Strategic Plan for Bellway Plc - Assignment Example

Strategic Business Plan Bellway Plc The strategic business plan for any organisation depends on its resource base as well as its capabilities. A strategic business plan is an integration of various elements that propel a business towards overall goal achievement. The strategic business plan depends on effective practice of sustainability theories as well as those of competitive advantage. The company that will be dealt with in this paper is the Bellway Plc - a construction company. Case Study: Following are the points pertaining to the company and its operations: The company was formed 50 years ago. It is the 4th largest builder in UK. It has built over 100,000 homes in UK since its conception. In 2008 alone, it sold 6,556 homes. It is listed in the London Stock Exchange as a FTSE 250 company. Basic area of operation includes high population zones. It sells more property privately. (Source: www.bellway.co.uk) Problem Areas: Following are the problems that the company has encountered: Lack of marketing initiative: there has been little need for intensive marketing activities internationally. Use and import of other material: there is less initiative to import and use new kinds of material as well as design themes. The strategy to be followed for construction needs to be different. (Pettinger, 1998) Competitive Advantage and Sustainable Entrepreneurial Growth in the Construction Industry: Before laying down the formal plan of action, it is necessary to understand the elements that will be involved in the strategy that has been developed later in the paper, from the perspective of the company. This will help us understand the exact application of the theories through the length and breadth of the paper. (Preece, 2003) A major part of Bellway Plc's plan of action must include following a strategy based on gaining competitive advantage as well as achieving sustainable entrepreneurial growth. Let us first examine competitive advantage to see how and where it will fit in with the overall growth and expansion of the Bellway Plc in securing buyers from the global market like Asia, US and other countries. This brings us to a discussion on the technicalities of the model proposed by Porter. Porter's Five Forces model provides suggested points under each main heading. When taken into consideration individually, each of these gives rise to the development of a broad and sophisticated analysis of competitive position. This may further be used during the creation of a strategy, plans, or even where making investment decisions about a business or organization is concerned. These five competitive forces determine industry profitability and attractiveness apart from being responsible for shaping the prices that firms can charge, the costs they have to bear, and the required investments to engage in industry level competition. We are concerned with the fact that Porter's essentially ahistorical approach cannot provide a full account of either a nation's competitive advantage and corporate strategies or the growth and development of industrial clusters. For this, let us first understand competitive advantage. This has special relevance for the Bellway Plc, owing to the following reasons: The company needs to launch a full fledged expansion policy in international markets as well as the public sector in UK. It needs to zero in on out station resources which can be procured on easy and regular terms. There needs to a study of the marketing options in order to gain competitive advantage as there are many players involved here. Its competitors include Barrat Development, Taylor Wimpey and Berkley Group Holdings. Competitive advantage is the response of afirm to the pressing need to organize and perform discrete activities. While these needs may not be perpetually spelt out, it is the responsibility of the planners and executers of policies to foresee such situations when catering for growth and development of the firm n various levels. So this implies that the Bellway Plc needs to employ an individual perspective with an affiliation towards the basic industry type as the market in the international scene vying for property in UK is at least 10 times larger than that of UK alone. (Langford et al, 2001) The basic explanation for this comes from the fact that any change on an individual level is effected by changes on a national level. Yet, Porter's theory cannot accommodate strategies and competitiveness at such levels due to various constraints. The first of these emerges from the fact that people run businesses and economies - and everyone has his or her own unique style. These cannot be covered at length when talking which factors and resources will be utilized in which combination. Thus Porter's theory does not provide an accurate account of the diversity and dynamism in the corporate and commercial environment that businesses and firms thrive in. (Langford et al, 2001) Secondly, there are various activities to take into consideration in the case of the Bellway Plc. The activities performed when competing in a particular industry can be grouped into categories, as these activities can be divided broadly into primary activities and support activities. (Preece, 2003) Whereas support activities are those that provide purchased inputs, technology, human resources or the overall infrastructure functions supporting the other activities. Every activity employs purchased inputs, human resources, some combination of technologies, and draws on firm infrastructure such as general management and finance. Activities vary in their importance in regard of competitive advantages from industry to industry. (Porter M E, 1998). While this is a good theory to reckon with, cynics are of the opinion that in today's world there are 'n' number of influences on a firm's activities and not just a set number of the same. In the construction industry, which is the basic arena of operations for the Bellway Plc, there is a large margin for profit and the products pass through a variety of middle men before reaching the final destination or end user. (Preece, 2003) This is especially true if the company wants to diversify into the public sector in UK. In this regard, it would be profitable for the Bellway Plc to diversify and meet the composite needs of the construction industry so as to cater to the middle men first. This will help the company gain a foothold as far as the export houses and other big stores are concerned. In this regard, all the activities of the Bellway Plc must contribute to the creation and development of buyer value, which may be defined as the consumer base of a firm and its product in qualitative as well as quantitative terms. Therefore, in keeping with the theory developed by Porter, the buyer value of the Bellway Plc must be viewed as directly proportionate to the effort put in by the firm when providing various customer and other services especially in terms of time and quality maintained. In this way, the firm can create value for its buyers where the ultimate value a firm created is measured by the amount buyers are willing to pay for the product or service offered in terms of the various activities it indulges in, as specified above. In a nutshell, the company is required to break even and garners profits if the buyer value manages to exceed the collective cost of performing the required activities on the international and public sector level. Thus, in order to gain competitive advantage over its rivals, the Bellway Plc must either provide comparable buyer value, and perform activities more efficiently than its competitors at a lower cost, or perform activities in a unique way that creates greater buyer value and commands a premium price through differentiation. If we are to take recent facts into consideration regarding the state of the economy, we will find that this is not necessarily an accurate measure at the national level. Thus, for a more competitive strategy, the theory that the firm adopts has to be more forward looking. In this regard, the Bellway Plc may make use of clusters which are groups of firms and other broad industries linked to each other on the basis of various skill and their subsets. These function in the sphere of providing the necessary technical and research based support for various customer services, by making use of various institutions and universities apart from interns and other individuals. A cluster that has been well formed and makes the required effort to be called well functioning is one that contributes to the advancement of an economy in terms f growth and development. This is a crucial aspect that most firms tend to ignore. In this way, one can measure the implications of the theory and growth thereof, in a more accurate and reasonable manner. This also helps avoid monopolistic tendencies within markets in order to make sure development is not impeded. This brings us to the issue of equality, which is a major requirement for the development of an organization. The more consistent and widespread the development, the more advanced its overall economy can be called. Unless there is mass involvement in various policies and acts, an industry or a sector of the economy, cannot be called developed by itself. Therefore, there is a need to redefine the theory in order to make sure it accommodates such yardsticks for the measurement of competitive advantage in the case of the Bellway Plc. This is due to the fact that more people need to be aware of such measures for development to be actually felt and enjoyed. In this case, this will be applied in the form of the marketing strategy laid down later in the paper. (Langford et al, 2001) In the context of the Bellway Plc, does Porter's theory ask the relevant questions What must the company do to ensure that the industry evolves in a way that is maximally advantageous for the organization in particular What skills and capabilities must the company begin building now if it is to occupy the industry high ground in the future How should the company organize for opportunities that may not fit neatly within the boundaries of current business units and divisions The answers are to be found in not in this theory but in the theories propounded by Gary Hamel, C.K. Prahalad titled Competing for the Future. The authors are of the firm belief that when armed with the information in their findings and subsequent theories, a company can create a pro-active agenda for organizational transformation and can control its own destiny by controlling the destiny of its own industry. Few companies that began the 1980s as industry leaders ended the decade with their leadership in tact and undiminished. Many household name companies saw their success eroded or destroyed by tides of technological, demographic and regulatory change and order-of-magnitude productivity gains made by nontraditional competitors. "Do you really have a global strategy", the first article by Hamel and Prahalad, developed the theme that small companies could prevail against larger, richer companies by inventing new ways of doing more with less. Differences in resource effectiveness could not be explained by efficiency, labor or capital, but by amazingly ambitious goals that stretched beyond typical strategic plans, raising the question how such incredible goals could get past the credibility test and be made tangible and real to employees As if in answer to this question, managers of late, have created new competitive space while sick units have protected the past rather than creating the future. In this regard, Porter's existing theory throws little light on what it takes to fundamentally reshape an industry and the gap provoked this book in which the goal is to enlarge the concept of the industry and not just the organization. Being incrementally better is not enough because a company that cannot imagine the future won't be around to enjoy it. (Hamel et al, 1996) Each argument put forward by the authors is clear and is seen to be progressing through the reasons behind competitive strategy being believed to be less mechanical that the claims of Porter in his theory of competitive advantage. Therefore, Porter's approach lacks the underlying belief that winning in business today is not about being number one - it's about who "gets to the future first", thus making the "core competencies" approach the right one to strategic planning when it comes to providing a full account of either a nation's competitive advantage and corporate strategies or the growth and development of industrial clusters. Marketing: The construction industry has seen many takers from a variety of income and social backgrounds in the recent past. This has triggered various empirical studies into the nature of the market forces that determine the operational realities of these products in terms of brand identities and knowledge. The branding and positioning of a high end lifestyle products like linen and artefacts is of utmost importance to give its market value a lift. (Bennett et al, 2002) Therefore, for a product range like Bellway Plc's, what better than two countries where lifestyle solutions are becoming a rage and the norm of the day - India and Dubai. Therefore, the important element in the application of the entry point strategy for Tutbury's is to recognise the age and income groups that predominantly define the demographics in India, before going on to carry out segmentation and reach suitability in terms of the marketing mix. In this case, the entry point strategy may be used as a preliminary process that will help develop the marketing mix. This entry point strategy has been defined in the various elements of the marketing mix so as to find a suitable base for segmentation and subsequent brand positioning over five years. Entry Point Strategy In terms of the suitable model to be used for the development of a relevant marketing plan and strategy, we have made use of the International Market Entry Mode Strategy for this company. This strategy is ideal for those companies that wish to diversify geographically. (Walter et al, 1988) This strategy along with others that have to do with market segmentation and brand positioning for maximum customer satisfaction will be used in order to evolve a strategy that is best suited for the purpose of an entry level product in a market as diverse as that of India. The first element when entering a new market is the risk factor. For the Bellway Plc there has been a strategic management of risk through a change of location. This needs to be followed up by the launch of personalised and online services. There is a need to now focus on changing passive international sales into hardcore business. It is important to capitalise on the opportunities by undertaking risks so as to achieve organisational growth. Therefore, once the entry level mode is applied to this situation, there will be a concerted effort towards arriving at decisions that have to do with control, risk and commitment as demonstrated in the diagram below: To deal with the risk factor at an entry level, this diagram shows that the commitment level needs to be high so as to start by catering to consumer satisfaction. With effective segmentation, it will be easy to find out the areas of investment so as to find an appropriate positioning on the scale where exports start. (Walter et al, 1988) Therefore, a good entry level strategy would involve introducing the fact that the Bellway Plc is capable of presenting an international face as far as its products go and can be modified to cater to any kind of culture or country. In this regard, there will be long term growth through the management of the immediate and other short term risks. In this case, the main risk comes from losing its exclusivity which can be tackled through the direct investment strategy. As an entry point mode, a company dealing with high end products needs to make a more individualistic statement. This calls for a mix of passive as well as consumer centric activities at the location as well as around it. For this, it is important to touch the pulse of the target consumers by being accessible to them distance wise. Therefore, it will be found that for an entry level product in an international market, exploring the retail market is the best option. The direct investment strategy is the best one for the entry mode strategy. In this regard, the entry level mode can be applied to find the areas where there is competitive advantage so as to find variations in the large consumer base that this product can enjoy in India. This will assist the company in finding an appropriate contractual or intermediate strategy that may be customised to fit into the Indian market in terms of segmentation. With franchising, licensing and other activities that will promote an environment of direct exports will also be a definite draw for most retailers. (Walter et al, 1988) According to the entry level mode strategy, it is important for the product to take the characteristics of its target market into account apart from the investment plan it will follow in the course of going international. This will serve the purpose of revealing the share holders ready to invest within India apart from the niche market that must be targeted. This brand must retain a more or less similar price in order to retain exclusivity. For this, it is also important to determine the dominance as far as risk and returns are concerned so as to command a fitting price accordingly. The level and degree of this dominance can be studied through an application of the entry level mode strategy. Marketing Mix A marketing mix is an amalgamation of the four Ps called Product, Price, Promotion and Place. It is a strategic process of planning and implementing the various elements in a certain combination so as to achieve the organisational goals. In this regard, it is imperative to reach a combination of the said elements along the lines of prevailing market forces and other such factors. In this section, there will be a discussion regarding the Bellway Plc's existing elements in order to study how these may be applied to formulate an apt marketing mix for the company. (Bennett et al, 2002) The reason for the focus on customer satisfaction as well as market segmentation lies in the fact that for this kind of a product range a market like India is vast and diverse with a wide base of consumer and market types. Therefore, these strategies will be implemented in terms of the four Ps - product, price, promotion and place. (Walter et al, 1988) Product As far as its branding process and make up goes, it would be imperative to first discuss the fact that the Bellway Plc is a composite of various products. While the linen section is more consumer oriented, it has a different branding strategy to create a different kind of presence from that enjoyed by the local construction companies. These new markets can be studied and interpreted in terms of consumer behaviour theories based on market segmentation. Considering the fact that the products offered by this company are not easily accessible to many segments, it is important to tap the segments that have maximum potential. Place As discussed earlier, the Bellway Plc has recently moved from the private quarters of UK to the public sector. This has been called a strategic move owing to the fact that, Bangalore has enjoyed more customers in the lifestyle segment which translates to enhanced market visibility. Visibility has also been fuelled by the fact that the physical positioning of the factory is near the many factory outlets for various trade shows. In fact, there is also a need for a fully operational informational outlet in malls to promote the brand as one of the prime attractions in UK. (Preece, 2003) Promotion The Bellway Plc has to follow a very systemised an exclusive form of promotion. In this context, it is imperative to carry out a thorough market segmentation every year. Market segmentation in the entry level anaylsis, as discussed above is the best method to follow in order to gain useful insights into consumer behaviour. (Langford et al, 2001) This will also help determine the exact segments within the country which needs to targeted. In turn, this process will provide a platform for effective brand positioning. This level of brand positioning will be in tandem with the policies and goals of the company in general. Brand positioning of this product in the Indian market depends largely on the skill and resource base according to the entry level mode. This will help decide on the perfect promotion strategy for high value products marketed by the company. In this case, according to the entry level mode, it is imperative for a high value product that can be bulky as well, to test the waters by creating a brand identity for starters. (Walter et al, 1988) Brand identity is built on the basis of various elements that surround the final perception surrounding a brand. This has a strong nexus with brand positioning in the market. Brand positioning is an activity that the Bellway Plc needs to place special emphasis on before its formal launch in order to study the operational aspects of the potential investors and to assess the actual promotional tools that will need to be applied with a focus on spreading awareness. Retaining exclusivity is of utmost importance in a country like India where the level of disposable income even with the most average person has increased by leaps and bounds. This will have a two fold effect for the brand. The first is that it will not be selling itself short and the second is that it will maintain a certain standard as far as its reach is concerned. (Bennett et al, 2002) Therefore, there must be advertisement only in specific business class and travel magazines of national airlines. In this regard, with glossy print ads that focus specifically on the quality of the crystal, there needs to be an attractive spread that must make an impact in a simple way. This is owing to the fact that in order for a product like stained glass or even designer furniture, which is so intricate and delicate in its designs, there must be focus on simplicity. This can be followed by exclusive exhibitions in 5 star and 7 star hotels like Taj, Oberio, and many more. (Fernandes, 2000) Further, towards the fifth year of the implementation of this strategic plan, the Bellway Plc must choose an Indian face as its ambassador so as to reach out to the people on a personal note. Instead of a regular actor or actress, this brand ambassador must be a stately icon from business, media or even politics, so that people will take the brand more seriously. To build a more strategic brand identity, the Bellway Plc must follow the process of getting to know a jet set clientele over pre launch parties as well as post launch parties of wine, cheese and steak at art galleries and other reputable lifestyle stores. In this regard, the Bellway Plc must create brand knowledge through presentations on the company and its history as well as reputation. Also, there must be media coverage by a maximum of two channels. For this, Zoom TV (a social page channel) and NDTV (a News channel of great reputation in India) must be chosen instead of the regular CNN IBN as NDTV is more Indian in its image. Further, there must also be international coverage of the launch details on BBC for its Non resident Indians, as these people have now taken to shopping on the great Indian shores where there is a lot more variety with retailers of all shapes and sizes flocking towards it. (Fernandes, 2000) Price Exclusivity is a major feature of the company which depends not only on promotion but also on related factors. This depends on the stock value also. In this regard, it has been mentioned earlier in the assignment that only 10% of the sales made by the manufacturer are to retailers. Therefore, in keeping with the promotional strategy that the Bellway Plc itself must have its own outlets, where most of them should be factory outlets near vineyards and high end hotels, there is a strong focus on the exclusivity approach in the price. (Fernandes, 2000) Conclusion According to the analysis done above, it is important for the company to employ a direct investment strategy with licensing and gaining international clients so as to convert passive pastures for sales into active and more action oriented strategies for marketing. In this regard, the direct investment strategy is the best one for the entry mode strategy as far as maintaining exclusivity is concerned. In closing, it would be imperative for the Bellway Plc to follow exclusivity as a strategic plan of action within the public sector in UK. (Pettinger, 1998) References: R. Pettinger (1998) 'Construction Marketing : Strategies for Success' - Macmillan Construction D. Langford and S. 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