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Business Strategy

Table of Contents
Introduction..2

Task 1: Understand the process of strategic planning


1.1 Identify & explain the missions, visions, objectives, goals & core competencies...3-5
1.2 Arguments for strategic planning in ABC Plc5-6
1.3 Different planning techniques and explain and link to ABC Plc......6-12

Task 2: Be able to formulate a new strategy


2.1 Conduct an organisational audit for ABC Plc 12-15
2.2 Conduct an environmental audit for ABC Plc 16-18
2.3 Conduct stake holder analysis and explain significance..18-20

Task 3: Understand approaches to strategy evaluation and selection


3.1 (a) Market entry strategies for GSM to enter India.20-22
(b) Growth strategies for GSM......22-23
3.2 Select a future strategy for GSM when entering into India23-24

Task 4: Understand how to implement a chosen strategy


4.1 Roles and responsibilities for strategy implementation in GSM and another org..24-25
4.2 Evaluate resource requirements to implement a new strategy for GSM.25-26
4.3 Propose targets and timescales for achievement of a growth strategy in GSM26-27

Conclusion28

References..29-30
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Business Strategy

Introduction
Nowadays, business strategy is core element of all firms in over the world. Before building a
business, participating in a new sector or new market, successful firms always deliberately
research market, trends of customer, their strength and their weakness to create an appropriate
strategy.
This study will show the analyses and evaluations about different aspects of business strategy.
There are two scenarios with two tasks each. The first scenario is regarding ABC Plc Tours and
the tasks includes the process of strategic planning and formulating a new strategy. The second
scenario is on GSM including tasks on the approaches to strategy evaluation and selection and
implementation of a strategy.

Business Strategy

Task 1: Understand the process of strategic planning.


1.1
I.

Identify & explain the ABC Plc missions, visions, objectives, goals, core
competencies strategy in terms of business strategy.

Mission
A mission is a written declaration of an organization's core purpose and focus that normally
remains unchanged over time. Properly crafted mission statements
a) serve as filters to separate what is important from what is not.
b) clearly state which markets will be served and how.
c) communicate a sense of intended direction to the entire organization.
A mission helps to provide:
Common purpose so everyone is clear what the purpose and values of the company are to
help guide the companys culture.
Focus for the strategy strategic decisions can be based upon and reviewed against their
consistency with the mission to ensure the organization does not get off track or lose focus on its
true values and purpose.
Direction for objectives to ensure alignment of activities towards achieving objectives which
are consistent with the companys purpose.
The mission of ABC Plc tours is to provide memorable holidays in Sri Lanka, social and
environmentally responsible, satisfying the needs of clients and always exceeding their
expectations.

II.

Vision.
Vision statements are future-based and should be aspirational laying out the most important
primary goals for a company. As a company grows, its objectives and goals may change.
Therefore, vision statements should be revised as needed, to reflect the changing business
culture.
Vision of ABC Plc tours is to become the premier and most preferred operator in the region and
its clients best partner, always providing the best possible product, with the highest quality of
services, and demonstrating faithfully the commitment towards social and environmental
responsibility.

Business Strategy
III. Goals.
Goals are long-term aims that a business wants to accomplish. It is used to help a business
grow and achieve its objectives. They can be used to foster teamwork and help the business
describe what it wants to accomplish. Setting goals is an important part of any business plan.
Goals of ABC Plc is to become the premier company in tourism in the country with high profits,
providing the best services to customers and promoting green and sustainable tourism.
IV. Objectives.
An objective statement is an explanation of company goals, including what the company would
like to achieve and the overall ideals of the organization. An objective statement can vary in length
and detail depending on the complexity of the company's goals. Each objective statement should
include information about how the company plans to achieve business goals.
Objectives are set at various levels: Corporate, Functional and Unit, often set in financial terms
but also can be in non-financial terms. An objective should be SMART: Specific, Measurable,
Achievable, Relevant, Time bound.
The objectives of ABC Plc are:
a) To make a profit of 1 million$ within one year.
For this, the following break-down is recommended.

1 year(4
quarters)
1st
qaurter
1 month
1 week
1 day

Figure 1: Financial objective break down.

b) To become best tourism company in Sri Lanka.


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Business Strategy
c) To achieve high customer satisfaction through best services
d) To promote sustainable tourism.
e) To act as a liaison between the travel agents and the airlines, tourism suppliers, affiliated
bodies and government agencies on issues and matters of concern.
V. Core competencies.
It is one of the core components of business success. Core competencies give competitiveness
over other companies. If any company have competitiveness it is sure they are able to penetrate
their desire market. It should not be something that the competitors can imitate easily.
Core competencies of ABC Plc tours is their quality customer service and relationship
management and also the ability to exceed their expectations.

1.2

Identify and give your arguments for strategic planning in ABC Plc.
Strategic planning is an organizational management activity that is used to set priorities, focus
energy and resources, strengthen operations, ensure that employees and other stakeholders are
working toward common goals, establish agreement around intended outcomes/results, and
assess and adjust the organization's direction in response to a changing environment. It is a
disciplined effort that produces fundamental decisions and actions that shape and guide what an
organization is, who it serves, what it does, and why it does it, with a focus on the future. Effective
strategic planning articulates not only where an organization is going and the actions needed to
make progress, but also how it will know if it is successful.
The arguments for strategic planning in ABC Plc tours can be better understood with the help of
Ansoff Growth matrix. It is a marketing planning tool that helps a business determine its product
and market growth strategy.

Figure 2: Ansoff Matrix

Business Strategy
Ansoffs product/market growth matrix suggests that a business attempts to grow depend on
whether if the markets are new or existing products in new or existing markets. The output from
the Ansoff product/market matrix is a series of suggested growth strategies which set the direction
for the business strategy.
In the case of ABC Plc tours, it stands now in the product development stage; where the company
is introducing its new tourism products into existing Sri lankan tourism market.
Since the market already exits, ABC Plc would face immense competition from the giants such as
Tangerine Sri-Lankan tours and Walkers tours who have been in the industry for a long time. To
be successful, it is essential for ABC Plc to understand the core competencies of its competitors :Tangerine tours are exceptional for their variety of tour packages and services while Walkers tours
have immense knowledge of Sri Lankan tourism industry as they have been there for over 45
years and understand the changing trends and know how to adapt to it.
It is therefore crucial for ABC Plc to do strategic planning, focusing on building its core
competencies, keeping in mind its target groups- Indian and Chinese markets and find ways to
implement its plan in a cost effective manner in order to stay in the competition and achieve its
missions and vision as explained in the previous section.
Here are some of the benefits that may occur as a result of strategic planning.
1) Makes the management of ABC Plc tours easier by providing a framework and a clearly

defined direction for decision-making.


2) Establishes a uniform vision and purpose that is shared among all members of the

organization and helps them pull in the same direction.


3) Works to create an increased level of commitment to the organization and its goals.
4) Can result in improved quality of services for clients and a means of measuring the

service.
5) Helps everyone in the organization with setting priorities and matching resources to

opportunities.
6) Increases the ability to deal with risks from the external environment.

Also the company has to do audits regularly to make sure that their financial matters are intact
and also contemplate on solving the strategic issues that may come in the process of strategic
planning.

1.3

Identify the different planning techniques and explain as to how it can


be linked with ABC Plc.

For ABC Plc, first, two types of planning techniques are considered.
a) Top-down planning:
This is focused on keeping the decision making process in the senior level and often dont
accept advice or guidance from lower level employees. The decisions are taken at the top
level and passed down to the lower level employees for implementation. Such decisions
cannot be altered at lower levels.

Business Strategy
Since ABC Plc is a service oriented company, this method could be ineffective because the
top-level management may not know the tourism market as much as the front line employees,
who constantly are in contact with the customers. This could lead to a trial and error method
and if not found successful, would only result in wastage of time and resources.
This method may have good results if the management are able to understand the market by
communicating with professionals in tourism market. But this may not happen due to lack of
time and interest of management and rather are interested in the organization as a whole.
Therefore, top-down planning is not suitable for ABC Plc tours.
b) Bottom-up planning:
In this, the plans are developed at the lowest level of the firm and are then passed on to each
higher level and finally to the top management.
This method is more realistic since the lower level employees have better understanding of
the trends in market and the needs of their customers, since they are in constant touch with
them. This also gives them more motivation and a sense of responsibility.
Therefore, bottom-up planning is the most suited for ABC Plc tours.
Lets see where ABC Plc tours stands according to other methods.
i.

BCG matrix
Boston Consulting Group matrix was developed by Bruce Henderson in early 1970s.
According to this technique, businesses are classified as low or high performers
depending upon their market growth rate and relative market share.

Figure 3: BCG matrix.

The matrix assess products on two dimensions. The first dimension looks at the products general
level of growth within its market. The second dimension then measures the products market
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Business Strategy
share relative to the largest competitor in the industry. Analysing products in this way provides a
useful insight into the likely opportunities and problems with a particular product.
Products are classified into four distinct groups, Stars, Cash Cows, Problem Child and Dog.
Stars (high share and high growth)
Stars have rapid growth and dominant market share. This means that star products can be seen
as market leading products. These products will need a lot of investment to retain their position, to
support further growth as well as to maintain its lead over competing products. This being said,
star products will also be generating a lot of income due to the strength they have in the market.
Star product can become Cash Cows as the market growth starts to decline if they keep their high
market share.
Cash Cows (high share, low growth)
Cash cows dont need the same level of support as before. This is due to less competitive
pressures with a low growth market and they usually enjoy a dominant position that has been
generated from economies of scale. Cash cows are still generating a significant level of income
but is not costing the organisation much to maintain. These products can be milked to fund Star
products.
Dogs (low share, low growth)
Product classified as dogs always have a weak market share in a low growth market. These
products are very likely making a loss or a very low profit at best. These products can be a big
drain on management time and resources. The question for managers are whether the investment
currently being spent on keeping these products alive, could be spent on making something that
would be more profitable. The answer to this question is usually yes.
Problem Child (low share, high growth)
Also sometime referred to as Question Marks, these might be new products or businesses and
could become stars and eventually cash cow but can also become a dog if the market share and
market growth is low.
According to this, ABC Plc is now in the question mark stage which shows that it is a new
business. Since it is new, it is obvious that it would absorb great amounts of cash and time for the
Research and Development and marketing of its products. ABC Plc has the potential to become a
star and eventually a cash cow, but have to work hard and avoid losing into becoming a dog.
ii.

PLC model.

Business Strategy
Product life cycle is a term used to describe individual stages in the life of a product. PLC is an
important aspect of conducting business which affects strategic planning. Product life cycle
can be divided into several stages characterized by the revenue generated by the product.
The main stages of the product life cycle are:
Introduction researching, developing and then launching the product
Growth when sales are increasing at their fastest rate
Maturity sales are near their highest, but the rate of growth is slowing down, e.g. new
competitors in market or saturation
Decline final stage of the cycle, when sales begin to fall

Figure 4: PLC curve.

ABC Plc is a new business and is in the introduction stage. During this stage, the primary goal is
to establish a market and build demand for its products. Advertising costs typically are high during
this stage in order to rapidly increase customer awarness. ABC Plc have to thoroughly think and
find ways to develop and move to the next phases.

iii.

DPM model.

Business Strategy
This is a form of portfolio analysis that is used to position strategic business units (SBUs)
relative to the attractiveness of their relevant market and their competitive strength in that
market. The matrix helps in focusing attention on key environmental issues and considering
individual business unit and overall portfolio strategies.
This tool employs two variables:
-The Business Position (i.e. measures the competitive position and market performance of the
company)
-The Business Sector Prospects (i.e. is the sector in a growing or declining sector)

Figure 5: DPM model.

ABC Plc tours come in the try harder stage where the companys competitive capabilities are
average and business sector prospects are attractive.
iv.

SPACE matrix
The Strategic Position and Action Evaluation Matrix or SPACE analysis matrix is a management
tool used to analyze a company. It was developed by strategy academics Alan Rowe, Richard
Mason, Karl Dickel, Richard Mann and Robert Mockler. It is used to determine what type of a
strategy a company should undertake.
The SPACE matrix is broken down to four quadrants where each quadrant suggests a different
type or nature of strategy:
- Aggressive
- Conservative
- Defensive
- Competitive
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Business Strategy

The matrix is based on four areas of analysis.


Internal strategic dimensions:
Financial strength (FS)
Competitive advantage (CA)
External strategic dimensions:
Environmental stability (ES)
Industry strength (IS)

Figure 6: SPACE matrix.

ABC Plc tours is in a highly competitive industry with good core competencies and fair financial
strength. Environment stability is a bit of problem since tourism can be affected by numerous
factors such as inflation, political instability, natural disasters etc.
Therefore, it can be placed in the conservative quadrant and should focus on its core
competencies and not take risks. It should improve its place by adopting few methods such as
market penetration, market development and product development.

v.

PIMS:
The PIMS program (Profit Impact of Market Strategic) knows of so-called portfolio analysis.
Comprehensive statistical analysis can be explored in the independent sector and the factors that
determined the evolution of the cash flow and profits. The gain is influenced by several factors.

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Business Strategy
- Investment package
- Productivity
- The quality of the products and services
- Innovation
- Vertical integration
- Market position
- Market growth
- Program managers emphasize that the main difference in spite of companies in the same
market forces is exposed.
PIMS program of market growth and profit trends identified relationship between positive shifts.

Task 2: Be able to formulate a new strategy.


2.1 Conduct an organizational audit for ABC Plc.
Organisational audit is defined as an independent, objective assurance and consulting activity
designed to add value and improve an organization's operations. It helps an organization
accomplish its objectives by bringing a systematic, disciplined approached to evaluate and
improve the effectiveness of risk management, control, and governance processes. In other
words, organisational audit is referred to as an activity which is created to assist an organisation
in improving its operations by identifying the strengths and weaknesses of the organisation to
achieve its objectives.
It can be done through any of the following methods:
1) Benchmarking:
It is the process of measuring an organization's internal processes then identifying,
understanding, and adapting outstanding practices from other organizations considered to be
best-in-class.
The objective of benchmarking is to understand and evaluate the current position of a
business in relation to best practice and to identify areas and means of performance
improvement.
As a new company in tourism, ABC Plc tours can look into processes of other organizations in
the same field to identify where they have to adopt changes.
It can use performance benchmarking which allows ABC Plc tours to assess their competitive
position by comparing products and services with those of target firms and improve them. The
company can also use functional benchmarking where in the focus is on benchmarking on a
single function to improve the operation of that particular function. Here, that function can be
customer services since ABC Plc tours is a service oriented company.
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Business Strategy

2) SWOT analysis:
SWOT analysis is a dynamic part of an organizations business and management
development process. It entails the collection of information pertaining to external and internal
factors which may have an impact on the organizations evolution. Strengths and weaknesses
are termed as internal factors while opportunities and threats are termed as external factors.
The SWOT analysis for ABC Plc tours is given below.
Strengths:
a. Sri Lanka is one of the best destinations in the South East Asia with unique combination of
attractions.
b. ABC Plc is a known company in the country.
c. Since the company is in Sri Lanka itself, they have an idea about the tourism industry.
d. ABC Plc is one of the largest insurance company in the country. So their new enterprise in
the field of tourism has sufficient financial back up.
Weaknesses:
a. The company may face problems since they are new to the market.
b. The cost of operations will be higher than expected most of the time.
c. Target groups are confined to Indian and Chinese markets.
d. The infrastructure to support the market is still under developed.
Opportunities:
a. Pricing strategy can be a success since the company now focuses only on three star
hotels that are cheaper yet provides standard services.
b. There is a growing demand for Sri Lankan destinations.
c. The country is in a phase of development which is favourable to tourism.
d. A variety of attractions are available which can be fully exploited.
Threats:
a. Tourism is the first to experience problems in cases of environmental, political and
financial instabilities.
b. Companys focus on only three stars can be a problem if the targeted group expects
higher standards of hotel services.
c. There are several government policies which may not support easy flow of tourists into Sri
Lanka.
d. ABC Plc tours face strong competitions from giants in the industry.
A tabulated format for SWOT analysis of ABC Plc:

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Business Strategy

Strengths:

Weaknesses:

Unique combinations of attractions.


Known company in the country.
Knowledge of tourism market in Sri
Lanka.
ABC Plc insurance provides financial
backup for ABC Plc tours.

Opportunities:

New to market.
Higher operational costs.
Targets confined to Indian and Chinese
markets.
Underdeveloped infrastructure.

Threats:

Successful pricing strategy due to


cheaper three stars hotels.
Growing demand for the destination.
Development of country favours
tourism.
Availability of a variety of attractions.

Environmental, political and financial


instabilities.
Target groups higher expectations on
hotel standards.
Government policies.
Strong competition.

Table 1: SWOT analysis.

3) Porters value chain analysis


A value chain is the whole series of activities that create and build value at every step. The
total value delivered by the company is the sum total of the value built up all throughout the
company. Michael Porter developed this concept in his 1980 book 'Competitive Advantage'.
Porter described a chain of activities common to all businesses and he divided them into
primary and support activities, as shown below.

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Business Strategy
Figure 7: Porters value chain analysis.

Primary activities of ABC Plc tours:


1) Inbound logistics These are all the processes related to receiving, storing, and

distributing inputs internally. The supplier relationships are a key factor in creating value
here.

Providing all working material for travel shops.

Printing of travel brochures.

Liaising with suppliers of airlines and car rentals.

Communication with various hotels and other sources of accommodation.

2) Operations These are the transformation activities that change inputs into outputs that

are sold to customers. Here, your operational systems create value.

Booking and pre-payment of hotels and other sources of accommodations for


clients at various destinations.

Liaising with different tour operators, transport and excursion providers.

Booking and pre-payment of excursions providers.

Updating the travel website for online booking.

Securing flights for various destinations.

3) Outbound logistics These activities deliver the product or service to customers. These

are things like collection, storage, and distribution systems, and they may be internal or
external to the organization.

Distributing brochures to customers.

Distribution of airline tickets or cruise ship passes to customers.

Online booking as well as a pre-departure website for new and existing customers.

Call centre staff are readily available for customer support.

Existing customers' sharing their experiences about the company through word-ofmouth.

4) Marketing and sales These are the processes used to persuade clients to purchase from

you instead of your competitors. The benefits offered, and how well you communicate
them, are sources of value here.

Advertising of the company by television, print and also on the company's website.

The offering of special package deals at a lower price.


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Business Strategy

5) After sales service These are the activities related to maintaining the value of product or

service to customers, once it's been purchased.

The service of travel insurance for all customers.

The service of Traveller's cheques is provided to customers who want to purchase


foreign currency.

Seats on the plane can be reserved before customers travel, making it easier and
more comfortable for a family to sit together.

Car hires are organised for customers in need of transport during their holiday.

Secondary/support activities of ABC Plc:


1) Procurement It is the purchase of inputs such as materials, supplies and equipment needed
by ABC Plc tours.
2) Technological development - The company should have technologies in hand. For example:
computer reservation systems like Amadeus or Galileo or Sabre for the booking of tickets and
other facilities.
3) Human resource management These include activities including recruiting travel
professionals and front line agents, their training and development of the organization as a
whole.
4) Infrastructure Serves the companys needs and ties its various parts together. It consists of
functions or departments such as accounting, legal, finance, customer care, quality
assurance, government relations and general management of ABC Plc tours.

2.2 Conduct an environmental audit for ABC Plc.


An environmental audit is a methodical examination of environmental information about an
organization, a facility, or a site, to verify whether, or to what extent, they conform to specified
audit criteria.
There are two types of environment:- macro environment which can be better understood with
help of PESTEL analysis and micro environment which is understood with Porters five forces
analysis.

1) PESTEL analysis
It is a framework or tool used by marketers to analyse and monitor the macro-environmental
(external marketing environment) factors that have an impact on an organisation.
Political
Political Stability is very essential for successful tourism. Sri Lanka is accounted to have few
instabilities in the past but as of now has a peaceful political environment. The government also
favours tourism as it helps in the overall development of the country.
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Business Strategy
.
Economic
High interest rate, currency exchange rates and inflation affects tourism immensely. ABC Plc tours
has a secure financial backup provided by ABC Plc insurance company.
Social
Different languages, cultures, traditions and cuisines offers a unique experience to foreign
tourists. Organizational culture like management style, staffs attitude towards work etc. has to be
maintained positive for a smooth functioning of the company.
Technological
Increasing role of web and internet makes it possible for customers and travel agents to
communicate easily. Technological advances also facilitates online booking of airline tickets, car
rentals, hotel rooms and other amenities.
Environmental
Environmental issues always pose as a threat to the development of tourism. Also there are few
restrictions to some tourists places.
Legal
Industry specific regulation, competitive regulations, employment law and consumer protection
law are few of the laws that are at the same time beneficial and a threat.
2) Porters five forces analysis.
This is done to understand the micro environment of the business. A firm needs to neutralise as
many as possible of the five forcers in order to create competitive advantage.(Porter 1998) Porter
defines five forces impacting a firm's competitiveness- threat of substitutes, threat of new entrants
in the industry, bargaining power of suppliers, bargaining power of customers, and the intensity of
competition within the industry. Understanding the nature of each of these forces gives
organizations the necessary insights to enable them to create the appropriate strategies to be
successful in their market (Thurlby, 1998).
Threat of New Entrants (High)
As ABC Plc tours is a new company launching into the tourism industry, they need to have high
investments and innovative ideas to sustain its presence in the tourism market. It also has to
adapt to the changes in trends and face immense competition from the giants such as Tangerine
tours and Walkers tours.
Bargaining Power of Buyers (High)
Tourism industry fluctuates with the buyers changing needs. With increase in competition, buyers
have a wider range of services to choose from hence the tourism industry are forced to comply
with changing demands and needs of customers. As the switching cost is not too high Brand
loyalty is low and with increase in purchasing power of a buyer the likelihood of travelling also
increases. Buyers even eliminate the tour operators and prefer make a direct sale from suppliers
(hotels, airlines etc.).
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Business Strategy

Bargaining Power of Suppliers (High)


It is difficult to bargain with the suppliers since the company is new. ABC Plc tours can have their
own set of suppliers in the long run, but as of now the bargaining power of suppliers is high.
Threat of Substitutes (High)
With the growing world of tourism there is a demand for strategic differentiation. Customers are
looking for new experiences, diversified attractions around the world. ABC Plc tours have to come
up with innovative ideas to keep the customer flow.
Competitive Rivalry (medium)
Tourism industry involves many competitors with an approach of performing better than the other.
The competition level increases because of distribution of market based on the regional
operators, privately owned, highly fragmented, and geographically marketed. ABC Plc tours
should find ways to keep up the pace in the competition.

2.3 Conduct a stakeholder analysis and explain the significance.


A stake holder analysis is a managerial step taken to identify each stakeholder's level of interest
or involvement in a given project and how that involvement can influence the project.
The benefits of stake holder analysis are :
1. Can improve quality, efficacy and evaluation of policies and projects.
2. Can improve assessment of social and political impacts of policies and projects.
3. Allows for differences in opinions to be identified.
4. Doesnt differentiate between those who own versus those with interest in tourism so does
not automatically exclude non-owners.
5. Makes managers responsible for more than profit maximisation.
6. Its relevance for identifying multiple objectives and concerns (e.g. between economic,
social and environmental viewpoints and between different interests of different
stakeholders).
7. A way in which the need and interests of people who are under-represented politically and
economically can be highlighted.

The steps in stake holder analysis of ABC Plc tours are:


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Business Strategy

1) Identify stakeholders.
Stakeholders of ABC Plc tours include customers, employees, suppliers, competitors, local
community, management, government of Sri Lanka, financial institutions, shareholders,
lenders, the press and other interest groups.
2) Prioritize stakeholders.
Prioritizing the stakeholders is important so as to identify who has what levels of power and
interest in the company. This can be done with a power/interest grid as shown below:

high

Keep satisfied.

POWER

Manage closely.

Suppliers.
Government.
Financial institutions.
Shareholders.

low

Monitor.
-

Management.
Competitors.

Keep informed.

Media.

low

Local community.
Customers.
Employees.
Other interest groups.

high
INTEREST

Table 2: Power/Interest grid.

3) Understand key stakeholders.


This stage is to get an understanding of what motivates the stakeholders and how you need to
win them around. A very good way to understand this is to talk to them directly. The
information can be summarized in the form of a table as below:
Stakeholder

Interests

Management

High profits and market


share.
Become better than the
rest
Get the best prices from

Competitors
Suppliers

Importance to
company
Very much
Very much
Very much

Influence
Decisions directly influence
the performance
Provides a very competitive
environment and motivates
Company has to make
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Business Strategy
client
Financial
institutions

Up-to date financial


settlements

Shareholders

High turnovers

Customers

Best offers, experiences


and services
Excellent benefits,
salaries and other
facilities
No disturbances

Employees
Local
community

Medium (since
company has
financial backup as
insurance Co.)
High
Very much
Very much
High

good relationships in order


to get good offers and
discounts.
Maintain good relationships
to get good deals
Revenue streams must be
clear and understand the
worth of project
Product must be
understood and recognized
Understand the vision and
mission and be given
proper training.
Have a peaceful
relationship

Table 3: stakeholder table.

Task 3: Understand approaches to strategy evaluation and


selection.
3.1 (a) Market entry strategies.
A market entry strategy is the planning method of delivering goods or services to a target market
and distributing them there. When an organization makes a decision to enter an oversees market,
there are variety of options to open it. These options vary with cost, risk and the degree of control
which can be exercised over them.
1) Organic growth
It is the expansion of firms operations using its own internal generated resources without
resorting to borrow or acquire other firms. It is a good indicator of how well management has used
its internal resources to expand profits. Factors that contribute to organic growth are increasing
overall customer base, increased output per customer, new sales or any combination of the
above.
GSM can adopt this method it is much cheaper and successful as the management team is able
to guide and lead business in-line with the strategic goals of company.
However, it will take a longer time for GSM to grow in India as they have to start from scratch. It
would also be much riskier as they would bear the risks themselves.

2) Merger and acquisition


Mergers and acquisitions (M&A) is the area of corporate finances, management and strategy
dealing with purchasing and/or joining with other companies. In a merger, two organizations join
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Business Strategy
forces to become a new business, usually with a new name. Because the companies involved are
typically of similar size and stature, the term "merger of equals" is sometimes used. In an
acquisition, on the other hand, one business buys a second and generally smaller company which
may be absorbed into the parent organization or run as a subsidiary.
GSM can merge with another company or buy another company and set up in India. But there are
several advantages and disadvantages to this and all must be considered before making the
decision. It provides instant access to new markets and distribution network and also obtain
access to new technologies or patent right. But sometimes the cost of acquisition maybe
unrealistically high.

3) Synergy
This method gives the idea that the value and performance of two companies combined will be
greater than the sum of the separate individual parts. Synergies consists of two types: operational
synergies that allow firms to increase their operating income, increase growth or both and
financial synergies in which payoff can take the form of either higher cash flow or a lower cost of
capital.
GSM can synergize with another company to obtain the benefits in the form of operations or
financial benefits. GSM is a largest PC manufacturer but has doubts in distribution. Therefore, it
can go into synergy with a company preferably in India which has a good distribution system.

4) Strategic alliances
It is an arrangement between two companies that have decided to share resources to undertake a
specific, mutually beneficial project. In a strategic alliance, each company maintains its autonomy
while gaining a new opportunity. A strategic alliance could help a company develop a more
effective process, expand into a new market or develop an advantage over a competitor, among
other possibilities.
GSM can enter into a strategic alliance with an established company in India to establish its brand
there.

5) Licensing
It is a method in which a written agreement is given by the contractual owner of a property or
activity giving permission to another to use that property or engage in an activity in relation to that
property. The property involved in a licensing agreement can be real, personal or intellectual.
Almost always, there will be some consideration exchanged between the licensor and the
licensee.
GSM can license the distribution of their PCs to another company in India which will give an
opportunity for income without significant investment or financial risk. But if the quality or
performance of the licensee is not good, it can destroy the image of GSM.

6) Franchising

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Business Strategy
Franchising is a network of interdependent business relationships that allows a number of people
to share a brand identification, successful method of doing business and a proven marketing and
distribution system.
In short, franchising is a strategic alliance between groups of people who have specific
relationships and responsibilities with a common goal to dominate markets, i.e., to get and keep
more customers than their competitors.

(b) Growth strategies.


The growth strategies possible for GSM are:
1. Horizontal integration.
This method involves the company joining with other parallel businesses in the same industry.
The goal of horizontal integration is to consolidate the market by acquiring or merging like
companies and exploit the market by monopolizing the industry.
It can happen when a competitor who offers the same product is acquired by the company or
acquiring the activities that are substitutes for the product.
GSM can go for horizontal integration with another similar company in India to gain the maximum.
2. Vertical integration.
There are two types: backward integration where a company tries to own an input product
company and forward integration in which the business tries to control the post production areas.
In case of GSM, vertical backward integration would mean that the company is developing its own
software rather than depending on a software provider like TNT Corporation. In vertical forward
integration, GSM would control the distribution of their PCs in India.
3. Diversification.
It is a corporate growth strategy where a firm expands its operation by moving into a different
industry. There are two types:
Related diversification where the company is diversifying into a different industry but one that is
related in some ways to its current operations.
GSM being a PC manufacturer would need softwares. With related diversification, they can
develop their own softwares under the same company name rather than relying on outside
suppliers.
Unrelated diversification is when a company diversifies into a completely different industry from
its current operations. This method is not advisable for GSM in India, since their main aim is to
establish their brand as PC manufacturers itself.
4. Market penetration.

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Business Strategy
In this the company markets their existing products to their existing customers. This is for
increasing revenue by promoting the product, repositioning or changing the brand. However, the
product is not change and they do not look for any new customers.
GSM can adopt market penetration method by promoting its products through advertisements.
This is only done after establishing the company in India.
5. Market development.
This is where a company markets their existing product in a new market, which means that the
product stays the same, but it is marketed to a new customer.
This is the case of GSM marketing their PCs in India.
6. Product development.
Here a company expands and plan new product to replace existing ones, and those products are
then marketed to their existing customers.
In case of GSM they can introduce a developed version of their current PCs in the Indian market.
Disinvestment and retrenchment strategies are not suited for GSM now, as they are moving into a
new market and these methods are aimed at reducing the capital investment which is not possible
for a company trying to expand its markets.

3.2

Select a future strategy for GSM when entering into India.

GSM is the largest PC manufacturers operating in Europe, USA and Australia and is now looking
to expand their brand in India. Indias PC usage is estimated to be at 9 percent according to a
study conducted on June 2015 by MAIT and KPMG on age groups from thirteen to fifty years. The
traditional desktop PC market is expected to grow at 2 percent, while the market for notebooks is
expected to grow at 9 percent, according a Gartner report published in April. so there is scope for
growth of GSM in the Indian market.
The selected entry strategy for GSM in franchising, as it one of the best methods for companies
looking to expand.

Franchising is a business strategy for getting and keeping customers and also it is a marketing
system for building an image in the minds of current and future customers about how the
company's products and services can help them. Moreover, franchising is a scheme for
distributing products and services that will satisfy customer needs.
Franchising is a legal contract which includes a brand owner (the franchisor) in this case GSM
and a local user (franchisee) to sell products or services under the owner's trademark employing
a production process developed by the franchisor. The franchisee here is AdiTech Pvt Ltd located
in Mumbai, India. The franchise system is created by units franchised to local operators and units
possessed by the franchisor; both types operate the same production process and sell under the
same trademark.

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Business Strategy
GSM maintains a considerable degree of control over the operations and processes used by
AdiTech Pvt Ltd, but also helps with things like branding and marketing support that aid the
franchise.
The generally agreed benefit of franchising that is franchisees instant access to a proven
marketing concept. Housden (1984) and Mendelsohn (1990) insisted that franchisees benefit
significantly from the franchiser's experience and expertise and save both time and money at
beginning established business. Mendelsohn (1990) also points out that franchisee have access
to considerable market information accumulated by the franchiser which would be too expensive
to procure.
The benefit for GSM who is looking to develop their own software is that their franchisee in India,
AdiTech also provides software solutions among their products. AdiTech is also responsible for the
distribution of the products in India. This franchising solves the main two problems that GSM had
while planning to enter India.

Task 4: understand how to implement a chosen strategy.


4.1 Compare the roles and responsibilities for strategy implementation in
GSM and any other organization.
Implementing a strategy gives a broad view of implementation and a thorough understanding of
each piece of the implementation process. When implementing strategy, one will learn how to
properly align corporate structure with corporate strategies and how to integrate strategy
formulation and implementation by focusing on core areas.
Here, the roles and responsibilities of GSM and Virgin Trains which is a train operating company
in the United Kingdom. Although it is branded as part of the Virgin Group, the group's share in the
company is only 51%, with the remaining 49% held by Stagecoach Group.
When comparing the strategies of both, they have their own strategies. The Virgin Train operates
in the transport industry, where top management must make sure that strategy complies with the
pre-set objectives and it is going on in the right way. They need to always check whether there is
any deviation from action plan. Resource allocation should be done throughout the
implementation process as appropriate. The top management also need to be concerned about
their major competitors.
GSM is a PC manufacturing company already established in Europe, USA and Australia and is
expanding to India. They are using franchising to enter the new market.
The advantages of having a range of roles with their own responsibilities in an organisation are
many; from ensuring the business stays moral to encouraging strong communication. By having
particular roles and responsibilities in an organisation is necessary in upholding appropriate
records. One of the biggest advantages of having clear roles and responsibilities in an
organisation is that it helps to preserve moral standards. It is the responsibility of business holders
and managers, to fully understand the organisation's standards, procedures and expectations.
The roles and responsibilities for GSM who are in franchise with AdiTech in India:

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Business Strategy
- Local market research
- Feedback
- Recruitment and selection of local staff
- Training to local staff
- Formulate local reward system
- Marketing and sales activities
- Goal setting
For Virgin Trains:
- Corporate strategic planning
- Identify growth options
- Centralised purchasing activities for trains
- Formulation of product policies
- Internet train ticket booking system
- Training of managers

4.2 Identify and evaluate resource requirements to implement a new strategy


for GSM.
At the implementation of the strategy, the resources allocation is vital. These resources
requirements can be differed from one organisation to another and one strategy to another. It is
clear that the organisational environment and nature of resources determines the resources
requirements (Coulter, 2001).
Human resources
The first stage of implementing strategic plan is to make sure to have the right people on board.
The right people include those folks with required competencies and skills that are needed to
support the plan. In the months following the planning process, expand employee skills through
training, recruitment, or new hires to include new competencies required by the strategic plan.
Financial resources
Sufficient funds and enough time to support implementation are two vital things needed. Often,
true costs are underestimated or not identified. True costs can include a realistic time commitment
from staff to achieve a goal, a clear identification of expenses associated with a tactic, or
unexpected cost overruns by a vendor. Additionally, employees must have enough time to
implement what may be additional activities that they aren't currently performing.

Research and development


There should be an efficient team researching the changing PC trends and an innovative team to
develop accordingly.
Marketing and sales

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Business Strategy
This is a very important tool to capture the attention of customers. Different techniques like
promotional mix, pricing strategies etc should be used in addition to advertising. The company
also should have very competent and energetic sales team.
IT
Since GSM is planning to develop their own softwares this is a very important resource.
Knowledgable IT personnels are very important for identifying, rectifying and developing new
techniques according to changing trends.
Customer Service
It is important to provide good customer service to all types of customers, including potential, new
and existing customers. Although it can take extra resources, time and money, excellent customer
service can generate positive word-of-mouth for your business, keep your customers happy and
encourage them to purchase from your business again. Good customer service can help your
business grow and prosper.
Structure
Set the structure of management and appropriate lines of authority, and have clear, open lines of
communication with employees. A plan owner and regular strategy meetings are the two easiest
ways to put a structure in place. Meetings to review the progress should be scheduled monthly or
quarterly, depending on the level of activity and time frame of the plan.
Culture
Create an environment that connects employees to the organization's mission and that makes
them feel comfortable. To reinforce the importance of focusing on strategy and vision, reward
success. Develop some creative positive and negative consequences for achieving or not
achieving the strategy. The rewards may be big or small, as long as they lift the strategy above
the day-to-day so people make it a priority.

4.3 Propose targets and timescales for achievement of growth strategies in


GSM to monitor a given strategy.
GSM is a well established PC manufacturer in Europe, USA and Australia and is planning to go
for rapid expansion to other countries to increase global presence. In addition, providing a reliable
customer service and building a strong brand equity is also their objective. These targets are
considered as a long term goal with 5 years plan.
The particular strategy considered here is vertical integration. Vertical integration is the process in
which several steps in the production and/or distribution of a product or service are controlled by a
single company or entity, in order to increase that companys or entitys power in the marketplace.
Companies will pursue vertical backward integration when it will result in improved efficiency and
cost savings. According to this method, GSM can develop their own softwares instead of
depending on an outsider supplier like TNT Corporation. This is a long term goal which can be
achieved within three or four years.
Vertical forward integration is where the business tries to control the post production areas,
namely the distribution network. In this case, GSM controls the distribution channel of their PCs in
the market. This is a short term goal that can be achieved within two to three years.
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Business Strategy
To make sure that the strategy is being implemented as planned and also to see that the results
gained are those intended, a strategic control must be done. Strategic controls take into account
the changing assumptions that determine a strategy, continually evaluate the implemented
strategy and take the necessary steps to adjust to new requirements.
This can be done in the following ways:
1) Premise Control
Every strategy is based on certain planning premises or predictions. Premise control is
designed to check methodically and constantly whether the premises on which a strategy is
grounded on are still valid. If it is discovered that an important premise is no longer valid, the
strategy may have to be changed. The sooner it is recognized and reject an invalid premise,
the better. This is because the strategy can be adjusted to reflect the reality.
2) Special Alert Control
A special alert control is the rigorous and rapid reassessment of an organization's strategy
because of the occurrence of an immediate, unforeseen event. An example of such event is
the acquisition of a competitor by an outsider. Such an event will trigger an immediate and
intense reassessment of the firm's strategy. Form crisis teams to handle the company's initial
response to the unforeseen events.
3) Implementation Control
Implementing a strategy takes place as a series of steps, activities, investments and acts that
occur over a lengthy period. A manager will mobilize resources, carry out special projects and
employ or reassign staff. Implementation control is the type of strategic control that must be
carried out as events unfold. There are two types of implementation controls: strategic thrusts
or projects, and milestone reviews. Strategic thrusts provide with information that helps to
determine whether the overall strategy is shaping up as planned. With milestone reviews, one
can monitor the progress of the strategy at various intervals or milestones.
4) Strategic Surveillance
Strategic surveillance is designed to observe a wide range of events within and outside the
organization that are likely to affect the track of the organization's strategy. It's based on the
idea that one can uncover important yet unanticipated information by monitoring multiple
information sources. Such sources include trade magazines, journals such as The Wall Street
Journal, trade conferences, conversations and observations.

Conclusion.
Failure and success of a business fully depend on its strategy. Strategy is nothing but a
forecasting power by a company on the basis of resources, market demand and variability,
competitive advantage, uncertain business environment and its stakeholder expectation. It is
easier or it is not all time possible for a company to start any business by fulfilling all kinds of
resources at a time. If we analyse all successful company, they started their business with many
lacking, but they took right strategy considering their lacking and they have overcome their lacking
step by step. Market needs is not stable it has reasonable up and down and it is depends on
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Business Strategy
many factors. So while the policy makers of a company is making a strategy should be kept in
mind those factors and reasons.
This assignment discusses some of the important aspects of business strategy like uderstanding
the process of strategic planning, formulating a new strategy, understanding approaches to
strategy evaluation and selection and finally understanding how to implement a chosen strategy.
These were given as four tasks, on two different scenarios based on two companies with two
tasks each.

References.
Books:
Christopher O. Gekonge (2014), Emerging Business Opportunities in Africa: Market Entry,
Competitive Strategy and the Promotion of Foreign Direct Investments, USA, Business
Science Reference.
Christof Lymbersky (2008), Market Entry Strategies, 1st edition, Hamburg, Management
Laboratory Press.
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Business Strategy

Eddie Fox (2004) et al, Business for Foundation Degrees and Higher Award, United Kingdom,
Heinemann educational publishers.
Journals:
Anita Zehrer (2009) et al, Key Competencies of Tourism Graduates: The Employers Point of
View, Journal of Teaching in Travel and Tourism, 9 (3-4), pp 266-287.
Bob Gappa (2010), What is Franchising?, pp 1-5.
Boundless (2015), Growth Strategy, Boundless Management, (7), pp 12, section 5.
Ha-Joon Cha (2009) et al, Development Policy Review Debate, Should Industrial Policy in
Developing Countries Conform to Comparative Advantage or Defy it? A Debate Between
Justin Lin and Ha-Joon Chang, 27 (5), pp 483-502
Trevor Sofield (2009), Stakeholder Analyis, (1), pp 15.
Newspaper articles:
Sriram Sharma (2015), The Huffington Post in association with Times of India: 10 Key Insights
on PC usage in India, Huffington post. Available from :
http://www.huffingtonpost.in/2015/06/12/what-indian-pc-users-want_n_7551024.html
[Accessed 10 Nov 2015]
Web references:
Strategic Alliance Definition | Investopedia
http://www.investopedia.com/terms/s/strategicalliance.asp#ixzz3v5wXXOm5
[Accessed 10 Nov 2015]
http://www.ukessays.com/essays/economics/franchising-system-services.php#ixzz3vBtafsg9
[Accessed 12 Nov 2015]
http://smallbusiness.chron.com/four-types-strategic-control-14720.html
[Accessed 16 Nov 2015]
http://www.investorwords.com/8226/stakeholder_analysis.html#ixzz3v5EPSWFi
16 Nov 2015]

[Accessed

http://whatis.techtarget.com/definition/mergers-and-acquisitions-MA
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http://www.slideshare.net/WelingkarDLP/6-15062814
[Accessed 1 Dec 2015]
http://www.ukessays.com/essays/marketing/organisational-audit-and-environmental-auditmarketing-essay.php#ixzz3uSkBEayA
[Accessed 1 Dec 2015]
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Business Strategy
http://economictimes.indiatimes.com/definition/value-chain
[Accessed 3 Dec 2015]
http://www.businessdictionary.com/definition/mission-statement.html#ixzz3tFxNABF5
[Accessed 3 Dec 2015]
http://www.businessnewsdaily.com/3882-vision-statement.html#sthash.3YDmupGU.dpuf
[Accessed 7 Dec 2015]
http://balancedscorecard.org/Resources/Strategic-Planning-Basics
[Accessed 7 Dec 2015]
http://work911.com/planningmaster/faq/benefits.htm
[Accessed 8 Dec 2015]
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[Accessed 8 Dec 2015]

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