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Strategy is the backbone for laying the foundation of a successful process and planning as it includes all the vital decisions that are needed to visualize them. This framework is an essential part of strategic approach as it directs the growth and optimum use of available resources to meet the needs of the organization as well as its stakeholders. In this report, focus is highlighted on the strategic planning process and its significance. Also, various techniques of planning, resources needed and roles to be handled for strategic implementation has been discussed here with focus on various companies taken as examples to help understand the various aspects involved in a simple way.
Strategic planning is the direction planning of a business which drives and leads it to most desirable probability ensuring growth from where a business stands to move it to where it is expected to reach in future. This likely process meets the interests of all the stakeholders to achieve the business vision and mission. But like any other business risks this road map also includes barriers which need to be overcome and adjusted to achieve the objectives of the business. The success of strategic planning depends on effectiveness of evaluating both internal and external business environment, competitiveness of employees and on effective communication. (Gaggl & Grunig, 2013)
The steps in the strategic planning process have been illustrated in the figure below.
Once the business mission and vision is defined and objectives are framed, then a strategy needs to be produced so that activities and roles are designed in order to accomplish them. Then this strategy needs to be put into action or implementation with the use of various resources and in a timeframe. The last step in strategic planning process is to monitor the progress of strategy to recognize its developments, need for improvements and overall reviews.
The strategic planning is the description of the business road map and it talks about competitive and strategic approaches that are undertaken to meet the interest of their entire stakeholder’s and achieve the business objectives successfully. It specifies the business mission, vision and plan to fulfill those (Objectives). In this process how, when, what is decided for resource allocation and implementation. This process helps a business to perform efficiently. (Simerson, 2011)
As strategy is basically a business directional plan so its role is to provide focus or define its approach in a competitive way. It clarifies activities to meet objectives by diagnosing the business strengths or characteristics with changes in environment so that efficient planning can be designed to respond. This helps to make able decisions for successful outcomes with available resources. Overall strategy helps to analyze and monitor business for its growth. According to Mintzberg, strategy has 5 P’s:
Ploy which describes witty advantage over competitors. Example, for this distributor, the strategy plotting can be low priced bulk sales. This will increase sales volume keeping the costs marginally low compared to rivals. (Prahalad & Hamel, 2010)
Though useful but strategy can also be countered with problems such as lack of clarified purpose, communication, information, approach, competence, resources etc. There can also be other issues such as problems within leadership, organizational culture, unrealistic expectations and unplanned changes faced from customer, environment or employees.
BCG matrix is planning for potential of product or business portfolio for investments and markets. They define existing competence and future probability creation. This helps to decide on investments, developments or decline of products. It decides on growth and market share dimensions based on aspects of stars, cows, dogs and questions mark. (Griffin, 2007). This is illustrated in the figure below.
SPACE Matrix is planning for competitive positioning for business based on four determinants: aggressive, conservative, defensive and competitive. This is illustrated in the figures belo
BCG Matrix as growth planning technique:
This matrix evaluates the positioning of product in response to environmental challenges to help decide business strategies for growth and market share. It helps to identify current strength and future potentials. This is determined by:
Benefits and limitations of BCG
To carry out the organizational audit SWOT is a useful analytical tool as it evaluates the internal and external competence and resources with the micro and macro environments of the business. This tool helps a business understand their own capacity and competitive advantage, evaluate competitor’s situation, recognize own opportunities and strategic response. (Bohm, 2009)
As per the case scenario, I have been working as strategy consultant where I used to carry out organizational audits for my client companies. The use of SWOT tool has helped me carry out my analysis. Example, I would like to discuss SWOT analysis for Mulberry and how it has improved their functioning.
Porter’s 5 Forces model is an analytical tool by which a counter strategy can be planned against competitive forces. This helps to evaluate and hence formulate the position of the business and its economic intensity in a manner that is difficult to be attacked.
Example, the environment audit for Mulberry will help to understand PORTER’S 5 FORCES:
Stakeholder analysis is about recognizing the interests and power of all individuals, groups and organizations that are directly or indirectly involved with a business or project. It is also about managing their interests to keep them convinced and faithful. Significance of stakeholder mapping: healthy relationships, strong cooperation, un-interrupted flow of resources, effective performance, strong decision-making and strategic approaches to respond to environments, changes and risk management. (Blokdijk, 2015)
The significance of stakeholder analysis can be understood with the mapping of stakeholders for Mulberry.
Assessment of Impact
Profit, Income, Stability of business, growth and sustainability
High power and high interest
Growth strategies that can sustain high market share and revenues.
Growth of capital and economies of scale from investments done.
High power and high interest
Participation in decision making process to keep them informed.
Career growth, adequate compensation, recognition and job security.
High power and low interest
Provide personal development, engagement and keep them satisfied.
High interest and low power
Long term trade contracts and benefits, strong relationship and timely payments
Quality and value
High power and low interest
Product innovation, creative designs
Compliance with regulatory frames, giving employment to community and value return for using public resources.
High interest and low power
Transparently communicating financial statements and other documents, timely taxes and practicing with regulations fairly.
High interest and low power
Keeping them informed
Responsive giving to society
Low interest and low power
Giving employment, scope for development
Substantive growth strategies are the growth strategies which are led by four factors: Horizontal integration, Vertical integration, related diversification and Un-related diversification. These are done by mergers or acquisitions.
Vertical integration is strategy that leads to gaining of control or ownership in the same industry such as acquiring production, distribution or delivery chains. This helps to enjoy all the profits by single player and helps to gain more power, minimize costs and control different channels or component parts involved. Example, Google one of the leading software giants have acquired Motorola Mobility which is a mobile company to integrate its software and hardware approach. It plans to enter into manufacturing android based mobile devices and television set-top boxes by providing them operating systems and software solutions under one name. (Knowledge@Wharton, 2012)
Horizontal integration is strategy that integrates another business or activities at the same stage of operation in similar or different industry. This helps to expand and strengthen the resources, economies of scale and cut-down competition within supplier and customer chain. Example, Walt Disney Group which is a leader in entertainment industry has horizontally integrated by acquiring other creative studios such as Marvel Comics, Lucasfilm and Jim Henson Studios. This has helped Walt Disney’ s to create new themes such as “ The Avengers”, “Star Wars” and “The Muppets”. (Hanks, 2015)
Differences between Vertical and Horizontal growth strategies:
b) Select an appropriate future strategy for one of your firm’s clients. This should illustrate one future market entry strategy such as Organic Growth OR Mergers and Acquisitions (M&A) OR Strategic Alliances
Merger and Acquisitions are the strategies that are undertaken by business to increase and expand their combined value which is greater than the parts. This helps to improve strategic positioning by minimizing competition, expanding on market size, improving business gains, creating new developments and ideas, using resources judiciously to eliminate loses and facilitate growth. This helps to distribute risks involved to create more favorable and secured environment. Example, Royal Dutch Shell’s recent acquisition with UK’s oil and gas company BG Group Plc. This would help Shell to benefit from expansion during changing market environment where prices in oil and gas are declining substantially. This will enable them to increase their economies of scale and remain competitive to changing environment though being limited with market shares. This would also influence competition strongly particularly in exploration and liquefaction of gases and in oil supply facilities in Europe and North Sea, with more projects being built to increase capacities. (Walker & Fairless, 2015)
The effective implementation of strategies can be visualized by the following roles and responsibilities and the business activities that are undertaken:
Human resources are most important inputs for the success of strategies. This goes true for Royal Dutch Shell also. They need competent and skilled employees who have through knowledge of all the technical details required in the process of oil exploration, drilling, processing etc. They need to have expert field employees as well as management level employees who can maintain the other in-house functions right from procurement, production, distribution etc.
In addition to manpower needs Royal Dutch Shell also needs to have strong budget planning so that adequate resources are procured and allocated for production process. In addition, they need to have budget for R& D activities, PR activities as well as for supply and distributions.
Material resources needed for Royal Dutch Shell are crude oil supplies, equipments for drilling and exploration, production equipments and materials, storage and distribution materials and also transport.
The proposed timeline for the above strategy implementation of Royal Dutch Shell can be understood with the following Gantt chart and task schedules, as illustrated in the figure.
Step 1: starts with market research and analysis. These activities are estimated about 44 day’s time. Next activity is arrangement of capital for which investors are looked into, it is allocated 24 days. Then, after the investments are arranged, an on-site and off-site property is finalized for production and other operations which are allocated 6 days.
Step 2: starts beginning with supplier seeking which is allocated 17 days time. Then, it is followed by tender quotation which is given 3 days. After this suppliers are finalized. Then on-site and off-site units are developed for infrastructure support and equipment installation.
Step 3: begins with human resource planning which is allocated 24 days and employees are then recruited for this plan. Last step is material procurement which is given 16 days and after all set up is prepared, production process begins to operate.
From this discussion it can be concluded that strategies are vital for recognizing and utilizing every business input judiciously so that growth objectives of a business are met with long term sustainability, high productivity, performance and profitability. This planning helps to make capable decisions so that various roles and activities are effectively achieved and on proper time. This is important for the successful operation and functioning of a business.
Bohm, A. (2009). The SWOT analysis. GRIN Verlag Copyright
Blokdijk, G. (2015). Stakeholder analysis: simple steps to win, insights and opportunities. Emereo Publishing Copyright
Bodenmuller, F., H. (2014). Leadership as framework for successful strategy implementation. Anchor Academic Publishing Copyright
Chernatony, de L. (2008). From brand vision to brand evaluation. Routledge Copyright
Gaggl, R & Grunig, R. (2013). Process based strategic planning.Sprienger Science and Business Media Copyright