Planning Manager in Strategic Management - Essay Example

Critically review the role of Planning Manager and assess the impact on our business plan Contents Contents 2 Introduction 3 Discussion 4 Conclusion 16 References 18 Introduction Annex House is a start-up entrepreneurial bakery in Cardiff, Welsh. The main competitors of the bakery house include Fabulous Welsh Cakes and Francesca Cakes. The main strategies required for positioning, planning and establishing the new bakery house in the confectionary market for Cardiff are studied and evaluated in order to understand the benefits and drawbacks of each of the strategies and the suitability and feasibility of the strategic objectives in deciding the appropriate future direction of the bakery house. A planning manager of the bakery house would focus on deciding the key market strategies, market research, strategic objectives and strategic management for the company. Since Annex House is a new bakery to be opened up in the market of Cardiff where other bakeries already exist with proper market shares and acquired base of customers, it is important for the planning manager of Annex House to identify the gaps prevailing in the market of Cardiff and try to position the new bakery house in order to fulfil this gap by catering to the unfulfilled and emerging demands of the customers in the confectionary market of Cardiff, Welsh. Deciding the proper strategies in order to ensure the competiveness, profitability and sustainability of Annex House is critical for aligning the business objectives and goals with the running of the bakery business. Also, implementing suitable strategic decisions and employing a proper strategic management and control in the business would ensure that the bakery house is enabled to meet the set objectives and goals for the business with respect to its operational, financial and other functional aspects. The strategic management process encompasses devising and incorporating the objectives and goals of the company with respect to the proper consideration of the available resources and capabilities in the business and by carefully assessing the internal as well as the external environment pertinent to the business. Developing a proper strategic management plan would help to decide the future direction of the bakery house and would also help to specify the objectives of the company, develop suitable policies and plans for achieving these organizational objectives and allocating proper resources in order to implement the decisions. This would ensure that the internal and external strengths, weaknesses, opportunities and threats of the business are evaluated in order to make key decisions regarding the strategic management of the bakery house. This would also help in ensuring the short term feasibility and the long term sustainability of the bakery house in the new market. This involves deciding the trade-offs between the to do and the not to do’s between the strategic decisions of the company. The business strategies devised for Annex House bakery would be aimed to equip the business to meet the strategic goals and objectives set for the business and a proper strategic management would help to ensure that all the functional processes including the operational management, human resources management and financial management are aligned with the objectives of formulating and incorporating suitable decisions for achieving the desired business goals and the vision of the company as a whole. Discussion The strategic analysis of a business is important to ensure that the organization goals of the business are achieved and the business is steered in the right direction. Also the strategic management involves strategic planning and control to understand and evaluate how different resources in the business are employed in various operational, financial and marketing arenas of the business to ensure the development of core competencies and sustainable competitive advantage of the business (Scwhartz, 2012, p.34). The strategic management process of a business usually encompasses the use of SWOT analysis to evaluate the internal as well as the external factors affecting the business, the Porters’ five forces model to evaluate the macro environmental factors influencing the business. The Resource Based View (RVB) analysis to asses and monitor the availability and use of resources in the business, the Porters generic strategies to decide the key strategies used by the business for competitive advantage creation, and the Igor-Ansoff matrix to identify and evaluate the marketing strategies used in a business. The swot analysis of the bakery business is done with the aim of understanding and evaluating the internal strengths and weaknesses of the bakery house and the external opportunities and threats prevailing in the confectionary industry on Cardiff, Welsh which are likely to impact the functioning and the viability of the bakery house in the market. Also, how the internal strengths of the business can be used to utilize the opportunities and mitigate the threats is explained in order to understand the suitable strategic decisions for the business (Elcock, 2012, p.330). The strengths of the Annex House bakery include the low pricing of the products, use of high quality ingredients, range of products, wide variety of flavours, financial viability of the business, adequate sources of fund, value added services, setting up of a favourable ambience for eating, differentiation on the basis of high quality services, manufacture of wide range of cakes and confectionaries to suit different customer tastes and a wide array of customer segments and the knowledge and experience of the owners about bakery business. The weaknesses of Annex House bakery includes taking a high value bank loan for funding the business, a smaller number of human resources personnel as compared to other bakery houses, small scale services due to being a start-up company, limited resources within the business and being a new entrant in the confectionary market in Cardiff (Wit and Meyer, 2011, p.404). The opportunities in the confectionary market of Cardiff which can be capitalized on by the Annex House bakery are the increasing levels of consumption of confectionary products in the Welsh region of the united kingdom, the increasing preference of the consumers of the region toward baked and chocolate products, the fast revival of the economy from the great financial recession of 2008, the accelerating perching power and disposable income of the consumers in the Welsh region, the high level of per capita consumption of confectionary items and the high preference shown by the customers from various segments towards the consumption of new bakery products. Also, the interest of the consumers in trying out new bakery items and involving more and more number of healthy baked foods in their day to day diets are other significant opportunities for Annex House bakery. The threats for the Annex House bakery include the existence of major competitors in the confectionary market of Cardiff like Fabulous Welsh cakes and Francesca Cakes, the existences of substitute products like packed confectionaries and snacks items, chocolates and Cadbury products and the presence of strong retailers in the confectionary segment (Hill and Gareth, 2012, p.304). Also, the preference of the consumers in spending towards dining out activities’ in restaurants is another threat because when customers go out to a restaurant for dining they usually satisfy the need of eating confectionary by trying out cakes and ice cream from the restaurant itself. The SWOT analysis of Annex House bakery indicates that the company has numerous opportunities to tap in. Annex House can focus on acquiring large number of customers by using their resources and strengths to create a unique proposition for the business in the Cardiff confectionary market. The bakery house can utilize the increasing interest of the consumers for Cadbury confectionary products by launching a Cadbury confectionary segment in the bakery house. Other than that, the provision of high quality and friendly services, the creation of a cosy and warm environment for eating out and the new strategies devised by the company like the waiters singing out the orders at the order taking points may be other attributes that would help the new bakery house to appeal to the customers in terms of a new experience and good services (Wilkens, Menzel and Pawlowsky, 2004, pp.8-12). The Porters’ five force model includes five key factors on which the macro environmental situation of the business is analysed. These factors include bargaining power of buyers, bargaining power of suppliers, intensity of competitive rivalry, thereat of substitutes and threat of new entrants. Bargaining power of buyers: This factor indicates the power of the customers in influencing the decisions of the business. The bargaining power of customers for Annex house bakery is medium. There are few established bakeries in the Cardiff city which have their own base of acquired customers. However, this indicates the future success of Annex House bakery. This is because, though there are other established bakeries in Cardiff city, yet the prices of these bakeries are high. This is likely to make the buyers in the bakery market switch to Annex House for buying the bakery items. Bargaining power of suppliers: the bargaining power of suppliers indicates the level of control that the suppliers in the industry have over the manufacturing companies. The bargaining power of suppliers in the bakery industry of Cardiff is low-medium as there are few established bakery houses and a large number of suppliers of raw materials in the city. Therefore, the bakery houses have more option of suppliers to choose from and can shift to other suppliers if they do not get the expected services and raw materials from one supplier (Olsen, 2012, p.210). Also, the suppliers would have high volume transactions because the few bakeries in the city aim to conduct high volume of transactions to source greater quantity of raw materials for more production aimed to attain economies of scale. Threat of substitutes: The threat of substitutes indicates the chances of other substitutable products in eating up the market share of a business. The threat of substitutes for bakery products is high in the market. The main substitute goods are packed baked items, chocolates, packed cakes and confectionaries which are widely available in many retail stores. Threat of new entrants: The threat of new entrants indicates the chances of new businesses to enter into the industry. The entry and exit barriers are important aspects for deciding the intensity of this factor in an industry. The threat for new entrants in this industry is high because the cost of establishing a business in the bakery market in Cardiff is comparatively low. Very high expenses are not associated with entering the market and the entry barriers in the market are quite low. Also, the bakery and confectionary market in the United Kingdom is a lucrative and prospering market which makes it attractive for many investors across the globe who wants to open upon new businesses in the country. Intensity of competitive rivalry: The intensity of competitive rivalry indicates the number of competitors competing in the industry and their respective strengths in adding to the competiveness and concentration level of the industry (Mazzucato, 2010, p.40). The intensity of competitive rivalry in the bakery industry of United Kingdom is low. Very few bakery houses and businesses are present in the Cardiff city of Welsh. The established bakery businesses have their own set of customers. However, there are many gaps prevailing in the market with the handful of bakery companies catering to scattered needs of the market. The resource based view is an important strategic management theory that can be applied to a business on the basis of understanding competitive advantage that can be gained by a business through the use of the tangible and intangible resources and capabilities available to the business. The main resources identified for Annex House bakery are the financial capabilities, the operational expertise of the bakery based on the prior knowledge and experiences of the owners, the physical resources like the equipment, the catering vans, the human resources like the high standard chefs and kitchen personnel, the financial resources like the availability of capital from bank loan and the owners capital and the intelligence resources like the existence of unique managerial and business capabilities among the owners. These are the main management resources identified to be available in the Annex House bakery. It is important to make a VRIO analysis of the resources and capabilities available in the bakery business in order to understand the position of the business in terms of its intangible and tangible resources (Mulcaster, 2009, pp.68-75). The VRIO analysis is done to understand the value, rarity, imitability and organized to exploit. The presence of valuable, rare, non-imitable and organized to exploit resources indicates the high competitive advantage of the business in the market. Value: The value factor of VRIO analysis aims to understand whether the resources available in the business are valuable for the business or not. The resources and capabilities in Annex House bakery can be identified to be valuable because they are likely to add value to the business and act as major strengths for the bakery house in the future. The proper employment of the financial capabilities and the operational resources in the business are likely to increase the revenues of the bakery house and decrease the operating expenses of eh bakery house in the future. Thus the available intellectual and physical resources in the Annex House bakery can act as major resources for the business and can also be identified to be one of the core competencies of the bakery house (Woodhouse and Collingridge, 2011, p.912). The specialized quality products are valuable resources which can act as core competencies for the bakery house as well. Rarity: the rarity factor indicates whether the resources and capabilities used by a business are available to the business alone or can easily be accessed by other businesses in the same industry. The resources and capabilities in Annex House bakery are not highly rare. The bakery procures its raw materials for baking from the finest quality suppliers to ensure that only premium quality ingredients are used in the bakery house. However, it is easy for other bakeries in the Cardiff region to access the same suppliers or access suppliers of similar competency in order to procure as good quality raw materials as those procured by Annex House bakery. As such, the resources in the bakery are not rare and may be easily accessible by other bakeries. Thus, the resources of the bakery like the established base of suppliers are general resources available to the business which can act as strength for the business but do not necessarily pose as the core competencies of the bakery house (Sadler, 2012, p.114). Imitability: The imitability of a resource indicates whether the available resources in a business can be easily imitated by other business in the same industry. Some resources in Annex House bakery like the cosy and upscale ambience for eating and the wide range of products of different flavours and different types are non-imitable resources. This is because the customers attribute a specific ambience and products to the bakery house which when imitated by other bakeries is likely to loose on the factors of freshness and appeal to the customers (Lag, Hambrick and Chen, 2012, pp.935-955). Other resources like the procurement networks, the home delivery services and order planning in the internet are servicers which can be easily imitated by other bakeries because they do not require wide knowhow or high scale expenses. Organized to exploit: It aims to evaluate if the business is ready to use the available resources effectively. The resources based view analysis of Annex House bakery indicate that the bakery house is suitably equipped to employ its resources and capabilities in order to achieve a moderate degree of sustainable competitive survival as well as sustainable competitive advantage in the confectionary market in Welsh (Grant, 2013, p.40). Most of the valuable and rare resources in the business are substantially exploited by the bakery house. However, the bakery house should devise more strategic planning in order to exploit and use the non-imitable resources in the business to ensure competitive parity and competitive advantage for the bakery. The strategic decision related to the positioning of the bakery business should be based on the selection of strategies to create a position for the bakery business in the market of Cardiff, Welsh (Cunningham and Harney, 2012, p.214). The porter’s generic strategy is an ideal tool to evaluate the strategic options for the bakery company with respect to the positioning and marketing of the company. Different businesses use different strategies in order to create a position for themselves in the market. However, the major options of strategic positioning of a company can be categorized into four distinctive strategies based on the porters’ generic model. These strategies are differentiation, cost leadership, cost focus and differentiation focus. A business may use one of these strategies or may adopt a combination of two complementing strategies. The bakery business should narrow down to one or two suitable positioning strategies from the porters genetic strategies. The choice of a suitable strategy in the beginning of the business helps the business to move on the right strategic direction and achieve the set objectives for the business. The choice of a strategy would be influenced by the goals that are set to be achieved in the business and the type of the business that is being conducted. A management strategy of cost leadership involves being a low cost provider of the products. It is a useful strategic management policy for a bakery business because the bakery business can achieve economies of scale in its production by taking up this strategy (Besanko, Dranove, Shanley and Schaefer, 2013, p.54). Since, the bakery business caters to a wide range of customers belonging to different income groups, it is advisable to take up the cost leadership strategy as it helps the bakery business to gain more customers from different segments as well as achieve economies of scale through the high volumes of production. In order to achieve economies of scale, a bakery business should aim to produce high volumes of cakes and other bakery products which will help to increase the production capacity and the productivity of the business by suitably distributing the labour and also by saving sufficient expenses by purchasing the raw materials required for the business in high volumes. This would also enable the bakery to become more capable of offering its products at a competitive rate in the market thereby competing suitably with the other existing bakeries in the market (Kozami, 2012, p.115). Differentiation is a management strategy in which the products or services of a company are differentiated on the basis of product attributes rather than prices. This strategy involves attracting customers on the basis of value added features rather than on the basis of lower competitive pricing. This can be done by differentiating through new services or through the use of premium quality ingredients. A cake bakery can differentiate itself from other bakeries in the market by providing value added features and services or taking up differentiating strategies like sourcing the most premium quality raw materials for the baking purposes or through the development of special recipes of cakes and confectionaries. Also, the bakery can differentiate itself on the basis of added services like providing a high quality ambience for eating in the bakery house, taking orders for customized cakes, by providing with options of fast services and home delivery services with a promised speed and time of delivery (Dress, Lumpkin and Taylor, 2010, p.44). The cost focus strategy for a business is similar to the cost leadership strategy. However, unlike the cost leadership strategy, the cost focus strategy involves narrowing down the customer segments and targeting a focused customer segment in order to focus on selling the products and services to a focused group of customers. The niche consumer groups in a bakery market can be targeted on the basis of vegan products or organic products and by offering cakes and confectionaries for special occasions like birthdays and weddings. This strategy is aimed at making the bakery competitive in terms of cost within a smaller segment of customers. This strategy is not consider suitable for the Annex House bakery as it has been identified in the market research for Cardiff, Welsh, that there is not much scope in niche marketing in the area. The bakery products are mostly consumed by the local people belonging to varying income groups which make it necessary for Annex House bakery to focus on customers from different backgrounds and income levels so as to earn maximum revenues and acquire maximum market share in the area. The differentiation focus strategy is also similar to the differentiation strategy with the only exception being that the strategy is incorporated when the targeted customer group is a narrow niche segment of customers. The businesses adopting a differentiation focus strategy aims at competing with other companies in the same industry by providing value added and differentiated product features and services to a focused group of customers. For example, a cake bakery company can differentiate itself on the basis of providing value added services like rush delivery and differentiated products like organic cakes or vegan bakery items that are preferred by a specific group of customers. Like the cost focus strategy, the differentiation focus strategy is also identified to be unusable for Annex House bakery because this would automatically narrow down the customer segments and as such decrease the number of customers for the bakery house which would impact their profitability and market share in the long run (Teece, 2012, pp.1319-1350). Also, to ensure a high level of competitiveness with other bakery companies like Francesca Cakes and Fabulous Welsh cakes it is important for Annex House to find out the existing market gaps in the confectionary market in Cardiff Welsh and try to position the new company in this market gap with the aim of fulfilling the unmet customer needs and requirements. Since the confectionary market in Cardiff, Welsh is a comparatively small market with already existing bakeries, it is advisable for Annex House to take up the cost leadership management strategy so that it can start to establish a unique position for itself (Wijnands and Bremmers, 2011, pp.417-439). A low pricing strategy is likely to attract more customers and would enable the bakery to be competitive in terms of competing with the existing bakeries like Fabulous Welsh Cakes in Mermaid Quay and Francesca Cake in Barry Vale of Glamorgan. Since the Fabulous Welsh Cakes and the Francesca Cake are already well positioned in the market through the differentiation strategies, it is difficult for Annex House to compete with these companies on the basis of product differentiation. Also, focusing on a niche market or any other narrow segment of the market would reduce the number of probable customers for the Annex House bakery and thus may impact the revenues, sustainability and profitability of the business in the long term (Johnson, Whittington and Scholes, 2011, p.500). Therefore, a little bit of differentiation combined with high scale cost leadership would be the ideal strategic management policy used by Annex House in order to increase its competitiveness and carve out a unique position for the bakery in the confectionary market of Cardiff, Welsh. The Ansoff matrix is a useful matrix used to decide the corporate strategy to be followed by a business in new as well as existing markets. The matrix establishes the use of a market penetration strategy for existing markets and existing products, a diversification strategy for new markets and new products, a product development strategy in an existing market with new products and a market development strategy for a new market and existing products (Wei and Wang, 2011, pp.267-277). Since the Annex House bakery is being opened up in the confectionary market of Cardiff, Welsh, which is an existing market; therefore, according to the Ansoff matrix of market planning, Annex House should opt for product development. The bakery house has set the business objectives of catering to the confectionary needs of the local people in the Cardiff city in Welsh, United Kingdom. With this aim, the bakery has aimed to develop high quality and wide variety of products and has embarked on product development through the introduction of cakes and confectionaries of different flavours made from premium ingredients. Also, the company has decided to launch new bakery products like organic cakes and vegan bakery items which are likely to attract the interest of the customers in the market. The strategic planning of a business involves the development of suitable strategies in the financial, operational, marketing and distribution and services of the business (Abraham, 2012, p.110). Along with suitable product development strategies, the bakery should also embark on proper distributional channel strategies, operational strategies and marketing strategies so that the strategic management and control of the business is sufficient to fuel the growth and sustainability of the bakery house in Cardiff city (Kudwig and Pemberton, 2011, pp.215-236). The bakery house should take into account the external opportunities and threats in the bakery industry by studying the market carefully and conducting an extensive market research. Visiting the stores of the competing bakery houses and websites would be an ideal way to create the base for future strategic decision management of the company. The product devolvement strategy of Annex House bakery includes rolling out a new bakery item every month so that the freshness and brand appeal for the business remains intact in the minds of the customers. Other than that suitable promotional discounts and offers would help in the marketing of the business as well as in creating more customer awareness and word of mouth publicity for the bakery house (Gardner, 2011, p.120). The development of signature bakery recipes with keeping the recipes and some key ingredients secret is a major strategic plan involved in the development of the bakery house. This would ensure the bakery to have a competitive edge over other bakeries in the city and also help to increase the rarity of the products of Annex House thereby creating competitiveness and sustainability for the bakery house. The development of a competitive pricing strategy would be useful for the bakery house to ensure that it efficiently positions itself in the gap identified in the bakery market in the United Kingdom. Since most of the bakeries present in the Welsh region have high prices for the bakery goods, the strategic decision of Annex House to maintain low prices is likely to be beneficial in terms of establishing the new bakery in the market as well as in helping the bakery to fulfil the customer requirements which have not yet been catered to by other bakeries (Mckeown, 2012, p.178). The development for a company website and the option for the customers to place orders through the corporate website are useful marketing strategies employed by the bakery house, this is because the customers across the globe including those in the United Kingdom are becoming more tech savvy and internet is easily accessible in all areas of the United Kingdom (Hill and Jones, 2012, p.60). Therefore, more customers are showing inclination towards ordering with ease over the websites. The launch of a strategy to enable ordering trough websites is likely to appeal to the young to medium aged people from all income groups. Differentiating the products by ensuring that the raw materials are premium quality and fresh and are procured from the best suppliers would ensure that the company maintains a continuous competitiveness in the bakery industry. Conclusion It can be identified from the strategic management analysis of Annex House bakery that the business is more or less adept in it choice of strategic decisions. The company has chosen suitable strategic options in order to meet the corporate objectives and the organizational vision set for the business. The bakery industry in the Cardiff city is identified to be a potential industry with few established bakery houses in the region and more control of the bakery companies in the area over the operational and procurement activities. There are market gaps identified with respect to the emerging preferences of the consumers in which the new bakery house can be suitably positioned. The marketing, operation and distribution of the bakery products of Annex House can be identified to be viable for the long term operations of the business. Also, the strategic analysis of the business including the resource based view and the SWOT analysis establish that the bakery house has few core competencies and many internal strengths and external opportunities that would help the bakery to have sustainable competitive advantage over other bakeries in the Cardiff city. The strategic planning of the bakery house is suitably formulated and implemented so as to attain the organizational goals while maintaining the core values in the business. The bakery is likely to be successful on the basis of the employment of the strategic decisions encompassing, the marketing strategies, operational strategies, business and corporate decisions, innovation, product development and competitive pricing strategies. References Abraham, S. C. 2012. Strategic Planning: A Practical Guide for Competitive Success. Bradford: Emerald Group Publishing. Besanko, D., Dranove, D., Shanley, M. & Schaefer, S. 2013. Economics of Strategy. New York: John Wiley and Sons. Cunningham, J. & Harney, B. 2012. Strategy and Strategists. Oxford: Oxford University Press. Dress, G., Lumpkin, G., & Taylor, M. 2010. Strategic Management: Creating Competitive Advantages. New York: McGraw-Hill. Elcock, H. 2012. Strategic Management: Managing the New Public Services, 2nd Edition. New York: Macmillan. Gardner, A. 2011. Marketing principles. London: Oxford Press. Grant, R. M. 2013. Contemporary Strategy Analysis: Text and Cases (8th edition). Chichester: Wiley. Hill, C. & Jones, G. R. 2012. Strategic Management Theory: An Integrated Approach. Hampshire: Cengage Learning. Hill, W. L. & Gareth, R. J. 2012.  Strategic Management Theory: An Integrated Approach. Hampshire: Cengage Learning. Johnson, G., Whittington, R. and Scholes, K. 2011. Exploring Strategy: Text & Cases (9th edition). Harlow: Pearson Education. Kozami, A. 2012. Business Policy and Strategic Management, 2e. India: Tata McGraw-Hill Education. Kudwig, G. & Pemberton, J. 2011. A managerial perspective of dynamic capabilities in emerging markets. Journal of East European Management Studies. Vol.16 (3), pp. 215–236. Lag, R. & Hambrick, D. C. & Chen, M. 2012. What is strategic management, really? Inductive derivation of a consensus definition of the field. Strategic Management Journal. Vol. 28 (9), pp. 935–955.  Mazzucato, M. 2010. Strategy for Business: A Reader. UK: SAGE. Mckeown, M. 2012. The Strategy Book. Edinburgh: FT Prentice Hall. Mulcaster, W. R. 2009. Three Strategic Frameworks. Business Strategy Series. Vol.10 (1), pp. 68 – 75. Olsen, E. 2012. Strategic Planning Kit for Dummies, 2nd Edition. New Jersey: John Wiley & Sons Inc. Sadler, P. 2012. Strategic Management. Great Britain: Kogan Page Publishers. Scwhartz, P. 2012. The Art of the Long View. New York: Doubleday. Teece, D. J. 2012. Explicating dynamic capabilities: the nature and micro foundations of (sustainable) enterprise performance. Strategic Management Journal. Vol.28 (1), pp.1319–1350. Wei, Y. & Wang, Q. 2011. Making sense of a market information system for superior performance: The roles of organizational responsiveness and innovation strategy. Industrial Marketing Management. Vol. 40(2), pp. 267–277. Wijnands, J. H. M., & Bremmers, H. J. 2011. An economic and legal assessment of the EU Food Industry’s competitiveness. Agribusiness-An International Journal. Vol. 24(4), pp. 417-439. Wilkens, U., Menzel, D. & Pawlowsky, P. 2004. Inside the Black-box: Analysing the Generation of Core Competencies and Dynamic Capabilities by Exploring Collective Minds. An Organisational Learning Perspective. Management Review. Vol. 15(1), pp. 8-12. Wit, J. and Meyer, D. 2011. Strategy Process, Content and Context. Berkshire: Thomson Learning. Woodhouse, J. & Collingridge, D. 2011. Strategic Management. London: Routledge. Read More