Strategic Management and Business Strategy

This assignment delves into the concept of business strategy, examining key theories and models such as contingency theory, institution-based view, and resource-based view. It analyzes a case study of McDonald's, exploring how the company aligns its mission, vision, strategy, goals, and objectives with the changing business environment. Students will evaluate the impact of strategic fit on business performance and discuss various strategies employed by McDonald's for success.

BUSINESS STRATEGY

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
TASK 1............................................................................................................................................1
1.1 Assessing the business missions, visions, objectives, goals and core competencies inform
strategic planning....................................................................................................................1
1.2 Analyzing the factors considered when formulating strategic plans................................2
1.3 Evaluating the techniques for developing strategic business plans..................................4
TASK 2............................................................................................................................................5
2.1 Analyzing the strategic positioning of organization through organizational audit..........5
2.2 An environmental audit for an organization.....................................................................6
2.3 Assessing the significance of stakeholder in strategy formulation..................................7
2.4 Presenting a new strategy.................................................................................................7
TASK 3............................................................................................................................................8
3.1 Analyzing the alternative strategies..................................................................................8
3.2 Justifying the selected strategy.........................................................................................9
TASK 4............................................................................................................................................9
4.1 Assessing the roles and responsibilities of personnel in strategy implementation...........9
4.2 Analyzing the resource requirements for implementing a new strategy for Honda.......10
4.3 Evaluating the contribution of SMART targets to the achievement of strategy
implementation.....................................................................................................................11
CONCLUSION..............................................................................................................................11
REFERENCES..............................................................................................................................12

INTRODUCTION
A business strategy is the direction and the scope of an organization over the long term of
business operations and activities. It achieves advantages & objectives for the orgabnization
through its configuration of resources within a challenging environment, to meet the needs of the
market and to overcome the stakeholders expectations (Hax and Majluf, 2006).
TASK 1
1.1 Assessing the business missions, visions, objectives, goals and core competencies inform
strategic planning
An organization's functions are related to mission and vision and are typically
communicated in some written form. Mission and vision are statements from the organization
that answer questions about who they are, what they value and where they're going. However,
organizations with clear communication, wide understanding, and together shared mission and
vision have been shown to perform better than the other organizations working without mission
and vision, with the caveat that they are interrelated to effectiveness only when strategy, goals
and objectives were aligned with them as well (Seybold and Marshak, 2009).
 Mission – communicates the organization's reason for being and how it aims to serve its
fundamental stakeholders like customers, employees, and investors most often
emphasized, but other stakeholders like government (i.e., in the form of social or
environmental impact through its policies) can also be discussed.
 Vision – is a future oriented declaration of the organization's purpose and aspirations.
This statement lays out the organization's purpose for being to what they want to become.
 Goals and objectives – based on the opportunities which an organization desire to achieve
in a particular period. Mission and vision specifies the objectives of the organization
(Baye and Beil, 2006).
For example, Asda stores limited, has a mission statement :'to be Britain's best value retailer
exceeding customer needs always' and vision statement :'to make goods and services more
affordable for everyone'. Its goals and objectives are: respect for the individual, strive for
excellence and service to our customers.
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Illustr
ation 1: Mission, Vision, Strategy and Goals & Objectives
Source:http://2012books.lardbucket.org/books/management-principles-v1.0/s08-developing-
mission-vision-and-.html
1.2 Analyzing the factors considered when formulating strategic plans
The factors which are to be considered during formulating a strategic plans, are:
 Internal Factors – the important aspects of the internal environment of the organization
associated with the human resource, assets management, capital and structure &culture
of the organization (Parthasarthy and Sethi, 2012). To some extent, the internal
environment is controllable and changeable through planning and management process.
The two main factors in the internal environment of the business and their overcoming
techniques are:
◦ Requirement of efficient human resource/staff – to overcome this factor,
organizations pay particular attention to the recruitment of staff and also engage in
the training of staff and new hires to build the organization's capabilities (Lawler III,
2010). Likewise, Asda also emphasize on training and developing its staff and recruit
new hires periodically.
◦ Ability of the management – it specifies the capability of the management team and
the leadership styles employed by managers will also have a major impact on the
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morale of staff and organization culture (Davenport and Prusak, 2007). Similar to
this, Asda's managers and workers may have different viewpoints, they largely
benefit by working together to achieve the business objectives.
 External Factors – identifies the important aspects of the external environment in which
the business operates. The business cannot control such aspects but can respond to
change if needed. Some of these factors are legal, social media, political policies,
economic conditions, demographic situation, climatic changes, advance technologies,
and market competition (Siegel, 2010). For example, Asda's economic conditions are
reported daily in the media and mangers have a wealth of information on which they
develop its strategic plans. However, it is difficult for them to identify the particular
change of pace is very slow or is hidden from their viewpoint.
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Illustration 2 Factors affecting strategic planning
Source:http://www.leoisaac.com/planning/images/business_environment.jpg

1.3 Evaluating the techniques for developing strategic business plans
 Boston Consulting Group Matrix (BCG) – most common planning tool used by the
management to develop their strategic business plan. Its graphical representation of a
company's products and services in an effort to help the company in making the decision
for investing, selling and storing (Culp, 2005). The BCG growth share matrix break down
products into four categories, they are:
◦ Dogs – it is to be considered when, the company's product has low market share and
its rate of growth in the market is also low, which indicate the company to sell the
products. Like for example, Asda money cards are acting as dogs for Asda stores.
◦ Cows – when the company's product, that are low in growth, that has large market
share are considered as 'Cows', the company should 'milk' the 'cash cow' as long as it
can, it gives the benefit to the company in terms of profits and revenue. For example,
the rising number of Asda stores and its branches in a particular country act as
milking cows for the company.
◦ Stars – this fact is considered when the company's products are high in growth rate of
the market and high portion of acquiring market share (Welford and Gouldson, 2013).
Like Food market of Asda stores are considered as stars for the company.
◦ Question mark – these are the opportunities which are in high growth rate markets,
but still the company is unable to maintain a large market share. Company's products
in these considerations are analyzed more carefully. For example, Asda direct is a
question mark for Asda company.
 Directional Policy Matrix (DPM) – the analysis aimed at determining the appropriate
strategic based planning goals and the right strategies to achieve those goals across the set
of products, strategic business units and its markets (Holbeche, 2009). Its is a model and
process to assess the performance and relative potential of each product/SBU/market and
to decide which products/SBUs/markets to :
◦ Develop further/increase market share of, for example as in case of Asda's Food
market, the company is developing its market share.
◦ Maintain/resource to keep the status of the current market share. Like Asda is
promoting and expanding its branches of business in foreign countries to maintain the
market share.
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◦ Sell off the last potential sales, for example, Asda is clearing all its non selling
products through discounting and lowering the price, in order to rise the sales.
◦ Exit immediately, like Asda would clear all its non demanded product and would not
bring that products back in that market.
TASK 2
2.1 Analyzing the strategic positioning of organization through organizational audit
Strength
 Strong brand name & value in food
market
 Customer intimacy to the products
 Strong supply chain
 Strong global presence & performance
 Supplier integration Innovation in products and technology.
Weakness
 Low extent and width of product.
 Legal issues related to health & safety
laws.
 Cultural impacts due to use of trans fat
and beef oil.
Opportunities
 Expand its business in overseas market.
 Rising preferences for fast food among
the youngsters (Barney, 2006.).
 Entry of the option of breakfast meal in
menu.
 Enter the new market through joint
ventures with retailers(e.g.
Supermarkets).
 Strengthening the value statement and
offering commitment.
 To encourage the customer who visits
coffee shops into McDonald. Acquisition of other quick service
restaurants and its market.
Threats
 Changing customer taste and
preferences.
 Increased competition from local fast
food restaurants.
 Charging high cost in less developed
countries.
 Relationship between corporate level
McDonald's and its franchise dealer.
 Less number of potential buyers in the
market.
 Rising legal frameworks of health and
safety issues (Håkansson and Snehota,
2008).
 Religious concerns & preferences (i.e.
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McDonald do not serve halal meat &
chicken)
2.2 An environmental audit for an organization
To identify the key success factors and the company's opportunities and threats in global
business. There are some macro or environmental factors which are uncontrollable for
McDonald's business. In order to determine those factors, Pestel analytical tool is applied. Political Factors – The important political factor is local legislation which creates leagal
framework through rules and regulations over foreign ownership, concentration and
health & safety issues (Olson, Slater and Hult, 2005). Economic Factors – The economical condition of the organization has a crucial
importance for its development. McDonald's has maintained a great level of economic
scale through it earning from maximizing profits and minimizing the cost. However,
McDonald's tries to maintain its products cost in the situation when government imposes
a VAT increase on its products. Social Factors – It includes the major factors which impacts the demand trend:
demographic shifts, social attitudes & cultural beliefs and fashion cycles (Hofer, 2011).
Although McDonald's has a Corporate Responsibilities Committee which acts in an
advisory member to the company's management regarding its policies and strategies that
affect its social responsibilities, they are like issues related to product safety, workplace
safety, employee opportunities and training, the environment and sustainable supply
chain initiatives (Peterson, 2015). Technological Factors – these factors affect the competitive manner of industry players
in the market. The innovative and advance technological solutions allows the companies
to reduce its cost of operations, increase its manufacturing capacity and quality (Peng,
Wang and Jiang, 2008). McDonald’s introduced a radical change in technological system
of its company from the crew room to the board room. Earlier they were using
computerized counting machine, and now they introduced e-business as well, besides this
system of customer service, which is energy saving option to minimize fuel and recycling
waste. Environmental Factors – They play an effective role in the success of the business as it
affect input manufacturing capacity (Arthur, 2006). McDonald's is trying to offer a sound
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environment at its every restaurant for customers and its employees. In order to improve
their environmental performance through effective and innovative ideas for natural by-
products of thinking 'green'.
 Legal Factors – there are legal confinements for the organizations operations such as:
laws against discrimination, health and safety at work, regulation of monopolies and
restrictive practices, etc. McDonald's is very aware about its legal issues in its company
and in the market.
2.3 Assessing the significance of stakeholder in strategy formulation
For an organization stakeholders are the people, groups, or institutions, which are likely
to be affected by the business operations (either negatively or positively) or which can affect the
outcome from the business operations (Schwartz and Davis, 2011). The participation of different
stakeholders in the decision making process introduces a range of ideas, experiences and
expertise that moyivate the development of alternative solutions. The importance of the
stakeholder's participation could be recognized from the aspects which are:
 Identification of stakeholders interests in, importance to and influence over the working
of the business of McDonald's.
 Gaining their feedback and reviews over the business, in order to make appropriate
changes in the strategy during the formulation.
 Involving the stakeholders in the process of preparing and implementing the strategy
would build support for the business (Vorhies and Morgan, 2013).
2.4 Presenting a new strategy
Some key changes McDonald needs to make in order to overcome the impacts and issues
during the working of the business activities and operations, which are: Quicker customer service – McDonald needs to assess the ways to speed up its customer
service in order to avoid the long ques and lines of the customers. Improved food quality – Company should redesign its menu for healthier quick service
meals by introducing salads, more chicken dishes, wraps and other items. More menu items – McDonald's needs to spice up its menu by developing new offerings
or differentiating its existing menu items to integrate Mexican, Russian, Oriental and
Indian flavors (Miller, 2007).
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 Reduce the promotions – in an attempt to drive up the customers, McDonald's recently
expanded its dollar menu and ran several promotions offerings like half rates in meal
during morning hours, free coffee on every Wednesday evening, etc. due to which the
profit of the franchisees are cut down (Sanchez, 2016).
TASK 3
3.1 Analyzing the alternative strategies
 Market entering strategy – M&S could develop its market share and growth through
entering the local and international market. The methods of growth in the local/domestic
market are:
◦ Building up new businesses through covering the market area by launching new
branches of stores (Teece, 2010).
◦ Acquisition, Joint Ventures and merging with the existing business of the different
owners.
Methods of growth in international market are Contracting, Franchising, manufacturing abroad,
Joint ventures, licensing, direct exporting and indirect exporting.
 Substantive growth – M&S could attain substantive growth through diversification
method in which the company markets new products to the customers. There are two
types of diversification:
◦ Related – when a company remain in a market or industry with which it is familiar.
Like M&S clothing manufacturer diversifies into Cloth material manufacturing.
◦ Unrelated – when it diversifies in a new market without having any experience (Hax
and Majluf, 2006). For example, M&S clothing company invests in Food business.
 Limited Growth -
◦ Market development – when a company market its existing product range in a new
market. M&S markets its food and home products in overseas market to target new
customers.
◦ Product development – when a new product is marketed to the existing customers of
the company. Like M&S often markets its new outfits and food produce to its existing
customers.
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 Retrenchment – Company's strategy to sell off its particular business operations from the
market. M&S could use this strategy in order to cover the certain areas :
◦ Low capital generation
◦ Limited resource availability
◦ No market response
3.2 Justifying the selected strategy
By analyzing the alternative strategies of M&S, it is recommended that the appropriate
strategy for the business growth would be 'Entering the new market'. As it improves the
company's operations and profits condition by targeting new customers (Seybold and Marshak,
2009). It would gave a new option to the customers of new market for buying the products
directly from their country's store rather than ordering online or from a central UK hub store. It
would rise the market share, size and growth of the company in international market. The
increase in consumer spending in Asian markets and their trends towards retailing acts as a big
opportunity for Mark & Spencer. The positive response for the products of M&S in international
market shows that the strategy of expanding the business by entering in new market is a perfect
option (Baye and Beil, 2006). The international market would also provide/address a new origin
of resources. The company could grow its market through methods of expanding in international
market which are Contracting, Franchising, Manufacturing abroad, Joint ventures, Licensing,
Direct exporting and Indirect exporting.
TASK 4
4.1 Assessing the roles and responsibilities of personnel in strategy implementation
According to the business strategy of Honda, its focus and main concern is to innovating
technology. To implement the strategy and run the business in the market, Honda requires
following personnel to perform their duties and understand their roles & responsibilities in
manner to attain the desired goals and objectives as per the strategy (Parthasarthy and Sethi,
2012). The roles and the responsibilities of the personnel in implementing the strategy, which
are:
 Human Resource Manager – Typically has the responsibilities like mentoring the less
experienced employees, hiring the new staff, improving the skills and knowledge of the
staff through training and development, to maintain a level of numbers of staff, Also, to
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facilitate meetings with the top level management and stakeholders to identify the
resource requirements (Lawler III, 2010).
 Strategic manager – Their duties is to represent the opportunities for the organization to
develop new products, troubleshoot problems or launch initiatives design to reduce the
operational costs, defects and waste.
 Resource Manager – They have to facilitate the efficient use of resources across multiple
strategy operations and monitor trends to ensure use aligns with strategic goals
(Davenport and Prusak, 2007).
4.2 Analyzing the resource requirements for implementing a new strategy for Honda
Assessing the estimated resource requirements for implementing a new strategy for
Honda, which are:
 Capital/Finance – Finance management should allocate the source of capital in efficient
and effective manner. Further, it should be invested and monitored wisely.
 Human resource – The HR management team of Honda is responsible to recruit top talent
in order to strengthen the team. Maintaining the quality, value, service and innovation by
the staff would inspire the trust of the customers (Siegel, 2010).
 Time - Honda company should manage the time as per its predefined strategic operations
and activities in order to overcome the values of innovation. They should divide the time
at each and every stage of operations and activities as planned in the strategy.
 Material – The management should allocate all the sources of gaining the material in the
market. They should also attain the level of available resources at that site/spot.
4.3 Evaluating the contribution of SMART targets to the achievement of strategy implementation
 Specific – Honda should make a specific goal or objective which is to be achieve by
implementing the strategy (Culp, 2005). For example, the company has not state that it
will produce fuel efficient cars but would innovate new ideas to lead to section.
 Measurable – Company should measure and compare the different levels and the stages
during the strategy implementation.
 Attainable – To attain the situation of Honda, whether the company is able to innovate
new ideas that are more effective and efficient than its competitor's ideas.
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 Realistic – Innovating the new ideas is a simple task but to know that is the idea realistic
or would it work is the main task to be achieved by the company (Holbeche, 2009). The
realization of the ideas depends on the available resources and areas/points to be covered.
 Time Bound – To achieve the task and the specified goals of the strategy within the time
limit specified by the management. The work should be divided according to the
available time (Hofer, 2011).
CONCLUSION
It has been articulated that in a rapidly changing business environment with a high
competitors' pressure, organizations have to adopt new expansion strategies to attain the market
attention. In order to sustain its leading market position in an already established market, they
need a continuous operation to identify, select, implement and execute their goals and objectives
(Olson, Slater and Hult, 2005). The business strategy act as the schedule of activities and
operations of the organization in a particular duration.
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REFERENCES
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Jossey-Bass.
Parthasarthy, R. and Sethi, S. P., 2012. The impact of flexible automation on business strategy
and organizational structure. Academy of Management review,
Seybold, P. B. and Marshak, R. T., 2009. Customers. com: how to create a profitable business
strategy for the Internet and beyond. Random House Audio Assets.
Siegel, D., 2010. Futurize your enterprise: Business strategy in the age of the e-customer. John
Wiley & Sons, Inc..
Welford, R. and Gouldson, A., 2013. Environmental management & business strategy. Pitman
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Journals
Arthur, J. B., 2006. The link between business strategy and industrial relations systems in
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Barney, J. B., 2006. Strategic factor markets: Expectations, luck, and business strategy.
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strategy. Scandinavian journal of management. 5(3). pp.187-200.
Hofer, C. W., 2011. Toward a contingency theory of business strategy. Academy of Management
journal. 18(4). pp.784-810.
Miller, D., 2007. The structural and environmental correlates of business strategy. Strategic
Management Journal. 8(1). pp.55-76.
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Olson, E. M., Slater, S. F. and Hult, G. T. M., 2005. The performance implications of fit among
business strategy, marketing organization structure, and strategic behavior. Journal of
marketing. 69(3). pp.49-65.
Peng, M. W., Wang, D. Y. and Jiang, Y., 2008. An institution-based view of international
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Vorhies, D. W. and Morgan, N. A., 2013. A configuration theory assessment of marketing
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Online
Peterson, H., 2015 McDonald's is about to unveil a huge plan to save its business - here are 8
things investors need to hear [Online].Available
through:<http://www.businessinsider.in/McDonalds-is-about-to-unveil-a-huge-plan-to-
save-its-business-here-are-8-things-investors-need-to-hear/articleshow/47130718.cms>.
(Accessed on 10th February 2016 )
Sanchez, M., 2016. 8 Strategies for Achieving SMART Goals.[Online].Available
through:<https://www.projectsmart.co.uk/8-strategies-for-achieving-smart-goals.php>.
(Accessed on 10th February 2016 )
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