Strategic planning of Apple Brandin in 2011 - Literature review Example

? Critically Evaluate the Reasons for the Rise in Position of Apple Brand in the Best Global Brands in Abstract Strategic planning is highly linked to improved performance in many organizations when considered from different dimensions. Meers and Robertson (2007, p.302) explains that this can be associated to the fact that, an organization which applies this strategy makes fundamental decisions which lead to appropriate actions aimed towards the achievement of its objectives. The overall objective of planning strategically is to come up with a map that determines and manages the positioning of an organization. Though others consider it to be time consuming and sometimes frustrating, strategic planning has been found to lead to quality decision making if applied effectively (Westphal & Frederickson, 2001, p.1113). This essay tries to find the possible determinants of the positional rise to 8th position of the apple brand in the global brands. Moreover, the rise in position has been linked closely to effective strategic planning hence, some of the tools used in strategic planning have been analyzed and justification for the choice of each tool given. Introduction According to Tapinos, Dyson & Meadows (2005, p.370) recently the topic of strategic planning has drawn a lot of discussions focusing on its effective implementation and the possible outcomes. The subject has attracted both empirical and theoretical exploration as entrepreneurs try to seek more information regarding it. Effective planning has been associated to improved performance, successful implementation and good decision making. Organizations are facing difficult times due to new technologies, market and economic changes globalization and deregulation. Consequently, all these activities call for the application of proper business techniques and the adoption of appropriate planning tools. Although some people may argue that strategic planning has its own ineffectiveness, the advantages that come along with it are overwhelming (Falshaw, Glaister & Tatoglu, 2006, p.9). Strategic planning allows an organization to understand itself by analyzing its vision and objectives in detail. If it is appropriately implemented, it will enable an organization to realize its full potential. Some of the tools employed in planning strategically are discussed below. Tools for Strategic Planning The SWOT analysis tool is the most commonly employed tool to help an organization determine its possible position within the industry of its operation. SWOT refers to the analysis of an organization’s strengths, its weaknesses, available opportunities and finally threats that are facing it (Lyles, Baird, Orris & Kuratko, 2000, p.38). First is to determine the internal position of an organization by assessing its strengths and possible weaknesses. Strengths refer to the most effective skills that are employed by an organization in the attainment of its vision. Some of such skills include employees of high expertise and advanced technology. On the other hand weaknesses are those things that hinder a firm from attaining its full potential such as functional areas’ conflicts and production costs which are very high (Meers & Robertson, 2007, p.303). Brews & Purohit (2007, p.68) asserts that having analyzed its internal position, an organization needs to understand its external position by analyzing the available opportunities and its external threats. Opportunities refer to the currently available or possible future circumstances that are likely to provide a favorable environment for the firm’s growth. They include conditions such as completion decrease, market population increase and favorable legislation. On the other hand, threats refer to the currently available or future environmental conditions which are likely to provide unfavorable environment for a firm’s growth such as, unfavorable legislation and new product-development by competitors. An effective SWOT analysis provides an organization with a clear picture of its situation currently and in the future (Falshaw, Glaister & Tatoglu, 2006, p.15). Through this understanding a company will be able to come up with an effective decisions aimed at its goal attainment. Another tool employed in strategic planning is the five-force model which tries to determine the market’s competitive nature. Market competition is a critical factor to consider in any business operations since it is faced with a lot of changes. Elbanna (2008, p.779) suggests five possible forces that collectively determine competition intensity in a particular industry. The five forces include: potential entrants threats, potential substitutes threats, suppliers’ bargaining power, buyers’ bargaining power and finally the existing firm rivalry. Entrance of a new company into an industry indicates market competition which may affect product costs. On the other hand potential substitutes provide options to particular products hence, affecting their sales (Lyles, Baird, Orris & Kuratko, 2000, p.50). In addition to that analysis a firm should assess the bargaining power of both buyers and that of suppliers and the currently experienced competition from rivalry firms (Wilson & Eilertsen, 2010, p.5). The potential buyers’ bargaining power can be affected by costs, concentration of consumers and product differentiation, which may demand lower prices and high product quality. Furthermore, suppliers’ bargaining power may affect competition when some suppliers decide to increase prices, reduce their product quality or reduce services. Lastly, rivalry completion is the most powerful of the five forces since companies are dependent. A competitive move taken by one of the companies is likely to impact other companies greatly (Kauffmann, 2003, p.47). By understanding all these forces, a firm will be in a better position of carrying out its activities consciously thus, eliminating any possible blunders. Matrix of general electric is another tool that is employed in strategic planning. It entails assessment the possible factors that define attractiveness of the market and strength of the business (Meers and Robertson, 2007, p.305). Market attractiveness may be assessed basing on factors such as growth-rate of the market and profitability of the industry. Market is very important in business and hence it requires close analysis. If a company cannot attract a high market, its products will not sale and such a firm will not easily attain its objectives. A particular business’ strength may have its basis on factors like the business’ technological position, position share of the market and brand equity (Wilson & Eilertsen, 2010, p.14). A business may decide to adopt new strategies in order to attain maximum utilization of its strengths. Kauffmann (2003, p.48) concurs that the major advantage associated with this design of analysis is that, both the market attractiveness of an industry and its strengths, are taken into consideration in the process of decision making. In addition, under this model the judgments of strategic decision-makers are also taken into consideration. However, this model has been associated with major weaknesses since it is very hard to determine these two things. This matrix requires a company to know how much it attracts the market and the particular strengths they possess. By so doing they will be able to come up with strategies of maintaining, and attracting the current market as well as perfecting their strengths (Kramarczuk, 2001). The matrix of consulting group by Boston cannot as well be left behind in the process of strategic planning. This strategy helps companies to relatively measure all their business in accordance to market share and industry growth (Falshaw, Glaister & Tatoglu, 2006, p.30). Here different businesses within a firm are analyzed separately, and their respective positions presented. By so doing, management will then identify the strengths of each business, as well as their needs, and strategize accordingly for better results. This matrix graphically presents specific differences being experienced in these units of businesses, in relation to the industry’s share of the market and its possible growth (Meers & Robertson, 2007, p.307). Analyzing market shares relatively indicates the position of a firm in the industry of its operation. Betts & Ofori (2000, p.511) explains that organizational businesses with a relatively high market share, indicates a positional leadership that is very costly and vise versa. Careful analysis of the market share by management may aid in the determination of which resources are required by a particular business for better results. However, research has indicated that this matrix has declined its usage in the recent past despite its advantageous implications. One of the major advantages associated with this matrix is that it focuses its attention to the characteristics of investments, business units’ needs and the genera cash flow, something uncommon in other matrixes (Dincer, Tatoglu & Glaister, 2006, p.206). Lastly, are the two strategies of generic competition suggested by Porter which include: a company’s overall lower-cost and strategies of differentiation, and its competitive scope. Feigener (2005. p.627) agrees that these generic strategies can be applied in any business, regardless of its size. Overall lower-cost is used to refer to a company that has the ability to operate under relatively low costs as compared to its competitors. Differentiation on the other hand refers to a company that is able to produce superior commodities and services in comparison to its competitors. Through differentiation a company can attract more customers by ensuring them of high quality products. Moreover, the competitive scope is the depth of the target market of a company (Stonehouse & Pemberton, 2002, p.853). Research indicates that effective implementation of these strategies call for adoption of new organizational structures and processes (Ketokivi & Castanaer, 2004, p.350). For instance, a company with both broad and narrow competitive scope, can decide to combine them both, and also apply both low-cost and differentiation strategies. Such a move in a company, will lead to the following listed competitive strategies: leadership costs, focus on costs and in focused differentiation. According to Betts & Ofori (2000. p.532), none of these strategies can attain success on its own hence, the need to apply them simultaneously. If applied appropriately, this strategy has been found to reduce production costs by a great percentage. In summary strategic planning is a very important strategy in business. This is basically because it critically analyses a businesses, giving it a better position in making its future decisions. A business cannot operate blind-folded, without understanding its current and future positions of its operations. Research has clearly indicated that organizations that carry out strategic planning in all their endeavors, have shown improved performance. This must have been the case of the apple as it experienced major improvements in the year 2011. Nevertheless, this improvement is an indication that, the strategic planning tools employed here, were appropriately done. This is exactly what strategic planning entails, if a company wants to record positive results. References Betts, M., and Ofori, G.O. (2000). Strategic planning for competitive advantage in construction industry. Construction Management and Economics, Vol. 10, 511-532. Brews, P. and Purohit, D. (2007). Strategic planning in unstable environments. Long Range Planning, Vol. 40 No. 1, pp. 68. Dincer, O., Tatoglu, E. and Glaister, K. (2006), The strategic planning process: evidence from Turkish firms. Management Research News, Vol. 29 No. 4, pp. 206. Elbanna S. (2008). Planning and participation as determinants of strategic planning effectiveness, Journal of Management Decision, Vol. 46, No. 5, pp 779. Falshaw, J.R., Glaister, K.W., and Tatoglu, E. (2006). Evidence on formal strategic planning and company performance. Management Decision, Vol. 44, No. 1, 9-30. Feigener, M.K. (2005). Determinants of board participation in the strategic decisions of small corporations. Entrepreneurship Theory and Practice, Vol. 29 No. 5, 627. Kauffmann, P. 2003, Strategic Project Management: Tools and Techniques for Planning, Decision Making, and Implementation, Engineering Management Journal, vol. 15, no. 3, pp. 47-48. Ketokivi, M., and Castanaer, X. (2004). Strategic planning as an integrative device, Administrative Science Quarterly, Vol. 49 No.2, pp.350. Kramarczuk, R.A. (2001). The Strategic planning and Financial Performance Relationship in Service Firms. Unpublished doctoral dissertation, University of Minnesota, Minneapolis. Lyles, M.A., Baird, I.S., Orris, J.B., and Kuratko, D.F. (2000). Formalized planning in small business: increasing strategic choices. Journal of Small Business Management, Vol. 31, No. 2, 38-50. Meers, K.A. & Robertson, C. 2007, Strategic Planning Practices in Profitable Small Firms in the United States, The Business Review, Cambridge, vol. 7, no. 1, pp. 302-307. Stonehouse, G and Pemberton, J. (2002). Strategic planning in SMEs - some empirical findings. Management Decision, Vol. 40 No.3, pp. 853. Tapinos, E., Dyson, R.G., and Meadows, M. (2005). The impact of performance measurement in Strategic planning. International Journal of Productivity and Performance, Vol. 54, No. 5/6, 370. Westphal, J.D., & Frederickson, J.W. (2001). Who directs strategic change? Director experience, the selection of new CEOs, and change in corporate strategy. Strategic Management Journal, Vol. 22, No.12, 1113. Wilson, J.W., and Eilertsen, S. (2010). How did strategic planning help during the economic crisis? Strategy & Leadership, Vol.38, No. 2, 5-14. Read More