Category: Strategic Planning

Al Hilal Bank is one of the largest and the most rapidly developing and growing banks of the United Arab Emirates. It was founded on the nineteenth of June in 2008. The bank’s headquarters are based in Abu Dhabi. Al Hilal Bank is owned by the government of the UAE. The bank’s total revenue is nearly two billion UAE dirham and its net profit is around three hundred and forty million UAE dirham according to the data of the end of 2013.

This Islamic bank I supported by eight hundred employees. Al Hilal Bank performs wholesale, investment, corporate and treasury operations. It has approximately eighty thousand clients. Its twenty two branches and one hundred and thirty ATMs function all over the territory of United Arab Emirates. Besides, Al Hilal Bank operates three of its branches in Kazakhstan.

The strategy the Al Hilal Bank is to improve and assist the rapid growth of the economy of the United Arab Emirates. Moreover, as one of the biggest state banks Al Hilal carries a purpose of promoting the reputation of Islamic banking on the world’s business and finance arena. Al Hilal Bank puts its strategy into practice by means of improving its interactions with the customers and providing better and more comfortable services. One of the tools and instruments Al Hilal Bank employs to follow its strategy is its Financial Mall branch, which is known to be the largest banking branch in the world.

The facility of this branch is located in Al Sahel Tower in Abu Dhabi and is designed as a shopping mall. To increase the level of comfort for the diverse clients the branch owns special sections for women, children and youth, it also has a private zone for VIP clients. In addition, the Mall is equipped with a coffee shop, a lounge for the state telecommunications, an airline desk, and an auto showroom. Al Hilal Bank also provides insurance services through its Takaful unit, while Al Hilal Auto unit employs special ”Walk In Drive Out” Program.

Al Hilal Bank first opened in 2008, and in 2010 the bank’s performance was challenged by the world’s financial crisis. In spite of all difficulties and obstacles the young and developing company managed to save its revenues and continues its growth. The strategy of Al Hilal Bank back then was mainly directed and expansion of branches. In 2008 the total number of Al Hilal branches reached nineteen.

The following years Al Hilal Bank was focused on the development of its ATM network. Through the next three years the number of the bank’s ATMs grew by one third of its initial number. This strategy was employed in order to increase the level of accessibility of the bank and its services and gain my customers this way. Besides, the operational system of the ATMs was simplified in order to further expand the bank’s customer base.

Al Hilal Bank’s flexibility, endurance, and great management were demonstrated in 2010 when the bank had to deal with the world’s financial crisis. The bank did not let its clients down, on the contrary, it continued to expand and develop, raising the level of its customer service to the world class standards. The bank combines corporate presence with a personal banking that is fully fledged, it also performs wealth management operations.

The challenges Al Hilal Bank faced were the lack of self-service channel, unreliability of ATMs, which operated through high costs and were based on a complex system. Al Hilal managers focused their efforts on solving these issues in order to make the bank services easier to use and more available, which immediately improved the number of the bank’s customers as the reduction of ATM fees attracted more people. The bank’s self service channel added to the bank’s customer base by means of providing an advanced set of transactions and promoting the bank’s reputation.

The responsibility of the prosperity and development of Al Hilal Bank majorly belongs to its Wholesale Banking Group that is designed to play the most important role of financing the bank’s most critical projects of both Governmental and non-Governmental value. Due to these projects the bank also earned the positive reputation among its partners, clients and peers. Al Hilal Investment Banking group is responsible for all the investment projects and operations. Its investment solutions are directed at attracting more customers. Since Al Hilal is an Islamic bank, it is determined to perform Sharia compliant investment programs.

Due to the successful strategic planning and employment of various tools designed to please the customers and improve the bank’s reputation on the Islamic and world’s financial arena, Al Hilal Bank has shown robust results and solid improvement through the years of its work, in spite of the financial crisis and created many complications for the young financial organisation. An important part of Al Hilal Bank’s mission was to promote its Islamic identity, which was done successfully and in 2010 the bank won an award and was named the Best Islamic Retail bank.

Al Hilal also formulated its governance framework by means of starting management committees and providing policies designed to strengthen the organisation’s framework. Over the year of 2010 Al Hilal Bank demonstrated rapid growth and outperformed all other banks of the United Arab Emirates demonstrating thirty seven perfect of total financing growth in the country. Currently the bank performs a large rate of functions such as legal, investment, human capital, personal banking, information technology and risk management. It also is controlled and monitored by a Sharia board.

As a splendid result of several years of Al Hilal Bank’s operation many innovations were integrated. For example, Al Hilal is responsible for the unique project of Emirate ID cards, which are the smartcards for the national identification of UAE. These cards make procedures such as opening new accounts and accomplishing ATM transactions much easier and more organised. Al Hilal started world’s very first mobile bank working without emissions, founded the first children’s branch in the UAE.

Besides, the bank is responsible for the first thumb verification system managing banking operations and transactions. It established the first drive though banking branch in the Middle East and in-bank vending machine for gold. Al Hilal is one of the most progressive banks of the United Arab Emirates, it works through the employment of the latest technologies and being in step with the latest and most advanced innovations of our times.

Al Hilal has proved its devotion to its VIP customers. For years it has been oriented at promoting and strengthening its brand by means of getting attention of the richest customers of the country. The bank’s success is obvious. At the same time, the bank’s customer base includes many middle class people, so it is recommended that the bank works on its accessibility and policies for less wealthy non-VIP clients.

Riordan, Inc. is a private organization that engages itself in the manufacture of plastic products that are later sold to other manufacturers. The items produced in this company include plastic bottles, fans, heart valves, custom plastic parts, and medical stents.

Over the years, the company has experienced tremendous growth that has resulted in the establishment of other branches, namely: San Jose, California, Albany, Georgia, Pontiac, Michigan, and Hangzhou, China. Riordan Company has a defined strategic plan to dictate how the organization will accomplish its mission. This paper will focus on the strategic plan of Riordan Inc and the importance of ethics and social responsibility in its strategic management plan.

The strategic plan of Riordan is an issue-based plan because it aims at providing solutions to the hurdles that have been cited as barriers towards achieving the company’s goals. Riordan Company has realized that it can accomplish its goals by trimming the expenditures and improving on its performance. For instance, the company plans to integrate IT infrastructure in its corporate strategy to interlink the four branches.

According to Bryson (2011), the current Enterprise Resource Planning systems are not compatible and hence it is necessary to install a common system that offers compatibility to all the branches. This is because the four branches are one entity and thus, their inventory records should be uniform.

Using the same ERP system ensures that employees can perform their tasks at ease, regardless of their location. This is because Riordan is a growing organization and employee transfers are bound to happen. Such transfers should not affect the performance of the employees who work in the incorporated departments. For instance, if an employee from Michigan office was relocated to China, that employee would have to be trained again for him/her to be able to catch up with the rest.

The incompatibility of Riordan ERP systems need to be solved because the problem can affect the inventory records and thus lead to a decline in output. The differences in the choice of system imply that the four branches did not address the issue of compatibility. Lynch (2006) explains that in strategic planning decisions are not made blindly because an organization needs to analyze the future implications of its decisions regardless of whether the solution is long term or short term.

In addition, the customers of Riordan are not limited to one geographic location and thus compatibility should enable the customers to interact remotely with the organization. In business world, trust is built by communicating regularly and from the look of things incompatibility can bar customers from communicating with Riordan. This interaction is important because it provides an opportunity for an organization to get feedback from clients and thus improve towards meeting customer needs.

Riordan Company scanned the environment with the aim of identifying open opportunities that can be utilized at its advantage. The observations revealed that Hangzhou’s branch was not conveniently placed and this is because more money was being spent on catering for transportation costs.

Shanghai was chosen because of its proximity to the water body, which is considered less costly mode of transport than road transport. If Riordan Company had not planned, the volume of output would have reached unmanageable levels. This is because road transport cannot be efficient in conveying bulky goods. Currently, the cost of road transport is hiking and this means that businesses will have to pay more for their goods to be transported from one point to another. This argument is backed by the latest rise in fuel prices.

Therefore, corporate social responsibility had to be considered from the day that Riordan Company resorted to using water transport. Additionally, ethics have to be adhered to because they were not established just for the sake of being defined. Riordan must exercise its ethics during the implementation of its strategic plan, regarding operations and waste management. For instance, financial records are supposed to be vetted by an external auditor and the current problem of systems incompatibility has been hindering the completion of external and internal auditing in considerable time.

The planned relocation should be evaluated to ensure that Riordan does not dispose its industrial waste into the river. This is because the act itself is a health hazard and if the potential customers realize this, the company will face a lot of resistance and will have many liabilities to deal with. Olsen (2007) explains that ethics are important because they are the ones that dictate how an organization is going to conduct its operations without interfering with the livelihoods of the public.

Furthermore, Riordan must observe ethics in all production processes to ensure that consumers get products that are worth their money. This is because customers develop loyalty to organizations that have their interests at heart. Giving discounts to buyers is a marketing strategy, but can also be considered as part of CRC.

Most people think that giving back to the society must entail material things. Giving back to the adjacent communities will go a long way towards cementing the relationship between Riordan and the society that is comprised of its potential customers.

In conclusion, Riordan must stick to its mandate of providing solutions to customers in an ethical manner, rather than being part of the problem. The challenges that are being faced and the ones that are yet to come should be viewed as opportunities of learning and growing.

Therefore, ethics and social responsibility requires constant changes in organizational conduct and performance. Since internal and external requirements change, it is imperative that Riodarn, as a firm likely to survive in future, observe the changing needs from the society and regulations imposed by the government

References

Bryson, M.J. (2011). Strategic Planning For Public And Nonprofit Organizations (4th ed.). San Francisco: John Wiley & Sons.

Lynch, R. (2006). Corporate Strategy (4th ed.). London: Prentice Hall.

Olsen, E. (2007). Strategic Planning For Dummies, Hoboken, NJ: Wiley Publishing.

First section

This article is about methodology for sustainability strategic planning and management. Its main purpose is to propose a framework that will intend to help organizations to achieve the sustainability goal by means of a methodology that integrates sustainability in both the planning and management tasks of the organization.

In this case, the last factor serves as a base for the implementation of an information system aligned with the business strategy. This article comprises of exhaustive review of literature about corporate social responsibility, strategic planning of organizations and balanced scorecards (BSCs). Moreover, a methodology that has been developed describes the process of designing and implementing sustainability BSC for sustainability strategic planning and management.

It also shows the following results that methodology can be easily implemented at companies with a minimum of computer resources, but managers play a key role in its success since they are responsible for providing the necessary environment for overcoming such an important change.

Second section

The key learning points in this article include the following issues that are mentioned below.

1. There should be a theoretical background comprising of Strategic planning, performance management systems and balanced scorecard, sustainable development, corporate sustainability and CSR.
2. There are also phases in sustainability strategic planning and management methodology which include planning the project, defining the enterprise mission statement, analyzing stakeholders, strategy definition, strategy implementation plan definition, design of indicators and targets, validation, SBSC implementation, and monitoring.
3. Moreover, the second section comprises a SSPM methodology validation which includes validation limitations, participant company and case description.

Third section

I agree with Bryson (1995) statement that management meeting its mandates and fulfilling the mission should result from strategic planning, which is defined as “producing fundamental decisions and actions that shape and guide what the organization is, what it does, and why it does it”.

This is true because strategic planning is a way of establishing business direction and decision making, in addition to resource allocation. Strategic planning should ideally focus on management courses of action in relevance to the management’s set objectives in order to attain its goals and mission.

I agree with (Porter, 1979) statement that the objective of the strategic planning processes is to design competitive strategies that enable the firm to find a position in the present environment and to go beyond perceptions of the current situation to distinguish the enterprise into the future because strategic planning is developed in manner that allows implementation of action plans (Mitchell & Wood, 1997). Also, it is true that environment is continually changing and strategic planning is a continuous process in the company.

It is the process by which firms derive a strategy to enable them to anticipate and respond to the changing dynamic environment in which they operate. In order to achieve its set goals and mission, management has to keep pace with the changing environment, which in turn affects the management both internally and externally. For instance, business environment changes like in market, competition and technology should be focused in strategic planning.

Fourth section

Title for this article is methodology for sustainability strategic planning and management. The aim of this article is to propose a framework that intends to help organizations achieve the sustainability goal by means of a methodology that integrates sustainability in both the planning and management tasks of the organization and that serves as a base for the implementation of an information system aligned with the business strategy.

Its design entail exhaustive review of literature about corporate social responsibility, strategic planning of organizations and balanced scorecards (BSCs), a methodology has been developed that describes the process of designing and implementing sustainability BSC for sustainability strategic planning and management.

Its theoretical background focus on strategic planning, which is corporate managerial practice by means of which a set of processes are undertaken in order to define a range of strategies that will contribute to the achieving of the organization’s mission statement (Mintzberg, 1978).

The objective of the strategic planning processes is to design competitive strategies that enable the firm to find a position in the present environment and to go beyond perceptions of the current situation to distinguish the enterprise into the future. Since the environment is continually changing, strategic planning is a continuous process in the company.

It is the process by which firms derive a strategy to enable them to anticipate and respond to the changing dynamic environment in which they operate. In a dynamic business environment, the plans of many managing directors are constantly in the course of modification, revision and refinement; often in the minds of the top management, emergent or actual strategy can diverge from planned strategy.

According to the article, organizations meet their goals by satisfying their customers more effectively and efficiently than their competitors. Efficiency is a measure of methodology of how economic resources are used to achieve the customer’s satisfaction. For sustainability framework, a business performance measurement system is a set of metrics for measuring and evaluating the efficiency and effectiveness of business operations that can be used as a support in making suitable decisions to enhance the competitiveness of the firm.

Strategic planning derives a general strategy from the mission statement, the implementation of a strategy requires the development of a progressively more concrete set of objectives and indicators broken down to the level of departments or fields of business. The balanced scorecards approach helps to integrate these within the overall strategy by exploding the business strategy in a hierarchical system of strategic objectives, all of them aligned towards the financial perspective.

This article balanced scorecards approach involves identifying key components of operations, setting goals for them, and finding ways to measure progress towards their achievement. Its objectives are organized in perspectives and cause-effect relations are stabilized among them. In addition, performance indicators are defined for the different objectives.

Many are the expected benefits of a balanced scorecards implementation, providing advantages such as keeping a consistent long term strategy, providing integration within other improvement programs or acting as a cornerstone of present and future success by informing managers “what has gone wrong” and where they can improve performance among others (Kaplan& Norton, 1992).

In this article sustainable development, corporate sustainability and corporate social responsibility; over the last decades, many have been the theories about sustainable development. This term was initially used as an egocentric concept directed to the conservation of existing ecosystems.

There are many expected benefits from the sustainable or socially responsible management of the corporations. Regarding cooperate social responsibility from a strategic perspective, companies would increase shareholder’s value and at the same time, fulfill all their responsibilities and compromises with society and other stakeholders. Financial measures are insufficient, and new measures that address the impact of current strategies and actions on sustainability of business growth are required.

According to this article, many works can be found regarding sustainable strategic planning or sustainable scorecards, but no one of them offers a process to set up both techniques in an integrated step by step procedure. The latter will be expected to allow companies to save costs and obtain better results, since common steps on both strategic planning and balanced scorecards implementation are performed just once and a major integration is obtained.

The main aim of the sustainability strategic planning and management methodology is to describe the process of designing and implementing sustainability balanced scorecards for corporations by means of asset of activities and techniques.

This methodology does not include solely the necessary phases to set up a balanced scorecards balanced scorecards system in a company, but instead, it provides a whole framework to help companies in sustainability strategic planning and management by integrating different existing techniques. Sustainability strategic planning and management has the following phases: planning of the project.

This is the initial phase in the development of any performance measurement project and hence, it is also the first step in our proposed methodology. During this phase, it is necessary, therefore, to create the plan for the project, defining tasks, timelines and resources, to establish the quality control mechanisms and to draw up the plan for change.

The second one is defining the enterprise mission statement. This phase focuses on understanding the business. Analysis is conducted to examine the enterprise in the competitive environment, its internal situation, culture and above all, the strategic relevance of the different stakeholder groups.

The aim here is to define the general aspects of the enterprise-level: its mission, vision and values, and in this sense. To write the mission statement, it is necessary to identify all those who have a claim on the business, that is, its stakeholders. A management system for CS requires that an adequate strategic framework has to be established in the sense of a viable sustainable approach before hand (Jackson, 2001).

Third is the analysis of stakeholders. During the mission statement formulation, identification of different stakeholders has to be done, but only for the purposes of the mission statement formulation in terms of sustainability, so a more complex stakeholder analysis has to be performed in order to formulate a sustainable strategy.

Hence, the purpose of this phase of the methodology is to carry out an extensive stakeholder analysis that will allow the business to integrate the stakeholders’ needs and expectations into the business strategy and to provide a base for the scorecard’s indicators definition. Additionally, it will be useful for the preventive identification of those areas where a potential conflict among stakeholders groups may appear.

Strategy definition is the fourth phase; this phase is related to strategy formulation, which has the purpose to determine the future direction of the firm, and it has been widely treated in planning literature. Given that there is no world agreement about the significance of cooperate social responsibility concept, many different approaches are considered possible to be used by accompany in its strategy definition, concretely in its sustainable strategy definition.

As the purpose of this methodology is to help companies adopt sustainability, market strategic orientation should be rejected by companies using this methodology, but they are still free to choose between reactive or proactive strategic behavior on the basis of having in mind the triple bottom line and not just the financial goals. Fifth strategy is definition plan implementation: During this phase, the action plans that will enable objectives fulfillment are defined.

The new sustainable approach can make it difficult to label the affordable planes since it involves changing the corporate culture and employee attitudes, defining responsibilities and accountability, establishing organizational structures, information reporting systems and operational practices (Husted & Salazar, 2006).

Designing of indicators and targets is the sixth phase. Once objectives have been established and plans have been developed in order to reach them in a sustainable manner, it is time to define which indicator measures will comprise the sustainable balance scorecard.

One of the most crucial elements to be accomplished in designing a system of indicators is to make sure it is properly aligned with the strategy, offering information about the extent to which objectives are being reached. With such purpose, it is considered that the best option is to use the selected objectives as the base for the indicators definition, so that measures in all three perspectives are formulated based on the causal map of objectives.

Phase seven is validation; a complete validation of the designed system of indicators and cause-effect relations is realized. The idea here is to use the results achieved over a period of time in order to look for a relationship among the cause and effect indicators and to measure the relationship among the variables chosen so that further adjustments to the proposed system can be made. Regression analysis can be used to adjust the indicators and to achieve a better system design.

If these results have not been recorded, its management staff can estimate the results to make the indicator systems fit better. Phase eight is sustainability balanced scorecard implementation. In this phase, the computer system that aids the sustainable balanced scorecard is implemented and is integrated within the information system of the enterprise.

Integration of the sustainability balanced scorecard computer system with the enterprise resource planning, which can be seen as being complementary systems, is an important factor for the success of the project. Enterprise resource planning systems are complex but flexible solutions that are easily integrated within other systems and can also be extended to the functionalities of a balanced scorecard (Grant, 2003)

Monitoring is final phase. Measurement systems are not simply designed and implemented, but they are also monitored over extended periods of time. Sustainability balanced scorecard systems succeed when they provide relevant facts and data on what is good about a current sustainability performance and what needs to be improved either immediately or in the future.

In this phase, a set of procedures for keeping track of the sustainability balanced scorecard should be designed. Implementation of the sustainability balanced scorecard is regularly checked and evaluated by monitoring the system in real-time and then honing it to peak efficiency (Carroll,1979).

Strategic sustainability planning management methodology validation is done after an initial design of the methodology. This article’s author uses this methodology because its applicability is in all process analyses and to the acquisition of a holistic perspective of complex phenomena. The application of the sustainability strategic planning methodology is a complex process that has to be overcome carefully in order to be successful.

Despite its applicability to any type of organizations, there are some key factors that have to be overcome by companies using the methodology to integrate sustainability in their operations. Sustainability strategic planning requires a deep change in the nature of companies’ objectives and goals. It demands managers to broaden their view of the company, being conscientious of all the impacts and searching for new opportunities that cooperation social responsibility model offers.

Fifth section

I can apply the subject matter in this article in improving UAE methodology as a result of applying it to the companies. Also, I can apply it in developing researching since there is still a lot of researches to do until sustainability is adopted by organizations in its wider range.

Also, series of lessons concerning the main factors involved in the successful inclusion of sustainable concerns in business strategic planning and management have been learnt like step by step planning.

The lesson learnt can be helpful to UAE business management sector. I would divide the complexity of the project in to stages produces more manageable sub-stages, with specific objectives that enable significant results to be obtained in a reasonable amount of time. At the same time, this arouses greater interest in the new system among users.

In UAE, I would use trained and experienced consultants in sustainability, strategy and computers. They are capable of transferring the needs of the business to the strategy map, the action plan and the configuration of the software that is going to be installed or developed, as well as the later management of change.

I would get end users involved in designing the sustainability balanced scorecard in UAE. Development of a sustainability balanced scorecard requires working directly with the end-users of the processes and the software, since, we may run the risk of developing a system that is not useful or usable by those who are going to utilize it (Chalmeta & Grangel, 2005).

I can apply subject matter of this article in UAE through permanent control and evaluation of the sustainable strategy. The sustainable strategy implementation does not end when the computer system begins to operate.

It is something that is under continuous development and evaluation due to the continuous changes of the organization context. It is, therefore important to systematically measure, control and analyzes its effectiveness in order to improve results.

Last section

I have learnt that to successfully carry out a project aimed at developing and implementing a sustainable balanced scorecard, it is essential to have a step by step methodology that directs the development and implementation processes.

Also, I have learnt that existing methodologies for implementing balanced scorecards or developing information systems are not oriented towards the specific problems a rising in triple bottom line based projects.

Managers can use the step by step methodology as a supporting procedure to define and manage strategies at their companies. The application of the sustainability strategic planning management methodology produce changes in the companies, providing them with the expected benefits from strategic planning and sustainable behavior.

References

Bryson, J. M. (1995). Strategic planning for Public and Non profit Organizations: A guide to strengthening and sustaining organizational achievement. San Francisco, CA: Jossey Bass.

Carroll, A. B. (1979). A three dimensional conceptual model of corporate performance. Academy of management review, 4 (4), 497-505.

Chalmeta, R. & Grangel, R. (2005). Performance measurement systems for virtual enterprise integration, International Journal of Computer Integrated Manufacturing,18 (1), 73-84.

Grant, R. M.(2003).Strategic planning in a turbulent environment: evidences from oil majors, StrategicManagementJournal,24 (2), 491-517.

Husted, B. W. & Salazar, J. (2006).Taking Friedman seriously: maximizing profits and social performance, Journal of management studies,43 (1), 75-91.

Jackson, J. (2001). Prioritizing customers and other stakeholders using the AHP, European journal of Marketing, 35(8), 858-71.

Kaplan, R. & Norton, D. (1992). The balanced score card: measures that drive performance. Harvard business review,34(3), 71-79.

Mintzberg, H. (1978). Patterns in strategy formation. Management science, 24 (9), 934-948.

Mitchell, R. K. & Wood, D. J. (1997). Toward a theory of stakeholder identification and salience: defining the principle of who and what really counts. Academy of management review, 22 (4), 853-86.

Porter, M. E. (1979). How competitive forces shape strategy. Harvard business review, 57( 2),137-45.

Strategic planning and management is a concept used in management concerned with organizational decision making in relation to growth, development and transformation of the company. Besides coming up with these decisions, strategic management and planning is also concerned with implementing and enforcing them.

This is usually conducted in two phases, that is the planning phase and the implementation phase. Strategic planning according to Thompson, Gamble and Strickland (2006) involves “determining the organization’s mission, formulating policies to guide the organization in establishing objectives, establishing long term and short term objectives and determining the strategies that are used in achieving the organization’s mission” (p. 86).

Strategic implementation on the other hand involves coming up with guideline to implement the strategy, identifying the resources required to achieve these objectives, organizing the activities in their respective order and monitoring the strategy’s performance in relation to the laid down objectives.

Event management is a kind of business that requires effective strategic management and planning. Events in this case include entertainment sprees, weddings, conferences and many other such like events. Strategic management plays a major role in the success of this business for a number of reasons.

First, it considers the future of the business and assists in laying down long term strategies. Strategic management ensures that future uncertainties in the industry have been taken care of and this includes changes in technology and the need to expand the market share.

The second importance of strategic management is that it results in a greater efficiency owing to the planning involved and this guarantees the success of the business. Third, it reduces instances of confusion since the procedures to be followed are clearly set. Besides this, strategic management catapults growth by discovering greater opportunities in the industry. When conducting strategic planning, the management has to do a thorough research in the industry, and in the process ends up discovering more opportunities.

Strategic management in the event organizing business also plays an important role in ensuring business continuity. The planning is done based on future parameters and this means that the company is protected from threatening competition. When conducting strategic planning, one of the most essential areas is the performance of competitors and the loopholes that they can take advantage of.

These are sealed and so the management is assured that they will remain on top of the market for as long as the strategies are still being implemented and improved. When running a business, there are many external threats that cannot be discovered without involving strategic management. This therefore forms the other advantage of conducting strategic management (Pearce & Robinson, 2009).

One of the parameters under scrutiny in this case is the external threats. When discovered, there are two options of dealing with them to ensure that they are not harmful to the company. They are either eliminated, or where this is not possible they are converted into opportunities. Finally, strategic management employs more focus on a proactive approach that empowers a company to be aware of the opportunities available and grasp them accordingly.

When developing and implementing strategic plans, there are four major roles played by the management of the company. The first role is conducting an analysis of the future business trends in the industry. Before making a plan the management needs to be certain on what they are planning for. “This involves coming up with an honest and unbiased analysis of the company’s weakness and strengths from a financial, operational, and staffing point of view” (Pearce & Robinson, 2009 p. 43).

They go on to explain other factors that should be considered by the management when conducting the analysis and these are “the technological, political, economic and environmental issues affecting the operations” (p.44). By identifying strengths and weaknesses, the management will be in a position to identify growth and improvement opportunities. The second role that the management plays in strategic management is planning.

This involves breaking down the mission and vision statements into short term portions and assigning a timeframe for the implementation of each step. In event management the most preferred parameter to be used when planning is revenue. For example, define the level of revenue that should be attained in six months and the strategies that will be employed to attain this.

These first two roles are mostly conducted in the boardroom, after which implementation has to be done. This brings about the third role of the strategic management team which is assigning responsibilities.

The responsibilities involved should be clearly defined alongside the people to handle them. This will ensure accountability, timely delivery especially where deadlines are involved. When assigning responsibilities, the management should be clear on the contributions each task makes to the success of the entire strategy (Thompson et al, 2006).

The final role is communication, which involves making decisions and ideas known to the parties concerned. Besides that, communication also involves having progress reports for different departments in a timely manner. This ensures that the people concerned with the strategic management process are up to date with the developments made. It also brings out the problems bound to come up along the way and these are dealt with before it is too late.

References

Pearce, J., & Robinson, R. (2009). Strategic management: Formulation, implementation, and control (11th ed.). New York, NY: McGraw-Hill.

Thompson, A., Gamble, J., & Strickland, J. (2006). Strategy: Winning in the marketplace: Core concepts, analytical tools, cases (2nd ed.). New York, NY: McGraw-Hill.

Vision

To create a dependable and superior bed and breakfast location that visitors can always count on.

Mission

To create a relaxing, home away from home experience where visitors will feel valued and cared for through continual added value and superior service provision.

Value statement

• To carry out business in a principled manner by working with ethical suppliers
• To encourage great services by offering our staff the best workplace environment
• To deal with consumer concerns/ complains in a caring and fair manner
• To foster an environment of accountability amongst all staff by making ethical decisions

The vision statement is invaluable to the success of this bed and breakfast business because it explains the big picture. In other words, it answers the ‘who’ and ‘what’ of the organization. This hotel was set up in order to provide leisure services to visitors at the selected location.

Therefore, the vision statement has responded to the “for what?” aspect of this business (Kono, 1994). However, it cannot just be a service that will last for a while; it is something sustainable that will ensure the continued profitability of the business. By adding the term ‘dependable’ in the vision statement, visitors will be certain of having a place that they can go to when traveling and this dependability will ensure consumer loyalty hence sustainable profits.

Also, the vision has responded to the “for whom?” query as well because it has specified that the business will be for visitors. The vision statement generally has shown where the company intends to be in the leisure industry and how this will affect the people targeted by Grover and Janelle (Kaye & Allison, 2005).

The mission statement is very crucial to the success of this business because it is the one that delves into the practical aspects of the vision. In other words, it explains how Grover and Janelle intend on achieving it. The vision will be achieved in the short term by making consumers feel valued and cared for. In the long term, this will be done by adding value continually to the location or the business.

In other words, the organizational vision is never quite complete unless there is an explicit mission statement that explains how the big picture will be formed (Brian, 2000). These are the nifty gritties of the organization.

The value statement offers the tools that will be necessary in ascertaining that both the vision and the mission are accomplished. It will be crucial to the success of this business because it will first of all reflect the values of the business. Furthermore, it will provide a mechanism that ensures that those values themselves are adhered to.

In other words, failure to use it will be detected within the system through one way or another. Furthermore, the value statement is going to guide the decision makers so that they can carry on doing what they do in an ethical manner.

They should not make decisions that will oppose those values. In this regard, the organization will have built for itself a very solid reputation (Ruess & Burkhart, 1993). It is likely that consumers will come to the bed and breakfast because their experiences demonstrate how value based this business is.

Furthermore, the value statement contributes to the sustainability of the company because it sets the foundation for long lasting relationships with consumers. It causes stakeholders to realize that this company actually will walk the talk and they can therefore be depended on for continuous service. This will not only assist the consumers but it will also contribute towards a stable relationship with other stakeholders in the business such as the suppliers.

References

Ruess, S. & Burkhart, P. (1993).Successful strategic planning. Newbury Park: Sage publications

Kaye, J. & Allison, M. (2005). Strategic planning for non profits. NY: Wiley publications

Kono, T. (1994). Changing a company’s strategy and culture. Long range planning, 27(5), 85-97

Brian, T. (2000). The 100 absolutely unbreakable laws of business success. Beret: Koehler publishers

Strategic Planning As a Competitive Factor

Strategic planning is a way in which organizations define their strategies and directions in order to make decisions on the allocation of their resources for purposes of pursuing various strategies. The achievement of all these is always preceded by the knowledge of the prevailing position and the gateways through which a particular course of action can be pursued.

It is a critical competitive factor as it provides the organization’s vision and mission statement (Grünig and Gaggl 80). The vision statement and the mission statement contain the vision, mission, values and the strategy of the organization.

Through its vision, an association delineates what it wants to bring about and also tries to influence the environment around which it is carrying out its operations. On the other hand, the mission comprehensively describes the motivations behind the existence of the organization together with the strategies it intends to puts in place to attain its vision. The cultural beliefs that an organization holds and upon which all stakeholders share constitute its values.

The decisions that are made within the organization are normally based on these values. Strategy is the way in which an organization makes policies and the methods through which the attainment and implementation of such policies are attained.

Changes in the Field of Strategic Planning and Strategic Information Systems Planning

Strategic information systems planning have come a long way over the years. During the 1960s, there was the era of data processing (DP) in which stand alone computers that were remote from the users were applied for the cost reduction functions. In the 1970s and 1980s, the management information system (MIS) was discovered. This system was more interconnected and distributed. It was also regulated by a management service and it supported businesses in a user driven fashion.

However, in the 1980s and 90s, there came an era of Strategic Information systems (SIS). When compared to the earlier eras, the SIS planning had more elaborate integrated systems and was extensively networked. It was also available to supportive users. This ensured that it efficiently related to the business’ strategy besides enabling the drive of the organization.

The strategic information systems’ planning that is carried out using the strategic information system is complex as it is deeply rooted in business processes. The main objective of the SISP is to enable an organization to plan for its activities, to not only reduce costs of running the business but also to ensure the addition of value to its products.

Information technology has played an important role in re-engineering and redefining businesses. It has carved multiple virtual corporations offering unprecedented possibilities (Ferrell and Hartline 529).

Strategic planning can also refer to as a methodical and officially documented process for selecting the most appropriate decisions that an organization needs to make in order to prosper over a certain period. In this aspect, strategic planning process is very important for the prosperity and survival of a business.

Its focus should be the definition and assessment of both internal and external situations. It also implements strategy, makes adjustments and evaluates the progress of a particular business activity or project (May and May 22). The most imperative thing to reflect on when carrying out strategic planning is the nature of the needs an organization has and the direct exterior surroundings it thrives in. Industries that change their products and services regularly need to carry out a lot of strategic planning processes.

On the other hand, the organizations that have stayed on the market for longer periods of time or that have established stable markets need fewer planning processes, which can be implemented once in a year. The most critical time during which an organization should carry out strategic planning is in the course of its commencement.

In this regard, the strategic plan is embedded with the business plan, the financial plan and the market plan among others. Another scenario that requires the execution of a strategic plan is during the formation of a new business venture, or the establishment of a new department or the conception of new merchandise. It is also important to note that strategic planning should be carried out at least once in a year.

This ensures that an organization is adequately prepared for every fiscal year. During this process, action plans are normally updated. However, during the implementation, the progress of the implementation needs to be reviewed even on a quarterly basis (Abraham 189).

Issues affecting the Selection and Implementation of the SISP

SISP is the method through which portfolio computer-based applications are branded. These applications help in the execution of business plans in order to meet the objectives of the organization. It is very crucial for the running of the business as it helps organizational managers and information technicians in the identification of strategic applications in order to align them with the needs of the business.

Over the past few decades, business leaders and their organizations have deemed it fit to include the acquisition of technological decisions as a key component tool that impacts on the organizational information system. This is normally founded on what the players in the industry believe in and the influence that they get from vendors and competitors.

However, a positive outcome is not always guaranteed. It is against this backdrop that the idea of strategic information systems planning comes in handy. In this regard, the decisions on the information systems of an organization must be made in compliance with it direction and strategy (Grant, Hackney, and Edgar 329).

The issues that normally impact on the implementation of the information systems and strategy planning include business strategy, organizational strategy and the information strategy. This strategy constitutes a synchronized set of procedures, which are set to arrive at the intention, objectives and the goals of the organization. It commences with the mission of the association and sets restrictions on the vital undertakings of the institute.

On the other hand, the organizational strategy is involved with the human resource, the processes of working, internal and external structures, hiring practices and the business plan (Küpper 7). This is specifically designed to enable a business enterprise accomplish its goals. In order to successfully provide adequate information services, organizations need to adopt effective action plans, such as valuable information systems.

The main objective of executing the strategic information systems planning is coming up with an excellent information system strategy. For the setting up of these strategies to be successfully executed, the organisation has to reflect on the key components that include: information strategy, change administration and execution strategy, information management strategy and information technology strategy.

In a nutshell, the whole idea of strategic information systems planning is to give the direction a business enterprise wishes to go to while keeping in mind the information about the future prospects of the organization. This helps in decision making in the future. The most important goal of this strategic plan is to put forward the framework for making future decisions. Apparently, planning in itself involves a lot of processes some of which are very complex (King 411).

Approaches to Strategic Planning

Some of the approaches to strategic planning that are in use include future research, open space, SWOT analysis and the ZOPP/OOPP/LFA. These approaches operate on the belief that the future is not pre-destined and can be changed. They also share a belief that all the significant stakeholders are important ingredients in the participation of decision making for the future actions.

Future Search Approach

This is a plan is intended to unravel the circumstances that had proved taxing at the start. It is appropriate for projects or programs that rely heavily on participants’ input. It is also commonly used by the non-profit making entities that do very little business.

This approach emphasizes on the need to leap forward in an appropriate time to identify the suitable conditions for the future and work toward attaining them (Simerson 201). Since it is normally manual, it consumes a lot of time and tedious. This is different from the strategic information systems planning, which is computer based.

Open Space Approach

This is the least structured of all the approaches available. In this approach, there lacks the preset agenda set aside for the topic that had previously been agreed upon and the time allocation for the meeting. It is also characterized by lack of planned discussions and the plenary sessions.

It is the duty of the participants to create all the relevant agenda. This they do with the guidance of the facilitator. Issues that are mostly pressing are normally at the top of the agenda. As compared to the strategic information systems planning, this approach is too narrow. SISP apparently uses numerous strategies to arrive at a decision.

The SWOT Analysis Approach

In this approach, the planners seek to identify the strengths, weaknesses, opportunities and threats that surround an organization’s operations. It is mostly common in business environments. The strengths are those qualities that a business organization possesses, which can enable it to accomplish its mission.

It is from these strengths that consistent success is made and sustained. Conversely, strengths can either be substantial or indefinable. Some of the most unique strengths that organizations experience include the expertise and the qualities of the employees, products and services, customer goodwill, process capabilities and brand loyalty. These strengths are also regarded as the beneficial aspects of the company (Fine 48).

Weaknesses are the traits within an organization that derail the attainment of its objectives. They weaken the organization’s prospects of achieving its full potentiality. Some of the examples of weaknesses include inadequate or poor research, operation of machines under poor working conditions, poor decision making skills and the narrow product range.

For the success of any business organization, the frequency of weaknesses must be minimized or eliminated at all cost. Some of the ways of overcoming the weaknesses include hiring competent employees, purchasing new and functioning machinery and engaging in a complex decision making process.

On the other hand, opportunities are exhibited by the operating environment of the organization. This is achieved through the actions of the organization to make beneficial choices out of its operating environment. The organization must be ready to put in place measures that ensure it succeeds by initiating strategies that enable it to become profitable.

A sure way for an organization to gain a competitive advantage over its competitors is to make wise use of the opportunities that come its way. However, this requires careful identification and recognition of such opportunities because it is not easy to select a target that will serve clients satisfactorily and at the same time give the business the desired results.

Some of the things that could help are the availability of a new-fangled and more resourceful technology, encouraging government policies, weak antagonism and an approving market. Currently, there is an increasing demand for telecommunication products; in an industry, which is accompanied by deregulation, companies in the telecom sector can utilize this to their advantage (Böhm 13).

Threats are the external factors whose influence is unfavorable enough to hinder the organization’s progress. In most of the cases, they are uncontrollable and their presence puts the stability of the business at a vulnerable state, especially if they compound with other weaknesses. Some of the most common threats to most business organizations include the frequent and consistent of unreliable technology, civil strikes by the employees, price wars and increased competition within the industry.

As a strategic planning tool, SWOT analysis ensures the provision of information for strategic planning besides building on the organization’s strengths and reversing the weaknesses. In addition, SWOT analysis helps to maximize the response of the organization to opportunities so as to tap them. If carefully drafted, this strategy assists in overcoming the threats faced by the organization.

By doing this, the key areas of competencies by the firm become easer to identify. The SWOT analysis approach also assists in setting up the objectives that are vital for strategic planning. To crown all these, the SWOT analysis tool puts an organization in a better position of knowing the past, current and future plans at a glance (Snelling 8).

As a strategy formulation tool, the SWOT analysis approach is very instrumental because of its reliability and profitability. It should provide a platform upon which business organizations gauge their performance.

In this case, the success of a business organization is premised upon building its strengths, correcting its weaknesses, and protecting itself against the external weaknesses and threats (Pahl and Richter 61). This approach shares the same contextual framework with the strategic information systems planning, as it is deeply rooted in explorations.

ZOPP/OOPP/Logical Framework Approach

This approach is also referred to as Objective Oriented Project Planning. It is a structured meeting process. It seeks to identify some of the most pressing prevailing problems by the use of the cause effect analysis.

This is then followed by the search for the best strategy for the alleviation of the identified problems. Conversely, this approach is limited in scope, time consuming and tedious when compared to strategic information systems planning approach.

All this planning approaches have their cons and pros. It is upon the business organization managers to identify and come up with the most suitable approach to apply.

Conclusion

From the above analysis, it is true that all the approaches described above are correct in their own right under the specified circumstances. However, for elaborate business organizations, SWOT analysis could the most efficient. Nonetheless, with the introduction of information systems to run business models, the strategic systems information planning can offer tools that are even more effective and sensitive.

Works Cited

Abraham, Stanley C. Strategic Planning: A Practical Guide for Competitive Success. Bingley, UK: Emerald Group Publishing, 2012. Print.

Böhm, Anja. The SWOT Analysis. München: GRIN Verlag, 2009. Print.

Ferrell, OC, and Michael D. Hartline. Marketing Strategy. Mason, OH: Cengage Learning, 2008. Print.

Fine, Lawrence G. The SWOT Analysis: Using Your Strength to Overcome Weaknesses, Using Opportunities to Overcome Threats. New York: CreateSpace, 2009. Print.

Grant, Kevin, Ray Hackney, and David Edgar. Strategic Information Systems Management. Andover: Cengage Learning EMEA, 2010. Print.

Grünig, Rudolf and Richard Gaggl. Process-based Strategic Planning. Berlin Heidelberg: Springer, 2011. Print.

King, William Richard. Planning for Information Systems. Armonk, N.Y.: M.E. Sharpe, 2009. Print.

Küpper, Alexander. Measures for Successful Strategic Information Systems Planning. München: GRIN Verlag, 2008. Print.

May, Gary May, and Gary May. Strategic Planning: Fundamentals for Small Business. New York, NY: Business Expert Press, 2010. Print.

Pahl, Nadine, and Anne Richter. Swot Analysis – Idea, Methodology and a Practical Approach. München:GRIN Verlag, 2009. Print.

Simerson, Keith B. Strategic Planning: A Practical Guide to Strategy Formulation and Execution. Santa Barbara, CA: ABC-CLIO, 2011. Print.

Snelling, Jennifer. The Influence of the SWOT Analysis in Organizational Development Strategic Planning. München: GRIN Verlag, 2012. Print.

Porter’s Five Forces Analysis

An industry’s external environment refers to the factors outside the control of the firm. The factors may influence the firm positively or negatively. These external factors are economics, legal environment, demographics, natural resources, technology, and social economic factors among others (Brech, 2008). The model can be used to analyze the external environment of a new business venture called Abel and Johnson Accounting Firm (AJAF) which is a small business group.

1. Threat of entrants
2. Bargaining power of customers
3. Threat of substitute products
4. Bargaining power of suppliers
5. Industry rivalry

Threat of new entrants – It occurs if there is ease of new players to enter into the market thus gaining a market share out of the existing market. AJAF will pose as a threat to the already existing firms in the market since it will put pressure on service costs downwards. It will pose as a threat since many consumers are willing to switch pattern and service to the new accounting firm.

The industry will be very attractive upon entrance by AJAF since it provides the mush needed competition to put prices down and in that process increase its profits considerably. It is good for AJAF to venture in accounting services since it is an ever growing market that is profitable and there is promise of making good money.

Bargaining power of customers – Customers exert low pressure to a business. They have the power to drive the cost of services downwards. AJAF has the ability to influence the customers by requiring them to maintain the internationally required standards of accounting.

AJAF as an audit firm should exert pressure by provision of quality services either on post-deals or pre-deal agreements once it gets into the market (Hill, 2009). However, customers will exert pressure on AJAF if it has a small customer base and if there are several other firms offering same service such as Earnest & Young and Deloitte.

Threats of substitute products – Substitutes are products that would perform the same function. The challenge here is that AJAF may suffer if its customers decided to seek other services such consultancy in order to mitigate themselves from adverse accounting practices. The customers may go for tax consultancy and legal advice thus shunning away the service provided by AJAF. The firm is at an advantage since it will start offering its services at a lower price than most of the existing industry players thus it will attract more customers.

Bargaining power of suppliers – It is used to identify the amount of influence the suppliers will have over the accounting firm. AJAF will be forced to start with suppliers who have less influence in the market since they will not control the prices of products or services they offer the firm. This would give AJAF an upper hand since it would threaten to shift to another supplier who has a lower price.

Industry Rivalry – Intense rivalry in the market leads to price wars in the market. It also leads to a change in the way a business conducts its activities. Businesses are forced to invest in research and development and they engage in sales promotions. These activities tend to increase costs and reduce profit. Therefore, before AJAF enters into the market, it will have to research on the market trends to determine the market competitiveness.

Generic strategies

These refer to strategies employed by a firm to maintain a competitive advantage. AJAF being in the accounting and financial service would use a Cost Leadership strategy. This is a low cost strategy which allows the firm to compete in the industry and at the same time earn profits per unit of service rendered. It can do this by offering its services at the average market price or by offering its services at a price lower than the market price in order to penetrate the market.

A firm’s strategy is determined by the cost strategy where effective competitive advantage is gained by offering services at low costs. Cost Leadership Strategy aims at ensuring that the firm is the market leader and has no equal in the industry, especially where the customers are price sensitive. This means that, even where there are price wars for services rendered by the accounting service providers, the firm will still make profits.

Balanced Scorecard

1. The four critical business perspectives are customer perspective, internal processes, innovation and learning, and financial perspective (Niven, 2010).
2. Customer perspective – It is concerned on how clients consider our business.
3. Internal perspective – It involves having the best quality of staff and improved internal processes.
4. Innovation and learning – This perspective looks at the ability of the firm to attain and retain its competitive position.
5. Financial perspective – This is concerned with how shareholders and other creditors view our business.
6. 3. b) SMART Key Performance Indicator (KPI)

References

Brech, E. F. (2008). The principles and practice of management. New York: Longman.

Hill, C. (2009). Strategic Management: An Integrated Approach : Theory. New York: Cengage Learning.

Niven, P. R. (2010). Balanced Scorecard Step-by-Step: Maximizing Performance and Maintaining Results. London: ohn Wiley and Sons.

Executive Summary

The aim of this paper is to construct a five years strategic plan for the Zurich Financial Services Group for the development of its services in its current and emerging markets. In addition, Zurich intends to boost its yearly revenue by 6% within next five years by using its resources and capabilities.

As a result, this five years strategic plan discusses the competitive challenges, mission, vision, SWOT strategic matrix, competitive forces, global strategies, and external and internal market atmosphere through the application of TELESCOPIC OBSERVATIONS method, financial ratios, and value chain analysis, key factors for success, BCG growth matrix for Zurich, branding models, and strategic group analysis to solve key issues.

Furthermore, this strategic plan concentrates on in putting together the 7p framework, budgetary requirements, control, milestones, and other corrective actions to reach its objective.

Key Issues

A brief account of key issues of the Zurich group is considered below:

Key Competitive Challenges

• It is a great challenge for Zurich to contend with high competitions from the insurers like AIG, Allianz-Group, Chubb-Group, Hartford Financial Services, ING Group, Prudential Financial, Sun-Life Financial, and Swiss Re (Swiss Re, 2010);
• Development of its services in the emerging markets would require huge capital investments (Frigo, 2009);
• The company needs to comply with all the legal and societal issues of the developing countries (Kokosinski, 2009);
• To gain competitive advantage over the competitors Zurich needs a proper utilization of its core competencies.

SWOT Analysis

The SWOT analysis of Zurich Financial Service Group has outlined below:

Strengths

• Zurich is one of the largest insurance businesses in Europe that have operations in about 170 countries worldwide with the help of 60,000 workers (The Times 100, 2010);
• It offers a wide range of services to its global customers;
• It possess a strong financial position through which it is able to do large investments for the development of the services provided (Insley, 2010);
• Strong operating performance throughout its core businesses and constant renovation of operating platforms reinforce its efficacy and competence.

Weaknesses

• The process of insurance making is time consuming for the customers;
• The recruitment policy of the company do not have a proper focus over its retention strategy (Zurich Financial Services, 2010);
• The company more often fails to address the cultural gap between expatriates and the company.

Opportunities

• The company is enhancing its services in terms of technology; this would ensure customers’ convenience, which in turn would induce them to take its services again and again;
• Kandell (2010) states that Zurich will be further developing its value chain system in future to increase its operational efficiency;
• It has a strategy to enter in some new markets for generating more income.

Threats

• Governmental regulations in some of its operating countries are getting very strict for the foreign businesses;
• Apart from a competitive pressure from the renowned businesses, many new players are entering the industry (Anon, 2010).

Vision, Mission, and Corporate Objectives

The Zurich Group considers its mission, vision, and corporate objectives by keeping in mind the factors that can influence its plan to develop its service in the operating markets.

Vision Statement of Zurich

It aims to continue providing pioneering services and other facilities to its customers through operational distinction and moral groundwork; through this, the company wants to be a leader in this industry within the chosen markets and deliver sustainable performance and highest customer satisfaction.

Mission Statement of Zurich

Zurich’s mission is to provide exceptional service and to be the best insurance provider of the world by means of an ingenious approach and incessant progression of uniqueness; moreover, it anticipates attaining this through employee leveraging, formation of manifold distribution channels, collaborating with concurring institutions, and utilizing IT facilities.

Corporate Objectives

The company has a number of corporate objectives for the enhancement of its business in the next few years in the existing markets. Currently, the company has the following corporate objectives:

1. It aims to include a few more life endowment policies in order to raise its yearly sales by 4% over next five financial years.
2. From $32,516 million direct written premiums and policy fees in general insurance in FY 2009, Zurich has a plan to augment these fees to $65,032 millions by 2015 through market enlargement strategy (Zurich Financial Services, 2009).
3. By developing its services in the existing markets, it will be increasing its business operating profit from $26,029 million in 2009 to $52,032 million by December 2014 (Zurich Financial Services, 2009). In addition, Zurich has a plan to reach the target of 2.7 billion by FY 2011:

It will amplify its net investment result on Group investments by 3% in 2015 from 3,181 million in 2009.

Situational Analysis

This analysis is the delineation of the factors that Zurich confronts from the external environment and an appraisal of the externalities that can influence Zurich’s strategic approach to developing its services.

Macroeconomic Analysis

PESTEL Analysis of Zurich:

The PESTEL Analysis of the Zurich Service Group has outlined below:

Political Factor

For reason that Zurich operates in about 170 countries all over the world, and that all those countries possess different political atmospheres, its operations are largely under influence by political situations, for example, by regional treaties, trade policies, and conflict/wars, policies formulated by respective governments, elections and relationships across its trading countries.

Economic Factor

The development of the services of Zurich in the current and emerging markets require a huge capital investment. Therefore, it is necessary to address the current economic condition of the company. It is arguable that the share prices of Zurich were quite stable from January 2006 to the middle of 2008; however, due to falling demand of its services during the recession, the company faced a fall in stock prices at 2009 (Yahoo Finance, 2010). Currently, Zurich is reviving back its stock prices as shown in the following figure.

Zurich Financial Services (2009) suggests that the company’s business total operating profits was 5,593 million in 2009, which is a quite impressive figure. A comparison of the company’s performance indicators has shown in the following figure:

Socio-cultural Factor

Zurich’s main principle remains to adopt quickly the societal and cultural concerns of the countries in which it operates. For example, whilst operating in Middle East, the company bears in mind that the local vicinities over there are very conservative and responsive to religious sentiments. Zurich also works to mitigate cross-cultural barriers and gender inequalities for its employees.

Technological Factor

To compete with the global players, Zurich is constructing strong IT infrastructure for carrying out the operations; for example, its new software has expected to be profitable for future development.

Environmental Factor

The company is very adept in managing issues related to pollution reductions. To implement ecological targets it is expending huge amounts in its green preservation proposal:

Legal Factor

Zurich Group complies with all the legal and regulatory requirements of the countries in which it operates internationally.

Industry Analysis

Zurich Financial Services is a player of an industry that is highly competitive because of the presence of numerous rival businesses. A detailed assessment of the industry analysis of this company has provided through the TELESCOPIC OBSERVATIONS technique –

Table 1: Part 1 of the TELESCOPIC OBSERVATIONS technique of Zurich Group. Source: Self-generated from Zurich Financial Services (2009).

Strategic Groups analysis

The strategic group analysis has conducted below with the help of Porter five forces model.

• Threat of New Entrants. The threats of new entrants are relatively low in this industry due to the presence of a number of obstacles to penetrate the market; it is rather hard for the new comers to sustain in such competitive environment.

• Rivalry among competitors. The competitive rivalry is quite high in the market because of the presence of many industry giants like Swiss Re and ING Group.

• Bargaining power of buyer. The existence of a large number of rivals means that the switching costs of the customers are relatively low. However, despite all these, Zurich has many loyal customers.

• Bargaining Power of Suppliers. There are adequate suppliers present in the industry making their bargaining powers quite endurable.

• Threats of substitute product. All the rival firms of Zurich offer similar types of services; in context, the competitive pressure over Zurich to diversify its service range increases. This has shown in the following figure:

Key Factors for Success

The annual report of Zurich suggests that the company has success factors in five main business areas:

• Corporate culture: Excellent working atmosphere with effectual communication between co-workers;
• Organizational structure: The operating structure of the company is very cost-effective to suit with its service type;
• Strategies: It focuses on methodical strategic decision-making;
• Leadership: It has strong top-level leadership;
• Execution: Zurich always remains very watchful in executing the strategies.

Positioning Map

Along with many competitors present in the global insurance industry, and with high quality services at high prices, the positioning map of Zurich will look as demonstrated in the figure below:

Competitor Profiles

• Swiss re: It is one of the biggest insurance companies in the EU and is located in Zurich, Switzerland; it not only provides numerous insurances to the clients but also helps them to assess risk;
• Allianz Group: It is located in Munich, Germany; besides of offering several services, this business has about hundred subsidiaries operating in many European countries;
• Prudential Financial: It is a US-based company with its headquarter in Newark; its services are available not only in America, but also in Asia and the EU countries;
• ING Group: Being situated in Amsterdam, Netherlands, it supplies services such as banking-services, life assurance, mortgage, wealth accretion for SMEs as well as wealth management services.

Market Analysis

Being a global market-player, it is important for Zurich to evaluate the current market condition for developing its services worldwide. To carry out this evaluation, the market analysis focuses on Porter’s five forces by means of the TELESCOPIC OBSERVATIONS technique –

Table 2: Part 2 of the TELESCOPIC OBSERVATIONS technique for Zurich Group. Source: Self-generated from Zurich Financial Services (2009).

BCG Growth Matrix Analysis

The BCG matrix portfolio will help the assessment of Zurich’s market situation in context to market growth rate with relative market share –

• Star: With high-growth and high-share, Zurich occupied this section before the recession;
• Cash cow: Frigo (2009) states that due to recessionary impact Zurich is in this section with low-growth and high-share of the market;

• Dog: Zurich is not in this section as it expresses low-growth with low-share businesses requiring huge-investment to promote development;
• Question mark: Some rivals of Zurich clasped this position in economic-downturn by confronting optimistic growth-rate in some parts of the world.

Branding models

Most of the time Zurich followed one brand or single brand strategy to operate global market but it has no specific existing branding model (after searching annual report, company’s website).

As there are no secondary data available relating to the Zurich branding models, this strategic plan suggest a branding models^[1] considering four segments of the market, such as super consumers, value consumers, low differentiation, and high differentiation; the branding models of the company in the segmented markets has shown below:

Market Positioning Map

Zurich would follow “more for more” or “more for same” strategy because it is already a renowned business and it is essential for the company to address a large part of the market in order to attain its aim to develop the services offered on current and developing markets.

Internal Analysis

The TELESCOPIC OBSERVATIONS schema will assist the discussion of internal strengths and weaknesses of the Zurich Group:

Table 3: Part 3 of the TELESCOPIC OBSERVATIONS technique for Zurich Group

Source: Self-generated from Zurich Financial Services (2009)

Financial Ratios

All the figures have taken from projected balance sheet, cash flow, and income statement 2011 of Zurich –

• Return on equity = (Net income/Equity) = (4854/ 47217) = 10.2801%
• Return on capital employed = EBIT/(Total Assets-Current Liabilities) x 100 = 6796.5/(553371-506152.5) = 14.3937228
• Gross profit Ratio =gross profit/revenue from sales = 80,725.50/105,408 = 76.58384563
• Net profit ratio = EBIT/Sale*100 = (6796.5/105,408) x100 = 6.447802823

Above financial ratio analysis demonstrates that the financial investors will be interested to invest at Zurich.

Value Chain Analysis

It has no specific existing Value Chain analysis (after searching annual report, company’s website). As there are no secondary data available relating to the Zurich Value Chain analysis, this strategic plan suggest following value chain figure –

• The company will be undertaking a five years plan do improve its value chain with integration of massive digitalization.
• In next two years, Zurich would develop communication software to manage its complex value chain system.
• Zurich will be enhancing its value system in future by vertical and horizontal integration.

Competitive Advantages

Zurich gains competitive advantage over competitors in terms of good working environment, better leadership, skilled top-level decision-makers, lean organizational culture, and superior promotional strategies.

Summary of Current Situation

The following figure shows the SWOT Strategic Matrix of the TELESCOPIC OBSERVATIONS schema for Zurich-

Marketing Objectives

Zurich will be resetting its marketing objectives to focus on its service development strategies by next five years.

1. Zurich expects to increase its yearly profit by 6% within next five years (Zurich Financial Services, 2010)
2. It will be raising its expenditure on marketing from $315 million in 2009 to $630 million in 2015.
3. NCOIC (2010) states that by 2013, Zurich will be spending 1.5% of its operating income in market research
4. It wants to increase budget for promotional tools by 14% within 2015.

Marketing Strategies

According to the David (2008), marketing strategies indicate number of tools or matrix, which require developing business aim. In this case, it is necessary to focus on the Ansoff’s Matrix, and the SWOT Strategic Framework, as Zurich Financial Service would like to expand its operation in current and emerging market.

Ansoff’s Matrix

According to the view of Stoner, Freeman, & Gilbert (2006), business organisation apply this matrix in order to discuss the main prospects while these firms would like to gather more revenue by developing business operation.

• Market Penetration: NGFL (2009) stated that market penetration is an applicable tool while it develops existing market with existing products; therefore, this strategy is match with present aim of Zurich;
• Market Development: In contrast, Jankowicz (2005) pointed out market development is the most suitable strategy to capture emerging market by introducing existing product line. So, Zurich Financial Service would pursue this strategy in order to enter new market with existing service;
• Product Development: Kotler & Armstrong (2006) stated that this strategy is applicable while company develop new products in existing market; Zurich can develop new product like “Takaful” in existing market considering this strategy;
• Diversification: At the same time, Zurich can introduce new products like “Takaful” in new market within next 5 years by considering this strategy (Hill & Jones, 2007).

The SWOT Strategic Framework

The table below shows the SWOT strategic framework of the telescopic observations for Zurich along with proper strategic plans for its development in next five years –

Table 6: the SWOT strategic framework of the telescopic observations for Zurich. Source: Self-generated from Panagiotou and Wijnen (2005, p.10).

Implementation

This section focuses on considering the internal operational affairs of the Zurich Financial Service Group through a brief depiction of the factors related to marketing mix. A proper development strategy of the following seven factors would help the company to enhance its business in the existing markets.

Product

Fisher (2003) argues that Zurich offers an extensive range of common insurance services to its global customers; the most well known once are motor insurance, buildings and contents insurance, risk management, business insurance, life assurance, pensions/investments, etc; currently, it is undertaking massive diversification strategies for improving it services. Moreover, its services cover the risks illustrated in the figure below:

For further development of its service in the emerging markets like Middle East, the company should diversify to include services like the Islamic insurance acknowledged as takaful as a future prospect for profitable acquisitions in next five years.

Place

Zurich has placed its services in a number of countries throughout the world. In so doing, the business had to come up with an intricate operational structure by means of which the placements of its services are done. According to the following figure, Zurich has placed its service in Northern Europe, Asia Pacific, Latin America, Southern Europe, and in some parts of the Middle East.

Additionally, the company must try to open more offices in upcoming five years in the developing markets to ensure effective communication between customers.

Price

In setting prices for its services, Zurich considers the overall economic condition of the market in which it is operating. The pricing also depends on the type of services provided (Pandey, 2007). For being a more buyer-oriented business, Zurich must try to get customer-feedbacks.

Promotion

Kotler & Keller (2006) stated that brand value of a company mostly depend on successful promotional activities; so Zurich is about to bring massive changes in its promotional strategies as a tool to develop its services in current and emerging markets within the next five years. Consequently, there will be changes in the content of the advertisements done in print and television media and engagement of more brokers and agents. Moreover, Zurich should allocate more budgets for five years in this segment to enhance advertising campaigns.

People

As a part of its strategic plan of service enhancement, it will be undertaking several policies for its personnel. Therefore, the company should focus on employee training, recruitment, and retention strategies in the emerging markets.

Processes

The awareness of the insurances available reaches the customers by means of advertisements and or by agents and brokers appointed by the company. Next, the customers need to add all the necessary detail and follow the following process to buy the insurances:

However, for reducing consumer’s efforts, Zurich should emphasize on digital e-gadgets that ensures consumer-convenience.

Physical Evidence

The physical evidence of the company suggests that it has several offices in all the countries it operates in; for example, in Switzerland, UK, USA, Saudi Arabia, and so on. For better outcomes in terms of service enhancement, Zurich must try to invest more on its physical attributes in next five years.

Budgetary Requirements

Zurich Financial Service Group is well-established insurance, which has enough financial capabilities to develop its business in current market as well as emerging market. The researcher of this project considered key financial indicators, income statement, cash flow, and balance sheet to consider the financial performance of Zurich.

Key Important Indicators

According to Zurich Financial Services (2009), the key financial indicators of the Zurich Financial Service Group are –

• Business operating profit 17.2%.
• Global Life – new business margin, after tax 21.3%.
• General Insurance – combined ratio 96.8%.
• Business operating profit $ 3,463.0 million.
• Total investments $257,773.0 million.
• Total Assets was $327,944.0 million in 2009 (Annual report 2009), and $553,371.0 million will be 2011.
• Total liabilities $ 30,416.0 million (Annual report 2009).

Projected Profit and Loss Account of Zurich

Table 6: Income Statement of Zurich. Source: Self generated from Annual report.

Projected Balance Sheet of Zurich

Table 7: Balance Sheet of Zurich. Source: Self generated from Annual report.

Projected Cash flow of Zurich

Table 8: Cash Flow of Zurich. Source: Self generated from Annual report.

Projected Marketing Budget of Zurich Financial Services in 2011

Table 9: Marketing Budget of Zurich. Source: Self generated from Annual report.

Control, Milestones, and Corrective Action

Control

The organisational chart of Zurich Financial Service Group is intricate like other insurance companies. According to the annual report 2009, this company is dedicated to practice efficient governance system for the advantage of its shareholders, clients, and workforce. This company is controlled in accordance with the local rule and regulation while the CEO of Zurich is responsible for the controlling the board of directors, and managing the company.

Milestones and Corrective Action

The five years strategic plan of Zurich will be placed to the board of directors for review and approval on January 01 2011 and designs its timeframe to go into operation within three months (90 working days) that counted December 31 2015. However, the purpose of this milestones and corrective action report is to propose the ways of how Zurich to develop its services in both its current markets and in emerging markets. The subsequent Gantt chart shows the milestone plan for next 5 years –

Table 10: Gantt chart of Zurich Financial Service for five years. Source: Self Generated.

Reference List

Anon (2010) Zurich extending its range of life insurance products. Web.

David, F. (2008) Strategic Management: Concepts and Cases. 12^th ed. New Delhi: Prentice Hall

Fisher, W. (2003) Risk Management at Zurich Financial Services. Web.

Frigo, M. L. (2009) Strategy Risk Management: The New Core Competency. Web.

Hill, C. & Jones, G. (2007) Strategic Management: An Integrated Approach. 8^th ed. London: South-Western College

Holytornado. (2009) Effective Online Brand Strategies for Targeting Prosumers. Web.

Insley, J. (2010) Zurich Insurance fined £2m for losing customer details. Web.

Jankowicz, A. D. (2005) Business Research Projects. 4th ed. London: Thomson.

Johnson, G. Seholes, K. & Whittington, R. (2006) Exploring Corporate Strategy: Text & Cases. 8^th ed. London: FT Prentrice Hall.

Kandell, J. (2010) Zurich Financial Rebounds From Insurance Industry Crisis. Web.

Kokosinski, K. (2009) Strategies for Measurement and Reduction of the Carbon Footprint of Zurich Financial Services. Web.

Kotler, P., & Armstrong, G. (2006) Principles of Marketing. 11^th ed. Prentice-Hall of India Private Limited.

Kotler, P., & Keller, K. L. (2006) Marketing Management. 11^th ed. Prentice Hall.

NCOIC (2010) Zurich Financial Services: System Oriented Architecture (SOA). Web.

NGFL (2009) The Ansoff Matrix. Web.

Panagiotou, G. & Wijnen, V. R. (2005) The “telescopic observations” framework: an attainable strategic tool. Emerald Group Publishing Limited, 23(2). Web.

Pandey, I. M. (2007). Financial Management. 9^th ed. New Delhi: Vikas publishing house Ltd.

Porter, M. E. (2004) Competitive Strategy. Export Edition. New York: The Free Press

Stoner, J. A. F., Freeman, R. E. & Gilbert, D. R. (2006) Management. 6^th ed. New Delhi: Prentice-Hall.

Swiss Re (2010) Our mission and priorities. Web.

The Times 100 (2010) Providing a customer-centric service. Web.

Thompson, A. et al. (2007) Strategic Management. 13^th ed. New Delhi: Tata McGraw- Hill Publishing Company limited.

Weihrich, H. (2009) The TOWS Matrix — A Tool for Situational Analysis. Web.

Yahoo Finance (2010) Basic Chart of ZURICH FINL SVCS N. Web.

Zurich Financial Services (2009) Financial Report 2009: Zurich Help Point. Web.

Zurich Financial Services (2009) Global excellence through coordination. Web.

Zurich Financial Services (2010) Zurich at a Glance. Web.

Zurich Financial Services (2010) Corporate social responsibility. Web.

Zurich Financial Services (2010) Environmental Policy. Web.

Zurich Financial Services (2010) The New Zurich. Web.

Footnotes

1. In addition, the original instruction of this plan suggest to use theory.

Strategic planning entails laying out the procedures that employees should follow to achieve the goals of an organization. All the departments within an organization are required to apply the stipulated procedures. However, the following are the various factors that affect strategic planning: (1) leadership; (2) organizational culture; (3) size of the organization; (4) expertise of the planners; and (5) environment. This paper will highlight the impact of these factors on strategic planning and explain how the responsibilities are shared.

According to Bryson (2011), every organization has its own unique strategic plan and that is why there are several options to choose. First, a strategic plan can be drafted according to the ambitions of the organization. In this model of planning, ambitions are identified and allocated a specific period within which they must be accomplished.

In order to beat the deadline the tasks are allocated to different persons depending on their skills. The second model tackles issues that are facing the organization. The issues here can be challenges or crises. In this model, the organization prepares to tackle any forth-coming challenge that might interfere with its operations.

Strategic planning is an inclusive task because all organs of the organization carry it out. The leaders are the ones who have the mandate of initiating strategic planning. This is because they are expected to have a clear vision of the future. The employees are important because they are the ones who implement the plan.

Sometimes strategic planning can be induced by suggestions made by employees during formal meetings. However, this is common in issue-based strategic planning. The leadership of the organization can have either a positive or a negative impact on strategic planning depending on its stand.

Additionally, the leadership of the organization is under obligation to come up with a realistic plan and then avail the resources that are needed to implement the plan. Similarly, the same organ should support the other members of the organization to prepare for the implementation process.

This team is also setting the standards that are to be observed during the execution period. Before the leaders draft a plan, they must analyze the organization by evaluating its strengths and weaknesses. This is because the plan may fail to bring the desired results if the organization does not have the necessary strengths.

The leaders should consider the size of the organization because some models are best suited for large organizations and thus, they may not work in a relatively small organization. Besides, understanding the size of the organization will help in estimating the resources that will be required. It is also important to consider the environment of the organization. The environment could be an obstacle to the implementation process and hence the organization must adjust itself to the changes of the environment.

Heizer and Render (2011) reckon that the details of the strategic plan should be communicated to the employees. This is because the plan might require some changes in its operations. When employees understand the necessity of change there will be a smooth transition period as opposed to when they are not aware of the underlying plot.

The tasks of implementing the plan should be assigned according to one’s expertise and this is where the changes in operations may come in. However, team members should be encouraged to embrace the changes that come with strategic planning because it enhances the performance of an organization. This is because the organization is able to overcome any challenges that may come its way.

In conclusion, an organization’s strategic plan depends on the expertise of the people who draft it. This is because they may overlook the most important aspects and in the end, the plan may not work. An organization must prepare for the execution of the plan by availing all the required resources such as the training materials. Moreover, the leaders should oversee the implementation process so that they can identify any setbacks and work on them within the shortest time as possible.

References

Bryson, M.J. (2011). Strategic Planning For Public And Nonprofit Organizations: A Guide To Strengthening And Sustaining Organizational Achievement (4th ed.). San Francisco: John Wiley & Sons.

Heizer, J. & Render, B. (2011). Operations Management (10th ed.). Boston, MA: Prentice-Hall.

Executive Summary

Mountain Equipment Co-Op can be regarded as one of the best illustrations of an environmentally responsible company. In the late 1990 the company worked out new strategic plan which focused on increase of buildings’ energy efficiency. At the same time the company revealed its environmental responsibility.

This is, undoubtedly, a winning strategy which can be applicable in the contemporary business world as now people are more and more concerned with environmental issues. Though the strategy has certain flaws, the company will benefit from it. The company will only need to collaborate with likeminded companies and organizations. It should also launch a project to encourage talented designers to create new winning designs.

Background

Mountain Equipment Co-Op founded in 1971 acknowledged the importance of environmental sustainability. In 1990s the company’s executives realized that MEC retail stores negatively affected environment. Notably, 1990 was the time when people started paying particular attention to environment issues.

Therefore, the executives decided to increase energy efficiency of its retail stores and decrease harmful emissions. One of the first buildings to be changed was the store in Toronto. The work had already started and the building was modified in terms of energy sufficiency. The project proved to be successful as the building was 35% more efficient than other buildings at that time. The company inspired by this successful project started constructing energy efficient buildings.

Situation Analysis

Admittedly, contemporary society pays much attention to environmental issues. More so, companies that reveal their responsibility gain favorable image and additional publicity. Thus, when in 1990s people started being preoccupied with such environmental issue as emission of ozone-depleting substances, MEC responded to these concerns.

The company was committed to reduce the amount of such emissions produced by their buildings’ cooling systems. This was the right decision as people welcomed such changes and the company became one of the leaders of the movement. More and more companies started responding to the problem but MEC was still the first one to gain considerable success. Thus, the company gained a favorable image.

Strengths

As has been mentioned above, the decision the company made was a winning one. The company obtained publicity. It also created a favorable image. The company attracted many consumers who appreciated the company’s environmental responsibility. MEC increased energy efficiency of its buildings. The company was among leaders of the movement which later involved many other companies and organizations.

Weaknesses

Nonetheless, there are certain weaknesses in this strategy. For instance, though the company increased energy efficiency of its buildings, it was not always cost efficient. Thus, some projects would take years or even a decade to realize paybacks.

Opportunities

However, there are quite many opportunities for the company. MEC will also attract many new customers as more and more people tend to purchase products from socially and environmentally responsible retailers. Besides, the company can co-operate with likeminded companies and organizations to work out new ways, e.g. ways to improve efficiency.

Threats

However, there are certain threats. For instance, the company cannot focus on environmental issues only. It is essential to allocate funds reasonably. Thus, extra expenditures can negatively affect business. Remarkably, recent financial crises also limited companies’ ability to fund various environmental projects. Therefore, it is important to take into account various financial constraints as well.

Analysis of Alternatives

Admittedly, the company should continue working on its environmental projects and continue constructing energy efficient buildings. However, it can be also effective to collaborate with other organizations and companies to work out new environmental projects. This will help the company to save considerable sums of money, and, at the same time, to remain in the mainstream of the environmental movement.

Of course, there is another option for the company. It can give up financing such projects as constructing new ‘sustainable’ buildings. Nonetheless, this will be the step backwards as the company will lag behind the companies which already reveal their commitment in the sphere of sustainable technology. This will negatively influence MEC’s image. This can lead to loss of customers, too.

Recommendation

Therefore, the company should continue working on its environmental projects. It should go on constructing ‘environmentally-friendly’ buildings. However, the company should not stop developing new ways and strategies. Thus, MEC should try new (more efficient) designs. As has been mentioned above, the company will be able to save funds when collaborating with other companies and organizations. Thus, sharing experiences can positively affect the development of business.

Implementation

First, the company can negotiate with other construction companies, other retailers and organizations concerned with environmental issues. The company can start a project which will be beneficial for the companies involved. This will reduce costs of technological development.

Besides, the company can launch the following campaign. It can encourage designers to come up with ideas concerning construction. The company can choose the most winning projects and offer the most successful designers a job in the company.

Finally, the company should analyze its own experience and other company’s experience in the field. This will help to work out new strategies and projects. Of course, the company’s executives should take into account the changes which are taking place in the contemporary society.