Strategic Business Planning

This assignment delves into the core concepts of strategic business planning. It examines various theoretical perspectives on strategy formulation, the critical factors that contribute to effective planning processes in organizations, and the impact of technology on businesses. Additionally, it explores global business strategies and the challenges faced by companies operating in international markets.

Strategic Management
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TABLE OF CONTENTS
INTRODUCTION................................................................................................................................3
LITERATURE REVIEW OF CONTENT AND PROCESS APPROACHES TO STRARTEGY.......3
COMPARATIVE ANALYSIS OF SELECTED MODELS.................................................................6
BUSINESS EXAMPLES.....................................................................................................................7
CONCLUSION....................................................................................................................................8
REFERENCES...................................................................................................................................10
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INTRODUCTION
Strategic management is all about identifications and description of the strategies that carry
out by the managers to attain better outcomes and take competitive advantages for the companies. It
can also be defined as a bundle of decisions and actions that executives undertake to perform the
work and help in deciding the outcome of the organizations in the terms of performance (Mathur,
2011). It is nothing but planning for both predictable as well as unfeasible contingencies. This is the
methods in which strategies set the objectives and continue needed efforts to attain them. Strategic
management compacts with developing and executing decision related to future direction of a
company. So with the help of this, it becomes easy for the firm to identify the direction to move and
achieve objectives (Hyde, 2014). It can be considered as continues process where evaluation and
control actions related to business operational activities takes place. Along with this, strategic
management assists in assessing the competitors’ strategies, goals and objectives to beat the
competition level. The present study is based on Strategic Management subject and to understand
about this, a statement of book Exploring Corporate Strategy that is written by Gerry Johnson,
Kevan Scholes and Richard Whittington is taking into the consideration (Parnell, 2010). The main
objective that will highlight under this topic is role of different perspectives of social science
disciplines inform strategic management in the different organizations.
LITERATURE REVIEW OF CONTENT AND PROCESS APPROACHES TO
STRARTEGY
As per the view point of Chernev, 2012, “strategy formulation is an important part of every
organization” (Chernev, 2012). It is a process of determining appropriate courses of action to
achieve organizational objectives in more effective manner. The approaches of strategy formulation
and its management can be categorized into process and content approaches. In this context, Das,
2011 has stated that “critical question analysis is a type of content strategy” (Das, 2011). Under this,
when a company formulate a strategy for the business, four questions is taking into the
consideration. These are purpose and objectives of the organization, where is the company presently
going, existing environment in which firm is exist and what modes can be used to better achieve
organizational objectives in the future. By supporting this statement, Mathur, 2011 has asserted that
“at the time of development of strategy, these contents have mentioned to make the tactics more
effective and appropriate” (Mathur, 2011). This information clearly explains about the current
performance level of the company determine in the marketplace. Along with this, it helps in find out
the areas where improvements will be required in the future.
On the other hand, Ferrell and Hartline, 2010, has defined that “with the help of SWOT
analysis, a company can formulate the different kinds of strategies to attain the objectives of the
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business in right manner” (Ferrell and Hartline, 2010). The following process approach of strategy
aids in match internal organizational strengths and weaknesses with external opportunities and
threats. By doing this, a firm can highlight those areas which allows the business to take
competitive advantages including different opportunities of growth along with those factors that
may affect the activities of firm in negative way. In the context of the above statement, Flander,
2014 has opined that “SWOT analysis facilitates the managers of the organizations to carefully
review about strengths and opportunities that minimize the impact of the threats and weaknesses of
business” (Flander, 2014 ). The outcome of the following strategy approach helps in developing the
right strategies to ensure the success of the venture in the different situation. Along with this, it
allows to align the formulated tactics with the set objectives in appropriate manner.
As propounded by Hyde, 2014, “BCG Growth Share Matrix is content strategy approach
that helps managers to develop organizational strategy by considering the various factors” (Hyde,
2014). It is much popularized portfolio analysis that based on market share of business and the
growth of markets in which a company exists. At the time of using the following tool, it is
important for the organization to analyze the significance of existing organizational strategies to
achieve the business objectives. In the contrast of the above statement, Kiptoo and Mwirigi, 2014.
has asserted that “experience curve is very helpful process approach of strategy formulation”
(Kiptoo and Mwirigi, 2014). The following tool was developing by the Boston Consulting Group in
1966. The hypothesis behind using this method is that total per unit costs declines systematically by
as much as 15-25% every time cumulative production or a process double. In the support of this,
Njeru, Stephen and Wambui, 2014 has supported that “BCG matrix helps the organization to
develop the strategies for different business activities by considering the cost structures” (Njeru,
Stephen and Wambui, 2014). It allows the company to analyze the cost positions of the competitors
and helps in attaining the lower costs to gain more market share. For example, BCG tool aid
manufacturing company to enhance cost structures in the right manner. With the application of this,
firm can develop various strategies to minimize the costs in several business or operational areas in
effective manner.
According to Parnell, 2010, “corporate strategy and portfolio theory is a context based
strategy approach” (Parnell, 2010). The concept of this tool is plotting of graphs based on the
market share and industry growth rate of an organization. With the help of this, organization can
plan their strategic development process. For example, venture is planning to invest more working
capital into the business. By taking consideration of growth share matrix, it becomes easy to
formulate the tactic where to invest the finance to achieve business objectives. So, the following
tool helps in prepare the strategies as per the situation of the market by minimizing the risk contains
in that. But Rumelt, 2010 has opined that “competitive advantage is the most effective strategic
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approach to develop strategies by considering the business objectives” (Rumelt, 2010). The
following model can be divided into two types: lower cost and differentiation. The advantage of this
method is it allows an organization to outperform its competition such as superior market position,
skills, or resources. By considering this aspect, it becomes easy to develop and execute the
strategies for the business in various manners. For instance, a firm wants to take competitive
advantage in the market place by serving more geographical areas. For this, management can make
strategy either to go with diversification or low cost approach to attain the purpose. On the basis of
this, a right plan can be made and achieve the set aim. It will allow the firm to sustain in the
industry and take competitive advantage.
On the other hand, Abraham, 2012 has stated that “Porter Five Forces analysis is a process
based strategic approach” (Abraham, 2012). It helps in analysing the profitability of industries and
the industry structure or environment. The following framework includes the bargaining power of
buyers and suppliers, the threat of new entrants, the availability of substitute products, and the
competitive rivalry of firms in the industry. On the basis of these elements, an organization can
formulate the strategies for different organizational objectives. In the above context, Allison and
Kaye, 2011 has asserted that “the five forces components help in defining how an organization can
use these forces to obtain a sustainable competitive advantage either by lower cost or
differentiation” ( Allison and Kaye, 2011). For example, a company want to maximize it
profitability by competing in industry with favourable structure. In this context, it becomes essential
to develop or prepare a strategy by considering Porter Five Forces framework to accomplish that
objective. By doing this, it becomes easy for the business to take steps in the direction of growing
the overall profitability in the marketplace as compare to rivals.
As per the view point of view, .Carlson, Harris and McLeskey, 2013“Porter's generic
strategy framework is also a kind of process based strategic approach” (Carlson, Harris and
McLeskey, 2013). It contains four strategic targets: cost leadership, differentiation, or focus. It can
be applied to any size or kind of business. As per this model, a company must only choose one of
the three strategies otherwise there is risk that the business would waste precious resources that has
been used at the time of strategy formulation. Porter's generic strategy technique works over the
interface between cost minimization strategies, product differentiation strategies, and market focus
strategies. In support of the above opinion,Conduit and Mavondo, 2015 has explained it future that
“a company which deals in multiple business areas can target more than one segment” (Conduit
and Mavondo, 2015). In this, it is very important to ensure that which strategy will help in survive
in the marketplace and provide huge opportunities of growth. For instance, a venture is planning to
increase its market share by low cost products to its customers. In this respect, management will
develop a strategy that will base on cost leadership concept. This will pursued the highest market
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share position and selling of low cost advantages to the organization. The above discussed different
kinds of content and process based strategy formulation approach; it has determined that it has
assisted the organizations to develop different tactics to attain the business objectives.
COMPARATIVE ANALYSIS OF SELECTED MODELS
According to, Dameron and Durand, 2013 “SWOT analysis tool is the most effective
framework for overall strategic position analysis and develop the business strategies on the basis of
it” (Dameron and Durand, 2013). The key aim of it is to determine those tactics that will align
organization resources, capabilities and objectives with each other. In this respect, Ferrell
and Hartline, 2012 has explained that “SWOT analysis is the tool of information for strategic
planning” (Ferrell and Hartline, 2012). It assists the management to find organization’s strengths,
reverse its weaknesses, maximize the opportunities and overcome business threats. Along with this,
it helps in identify core competencies of the firm in order to setting of objectives for strategic
planning. So, by including all these information, a venture can develop its strategies for various
purposes in an effective manner. Author has future stated that for example, to assess a product or
brand or the outsourcing of a business function, SOWT analysis play an important role. The reason
of this, it gives some important information about the organization which assists in developing new
strategies or modifies the existing once.
On the other hand, Hamilton and Webster, 2015 has opined that “Portfolio Analysis is much
better method as compare to SWOT” ( Hamilton and Webster, 2015). The reason is because of the
limitation of this technique. With the application of SWOT, there are some factors which are not
under control or assess by the company itself. These are such as price increase, government
legislation, economic environment etc. These all information cannot be gathering or find from the
SWOT analysis at the time of strategy formulation. In the support of the above statement, Kapferer,
2012 “Portfolio Analysis is effective strategic model as compare to SWOT analysis because it
defines the risk profile of the company in right manner” (Kapferer, 2012). This information helps
the management of an organization to make tactics to deal with those identified risks. For example,
with the help of the following framework, a firm can make sure about the risk of investment in the
new business areas. On the basis of this, it becomes easy to make strategy or plan to overcome the
impact of those risks on the business growth. Apart from this, Muellerand and Naffziger, 2015 has
opined that “Portfolio Analysis aids the enterprises to make comparison of assets to indexes over
any given time period” (Muellerand and Naffziger, 2015). By this, variety of resources clubbed
together to determine how they are performing in relation to a variety of similar indexes. It gives an
indicator of whether business portfolio is performing under or more than the expectations. On the
basis of the outcomes, the potential strategies to enhance the performance level or minimize the
issues that affect the performance of business in negative aspects can be prepared by the top
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management.
While, Needle, 2010 has explained that “Portfolio Analysis has not applicable for complex
products portfolio because it is not possible to determine the relation between different products”
(Needle, 2010). In this regards, the limitation of the following framework can be overcome by BCG
matrix. It is very helpful for higher management to assess balance in the company current portfolio
of Stars, Cash Cows, Question Marks and Dogs terms. On the basis of this, it assists the executives
to decide and prepare for future course actions in the form of strategies to deal with the marketplace
situations. According to Piercy and Morgan, 2015, “BCG matrix is the reputable and long-standing
strategic model which enables the organizations to cope up with the significant changes in the
competitive environment” (Piercy and Morgan, 2015). On the basis of this, it becomes easy for the
business to measures the market growth and relative market share that are available to the company
with the competitive assessment. On the basis of this, it becomes easy to develop strategies for
business objectives. In contrast of the above positive comment, Stevens and et.al, 2013 has stated
that “BCG matrix is an important model to allocate resources for ventures to pursue market share,
goals and seeking experience curve benefits” (Stevens and et.al, 2013). By considering all these
elements, a company can prepare its strategies to achieve all kind of competitive advantages.
But Chernev, 2012 has asserted that “there are limitations of BCG matrix which has some
effect the real implementation of strategies of organization” (Chernev, 2012). It has not helped the
firms to appropriately define the target market. For example, Apple define is phone market either in
all mobile phones or smart phones segment. It is only compete in the smart phone sector but there
are many companies who are dealing in both smart and non-smart phone sub-markets. So, it
becomes difficult to define the target market to those businesses which are operating in both areas.
The result of this, organizations has not able to prepare their survival strategies.
BUSINESS EXAMPLES
There are various organizations which are using different strategic models to make strategies
for various purposes. In this context, Nestle is one of the companies that apply BCG matrix to its
business. It is a multinational food and beverage producer. In the question mark quadrant, Magi 2-
minute Noodles presently needed lots of investment with the aim of to capitalize on the growing
cooking segment (Njeru, Stephen and Wambui, 2014). The reason is it is not offering the highest
return on investment to Nestle’s brand portfolio. On the other hand, from the evaluation of BCG
matrix, it has determined that mineral water of cited organization has come under the star category.
It has provided the benefits to the business because of combination of healthier lifestyle trends and
emerging markets. But to differentiate this bottled water from the other competitors’ brand, it has
required more investment and need to create awareness in emerging markets. On the other hand,
Sports performance and nutrition brand, PowerBar etc has come under dog category and needed to
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be divested because there is poor sales in a saturated market (Kiptoo and Mwirigi, 2014).
Another example related to the strategic tool is taking with the context of Apple. From the
perspective of Porter Five Forces Model, it has seen that Macintosh computers and operating
system, the iPad, iPhone and other products of Apple has gained high success in the marketplace.
Although, there have different up and down cycles faced by the organization in 1976. But in 2014,
after the use of Porter Five Forces Model, Apple has achieved the notable distinction of being the
first U.S. Company that achieves market capitalization greater than $700 billion (Mueller and
Naffziger, 2015). The success of firm goes to its ability to innovate and bring unique products to the
market and this thing has made the customers more loyal towards the brand. Along with this,
product development and marketing strategies of Apple has created awareness in the customers and
this has made impact on company marker share and profitability. Along with this, Five Forces
analysis defines the cited firm position in the technology sector. It also demonstrates that industry
competition and the bargaining power of buyers are the biggest forces that have highly affected the
profitability of the business (Kapferer, 2012). But bargaining power of suppliers, the threat of
buyers opting for substitute products, and the threat of new entrants have some weaker elements
that made impact on the success rate of the Apple in negative manner.
On the other hand, another instance of strategic model of Porter's generic strategies can be
taken in the context of McDonald. It is biggest fast food restaurant chain in the world. The reason of
using this framework by the company is develop its business and take competitive advantage in the
marketplace (Stevens and et.al., 2013). The objective of using Porter's generic strategies is to
perform the operational activities in an effective manner and respond towards the economic changes
and the actions of competing firms. The adopted strategy by the McDonald is cost leadership. As
per the Porter's generic strategy model, this tactic includes minimizing costs to offer low prices
products. So for this, company has lower down the costing of the services as compare to its rivals
(GREGORY, 2016). Along with this, organization has used broad differentiation as supportive or
backup strategy to develop products for the target market and growth for the business. For example,
via McCafé products, McDonald’s applies the broad differentiation generic strategy. SO, it can be
said that with the help of Porter's generic strategy model, McDonald has able to make its products
diverse from the competitors.
CONCLUSION
From the above study, it can be concluded that strategic management has an important part
of an organization. It has affected the business operational activities in both positive and negative
manner. There have different strategic tools and models have developed by the researchers that
assisted the companies to formulate the strategies according to it. Each and every framework has
contained some limitations and benefits that aided in made the tactics and align the business
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objectives in an appropriate format. There are different companies such as Nestle, McDonald, Apple
etc that has used various strategic tools in formulation of various strategies for the business.
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REFERENCES
Books and Journals
Abraham, S.C. 2012. Strategic planning: A practical guide for competitive success. Emerald Group
Publishing.
Allison, M. and Kaye, J., 2011. Strategic planning for non-profit organizations: A practical guide
and workbook. John Wiley and Sons.
Carlson, S.L., Harris, M. and McLeskey, N., 2013. Strategic planning for organizational
effectiveness during dynamic change. Geriatric Nursing, 34(4). pp.335-338.
Chernev, A., 2012. Strategic Marketing Management. Cerebellum Press.
Conduit, J. and Mavondo, F. T., 2015. Internal Customer Orientation: Antecedents and
Consequences. Springer International Publishing. pp. 208-213.
Dameron, S. and Durand, T., 2013. Strategies for business schools in a multi-polar world. Education
+ Training. 55(4/5).pp. 323-335.
Das, T., 2011. Strategic Alliances in a Globalizing World. IAP.
Ferrell, C. O. and Hartline, D. M., 2010. Marketing Strategy. 5th Ed. Cengage Learning.
Ferrell, C. O. and Hartline, M., 2012. Marketing Strategy. 6th ed. Cengage Learning.
Flander, J., 2014. Great strategists say “no”. Strategic Direction. 30(4). pp.31 – 32.
Hamilton, L. and Webster, P., 2015. The international business environment. Oxford University
Press.
Hyde, M., 2014. Technology is reinventing your business. Strategic Direction. 30(4). pp.1 – 2.
Kapferer, J. N., 2012. The new strategic planning: Advanced insights and strategic thinking. Kogan
page publishers.
Kiptoo, J. K. and Mwirigi, F.M., 2014. Factors That Influence Effective Strategic Planning Process
In Organizations. IOSR Journal of Business and Management. 16(6). pp. 188-195.
Kunnanatt, J., 2011. Global business chain and twin advantage: Strategic opportunities for
developing countries. Competitiveness Review an International Business Journal. 21(4).
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Mathur, U., 2011. Global Business Strategies: Text and Cases. I. K. International Pvt Ltd.
Mueller, C.B. and Naffziger, D.W., 2015. Strategic planning in small firms: Activity and process
realities. Journal of Small Business Strategy. 10(1). pp.78-85.
Needle, D., 2010. Business in context: An introduction to business and its environment. Cengage
Learning EMEA.
Njeru, N. E., Stephen, M. A. A. and Wambui, M.A., 2014. Analysis of factors influencing
formulation of strategic plans in Embu North District, Embu. Global Business and
Economics Research Journal. 2 (5). pp. 116-129.
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Parnell, J., 2010. Strategic clarity, business strategy and performance. Journal of Strategy and
Management. 3(4). pp.304 – 324.
Piercy, N. F. and Morgan, N. A., 2015. Strategic and operational Market segmentation. In
Proceedings of the 1993 Academy of Marketing Science (AMS) Annual Conference.(pp. 676-
676). Springer International Publishing.
Rumelt, R. P., 2010. Towards a strategic theory of the firm. Competitive strategic management. 26.
pp.556-570.
Stevens, R.E. and et.al., 2013. Strategic planning for private higher education. Routledge.
Online
GREGORY, L., 2016. McDonald’s Generic Strategy & Intensive Growth Strategies. [Online].
Available through: < http://panmore.com/mcdonalds-generic-strategy-intensive-growth-
strategies >. [Accessed on 20th October 2016].
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