Business Strategy Report

This report analyzes the external and internal environment of New Kandy Fashion, a clothing retailer in Kandy, utilizing various frameworks like PESTEL, SWOT, TOWS, Porter's Five Forces, VRIO, and McKinsey 7S to assess the company's strengths, weaknesses, opportunities, and threats. The report also explores strategic formulation using Ansoff Matrix and Bowman's Strategy Clock, and examines the value chain and BCG matrix. Finally, it outlines strategic implementation, monitoring, and control measures for the organization.

Business strategy
Acknowledgement
I have taken efforts in this project. However, it would not have been possible without the
kind support and help of many individuals and organizations. I would like to extend my
sincere thanks to all of them.
The completion of this assignment gives me much Pleasure. I would like to show my
gratitude Mr. Azard (Bcas) for giving us a good guideline for assignment throughout
numerous consultations. We would also like to expand my deepest gratitude to all those
who have directly and indirectly guided us in writing this assignment.
I would like to express my gratitude towards my parents & family members for their kind
co-operation and encouragement which help me in completion of this project. I would
like to express my special gratitude and thanks to industry persons for giving me such
attention and time. My thanks and appreciations also go to my colleague in developing
the project and people who have willingly helped me out with their abilities.
Thank you,
Sangeetha subramaniyam.
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Contents
Acknowledgement....................................................................................................................................1
Introduction................................................................................................................................................4
Current situation of the organization..................................................................................................4
Strategic planning VMOSA..................................................................................................................4
Mintzberg’s 5ps strategy......................................................................................................................5
Situational and pestle analysis for the organization (macro analysis)...........................................7
Positive and negative impact of external environment....................................................................9
Porter’s five forces analysis...............................................................................................................12
Porters five forces for new Kandy fashion.......................................................................................13
Competitive analysis...........................................................................................................................14
Resource Based View........................................................................................................................16
Micro analysis (internal analysis)..........................................................................................................17
VRIO Analysis.....................................................................................................................................17
Stakeholder analysis..........................................................................................................................18
McKinsey 7s model.............................................................................................................................20
Strategic formulation..............................................................................................................................21
The Ansoff matrix................................................................................................................................21
Bowman’s Strategy Clock..................................................................................................................23
Porters value chain.............................................................................................................................24
Porters value chain analysis done for new Kandy fashion............................................................25
BCG growth share matric..................................................................................................................25
Strategic implementation, monitoring and control..............................................................................26
Conclusion...............................................................................................................................................27
References..............................................................................................................................................28
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Table 2.......................................................................................................................................................9
Table 3.....................................................................................................................................................10
Table 4.....................................................................................................................................................14
Table 5.....................................................................................................................................................16
Table 6.....................................................................................................................................................18
Table 7.....................................................................................................................................................20
Table 8.....................................................................................................................................................22
Table 9.....................................................................................................................................................25
Table 10...................................................................................................................................................27
Figure 1....................................................................................................................................................12
Figure 2....................................................................................................................................................19
Figure 3....................................................................................................................................................20
Figure 4....................................................................................................................................................21
Figure 5....................................................................................................................................................23
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Introduction
The chosen organization is New Kandy fashion. It’s found in Kandy and which sells all
kinds of clothing. Their product are – women, men, kids, other items (cloths).
 Vision statement of the organization
To be the leader in all areas of the clothing industry.
 Mission statement of the organization
To provide a wide range of products and services of the highest quality while satisfying
its valued customers.
Current situation of the organization
Currently the industry main objective to increase its market share and to bring the
business back to the former level because due to past 6 month the business was in lost.
The organization follows a transformation leadership style. This organization follows a
transformation leadership style. This organization has a considerable rate online
customer base. Due to the current situation of the country the organization is currently
suffering from customer loss.
VMOSA is. The strategic planning process related to groups of people deciding together
what they want to accomplish, and how they are going to get there.
One way to make that journey is through strategic planning, the process by which a
group defines its own VMOSA that is its vision mission objectives strategies and action
plans. VMOSA is a practical planning process that can be used by any organization or
initiative. This comprehensive planning tools can help our organization by providing a
blueprint for moving from dreams to actions to positive outcomes for your community.
Strategic planning VMOSA
 Vision
 Mission
 Objectives
 Strategies
 Action plane
Vision
 To be the leader in all areas of the clothing industry.
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Mission
 To provide a wide range of products and services of the highest quality while
satisfying its valued customers.
 Provide fashionable products at affordable price.
Objectives
 To maximize the groups operational and financial performance.
 To ensure cost competitiveness
 To provide industry leading availability.
 Increase the market share 12%.
Strategy
 Market penetration
 pricing strategy
Action plane
 Discounts and festival offers.
Mintzberg’s 5ps strategy
Mintzberg’s 5ps strategy consists of different approach to strategy as,
 Plan
Planning is something which naturally starts out when thinking about strategy.
Fashioning a plan for the company is going to take the company from where it is now to
where it would be future.
 Ploy
Strategy as ploy is about competitors. By plotting to disrupt, dissuade, discourage, or
otherwise influence them, can be part of a strategy. This is where strategy can be a
poly, as well as a plan.
The organization is highly well-known for offering the products that are fashioner and
unique in the country side that gives them a competitive advantage in the market.
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 Pattern
Strategy as a pattern is all about observing what is going on in the organization
currently so that the company can be take maximum advantage of those pattern into its
future success.
 Position
Strategy as position is how the business positions itself in the market place. The new
Kandy fashion has effectively carved a market for itself in the market and in the
customers’ minds as a business that offers only high end products with quality raw
materials.
 Perspective
Strategy as perspective makes choices about its culture.
The strategy that new Kandy fashion use are,
 Market penetration
 pricing strategy
The combination of the intensive growth strategies of market penetration, market
development and product development also contributes to the capability of Kandy
fashion to maintain its leadership position, which in turn empowers the company to
maintain its financial viability. The leadership is important for the firm to satisfy its
mission statement and vision statement.
Kandy fashion standard strategy is a mixture of cost management standards strategy
and the market development standard strategy. Cost leadership involves minimizing
cost of operations and selling prices. The product development standard strategy
requires increasing business and product availability to ensure Kandy fashion market
growth. The combination of these generic and intensive strategies supports new Kandy
fashion market’s to sustain in the market.
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Situational and pestle analysis for the organization (macro analysis)
PESTEL analysis for New Kandy fashion
 Political
Political factors is all about what degree a government is intervening in the economy.
This include government policies political stability or instability in overseas market,
foreign trade policies, tax policies etc. in this political environment new Kandy fashion is
concerned about the government policies, taxation legislation etc. taxations in political
factor is a huge concern for the organization since the taxation is being increased.
Political instability of the country. Due to political insatiability of the country. Due to
political instability of the country business can’t take any step to develop it. Market
share, which is a negative impact to the business.
 Economical
Unstable exchange rates is a negative impact to the business because business can’t
fix a fixed price for the products when it comes to exporting, which is a negative impact
to the business.
 Social
In the present era people are demanding for high quality services which literally
increase the overall performance of the organization in giving a good quality product to
the customers as they expected.
It’s a challenge for the business to adopt to people trends. Attitude of the people are
changing time to time according to various different reasons which also a social factor to
be concerned when is doing a business.
 Technology
Most of business at present has adopted technology into their businesses, the
adaptation of technology by our competitors is a huge threats since they can easily
capture the market using technology which is very convenient and easy for use. Due to
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the development of supply chain technology and its productivity. The orders can be
transported on time to the customer. This is a positive impact to the company.
 Legal
The employment law in the legal factor helps the employees to obtain their rights such
as getting EPF, ETF paid work time rules etc.
 Environmental
The pollution law restricts the organizations from having improper disposal of products.
This law helps them to think in a proper way to dispose the products. Polythene usage
has a huge impact towards the industry but a low impact towards the organization
because user a very moderate amount of polythene.
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Factors likelihood outcome Rating
Political
 Political instability of the country
potential Extensive Negative
Economical
 Unstable exchange rates
Potential Extensive Negative
Social
 Lifestyle of customer.
 Attitude of the people
Significant significant Positive
Technology
 Supply chain
significant high Positive
Legal
 Employment law
Extensive Negative
Environmental
 Polythene usage
significant significant Both

Business strategy
Positive and negative impact of external environment
Political factor which is to be noted in this industry is regarding the taxation. Since the
Sri Lankan government has increased the VAT up to 15% this is one of the factor that is
to be concerned in this industry. This is being a threat for the organization since some
portion of the profit is gone out of the business due to tax. These are the negative
impact of political factor. The technology environment plays a huge role in today’s
businesses. The positive impact that this organization will obtain through technology is
approaching to offer product using technology such as website etc. This will open
opportunities to gain more customers and it will be more convenient to capture the
market. Whereas the negative impact that technology has is that the adaptation of
technological development by the competitors which makes this organization stay
backwards. The environmental factor which positively impacts the organization is the
environmental pollution law. This leads the organization to get an opportunity to recycle
the broken and damaged cloths material and poliythine bags products effectively.
Internal analysis
SWOT analysis is a beneficial technique used in business for understanding the
strengths and weaknesses, and for recognizing both the opportunities open to the
businesses and threats faced by the business.
SWOT analysis for New Kandy fashions
Strength
 Good distribution.
 Reasonable price.
Weaknesses
 Depend on employees (sales
executive)
Opportunity
 Peoples trends to the western
culture.
Threat
 Increase of competitors.
 Changes in government policies.
 Increase of exchange rate.
Table 1
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The strength which the new Kandy fashion is having is a good distribution around that
specific area which helps them to grab new customers to their business and they
provide products for a reasonable price which is a affordable for the customers through
having good distribution and reasonable price they can identify the current trends and
changing behavior of their customers which open them to identify the opportunity and
sustain in the market.
The weaknesses that this organization is having is that they have low employees in that
they have low employees in the shop. It effect the business because if customer are not
satisfy with the customer relationships.
The people trends to the western culture is an opportunity for the new Kandy fashion.
Since they can make a lot of sale due to the new design clothes materials.
The new Kandy fashion is threatened by increasing number of competitors they still
survive successfully in the market due to their reasonable pricing strategy as well as
good distribution. Increasing exchange rate and changes in government policies huge
threat for the organization. Since when the exchange rate increase the costs for the
products increase therefore it is a threat to the organization.
TOWS analysis of Kandy fashion
Internal factors Strength (S) Weakness (W)
External factors
Opportunities (O) SO WO
Threats (T) ST OT
Table 2
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Business strategy
SO
 Reasonable price and good distribution.
 Peoples trends to the western culture.
The people trends to the western culture is an opportunity for the Kandy fashion. For
that good distribution can attract the customer and they can make a lot of sales.
WO
 Low employees
 Peoples trends to the western culture.
Low employees in a organization. It effect the sales. And if we increase the number of
employees it help to increase the sales and customer relationships.
ST
 Reasonable price
 High competitive
Although the competitors are high in the market. They giving reasonable price and
giving discounts for the products. And it is a low cost, for that business can sustain in
the market.
OT
 Peoples trends to the western culture.
 Increase of exchange rate.
By setting the raw materials the country organization can get rid of tax. Because people
change to the new trend and for that we have to import the new and different kind of
dresses and raw materials.
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Porter’s five forces analysis
Porter’s five force model is a model that identifies and analyses the five competitive
force of the industry and it helps to identify the strength and weaknesses of the industry.
The five forces of porters are;
 Supplier’s power: this address the power of the suppliers in the industry. The
power of supplier depends on how easily the suppliers can drive up the prices.
This is judged by the number of suppliers in the industry and the uniqueness of
the product.
 Buyer Power: this address the number of buyers in the industry and their power.
The power of the buyers depend on how many buyers available in the market
and the cost of the buyers from switching one supplier to another.
 Competitive rivalry: this depicts how the organization can fight its competition.
Many competitors offering undifferentiated products and services reduces the
market attraction.
 Threat of substitution: this knows about whether others can substitute the
product. When substitutes products increases the likelihood of customers
switching and the alternative prices increase.
 Threat of new entry: this is being aware from competitors entering the market.
Figure 1
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Porters five forces for new Kandy fashion
1. Threat of new entrance. (Moderate)
 Easy to enter the apparel market and easy to start.
 High, new competitors are entering market easily.
2. Bargaining power of buyers (high pressure)
 Consumers are more focused than sellers on quality.
 Switching cost for customers are very low.
 Changes is consumers preferences to brands that are not available in the store
can reduce the sales of the business.
3. Bargaining power of suppliers (high pressure)
 Switching cost is very high because it’s hard negotiate and to come to an
agreements with suppliers.
4. Rivalry (moderate)
 Number of opponents very high.
 Large volume of products.
According to the porters five forces analysis, the threat of new entry for new Kandy
fashion is high since it is easy for the competitors to enter the market, experience to
enter the field. Therefore the threat of new entry is high. The bargaining power of
buyers, the customers have the most powerful tool called purchasing power. Rivalry
moderate is in between the pressure group and the mediation.
Competitive analysis
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 Market segmentation
Four basic factors that affects market segmentation are
 Clear identification of the segment,
 Measurability of its effective size,
 Its accessibility through promotional efforts
 Its appropriateness to the policies and resources of the company.
The four basic market segmentation strategies are based on
 Behavioral
 Demographic
 Psychographic
 Geographical
Strategic group
 Strategic group of firms within an industry which face the same environmental
forces, have same resources and follow similar strategy in response to the
environmental forces. These strategies include pricing practices, level of
technology investment and leadership, product scope and scale capabilities,
and product quality.
 Characteristic for identifying strategic groups.
Scope of activities Resource commitment
Extent of product diversity Extent of branding
Extent of geographic coverage Marketing effort
Number of segments served Product quality
Distribution channels Technological leadership
Organizational size
Table 3
Competitive advantage
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Competitive advantage are conditions that allow a company or country to produce a
good or service of equal value at a lower price or in a more desirable fashion. These
conditions allows the productive entity to generate more sale or superior margins
compared to its market rivals.
A superiority gained by an organization when it can provide the same value as its
competitors but at a lower price, or can charge higher prices by providing greater value
through differentiation. Competitive advantage results from matching core competencies
to the opportunities.
 Strategic capability
Strategic capability refers to a business ability to successfully employ competitive
strategies that allow it to survive and increase its value over time.
Factors effecting strategic capabilities
 Manufacturing, product purchasing or service delivery.
 Supply chain.
 Time to market.
 Research and development.
 Skills among managers and employees.
 Core competencies
Core competencies are the skills and abilities by which resources are deployed through
an organization’s activities and processes such as to achieve competitive advanatge in
ways that others cannot imitate or obtain.
 Can be identified using
 Resource analysis
 Competence analysis
Resource Based View
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Resource based view is a tool used to achieve competitive advantage. Resource based
view approach has helped companies in achieving higher organizational performance
by getting the major roles of the resources. The Resource Based View of new Kandy
fashion is given below.
Resources Resources measures Commentary
Cost control How is the cost being
managed.
The company is partially
managing the costs related
to products, labor
Customer relationship How is the customer
satisfaction maintained?
The company has a stable
customer group
Supplier relationship How is the interaction and
bond with suppliers
The company maintains a
good relationship with the
suppliers
Quality control How well the product
meets the quality
requirements of the
customers when the
product reaches them
The organization is
partially able to provide
quality products to
customers
Table 4
According to the Resource Based View analysis, the intangible resource cost is being
partially managed in regards to purchasing the products, labor costs, transportation cost
etc... This was measured by analyzing how well they manage their costs. Customer
relationship is maintained in a stable manner whereas in the long term they would have
very less chance of losing customers. This was measured in terms of how well they
maintain their customer relationship. The quality control is measured by how well the
customers are satisfied and does the product meets the quality requirements of the
customer. Through this Resource based View it has been clearly understood that the
organization is having an average competitive advantage and strategic capability.
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Micro analysis (internal analysis)
VRIO Analysis
VRIO analysis is an analytical technique brilliant for the evaluation of company’s
resources and this the competitive advantage.
The VIRO analysis was developed by jay B. Barney as a way of evaluating the
resource of an organization which are as follow.
 Financial resource
 Human resource
 Material resource
 Information knowledge
The dimension of VRIO are
 Value- how experience is the resource and how easy is it to obtain on the
market?
 Rareness- how rare or limited is the resource?
 Imitability- how difficult is it to imitate the resource?
 Organization- respectively organization is the resource supported by any rioting
arrangement and can the organization use it properly?
New Kandy
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fashion
strategic
capabilities
(resource)
V
value
R
Rare
I
Imitability
O
Organizatio
n
Results
Employee
compensatio
n
Yes - - -
Competitive
party
Availability of
products Yes - - -
Competitive
party
Location
Yes - - -
Competitive
party
Varity of
products Yes - - -
Competitive
party
Table 5
Competitive party
In this table, new Kandy fashion competitive party includes business process activities,
which is valuable but common throughout the industry and even in other industry and
even in other industries and markets.
In addition competitive employee’s compensation packages are a capability that helps
the company maintain a highly skilled workforce that supports rapid growth.
The increasing variety of the business product mix is an indication of strategic efforts to
reduce the per market rise contact of the business.
Stakeholder analysis
Stakeholder analysis is a process by which we identify the key stakeholders and win
their support. This is a stage where the most important stakeholders are understood
and identified.
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Figure 2
Stakeholders of an organization are CEO, employees, government, suppliers,
customers etc. the stakeholder analysis for new Kandy fashion
The CEO and the government need to be managed closely since they have high power
and interest towards the business. The CEO workers with a profit maximization motive
and long term survival of the organization there by we need to manage them closely
since change of mind by the CEO can collapse the whole organization.
The lower level employees and the customers have low power and low interested
toward the organization. The organization needs to monitor on their performance and
there try to keep them in a certain satisfaction level. The organization needs to take
steps to keep them satisfied have make them have high interest towards the
organization. By understanding their requirements about the product and the services
the organization provide with the product.
The government needs to be monitored such as minimum wages, tax rate, quality
inspection etc. the suppliers and bank are having high interest and low power towards
the organization. When the products are needed by the organization they inform their
suppliers about the products requirement to the organization.
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McKinsey 7s model
In
McKinsey model the seven areas of
organization are divide into the soft and hard
areas. Strategy, structure and systems are
hard elements that are much easier to identify
and manage when compared to soft elements.
On the hand, soft areas, although harder to
manage, are the foundation of the organization
and are more likely to create the sustained
competitive advantage.
McKinsey 7s for New Kandy fashion
Aligned
Strategy Market penetration Yes
Structure Simple structure Yes
Systems Few formal system.
Control, customer support
and personnel
management systems
Yes
Skills Skills aligned with a
company’s operation
Yes
Staff Employees from many
cultures, who expect
different motivation and
reward systems.
No
Style Democratic style Yes
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Figure 3