Managing Strategies and Strategic Planning
Strategic planning is a process that helps to define what an organization does and also helps in making decisions on what direction the organization is to take. The process offers a general approach to planning and management. It starts with a vision where we want to see the family in future and then we break it down into tasks and activities that will help reach this goal. It helps define long term goals and best ways to achieve them. This type of planning provides a clear frame work of what the organization wants to achieve and how to accomplish this. (Samson, 2003)The process of planning and the detailed process to achievement is conducted by use of a strategy plan document. The plan works as a road map which the organization follows to get to where they plan to be in a certain period.
Organizations use strategic planning with the thought that this will help them in many ways. They expect the planning to help in surviving the market by improving their competitive power and increase their share in the market. It acts as a motivation for people in the organization to reach the set goals and understand how to mange external forces. Also strategic planning is used as a way to renew and consider other options for the organization as well as a guide in planning mergers and acquisitions.
In the strategic planning some of the key processes include;
Mission and Objectives- This clearly defines the vision of an organization and showing their values. It also shows the purpose and objectives (Kendall, 2003). The objectives are either financial or strategic and vary from sales targets to achieving larger market shares.
Environment analysis- The internal scan involves the identification of the strengths and weaknesses while the external analysis shows the threats and opportunities an organization can encounter. This information is achieved by the use of the SWOT analysis. SWOT analysis is a tool that is used to audit the organization and it’s environ. It provides information on the organizations resources and its ability to stay competitive in the market environment.
Formulation- To come up with a strategy an organization must combine and use its strengths and opportunities while trying to work on their weaknesses and threats (Bonham 2008). This allows the organization an advantage for competitiveness as well as focus to achieving their goals.
Implementing- This involves plans and budgets and the mobilization of staff and resources in order to reach our goals.
Evaluation- This is the constant monitoring of the strategies that are implemented. This is important in measuring progress and making of changes where necessary.
In the implementation of business level strategies there are many frameworks that are used to provide strategic alternatives which a Company should choose from when making strategic decisions. There help an organization to easily make decisions giving it a long term advantage over other organizations.
Porter’s differentiation strategy is a generic strategy whose main focus is on quality. Its main emphasis is to provide high value and quality of products and services. An organization distinguishes itself from the other competitors in the market through the creation of quality products and services. Businesses that use this strategy can sell their products at higher prices than the ones offered by their competitors and still be able to dominate the market because their customers are willing to pay more in order to get the extra quality and value the business is providing (Brandenburger, 1996) A good example of a Company that uses this strategy is Rolex Watch Company. They offer quality watches that are handmade using precious metals that include gold and platinum which are subjected to many tests to ensure they reach the desired quality and the products are reliable. With this the Company is able to sustain its competitive advantage in the market.
The other of porter’s strategies is the overall cost leadership strategy. Businesses that use this strategy focus to maintain lower manufacturing and other costs than their competitors thus are able to sell at these low prices and still gain. The prices of their products are lower than those of their competitors because their production costs are also low this makes them gain their competitive advantage in the market. With the prices being low they are still able to make profits. The finance and accounting of these organizations is very crucial as the success of it depends on proper cost management. A good example of a company that has been using this strategy is Timex Watch Company. The main focus of the Company is to make simple and low cost watches that are delivered to the mass market. The Company has maintained high capacity in production thus can sell their watches at a relatively lower price and still maintain a substantial share of the market.
Another classification of strategic options for a business is identified in the Miles and Snow Typology. They are classified into four types namely; prospector, defender, analyzer and Reactor.
An organization that uses the prospector strategy puts its focus on innovation. This means that the market has to be in constant search of new opportunities and markets. It also has to be creative in creating new products and services. Te creativity is increased by decentralization of the organization structure thus delegating responsibilities to lower level managers to help in making decisions and coming up with solutions. This strategy is propelled towards bringing growth through taking risks. An example of a firm that prides itself of this strategy is 3M. The Company focuses in creatively developing new products and ideas that have led to the creation of a vast range of products and the exploration of new markets.
A defender strategy has its main focus in providing protection of its current markets as well as maintaining a stable growth in this market. It also focuses on serving their current customer base by offering fair prices and improving their already existing products. Most Companies switch to this strategy after they have used the prospector strategy in creation of new products and have already established a market for these products. An example of a Company that uses this approach is BIC. It has a less aggressive management approach and mainly concentrates on satisfying the customer and being efficient in their manufacturing thus are able to maintain their share of the market.
Target is an online store that deals with sales of a vast variety of products from furniture to electronics to medicine. By the look of the Target website it is clear that the Company is using the overall cost strategy. They emphasize on providing low prices for the products on sale. This is seen in their provision of discounts even showing the amount one can save if they buy products from their shop as compared to players in this market. For them to be able to offer this they must have focused on low costs and low product prices for their customers thus use of the overall cost leadership strategy.
Cole’s supermarket is an online business which has a chain of stores that supply groceries and emphasizes on providing excellent quality and value to its customers. Their strategy for competition is the differentiation strategy (Samson, 2003). The business puts emphasis on supplying high quality products and also quality ingredients. They also provide delivery services to their customers providing them satisfaction. This is clearly shown on their website and they get to their customers through quality and with this the customers are willing to pay more for this products and services giving the business a competitive advantage over others in the same industry.
David Jones is an up market retailer that has its stores distributed through out Australia. The company mostly focuses on customers who are middle and high income earners. Their strategy type is focus strategy which concentrates on regional market, a group of buyers or a specific product line. The strategy uses either differentiation or overall cost focus. David Jones uses differentiation by positioning itself at the top of the market and targeting on affluent ladies whose income for disposal is above average (Kendall, 2003). With high quality merchandise the Company has maintained customer loyalty and continuously gained market share. In the use of overall cost strategy David Jones focuses on low costs so as to be able to offer attractive discounts and low prices on their products and still stay on top of the market.
Kmart is an online business which also runs a chain of discount department stores that are spread across Australia and New Zealand. The main strategy used by this Company is the overall cost leadership strategy. On the website it is clear to see that the products listed are all discounted and the emphasis is on the amount of cash the customer is to save. For Kmart to offer this discounted prices and still gain profit have reduced their costs to a level that is lower than that of the competitors in the same industry. This strategy is what gives the Company its competitive advantage.
For any of the above businesses the choice of strategy depends on the products and services they are offering to their customers as well as the group or community the business is targeting (David, 1993). For the Companies that engage in the overall cost leadership strategy like Kmart and Target, their main focus is on providing simple products that are cheap and meet the needs of their target market. For the businesses that use the differentiation strategy like Cole Supermarket, their main emphasis is in providing high quality and value products and services to consumers. David Jones incorporates both high quality and low prices with the focus strategy to reach to their target market. Any of these three strategies is can lead a business to gaining competitive advantage and success if used in a fitting environment.
Summary
Strategic planning can be defined as a process assisting in defining an organization in what it does and makes decisions on what direction that it takes. It pinpoints the long term goals and best ways to achieve them. Some of the processes involved are: mission and objectives: which shows the vision of the organization, the values, the purpose and the objectives. The latter, involves financial and strategic matters so that they can acquire large market shares. Among others are formulation, where it involves the SWOT, and the organization uses strengths and the opportunities so that they can show the threats and the weaknesses that organization can encounter. Evaluation entails the constant monitoring of the strategies that are implemented by an organization of which is vital in measuring progress and making of alterations where necessary. The last is typology and it is sub-divided into four strategies namely: prospector, defender, analyzer and Reactor. The prospector strategy steers its focus on innovation. The defender gives protection of its current markets as well as retaining a stable and constant growth in this market share. The analyzer analyzes the market price and the reactor contains the ultimatum of the ultimate that will be set.
References.
Bonham, S. (2008). Actionable strategies through integrated performance and process. Boston: Artech House.
Brandenburger, A. (1996). Co-opetition. New York: Doubleday.
Kendall, G. (2003). Advanced Project portofolio management and the PMO. Conveyors,GA: J.Ross.
Samson, D & Daft, L. R. (2003). Management. Sydney: Thomson Learning Australia.
David L., G. (1993). Applied Strategic planning : a comprehensive guide. New York: McGraw-Hill.