Business Strategy: Cath Kidson - Assignment Example

Business Strategy: Cath Kidson Contents Contents 2 1 Explain strategic contexts and terminology – missions, visions, objectives, goals, core competencies 3 1.2 Review the issues involved in strategic planning 3 1.3 Explain different planning techniques 4 2.1 Organisational audit for CathKidston 4 2.2 Environmental audit for CathKidston 7 2.3 Stakeholder analysis 7 3.1 And 3.2: Review of possible strategies for growth of CathKidston 9 4.1 Compare the roles and responsibilities for strategy implementation 9 4.2 Discuss targets for achievement in a given organization to monitor a given organization 10 1.1 Explain strategic contexts and terminology – missions, visions, objectives, goals, core competencies A Mission Statement is defined as an organizations primary objective and purpose. The prime function of a mission is internal and is to define the key measures or measure the success of organization, the prime audience of a mission statement is the stockholders and leadership team. Vision Statement defines the purpose of the organization, but it does so with respect to the values of the organization and not on the bottom line of the organization. The vision statement communicates to all the stakeholders the values and purpose of the organization. It also gives direction to employees about the expectations of the organization in context of their behaviour and provides inspiration so that they give the best to the organization. The vision statement shapes the understanding of the customers of what the organization stand for and aspires to achieve. The objectives or an organization include the goals, mission and purpose of an organization which are established by the management of the organization and communicated to all the stakeholders. The organizational objectives of an organization  focuses on the long range intentions of the organization for successfully operating business in the market. It provides useful guidance to employees who seek to become a successful and grow with the organization (Barney and Clark, 2007). The overall objectives, purpose and mission of a business that have been established by its management and communicated to its employees. The organizational goals of a company typically focus on its long range intentions for operating and its overall business philosophy that can provide useful guidance for employees seeking to please their managers (Choo and Bontis, 2002). Core competencies of an organization are strengths the organization has developed over time. The core competencies of an organization include combination of technologies, skills, knowledge, processes and expertise are achieved due to long-term development of processes and experiences. 1.2 Review the issues involved in strategic planning There are various issues which are involved in strategic planning of any organization. Some of them have been listed in the following paragraph. An important issue with strategic planning is misunderstanding the environment of business or focusing too much on results. While preparing Strategic Plan the organization must pay due attention to changes in the environment of business, set its priorities and actually understand the true need to pursue the desired results. Strategic planning may also have an issue due to the Partial commitment of the stakeholders. The Business owners and CEOs must be totally committed and must understand the strategic plan and its use to the enterprise. Without such a commitment and associated knowledge, there can be problems in the implementation of strategic plan. All stakeholders may not be involved in designing and implementation of the strategic plan. The people who are charged with implementation the plan must be involved till the end. Those charged with creating the strategic plan should be committed to guide the plan through execution. An issue can arise during writing the plan and ultimately finishing it. In case the plan is expected to be an effective management tool, it should be reviewed and used continuously. One of the major issues that an organization may face while implementation of strategic plan is the unwillingness or inability of the organization to change. The organization and the strategic plan must be able to adapt to changes in market conditions. Another issue that can arise is selection of the wrong people in leadership positions. The leadership should be such that they must be willing to take tough decisions so that the right individuals are in correct leadership positions. 1.3 Explain different planning techniques Strategic planning helps business succeed by achieving its organizational goals. There are three techniques that can be employed for strategic planning. First, a realistic, measurable goals has top me set to create a benchmark for the work to be done. Second, the customer segment to be targeted has to be properly understood and a communication channel with customer base needs to be established. Third, the best employees and leaders need to be selected and retained in the organization to implement the strategic plan and achieve the organizational goals. A major planning tool is benchmarking. Benchmarking is the process of planning through comparisons with other organisations, which are the best in their class and the techniques used by them. Benchmarking can be of three types. Process benchmarking or designing of process through comparisons with organisations whose processes have been deemed the best. Product benchmarking or planning a product according to organizations those are best at producing the particular product. Best in class benchmarking is the planning based on plans of organisations which are deemed best in the particular segment. 2.1 Organisational audit for CathKidston Benchmarking is the comparison of companies’ products, services or processes with another company or other players in the market or the best in the industry. Benchmarking can be of three types. Operational Benchmarking deals with the comparison of the company`s` processes with other companies in the market. Cath Kidson has efficient processes which are far more productive than its competitors. Product benchmarking deals with comparison of the quality of the products produced by a company with respect to other manufacturers in the market. Cath Kidson one of the oldest brand in the UK to produce hand bags with a large loyal customer base which proves that the Cath Kidson produces bags of high quality. Best in class benchmarking means comparison of a company`s product and services with the best in the industry worldwide. The strengths of Cath Kidson include a robust supply chain which has helped it stay competitive for many years in the UK market. It manufactures bags at low production cost; it has superior customer service facilities which have created a loyal customer base in the UK market. Cath Kidson has also ventured into e-commerce and provides lifestyle goods to customers around the clock. Cath Kidson has created a niche for itself in the lifestyle goods market with a strong brand. The weaknesses of Cath Kidson include its lack of diversification. It produces lifestyle goods of a similar type and many times customers get bored with the similar pattern. The opportunities in front of Cath Kidson is huge as it can expand to markets like the US, where through its high quality and strong brand can become a large selling brand. This can increase the total revenue of the company. The e-commerce initiative recently launched can be extended overseas and the customers from foreign market scan also be tapped by the company. Cath Kidson has a considerable amount of threat from knock offs which have recently started to enter the market causing brand dilution and cheaper imitations produced in developing countries is also eating into the market share of the company. Cath Kidson has positioned itself as a niche provider of mass customized lifestyle goods. It believes that the product style should match the preference of the user. Cath Kidson products are also determined by the demographics of the customers. Therefore the baby care kits produced by Cath Kidson are design as per mother’s fashion taste, the teenagers` camping kits have youth style printed on them, and coffee mugs that are produced by Cath Kidson look different for the father, mother, son and daughter. Michael Porter introduced the concept of value chain analysis. Cath Kidson has its own value stream which consists if primary and support activities. These activities add value to its serves and products which has made it a world class organization. The primary activities of Cath Kidson include inbound logistics and outbound logistics. Inbound logistics refers transportation facilities currently present to transport goods from its suppliers to its manufacturing locations. Outbound logistics refers to distribution of manufactured products to Cath Kidson stores. Cath Kidson works on the concepts of lean management which ensures efficient handling of raw materials and finished products. It stands for reduction in wastage and reducing inventory. The second primary activity is operations which refer to the actual processes of production of lifestyle goods. Cath Kidson ensures the efficient production with stress on quality through frameworks like quality circles to provide on the best product to its customers. The other primary activities include customer service, sales and marketing. Cath Kidson marketing is mainly targeted towards a specific customer segment. The marketing mix is used to form an effective marketing strategy for the company which is communicated to the target customer segment through the promotional mix. Cath Kidson also endeavours to provide quality customer service through providing assistance to customers in every country it is present in. Cath Kidson also provides support activities that assist the primary activities to help the organization achieve goals. The support activities include procurement and Cath Kidson uses collaborative and strategic procurement processes to obtain the best price for quality products. The second support activity is Technology development which is leveraged through e-commerce by Cath Kidson to obtain a competitive advantage over its competitors. The third support activity is Human resource management. Cath Kidson implements a variety of programs for staff motivation and selects the best talent that helps it to add value to products and services. The last support activity is infrastructure of the firm. Cath Kidson is based in the UK and has efficient infrastructures which aim at reducing wastage of resources. Ansoff’s matrix suggests four marketing strategies. The marketing strategies of Cath Kidson are compared with respect to the ansoff matrix. There are four strategies and in each strategy there are differing levels of risk. The four strategies are given below. The strategy of market penetration involves Cath Kidson increasing the market share in existing market through selling more products/services to loyal customers. The strategy of product development involves Cath Kidson developing new products for loyal customers using the customer requirements in existing market. The strategy of market development entails finding new markets for existing products (Chrisman, Chua and Sharma, 2005). Market research and segmentation of markets helps Cath Kidson to identify new groups of customer groups. The strategy of diversification involves moving new products into new markets at the same time. Cath Kidson is contemplating using this strategy to spread risk and increase its revenue through increase in sales. Scenario planning, which is also called scenario thinking and scenario analysis, is a planning method which few organizations are using to undertake flexible long-term planning. It is a method in which through simulation virtual but eminent scenarios are designed and proper planning is done by policy makers. The simulation combine facts about the future and issues in demographics, geography, military, political, industrial information, and mineral reserves. The key drivers of this simulation are based on identification of key social, technical, economic, environmental, and political (STEEP) trends (Gulati, 2007). Cath Kidson is a prominent and only recognizable brand in hand made bags in a country which is stable and a considerable economic growth. So along such a scenario the company needs to invest in marketing activities and increase its sales through expansion in other markets like the US. For survival of the company Cath Kidson, many new franchisees which met the basic criteria of the company where roped in through brand collaboration and licensing like Roberts Radio and Churchill China. The company went public and sold majority stakes to other investment companies to fuel expansion in foreign markets like Japan. 2.2 Environmental audit for CathKidston Through porters 5 force analysis; the threat of new entrants, the power of buyers, the power of suppliers, the threat of substitutes, competitive rivalry and collaboration for Cath Kidson have been identified. The supplier power of the company is very low due to the presence of a large number of suppliers present in the market which can supply raw materials to the company. The company mainly produces handmade and uniquely designed bags which are not produced by any other company. So the treat of new entrants is low due to already established supply chain and a loyal customer base of the brand. The threat of substitution is high as more and more customers are opting for plastic or leather bags which are cheaper and considered more stylish than Cath Kidson bags respectively. The buyer power is very high as the company operates in the business to consumer segment which requires direct selling to consumers. Thus the company has to produce and design bags according to the needs and wants of the customers. The industry rivalry is very low as the company is the only notable manufacturer of customized hand bags in the market. The PESTLE analysis of Cath Kidson is done to understand the environmental conditions of the company. The political, economic and legal condition of the UK, where Cath Kidson is based in is suitable for growth and development of any company. The economic recession had led to an economic crisis but the world economy and thus the purchasing power of customers is rising. Socially Cath Kidson products are seen as a niche brand and the products have a place of their own in the society. Technologically Cath Kidson has advanced a lot with opening of its own e-commerce portal customers in the UK. Cath Kidson is committed to the growth of the company along with sustainable development of environment. 2.3 Stakeholder analysis Stakeholders are all the people who are directly linked to the organization. These include shareholders, promoters, customers, prospective customers, employees and even the general public which is getting affected by the functioning of the organization. The stakeholders of Cath Kidson include the customers, the promoters or top executives like presidents and the CEO of Cath Kidson, employees and prospective customers. Stakeholder mapping of Cath Kidson can be done through a collaborative process of research, and discussion which draws from many perspectives to determine a list of stakeholders and their relationship with the brand. Mapping can be done through four phases which include identifying stakeholders, analyzing the perspectives and interests of stakeholders, visualizing relationships and prioritizing stakeholders as per their relevance. Cath Kidson`s stakeholder significance grid is used for its stakeholder`s mapping. Figure 1 (Source: Freeman, 2010) The prospective customers form the Least Important segment whereas the loyal customers of Cath Kidson form the Meets the need segment, the employees form the Show Consideration segment and the CEO, Presidents form the Key Player segment of the stakeholder grid. 3.1 And 3.2: Review of possible strategies for growth of CathKidston To: CEO CathKidston, Subject: Review of possible strategies for growth of CathKidston From: Student Date: 31/5/2014 The most pertinent growth strategies for CathKidston include expansion and diversification. The company cans expand in foreign markets like the US, where the political, economic, legal and technological factors are similar to that of the UK. The company can also benefit from the strengths of the brand and can consider concentration and integration. Integration strategy stresses on concentration and consolidation of existing markets through more extensive marketing initiatives and thus increases the market share in the existing customer segment. Through this approach high quality products can have greater market penetration leading to high growth. Cath Kidson can also utilize the strategy of diversification. This strategy mainly stresses on increasing the number of product variants as a part of its market offering and thus venturing out to target new market segments. The company should leverage its brand name to diversify into more products which can increase the total revenue of Cath Kidston. The company which is already a niche lifestyle brand can increase market portfolio and market reach through this strategy. The most suitable growth strategy for Cath Kidston is market expansion into newer markets like the US. Cath Kidston expanded to Japan and the brand did exceptionally well. It had to open six new stores in the span of four years to satisfy consumer demands. This proves that Cath Kidston is a global brand which stands for quality lifestyle products. Its expansion into foreign markets will be successful in terms of company growth. 4.1 Compare the roles and responsibilities for strategy implementation To implement the expansion strategy Cath Kidston should continue with its robust supply chain. It should allocate resources to a global finance and supply chain team so that the company can keep track of the finance of the organization as a whole and also get raw materials at lower price exploiting the economies of scale. The US and the UK divisions of Cath Kidston should have separate presidents reporting to a CEO so that the responsibilities are equally divided. The finance and procurement teams should be only one which looks after the financing and production needs of both the divisions. The common finance team will help the presidents and CEO understand the complete financial status of both the divisions. The procurement team should be one to ensure procurement of raw materials through a single window so as to exploit the economies of scale and avail discounts. The HR teams should be separate for separate divisions to ensure that both divisions work with respect to local laws of the land. The employees should be carefully handled by HR teams as the cultures and time zones of two countries do not match. The marketing teams should also be separate as the product placement in the target market should be done based on local cultures and tastes. 4.2 Discuss targets for achievement in a given organization to monitor a given organization Cath Kidston should set realistic benchmarks to evaluate the growth of Cath Kidston US divison. The first few years, in the introduction and the growth phase of the division stress must be given to marking of the product and designing new products according to the local tastes. The target must be to ensure that that Cath Kidston comes in the consideration set of the prospective customers. Cath Kidston should target to break even by the end of four years at the same time investing in marketing initiatives to increase the brand penetration. The brand reach should be at least 60 percent by the end of sixth year. The next ten years should be the main period to earn revenue through pushing higher sales. The target must be to increase the sales revenue to the maximum possible levels. The target should be growth in sales of thirty percent every year after the tenth year. Along with meeting these targets Cath Kidston should keep introducing innovative products to keep the customers interest in the brand. Reference List Barney, J. B. and Clark, D. N., 2007. Resource-based theory: Creating and sustaining competitive advantage. Oxford: Oxford University Press. Choo, C. W. and Bontis, N., 2002. The strategic management of intellectual capital and organizational knowledge. Oxford: Oxford University Press. Chrisman, J. J., Chua, J. H. and Sharma, P., 2005. Trends and directions in the development of a strategic management theory of the family firm. Entrepreneurship theory and practice, 29(5), pp. 555-576. Gulati, R., 2007. Managing network resources: alliances, affiliations and other relational assets. Oxford: Oxford University Press. Freeman, R. E., 2010. Strategic management: A stakeholder approach. Cambridge: Cambridge University Press. Read More