Business Strategy and Strategic Planning - Essay Example

?Business Strategy Executive Summary: The intention of this paper is to carry out a strategic planning analysis? which involves estimating the present strategic positioning of the business and the recommended strategic choices for the further success of the organization. The product chosen to make the strategic plan is the True Call. The first step is to perform an external analysis of the True Call Ltd. The analysis of the external environment consists of both domestic and global environments of the company. Only a sufficient analysis of the external environment of the business can aid in the strategic positioning of the organization. This also helps in identifying the firm’s stakeholders as well as taking strategic decisions. Strategic planning is a procedure that involves preparing a report of the company’s most important goals, the execution of plans to accomplish them, the evaluation of development as well as the continuous revision of objectives and schedules. This strategic plan serves to build up the operational? financial and strategic focus for True Call Ltd. The plan also addresses many of the opportunities and challenges at the present. As a tool of management, a strategic plan should be developed according to the requirements of the organization that it stands for. Representatives from each department in the organization must participate in the process of strategic planning. If possible, stakeholders and customers can also be made an integral element of the planning activities. When each person participates in the planning phase, the execution of the strategic plan turns out to be less of a challenge. The financial evaluation of the company is based on historical evidence and future projections. To carry out a financial evaluation of the strategic plan, consider the following steps: 1. Estimate expenses and revenue. 2. Carry out a contribution analysis to find out if strategies positively contribute to the bottom line. Environmental Analysis: A full environmental analysis of the True Call Ltd is study of both external and internal surroundings of the business. The True Call? a kind of call blocking machine? is a clever gadget that is programmed to put a stop to all those annoying phones calls including silent calls, sales calls and malicious calls. The external analysis of True Call Ltd consists of identifying its opportunities and threats. The opportunities and threats to the organization are considered to be a major part of external analysis. These elements exist outside the realm and also depend on forces beyond the control of the company. “An environmental analysis evaluates internal and external factors impacting an organization's performance, especially its marketing effort” (In Business What is the Environmental Analysis? 2003). Some citizens screen all of their telephone calls? as they prefer to direct all callers to their answering machine, pay attention to the message being said, and only then attend if it is someone they desire to talk to. True Call facility is comparatively better than this. For strategic planning? it is significant to carry out an analysis of the external environment, to identify the internal strengths or core resources of the organization, to assess the organization’s present strategic choices as well as to select a best strategy that suits the organization. “Steve Smith and John Price, the Directors of true Call Ltd, have been working in the field of nuisance call control since 1999” (Response to the Consultation by ofcom on Tackling Abandoned and Silent Calls 1st June 2010, 2010). True Call gives a choice of facilities to keep messages secure and private? External environment analysis of the True Call is used to examine the opportunities and threats of this product. Opportunities: “TrueCAL-MAG is a special chelate complex of 6 sources of calcium with magnesium and other ingredients to assist the body in maintaining healthy bone structure. Calcium is a primary mineral for building the strong structure of bones and teeth” (TrueCal- MAG: Keep Your Bone Strong, n.d). True call opportunities are its sustainability plans? which intend to provide its clients with: • Environment friendly services. • Products at reasonable prices. • Preserves healthy bone. • Can boost weight loss. • May aid with blood pressure regulation • Helps with muscle cramps. • Helps in getting proper sleep Threats to the True Call are: • With respect to the threat from social trends? the clients could be asked to purchase more of the environment friendly products? which are formed by the organization with the intention of protecting the environment. • Threat from market forces? which is largely regarding the less demand for its products can be recovered by making adequate use of technology and materials so that the clients are provided with low cost products. • Another threat is the low price of products. Due to low prices? sometimes clients do not consider it to be of good standard? but this threat can be nullified stating that low price of products will be useful to clients in times of financial crisis. 3. A full internal analysis, including a summary description of financial assumptions and estimation of the required resources is to be carried out? A summary description of financial assumptions of True call Ltd: True call Ltd is a dynamic business incorporated in England & Wales on April 2008. Their production movement is recorded under extra activities of Telecommunications. True call Ltd is run by two current administrators and one company secretary. “1 Shareholders own the total shares within the company. It is also part of a group. The latest Annual Accounts submitted to Companies House for the year up to 31/05/2011 reported 'cash at bank' of ?37,308, 'liabilities' worth ?199,452, 'net worth' of ?-141,294 and 'assets' worth ?57,002. True call Limited's Risk Score was amended on 03/03/2012” (True Call Limited, 2012). In order for the planned management procedures to begin, managers are required to conduct an internal analysis. This includes recognizing the business' strengths and weaknesses, by examining its competencies. It also contains managers emphasizing the business' competitive benefit. For strategies to be efficient, the organization has to develop on its strengths, in addition to decrease its weaknesses? therefore advancing its competitive benefit, so as to achieve profitability. “Internal context analysis answers the questions ‘what do we start from?’, ‘what do we have in our hands?’, 'what aspirations do we have?’ Setting up a business is not an ‘objective’ thing; it is subjective to who you are, who you know, what you identify and what you be able to do in terms of capabilities and resources” (Internal Context Analysis, n.d). Internal analysis of True call Ltd includes analysis of strengths and weaknesses of the company. Strengths: • True call is a powerful retail product. It has a standing value of money, expediency and a wide range of products in every store. • True call has grown substantially over current years and has knowledgeable worldwide expansion. • The firm has a core capability based on its use of information technology to sustain its global logistics system. • A focused plan is in place for human resource growth and management. People are the key to True Call’s business and? therefore? it spends money and time in training people, and rising them to reach their greatest potential. Weaknesses: • Since True Call sells products across many sectors, it cannot have the elasticity of some of its extra concentrated competitors. • The product is worldwide, but also has a presence in comparatively the minority countries as well. 4. A strategy formulation section, explaining whether or not you are planning to use a generic or customized strategy, along with a justification of your strategic choices. True Call uses generic strategy for its strategic formulation. These strategies were used firstly in the early 1980s, and appear to be widely used nowadays. They plan the three main strategic choices open to organization that desire to attain a sustainable competitive advantage. Each of the three choices is measured within the background of two parts of the competitive environment. These generic strategies contain cost leadership, differentiation and focus. Cost Leadership. The short cost leader in any market increases profit through competitive benefit by being able to produce more at the lower price. Industrial units are built and maintained; labor is trained to distribute the lowest probable costs of production. Cost benefit is the focus here. Prices are shaved off all component of the price chain. Products be inclined to be with no frills? however? on the other hand, low production cost does not always guide to low price. “Attaining cost leadership typically requires aggressive construction of efficient scale facilities and vigorous pursuit of cost reductions through experience, tight cost and overhead control, avoidance of marginal customer accounts, and cost minimization in areas like R&D, service, sales force, advertising, etc. When attempting to achieve an overall cost leadership position, low cost relative to competitors is the theme running through the entire strategy” (Cost Leadership & Differentiation- An Investigation of the Fundamental trade-off between Porter’s Cost Leadership & Differentiation Strategies, 2007). Producers can price at competitive equality, exploiting the advantages of a better margin than participants. True Call are also very good at creating high value autos at a short price, apart from possessing the marketing and brand skills to utilize a premium pricing policy. Differentiation Differentiated services and goods satisfy the requirements of consumers through a sustainable viable benefit. “This allows companies to desensitize prices and focus on value that generates a comparatively higher price and a better margin. The benefits of differentiation require producers to segment markets in order to target goods and services at specific segments, generating a higher than average price. For example, British Airways differentiates its service” (Generic Strategies- Michael Porter (1980), 2000). The discriminating organization will incur extra costs in making their competitive advantage. These expenses have to be offset by enhancing income generated by sales. Costs have to be improved as well. There is also the probability that any innovation can be copied by competitors. Consequently? there is always an incentive to continuously improve and also innovate. Focus: Where an organization cannot afford a wide range cost leadership separation strategy, this plan can be more appropriate. True Call concentrates effort and resources in the narrow, defined part of a market. Competitive advantage is created particularly for the strategy. An organization can use either a differentiation focus or a price focus. With a price focus? an organization aims at being the lowest price creator in that section. Whereas? while concentrating on separation? a firm makes competitive advantage through differentiation in the industry. There are potentially problems with the niche method. Small, expert niches can disappear in the long term. Cost concentration is unattainable in an organization depending upon financial system of scale? for example? telecommunications. 5. A strategy implementation section based on an application of the balanced scorecard framework along with a summary financial plan. You should also submit an implementation strategy map for the start-up phase. The balanced scorecard is a system of strategic planning and management? which is used widely in organizations and industry, nonprofit organizations and government internationally to line up business processes to the strategy and vision of the organization, develop internal as well as external communications, and supervise organizational performance in opposition to the strategic goals. The approach of balanced scorecard offers a clear direction as to what organizations should evaluate so as to 'balance' the monetary viewpoint. The balanced scorecard is a management as well as a measurement system that facilitates organizations to elucidate their strategy and vision and convert them into action. It offers response around both internal business activities and external results so as to incessantly develop strategic performance and outcomes. When fully organized, the balanced scorecard converts strategic planning from an intellectual exercise into the center of operations of a venture. The balanced scorecard also offers a framework for the managers to utilize in bringing together its different dimensions. “It provides a framework that not only provides performance measurements, but helps planners identify what should be done and measured. It enables executives to truly execute their strategies” (What is the Balanced Scorecard? 1998). According to the score card the True cal Ltd views the business from four viewpoints: firstly the perspective of customers, an internal business viewpoint, a learning and innovation perspective, and finally from the viewpoint of financial or shareholders. Using the general business plan as their guide, True cal administrators get the purposes about each point of view, and then increase exact actions to sustain every purpose of the business. Preferably, the scorecard assists the managers to elucidate the organization’s vision and that vision is transformed into quantifiable deeds that employees can recognize. It also facilitates the company managers to stabilize the anxieties of different shareholders so as to develop the overall performance of the company. Below depicts the balance score card framework of the business: (Martin, n.d). The generic measurements are as follows: From the financial viewpoint? the generic measurement is done on the basis of economic value added, return of capital employed, cash flow, sales growth etc Whereas? the generic measurement from the viewpoint of customer is done on the basis of their level of satisfaction, acquisition, retention, market share and profitability. From the perspective of internal business process the generic measurement includes: The measurements for innovation are to estimate how excellently the company recognizes the future needs of customers. Operations to measures the quality, costs and cycle time. After sales service to measure the shortcomings and returns. By considering the 2009-2011 accounts of the True Call Limited? the summary of financial plan is summarized as follows: Year Cash at bank Net worth Total Current Assets Total Current Liabilities 2009 ?13236 ?47013 ?16247 ?63260 2010 ?13566 ?101770 ?25576 ?128307 2011 ?37,308 ?-141,294 ?199,452 ?57,002 From the financial perspective the cash available for the business for 2011 is ?37,308. While looking at the cash available for the True Call limited from 2009 to 2011, the cash has been increased at a higher rate. The intangible assets are deducted from the shareholders funds in order to calculate the net worth or the book value. The calculation of current liability includes the total of bank overdraft, trade creditors and other current liabilities? whereas the calculation of total current assets includes the total of trade debtors, stocks, sash and sundry current assets. Strategy Map The team of Strategy MAP will create a risk alleviation plan in the course of recognizing all processes relating to the operating functionality, cost of implementation and the delivery timelines. The Strategy MAP commitment is proposed as an activity of multi-days with a possibility from a sole facility across to True Call Limited. Strategy MAP activities are tailored to the particular requirements of the company. Strategy map is given below: Balanced Scorecard Strategy Map (Knapp, 2001). Reference List Cost Leadership & Differentiation- An Investigation of the Fundamental trade-off between Porter’s Cost Leadership & Differentiation Strategies. 2007. Stockholm School ofEconomics Institute of International Business. Available at [Accessed on 08 December 2012]. Generic Strategies- Michael Porter (1980), 2000. Marketing Teacher.com. Available at [Accessed on 08 December 2012]. In Business, What is the Environmental Analysis? 2003. Wise Greek. Available at[Accessed on 08 December 2012]. Internal Context Analysis. n.d. Vlerick Leuven Gent Management School. Available at < http://toolpack.vlerick.com/what/step1/internal>[Accessed on 08 December 2012]. Knapp, K. R. 2001. The Balanced Scorecard: Historical Development and Context, as Developed. Anderson University. Print. Martin, J. R. n.d. The Balanced Scorecard Concepts. Management and Accounting Web. Available at [Accessed on 08 December 2012]. Response to the Consultation by Ofcom on Tackling Abandoned and Silent Calls 1st June 2010. 2010. True Call Ltd. Available at [Accessed on 08 December 2012]. TrueCal- MAG: Keep Your Bone Strong. n.d. True Star Health. Available at < http://truestar.com/store/product/calcium-supplement-boron-magnesium-TrueCAL>[Accessed on 08 December 2012]. True Call Limited. 2012. Company Check. Available at [Accessed on 08 December 2012]. What is the Balanced Scorecard? 1998. Balanced Scorecard Institute. Available at [Accessed on 08 December 2012]. Read More