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Unit 32 Business Strategy Assignment - Samsung
Diploma in Business
Unit Number and Title
Unit 32 Business Strategy
Business strategy is must for every single organization to achieve its objectives. It is plan which is decided by the top management for the good perforce and more profit. Business strategy is the integral part of an organization to find its way to achieve thrives. Without the strategy it becomes impossible to fight in a tough market. Developing a business strategy is one of the ways to have good and successful business. The business strategy has been constructed over to develop the business strategy for the Samsung Company. It has also shown how objectives, aims, goals differ from each other and what are their roles. In the last, assessment has cleared how strategy accomplishes targets of a company by splitting into several strategies. Organizational activities and task work upon internal and external factors which is why organization develop the business strategy else it will be very difficult to control over the market. Business strategy helps the organization to gain the public advantage and intelligence which is needed to run a giant business like Samsung organization.
LO1 Understand the process of strategic planning
1.1 Assess how business missions, visions, objectives, goals and core competencies inform strategic planning
Strategic planning is a procedure which involves the strategies which are used by the organization to achieve the objectives decided by the company. In order to determine the usage of resources and direction to move are the main factors which are determined by the strategy planning. It incorporates some of the most important components which are must to develop the whole plan. (Montgomery, 2011)
Mission: The main aim of the mission statement is to meet the ends or goals set by the organization. The statement help in identifying the market size of the company and also helps the stakeholders by detailing the execution of the strategies followed by the organization. For example, in case of Samsung the mission statement is “Inspire the world, create the future”. From this mission statement it can be assessed that the organization Samsung wants to satisfy all the customers across the globe by creating superior value in the terms of advanced technology, availability and service quality. With this mission statement, the strategic plan of Samsung will get an aim or desired goal.
Vision: Vision shows the organization future and assists it to form a way for its missions. Generally, visions are long process of future goals of organization.All the steps necessary to achieve the mission statement is the vision. For example the vision statement of Samsung is focused for the period 2020 by integrating employees, industry and partners in a same channel for achieving the mission. Adopting innovation, identifying new territories, providing support to all the employees, assessing the industry requirements are mainly considered in the vision statement of Samsung(Teece, 2010). From this vision statement, strategic planning of Samsung will get the parameters or objectives to initiate the process for achieving the ultimate goal that is to reach at 400 billion dollars in the terms of revenue.
Goals:These are precise targets which an organization decides before implementing any strategy. Goals are the end part of any organization deal or desires. It also involves extensive planning to achieve targets. There are two forms of goals which are:
Short term goal: They help to achieve long term goals as they help the organisation in facing daily challenges, hence keeping the organisation intact. For Samsung the short term goal is to explore new markets to cater and to develop new series in order to attract more customers.
Long term goals-It includes achieving the objectives set by the organisation in order to attain the mission statement of the company. For example, the long term goal of Samsung is to become a leading consumer electronics organisation in the world by having a large customer base.
Objectives:Objectives are the roadmaps that are designed in order to achieve the goal successfully. The main objectives of Samsung are as follows-
- Providing customer satisfaction
- Using advanced technology
- Supportive macro business environment for the staff members
- Raising the revenue generated by the organisation etc.
Core competencies: Core competencies also help in strategic planning as they act as the real drivers of the competitive nature of the market and also enhances the skills of the employees which benefit the customers. For example, Samsung aims to reduce the operation cost and maximise the profit level in order to achieve the competitive advantage.The utilisation of the resources is given importance at Samsung in order to create a unique value proposition in the market. In this perspective, a strategic plan should be focus on the superior value of the organisation in order to achieve the competitive advantage and high level of brand equity. It has been observed that there lies an interrelation between the strategic planning with mission, vision, objectives, goals, core competencies of the organisation.
1.2 Analyse the factors that have to be considered when formulating strategic plans
Strategic planning is highly crucial for the organization to achieve their desired targets. However, there are some important factors that are attached with the strategic planning which are needed to be checked properly.It is much difficult for the management to pick those factors against the priorities. In case the organization has some incongruities about the priorities and factors, perhaps it will divert the organizational from vision to targets. (Woodcock and Starkey, 2011)
The factors that are needed to be considered while formulating the strategic plans are follows:
- Managers:There is a set up in every organisation related to the hierarchy which involves top level, middle level and front line level management. The strategic plans are prepared by the team of top management in the organisation taking the perspective of business goals and objectives. The team of middle level management will divide the responsibilities and targets based on the departments and then the front line managers will fix the individual targets in order to cope up with the strategic plan. Thus there is a need of skills and rich experience to set up the plan that can give an edge to the organisation in the industry.
- Delegation:The middle level management delegate the duties as per the strategic plan fixed by the top level management. All the duties are divided as per the experience and skills of the employees. The delegation is depend on the availability of the resources which are needed to be aligned with the targets otherwise the imbalance will result in low level of productivity.
- Targets: Targets are the desired standard or benchmark fixed by the top management in order to increase the profitability of the resources. Fixing the targets requires the analytical and logical skills due to the anticipation of the profits or losses in the coming year. Thus time is the important consideration while fixing the targets.
- Resources: Resources are the requirements which are needed in the organisation for accomplishing the strategic plan. Strategic plan is set by taking the perspective of business goals and for that resources like finance, human capital, knowledge, place and equipment are required. Resources are needed to be allocated as per the output of the process and deficiency in the resources can bring crisis in the strategic planning.
1.3 Evaluate the effectiveness of techniques used when developing strategic business plans
As Wittmann and Reuter (2008) said that strategic planning depend on the business situations. With the help of these strategies the organisation maintains its position in the market.(Bharadwaj AND Venkatraman, 2013). Samsung follows the following strategies-
The effectiveness of the techniques used in the strategic planning can be done from the following way:
BCG matrix: it is the matrix which determines the level industry relative share of the industry and the business with the help of four dimensions. Strategic business plans are set by considering the growth rate of the industry and current situation of the business. BCG matrix determines the industry growth rate along with the concerned business share. The four dimensions are question mark, stars, cash cows and dog. The dimension question mark is the position where the business share is low than the industry growth rate. Stars determine the position where the industry growth rate and the business share is rising at an increasing rate. Third is the cash cow which highlights the stagnant growth of the industry but a favourable market share of the concerned business. Last is the dog where the business slows down as well as the industry.
The disadvantages of BCG matrix are:
- The business or the industry can only be measured from the view point of high and low. As there is no scope of the medium in this technique
- In the BCG matrix only two variables are considered which are industry growthand relative market share of the business. The other factors like competition level, customers taste and preference, demand supply are being ignored(Hernández AND Martín, 2009).
Mc Kinsey Matrix:It is the matrix which consists of 9 dimensions based on the high, low and medium. Industry attractiveness and the strength of the business unit are considered to determine the position of the business. All the factors like market size, growth rate of the industry, competition level are being considered in this approach. The main strength of this technique is to determine all the possible level of the business while designing the strategic plan. But efficient team of analyst are required to determine the correct financial figures for this matrix.
The management of Samsung can undertake the strategic planning by the techniqueswhich will give more correct figures of the business and the industry. All the techniques have certain advantage and disadvantage which are being discussed. The application of the techniques is only depend on the level of competency of the team.
LO2 Be able to formulate a new strategy
2.1 analyse the strategic positioning of a given organisation by carrying out an organisational audit
- SWOT analysis- this is the technique which incorporates strength, weakness, opportunity, threat of the company like Samsung.
- Strength-the strength of a Samsung can be its hardworking and committed employees, quality of product, updated technology, production, recruitment department. These all together form the strength of a company like Samsung which is world renowned.It is considered as the fastest growing company around the world.(Naidoo, 2010)
- Weakness-this can be anything in a company like poor management, insufficient resources or raw materials, dearth of suppliers, poor customer support. These all elements together form the weakness of the company. Moreover, it weakness may be of its punctuality among employees and can be job security.(Holbeche, 2009)
- Opportunity- a company has many opportunities like international clients, good suppliers, new equipment’s with high technical devices.With the new transportation facilities Samsung can easily import and export its business.
- Threat- in a competitive world companies fight in the market for larger acquisition of customers. Therefore, all the companies become threat to each other.
Internal factors are analysed in the Internal Factors Evaluation Matrix presented below:
Internal Factors Evaluation Matrix for Samsung
Innovative thinking to create high quality,digital products leading to strong loyalty of customers
High price to many products comparing with the competitors
High financial performance, over the last years due to cost reducing strategy
Late venture in operating system licensing
Trend setting design and integration of digital media
Restriction of software usage by hardware platform
Exceptional customer services and 24 hours online sales department
Over dependence for new ideas on top management
Offbeat marketing strategy focus more on smart phone users
Declining ratio of Rand D investments over revenue
Excellent track record in customer services
The competitive profile matrix indicates the company’s competitors and also the strengths, the opportunities and the weaknesses that the organization must consider when formulating its strategy in report with its competitors.
2.2 Carry out an environmental audit for a given organisation
An environmental audit gives an idea and figure in which the company operates or work. PESTL
- Political- Political factor allows companies to make their market among customers’. They are the` ones which formulate laws and protocols for the companies. And if company like Samsung has good relation with political affairs, then it may have wider chance of enhancing its profits.
- Economical-Before setting up any strategic planning it is important to look at the economic condition of the market of a country or area. It decides how many people will be there to buy branded products.This factor figures out the recession, economic situation and exchange rate of the country.
- Social-Beveloping social relation with the customers and people or employees it is meticulous after all we all are human and harmony smooth the work process.Samsung should consider all the social factors and deliver equal response or facilitate to all the factors. The staff should be well trained to meet the needs of different social regions.
- Technological-With the uprising of technology companies have started investing in their RANDD to find out best resources and machines to manage their work and make it easier. New invention andinnovation can be used by the Samsung Company.
- Environment- Since every company wants to develop sustainable development; therefore,Environmental factors are very important for successful business. Likewise, Samsung should focus on these environmental factors for great success and analyse the impacts on business.
- Legal-laws vary from country to country and every company is bound to follow all the litigations and statutory statements decided by the government.
2.3 Assess the significance of stakeholder analysis when formulating new strategy
Stakeholders play an important role in an organization. This is an entity which can be impacted or can impact on the business strategy. These entities can be internal and external employees, government, unions, customers, etc. To assess the significance of the stakeholders towards the organisation Samsung, Stakeholder mapping is needed to be applied where the power and influence level can be determined (Wilson and Gilligan, 2005).
In this stakeholder mapping there are four dimensions which can be related with Samsung in the following way:
- This is the section which highlights high power with low level of interest. The customers of Samsung can be categorise in this dimension where they have high power with less interest level. The customers are the main revenue drivers of the business and the organisation should understand their needs and wants while deleivering the value. Thus satisfying the customers with the value proposition is the only strategy for Samsung.
- This is the section which represents the high power with high level of interest. The investors, financial institutions, share holders are in this category. They have done the investment in return of a sound return. Thus the management of Samsung need to manage them effectively by sharing all the updates of the business and coordinates a meeting for long term profitable relationships.
- It is the section where the level of interest is high with low level of power. The employees of Samsung will be in this category. They have a high interest in the business due to the incentives, salary and growth opportunities associated. Informing them about the change in the business process should be done to remove their confusions or misunderstandings.
- It is the section which shows low level of power as well interest. Only way to meet their requirements is to monitoring them when there is a time. Fewer effortswill be given in this category.
From the stakeholders analysis following assessment can be done (Verbeke, 2013):
- Identification of the stakeholders can be done with the analysis.
- The level of influence and power can be determined which will help the management to design their strategy to the prospective stakeholders of the business. The management of Samsung can easily determined the level of influence and manage them effectively
- The expectations of the employees can be fulfilled if the management inform them about the modifications and that can be only possible if the importance of the stakeholders can be addressed.
- For maintaining a long term profitable relationship with the customers and investors of Samsung, stakeholder’s analysis gives road map that clearly states the position and expectation of the stakeholder’s of the business.
2.4 Present a new strategy for a given organisation
Strategy is the roadmap that can enhance the organisation to reach the desired target level. The strategy should align the objectives of the business. The new strategy for Samsung will be the Market Penetration and Market Development. Market penetration is the strategy that can increase the market share of Samsung by undertaking certain modifications in the pricing and modification strategy. Market development will assist the organisation Samsung to cater the new target segment with the existing products. For example 30% of the people in UK do not use smart phones but majority of the people access the internet which is around 90%. In these circumstances, Samsung should changes the pricing and promotional strategy to create interest on the mind of the non buying customers of Samsung which can increase the scope of the market share of Samsung in UK. Market development is another growth strategy which can be relate with the non buying customers of smart phones in UK. The sales volume will be increase and there is chance to get high customer’s equity in the business of Samsung.
- The framework of the strategy will be based on the following grounds:
- The needs of the customers or the importance to use the smart phones are needed to be promoted during the promotion
- Supporting the innovation continuously is needed due to the changing taste and preferences of the customers
- All the process should be integrated while delivering the value to the customers.(AugierANDTeece, 2009).
LO3 Understand approaches to strategy evaluation
3.1 Analyse the appropriateness of alternative strategies relating to market entry, substantive growth, limited growth or retrenchment for a given organisation
The appropriateness of alternative strategies are as follows-
Market Entry: Market entry determines a complete new market for the business. Market entry is based on the external factors like the level of competition exists, Government taxation, current taste and preference of the customers, localisation factor etc. Samsung is the global brand and catering to the completely new market will require extensive research in order to successfully operate the business. This strategy will not be appropriate for Samsung currently due to the increase in the investment and also risk is attached.
Substantive growth- the organisation increases or maintains its position in the competitive market with the help of substantive growth. It is divided into horizontal and vertical integration. Under horizontal integration two or more companies are merged together, if we take the example of Samsung C&T and Samsung Engineering merge to increase the construction business. Under vertical integration the company itself becomes its own supplier or distributor or the company moving in the similar type of market with similar technology for example Samsung used to manufacture smart TV later started to manufacture phones. Thus the added growth from the substantive growth strategy can be achieved for Samsung.
Limited Growth strategy- This is strategy which will restricts the growth of Samsung in some business units in order to give focus on other business areas. Sometimes the business organisation follows this strategy to give focus on the specific area for developing the business. This strategy will not be feasible for Samsung at this time due to the intense level of competition that is exist across the globe.
Retrenchment- this strategy comes in force during recession period. It may occur that the company faces from huge failures and losses which in turn the organisation would need to cut down their product prices in order the maintain their position in the market. The restriction in the output of the business for reducing the risk factors is associated with retrenchment. This strategy will also not be feasible and justified for Samsung in the growing market rather than they need to focus on the customers who are shifting to other brands or non-buying customers of Samsung by the techniques like pricing, promotion and product modification which will definitely increase the level of output.
3.2 Justify the selection of a strategy
The Samsung has the most critical human resources, which not dug the way to success for Samsung but also choose the best man for competitive world. Moreover, Samsung has analysed that there is very bad demand of employees training skills in order to compete in this ever growing market. The up-gradation of skills and knowledge will make delivery service smooth and will lead to great quality available at company which will help it to gain benefit from the market. The Samsung Company has only one aim to increase the profit of the company without compromising the quality which they offer. The objective of Samsung is to deliver enhanced value to the customers with the innovative products and quality service. Based on this objective, the substantive growth strategy can be useful in order to attract the customers and to increase the business turnover. Currently Samsung is lying behind the Apple in UK and for that reason substantive growth strategy can be useful which will enhancethe scope of utilising the resources in a better way by the added growth. The competition can be encountered along with the increase in the customer base. The justification behind the strategy of Samsung can be done in the following way:
- Suitability:The global revenue has increased around 5.7% which is nearly 49.78 trillion KRW and the operating profit has increased around 12% which is significant for the strategy. The excess growth and operating profit can be utilised by opening a new research unit in UK in order to tap the non-buying people of smart phone.
- Feasibility: The feasibility based on the strategy will be the future scope of getting new customers and that will assist the organisation to achieve the competitive advantage. If Samsung can cater the untapped market of UK successfully then there will be an opportunity for Samsung to grow and enhance the level of profitability.
- Acceptability:Samsung is the global organisation having different product line on the consumer electronics segment. The substantive growth strategy can extract the required investment from the added growth from the different product line. Adjustment and carry forward can be possible with this strategy as Samsung can successfully the tap the target audience effectively with the additional resources. The customers will find a difference and that will create interest on the brand Samsung who are giving focus to all the segments of the customers by designing new products or services.
LO4 Understand how to implement a chosen strategy
4.1 Assess the roles and responsibilities of personnel who are charged with strategy implementation
A proper team of various individuals is required in every organisation to work together. The involvement includes planning staff, boards of directors and top management. Their talent and skills help the organisation in the strategic planning of the business. The assessment of the roles and responsibilities can be undertaken from the following way:
- Role based on the top level Management: The top management will be responsible to prepare the draft of the strategic plan. The global top management team will discuss the overseas top management team for the approval of the plan. The financial conditions or budget will be verified by the members of the top management of Samsung for preparing the plan. After preparing the plan, the members of the top management will conduct a meeting where the details of the plan will be communicated to the middle level management of Samsung. The clear business goals and targets will be shared in the meetings conducted by the top management.
- Role based on the Middle level Management:The middle level management of Samsung are the executives of the department or the heads of the department who will communicate all the targets and objectives of the department to their subordinates. All the business management will be divided in to the departmental targets in order to support the strategic plan of the business. The guidance will be provided by the middle level management to the frontline management in order to accomplish the targets. All the feedbacks will be taken from the subordinates in order to communicate them with the top level management.
- Role of the front line management: It is the supervisors or the team leaders who will delegate the duties or responsibilities to the team members. The team members will be controlled and measured by the front line management based on the targets and responsibilities shared by the team leaders of Samsung. Issues faced by the members will be communicated to the middle level management.
- Role of the employees: Lastly are the employees who will achieve the targets based on the middle level management.
4.2 Analyse the estimated resource requirements for implementing a new strategy for a given organisation
Resource allocation is taken care by the management to execute the planned strategy. Resources allocation is totally based upon the company product demand in the market and it only enables resources availability for the company annual objectives planned by the top management. To formulate implementation of the strategy, it is very important to allocate the resources. However, these resources can be different from one organization to another and may have different strategy implementation. And it has been acknowledged that organisation ambience and resources usage decides the requirements of resources. For successfully implementing the strategy the requirements can be analysed in the following way:
- Budgetary resources: First and foremost a budget is to be designed considering the desired market returns and requirement of the fund based on the strategy. An estimate will be needed to allocate the requirements by considering the expected return or output. For that an analysis is needed to be done correctly for assessing the current working capital. The estimation is the anticipation of the profit which the strategy should consider in order to accomplish the goal.
- Personnel resources:The second resource is the people resources which have the same importance as the other ones. They are the ones which required for the improvements of the quality of the product and they must be trained before allotting any work to them. Finance start all the resources requirement and make available to the company, since Samsung is growing company and can easily acquire all the above listed resources for development. The R and D team of Samsung is to be trained and motivated for giving their productive performances. The requirement of the human capital can only be determined by considering the human resource planning. The demand and supply of the workforce can be assed from the HRP which is needed to be implemented at Samsung.
- Physical Resources: Physical resources will be the purchase of the machineries or new set up of the manufacturing plan which will support the strategic planning of Samsung. The new plant or machineries will be needed to be installed in order to increase the production volume and to tap the non-buying customers of Samsung.
- Technology: For Samsung, technology is the key potential in the business and for that new machineries are needed to be installed which will lower the operating cost and increase the production output.
4.3 Evaluate the contribution of SMART targets to the achievement of strategy implementation in a given organisation.
Samsung is the leading company in gadgets, mobiles, televisions, etc. and it is renowned all over the world. But to compete with other brand like Sony, they need to implement new strategy. They have to be more competitive, fast and innovative in their technical appliances. Since, this company is being recognized by all the countries; therefore it has maintained their management staff for good performance. They have to change their permanent policy. So that they can plan for the long term and short term goals. The organization need to develop in order to attain their goals, and for that it need to attain SMART targets. SMART stands for specific, measureable, attainable, relevant and time- bound.
- Specific-a specific goal helps to make the decisions made by the organization more clear and unambiguous. With the help of these goals, the communication between the organization and the involved members is done easily. The specific area of the strategy is very clear which is associated with the increase in business turnover by targeting the non-buying customers of smart phones in UK. The portion of the organic growth of Samsung will be utilized in opening new production site or maximize the output of the manufacturing process by increasing the capacity of the machineries. Additional investments will not be required from this strategy
- Measureable- this factor helps the organisation in measuring the achievement of the goals set by the company. With the help of this, the team members can check whether they are in the right direction or not. The measurable area of this strategy will be justified after three months of the implementation. The business turnover from the concerned territories in UK will provide a clear reflection on the success of the strategy.
- Attainable-Achievable is the critical area in the strategy. The success of the strategy will only be effective if the non-buying customers of the smart phone shows their interest towards the products. For that integrated promotional approach is needed which will aware, inform and persuade the customers towards the product of Samsung. Thus the expectation of the customers are needed to be analysed for the strategy.
- Relevant- The relevant part of the strategy is the additional investment which will not be taken from the investors. The excess growth of the global business will be utilised for the investment of the strategy. Horizontal integration is not relevant to maximise the market share of Samsung in UK.
- Time- bound– this helps the organisation to decide a starting and ending point of the goal. It tends to put a limit or time bound on the achievement of the goal. Time scale of the strategy will be fixed for determining the effectiveness. Quarterly result of the business turnover can give the real picture of the strategy. The goal to reach the target can be measured in this time scale. Certain deficiencies if arise, measures will be taken to improve.
At last it can be seen from the assessment that business strategy is essential for good and sustainable growth of the company. After analysing this assessment, business could become easier to run and formulating strategy for future growth. Hereby, it is clear that business strategy turns the business to its success and should be developed with experts and erudite people who are well versed about the market.
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