Formation and Implementation of Business Strategy Assignment

Formation and Implementation of Business Strategy Assignment

Formation and Implementation of Business Strategy Assignment

Program

Diploma in Business

Unit Number and Title

Formation and Implementation of Business Strategy

QFC Level

Level 5

Introduction

To run a business successfully, the top management of that organisation has to take the different set of decisions to make a presence into the market and raise the growth chart of the organisation and employees as well. These sets of decisions are also very useful to be competitive into the market. These sets of decision are called strategy. Business strategy may also include the processes through which the company may expand their share into the market.  Business strategy could be defines as an art or science in which the top management take the decisions related to the penetration into the new market, successfully execution and implementation of the plan and setting of objective, mission and vision for the company and allocation of the resources to fulfil these three after examine the environment of company (Ahenkora & Peasah, 2011). Strategic management works as a catalyst for an organisation which can influence the process of all departments present in the organisation. In this report, I am taking the Sainsbury as an example to explain the strategy and get a clear view how a strategy runs in the organisation and describe the whole concept of business strategy and the  strategic management  related to formulation and implementation of strategy.

Formation and Implementation of Business Strategy - Assignment Help

Task 1

1.1 Explain business strategy, mission and vision of Sainsbury and explain how its business strategies are related to mission, vision and business environment.

It was 1869, when John James Sainsbury opened the first store of Sainsbury at Drury lane in London and it has become the largest store of grocery of London in 1922. Now a day Sainsbury is on the third rank among the largest chain grocery store of UK. And it is headquartered in Holborn circus, London. Sainsbury is divided into three parts these are Sainsbury’s supermarket ltd, Sainsbury convenience stores ltd and Sainsbury bank. For an organisation, it is very important to be clear in term of strategy because it is a set of decision and plans which is basically taken by top management to run the business successfully. Business strategy of Sainsbury is to make long term relation to its customer by provide satisfactory products and services. Sainsbury provides their services in food, fuel, clothing and general merchandising (Augier & Teece, 2009). Like business strategy, the vision of Sainsbury is also around its customer to position itself as a most trusted brand in the mind of customer. Sainsbury always want to be in the mind of customer and market. The only mission of Sainsbury is to make the lives of their customer very easy by providing them their services and product at best price then competitors and also gain their loyalty.

The stores of Sainsbury provide a very friendly environment to the customer where the customer can buy the products and can also relax in cafe and order some food. Sainsbury sometimes changes the approach and the departmental strategies to achieve the mission and vision of the organisation. Sainsbury always works on the long term relationship with their customer and conduct the various type of analysis to gain this relationship. With the help of these analyses, Sainsbury exactly get to know the exact need and wants of the customer and make the product and even make available in the market in an easier way. By doing this Sainsbury makes their lives easy and gain their loyalty.

1.2 a. Identify the steps of strategy planning and explain if the strategy planning is one off issue or a continues process and review the matter involved in this process

Even a small organisation needs to follow a plan to run a business and it is almost impossible to be successful in the market without any strategic plan. To develop a strategic plan the top management of Sainsbury should clear about where the Sainsbury is? What is important for Sainsbury? And what the Sainsbury want to achieve and where the Sainsbury stand in the term of investments? A strategy planning basically is a process in which the top management has to evaluate strength, opportunity and the threat present in the market and allocate all the recourses of the company according to the goals and objective of the company to make a plan that can give the company a competitive image in the market (Bonnet & Yip, 2009). The steps of strategy planning taken by Sainsbury are following:

  • Set mission and objective: This includes what Sainsbury want to achieve in the future. With the help of this, the top management set the target and growth.
  • Environmental scanning: Examining the various factors like political, legal, environmental and technological around the external environment of Sainsbury.
  • Strategy formulation: To find an advantage over competitor like Tesco plc and plan a strategy accordingly.
  • Strategy implementation: A strategy is implemented by motivate the total workforce of the Sainsbury towards the mission and vision or the target.
  • Evaluation and control: The control on the variable where the strategy is being implemented in Sainsbury and make changes where needed.

1.2 b. Classify the four level of management and briefly show the responsibility of each level of managers to decide and implement the vision and mission and strategies to achieve goal.

The term” Level of management” draw a line between the managers of organisation in term of authorities and power. And the managers are the person inside the organisation who can use the resources of the organisation to guide the organisational member and responsible for the performance of the member. Level of the management in Sainsbury is very large because it is at a very large scale. Basically Sainsbury has four level of management. These are:

  • Corporate level managers: Corporate level managers of Sainsbury take the decision by keeping the image of whole organisation in mind. They create the clear picture of mission and the vision of the organisation and take decision according to the information provided by the business level and the external environment.
  • Business level managers: Business managers also plan the strategy to achieve the target set by the corporate level and this level also provides the important information to corporate manager which is useful for formulation and implementation of strategy (Cavusgil, Knight & Riesenberger, 2008).   
  • Functional level managers: The managers of this level have the responsibility of lower level and guide them. And also translate the responsibility define by the business level to the lower level. And also conduct some training plans and quiz to motivate the operational level.
  • Operational level managers: These are the managers of bottom line of the organisation. They only execute the plan and the procedure defines by the functional manager to fulfil the mission of Sainsbury. They also provide the information about exact consumption of the resource in the Sainsbury to the functional level managers.

1.3 Explain Ansoff matrix, BCG growth share matrix directional policy matrix as planning technique

There are various techniques to plan or implement a strategy in an organisation these are following:

Ansoff matrix: This is a matrix in which Sainsbury get to know about their present and prospective product for present and prospective customer in the existing and new market.

- Formation and Implementation of Business Strategy 1

Ansoff matrix explains four strategies for the growth of Sainsbury these are:

  • Market penetration: The main aim of this strategy is to expand the market share by offering the extra product and services into the existing market.
  • Market Development: In this, the company expand the target market area or offer the product and services into the other segment.
  • Product development: In this, the organisation makes the new product for the existing market.
  • Diversification: diversification is the strategy in which company make entrance into the new market and make new product for new market.

BCG Growth share matrix: BCG growth matrix is a tool which helps the Sainsbury in allocation of the resources and even helps in the  targeting marketing  and branding of the product offering by the Sainsbury.

Formation and Implementation of Business Strategy 2

It is a graph in which the Sainsbury can rank their business unit according to allocation of the resource present in the market.

  • Cash cow: the business unit come under this category has a large market share so company can get good cash by small investment.
  •   the business unit has large market share and high market growth. So it needs the quick investment to lead in the market.
  • Question mark: The business unit needs the more resources because it has good growth but less market share.
  • The business unit has low market growth and market share.

Directional policy matrix: This is a technique which can help Sainsbury to find the most suitable segment. And also helps in taking decision related to the segment and provide a full direction to the organisation. Directional policy matrix depends on two variable that is the how attractive market is and capability of organisation to invest in same segment.

Formation and Implementation of Business Strategy 3

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Task 3

3.1 Analyse the market entry strategies

Sometime it is very difficult for Sainsbury to do market analysis in the new and different market at a very large scale. The simple solution of this problem is that Sainsbury should adopt some strategies to enter in the new market. These strategies are:

  • Organic growth: This strategy involves the use of the company’s own resources and energy. It is a long term strategy which the Sainsbury can develop its strengths by offering the wide range of product and services (Stonehouse, Campbell, Hamill & Purdie, 2009).
  • Mergers or acquisition:Most of the organisation uses this strategy to enter in new market. By using merger, Sainsbury and the other company go through a legal contract and make a new company, share their resources and workforce to develop the new resources and product to enter in the new market. And by using acquisition, Sainsbury can purchase all the assets of another company and emerge as a new company into the market. In acquisition, Sainsbury can’t share the recourses of the other company so it is more complex than mergers.
  • Strategic alliances: As it is known that Sainsbury is on the third rank in UK but doesn’t have stores in other country. In strategic alliances, Sainsbury can work with other company to gain their mutual objective. In this, two entities make an agreement on the resources, distribution channels and manufacturing. This strategy is more effective when a strong competitor like Tesco plc is present into the market.
  • Licensing and franchising: Licensing and the franchising are the strategies which are followed by the many organisations to enter in the new market. In licensing strategy, Sainsbury can sell their licence to the other. By this, it can only have a control on the licence but not on the business operation of the other organisation. But in franchising, if Sainsbury provides a licence to the franchisee, then it can have a control on the business operation of other organisation too.
  • Strategy used by Sainsbury: Sainsbury is a big name in the term of super market in UK. It is following the internal growth strategy in which it is using their resource. The drawback of this strategy is that it doesn’t lead the rapid growth for the organisation. Because of this, Tesco plc left Sainsbury behind in 1995 and emerged as a market leader (Teece, 2010).

3.2 Horizontal and vertical strategies

Horizontal strategy involves the acquirement of the assets of the one company by the other company of the same industry. The takeover of the assets is done only to expand the existing operations of the company rather than to produce new operation.

Merits and demerits: The efficiency of the Sainsbury can increase when it uses horizontal strategy and it also helps in gain the scope of economy results in more power in the market. The main disadvantage of horizontal strategy is that when it comes to merger in small and large  business organisation  then for small organisation, it is hard to handle the large organisation.

While the vertical strategy is totally opposite to horizontal as it involves the expansion in the process of production and distribution and it is controlled by the single company to get a hold into the market and make profit (Werbach, 2013). There are the three types of vertical strategy.

  • Backward integration: where Sainsbury can try to control on the raw material or input material of the company.
  • Forward integration: where a Sainsbury can try to control on the post production variables of company.
  • Balanced integration: This is the combination of the backward and forward integration.

Merits and demerits: The main advantage with vertical strategy is that Sainsbury would have full control on the production or distribution. And it can allocate the resources inside the organisation. And the drawback is that it leads monopoly in the market.

Future strategy for Sainsbury: As it is known, Sainsbury works as a brand in UK market. And it has very less number of stores in few other countries. To be a market leader it has to spread its branches to the other country. And the best strategy to enter in the new market for Sainsbury is franchising in which it would provide a licence to the small organisation of the other country to enter in the new market (Yip & Johnson, 2007). By providing a licence as a franchiser, it can control the business operation of the organisation also can pressurise them to maintain the same standard as it is maintaining in UK because it is very important to keep position as a brand in the mind of customers of new market.

Task 4

Strategy used by the organisation there are the various strategy used by the many company to growth in the market. These are following:

Type of Strategy

Methods of this Strategy

Which level of management is (are) responsible in your chosen company to execute this strategy

How often this strategy is reviewed or changed.

 

Customer focus

The main aim of organisation which follows this strategy to fulfil of the need and wants of the customer present in the market and make available the product according to the requirement.

Sales department of the company is responsible for the implementation of this strategy as this strategy needs the direct contact with the customer.

Quarterly

Pricing strategy

The organisation can increase and decrease the price of product to enter in the market or expand the market share in the industry and also can decide according to the reaction of the customer towards its product.

The strategic management department and the top management are responsible for this strategy as this is very critical for the company to set the prices of the products which are profitable as well as affordable.

As per the market fluctuations.

Promotion strategy

Organisation can promote their product by advertising on TV and radio and through public relation and publicity.

This strategy comes under the marketing department of the company.

Half Yearly

Market penetration

The company increase the sale of their existing product into the existing market by promotion. The Company doesn’t think any expansion neither in product nor in market.

This strategy comes under the marketing department of the company.

Yearly

Expansion

Expansion occurs when company decides the increments in the type of product and the existing market.

This strategy is initiated by the top management of the company which than falls on the production department.

Depends upon the updating of company catalogue of the products.

Product strategy

The existing product line replaced by another product line by company and then offered this to existing customers.

This strategy is initiated by the top management of the company which than falls on the production department.

Depends upon the updating of company catalogue of the products.

Roles and responsibility for strategy implementation

The success of strategy implementation is totally depends on the responsibilities of team members in the Sainsbury. So the top management should always explain the strategy like the benefit by implementing strategy and also should explain the clear objective and vision. And the corporate and business level manager should also plan the training program to inspire the function level employee for better performance. Clear explanations of roles and responsibility always carry a strong communication and also increase moral standard (Ahenkora & Peasah, 2011).

Resource requirement to implement a new strategy in Sainsbury

The resource helps in building the competitive image of Sainsbury into the market. Sainsbury uses the resources like human resource, finance resource and physical resource. Combinations of resources always formulate a capability for organisation. The effectiveness of the strategy highly depends on the human resources and these are the real assets of the company. Sainsbury always look for the talent for the success of the strategy. The physical resources are the stores present in the UK these gives lots of profit to the Sainsbury to emerge in the industry. And the finance resource provides a capability to finance in the new market.

Targets and timescales for achievement in Sainsbury

Sainsbury is a third leading company in the supermarket company of UK. To open their new store in the other country it is planning to expansion in the strategic plan. Before setting the long term and short term targets and timeline it is important to think about the mission and the vision of Sainsbury (Cavusgil, Knight & Riesenberger, 2008). The long term target always affects the short term targets. While the short term targets always helps in evaluation of the strategy of each department present in the Sainsbury. Sainsbury offers their customer a wide range of product on New Year and Christmas but they annually calculate the profits on timescale.

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Conclusion

When an organisation runs in the market, its success is not based only on these sets of decision taken by the management but also on the all the employee as well. Every employee, works in the company, needs to be fully motivated to achieve the defined target by the management. The vision of any organisation should be very clear because it always lead the employee to set their target and motivate them to achieve. The different marketing strategies used by the Sainsbury are explained in the paper along with the future strategy. The success and growth of a company depends entirely upon the strategy company chooses and how this strategy is implemented at the ground level. Once a strategy is implemented, its continuous monitoring is also required to keep an eye on the outcomes of the strategy. The monitoring and reviewing of the current strategy make sure that everything is fine and if any change is required, it should be initiated at once.

References

Ahenkora, K., & Peasah, O. (2011). Crafting Strategy That Measures Up.International Journal of Business and Management, 6(10), p278.
Augier, M., & Teece, D. J. (2009). Dynamic capabilities and the role of managers in business strategy and economic performance. Organization Science, 20(2), 410-421.
Bonnet, D., & Yip, G. (2009). Strategy convergence. Business Strategy Review, 20(2), 50-55.
Ellis-Chadwick, F., Doherty, N. F., & Anastasakis, L. (2007). E-strategy in the UK retail grocery sector: a resource-based analysis. Managing Service Quality,17(6), 702-727.
Gond, J. P., Grubnic, S., Herzig, C., & Moon, J. (2012). Configuring management control systems: Theorizing the integration of strategy and sustainability.  Management Accounting  Research, 23(3), 205-223.