future products.
Has its stores and catalogue, and shelf arranged based on a predictive and real-time merchandising management system for product display.
Uses effective and transparent job performance reviews and has reward based motivation techniques implemented.
Makes use of latest technologies like social media to connect with consumers, online shopping portals, and employee performance management tools. Advanced GPS and RFID technologies are used in company logistics department.
Procurements with other businesses are done on basis of POS trends and data research, as well identifying the consumer needs.
P 2.2 Carry out an environmental audit for Mulberry
PESTEL analysis of the Mulberry brand is an effective tool of performing environmental audit of the company.
organization example i.e. how these factors affect Mulberry organisation
Political factors often influence the strategic formulation through laws of intervention and government.
Mulberry organisation need to follow the political views of the government to stay on the right side of the road to avoid future complications with new laws getting passed by politicians.
Economy is a big factor that affects the strategy of any commercial organization.
The strategy development process of Mulberry organisation should adequately define the budgetary requirements for the strategy implementation.
As human resources within the company and the target consumers are part of the society, it plays a vital role in formation of strategy.
The strategy implementation should be acceptable by the local community and social perspective.
Technological factors affect the way a company develops its strategy as it provides the basic framework for implementation of strategy.
It is always essential for the company to keep investing a fair share in R&D department of the company.
Environment issues like pollution and use of natural resources may also affect the strategy of the company.
Environmental risks needs to be assessed and kept minimal in all cases.
Legal issues restrict the strategy of the company by the law.
The new strategy should follow all the applicable laws.
P 2.3 Asses the significance of stakeholder analysis when formulating new strategy
Stakeholder analysis helps the organization to gauge how realistic the policies are, Stakeholder analysis helps the organization to understand the needs of the various stakeholders and analyse their capacity to oppose reform. “In addition, it provides an idea of the impact of reform on political and social forces, illuminates the divergent viewpoints towards proposed reforms and the potential power struggles among groups and individuals, and helps identify potential strategies for negotiating with opposing stakeholders (Friedman and Miles, 2006).”
The different stakeholders in the Mulberry organisation include- the consumers of the products offered, employees, shareholders, and the society. By providing adequate value to each stakeholder, mulberry organisation ensures that it is aware of the significance of its stakeholders. For the company employees, the organisation has motivational performance based reward systems and exclusive apprentice program for new employees (Oliver, 2004). The organisation pays close attention to its brand image, prices and product quality to ensure consumer satisfaction. For most craftsmanship jobs, Mulberry organisation offers the job to people from nearby area, thus supporting the community and society.
P 2.4 Present a new strategy
The new suggested strategy for Mulberry organisation to launch a new fashion accessory line under its brand name that is targeting specifically at the lower spending power having consumers in the market. This is a market that is having lower spending power than the usual and traditional market share dominated by Mulberry, but has slightly more consumer share in the market. By introducing its products to the new market share, the organisation can appeal to a broader market share and increase its revenues (Porter, Angle and Allen, 2003). The new product line and branding should be unique and different from the current Mulberry product to retain the premium and luxury brand image of Mulberry.
P 3.1 Analyse the appropriateness of alternative strategies relating to market entry, substantive growth, limited growth or retrenchment for Mulberry
On basis of the discussion about the external methods of expansion and growth, and the secondary sources of learning from past experience, the following recommendations are well suited to fit in the existing business scenario of Mulberry organization. It provides an excellent approach of implementing the recommendations to proceed with the external growth factors.
Recommendations for Mulberry organisation:
- Developing the utilization plan for the talent pool and the available resources
- Expanding the market share on basis of innovation products and increased quality of services
- Good promotion of the company services in foreign markets to create a brand image of a global leader in fashion accessories industry
- Performing growth monitoring to effectively expand in new territories by analysing the most optimum technique of growth such as merger, acquisition and joint venture.
The new business strategy suggested for the Mulberry organisation in the previous segment of the paper addresses the following aspects of industry environment:
- Market entry: The market segment that the new strategy addresses has low barriers to enter and the competition is quite high. The ideal strategy would be to advertise the brand image of Mulberry with the theme of ‘budgeted luxury fashion accessories’.
- Substantive growth: for the initial period after launch, the organisation should stick with the gradual growth of its new product line targeted towards the economic fashion accessory market segment. For the marketing and promotion purposes, the organisation can also offer the new products bundled with the existing popular Mulberry products.
- Limited growth: With the launch of a new product line, in a market segment that is new for the organisation, it should have a strategy prepared for limited growth response of the product launch. In such a situation, the organisation has the option to effectively promote the products with traditional Mulberry luxury product branding.
- Retrenchment strategy: to make the new product line more budget friendly, the organisation needs to make use of cost-cutting methods. Such techniques may include- slightly less premium packaging for the product, developing the products in same factories as the premium products, and with the increased demand for raw material, using the high volume of supply as leverage to negotiate more appealing prices.
P 3.2 Justify the selection of a strategy for Mulberry
The analysis of Mulberry Group report suggests that the organization requires a significant amount of rethinking in order to implement its strategy of expanding into the newer market territories. The high competition and changing environment of airlines industry is also an important factor in development of the valid strategy for Mulberry(Ward and Peppard, 2002). The process helps the company in identification of the issues in existing organizational structure of the company as well as describes the driving factors in processes like advertisement, promotion and the other factors that can attract the consumer towards selection of services offered by Mulberry Group. It is highly essential for the company to make sure that the customer satisfaction is at the very core of its strategies and various marketing plans.
In commercial business environment, the development of strategies requires extensive planning and input from all company personnel. For a good strategy it is important that the goals identified by the strategy are S.M.A.R.T., futuristic and practically achievable. An effective implementation is essential for the success of any strategy. The paper presented discuss the process of strategy planning and the various factors that influence this process by taking example of Mulberry Group plc.
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