This assignment focuses on strategic analysis using the BCG Matrix and stakeholder mapping. It delves into how these tools can be used to evaluate a company's product portfolio and identify key stakeholders. The assignment provides examples of applying these frameworks and references relevant academic literature.
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Business Strategy 1
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TABLE OF CONTENTS INTRODUCTION...........................................................................................................................3 TASK 1............................................................................................................................................3 1.1 Assess how business missions, visions, objectives, goals & core competencies inform strategic planning when formulating strategic plans..................................................................3 1.2Analyze the factors that have to be considered when formulating strategic plan..............4 1.3 Evaluate the effectiveness of techniques used when developing strategic business plans....5 TASK 2............................................................................................................................................6 2.1 Analyze the strategic positioning of VW AG by carrying out an organizational audit........6 2.2Carry out an environment audit for VW AG......................................................................7 2.3 Assess the significance of stakeholder analysis when formulating new strategy for VW AG................................................................................................................................................8 2.4Present a new strategy for VW AG...................................................................................10 TASK 3..........................................................................................................................................11 3.1 Analyze the appropriateness of alternative strategies relating to market entry, substantive growth, limited growth or retrenchment for VW AG................................................................11 3.2Justify the selection of a strategy.......................................................................................12 TASK 4..........................................................................................................................................12 4.1Assesstheroles&responsibilitiesofpersonnelwhoarechargedwithstrategy implementation..........................................................................................................................12 4.2 Analyze the estimated resource requirements for implementing a new strategy for VW AG ....................................................................................................................................................13 4.3EvaluatethecontributionofSMARTtargetstotheachievementofstrategy implementation in VW AG........................................................................................................14 2
INTRODUCTION The objective of the report is to study Business Strategies that can be appliedto get succeed in the business. Strategy is required by everycompany to achieve its targets and objectives . Strategic plan is formulated by the top level management members which is then communicated to the other members of the team (Scholes, 2015). Study will asses importance of mission statements, visions , goals and objectives of the company to formulate business plan. Factors involved in formulating strategic plan such as innovation, communication, resources etc willbestudied.BCGmatrixtechniquewillbeusedindevelopmentofstrategicplan. Organization audit of Volkswagen will be performed using SWOT analysis and PESTEL analysis will be used for environmental audit. Market penetration and Market development strategies will be used for VW and appropriateness of this strategy will be analyzed. TASK 1 1.1 Assess how business missions, visions, objectives, goals & core competencies inform strategic planning when formulating strategic plans The process of defining strategies of an organization in which it will direct its works and make decisions by using available resources to implement the current strategy is known as strategic planning. Strategic planning for any business involves certain elements that are described below: ï‚·Mission: Mission statement of the organization is identified before planning any strategy. Objective of mission statement is to fulfill goals of the organization. Mission statement is useful to identify market size of any company. For example, VW's mission statement is to offer safe and attractive vehicles to the customers which does not produce sound as it could be harmful to others. Environmental friendly vehicles can challenge in inflexible market by setting standards into specific field (Leonidou and et.al., 2015). ï‚·Visions: Vision statement presents description about what company would accomplish in the long term future. It also declares mid term goals of the company. Basically Vision is the steps required to attain mission statement. ï‚·Goals:Goal represents something that you working on to achieve. It includes planning for accomplishing targets. Goals can be classified into categories: short term goals and 4
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long term goals. Short term goals contributes in achieving long term goals of the organization. It involves challenges that are being faced on daily basis. Long term goals includes attaining company's objectives in order to achieve mission statement. ï‚·Objectives:Forachievinggoalssuccessfullyblueprintofthestepsinvolvedare formulated. Basic objective of the VW are : 1.Customer should be satisfied with the product. 2.Usage of advanced technology to facilitate comfort. 3.Revenue generation should get increased. ï‚·Core competencies: It is useful in strategic planning which involves utilization of resources in order to achieve target. 1.2Analyze the factors that have to be considered when formulating strategic plan For aching desired goals and objectives strategic planning is required to be formulated. Several factors are involved in strategic planning that requires to be checked. But choosing these factors becomes difficult when they are to be chosen opposite to priorities. Factors involved in formulation of strategic plan are described below.ï‚·Targets:Top level management sets desired benchmark with the aim of increasing profits to the organization. Analytical skills are required to set the targets. Logical skills are also involved in the process to encounter analysis of profit and losses for the next year. The most important consideration during setting up of targets is time.ï‚·Resources:To achieve strategic plan resources are required by the organization. Formulation of strategic plan is carried out by considering goals and objectives of business. For the above purpose resources are required such as knowledge, equipment and skills (Rothaermel, 2015). Human capital and finance are also needed for fulfillment of targets. Output of the procedure is the deciding factor in allocation of resources. Lack of resources can bring problems to the organization.ï‚·Communication:Forsuccessfulimplementationofstrategicplancommunication between management levels is required. The process starts with informing about the strategic plan to the employees of the organization. Input for the plan will be provided by employees by various means such as meetings and group discussions. Surveys can also be conducted and feedback can be taken asking their views and perceptions. 5
ï‚·Innovation:Innovation is required for business to be successful. Innovative ideas brings creative products . Risk factor is involved in innovation. 1.3 Evaluate the effectiveness of techniques used when developing strategic business plans BCG matrix: Boston Consulting Group Matrix can be used for developing strategic business plans. Matrix constitutes four cells (2*2) which is an effective analysis method. Graphical representation of the firm is provided by BCG so that businesses can be examined consideringmarket share and growth rates of the organization (Hambrick and et.al., 1982). According to the BCG matrix, high and low are the two categories for classification of business that depends on market share and growth rate. BCG matrix consists of four cells where: ï‚·horizontal axis represents relative market share ï‚·vertical axis represents market growth rate Mid point of relative market share is set at 1.0. Average growth rate comes into existence if all theStrategic Business Unit are working in similar industry. If Strategic Business Units are working with different industries ,at that time mid point is put at the growth rate . (Source:BCG Matrix, 2017).ï‚·Stars: Stars represents high market share and high growth rate of the organization. They have capabilities to produce cash as a result of growing and emerging market. Large amount of investments are required for maintaining lead in the market. 6 Illustration1: BCG Matrix
ï‚·Cash Cows: It represents high market share and low growth rate. Small amount of investments are required by cash cows. Cash produced by it can be used for investing in other businesses.ï‚·Question Marks: Question marks demonstrates low market share and high growth rate. Large amount of investment is required for maintaining shares into market. Viability of the firm is required to be identified. ï‚·Dogs:Dogs represent low market share and low growth rate. They don not require large amount of cash and does not produce cash either. As market share is low due to which they bear downside in costs. TASK 2 2.1 Analyze the strategic positioning of VW AG by carrying out an organizational audit SWOT analysis can be used for carrying out organizational audit of VW. SWOT analysis is used to identify strengths and weaknesses of any organization. It can also be used to identify opportunities for the company and potential threats of the organization. Volkswagen AG is one of the prime manufacturer of automobiles that produces more than 10 million automobiles every year. In China company and widest has the largest market (Hollensen, 2015). Volkswagen is coming up with new strategy 'TOGETHER-2025'. It focus is to deliver its basic goals by 2025 year. SWOT Analysis of Volkswagen Strengths ï‚·It is one of the biggest and extensive automobilecompanycomparedto other companies of automobiles. ï‚·'TOGETHER-2025' is the new strategy of Volkswagen. ï‚·Strategies to become more varied and diverse into world (Jurevicius , 2016). ï‚·Team work among other companies.ï‚·LocalChinesemanufacturersof Weaknesses ï‚·Brandisgettingweakenduetoits negative promotion and advertisement. ï‚·In U.S. Market recall rate is highest. ï‚·Market share is low in markets of U.S. ï‚·They have very few expertise. ï‚·Theydonothaveabilitiestomake vehicles that can be driven by batteries. 7
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automobileshavejointventurewith Volkswagen. Opportunities ï‚·There are chances that in future prices for fuel may increase. ï‚·Skills can be gained. ï‚·Competencies can be procured. ï‚·Demandforautomaticautomobiles may arise. ï‚·Exchange rate of euro may decline.ï‚·Emphasisonimprovementof sustainable policies in order to protect brand image . Threats ï‚·High competition into market. ï‚·Chargesandfinesthatmightbe required to be settle. ï‚·Regulationsofgovernmentare increasing that may become threat in near future. 2.2Carry out an environment audit for VW AG Pestel Analysis can be used for performing environmental audit. Objective of performing PESTEL analysis is identifyexternal factors that are affecting company and possibilities of the factors that may change . ï‚·Political : Political factors are used to construct legislation and laws for the firm that helps in making market among its customers. If a company has quality relations then opportunities for making profits gets enhanced. ï‚·Economical: It is required to identify market's economic conditions before putting up any strategic plan. Research helps in identification of potential buyers to the company. Economic factor helps in understanding of economic condition of the country. It also identifies current exchange rate and recession about the country. ï‚·Social: Developing relations with employees and customers ensures smooth working of the process. Staff of the company is required to be trained enough. 8
ï‚·Technological: As technology is changing in every few years, thus it is required to invest more on RANDD so that machines and resources can be identified that could help in making work easier and faster. ï‚·Environment: environmental factors plays significance role in business to get successful. Demand for sustainable development has raised over past decade.ï‚·Legal: Legislation and laws are different for different countries and companies are restricted to follow them. Political factors ï‚·Corruption ï‚·Restriction on importing ï‚·Regulating competition ï‚·laws of education (Jurevicius , 2013) ï‚·Laws of environment ï‚·Laws for Discrimination ï‚·Laws for copyright and patents. Economic factors ï‚·Interest and Growth rates ï‚·Costs for labor ï‚·Policies for Monetary ï‚·Fluctuations in price. ï‚·Trends of stock market may change. ï‚·Availability of Credit. Social factors ï‚·Consciousness about health ï‚·Level of education provided. ï‚·Outlook for work and career. Technological factors ï‚·Change in technology. ï‚·Incentives for technology. ï‚·Infrastructureforinternetand communication. 2.3 Assess the significance of stakeholder analysis when formulating new strategy for VW AG In any organization an important role is played by stakeholders. Stakeholders can have impact or can impact business plan. They could be internal or external employees and customers. It could also be government and union. Stakeholder mapping consists of four dimensions which can be relate as follows: 9
ï‚·Keep satisfied: This section illustrates high power and low interest. Customers of VW AG can be classified into this section . Customers are the key revenue generators in any business. Customers needs should be understand by the firm and hence satisfy customers.ï‚·Manage closely:This section illustrates high power and high interest. People that can be categorize in this section are investors of the company, financial institutions that are financing to the company and share holders of the firm (Yang, 2014).ï‚·Keep informed:This section illustrates low power and high interest. Employees of the VW can be classified into this category. Incentives, opportunities for growth and salary makes int erst into business for the employees. ï‚·Monitor: This section illustrates low power and low interest. Monitoring according to the available time can only help in fulfillment of requirements. Following assessment can be accomplished with stakeholder analysis: ï‚·Analysis helps in identification of stakeholders. ï‚·Determining power and influence level that could be beneficial for the management for designing strategies and business plan. Management of Volkswagen can now identify influence level and accordingly can manage them. 10 Illustration2: Stakeholder Mapping
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ï‚·If importance is given to the stakeholders, it could help in identifying employees expectations that management will fulfill. ï‚·Stakeholder analysis is used to identify expectations of stakeholder into business which is beneficial in maintaining long term relationship with investors that are investing in VW and customers of Volkswagen (Lienert and et.al., 2013). 2.4Present a new strategy for VW AG Strategies helps organization to achieve desired goals and objectives. They are road map to success. Strategy should be designed in such a way that it should achieved objectives of the instigation.NewstrategyforVolkswagenwillbetheMarketDevelopmentandMarket Penetration.Marketpenetrationstrategyisusefulinincreasingmarketvalueofthe Volkswagen's existing products (Zhouand et.al., 2015). It is also used in promotion of new product in the market. Market share of any product can be increased by modifying prices and performing modifications into strategies. Market development will foster Volkswagen to create and set new targets of the existing products into market. Market development targets those customers that have no interest in purchasing products. For example, number of buyers of Volkswagen is very less in U.S. Market. Therefore, Volkswagen could design some strategies to target customers in the same service segment. Pricing of the product could also be changed. Volkswagen could also enhanced its promotional strategies to attract more number of customers. In this way customers can be pulled and develop interest for the brand. As a result, scope of the market value of the VW will also increase. Framework of the plan would be based on following criteria: ï‚·Needs and requirements of customers are required to be identified. ï‚·Benefits of using Volkswagen automobiles are required to be enlightened and promoted in promotional campaigns. ï‚·Innovation are required to be supported by the company because taste of customer changes with the time. ï‚·Customer's Preferences should be considered. ï‚·At the time of delivering value all the processes are needed to be integrated. 11
TASK 3 3.1 Analyze the appropriateness of alternative strategies relating to market entry, substantive growth, limited growth or retrenchment for VW AG Appropriateness of alternative strategies is described below: ï‚·Market Entry:A totally new market is determined by market entry. Volkswagen is available everywhere across the globe and setting up of new market requires large scale study and research work to be successful in operating business (Kramarz and et.al., 2014). There are several factors involved which forms its basis and these are: ï‚·customer preferences ï‚·Taxation by government ï‚·Current taste of customers ï‚·Competition level ï‚·Factors for localization. Market entry strategy will not be fruitful for Volkswagen due to large amount of investment. Risk factor is also involved into it.ï‚·Substantive growth:It is used by the company to maintain market position where competition level is high. Substantive growth can be divide into horizontal integration and vertical integration. In horizontal integration, two or more companies merge with one another. For example, VW Sharan and Ford galaxy. They set up a totally new company which is legally not dependent on others. Resources of the company are provided to the new joint venture. Objective of the merging was to cut down costs which increased market power.ï‚·Limited growth:This strategy limits the growth of VW in certain areas with aim of focusing on several others fields of business. It enables company to develop business in specific area only. It is not reasonable strategy for VW due to excessive competition in the market across the world. ï‚·Retrenchment:During recession time this strategy come into existence. During business losses and large amount of failures, in order to maintain market position company would cut down prices of products (Ungandet.al.,2016). This strategy will also be not applicable for VW as it is required for the company to identify reasons of shifting of 12
customers towards other brandsand thus making promotional strategies and cutting down of costs of product in order to help in revenue generation. 3.2Justify the selection of a strategy Human resources are chosen in such a way that could compete in the competitive world for business to get successful. Due to change in technology, it is required to have skilled manpower to compete in the competitive market. Learning and implementation of new strategies benefits company. As a result quality of the product gets improved which increases profitability of the VW. The objective of VW is to deliver quality automobile without compromising in its quality and should fulfill environmental friendly standards as well. To supply quality product innovationintheexistingapproachisalsonecessaryduetochangeistastewiththe advancement in technology (Eden and et.al., 2013). Justification for the strategy is given below: Suitability:Revenue has increased about 6.7% and as a result operating profit has also increased which is remarkable growth for the company. The profits can be used in opening new training centers where employees can be provided training on the technology which is currently trending in the market. Feasibility:It will identify potential scope for new buyers of the product . Thus, it will help VW to achieve targets and make profitsfrom it. If VW gets successful to increase market in U.S. , then it will have opportunity to grow and enhance profits for the firm. Acceptability:Volkswagen is a global company that hasproduct line in automobile filed.The amount of investment needed can be extracted and analyzed by substantive growth strategy. Transfer and reconciliation are possible with this strategy. Volkswagen is capable enough to use desired customers in effective way with the available resources. TASK 4 4.1Assesstheroles&responsibilitiesofpersonnelwhoarechargedwithstrategy implementation Team work is required in any organization to accomplish goals and targets. It involves top level management, staff, managers and many more. Individual's skillscontributes in implementation of strategic plan.ï‚·Role of Top level management:Top level management comprises share holders , stakeholders, CEO and director of the company. Outline of the strategic plan is prepared 13
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by them. Finance and budget for the project is finalized by the members of top level management (Cassidy, 2016). Meeting is conducted after completion of plan to discuss it with the team members where they will be given detail description of the plan. Targets will be communicated to the team by them.ï‚·Role of Middle level management: Middle level management comprises headsand executives of the department . They are responsible for communicating business plan to the employees of their respective department. They will conduct discussion where objectives of the plan will be shared. Middle level management is responsible to provide direction of working to the front-line management. Business management is used by the departmentsfor supporting strategic plan. Feedbacks will be provided by the team members which will be communicated to the top level management back.ï‚·Role of front line management: It consists of team leaders and supervisors that are responsible forcommunicating roles and responsibilities to the members of the team. Front line management will control activities of the members which would be based on thesettargetsoftheVWandresponsibilitiesassignedtoindividuals.Problems encountered by the members will be conveyed back to the middle level management. ï‚·Role of the employees:Employees are responsible in achieving targets and goals communicated by middle level management (Goetsch and et.al., 2014). 4.2 Analyze the estimated resource requirements for implementing a new strategy for VW AG Resources required to implement strategy is manged by top level management. Demand of the product into market is the deciding factor in allocation of resources. Requirement of resources varies with the type of organization and each company has different strategies to implement plan. Estimation of resource requirements for implementation of new strategy for VW is given below:ï‚·Budgetary resources:Budget is required to be finalized based on market demand . By identifying estimation of output resources are needed to be allocated. For resource allocation current capital is analyzed.ï‚·Personnelresources:ItinvolvesnumberofemployeesrequiredbytheVWfor development of product. Manpower is required to be skilled and trained in order to meet quality of product. Volkswagen is a developed company therefore it can accommodate all 14
the resources. For performanceto be productive and constructive, well trained and skilled R& D team is required.ï‚·Physical resources: Resources involved are machines and manufacturing plant for production of automobiles. New machines would be required with the advancement in technology. ï‚·Technology:Technology is the basic element in any business to be successful in the competitive market (Skinner, 2016). Everyday technology advancements come which are requiredtobeintegratedwiththeexistingproductstoincreaseproductivityand profitability . 4.3 Evaluate the contribution of SMART targets to the achievement of strategy implementation in VW AG Volkswagen isone the leading automobile company in the world. To survive in competitive world implementation of new strategy is required. VW is required to be more innovative. Staff management is needed for remarkable performance as company is recognized by across various parts of world. Long term and short term plans can be formulated by the VW. SMART targets are needed to be achieved. Specific: Setting up of specific targets and goals helps organization in decision making . Communication between different levels of organization becomes easy with the already stated goals (Maxwell and et.al., 2015). Objective is clear which aims at focusing non- buying customers in order to make profits. Output of the production can be increased by increasing machinery capacity. Measurable: This factor is responsible in measurement of achievement of targets of the company. It helps in identificationof the employeesto check whether they are working in correct direction. Attainable: It is the crucial segment into strategy. Success will only be measured if non interested customers buys products. Relevant: It comprises additional investment taken by the company from other than investors. Time bound: Time bound ensure start time and end time of the target. It puts limit on achieving the goal. Quarterly outcomes of the turnover of the business presents actual outline of the plan. 15
CONCLUSION Study was focused on assessing importance of business strategies. For any business to get successful, strategic plan is required for that. BCG matrix was used in evaluation of the strategic plan.SWOTanalysiswasperformedonorganizationalauditandPESTELanalysiswas performed on environmental audit of Volkswagen . Significance of Stakeholder analysis was studied.New strategy for VW was presented. Analysis on the appropriateness of the strategy was performed. Roles and responsibilities of different levels of members has been identified. Contribution of SMART targets in the achievement ofimplementation of strategy in VW has been evaluated. 16
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