Strategy at Different Levels of a Business - Essay Example

Strategy at Different Levels of a Business Introduction Business strategy is very paramount for the success of any company especially profit oriented organization. It is regarded to be the foundation of any successful company. A company should adopt a business strategy that ensures that the demands of the rapidly changing environment are meet satisfactorily. These should be in aligned with the goals and missions of the company to expand the business in terms of sales and profits. Companies are driven by inevitable internal pressure for business continuity. Business strategy is defined as a business plan that clearly defines the vision and mission of the organization. It defines the tactics that will assist the company to realize its objectives. Business strategy also defines the amount of resources that an organization requires and it is going to manage in order to achieve its goals. This business plan dictates the steps to be followed and the responsible persons for each step. Business strategy is more than visioning, forecasting and planning. Implementation is what matters most and this should be done carefully to ensure that there is match between the internal capabilities of the organization and its external environment. The strategies should influence the position of the organization at any time. It should enable the stakeholders to understand the better ways of realizing the desired objectives. Application of the business strategy is very paramount as it bounds business operations together. Strategy at Different Levels of a Business Business strategy is implemented at different levels in the organization. Individuals are involved at different stages during implementation. Corporate Strategy- business should meet the expectations of the diverse stakeholders; customers, employees and the owners. This level of strategy deals with the objectives and the purpose of the business in satisfying the stakeholders. At this level, the owners or the investors are very influential as they act to guide the decision makers to achieving the stated goals. Business Unit Strategy- Fair competition is a factor that cannot be neglected by the organization. It is imperative that the organization is in a position to compete successfully in the economy. This strategy is governed by the demands of the market hence the organization is obliged to ensure that the right products of the right quality are supplied in the market to enable it compete with others competitively. At this level, the products should meet customers' needs enabling the organization to outwit the competitors. This in turn enables the organization to create new business opportunities. Tesco is successful because it able to compete successfully with the competitors. The grocery firm is in position to meet the demands of the customers. Operational Strategy- the ways resources are spend in the organization is very useful for the success of the company. The way the business operations are carried out by different persons using different processes should be monitored. This strategy concerns with each part of the business, they way it is organized to deliver the right procedures in realizing the objectives of the organization. Tesco Grocery Firm: Sure Way to Increase Sales It is objective of every company or an organization to increase sales which leads to profitability of the company. This in effect leads to expansion of the company. Tesco grocery firm has been very successful in increasing the volume of sales. For example, the firm sales had grown from 9 to 13 per cent Europe and from 6 to 11 per cent in 2002. This is a significant growth in the volume of sales. The firm expanded substantially through by developing establishing internal stores as the basic strategy for its development. The firm strived to increase the volume of sales through attracting of new customers and enticing of the proven customers to buy again. Retaining of customers is very important to any business organization. It is important to understand that, ''The best sales prospect is a prospect that is already converted.'' This refers to maintaining of the current potential customers. The firm has expanded enormously by increasing the number of outlets which in turn has enabled the company to increase the volume of sales. The firm has grown substantially due to the fact the number of products made available to the consumers were increased significantly. Provision of variety of products to customers is very important to the firm. For example, introduction of non-food products has enabled the company to make substantial sales. From the excerpt, we note that the company established beauty and health products as part of its development. This was then received warmly by customers who boosted the amount of sales. The firm went further to introduce diverse products such as consumer electronics which experienced a substantial growth of about 34 per cent. The firm proved to be customers oriented. It is important for any business organization to build customer base. By the fact that Tesco firm provided different tastes and preferences, it has managed to build a broader customer base. This is a very important strategy for any growing business firm. The firm appreciates the fact that customers have different taste and a preference hence increasing the number of products available to customers is very important. Breaking away from competition is very important. As a sign of development and a business strategy, the firm has been in a position to compete successfully in the market. The firm is able to increase the volume of sales and generate more profits because it outwits its competitors in the market. The firm is offering quality goods and services at fair prices. This indicates that the company is in position to attract and maintain customers. From the excerpt, more people choose to buy from the firm not only food items but also non-food products because of the fact that the firm offers great quality of products at a fair price. The staff in the firm matters a lot hence it is imperative for a company which is in the process of developing to build a very successful team. Tesco has managed to grow substantially because of good employees. A successful organization has motivated employees who are ready to cooperate with the other stakeholders in ensuring that the objectives of the company are realized. Tesco Company has attracted a lot of customers due to services from the employees. Customers choose to buy wide range of products from the firm because of services and quality of products the firm offers. The quality services the customers get from the firm are attributed to the efforts of the employees or the staff in general. The firm managed to create a robust stable business through efficient business system. The development of outlets through joint venture has boosted firm's business operations. By expanding through joint venture, the firm is in position to reduce the cost of productions. The customers are attracted by the fair prices offered by the firm in both food and non-food products. This indicates that the firm is in apposition to cut down the cost of operations without interfering with the flow of cash into the business. The firm has managed to maintain steady flow of cash which has been used to expand business operations. Development Directions It is imperative for a growing firm to have strategic directions which will enhance development. Ansoff matrix has been used by most firms to analyze the possible strategic direction to be adopted since it is the most efficient. The method shows potential areas that the firm can deploy the core strategies that enhance development of the firm. There are four categories that Tesco firm can adopt for its growth. Market penetration- It is the process where a firm increases share of its existing products in the existing markets. The firm is obliged to build core competencies or improve the existing ones. The competencies are aimed at improving the quality of services that a firm offers at any given time. Improved services enhance reputation of a firm. Building of core competencies enables a firm to be more efficient in service delivery. It is difficult to venture into declining or mature markets than the markets that are still growing. A firm should withdraw itself from the declining markets as it may not be very successful. Tesco company is expanding its business operations very rapidly hence it should venture more into the new markets. Market development- This is going into new markets or new segments of already existing markets without changing the products. This is aimed at attracting new customers and retaining existing ones. Going into new markets means that the firm has to leverage the existing core competencies or develop new ones. Market development has lead to internalization and globalization. When a firm enters international markets, then it has to develop new core competencies or otherwise it might not do well. Tesco grocery firm has adopted this strategy very successfully. It has venture into international markets such as Europe, Asia and U.S.A with the food products. Product Development- This involves development of new products for already existing markets. The firm will exploit the existing competencies that have not been previously utilized. It may also require developing new competencies such as product research. Product development is very advantageous to the firm in the sense that it enables it to deal with customers who are known for a longtime. Their potentialities are known hence the products that are to be developed should fit their purchasing ability. Tesco firm used this strategy when it introduced products such as non-food items and the retailing services to the UK population. Introduction of non-food items gain strong progress where sales rose by approximately 13%. The establishment of healthy and beauty and electronics items was a very good business strategy as it enables the grocery firm to increase the volume of sales Diversification- This involves combination of product development and market development strategy i.e. business growth through new products and new markets. This can be used efficiently and effectively when the market is very saturated and the products are reaching the end of their life cycle. This strategy has synergy effect hence risk are spread the broadened market and product portfolio. This strategy has also done very well in Tesco firm. The firm has expanded the markets for the new products. Products such as electronics and the retailing services are been sold in new markets such as China, Czech Republic, Malaysia among others. Product Selection and market decisions It is extremely important to consider the type of products that can lead to profitability of the business. The type of the product also determines the survival of the business. The firm should make a number of decisions concerning the type of market and products to be supplied. Product and market categories- The categories of products that the firm should offer should be determined. The classifications of products are: goods and services, consumer and industrial products and convenience and speciality products. The firm has to decide fully on the geographical coverage and international exposure and the risks associated. Product features-For a firm to make a lot of sale, it has to offer products that are superior in terms of quality. Product differentiation is very imperative hence the firm is forced to make right decisions concerning the features that products should posses. Mix of a product is very beneficial to the firm and this is what has boosted the sales of Tesco against its competitors. Product and Market Portfolio-the extent to which the products and the market is to spread is very important. Broad portfolio is what assisted Tesco firm to withstand any economic pressure that might occur in one market. Broad portfolio enables a firm to exploit opportunities that arises in location of the business Assessing the Suitability of Business Strategy It is important for a firm to assess whether the business strategy to be adopted will be suitable for the firm. There are various tools that can be used to assess the suitability of a business strategy. Decision trees - This involves assessing the strategic alternatives available against the factors that have great influence in the growth of the firm. For the case of Tesco, the key factors are resources and technology. The firm should make decision on whether to establish new products on new markets or develop new products on the existing markets basing on this method of evaluation. Substantial resources are required to expand to new markets as compared to creating new markets for the existing products. Venturing into new markets means that the firm has to incur a lot of advertising expenses hence limiting the amount of profits Scenarios- Every organization aims at improving the affairs of the company currently and in the future. Future sometimes proof uncertain hence a lot of care should be taken when adopting a business strategy. This method enables the firm to adopt a very suitable business strategy that enables the firm to grow in the uncertain future. The management of a firm should adopt strategic options considering the future. The best strategy is one which can accommodate uncertainties in the future. Ranking options- This method involves assessing the strategies available in relation to factors that are considered important to the firm. For example, a firm may choose to expand its products overseas through joint venture. What matters here is the ownership. The parent firm might loose full control of the business. If a firm decides to consolidate on the already existing markets, then designing of market taste might be difficult. These options are ranked and at the end, the option ranked higher is going to be adopted. The TOWS Matrix- Every firm has both weakness and strengths. It is essential to develop a strategy that considers the strength, weaknesses, opportunities and threats to the firm. The option to be adopted should address all these factors for it to enable the firm to grow. Strengths-Some of the strengths of a firm are very supportive staff, if the firm has extensive research and development, strong management team, good location of the firm etc. Weaknesses- Some of the weaknesses are few key staff, lack of awareness among the potential customers, lack of strong sales persons and emergence of high-tech that calls for substantial resources. Threats- include competition, economic recession in the global economy, and price sensitivity of the market and new technology which may render products obsolescence Opportunities- scope to diversify into new market segments, availability of distribution channels to be used during product distribution, high potential export markets. . References Ansoff, I. (1998). Business Strategy. London: Penguin. Pp.100-180. Read More