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Strategic planning in any of the organization helps in judging the strategies, directing and making decisions with respect to the best allocation of resources for the strategy. The Unit 32 Issues in Business Strategy Assignment has been carried out to analyze the strategies and its appropriate selection in an organization. The report would also identify various tools and techniques to understand the process of strategic planning more clearly. Further, the implementation and the evaluation of the strategies in an organization would be discussed.
Strategic planning is defined as a process which is being undertaken by the organization to implement a plan for the achievement of its long-term business goals. Strategic planning process is a methodical procedure of predicting the potential environment of business and deciding the appropriate aims, positions and objectives for best utilization of the environment (Steiner, 2010). The five steps of strategic planning process are as follows.
The objectives of the company:
Strategy is been defined as the scope and direction of an enterprise for the long term which helps in achieving the organizational advantage through the optimum utilization of resources in the business operations to fulfill the requirements of the market and the expectations of the stakeholders. Strategic plan includes simple but influential statements which carry out the objectives and the goals of an organization with respect long term success of the enterprise.
A systematic process being followed while formulating a strategic plan for the business operation is been termed as the strategic planning (Swayne.et.al, 2012). It also involves the decisions related to the products and services to be offered in the market particularly. There are certain issues being faced during the planning of strategies such as lack of leadership skills, Lack of consent, Lack of thrust for the short term, unwillingness to bring change, vague aims and objectives etc. According to Mintzberg, there are 5Ps for Strategy in strategic planning.
The 5P’s indicates plan, Ploy, Pattern, Position and Perspective. Plan must be formed in advance with an appropriate purpose. The strategy being framed for overcoming the competition is strategy of Ploy. Strategy of pattern is a set of standards of the past to the future. The strategy of position is related to the competitive environment and attempt to make the product unique (Spee and Jarzabkowski, 2011).
The strategy of perspectives lays an emphasis on the organizational culture and the thinking of the decision making in the company. The major problems being faced in the strategic planning are the accountability of the staff members and the management towards the strategy and the organization and the lack of control from the other parties.
The techniques are being used in planning like BCG matrix and Space matrix as a strategic positioning technique. The technique used by Natural Skincare Company for making the strategic plan is the SPACE matrix technique which helps in analyzing the positioning for the mangers. The SPACE matrix is a management tool of strategy which mainly focuses on the formation of strategy and the positioning of the company. SPACE is also known as strategic position and action evaluation. It is specifically concerned with the competitive position of the company. The matrix is been divided into four dimensions which justifies the nature of the strategy (Wheelen and Hunger, 2011).
Figure 1: SPACE matrix
(Source: SPACE analysis- strategic position and action evaluation matrix, 2011)
The dimensions of SPACE matrix are Aggressive, Conservative, Defensive and Competitive. With the help of the analysis of this matrix the top level management or the managers of the Natural Skincare would be able to select the suitable strategy through which the organization would be focusing for the achievement of the strategic objective and goal. The analyses of the matrix help out in identifying the loop holes or the drawbacks of the organization and making the best suitable strategic plan. The matrix supports the organization with proper planning and directs as what strategy should be pursued by it. The analysis of Space matrix includes four basic factors that also affect the dimension of the strategy. The factors are been discussed below:
The Natural Skincare Company deals with the large products and services all over the country and it is important to carry out an organization audit. An organizational audit is been performed to evaluate the factors related to the day to day operations of the business and the consequences being related to it. It is also identified as an activity being performed to support an organization to enhance its functionalities and operations through identifying the different aspect like strength, weakness, opportunities and threats within an organization to attain the desired objectives and profitability (Helms and Nixon, 2010).
To conduct such audit SWOT analysis of natural skincare company had been described briefly below:
Table 1: SWOT analysis of Natural Skincare Products
1.The products being offered by the company are of herbal and natural contents and thus are the major strength.
1.The major weakness being identified is that the products of premium range are not much preferred in the rural areas.
2.These acquire a large base of market and the activities related to market expansion.
2. Another weakness of the company that some of the products like scrubs, sun screens are also not much developed as per the expectation of the customers
3.The company adopts a strong and systematic distribution channel from which the proper delivery of products are be n ensured.
3. The skincare manufacture the major range of products focusing on the women and are limited to them (Quynh Trang Nguyen, 2013).
1. Natural Skincare Company had a widespread opportunity as organization could introduce new improved products brought in the range of varieties.
1. There is a relevant growth in cosmetics and skincare products and a large number of competitors in the market with the similar products and services.
2. A new range of products for men would provide a market expansion and also had a high growth potential in the market area.
2. There are certain consumer protection constraints with respect to the health issues of them.
3.The company should have the opportunity to develop its business in international market.
3.There are some other organizations which provide additional products to the customers in affordable price.
Environmental audit is been referred as the evaluation of various external factors of the skin care organization with respect to its operations or function and determining the policies to identify the consistency of the company. It is been ensured that the policies being implemented are whether followed by the company or not. With the help of PESTLE analysis the external factors would be clearly described.
A stakeholder in an organization is the one who acquires a level of interest from the business operations and production particularly. There are several stakeholders in a single company who affects the business operation in one or the other way and participate in all types of profits and losses by the company. Through stakeholder analysis the stakeholders of Natural Skincare Company had been recognized. The stakeholders include employees, shareholders, partners, competitors, customers, government, etc. of the skincare (Leszczynska, 2012).
Stakeholder analysis helps in forming the new strategies and conducted to achieve the perceptions and proper judgments about the strategies from the stakeholders. For achieving a productive stakeholder mapping and analysis the Mendelow Matrix is been implemented. It is a business analytical tool being utilized for mapping the different stakeholders as per the interest in the company and the influences on the decisions of the company. It directs the management as what kind of reaction should be made against these stakeholders as to make them satisfied.
The most powerful stakeholders who could make effects on the productivity and profitability of the skincare being identified are the suppliers, shareholders, customers, employees, etc. (Carey.et.al, 2010). The implication of Mendelow matrix in Natural skincare company is been discussed below:
Figure 2: Mendelow Matrix
(Source: Mendelow Matrix, 2015)
The matrix is been divided into four segments which identifies different factors of the stakeholders and their effects on the business operations of the Natural skincare company.
The first segment A identifies the minimum power and interest of the stakeholders and thus needs minimal efforts.
The next segment includes the stakeholders who do not have much power to influence the strategies of the company but attains high interest level in the functions of the company and could make influences on the powerful stakeholders. It is very important that the stakeholders are made aware about the strategies being implemented in the skincare for example, information about the charity if performed by the company (Horn and Johnson, 2012). Section C includes the stakeholders who are not much interested in the operations of the company but makes effects in the greater way and thus they must be treated with great care so that to make them delighted.
The final criterion which lies in D section involves the key players and acquires a larger number of interest and high influencing power in the organization. The best example of these types of stakeholders is the customers of Natural Skincare Company as the total profitability and success depends on the sales only.
Substantive growth: This kind of strategy involves vertical and horizontal integration of organization to develop the standard in services and products to meet the level of satisfaction among customers. This strategy useful to makes sure the integration and diversification of operations which have an essential impact on growth and profitability. Furthermore, this strategy recommends that firm has to produce the raw material and another supporting devices rather than buying it from others which will enhance the profit amount and help to meet the preferred objectives including the stakeholders (Casson, 2012). If the company performs every achievable operation at single place will helps to overcome the expenditures of carrying and logistics that increase the profit margin.
Vertical integration: Vertical integration (VI) is a strategy which is used by many companies to increase control over their value chain. This strategy is one of the main considerations when developing level strategies of business for natural skin company. VI is define as the strategy which is used by the organization to obtain control over its distributors and suppliers to enlarge the power of firm in the marketplace, decrease costs of transaction and protects distribution channels or supplies. For example, the organization of Natural Skin Care Company has to determine its products or would engage in retailing and after sales services as well. Two issues have to be considered before integration:
Horizontal integration: It is another type of integration strategy which is pursued by the company of Natural Skin Care Company to strengthen its market position. Business that applies this type of strategy generally acquires or mergers other company which is in the stage of same products. The main purpose of horizontal integration (HI) is to develop the business in size, improve differentiation of products, decrease competition, and achieve scale of economies or to access new markets. When various companies follow this type of strategy in similar business, it guides to industry consolidation. It should occur in a structure of mergers, hostile takeovers or acquisition in which merger is defined as the joining of two similar organizations behaviour to create one combined entity (Bowonder.et.al, 2010). Acquisition is the buying of other company and hostile takeovers is considered as the acquisition of company, which does not need to be obtained. Strategy of HI is effectual when:
Table 2: Difference between vertical and horizontal integration
The basic objective is to strengthen the supply chain of the industry.
The objective of this strategy is to enhance the size of the business activities.
The strategy has a control over the industry
This is used to attain control over the market
The capital requirement is comparatively lower.
In this strategy high capital is been required.
The major effect of this strategy is laid on the cost and wastage reduction (Khraim, 2011).
While it eliminates the competition and acquires maximum share in the market.
Mergers and acquisitions: Merger is mutual efforts of two or more organizations that looking to expand the business by pooling the resources. In other words, merger refers to combining two of more companies by offering the stockholder of one company securities in the acquiring organization in exchange for the surrender of stock.
Advantages of mergers?
Disadvangtages of mergers
Example of merger
Natural Skin Care Company is also suggested that after analyzing the market growth and the productivity it could move towards the acquisition process. By conducting market analysis the company could obtain an idea over the acquisition of any other small company having good products and services and could be a profitable deal after acquiring.
For obtaining a product specifically the company could go for this attempt as it would be less expensive to acquire a company and sell the product rather than developing the products itself. It would also expand its operations and enhance its market size as the larger company attains more identification in the market and also have better access towards the resources and other credit facilities (O'Brien, 2015).
The company could acquire another company to attain a control over the specific products in the market.
For example, natural skincare could acquire a herbal lotion company to enhance its product range and improvement in it.
For implementing the strategies in Natural skincare it is very important that the proper roles and responsibilities are been assigned to the correct individual and are been followed properly in different departments. It is very important to analyze that how the task must be assigned and would be accomplished in an effective manner. The managers, employees and the senior authorities are responsible to implement the strategy effectively in the company (?ater and Pu?ko, 2010).The roles and responsibilities within the organization for executing the strategy could be identified as following:
There are several tools and techniques which could be utilized to manage the project and make the schedule for the day to day activities for the implementation of the strategy. For the present scenario a Gantt chat is been drafted to identify the exact tasks to be performed and needs to be followed (Kaur.et.al, 2010). It would help in exploring the activities and the time scale for the project. The effect of the project could also be evaluated and the requirements of the resources according to the plan could be set.
Table 3: Gantt chart
For implementing the merger and acquisition technique in the organization some of the basic steps are been followed so that to attain a profitable deal. The process to be adopted while carrying out the merger and acquisition would enhance the reliability and profitability of the project (Lamberti and Noci, 2010).The steps are following:
As a CEO of Disney I would follow the below listed approach for implementation of strategy:
Strategic planning in an organization assist in making judgments about the strategies, directions and making decisions regarding the best allocation of resources for the strategy. The report concludes that the strategies and its appropriate selection in an organization are the major factors which could influence the operations and the success. The report had also revealed that various tools and techniques could be used to measure the effectiveness of an organization and the strategies being implemented in it. The skincare company had been suggested to adopt the mergers and acquisition technique to expand its market growth and attain more profitability out of it. Further, the Gantt chart had been utilized to attain more clear understanding about the implementation of the strategy in the company and its operation.
Books and journals:
Assenmacher, K., 2011. The Bodyshop-An Analysis of the Company´ s Actions towards Sustainability.
Atun, R., de Jongh, T., Secci, F., Ohiri, K. and Adeyi, O., 2010. Integration of targeted health interventions into health systems: a conceptual framework for analysis. Health policy and planning, 25(2), pp.104-111.
Bowonder, B., Dambal, A., Kumar, S. and Shirodkar, A., 2010.Innovation strategies for creating competitive advantage. Research-technology management, 53(3), pp.19-32.
Cadle, J., Paul, D. and Turner, P., 2010. Business analysis techniques: 72 essential tools for success. BCS, The Chartered Institute.
Carey, N., Stenner, K. and Courtenay, M., 2010. Stakeholder views on the impact of nurse prescribing on dermatology services. Journal of Clinical Nursing. 19(3?4).pp.498-506.
Casson, M., 2012. Multinationals and world trade: Vertical integration and the division of labour in world industries. Routledge.