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MANAGING STRATEGY
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CONTENTS INTRODUCTION...................................................................................................................................1 COMPARING DIFFERENT STRATGEY SCHOOLS..........................................................................1 STRATEGIC PLAN................................................................................................................................3 Executive summary..............................................................................................................................3 Mission statement................................................................................................................................3 Vision statement..................................................................................................................................3 Goals and objectives............................................................................................................................3 Internal analysis...................................................................................................................................4 External analysis..................................................................................................................................4 COMPETITIVE ADVANTAGE STRATGEY FOR STRENGTHENING THE MARKET SHARE IN UK AND JAPAN.....................................................................................................................................6 RECOMMENDATION...........................................................................................................................8 REFERENCES........................................................................................................................................9
INTRODUCTION Strategic management is referred as the process through which continuous planning, monitoring as well as evaluation of all the important components of business is being done. Further, it is being planned for meeting out the desired goals as well as objectives. It is the best way by which the firm can get the overall direction (Kazmi, 2008). The current research report also deals with strategic management plan and its related concepts. It is based on the case study of ‘Just Toyz’ which is a Thai online wholesaler supplying both to UK and Japan. As a business consultant to the firm, the main aim is to develop a strategic plan of the firm. With this, the firm will be able to plan, monitor and analyse the progress and can alter their priorities. The research report will throw on mission, vision and values of the firm and will also conduct internal analysis of Just Toyz. Different strategy schools and competitive advantage strategy will be discussed. The final part of the report will include conclusion and recommendation to the firm related to its short as well as long term goals. COMPARING DIFFERENT STRATGEY SCHOOLS Talking in relation with the strategy, it is being referred as a pattern of decisions related to the policies as well as practices linked with the organizational system. This system involves all the functional areas and to comprehend these areas, formulation of strategies at each level of the firm is required. According to Mintzberg, there are ten schools of strategy which is categorized into prescriptive as well as descriptive schools (Cole, 2013). The former one includes design, planning and the positioning schools. The later one encompasses seven types of schools i.e. entrepreneurial, cognitive, learning, configuration, environmental, power and culturalschools. Allof these schools of thoughtsimpactsthe studiesrelated to organizational behaviour directly and indirectly at the outset. Design school– This is being defined as thought process of strategy formulation in which main attention is being given on conception of ideas. The firm perform SWOT analysis and carries out operation in stable environment where there is not disturbance ofthecompetitors.But,theinternalanalysisisbasedonthecompany’sown knowledge. Planning school– It focuses on planning of the entire strategy in a rigorous way to achieve growth. Plans are being documented and referred as the time of making decisions. Here, in this school of thought, management gets the direction to move forward. However, if anything happens beyond planning, the whole plan gets affected (Alkhafaji, 2011). 1
Positioning school –In this kind of school thought, the management of the firm makes decision regarding the promotion of the product in the top intellects and then decisions are made accordingly. Identification of competition prevailing in the market needs to be done. Tools such as value chain, porter’s five force are being used. Similar to the design school, this school of thought also assumes the market as it is and does not take into account alterations in the business environment (Taylor and et.al, 2012). The entrepreneurial school– The main emphasis is being given on the chief executing officer of the firm. Trust is placed on the leaders and whatever decisions he takes, is followed by the company. CEO needs to have strong leadership skills and must be visionary. The problem with this type of school is how to search for such leader. For instance, if marketing strategy needs to be developed than the leader might prove to be wrong and thus, dynamic personality which is very strong in the business front is needed. The cognitive school– It helps in studying the perception of the people and their information. The example of this school is Johari window. Further, this thought of school involves psychological and mental process to know what’s going in the mind of consumers. However, cognitive school of thought is not practical after certain level. Learning school– Under this, the management of the firm overview the things that has happened in the past and based on that formulates future strategy. It just guides the business based on the previous road which has gone well for the firm. It certainly not a right decision because the road can alter anytime (Hill, Jones and Schilling, 2014). Power school– People who have the power takes the decisions and they can be anyone like customer, supplier, stakeholder etc. It is also being regarded as the realistic thought process as in firms there exist numerous people and power should be given to few of them. However, if these powerful people does not consider the feedbacks and measures for improvement, problems soon starts. The cultural school– This school of thought of strategy formulation states that a positive culture within the company can provide effective direction. Such type of school of thoughts is useful in case of acquisitions and mergers. But, there are chances of resistance to this thought as people might not unite and line the idea of change. Environmental school– In this type of school, emphasis is being given on the environment.Situationalanalysisisbeingregardedasthemostimportanttool. Nevertheless, it is based totally on situation and therefore, can be used when it is totally based on environmental factors (Halbert and Ingulli, 2014). 2
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The configuration school– This school of thought says that strategy needs to be configured as it cannot be derived from simple set of values. Stability is being achieved in the business through different ways under this school of thought. Based on the current position of Just Toyz in the market and looking into the above discussion on different schools of thoughts, the design and positioning school of thoughts is quite suitable for the firm as the firm need to pay attention on conception of ideas and decision regarding the promotion of the product in the minds of consumers in Japan and UK (Kourdi, 2015). STRATEGIC PLAN Executive summary Just Toyz is a Thai company engaged into the business of supplying toys online to both Japan and UK. The firm was established as an internet start-up and in three years it turned out to be a multi-million company. For achieving further growth and to guide the daily decisions of “Just Toyz”, strategic planning is being used as an instrument by the firm. It also helps the firm in evaluating the progress and they can pay attention on changing their priorities as well. The strategic planning of the firm will involve mission, goals, internal and external analysis significantly. Mission statement The main mission of the firm is to inspire and develop children in order to think creatively. They should be able to release their potential for shaping their future. Vision statement The main vision of the firm is to become of the leading online wholesaler of toys all across the world. Goals and objectives The goals and objectives of the firm are being defined underneath: To become of the leading brand all across the world To enhance the sales of the toys by 50 percent in the coming years Launching operations in new countries Increasing the share in the market by capturing new areas such as France, Germany and Italy 3
Internal analysis SWOT analysis Strength One of the major strength of the firm is its higher online sales. Further, Just toyz also has a strong brand image in the market. Further, the toys being supplied by them company includes educational features that helps in facilitating skills development of children (Jackson, Joshi and Erhardt, 2013). Weakness Just toyz is supping toys only to Japan and some parts of UK and thus, have lower presence in the global market. Further, there is huge competition in the market which makes it difficult for the firm to achieve more sales. Opportunities Themainmarketofoperationofthe company is in Japan and UK and thus, they should expand their business operation in some of the other prospective markets such as Germany, France and Asia Threats Increasing popularity of the online games and computer games might result in the loss of market share of the company. In addition to this, Just toyz might also face a great threat from substitute products. Continuous advancement in information technology in toy industry is taking place which might impact the sales of Just toyz (Muhammad, 2015). External analysis Porters five force analysis Bargaining power of the suppliers– the bargaining power of the suppliers is moderate in the toy industry. This pertains to the fact that the offering of the company is dependent on the standardized inputs like plastics and chemicals. Because of the brand’s high power, the firm is able to retain its supplier’s bargaining power. Bargaining power of buyers– The bargaining power of the buyers is quite high in the global toy market. For the purpose of minimizing this threat, the firm needs to strive for maintaining reasonable prices for its products. Through this, they can sustain relations with its valuable customers. Furthermore, Just toyz is also putting in efforts for developing different promotional strategies for restricting them to make purchase from the rivalry firms (Dobbs, 2014). 4
Threats from substitute– The threat of substitution is also very high. There are many firms which are making use of standard technology and selling products in the online markets with quality services. Further, increasing use of online and computer games also influencing the buying habits of the consumers. Parents are now desiring that to make their children more connected with extra-curricular activities such as hobbies and sports. As children are getting more engrossed in such activities, it has become a great threat for the toy and gaming industry. Threats from new entrants– The threat of new entrant is relatively high which means that the firm is required to develop large and strong distribution network. Better technologies need to be developed for establishing as a strong competitor in the global market. The rivalries of the firm have already taken the best location within the market and thus, Just Toyz need to compete with those already existing stores at an accessible market area in order to achieve a competitive edge (Bischoff, 2016). Competitive rivalry– The threat pertaining to competitive rivalry is quite low for Just toyz. This is because of the fact that there are very less online wholesalers that exist in the global toy industry. Since, the firm has acquired enough amount of loyal customers in past three years, the competitors of the company is not in a position to generate sufficient risks for its. Talking in relation with the toy industry, it is characterized by oligopolistic market wherein limited firms are operating in few nations all around the world. However, the level of competition is quite intense. Thus, for the purpose of gaining a huge market in this area, the Just toyz has also started including incumbents from the electronic sectors. In addition to this, the intensity of rivalry has helped the firm in determining its value generation by fierce competition which shows high internal competitiveness for the firm (Cordon and et.al, 2016). Pestle analysis Political Trade relation of the nation with other nations of the world might result in some political conflicts (Roos, Victor and Statler, 2014) Because of the multi-part culture in UK, the political environment is quite impressive Global financial crisis can influence the operations of the firm Toy educational industry is expanding and thus, can be viewed as an economic stable from past few years The market of UK will be a great opportunity for gaining larger 5
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Economicmarket share (Van den Bosch and De Man, 2013) Profitability of Just Toyz can be harmed by hedging of currency Social Religion might impact the operation of the company Rising level of globalization is resulting into mix of varied cultures Increased demand of electronic goods in the market Technology Young population is becoming technology savvy and thus, Just toyz needs to advance their technology With this, company can compete strongly with the other companies operating in the market (Hamilton and Webster, 2012) Legal Rules and regulations of the market might affect the functioning of the firm Counterfeit products prevails largely in this industry and thus. copyright laws and patent rules of the nations should be considered Environmenta l UK has strict rules and regulations related to environmental protection Product with eco-friendly materials should be used (Bayode, Adebola and Adebisi, 2012) Rising issue of carbon emission and other harmful gases COMPETITIVE ADVANTAGE STRATGEY FOR STRENGTHENING THE MARKET SHARE IN UK AND JAPAN The major issue for the business strategy is to search a direction for attaining a sustainable competitive advantage in the market. A competitive advantage is a benefit which is achieved by providing greater value to the consumers either through low prices or high prices with greater benefits and services. According to porter, there are four generic business strategies which can be used for gaining competitive advantage (Freeman, 2010). As per him, all these strategies relates to the degree of narrowness and broadness of the business activities along with the degree to which the business is seeking to differentiate its products and services. Explanation of these strategies are being done below: Cost leadership– Seeking help from this strategy Just Toyz can become the lowest cost producer within the industry. This is a traditional method being used for achieving the goal to produce large scale. Further, for becoming a lowest cost 6
producer, it is vital for the firm to have high capacity utilization, production, use of technology, effective distribution channels etc. Differentiation leadership –In this strategy, the company can target larger market segment and achieves competitive edge all throughout the industry. One or more than two criteria is used by buyers in the market and then business is being positioned uniquely for meeting the demand (Ansoff and McDonnell, 2010). Differentiation & cost focus– In this type of competitive advantage strategy, the main aim of the firm is to differentiate within some of the small target market segments. Special needs of the customers is considered and helps the company to differentiate it from its competitors. It is a kind of a niche marketing strategy. The competitive strategies being suggested by Porter are quite suitable for seeking an edge over the firms operating in the market. Talking in relation with the differentiation ad cost leadership strategies, they helps in seeking competitive advantage in a broad range of market. On the other hand, differentiation and cost focus strategies pays attention towards narrow industry. In the current case, Just toyz need to expand their market share in UK and Japan (Freeman, 2010). They want to strengthen their share in both the international markets. In this regards, differentiation leadership strategy will assist Just toyz to achieve its desired goals and success. This is because of the fact that differentiation is all about charging premium price which generally covers the extra manufacturing costs and offer valid reasons to the customers for preferring the products over the other competing products which are less differentiated. The firm can achieve this by adopting different ways, though it will not prove easy for them and will definitely need substantial as well as sustained marketing investment and this will encompass: Offering superior quality of products such as durability, benefits, reliability and features. Strong branding the markets of Japan and UK, for example, brand loyalty and strong customer recognition (Andersen, Kragh and Lettl, 2013) Need to focus on industry wide distribution all around the major channels. In other words, the products or the brand company is selling should be stocked by them There should be consistent promotional support which is often ruled by sponsorship and advertising. RECOMMENDATION Considering the above discussion and evaluation of the current case of Just Toyz, it is highly suggested to the firm to focus on its short term as well as long term goals. In regards 7
with the short term goals, Just Toyz want to supply educational toy to the people all across UK and Japan and thus, they should sale creative educational toys. Further, the toys should be offered as per the taste and preferences of the children and parents. It is also vital to comprehend the strategies of the competitors before setting up a business or market in UK. Concerning this, it is highly recommended to the company to have a strong community, as it is very essential for understanding the taste and preferences of the consumers (Boyne and Gould-Williams, 2003). More initiatives both offline as well as online should be researched in order to augment the reaction with children and their parents. This is crucial because, most of the children like toys of Just Toyz but their parents will going to pay for all this stuffs. Thus, efforts should be made to persuade them and make them feel that the product is reliable. Furthermore, online database for parents should be used wherein they can react along with the other family and can make a community of parents who significantly escalate the value of endless ideas, innovation and creativity. Underpinning the discussion further, the long term goals of the firm should include to become one of the leading toy company in the world, increasing the share in the market and capturing market through brand. For achieving the long term goals, it is highly suggested to Just Toyz to become different and reliable from their competitors. This will significantly reflects the reputation of the company in the market. The firm can open a restaurant with the main theme of Just Toyz world. There are few opportunities in some of the nations in UK for kids and parent approach game. Therefore, Just Toyz can become a way to them by introducing such products. Moreover, they can also earn profits from other services as well instead of just earning through selling toys. This new concept will being new trend and innovation for customers. Seeking help from the chain of system, brand value and creative ideas can be sent to the customers such as dining area, kids play area, toy style decoration, small museum etc. for making them connect with the unique style of restaurant. 8
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REFERENCES Books and journals Alkhafaji, A.F., 2011. Strategic management: formulation, implementation, and control in a dynamic environment.Development and Learning in Organizations: An International Journal, 25(2). Andersen, P.H., Kragh, H. and Lettl, C., 2013. Spanning organizational boundaries to manage creative processes: The case of the LEGO group.Industrial Marketing Management, 42(1), pp.125-134. Ansoff, H.I. and McDonnell, E.J., 2010.Implanting Strategic Management. Europe: Prentice Hall. Bayode, O., Adebola, B. and Adebisi, O., 2012. Strategic Environmental Scanning and Organization Performance in a Competitive Business Environment.Economic Insights – Trends and Challenges. 24, pp.24-34. Bischoff, A.L., 2016.Porters Five Forces. Innovation through Business, Engineering and Design: How does rivalry in a market as well as customer expectations influence the process of a design concept from a business perspective?Berlin: GRIN Verlag. Boyne, G.A. and Gould-Williams, J.S., 2003. Strategic Planning and the Performance of PublicOrganizations:AnEmpiricalAnalysis.PublicManagementReview,5(1), pp.115–32. Cole, A.G., 2013.Strategic Management.Cengage Learning EMEA publications Cordon, C., Garcia-Milà, P., Vilarino, T.F. and Caballero, P., 2016.Strategy is Digital: How Companies Can Use Big Data in the Value Chain. Berlin: Springer. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry analysis templates.Competitiveness Review, 24(1), pp.32-45. Freeman, R., 2010. Strategic Management: A Stakeholder Approach.Cambridge University Press. Halbert, T. andIngulli, E., 2014.Law and Ethics in the Business Environment. SAGE. Hamilton, L. and Webster, P., 2012.The International Business Environment.Oxford University Press. Hill, C., Jones, G. and Schilling, M., 2014.Strategic management: theory: an integrated approach.Cengage Learning. Jackson, S.E., Joshi, A. and Erhardt, N.L., 2013. Recent research on team and organizational diversity: SWOT analysis and implications.Journal of management, 29(6), pp.801-830. 9
Kazmi, A., 2008.Strategic Management and Business Policy. 3rded. New Delhi: Tata McGraw- Hill Publishing Company Limited. Kourdi, J., 2015.Business strategy: a guide to effective decision-making. New Jersey: Public Affairs. Muhammad S.C., 2015. A Comparative Study of Strategic Planning Practices of SMEs and Large Sized Business Organizations in Emerging Economies: The Case of UAE. Strategic Change, 24(6), pp.553-567. Roos, J., Victor, B. and Statler, M., 2014. Playing seriously with strategy.Long Range Planning, 37(6), pp.549-568. Taylor, W.C., Franzini, L., Olvera, N., Poston, W.S.C. and Lin, G., 2012. Environmental audits of friendliness toward physical activity in three income levels.Journal of Urban Health, 89(2), pp.296-307. Van den Bosch, F.A.J. and De Man, A.P., 2013.Perspectives on strategy: contributions of Michael E. Porter. New Jersey: Springer Science & Business Media. 10