Category: Strategic Management

Strategic Management: Killing Competitors Through Acquisition

Strategy and Strategic Management

Strategy and planning are used interchangeably by many authors. The main difference between a strategy when compared to planning is that it takes specific measures and policies to develop robust resources that can lead to sustained development and such a development is in line with the changes in the macroenvironment and the stakeholder’s demands and changes in expectations (Finlay, 2000; Hill and Jones, 2012). As far as the retail industry is concerned, one common feature shared by companies in the last many years is the pressure on a strategy to reduce prices, which to a considerable extent is driven by competition. A major strategy is to kill this competition through acquisition. The acquisition is one of the major growth strategies (Smit, 2001), and the parent company, the Aditya Birla Group also pursues this strategy, and this is how Vodafone and Idea have become part of the group.

One of the main advantages of this growth strategy is that it can acquire the resources and market and there could be only some issues that may be needed to be managed (Smit, 2001). However, the majority of acquisitions fail and reduce the market value of companies. This is particularly the case of companies that try acquisition as a diversification strategy to reduce risk (Schraeder and Self, 2003). A company that has successfully pursued acquisition as a growth strategy is Procter and Gamble (Marketing Week, 2007; Weston, 2001).

Strategy and Structure

While pursuing a strategy, an internal environment of a company must support the development of key resources in a timely manner if the planned strategy is adopted. If the emerging strategy is adopted, then it must have a structure that acts as an instrument or glue offering cohesion between the different elements of that company (Farjoun, 2002; Mintzberg et al., 2009) in a manner that allows quick responses to the changes in the macro-environment. Planned strategy to a considerable extent is possible with Company as it is in retailing and the amount of differentiating that can be achieved is relatively low. Nonetheless, product line differentiation is something that Company can follow (Avenel and Caprice, 2006). It is not just the planned and emergent strategies (Mintzberg et al., 2009) that companies follow but also some companies tend to pay great attention to innovation by keeping consumers at the heart of their product development process. Thus, they keep on delivering innovative products and one such company is Amazon which introduced Kindle Publishing, Prime, etc.

The relevance of strategic management models becomes explicit at various stages of strategy development. In internal environment analysis, SWOT analysis is useful because for Company, even though it has strengths such as having the presence of great brands, it may need to assess its strengths and weaknesses (none as such) against opportunities and threats. Then only resource development can fulfill its purpose. Besides this, in resource development, the nature of competitive forces must be considered (Porter, 2004). Newmarket growth strategies can be a major area of attention of a Company with its growth and Segmentation, Targeting, and Positioning along with the possibilities of Export, Joint venture, or greenfield investment can be assessed. Further, the Ansoff matrix can be applied for determining the growth strategy (Johnson et al., 2017).

Strategic Management: Managers And Other Staff Should Be Aware Of Their Roles In Company

A company’s activities in planning, monitoring, analysis, and assessment of its resources are its strategic management. Therefore, for such an organization to be profitable in the long run, its strategies need to change with the changing operating environment. As such, strategic management requires a company’s management team to be constantly aware of their internal and external changes to address them effectively. This paper will discuss the strategic management measures taken by Reyes Fitness Centers, Inc.

In May 2009, John Reyes launched Reyes Fitness Centers, Inc. (RFC). The first center was a success and included a wide range of services: exercise classes workout equipment, an outdoor pool, personal trainers, daycare as well as a restaurant. From this center, growth for RFC was rapid for the next three years. By end of 2012, the company was grossing $51 million and $1 million in revenues and net income respectively. At this point, John Reyes had managers to oversee the day-to-day activities, which prompted the board to hire other senior management team members and a CEO, Mike Lowe. Focus on member enrollment and retention were stressed upon by Lowe. With 20 years of experience in the fitness industry, he understood that to achieve this goal, his staff would have to proactively align their work with customer retention in mind. At the time, member retention was 20% lower than the industry average, prompting Lowe to maximize Lori Patrick’s HR expertise.

Issues

One of the major causes of low customer retention numbers is that most employees do not know their specific role in retaining numbers. Though they know it is important, a survey of the employees highlighted that most were only aware that the strategy was to make money. Besides, it was not clear to them how they specifically contributed to FRC’s strategy. This then would be the likely reason why member feedback reported low customer service.

Another cause of low retention levels at RFC is its work culture. As fewer people are aware of how they directly contribute to the company’s strategy, the result is that they do not accomplish this goal. Besides, to serve members well means that the organization needs to assess complaints and make necessary adjustments. Currently, no formal data has been collected, yet the expectation is to have 90% member satisfaction. With no tracking mechanism in place, this would be hard to achieve.

Alternatives

Lori identified that some strategies within the company were working towards achieving the company’s goal to bring in new members and retain older ones. Vice president of sales and marketing Alex Garcia was doing this through special promotions and advertising. Furthermore, he motivates his sales representatives through and an incentive compensation program that has gone a long way to motivate them.

Performance goals are currently focused on job description activities. According to Lori, they should be focused on results that contribute to customer retention. Staff should be aware of their responsibility to ensure customer retention and be equipped with the right customer service training and skills. Besides, HR has the mandate to ensure that employees are aware that member retention is a part of their job.

A culture change would be essential in ensuring that customer retention is understood and implemented by everyone at RFC. For this to happen, it needs to be a core value within the company and can be realized by managers incorporating retention activities into the staff’s annual performance plans. Additionally, to ensure that employees are motivated throughout the process, an analysis of the compensation system should be done. As suggested by Lori, profit-sharing programs as those undertaken by other organizations could be implemented. When employees are fully aware of what the company’s strategy is, they can relay this to customers. This results in more customer acquisitions and retention, as well as more profit.

Recommendation

It is clear that for RFC to achieve its strategic goal, employees will play a major role. Therefore, arming them with the right information, skills and motivation will make the process quicker. The business strategy should be more descriptive for staff to understand their role in achieving it. Once they are aware that they play a central role in communicating the same to members, they will be in a position to offer better customer service. Additionally, there is a need to have an individual with the primary responsibility for ensuring retention measures are taken. As customer feedback is important for RFC, creating avenues in which to receive, analyze and manage such information is of utmost importance. Therefore, RFC should come up with a system where such information is collated to gauge the effectiveness of the strategy. Further, the company should increase advertisements and special promotions efforts in a bid to have more new members. As this strategy is already working, it would be a profitable avenue to explore.

For any company to succeed, managers need to realize a few key factors. One of these is the ability of employees to align their work with the organization’s objectives. When staff members are well informed on how their input is detrimental to the success of the company, they feel the need to do their best. Similarly, when employing new strategies as a result of changing business environment, employees must be on board. Besides, as seen in RFC’s case, when employees are unaware of their impact on the company strategies, performance goes down. It is no wonder that customers complain about customer service quality. Despite having all the right equipment and a good strategy, more factors need to be considered. Compensation strategies are a good way to motivate employees and increase job satisfaction. Furthermore, a motivated employee is more productive and open to ideas. It is therefore imperative, that for strategic management to be effective, both managers and other staff should be aware of their roles in affecting an organization’s strategies.

The Impact Of Strategic Management On Business

Introduction

To deal efficiently with the broad array of factors impacting the capability of a company to develop and prosper, managers require superior tasks they think will facilitate the best placing of the company in its naturally competitive environment. Such positioning is achievable with strategic management as this method enhances preparedness for unexpected inner or maybe competitive demands. Strategic management is composed of the evaluation, decisions, and methods a company undertakes to be able to develop and sustain naturally competitive benefits. It provides the group a feeling of its goals along with a sense of the way it is going to achieve these objectives. Therefore, this essay will state the different terms of strategic management all over different domains in which line up the exact identical meaning to the main terminal. Examples will be provided as well in order to demonstrate and clarify the terms from different perspectives for the seek of having a full understanding of meanings.

Body

Planning as well as Management Strategy Formulation Strategy may be described as a guide through who organizations improve from the present state of affairs to some future preferred state. It is a powerful argument for a company to properly place itself within its environments and constrain, therefore maximizing the potential of its for moving together with the green improvements. According to Miller, A. (1996) that,” It is then easy to change accordingly as situations in the ecosystem change”. This term is applied in a work environment with the employees and how the strategic management took a place in that specific field and here is a clarification of it. dedication from the administration heading down and also help through the leading brass going down will guarantee strategic planning initiatives shift within the correct path and most employees within the group will purchase effortlessly into the technique. Each part of the company is as crucial as the best level of administration and thus should be recognized as such. Strategic planning teams must make sure that most organizations are represented, for instance, all levels of control and direct care personnel, in the situation of a clinic, must be well represented not by their managers but by the peers of theirs. Ansoff, R. (2018) has stated that “All those that represent the staff needs to be people who’d place the interests and issues, of the group first before theirs”. The staff must be healthy and also think about the gender balance as equally crucial as various group balance, by doing this the group’s dynamics will have the ability to run to all views and the maximum represented.

So, what do we comprehend by Strategic Management? it could be called or even describe as the technique that business has to utilize so that, they are able to be ready to attain everyday goals of the group as well as at exactly the same time it will be simple for the organization to achieve naturally competitive advantage in the marketplace. According to Wheelwright, S. C. (1996) that,” SM is really important because of reasons that are many. They generally include whether the company is confronting issue in the business line of theirs, in case they wish to release a product that is new in the industry, for right analyzing the environment”. Additionally, the key choices that the company takes are based upon what technique that they’re planning to use and just how it will have an effect on their company revenues as well as profit margin. The primary definition for SM is science or art in formulation, analysis, and in addition to drawing crucial choices that are cross-practical in nature and that could really help accomplish the common aims of theirs and the objectives. This just means they’ve to prepare for the activity of theirs, assess after which they have to apply after taking into account different factors, therefore, it will be simple to evaluate as well as can make changes that are necessary when it’s being required. SM happens to be viewed as among the significant element in the good results of any organization.

Here is listing a lineup of all the strategic management definitions which have been found and stated at all times. a pair of choices plus steps causing implementation and formulation of techniques made to get the goals of an organization. It tries to maintain an organization lined up with its earth while capitalizing on environmental opportunities and organizational strengths and also avoiding or minimizing organizational flaws and outside risks. According to Shuen, A. (1997), “The supervisors, who have strategic management expertise, are looking for a competitive edge for the organizations of theirs and also long-term organizational efficiency”. It’s, thus, an intricate function dealing with all activities associated with formulating, applying, reformulating, and recycling strategies. In a nutshell, good strategic management translates a good method into action. As normally, including a good strategy will be made ineffective in case it can’t be changed into action. Hence, it’s the responsibility of the strategic supervisors to accomplish green checking, assess inner weaknesses and strengths, set objectives, mobilize online resources, layout actions plans, monitor progress, implement actions, and balance energy and deviations from targets for the accomplishment of key results areas and goals.

Conclusion

The intention of mine in this particular essay isn’t to market any one particular view of technique but to suggest a number that looks helpful. In going after the various definitions, it is going to be beneficial to consider the significance of technique, to try out realize just how various folks used the expression, as well as, later to determine if some definitions hold up much better in a specific context. Lastly, the various versions of the approach suggest above all that approach is a concept. Any company ought to have a vision, organizational structure, objectives, and mission. For covering the all of conditions organization has to build a strategic choice by which they are able to achieve their primary goal point. Business must keep the most key course of action also the various other elements. The procedure for strategic management is a combination of numerous products. It’s a science since it demands scientific research when formulating blueprints for the tight. On another hand, it could be claimed it’s art given that when plans are applied it varies distant relative to the qualities and color of managers.

Importance Of Strategic Management And Its Two Main Methods

Introduction

Strategic planning implies getting ready for making and actualizing procedures to accomplish hierarchical objectives. It begins by making oneself straightforward inquiries like: What are we doing, should we keep on doing it or change our product offering or the method for working, what is the effect of social, political, innovative and other natural factors on our activities, are we arranged to acknowledge these progressions and so forth. (Steiner, 2014)

Strategic planning helps in knowing where we are and where we need to go with the goal that natural threats and opportunities can be misused, given the qualities and shortcomings of the association. Strategic arranging is ‘a careful self-examination with respect to the objectives and methods for their achievement so the endeavor is provided both guidance and union.’

Strategic planning is done to understand, foresee and assimilate ecological notions. It is a constant procedure. Each time business associations need to build the development rate or change their tasks, want for better administration data framework, co-ordinate exercises of various offices, expel lack of concern from associations; they make strategic planning.

Importance of Strategic Planning

Firms that make strategic plans have great deals, low costs, high EPS (income per share), and high benefits. Firms have money-related advantages in the event that they make strategic plans. strategic planning guides individuals towards hierarchical objectives. It brings together authoritative exercises and endeavors towards the long haul objectives. It guides individuals to wind up what they need to end up and do what they like to do. strategic planning gives data to evaluate hazard and edge methodologies to limit the chance and put resources into safe business openings. The odds of committing errors and picking incorrectly destinations and procedures, along these lines, get diminished. strategic planning makes the best utilization of assets to accomplish the most extreme yield. Assets are rare and key arranging helps in their utilization in the territories where they are most needed.

Literature Review

The writing survey uncovered that strategic planning is a mainstream and widespread practice in the private part. It is an initiative and the board apparatus that has been effectively utilized for a considerable length of time to enable associations to more readily plan for the future and enhance long-haul execution. There is expanded acknowledgment that key arranging isn’t sufficient without anyone else’s input and that an excessive number of good strategic plans have been left to assemble dust. The powerful initiative is required to both create and execute vital plans. This has prompted the idea of ‘strategic management, which incorporates the execution and continuous administration of vital arrangements, not simply their advancement. There are diverse key apparatuses that an organization can use to get a deliberate and adjusted methodology. One of the key abilities of a strategic investigator is in understanding which systematic devices or procedures are most fitting to the goals of the examination. The following is a review of a portion of the more ordinarily utilized strategic analysis tools.

SWOT analysis

A SWOT examination is a straightforward however generally utilized apparatus that helps in understanding the qualities, shortcomings, openings, and dangers associated with an undertaking or business action. It begins by characterizing the target of the undertaking or business action and recognizes the inner and outside components that are essential to accomplishing that objective. Qualities and shortcomings are generally inward to the association, while openings and dangers are typically outside. (Patrakhina, 2015)

SWOT distinguishes the techniques utilized for making a particular plan of action as indicated by the organization’s accessible assets and capacities, incorporating the earth in which the organization works. It sees positive and negative components both inside and outside the firm, that influence its prosperity. The investigation enables the organization to figure or anticipate changing patterns that advantage the basic leadership procedure of any association. (Tassabehji and Isherwood, 2014)

PESTLE Analysis

PESTLE examination is a strategic planning technique to decrease business dangers. By analyzing the Political, Economical, Social, Technological, Legal, and Environmental elements, firms will increase profitable favorable circumstances. These favorable circumstances help with the thought stage, item advancement, item propelling, content advertising procedures, and different variables, to build achievement. (Holloway, 1987)

The benefits of the PESTLE examination include being financially savvy, giving a more profound comprehension of the business, sharpness to dangers, and a technique to exploit openings. The main expense of the PESTLE examination is time. While extra projects can help sort out info and criticism, PESTLE investigation can be finished through a basic archive or pen and paper. PESTLE examination is additionally direct. The measure of research fundamental, how much time, and how frequently you do PESTLE investigation for your firm is discretionary. but, the expense to do any dimension of the examination isn’t inclined to change.

Without PESTLE investigation, conditions that specifically and in a roundabout way influence business can go unnoticed. PESTLE examination takes a gander at various and persuasive variables which could influence the achievement of your item dispatches. It energizes the improvement of vital reasoning for a more profound comprehension of strategic planning. While we can utilize PESTLE to dissect firms in a wide sense, it can likewise be limited and utilized for explicit items, promoting plans, and client connections. Especially, when utilized in new improvements inside the firm, PESTLE examination can bring issues to light of potential dangers. Regardless of whether that is a current contender, up and coming contender, or inside your very own items. With PESTLE investigation, you can altogether analyze changes and build up an arrangement to limit any/all benefit increment or harm. Without it, the business could be hit by startling danger. Openings are mostly external. By utilizing PESTLE examination to contemplate outer situations, opportunities can be found and used to reinforce a company’s business.

Definition Of Strategic Management Its Importance And Need

What not to do, as opposed to what to decide to do, is one of the things when discussing strategy. Strategy is an action that leaders take to achieve one or more of the organization’s goals. Strategy can also be defined as a general direction set for the company and its various components to achieve a desired state in the future. Strategy is the result of a detailed strategic planning process. Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages and this analyzes the major initiatives taken by a company’s top management on behalf of owners, involving resources and performance in internal and external environments (Nag et all, 2007). In order for the organization to apply this process, the upper management must be able to think strategically first. The strategic management process is best implemented when everyone within the business comprehends and understands the strategy. It is essential to know the correlation between the two concepts of the strategic management process and strategic leadership.

Strategic management is important because it permits companies to analyze their current capabilities and their operating environment, to be able to identify either opportunities or even long-term threats, and collect the company’s resources to address them. The objective of strategic management is to achieve better alignment of corporate policies and strategic priorities. In other words, the strategic management process is important to the leaders in the organization to be able to align the company towards the organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement those plans. It is the highest level of managerial activity, usually performed by the company’s Chief Executive Officer (CEO) and executive team. It provides overall direction to the whole enterprise. The three stages of the strategic management process are Strategy Formulation, Strategy Implementation, and Strategy Evaluation. The process involves matching the companies’ strategic advantages to the business environment the organization faces. One importance of an overall corporate strategy is to enable strategic leaders to put the organization into a position to carry out its mission effectively and efficiently. A good corporate strategy should integrate an organization’s goals, policies, and action sequences (tactics) into a cohesive whole. To tackle the many obstacles created by today’s global business environment, strategic leaders must be able to develop, employ, and evolve focused strategies that address and attack the ever-changing landscape in which they operate. Understanding the importance of the strategic management process enables leaders to critically analyze the potential shifts in their industry, evaluate opportunities to create value, and learn how to employ effective leadership techniques to shepherd an organization through necessary strategic shifts.

Business activities of an organization are carried out by formulating a strategy called Strategy Formulation. The following elements are developed in the strategic formulation stage; vision and mission that include the organization’s goal, strengths weaknesses identifying the organization’s strong and weak points, as well as opportunities and threats associated with the organization’s external environment. By understanding the elements developed during the strategy formulation stage, strategic leaders will be able to decide and consider how to allocate resources, enter or maintain business, consider mergers or joint ventures, liquidate or divest the business, enter foreign markets, consider business expansion and notice and manage resistance to takeover. The process of formulating a strategy essentially involves six major steps. Although these steps do not follow a rigid chronological order, they are very rational and in this order can be easily followed. First, setting the goals of the organization is the key component of any statement of strategy in setting the organization’s long-term goals. Strategy is generally known to be a medium for achieving organizational goals. Objectives emphasize the state of being there, while strategy emphasizes the process of getting there. The strategy includes both setting goals and the means to be used to achieve those goals. Strategy is therefore a broader term that believes in the way resources are deployed to achieve the goals. Once the goals and factors that influence strategic decisions are determined, strategic decisions are then easy to take. Evaluating the organizational environment is the next step in evaluating the organization’s overall economic and industrial environment. This includes a competitive position review of the organizations. A qualitative and quantitative review of an existing product line of an organization is essential. The purpose of such a review is to ensure that the factors that are important for competitive market success can be discovered so that management can identify their own strengths and weaknesses as well as the strengths and weaknesses of their competitors. After identifying its strengths and weaknesses, an organization must keep track of the moves and actions of competitors in order to identify likely opportunities for threats to its market or sources of supply. The next step is to set the quantitative target as the organization has to set quantitative target values for some of the organizational goals in practice. The underlying idea is to compare with long-term customers in order to assess the contribution that different product zones or operating departments could make. The next step is aiming in context with the divisional plans where contributions made within the organization by each department or division or product category shall be identified and strategic planning for each sub-unit shall be carried out accordingly. In which, macroeconomic trends need to be carefully analyzed. Performance analysis is then administered which includes the discovery and analysis of the gap between the performance planned or desired. The organization must carry out a critical evaluation of the past performance of the organization, present condition, and desired future conditions. This critical assessment identifies the degree of gap between the actual reality and the organization’s long-term aspirations. The organization then attempts to estimate its likely future condition if current trends persist. Finally, the strategic choice is the ultimate step in formulating a strategy. After consideration of organizational goals, organizational strengths, potential, and limitations as well as external opportunities, the best course of action is actually chosen.

Strategic implementation is the second phase of the strategic management process which is also dubbed as the “action stage” of the strategic management process. Annual objectives are established along with the formulation of policies. Furthermore, the employees of the organization are motivated & resources are allocated in order to implement the formulated strategies. Strategy implementation further includes developing a strategy of pro-culture that is supportive, creating an effective organizational culture, redirecting marketing efforts, budget preparation, developing and utilizing information systems, connecting compensation of employees to the organizational performance. At this process, strategic leaders are able to mobilize their managers & employees into the implementing phase so that the formulated strategies are executed. This process is also considered the most difficult stage amongst the other stages of strategic management due to the requirement of personnel discipline, commitment, and sacrifice. Interpersonal skills are of particular importance for successful strategy implementation as this stage is considered as utmost critical in the stages of the strategic management process for leaders by creating answers as to “How best can we get the job done?” to stimulate their employees throughout the organization to work with pride and enthusiasm towards achieving the organization’s objectives.

Strategy evaluation is as important as formulating a strategy because it sheds light on the efficiency and effectiveness of the comprehensive plans to achieve the desired outcomes. With socio-economic, political, and technological innovations, strategic leaders can also assess the appropriateness of the current strategy in today’s dynamic world. Strategic evaluation is an important means for strategic leaders to assess how well the organization has performed, relative to its goals. This is the final stage of the strategic management process. Organizational evaluation ‘measures, compares and analyses the coherence between results and specific objectives and between specific objectives and general objectives of institutional projects, programs or plans’ (Hernan, 1987). It’s an important way for leaders to reflect on achievements and shortcomings. At this stage is important for the organization to be able to re-examine their current goals, which may have been set at a different time, under different circumstances. Three fundamental strategy evaluation elements are to review external and internal factors that are bases for current strategies, measure performance, and lastly to take corrective actions. It is crucial for leaders to have sufficient awareness about the problems and if strategies are not working well. Moreover, future modifications are in lieu of strategies due to forces of external & internal factors. Any successful evaluation of the strategy begins with defining the parameters to be measured. This stage is important to leaders as they can determine the organization’s progress by measuring the actual results versus the plan. By monitoring internal and external issues will further enable leaders to react to any substantial change throughout their organization. If the leaders determine that the strategy is not moving the company toward its goal, then they take steps for corrective actions. If those actions deem successful, then repeat the strategic management process. Because internal and external issues are constantly evolving, any data gained in this stage should be retained to help with any future strategies.

For most organizations, the major advantages of strategic management include identifying, prioritizing, and exploring opportunities. The process will greatly assist an organization in launching new products or penetrating new target market groups. It allows strategic leaders to understand whether or not the business is in a profitable position. Broadly speaking, the benefits of strategic business management can be divided into two distinct sections. One is a financial advantage and the other is non – financial advantage. It has been widely noted that companies with skilled strategic leaders always profit better than their competitors. The reason is strategic management helps an organization to stay focused on its goals. Many people see strategic planning and management processes only for large-scale businesses. In fact, even a startup requires strategic services of management. In fact, start-ups or small businesses require better strategic planning to ensure business growth in the shortest possible time frame. Many startups have their vision scattered. They lack good strategic planning, so they don’t understand their chances. Failure to understand opportunities keeps a business away from its main objectives that can generate real income for them. In Malaysia, large numbers of startups or small businesses are failing to thrive because they lack support for quality strategic management. Only tangible benefits of strategic management have been highlighted so far. In addition to the tangible benefits, strategic management also offers certain non-financial benefits to strategic leaders. It helps an organization to understand its threats, weaknesses, and gaps thus to better understand its business rivals. Strategic management’s most important non – financial advantage is that it helps strategic leaders become more disciplined and organized. It bridges a connection between performance and employee rewards. A company grows rationally under proper strategic planning, understanding its financial feasibility. If the organization is planned to be expanded by strategic leaders, they should aim for meticulous strategic management to find the feasibility or viability of business expansion at this stage.

Any organization can follow to the letter any of many strategic management frameworks, but there may still be chances of failure at execution. This is where the strategic management process is crucial for leaders to be successful in the leadership team that they must have the requisite strategic management competencies or at a minimum be working toward building these competencies. Strategic leaders must be competent with the vision and direction for the growth and success of an organization and a good strategic plan allows their business to be able to assess resources, allocate budgets, and maximize ROI (investment return). In order to successfully deal with change within an organization, all executives need the skills and tools for both strategy formulation and implementation. Managing change and ambiguity requires strategic leaders who not only provide a sense of direction but who can also build ownership and alignment within their teams to implement change. Summing up the following can be stated that strategic management is the process of specifying an organization’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. This process is important to molding strategic leaders to manage, motivate and influence the whole organization to share that same vision.

Strategic Management: Product Performance Analysis and Market Review

Strategic Management SLP 1

Per request, the required 5-year simulation provided the following findings based on thorough review and data analysis. The narrative details necessary changes in products W1, W2, and W3 in terms of lifecycles as well as price and performance to be considered that will enhance the company’s future profit margin as requested. This report also addresses concerns related to sales, costs, unit margins, profitability, market saturation, and implementing a different marketing strategy towards R&D and pricing from 2013-3016.

Initial Observation

Cost volume profit analysis (CVP), is a method that is used to achieve profit by estimating the changes associated within an organization’s cost. These costs are defined as fixed costs and variable costs which controls 3 parameters (1) sales volume, (2) price, and most importantly (3) company’s profit (Peavler, 2017). As the responsible person for strategic management and pricing in research and development (R&D) and to expound on funding allocations. After running the simulation Joe’s failure to adjust the existing numbers in pricing and R&D based on findings from fiscal year 2012 to fiscal year ending 2016 jeopardized earning potential within a 5- year period. Without compromising and discrediting facts, Joe’s failure to adjust figures in W1, W2, and W3 products lifecycle compromised the ability for the Wonder Company to maximize profitable growth and earning potential. Manager’s pay particular attention to detail and product performance due to market fluctuation which is crucial to operational growth. Marketing and advertising are key indispensable functions to enhance merchandise sales, maintain existing customers, and draw attention to new potential consumers. The previous manager’s choice of decision making affected organizational subtleties from leading, planning, controlling, and directing the functionality of operations to enhance or improve product procurement. Even though the Wonder Company was able to obtain significant profit throughout the 5- year period, continuous change and adaptability is inevitable for elasticity of an organization to remain relevant. Yearly, Wonder’s profit margin decreased substantially due to the marketing manager’s failure of proper fund allocation. When the Wonder Company’s products were no longer in high demand, minimal strategic efforts led to the company being consumed by market saturation. According to (Hargrove, 2019) market saturation occurs when the quantity of a product or service peeks in a particular sector. Implementing a yearly pricing strategy allows a company the ability to adapt to a saturated market if necessary, by utilizing R&D with creativity and an effective marketing strategy for pricing.

Product Performance Analysis

Upon completion of the simulation, the initial performance within the company aligned with the competitive market in 2012 for W1. Wonder Company’s customer base was 1,035,00 with 882,729 being first time customers and 86, 230 being repeat sales accumulating a total of 15% market saturation. The same year, W2 sales decreased to 550,000, with 46,945 repeat customers and 8% market saturation. W3 sales attracted no repeat customers with 2% market saturation during 2012. That year alone was a red flag for the previous marketing executive to conduct thorough review of product analysis instead of running repeat numbers. The previous decision was derived on the inclination of sustainability and attributed to W1’s performance in 2012-2013 with increasing customers from 1,035,000 to 1,917,729 however, market saturation increased 12% that year from 15% to 27%, W2 doubled from 8% to 16%, but outperformed competitors in the same market, and W3 remained consistent due to pricing which contributed to allocation concerns for demand. The simulation provided the following results for market saturation for 2013-2016:

2013-2014- W1 market saturation increased from 27% to 48%, W2 increased from 16% to 36%, and W3 increased minimally from 2% to 3%. The W1 sales fared the same as market competition, and W2 was still in the growth phase where consumers had yet purchased. Failure to adjust the necessary funding for pricing allocation allowed continuous market saturation of W1 and W2. As the years progressed the percentages steadily increased for those two products and are detrimental to potential profit margin.

2014-2015- W1 increased from 48% to 73%, W2 from 36% to 73 %, and W3 from 3% to 4%. From 2014-2015, the products of W1 and W2 began experiencing saturation as Volume sales almost doubled and its repeat customers declined. During this phase W3 price point cost more than the product market and performed lower than the competitors.

2015-2016- W1 INCREASED FROM 73% to 93%, W2 FROM 72% to 100%, and W3 4% to 5%. The yearly growth percentages of W1 and W2 contributed to market saturation contributing less need of the product due to market and consumer demand.

Financial/Market Review

The attached appendix depicts product analysis for W1, W2, and W3 from fiscal years 2012 to 2016. The breakdown is a comparative comparison based on the given numbers provided within the simulation. During the lifecycle, the simulation provided the following results. In 2012 total profit was $86,637,786 with 17% profit, in 2013 total profit was $289,759,640 with 27% profit margin, 2014 total profit was $567,621,741 at 22% profit margin, 2015 total profit was $18,964,877 at 3% profit margin, and 2016 total profit was $19,876,715 at 4% profit margin totaling $1,650,231,103. The numbers represent significant profit but did not maximize on outcome potential. The profit margins continued to decrease as a result of failure to implement cost volume profit analysis, market saturation, and consideration for market demand. In 2012 costs associated to product market price was more than the competitive market. In 2013 the company saw its most significant profit in sales growth, but most consumers had not yet committed to purchasing the merchandise. In 2014, based on previous sales, the price of W3 products cost more than competitors, however, majority of W3 consumers were new and led to W3 pricing of $185 falling below the competitive pricing market. Analyzing the process and using the given numbers provided, in 2015 W1 achieved profit but sales declined and executed the same as market competition. During the span of 5 years none of the prices were adjusted, nor products discontinued, product cost and market demand were irrelevant since breakeven point was not taken into consideration for either product. Wonder Company’s previous marketing VP should have paid particular attention to breakeven analysis in 2014 as W3 sales declined but product cost was more than the competitive market. At that time, inconsistencies within current pricing strategies should have been a marketing concern. W3 pricing and R&D allocation should have been monitored more closely since there was no significant growth utilizing the numbers for this product. In retrospect, Joe saw no need to adjust the current pricing strategy due to the company accumulating profit with the figures that were previously used. Consideration of market volatility is important in adjusting operations. Amadeo (2019), referenced market volatility as the velocity of price with the changing market with a market cap and bottom. Managers should pay close attention to pricing and adjustments associated with because of market uncertainties and global growth. The failure to adapt a competitive pricing strategy for W3 or try to improve performance on W1 and W2 implied concerns of future options and company advancement.

Alternate Strategy

As VP of marketing, it is vital to conduct necessary research to enhance organizational growth and future potential. Quantitative data provides reports and statistical data for the output of each product within a company’s footprint. Management control is a way to direct staff with task and purpose to promote future potential. According to Erik-Sveiby (2001), management control is the most common approach to measure and report to improve an organization’s internal performance. Therefore hands on involvement is one of the most essential elements for visibility within company operations. As an enabler, visibility is a key performance indicator (KPI) which directs the needed attention to performance and the required adjustments to be made i.e. in performance, pricing, R&D, and how each function should be addressed to maximize profitability at the lowest operating cost. Of the four intangible measuring approaches by (Luthy) 1998 and Williams (2000), 2 of those stands out to improve performance and they are return on assets (ROA) and market capitalization (MCM).

• (ROA)- a time-based analysis of actual performance of a company’s product compared to the industry average.
• (MCM)- analyzes the difference between organizational capital and stockholder’s equity as assets of little to no importance.

However, stockholders’ point of view should be considered in the decision- making process of product procurement. Stockholders’ are not only investors, but also include customers and when sales decline the impact affects all involved and the entirety of the process. Managers should be more engaged and proactive in their approach to market fluctuation as a concern for future potential.

References

1. Amadeo, K., 2019. Volatility and its Five Types. Retrieved from https://www.thebalance.com
2. Erik-Sveiby, K., 2001. Methods for Measuring Intangible Assets. Retrieved from https://www.sveiby.com/files/pdf/intangiblemethods.pdf
3. Hargrave, M., 2019. Market Saturation. Retrieved from https://www.investopedia.com/terms/m/marketsaturation.asp
4. Peavler, R. (2017, February 02). How to do Cost-Volume-Profit analysis: An introduction. The Balance. Retrieved from https://www.thebalance.com/how-to-do-cost-volume-profit-analysis-an-introduction-393475

Strategic Management And Its Significance

INTRODUCTION

The management concept of building an organization around the profitable satisfaction of customer needs has helped firms to achieve success in high-growth, moderately competitive markets (Bracker, J., 1980). However, to be successful in markets where the economic growth seems to be matured and in which competition appears to be high, it is key to follow the marketing concept and a well-developed management strategy. Such a strategy considers a portfolio of products and takes in to account the anticipated moves of competitors in the market.

Management is strategically concerned with the direction and scope of the long-term activities performed by the organization to obtain a competitive advantage. The idea is to have your organisation customer focused whilst simultaneously satisfying your stakeholders’ expectations. The scope of my study restricts itself to the analysis of Management strategy of Nokia and Samsung.

What is strategic management?

According to Chen, Hambrick and Nag “strategic management is the continuous planning, monitoring, analysis and assessment of all that is necessary for an organization to meet its goals and objectives” (2007, p. 935-955). Fast-paced innovation, emerging technologies and customer expectations force organizations to think and make decisions strategically to remain successful (Völckner, F. and Sattler, H., 2006). The strategic management process helps company leaders assess their company’s present situation, chalk out strategies, deploy them and analyse the effectiveness of the implemented strategies (Welch, D.E. and Welch, L.S., 1996). The strategic management process involves analysing cross-functional business decisions prior to implementing them.

Importance of Strategic management

Strategic management drives the necessity to form a commitment toward strategic planning which in-turn signifies the company’s ability to set both, short- and long-term goals, then determining the decisions and actions to be taken in achieving these goals.

Strategic Management on a corporate level normally incorporates preparation for future opportunities, risks and market trends. This makes way for the firms to analyse, examine and execute administration in a manner that is most likely to achieve the set aims (Covin, J.G. and Slevin, D.P., 1989). As such, strategizing or planning must be covered as the deciding administration factor. Apart from faster and effective decision making, pursuing opportunities and directing work, strategic management assists with cutting back costs, employee motivation and gratification, counteracting threats or better, converting these threats into opportunities, predicting probable market trends, and improving overall performance Covin and Slevin, 1989, p. 75-87).

Strategic management process

(Poister, T.H. and Streib, G.D., 1999)

Strategic Intent

Strategic intent gives an idea of what the organization desires to attain in future. It answers the question what the organization strives or stands for? It indicates the long-term market position, which the organization desires to create or occupy and the opportunity for exploring new possibilities.

Strategic Formulation

Strategy Formulation is an analytical process of selection of the best suitable course of action to meet the organizational objectives and vision. It is one of the steps of the strategic management process. The strategic plan allows an organization to examine its resources, provides a financial plan and establishes the most appropriate action plan for increasing profits.

Strategy Implementation

Strategy implementation is the technique through which the firm develops, utilises and integrates its structure, culture, resources, people and control system to follow the strategies to have the edge over other competitors in the market.

Strategic Evaluation

Strategic evaluation is the assessment process that provide executives and managers performance information about program, projects, activities designed to meet business goals and objectives.

Introduction to the company profiles

Company 1 – SAMSUNG

Samsung is a South Korean multinational company headquartered in Samsung Town, Seoul. It was founded by Lee Byung-chul in 1938 as a trading company. Samsung entered the electronics industry in the late 1960s and the construction and shipbuilding industries in the mid-1970s; these areas would drive its subsequent growth. Following Lee’s death in 1987, Samsung was separated into four business groups – Samsung Group, Shinseki Group, CJ Group and Hansol Group. Since 1990s, Samsung has increasingly globalized its activities and electronics, particularly mobile phones, have become its most important source of income .

As stated in its new motto, Samsung electronics ‘vision for the new decade is ’Inspire the world, Create the future’

This new vision reflects Samsung electronics ‘commitment to inspiring its communities by leveraging Samsung’s three key strengths New Technology, Innovative Products, and Creative Solutions. And to promoting new value for Samsung’s core networks, Industry partners and employees. Through these efforts , Samsung hopes to contribute to a better world and richer experience for all.To this end, Samsung has also three strategic approaches in management. ‘Creativity, Partnership and Talent.’

Strategies used by Samsung

1. Globalization – With more than 285 overseas operations in 67 countries. Samsung is truly global in scope and nature. Samsung’s strategy is two-pronged:

• To prudently expand outside its home market
• To equip overseas units with the skills and resources to be self-sufficient.

This strategy brings Samsung, and the countries where it operates, Globalization provides access to new suppliers and customers, and allows Samsung to learn and benefit from new cultures and new ideas.

2. Human Resource Strategy – One of Samsung’s human resource strategy is to recruit the highest quality personnel around the world, regardless of nationality, by focusing on those who have masters and Doctorate degrees in all areas of management.

3. SWOT analysis of Samsung

4. Value chain analysis

‘electronics and computing’ industry reveals that ‘manufacturing’ is the maximum value adding activity (approx. 50% of total), and a key area for companies to reduce costs and control product quality. Samsung is ‘contract manufacturer’ in DS business, and ‘vertically integrated’ in CE and IM businesses.

PESTEL analysis

Political: Mallard (2015) has highlighted the role of governments using political influence to attract foreign direct investment. Reuters have reported that Samsung is under pressure from the US government to set up a production base in USA (2017a). The recent arrest of Samsung’s Vice Chairman, Lee Jae-Young (McCurry, J., 2017), in a corruption scandal shows that politics plays a significant role in how businesses are run.

Economic: Consumer electronic products have shorter life-cycles due to the speed of technological obsolescence (Torresen,J. and Lovland, T.A., 2007), and companies have to price new products at a high price to be able to breakeven quickly. The consumers in developed countries have the buying power to afford new electronic products.

Socio-Economic: The changes in the life-style of consumers, due to the fast pace of modern life, has seen increase in ‘impulse’ buying of products, In addition, Park, Jun and Lee have concluded in their study that mobile phone shoppers are impulse buyers, and have a high consideration for the product price, since they perceive effort and time spent in buying as a cost (2015, p. 157).

Technological: Wang and Ahmed mention that “a firm’s dynamic capabilities depend upon market dynamism, and this drives the firm to develop core capabilities over a period of time” (2007, p. 31-51).

Environmental: Chopra and Wu (2016) mention that the directives like 2003 RoHS (Restriction in use Of Hazardous Substances) in the EU, and increased emphasis on Climate Change, has seen an increase in eco-announcements from companies in the computing and electronics, who are beginning to view the use of eco-friendly materials and systems in their products as a competitive advantage.

Legal: The ‘electronics and computing industry’ is dependent on technological innovation, which means that protecting IP (intellectual property) is a key issue, and companies have to ensure that competitors do not take advantage by copying or imitation. In addition, product safety issues can affect the company’s reputation and impact product sales (Chen, 2004). Bloomberg (2016) reported that Samsung China have been ordered to pay CNY80 million (US$ 12 million) to Huawei for a patent infringement.

Key success factors

These are the key factors which contribute to success in an industry, and can either be resources (investment, talent) or competencies (technology, process) which an organisation must possess to become successful in the marketplace (Lynch, 2015).

Analysis of the factors influencing the ‘electronics and computing’ industry shows that product affordability, product features, and product quality are the main requirements, and to achieve these, the key success factors are:

• i) Low cost of production (for contract manufacturing only)
• ii) Investment in production facilities
• iii) High investment in R&D
• iv) Availability of talent (scientists and designers)

Company 2 – NOKIA

Nokia is a Finnish international communications corporation. It is mainly involved in the production of mobile devices and in joining Internet and communications businesses. They create a widespread variety of mobile devices with amenities and software that allow people to practice music, navigation, business mobility and more. Nokia is the vendor of Symbian operating system. Nokia has implied such strategies that help it to maintain its hold in the market of being a leading manufacturer in mobile devices.

The organizational mission of Nokia is “Connecting People”. Their mission statement is “In a world where everyone can be connected, we take very human approach to technology”. The organization is involved in the business of manufacturing mobile devices and is in a race to become the world’s leading manufacturer of mobile devices. As the mission states that it wants to connect people, it is aimed at making such devices that they are easy to use for humans and also remain up-to-date with technology.

Strategies used by Nokia

• SWOT analysis
• Corporate culture

Nokia corporate culture is one of the corporation’s planned and cutthroat benefits. Even the corporation’s slogan, `Connecting People’, is representative of the culture, and aids in describing the reason of its corporal amenities. The corporation’s structures highlight masses of natural wood, huge windows, welcoming colours and fabrics, exposed floor strategies, pedestrian overpasses, game/leisure parts, fitness places and saunas.

• Value chain

To get an improved comprehension of Nokia’s stance in the mobile telephony business, it is significant to observe the business value chain. Handset end-consumers do not buy straight from Nokia, as an alternative, they generally register in cellular calling strategies from amenity sources. Nokia trades its phones to the mobile service contributor and/or supplier after creating every handset using several factors created by other sellers.

• PESTEL analysis

Political-The outer political environment has the ability to influence Nokia considerably, particularly owing to the detail that Nokia is functioning on a universal level and should stand to a complete presenter of country precise podiums in which the political and legal techniques can vary considerably.

Economic –Economic factors such as development rates, interest rates, trade rates and inflation rates are vitally imperative to Nokia equally in the temporary and enduring term. The influence of these issues can have main inferences, comprising how they function and make verdicts such as what must be manufactured, how it must be created and what demographic of consumer the end result must be directed to.

Social – Nokia’s inventions have comparatively small product lifespans; this indicates Nokia has to pay careful concentration to styles and social choices. Growths in how mobile phones and smart devices are consumed have altered over the years, for instance, the development of camera phones, touch screens and 3G. Disaster to execute qualities when they initially occur can direct to meaningful market share destruction. Nokia functions in a vast amount of markets mostly owing to its robust allocation system, all of these markets have certain tastes, cultures and anticipations.

Technological –In the telephones business, particularly OEMs, the rapidity of alteration and acceptance of new technology influences officials knowingly; the achievement of Nokia is built on endless invention. Nokia examines research and development improvements by rivals, obvious from their speedy acceptance of touch screen technologies and more lately throughout their research plans into gadgets such as Tablets that are comparable to the iPad.

Legal –Nokia has above 132,000 employees in 120 countries and therefore distinguishes the significance of concerns that associate to service adjustment in addition to employee wellbeing and protection. For instance, Nokia lately authorized a contract linking to the reimbursement parcels to be obtained by the personnel of Nokia employed at the Jucu plant with the Romanian trade alliances. Product protection and well-being is added legal concern that is of extreme significance to Nokia.

Environmental –Altering public approach to environmental sustainability in addition to invention removal and reprocessing have altered extensively over the previous era. Nokia have been active with respect to environmental accountability and sustainability, they set further that it is “integrated into everything we do. From the devices we build and the suppliers we choose, to our mobile solutions that enhance people’s education, livelihoods and health”.

Key failure factors

Ultimately though this lack of innovation management and understand is a failure right at the top of the Nokia organization. For over a century Nokia had exemplified transformational leadership, evolving itself from a manufacturer of rubber products (Wellington boots and cables) to technology hardware to ultimately to the global market leader in mobile telephony. These transitions must have taken transformational leadership in the form of visionary thinking, risk taking, long-term planning and the careful management of

business transformation and organizational culture. However the leadership team present during the last 5 years (or maybe longer) of Nokia’s demise clearly exerted the traits of transactional management – focused on the short-term and managing the maintenance and improvement of performance. This coupled with often conceited nature of a market leader who think they know their market best due to past performance is ultimately the reason why Nokia exists no more.

Conclusion and Recommendation

According to the strong competition in the mobile phone market, Nokia should improve their mobile phone’s abilities such as function of internet using on mobile, and also produce new application to satisfy customers ‘needs. They should not be too dependent on Microsoft, because it would be hazard for the company. On the other hand, Nokia should keep developing the mobile phone technology at the same time Microsoft focus on software and another application that relates to mobile phone using. It might be true that is difficult for Nokia to recover from the problems while the competition of mobile phone is very strong due to the trend of smart phones for Apple and Google’s android operating system, But cooperation between Nokia which produces numerous portfolios and has a very large distributed channel around the world and Microsoft that is the worldwide leader in software, would create new efficiently technology to offer customers and be successful again.

References

1. Bloomberg (2016) Company Overview of Samsung Display Co., Ltd [online]. Available at: https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=22399354
2. Bracker, J. (1980). The Historical Development of the Strategic Management Concept. Academy of Management Review, 5(2), pp.219-224.
3. Covin, J. and Slevin, D. (1989). Strategic management of small firms in hostile and benign environments. Strategic Management Journal, 10(1), pp.75-87.
4. David, F. D. (2011) Strategic Management – concept and cases. 13th ed. New Jersey: Pearson Education
5. McCurry, J. (2017). Samsung head arrested over South Korean Choi-gate corruption scandal. [online] The Guardian. Available at: https://www.theguardian.com/technology/2017/feb/17/choi-gate-samsung-heir-lee-jae-yong-formally-arrested-for-corruption [Accessed 1 Jul. 2019].
6. Nag, R., Hambrick, D. and Chen, M. (2007). What is strategic management, really? Inductive derivation of a consensus definition of the field. Strategic Management Journal, 28(9), pp.935-955.
7. Park, C., Jun, J. and Lee, T. (2015). Do mobile shoppers feel smart in the smartphone age?. International Journal of Mobile Communications, 13(2), p.157.
8. Poister, T. and Streib, G. (1999). Strategic Management in the Public Sector: Concepts, Models, and Processes. Public Productivity & Management Review, 22(3), p.308.
9. Torresen, J. and Lovland, T. (2007). Parts Obsolescence Challenges for the Electronics Industry. 2007 IEEE Design and Diagnostics of Electronic Circuits and Systems.
10. Völckner, F. and Sattler, H. (2006). Drivers of Brand Extension Success. Journal of Marketing, 70(2), pp.18-34.
11. Wang, C. and Ahmed, P. (2007). Dynamic capabilities: A review and research agenda. International Journal of Management Reviews, 9(1), pp.31-51.
12. Welch, D. and Welch, L. (1996). The Internationalization Process and Networks: A Strategic Management Perspective. Journal of International Marketing, 4(3), pp.11-28.

The Peculiarities Of Strategic Management

Executive Summary

ALDI is a leading retail industry in Australia. This paper will discuss a contemporary analysis done on the ALDI. The threat of new entrances, technology, and environment are such factors that are affecting the overall strategic development of ALDI. The macro analysis shows that Aldi affected by its supplier as they are very dominant. Thus, partnership with the supplier will be a good strategy. SWOT analysis will help to identify the strengths, weaknesses, opportunities, and strengths of ALDI. ALDI has a strong strength of having good reputation in Australia’s retail industry. ALDI is also using new strategies to attract customers. However, existing rivals like Coles and Woolworth, affecting the sales of ALDI This report will also present some strategic implications that ALDI should use to make success in the Australian market.

Introduction

ALDI Company’s expansion throughout the Australia is growing as strong from the day of its first store in Australia in 2001 to its development in above 500 stores across WA, SA, NSW, VIC, ACT, and QLD. In this short period, ALDI has stands in top retailers of Australia. ALDI has also influenced the grocery prices in Australia, improved the quality and perception of the private-labeled goods through its exclusive brand’s philosophy. It introduced various market-leading edges that never offered by any other retailer in Australia. This company is facing tough competition from Woolworths, Amazon and Coles. To compete with all these competitors, ALDI opted the strategy to provide the products with high-quality at competitive prices. Moreover, ALDI also facing difficulties in meeting its sustainability targets. This report will discuss all these three strategic influences that together impact on the outcomes of Aldi.

Low Pricing

The market leadership of ALDI depends upon low pricing. To maintain the strategic management, ALDI in Australia invests in the strategies to lower the products’ prices. ALDI is focusing on selling its products at a low price due to the limited range of products and large quantities of purchasing. Rather than offering the promotional pricing and temporary markdowns, ALDI offers low pricing that brings supreme value to the customers. The policy of ALDI on pricing changes is as the first throughout the industry for passing on the lower cost to customers. It is last in increasing prices while the cost increase. The company mentions the change to its customers by displaying notes upon the cartons. ALDI serves the customers’ needs as a discount store by offering the products at low prices with decent quality. It is effective in offering the lowest prices as compared to its competitors. The fair pricing strategy of this company helps it to earn respect from the target market (roymorgan, 2017).

Competition

The main competitors of ALDI in Australia are Coles and Woolworths. They have good strategies such as higher compensation and promotions to employees as compare to ALDI. Both competitors are also offering products on lower prices as compare to ALDI. ALDI is also facing a hard competition the grocery and food in sales. It is affecting the food and grocery price at ALDI. ALDI is committed to maintaining pressure upon its competition by launching new brand campaigns which celebrate the differences as well as challenges the supermarket retailing conventions in Australia. To deal with the competition, ALDI must possess an effective competitive advantage that will result in competition advantage over the competitors. For this competitive advantage, ALDI is using cost leadership and differentiating strategies (Janis Bailey, Pyman, & Parker, 2015).

Sustainability

ALDI is committed to reducing its environmental impact. The company focus to recycle and reuse waste. Its remodeled stores having an environment-friendly building material and LED lighting is helping to optimize the water use and increase the application of renewable energy. ALDI assess the viability of its solar panels throughout the stores and distribution centers. Additionally, Aldi is using a security system for the trolleys for reducing the numbers of trolleys uncontrolled in the public areas. For example, the stores in Scoresby, Victoria because it get the six stars rating by “Green Building Council Australia” for its environmental-friendly designs. Aldi promotes the healthy eating and lifestyle for its customers. ALDI develops a brief sustainable-based packaging guide to buy suppliers and teams based on the Sustainable Packaging Guidelines of Australian Packaging agreement. ALDI also support the One Voice system for providing the mobile shower services to the homeless people living in all states of Australia (Trapp, Pulker, Scott, & Pollard, 2018).

PESTLE Analysis

Political

The multinational companies always strive for the persistent legal environment, despite the government changes, to ensure the growing business and functioning. As per the market analysis the retailing supermarket is much stable, thus, the risk to lose the business is not significant. Australian Government also take actions against of the duopolistic quality of supermarket retailers. Australian government reduced the entrance barrier for the new companies. These legal actions can help the companies for increasing the customer’s bargaining power. ALDI has taken the advantage because of the political framework of Australia and gained greater market shares in the recent years (PC, 2011).

Economic

The Australian government’s budget shows that its economy expects to grow as solidly. It will continue growing in the next years also. According to the CIA statistics in 2017, the GDP of Australia is USD 1.38 trillion (CIA, 2019). These statistics would lead toward higher growth for the household income, and leading to a strong purchasing power. The economic status of Australia also points toward the supermarket industry’s steady growth.

Social

Changes in lifestyles, social concerns, and attitudes have led to a drastic change in grocery retailing industry of Australia. Australian people are concerned for obesity and health. Thus, there is demand for the low-fat food products, easy for cooking food, GM-free and organic foods. Many of the retailers getting benefits from increase in demand as well as pushed the sails with healthy, fresh and organic food. So ALDI is focusing on these preferences of society. From 2017 to 2018 around 9.46 Million people of Australia shopped online. But ALDI supermarket is not providing the online shopping service to the customers (roymorgan, 2018).

Technological

Technology is also playing an important role in retailing field for providing a suitable shopping experience. Australian customers increasingly prefer online shopping. Moreover, the technology is helpful in improving the customers’ experience in store through providing the electronic displays and self-checkout system. Currently, ALDI in Australia is not providing online shopping system. To implement the self-checkouts can be an effective strategy which should consider to increase efficiency.

Environmental

People in Australia are aware of the impact on environment. Thus they mostly prefer to buy environment-friendly products. ALDI in Australia is aware about environmental pollution. Thus ALDI is accountable for impacts that its business has upon the environment. This company is also investing in waste management strategy and ecological products. It reduced the waste for landfills as well as using the energy-efficient products.

Legal

Australia applies the legal system that originates from the English law. Aldi is familiar to German legislation system that uses code law because it is a German company. It can be a challenge in front of ALDI. This company also needs to fulfill the Competition and Consumer Act 2010 for protecting the consumers. It must follow to opening hours as per the trading law. The legal factors such as plastic ban and carbon emission tax implemented across the retailers working in Australia. It affected the policies of ALDI in Australia.

Porter’s Five Forces

Bargaining power of the buyer

ALDI economic conditions of particular region and consumers’ buying power must analyze whenever it starts a store in Australia. It depends upon the substitute products, as well as ALDI must consider the consumers’ taste before establishing the store.

Bargaining power of supplier

ALDI requires raw material. Suppliers can use an influence upon producing industry through selling the raw material at high prices or through having monopoly. Some low pricing suppliers might not focus upon good quality (roymorgan, 2017).

The threat of new entry

Grocery stores with a low cost, such as Wal-Mart entering the Australian market can attract the ALDI’s customers as well as profits by providing the fresh goods in low pricing.

Rivalry among existing firms

In Australia, Coles and Woolworths are main competitors for ALDI. These competitors can have good strategy such as high salary to employees as compare to ALDI Company. These competitors can also merge for reducing prices as cheap.

Threat of substitute

ALDI has less threats from substitutes. But the threats from substitutes could cause major damage. As it deals through regular household products whether low prices, good quality, and fresh products are the main factors, but the customer service can be a major issue.

Internal Environment Analysis

SWOT analysis can be used for identifying the internal position of ALDI. The SWOT analysis is as follows.

Strengths

Pricing is the main strength of ALDI in Australia because it pursues the cost-leadership strategy. ALDI has a strong purchasing power and can influence grocery prices in Australia. It has a strong product mix. Another strength of ALDI is its low operating costs. The low operating cost strategy of ALDI helps it to sell products at low prices. Another strength of ALDI Company is its corporate responsibility policy as it is committed to reducing the environmental impact by reducing the wastage and recycling strategies. It is offering various products and has a good reputation among the customers (Dunford, Palmer, & Benveniste, n.d.).

Weaknesses

ALDI needs to have very high productivity to survive in the competitive market of Australia. The employees of ALDI often need to work as per the multiple shifts and get salary as less than most of other jobs. It creates dissatisfaction among the employees. Another weakness of ALDI is the customer services provide by the company. Another weakness of ALDI is that it has not provide online grocery shopping in Australia. On the other hand, its competitors are focusing on introducing online grocery shopping websites (Pulker, Trapp, Scott, & Pollard, 2019).

Opportunities

The technological advancement is a major opportunity that ALDI can use for managing the organization operations more effectively. Social media can help the ALDI management to promote its brand name much effectively. Expansion in other countries is also a major opportunity for ALDI.

Threats

The main threat that ALDI faces much competition from Woolworths and Coles. As retailers such as Amazon and Walmart also move into the grocery, ALDI is also facing a threat from these competitors. Globalization is another threat because it forced ALDI for competing with local and global competitors (Pash, 2017).

Financial Analysis

ALDI’s revenue expects to increase an annualized 12.1% in the five years to 2019, to $9.9 billion. This company has rapidly increasing the market share because of the new stores’ rollout. Consumers are also responding favorably to low prices offered by the ALDI Company. However, ALDI’s revenue growth is starting to reduce as market nears the saturation, particularly throughout the eastern states, whether the ALDI established from long time. The profitability of ALDI has risen throughout the past years because of greater sales of the grocery items as well as economy gains. The financial performance of ALDI of last ten years is shown in the appendix (Youl, 2019).

Strategic Implications

As there is a tough competition in the retailing industry, therefore ALDI must change its strategy. Change in strategies will help ALDI to increase the opportunity and strengths and reducing the weaknesses and threats. ALDI should use the following strategic implications: –

• As compare to Woolworth and Coles, some employees are consulting the customer during the shopping experience. ALDI must consider the customers’ shopping experience and service because it might result in customer satisfaction.
• ALDI will have to use a low price and high-quality strategy to attract more and more customers.
• ALDI must develop new stores and outlet designs for better customer experience.
• ALDI needs to develop more and more customers to attract more and more customers (Sandberg, 2013).

Conclusion

ALDI is facing challenges due to competition, technology, and the environment. As per the internal analysis, ALDI has more strengths instead of weaknesses. So it can retain the customers by providing the products at low prices and with effective quality. It can also use new technology and strategy to attract new customers. External analysis of ALDI shows that the technology and social factors have much impact on ALDI. As other competitors are using the online shopping strategy, ALDI is less developed in online shopping technology. New strategies and online shopping technology will help ALDI to sustain the growth and decrease price so that the customers buy products at similar prices as competitors but without compromising on brand.

References

1. Australian Government Productivity Commission. (2011). Economic Structure and Performance of the Australian Retail Industry. Retrieved from https://www.pc.gov.au/inquiries/completed/retail-industry/report/retail-industry.pdf
2. CIA. (2019). The World Factbook: Australia . Retrieved from https://www.cia.gov/library/publications/the-world-factbook/geos/as.html
3. Dunford, R., Palmer, I., & Benveniste, J. (n.d.). Strategy for Successful Entry into a Concentrated and Highly Competitive Market. Retrieved from https://www.anzam.org/wp-content/uploads/pdf-manager/2374_DUNFORD_RICHARD_BSP-01.PDF
4. Janis Bailey, R. A., Pyman, A., & Parker, J. (2015). Union power in retail: Contrasting cases in Australia and New Zealand. New Zealand Journal of Employment Relations, 40(1), 1-18.
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6. Pulker, C. E., Trapp, G. S., Scott, J. A., & Pollard, C. M. (2019). The Nature and Quality of Australian Supermarkets’ Policies That Can Impact Public Health Nutrition, and Evidence of Their Practical Application: A Cross-Sectional Study. Nutrients, 11(4), 253. Retrieved from https://www.ncbi.nlm.nih.gov/pmc/articles/PMC6520865/
7. roymorgan. (2017). Aldi hits new high in supermarket wars. Retrieved from http://www.roymorgan.com/findings/7234-woolworths-coles-aldi-iga-supermarket-market-shares-australia-march-2017-201705171406
8. roymorgan. (2017, May 17). Aldi hits new high in supermarket wars. Retrieved from http://www.roymorgan.com/findings/7234-woolworths-coles-aldi-iga-supermarket-market-shares-australia-march-2017-201705171406
9. roymorgan. (2018). Who’s Shopping Online? Nearly 9.5 million Australians. Retrieved from http://www.roymorgan.com/findings/7612-whos-shopping-online-nearly-9point5-million-australians-201806080733
10. Sandberg, E. (2013). Understanding logistics‐based competition in retail – a business model approach. International Journal of Retail & Distribution Management, 41(3), 176-188. doi:https://doi.org/10.1108/09590551311306237
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Strategic Management: Creating Competitive Advantage

The fundamental forces in the general and industry environments

This is the case study that helps to find the strategic analysis and make the concern about changing the environment of the company that operates usually. A manager like to make the changes in the work and they want to see the position of the company. As a result, they make a good position in the marketplace. But there are some effects created by the critical force of strategic energy. There are some core concept is present strategic management and their business review process to develop the direction for the Emirates airline. They need to find the position of them in the market, and they also should find the competitive advantage to occupy the market place. In the final, the new business goals and a new strategy will ser for the different environment. This is the report which explains the development of the business strategy that was used by the Emirates airlines.

The background of the company is advantageous and they stated the first route to Dubai with two aircraft process one is Boeing 737 and another one is airbus 300 B4 in the year if 1985. The success story of the airline is acting as the phenomenon in all terms like growth, Innovation, and some global expansion. Emirates use the draw out process and make a significant airline function. But there is some impact present in the economic recession it affects the business fo the Emirates airline and prepares them to present at the financial crisis. It is the kind of famous for management to understand the short term and long term potential. For this crisis, they take advantage of the competitive edge. There are two analysis is made, and they are external environment and industry environment analysis (Business strategy and analysis for Emirate airline , 2017)

External Environment

For every airline industry, travel depends on the condition of the economic, pride. Elite and some other. Emirates used this intense economy process and developed its business to the United Arab Emirates. The market that they selected will operate them to the authoritative economic and find their success. The recent External environment factors are four, and they are

• Political force
• Social and culture
• Technological force
• Sustainability.

In the political force process, there is some negotiation present for the aviation system. To operate the airlines. Most of the government are needed to make strict regulation, and the different process is implemented form the Emirates airline. Dubai is marked as the best, so they started there. In the social and cultural process the influence the development strategy and follow the international market function. They indeed use this advantage to form the designation and make the trend. Technological force is act as the success driver for the airline industry they used this process is to form all the latest technology flight and do the differentiation in the standard of the airline. So, it acts as the best global airline website, best flight entertainment, best developer, and Sustainability is act as the high fuel price process and their natural resources for the small and more efficient vehicle. In this, all Emirates airline issue at first and then they solve it by using their competitive strategy.

Impact

There are some impact that faced by both the general and environmental process, and they are

Industry Environment Analysis

Portee Five force is one of the sufficient industrial competitive levels. There are five primary processes is present for this process they are

• Threats of new entrants
• Rivalry among established companies
• Bargaining power of buyers
• Bargaining power of suppliers

There is some impact faced by both the general and environmental process, and they are experiencing a hard time in the financial crisis. The slowdown in the economic growth of the organization. Act as overcapacity in the market, rising in labour cost, do the yield for the overcapacity and do the math for the falling demand. So, it is clear that the economic condition of the organization is to reduce some financial process like cost-cutting, and others sustain business function. So in the final from the analysis of external and internal environment process Emirates face the issue and solve it by their competitive strategy.

How do Emirates compete?

Internal Competitive advantages

Emirates airline is the kind of airline that operates on the unique business model with some flexibility. It used to enable innovative delivery and form the affordable market. Emirates also at as the pride leader for the Innovation in haul fights. So the past company crises are gone and the management from the tackling device to solve the global crisis. The firm model support two main model business one is haul flights and connection between points.

The pricing of the Emirates airline creates an effective one and make the passenger pay cheap fares and also enjoy the trip. This is one of the leading competitive advancement for the airline than the other. So, the list of the passenger is increased and their main cost is also increased. The Haul flights have been acting as the low cost and profitable one. The frequency of the plane has made the emirate to serve more valuable, and the other need to increase their fair. Pricing is acting as an excellent competitive strategy for the firm, and they derived success from this low cost and long-haul flight process.

This is the airline which enjoys a large number of advisor and also creates an excellent manager to form the best interest in the airlines. They used to develop high IQ manager to design and develop the best competitive products. That the other organization. Emirates airline has begun his market by using this process in the short period / The airline is not act as the burden one in any form of cost, so they form the legacy fees and form the pension for the long-term service employee. The legacy cost is acting as the reason for the many airline fall and do the change in the price. So, they form the constant process and provide it for the low fare. There is no long service for the competitive function and its cost.

From the case study, there are two main asses which make more profit. In the year 2015 and 2016, they make more profit than the last five years. There are several reasons present for this asset, and they are the development of technology. They use a specific technique for the customer to book flight and served better. The main moto is the stratification of the customer and proper communication of the employee to the customer. Many customer is cannot able to understand language, so they form some communication process for them. Also, they use a wide variety of types and operating system for the customer to take advantage. In recent days there are no accidents occurred, and there is no report registered for the Emirates airlines. This is act as the safety flights, and passenger acts as the confidence one to prefer this airline. The efficiency of the engine is also installed in every aircraft and make them ensure the trial run. They too do support for the environmental process to emit the low carbon. It makes them act as environmentally friendly.

There are three generic stages is present for the generic strategies, and they are

• Overall leadership
• Differentiation
• focus

They also carry the value chain process and do support for the intangible assets and VRIN resources. It does not act as the single activity process, and it does the value chain, and for the sustainable competitive advantage. In the tangible support, there are three processes is followed they are

• Financial
• Physical and
• Technological

In the intangibles resources here are some other process is present like

• Organizational
• Human
• Innovation and
• Reputation

In the final Emirate had the interlocking system for the mutual and reinforced function. They used to create the ultimate experience for the people and do the privilege for them compare to others. They also make some promise for the Middle East countries to do their Innovation.

The challenges Emirates might face

The airline industry is act as one of the important ones for many countries they used to make more profit for the country. Like the same Emirate, the airline is acting as the important one for the UAE they make many promises, and they face many problems to keep that promise Some of the critical challenges are the best service for the client. For this process, they make the new marketing strategy like pay the basic price for the designation. They make some effort for the organization to capitalized the impunities and make them as the global carrier. They also form some feedback and receive company feedback from all the clients. The company is used to launch the worldwide campaign and also refer the kids to Kids go Free. The discount is also given for the families to this go free process in any of the emergency. Based on the survey there they form the report as Emirates airline has increased the number of to the general to global. After the worldwide formation, they used to serve a wide variety of clines all over the world. It acts as one of the immediate processes and makes the address for this method. There are some complex is present for the function, and they do solve all from the SWOT analysis process

The effectiveness of Emirates’ leadership

`Emirates is one of the largest airlines, and it plays a major role in country health. There is no doubt that a talented leader plays a functional position and makes all possible things under the management. Leader of this organization is always acting as the responsible one and do treat the people equally. They still work as the honest one and make the connection between the staff and them.

Like the other organization, emirates airline play a management theory to motivate and control the people. They use a different style of the management process and manage the business. They deal with planning and other pieces of stuff to increase the performance of the company. In today nosiness the motivation and leadership skill plays a significant role Sheikh Mohammed bin Rashid al Maktoum and then Sir Tim Clark, They do the activation theory to solve all the problem on time, they monitor the process, control the system and do have the essential to control all the management process. These three acts as the motivation leader and do support for all the struggle that happens. It makes the employee work well and does give their best contribution. Strategic management and their significance of the Emirate airline increase the stakeholder and their customer, the management process is carried by the theories of the management and reach the success.

Bibliography

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Strategic Management: Creating Competitive Advantages

Basically, with the current trends in the market and the growing levels of competition, organizations are expected to become more innovative and ensure the use of better ways of operating in the market so as to have a higher competitive advantage over their competitors. In this case therefore, Aldi, which is a discount supermarket retailer has realized that one way of doing this is through the limitation of the number of products in each and every given category so as to ensure that there is a guaranteed product turn, and also ensuring ease of the stocking shelves, which would therefore make the organization more financially powerful than their suppliers (Udriyah, Tham, & Azam, 2019). Aldi organization also prioritizes on dealing with private-labelled products as a way of minimizing related costs. It also has a number of ways aimed at reducing their expenses, to help them in outweighing their reduced product prices, and among them are advising their customers to come with their bags for their groceries, to reduce the cost of packaging for the customers.

Every strategy that is basically utilized by an organization in the market, and especially aimed at improving their competitive advantage over their opponents in the market has possible pitfalls, and that the organization should be ready to outweigh by possible planning for the same and putting in place some measures which would help them in dealing with such issues in case they happen in the business, so as to avoid complications in their market operations. In this case therefore, the Aldi utilized strategies could also have some pitfalls and which is normal (Nadarajah, Kadir, & Khalid, 2019). To begin with, their market strategies may not work for a long time unless they are updated and some changes made over times so as to keep them relevant with the changing market situations. Also, the customers may not buy the idea of coming to the grocery with their bags, and would probably select to buy their products from other places where the bags are provided. Lastly, in most cases, customers prefer shopping under one roof, and therefore may not shop from Aldi since the organization offers limited and private-label products with an aim of minimizing cost.

Lease can be one of your greatest operational expenses. Be that as it may, numerous business people make a less than impressive display of arranging their business land rent and end up stayed with major tremendous costs. In case you’re not cautious, that could have genuine repercussions for your organization’s benefit. When you hear the word “negotiate”, your rent is probably not the first thing that comes to mind. In fact, your initial thought is probably that of a business deal or bargaining prices at a farmers’ market. While most people don’t realize, it’s possible to negotiate your rent price. Your landlord operates as a business, after all, and they’re going to want to find a balance of happiness for their client and themselves. Here’s what you need to know to negotiate your rent the right way (Weill, & Woerner, 2018). The Apple company has greatly revealed its enormous gravitational pull when it comes to the issue of bargaining for spaces to rent in different malls, something which has greatly distorted the entire market for mall rents and which also has helped the Apple company in winning the iPhone maker great deals (Katsouros, & Stephen, 2017). Apple attracts such a large number of customers that its stores can without any assistance lift deals by 10 percent at the shopping centers in which they work, as per Green Road Consultants, a land inquire about the firm. Truth be told, Apple has utilized its bartering capacity to pay close to 2 percent of its deals a square foot in lease. That contrasts well and a run of the mill inhabitant, which pays as much as 15 percent, as indicated by industry administrators.

Basically, in the current, technology and its related advancements have been of great importance and especially in the field of business. In this case therefore, technology has been greatly utilized in improving such services like communication within different organizations and ensuring that all relevant information is made available for the employees and other stakeholders when necessary. It has therefore impacted greatly in the business industry through making it possible for different operations to be carried out with a lot of ease (Kane, 2017). There have been enhanced methodologies in creating information the executive’s innovation as an answer for advance information dispersal, information creation, and information partaking in an association or network. These methodologies have qualities and shortcomings of their own concerning innovative advances, client’s gathering, flexibility, and achievement rate in the genuine feeling of producing information. With consistent advances in portable and PC innovation, mechanical development between associations is serious. Be that as it may, an association can’t flourish if its representatives don’t share information and work together with each other.

Numerous affiliations are benefiting as much as possible from the odds to utilize new advances to end up being progressively convincing and successful. One of the more present sorts of approaches to manage to be used is the ‘virtual gathering.’ These are bunches that are incorporated into people who don’t work at a comparative spot or even all the while. They may be spread across many time zones and maybe found wherever all through the world. These sorts of gatherings are made possible by impels in PC mediated correspondence and programming that grants people to work helpfully on adventures without being helped to establish or regardless, working all the while (Newman, Section, & Marshall, 2019). Obviously, regulating gatherings of this sort presents many, and now and again exceptional, challenges. Keeping any gathering coordinating and passing on satisfactorily is continually a test, yet with virtual gatherings, these issues are indisputably to a more noteworthy degree a concern. We realize that it is vital and significant for individuals in associations to stay in contact all the time and in many associations today that is turning out to be progressively troublesome even with improved correspondence innovations.

Any organization that generally starts a business is always aimed at making profits. This therefore means that the organization must have a way of setting products prices and values that basically will favor their clients, make profits out of that and still have a higher competitive advantage over their competitors in the market. These values are therefore utilized by professionals to analyze a business competitive advantage in consideration of the market situation (Morioka, Bolis, & Carvalho, 2017). Official Outline Tried and true way of thinking in esteem chain procedure expects a one-directional progression of essential exercises, beginning from inbound coordination to activities, outbound coordination, advertising, and deals, lastly to support. Clients on a normal return about 6% of all that they purchase. Organizations need to see this as a chance to give this arrival heap another rent of life. However numerous organizations are not used to believing that the things they oust, for example, items, waste, and assets really have esteem. Truth be told, barely any retailers and providers catch the abundance of data that is bolted inside a case that has been come back to the distribution center. Firms that don’t perceive the significance of a compelling converse coordination technique as a major aspect of their worth chain hazard harming client relations and may genuinely risk their image picture and notoriety (Mahdi, Nassar, and Almsafir, 2019). A decent opposite coordination program can be a differentiator and gives a method for picking up showcase advantage. In our viewpoint, a reclassified esteem chain must be a bit of the general business manner for makers or shops who manage item returns.

References

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3. Mahdi, Nassar, & Almsafir, (2019). Knowledge management processes and sustainable competitive advantage: An empirical examination in private universities. Journal of Business Research, 94, 320-334.
4. Morioka, Bolis, & Carvalho, (2017). Transforming sustainability challenges into competitive advantage: Multiple case studies kaleidoscope converging into sustainable business models. Journal of Cleaner Production, 167, 723-738.
5. Nadarajah, Kadir, & Khalid, (2019). Understanding How IT Capability Impacts Sustainable Competitive Advantage through Business Process Management. Business Management and Strategy, 10(2), 250-264.
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