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How to Develop Business Strategy Assignment
Diploma in Business
Unit Number and Title
Unit 32 Business Strategy
To attain organizational goals and objectives business strategy is very important. To increase performance and efficiency of organization a clear understanding of strategic planning is crucial. Before starting any business vision, mission, objectives and core competence are necessary factors which should be analysed. To develop business strategy SWOT and PESTEL analysis should be done. This assessment is based on developing business strategy for business consulting firm; the organization chosen for this assessment is ABC Consultancy.Business consultant organizations provide professional or expert advice in areas such as marketing, finance, engineering, etc. This assessment comprised of major tasks such as mission, vision of chosen organization, formulating of strategic plans, SWOT and PESTEL analysis, significance of stakeholders and implantation of strategy in organization (Steiner. 2010).
1.1 Mission, vision, objectives, goals and core competencies
Mission – Before building any organization mission statement is very important. To meet expectations of stakeholders and describing how organizations run their business mission statement is crucial. For example, a business consulting firm’s mission statement include:
- Providing effective services to help organizations to improve performance and efficiency
- Bring success to clients by providing valuable services and quality services.
Vision–The vision statement outlines organizational future planning or areas where it wants to operate or what targets it wants to achieve within specific period. Primary purpose of business consulting firm is to deliver exceptional financial, tax and consulting services to clients. Organization’s primary purpose is to provide high quality financial products.
Objectives–The main objectives would include:
- Customer satisfaction by providing valuable services
- Encouraging employee for work efficiently
- Increasing profits
- Enhancing quality of products and services (Teece, 2010)
Goals–It can be described as target to achieve within specific time. Goals are conceptual planning to achieve targets. For development and growth of organization effective goals planning is necessary. For business consulting main goals involve:
- To develop an outstanding reputation of brand
- To develop loyal customer base and expand market shares.
Core competence – To compete in market with their competitors organizations require unique skills, resources and activities that cannot be copied by their competitors. In attaining competitive advantage core competencies are very effective. To attain organizational goals and objectives encouraging staff members and motivating them for effective and quality services to clients. Therefore a being a business consulting firm our organization needs to develop unique skills and activities to gain confidence of client (Campbell, et. al., 2011).
1.2 Factors considered when developing strategic plans
There are various factors and issues need to be considered during the process of develop a suitable strategy for a business. There are following factors should be taken into consideration with the formulation to ensure successful implementation of strategic plans:
- Communication - When formulating any strategic plans it is important to involve employees in decision making process because without proper support from employees plans would not be succeed. Therefore leaders should develop effective communication where all staff members encouraged expressing their ideas and thoughts.
- Engagement – All levels of staff members throughout organization should be involved in strategic planning. The rate of success will increase if employees would be engaged in strategy execution.
- Financing – Strategic plans are developed to introduce new products or services or re-structure department, etc. Therefore to analyse economic condition of organization. High Management level managers required to evaluate accounts of company before formulating strategic plans.
- Management – In order to successfully implement strategies effective management is very important. All steps to formulate strategic plans should be taken properly and managers should include key information required for strategic planning during meetings (Kalyani, et al, 2011).
1.3 Strategic Planning techniques
There various techniques or methods used for strategic planning of an organization. Each and every technique has some advantages and disadvantages also. These techniques can be described as:
Space analysis - It is an analytical technique used in strategic planning and management. SPACE stands for Strategic Position and Action Evaluation. This technique analyses industry strength, financial strength, competitive advantage and environmental stability of the company. Factors that determine industry strength include: ability to make profit, develop new products and further development. Financial strength include: inventory turnover, capital requirement, etc. Market share, customer loyalty, etc. involve competitive advantage. Environmental stability include: inflation rate, price range of competitive products, etc. (Helms, et al. 2010).
- Gives detailed information
- Efficient allocation of organizational resources can be done
- Results in internal complexity
- Expensive to maintain
Directional Policy matrices: It is framework used by organizations to determine the preferred segments for their products and services. By analysing directional policy matrices organizations can easily understand the direction for future investment. It is basically variation of Boston Matrix but it provides more details and clearer generic strategies for SBUs (Strategic business units).
- It is effective tool to compare strength of attraction of the product to customers
- It provides information of relative market share and industry growth rates
- The true nature of business may not reflected by this strategic planning technique
- Basically relative market share and growth rate are not only factors that indicate profitability of organization.
PIMs (Profit Impact of Market Share)
It is a long-term and complete study of performance of strategic business units. PIM database is basically a collection of statistically documented experiences derived from number of business, developed to understand what kind of strategies work best in what kinds of business environment . In order to highlight relationship between business key strategies and results PIM is very effective tool.
- This technique enable organizations to determine strategic elements that affect company profits
- Companies can increase profitability by using this tool
- Effective but not able to analyse overall strategic planning
- Time consuming technique (Helms, et al. 2010).
2.1 Swot analysis of ABC Consultancyfirm
It is an effective tool used by organizations in developing strategic plan for mission and goal achievement. SWOT analysis is done to examining particular organization’s strengths, weakness, opportunities and threats in business environment. ABC Consultancyfirm’s SWOT analysis can be explained as:
Strength – In order to achieve organizational goals and objectives it is important to evaluate the strengths for further development and growth. The ABC Consultancyfirm provides valuable services to its clients and used effective business model to achieve goals and objectives. Strengths of ABCConsultancyfirm involve:
- Serving best organizations in market
- Effective marketing capabilities
- Ability to provide solutions to face recession
- Team spirit (Yüksel, 2012).
Weakness – To improve performance and efficiency of organization, areas of weakness should be identified. In order to design and implement strategies and policies organizations need to evaluate both strength and weakness. ABC Consultancy firm weakness identified as:
- Lacking in developing effective business model
- Company invest more on training programs but employee unable to deliver good performance
- Poor performance management system
Opportunities – For development and growth of organization it is important to capitalize on opportunities. ABC Consultancy firm has focused on opportunities to increase business and also used modern technology for developing effective business model.
Threats – organizations have to face competition from other market players and they are also concerned about customer satisfaction. Possible threats for ABC Consultancy firm involve:
- Recession in market
- Global competitors threat domestic and local players
- Threats of losing existing clients
To monitor and evaluating micro-environmental factors that influence progress and development, organizations have used PESTEL analysis tool. Political, economic, social, technological and environmental factors are measured through PESTEL analysis. It can be explained as:
- Political – Political interventions have impact growth and development of industry. Government implement certain rules and regulations which need to be followed by organizations. ABC Consultancyfirm has also affected by governmental laws regarding tax policies. The organizations need to adopt governmental policies for employees which affect business environment.
- Economic – Purchasing power of customers would be affected due to several economic factors. Economic growth rate, interest rate, inflation rates, etc. are the economic factors that influenced ABC Consultancyfirm’s strategic planning.
- Social – Several social factors have influenced organizations such as cultural trends, demographics, etc. In consulting business client’s social values and beliefs affects company’s relationship.
- Technological – To improve business and performance companies utilized technologies in order to provide valuable and quality services to customers. ABC Consultancyfirm has used technology for giving effective services to clients. The company has used automated software to maintain database of its clients and also develop performance management tool.
- Environmental – This factor is important for organizations in certain industries such as manufacturing, tourism, etc. ABC Consultancy firm should not work with those companies that do not follow environmental laws.
- Legal – There are certain laws that impact business environment. For example, safety standards, labour laws, consumer laws, etc. The ABC Consultancy firm has worked in accordance with standards and legal requirements and performing its business operations as per health and safety measures (Bryson, 2011).
2.2 Analysis and mapping of stakeholders
Stakeholder analysis – For any organization stakeholders are crucial and basically there are two types of stakeholders: internal and external stakeholders. Internal stakeholders for ABC Consultancyfirm involve employees, shareholders and management team. Clients, government, society and financial institutions are the external stakeholders for ABC Consultancyfirm. Stakeholder holder analysis can also be done as:
Direct stakeholders – Customers, employees, shareholders, etc. are the direct stakeholders because they are involved in day-to-day activities of business.
Indirect stakeholders – Individuals or organizations that do not have role in daily activities of business are indirect stakeholders. Government, associated groups, etc. are indirect stakeholders (Kalyani, et al, 2011).
Stakeholders mapping – It is management tool utilized by companies to identify stakeholders’ interest, their involvement and categories in which they fall. For project analysis stakeholders maps are effective tools. Stakeholders mapping can be done in four phases:
- Identifying – finding relevant individuals, groups and organizations
- Analysing - understanding stakeholder interests
- Mapping – it allows to see where stakeholders stand
- Prioritizing – Evaluating issues of stakeholders.
3.1 Alternative strategies for market entry, substantive growth, limited growth or retrenchment
The market entry strategy can be defined as the planned method of establishment and management of business in a new target market. These strategies can be strategic alliance, licensing, franchising, mergers, acquisitions and organic growth. The ABC Consultancy needs to expand its presence in global market and for that the market entry strategy of ABC Consultancy must be franchising and strategic alliance model. In this strategy, company can easily build an effective platform in order to get knowledge of foreign markets. The strategy chosen for the firm can also help in the substantive growth of the ABC Consultancy firm as there are many possible strategies are potentially present. These strategies include horizontal integration, vertical integration, related and unrelated diversification. ABC can choose for horizontal integration as it can integrate with local foreign market easily with its own services and brand name (Bhardwaj, et al, 2013).
In the case of limited growth, the four basic strategies of ABC Consultancy can be focused and chosen, which are market penetration, market development, product development and innovation. ABC Consultancy can look after the product development and innovation strategy for limited growth context. The company can work over new product or service which can be provided by the organization such as consultancy for recruitment of human resources, these kinds of services are always preferred by the consumers as they require guidance on these services on a regular basis. Also, ABC needs to focus on getting an innovative approach for their marketing strategies which can reduce their man power in marketing and use their employees in other useful tasks. ABC Consultancies can look for internet marketing tools as applying innovative approach in the organization. Further, ABC Consultancy needs to utilize disinvestment plan in order to include retrenchment. This will directly help the company in order to get financial steadiness in the business. The disinvestment strategy will improve liquidation for the firm (Verbeke, 2013).
3.2 Future strategy
The Future strategy for ABC Consultancy can be proposed as development of brand image and getting a strong market image in urban market. ABC Consultancy provides its services to other business organizations regarding financial, taxation and other economic consulting services. The target market of the company is in urban areas. Thus, company needs to focus into the urban market and penetrate into new urban areas with developing new service portfolio. The company can build innovative strategies such as supping with economic as well as recruitment services for their clients. This will directly help the firm in getting a strong market image and brand build up. Further ABC Consultancy can use other growth schemes for future market development such as strategic alliances with smaller local consultancies and recruitment firms. This will help company to grow in the market with a steady pace. ABC Consultancy needs to focus over the feedbacks of their clients and work in order to amend its services. The key to success in a service providing business is to satisfy the clients and customers completely with the service quality of the company (Reich, et al, 2013).
This report has successfully explored the business strategy of ABC Consultancy. The report depicts the understanding of process of strategic planning in the company. Secondly, the strategic positioning of the organization has been explained briefly in the market with environmental audit and stakeholder analysis of the company. The strategic evaluation of ABC Consultancy is demonstrated with alternative strategies of market entry, growth, limited growth and retrenchment for the company. And finally a future strategy has been explained with recommendations according to the consultancy firm (Oestreicher, and Zalmanson, 2012).
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