Understanding Business Strategy - Essay Example

? Understanding Business Strategy Leena This report is a strategic plan for ABCD company that is offering Adult Education Services in Central London and plans to expand its business in India with an initial offering of some of the courses it now offers in its London college. The report states the different elements of the strategic plan of the company while studying the importance of each element. It is seen that BCG matrix analysis technique for charting the strategic plan is useful in further deciding the courses that can be offered at the new overseas centre. Table of Contents 1. Introduction 2. Vision 3. Mission 4. Goals/ Aims 5. Objectives 6. Core competencies of ABCD 7. Strategic planning techniques 8. Competitive advantage for ABCD 9. Role of managers at ABCD 10. Conclusion and recommendations 11. Personal Reflection 12. References 1. Introduction This report is intended to give a strategic plan to the management of ‘ABCD’ for establishing their branch in India with different program offerings. ‘ABCD’ is a service provider in adult education, situated in Central London and has been operating since the last ten years. It has plans to extend its operations in India from the coming academic year, and this report helps document the various tangible and intangible efforts, ideas and experiences of the company in terms of its vision, mission, goals, aims and objectives, etc. Business strategy is defined as the selection of ideas and assets to meet long-term goals (What is business strategy?, 2012).The concept of strategic planning under the purview of strategic management is also introduced in the report to stress on the importance of having a business strategy for the proposed India centre. Strategic planning includes among others, defining the business goals of the organization and formulating a business strategy that can be implemented successfully by the organization for effectiveness and profitability. 2. Vision The vision of a company clearly declares the future direction of the business and helps the company clearly states its image that it wants to see in the future. A vision statement states the company’s position over the next 5 to 10 years into the future in terms of the direction it is headed in, where it wants to see itself in terms of market position, which market segment it needs and plans to focus, what strategies it plans to implement and how it plans to develop its capabilities for future. A vision statement infuses a sense of purpose for the company and sets a clear direction for the immediate future. ABCD Company has a vision statement based on its intent to provide educational services to adults. It has plans to utilize its expertise in the field of providing educational services by expanding into the global market with a new office in India by the next academic year. The company also intends to offer some of the courses that it currently offers at its London based college that has an extensive course offerings along with a pool of resources in terms of 50 part-time and full-time employees who are all highly experienced and well qualified in teaching methodologies (Olsen, 2011). Vision statement of ABCD: “to integrate capabilities and resources to provide worldwide adult educational services to facilitate and improve the quality of adult education”. This vision statement is key in establishing a clear direction and a sense of purpose for the management and staff of ABCD and it is also essential that the management clearly communicates its vision to the staff and enable them to set goals for the next 5 years based on this vision. Both individual and organizational level goals can be set against the backdrop of the company’s vision statement (Biz/ed, 2006). 3. Mission A mission statement of a company states the current position of the company and its values that form the basis of formulating its vision statement for future (Biz/ed, 2006). A mission statement helps the company clearly envisage itself in terms of its current position in the market and the market segment that it serves. It helps the company understand the customer behaviour and propose better and newer ways of serving them through implementation of new strategies, in turn addressing the changing preferences of the customers. A mission statement of a company helps it in its day-to-day operations as well as enables effective decision-making both in the present and future. It can be seen as a constant commitment to serving its customers, better, by realizing its reason for existence (Olsen, 2011). A mission statement further is realized in terms of the company’s logo, vision, leadership and staff’s attitude, its attitude to change, etc. it is reflected in the culture that it builds in totality (Biz/ed, 2006). ABCD’s mission statement reflects its culture in terms of its leadership’s commitment to excellence and business expansion plans. “To become a world leader in providing quality educational services for adults across the globe while constantly understanding the specific needs of the customers, identifying and utilizing the best of resources and achieving strategic goals”. This mission statement of ABCD truly reflects its current business scenario as it has quality resources and experience in providing services to a niche market that it can tap in future. Also, the board of directors’ decision to seek professional expertise to chart out a business and corporate strategy for its new overseas initiative is a step in this direction. 4. Goals/ Aims A company’s strategic goals are articulated in its vision and mission statements. Goals form part of a company’s attempts at strategic planning of its operations and business (Biz/ed, 2006). Planned goals for a business require strategic planning to realize the goals and the vision and mission statements along with the aims and objectives of the company reflect these goals of the company, in keeping with its values. Goals for an organization concern the various functions: financial goals, branding, etc. of the business and can be long-term or short-term (Website 1). Goals are synonymous with the aims of a company and help realize the strategic intent of the company by defining its intent of what it aims or plans to achieve in the long-term (Website 2). It can be seen that the primary aim of any business is to add value to its customer while making profits. A company can have strategic aims for expansion, brand building, market leadership, etc. (The Times 100, 2011) through a range of strategies like cost differentiation, market segmentation, etc. Further, aims may differ from company to company, market segments and industries and form the basis for defining the set of strategic objectives that help achieve these goals (Dr. Nurse, 2004). The aim of ABCD is to expand into new market overseas, in India by testing waters in the sense that it plans to initially offer a few of the courses it currently offers at its London college, gain an understanding of the market and gauge its potential, and further expand and adapt its course of action. 5. Objectives “Objectives are the desired outcomes of a business derived from the processes it undertakes” (Hampreston, 2009). Business objectives set to achieve the goals of a business organization and concern the various interests and goals of the different stakeholders of the business (The Times 100, 12th Ed., 2011). The most common long-term objectives for a company are: customer satisfaction, employee satisfaction and motivation, community development, etc. along with financial objectives that are key to the success of the company (Website 1). For a company to chart out a new strategy, it should base its strategy on the established objectives categorized under three success factors: operational excellence, market leadership and stakeholder interest (Dr. Nurse, 2004). Strategic objectives of ABCD are: Expand business in new markets in developing economies Utilize existing resources to build a network of customized services Scale operations across continents Extensively study new market entry (India operations) before scaling pan globe Create a worldwide brand and Utilize existing brand image to leverage new market opportunities. It is imperative that objectives of a company reflect the different aspects of business: market share, customer and employee satisfaction, sustainability, market positioning, etc. Also, objectives need to be challenging, realistic, attainable, quantifiable, easy to communicate, etc. (The Times 100, 12th Ed., 2011) and are often framed on a framework called SMART (Specific, Measurable, Achievable, Realistic and Time bound) aims and goals set at a hierarchy of levels within the organization (The Times 100, 2011). While the aims and objectives are to be met, it is important to understand that there is a difference between the two in terms of implementation as aims are concerned with the achievement of specific goals and are different for each individual company as in the case of different but similar aims for two different companies in the same sector depending on various factors like market position, brand, etc. Further, to realize these objectives, the company needs to identify its core competencies on which to develop a framework for scalability. 6. Core competencies of ABCD Core competencies of a company relate to the specific activities of the company that give it a competitive capability in which the company demonstrates expertise. This aspect of the company is what gives profitability as it is the core competencies that a company builds on. Core competencies are more developed skills within a company when compared to other skills and people are seen as the core competence capabilities of any company as they are seen to possess valuable skills, knowledge and capabilities that can turn into valuable assets for the company to build other core competencies. People with skills that form the basis for the company’s core competencies are considered as genuine strengths and resources to help gain market competitiveness and profitability in business (Porter and Kramer, 2002). ABCD has its core competencies as their staffs that are highly qualified in the relevant field of teaching and also have experience in the same field. The company has an extensive pool of resources in its 50 employees who have skills in teaching the varied array of courses at the college. 7. Strategic planning techniques ABCD needs to adopt strategy planning techniques to define its objective, formulate and implement strategy, measure the success of the strategy implemented and adapt to the changes in the market. A strategic planning process typically consists of: stating mission and objectives, analysis of internal and external market environment, formulating business strategy in line with the corporate strategy, implementing strategy and evaluating success of strategy implementation (QuickMBA, 2010). A strategic plan is a visionary, conceptual and directional plan in contrast to other plans such as operational plan, business plan, etc. and serves as a framework for effective decision-making, benchmarking and performance monitoring. Elements of strategic planning include stating the vision, mission, goals, objectives, values, strategies, etc. of the company while assessing the current market and financial position of the company through use of techniques like SWOT (Strengths, Weaknesses, Opportunities, Threats), PEST (Political, Economical, Social and Technological), BCG matrix/ portfolio analysis, etc. analysis (PlanWare, 2011; Powell, 1992). BCG matrix is a strategic planning technique used to analyze the portfolio matrix of products and services to determine the cash cows, star products and services, through a series of questions identified and addressed to position the company in high growth areas through product innovation and a focus on its core competencies (Website 3). Figure 1 shows BCG matrix: Figure 1: BCG Matrix. Source: (The BCG Growth-Share Matrix, 2010). 8. Competitive advantage for ABCD Strategic planning is not a sure success factor for performance leading to financial profits and in turn to a competitive advantage, but a company’s competitive advantage lies in its people skills as capabilities and resources. Strategic thinking acts as the input to strategic planning where potential opportunities are identified and competencies and skills, products and offerings, environment and industry, markets and customers, competitors and substitutes and suppliers and buyers are taken into consideration to plan for competitive advantage (Briefing notes: What is strategic thinking?, 2001). The strategy process is to be linked to strategy content to gain a competitive advantage (Powell, 1992). Effective strategic planning is key to gaining a competitive advantage for any business (Goetsch, 2005) and ABCD is well on its path to achieve this competitive advantage in the adult education market with its current attempts to chart a strategic plan for its operations in India. The company has well experienced and qualified teaching staff along with resources in terms of planned courses and leadership commitment to excellence. This enables the company to set itself on the path to achieving its goals in the long-term, for which the strategy is intended to give a fillip. The company can implement a competitive advantage strategy as part of its expansion objectives. 9. Role of managers at ABCD Managers are the steering group for a company in times of change and ABCD is undergoing a change in terms of global expansion. Managers need to gain skills, knowledge, and attitudes to lead the company towards successful implementation of the new business strategy. The role of managers at ABCD can be crucial as they develop new skills and create evidence based learning resources based which they need to disseminate throughout the course of project implementation to create value to customers (Website 4). The role of managers may be related to the change management role played effectively in Apple Inc. By Steve Jobs in turning the fortunes of the company when it was in dire consequences. 10. Conclusion and recommendations ABCD is an adult educational service provider in Central London with highly qualified and experienced staff of 50 part-time and full-time employees. The board of Directors have decided to expand its business globally with their first overseas centre in India with some of the courses being offered initially. As the vision of company is what sets its path to the new future, the strategic planning for the new centre helps includes vision along with other elements of strategic planning like: mission, goals, aims, objectives, strategy, etc. The company has a competitive advantage through its strategic plan being effectively implemented with long-term sight. It can be advised that the company ensure that the strategic plan is effectively implemented to enhance performance for profitability. The BCG portfolio matrix is an efficient technique that the company can use to identify an effective portfolio of products and services to gain a competitive advantage for future. 11. Personal Reflection While preparing this report, care has been taken to understand the vision, mission, goals, existing strategies of the company, its products and services, etc. so the new strategies reflect the company values. Identifying the core competencies as providing educational services for adults has been easier as the company is solely focused on this, however, the company’s market positioning, brand and corporate strategies would definitely be helpful in charting out the new strategy that can be implemented effectively. Also, knowledge of the duration for which the strategy needs to be charted, either for 5 or 10 yrs would give more specific direction to the implementation plan. I personally enjoyed analysing the company for its market potential and am of the idea that more specific information on hand about the company’s strategies, further expansion plans, etc. would help draft a better report in future. Also, the BCG matrix along with the traditional tools for analysis like SWOT, PESTLE, etc. would be more helpful in determining the strategy for the new venture by ABCD company. Knowledge of HR policies can be helpful in understanding the role of the key determinants of success for ABCD, i.e. its employees and the role of managers. 12. References Biz/ed. 2006. Business Strategy. http://www.bized.co.uk. Briefing notes: What is business strategy? 2001. CFAR. Available online: http://www.cfar.com/Documents/strathink.pdf Accesssed on: 14th April 2012. Dr. Nurse, K. 2004. Reinventing CARIFESTA: a strategic plan. Caricom taskforce on CARIFESTA, Georgetown, Guyana. Goetsch, L.D. 2005. Effective Strategic Planning for Competitive Advantage:Ten Steps for Technical Professions. Prentice Hall. Hampreston. 2009. Strategic Planning – Business Aims and Objectives. Olsen, E. 2011. The Ten-Step, One-Day Strategic Plan. About.com. PlanWare. 2011. Business Planning Papers: Developing a Strategic Plan. Available online: www.planware.org. Accessed on 18th November 2011. Porter, M.E. and Kramer, M.R. (2002). The competitive advantage of corporate philanthropy. Harvard Business Review. 12, Vol. 80, Dec.2002. Available online: http://weblinks1.epnet.com/citation.asp?tb=1&_ug=dbs%2B6%2B1n%2Ben%2Dus%2Bsid%2BEFBF076F%D6CEA%2D47%85 Accessed on 18th November 2011. Powell, C.T. 1992. Strategic planning as competitive advantage. Strategic Management Journal. Vol. 13, No. 7. John Wiley & Sons. QuickMBA. 2010. The Strategic Planning Process. Available online: Accessed on 19th November 2011. The Times 100, 12th Edition. 2011. Business objectives, planning and stakeholders. http://www.thetimes100.co.uk The Times 100. 2011. Strategy. Available online: Accessed on 18th November 2011. Website 1: http://www.briefcasebooks.com/formisano01.pdf Website 2: http://www.oup.com/uk/orc/bin/9780198782292/ch14.pdf Website 3: http://www.google.co.in/url?sa=t&rct=j&q=tata.ppt.%20tata%20tea.%20roll%20nos.%2041-50.%20&source=web&cd=4&ved=0CDwQFjAD&url=http%3A%2F%2Fxa.yimg.com%2Fkq%2Fgroups%2F22867016%2F633124407%2Fname%2FTata&ei=hKPLTt78CMLtrQedw-S8DA&usg=AFQjCNEdfGniMkAGfjWOwrqDp1OO6HYO_w Website 4: http://www.exeter.ac.uk/spc/stratplan/hefcecreatingvalue/abouttheproject/aimsandobjectives/ What is business strategy? 2012. Available online: http://www.briefcasebooks.com/formisano01.pdf Accessed on 14th April 2012. The BCG Growth-Share Matrix. 2010. Available online: http://www.netmba.com/strategy/matrix/bcg/ Accessed on: 14th April 2012. Read More