Strategic Positioning Strategies of the Fransoko Group - Coursework Example

The Fransoko Group The paper intends to evaluate the case of The Fransoko Group emphasising its brand and strategic positioning strategies. The two ventures of the brand, Fransoko Airlines and Railways, along with different attributes with regard to its brand extension, stakeholders and Chairman’s responsibilities have also been referred to evaluate its success as a modern organisation. The findings obtained accordingly reflect that proper strategic decision and market research were the key roles of the business. Table of Contents Abstract 2 Introduction 4 Discussion 4 Importance of the External Forces for Fransoko’s Business Development 4 Evaluation of the Performance of the Fransoko Airlines and Fransoko Rail Companies 6 Recommendations for Increasing Individual Contribution to the Future Development of the Group 8 Advise to the directors of Fransoko 9 Main Factors Contributing to Fransokos Commercial Success 11 Conclusions and Recommendations 12 References 13 13 Introduction In the case scenario provided with regard to Fransoko, the organisation is noted to have a strong business history. The group has diversified its business to a vast magnitude in the past few years in various sectors for a successful venture. This particular strength has further helped the company to develop a strong brand and gain an impressive reputation in the market. In the similar context, it can also be argued that the brand reputation of the organisation is creating pressure on its management to preserve its success record and suffice the customers’ demand with consistent performances. Due to massive diversification, the corporate group has also faced few issues with respect to its services and strategic management initiatives. The business has accordingly been using the concept of brand stretching for its various products as well as services. With regard to Fransoko Group, strategic management is an important consideration required for the success of the business. There are various strategic factors that affect the business and its success, such as the management style, financial performance as well as other relevant aspects, as can be apparently observed from the case reference. Discussion Importance of the External Forces for Fransoko’s Business Development Industry rivalry- Fransoko will face intense rivalry from its competitors to enter the new market. To attain the required market share, the company will need to appoint skilled managers to accomplish their objectives. Although the personality of the Chairman deciphers his effective leadership abilities, it shall not be sufficient in meeting the intense rivalry and hence, proper strategic planning will be required. Bargaining Power of the suppliers- Suppliers need to provide resources on regular basis for the company to develop its market worldwide. Quality along with the reliability of the supplier is also deemed as an important issue, which needs to be mitigated by managing the resources effectively. Bargaining Power of the buyers- The bargaining power of the buyer is high in the industry context of Fransoko and therefore, it is important for the company to meet the demands of the customers to survive in the long run. Creating brand awareness and understanding the needs of the customers is also important in this regard. However, irrespective of the fact that the bargaining power of the buyers is high in the industry, the need for advanced good will provide a good market position to Fransoko (Vedd, 2003). Substitutes- Threat of Substitution is important to be considered in the business development of Fransoko. Fransoko herewith needs to provide value for money to its customers for developing a strong customer base. Entry barriers: It should be noted in this regard that the business operations of every country is different and hence, Fransoko needs to develop a proper strategic decision to function effectively. It is important to deliver due consideration on these factors to obtain a proper understanding of the market and the changing demands thereupon. Evaluation of the Performance of the Fransoko Airlines and Fransoko Rail Companies In the year 2014, the turnover of Fransoko Airline increased to a considerable extent. The increased rate of the business was 19%. On the other hand, the increase in the turnover of the Fransoko railways was less as compared to the airline. It increased by merely 3% in the year 2014. This differentiation in the performance was due to various factors comprising both external and internal. With the intention to conduct the evaluation of the data, it is evident that there were various differences identifiably in the performance of Fransoko divisions, i.e. railways and airlines (Botten, 2009). The differences between the two brand divisions have been accordingly evaluated to obtain a proper understanding, as has been depicted in table 1 below. Fransoko Airlines 2013 2014 Percentage Turnover Of Profit 10.5% 11.8% Return on capital employed (ROCE) 8% 10.1% Turnover/capital employed 76% 85.5% The above table evaluates the performances of Fransoko Airlines for the year 2014 and 2013. Observably, the performance of airlines increased in the year 2014 as compared to that of 2013. This is owing to the facts that the organisation took proper strategic management decisions after analysing both the external and internal environmental trends with adequate accuracy and intensity. Correspondingly, the performance of Fransoko’s railways division has been for the year 2013 and 2014 has been evaluated in table 2 below. Fransoko Railways 2013 2014 Percentage Turnover Of Profit 7.3% 7.6% Return on capital employed (ROCE) 5.7% 5% Turnover/capital employed 77.4% 66.1% From the analysis of the above table, it can be observed that the performance of the railways decreased to a considerable extent in the year 2014. It is observed from the case scenario that the decrease in the performance was due to the irregularity in the services provided to the consumers within the society. This particular factor was apparently affecting the performance of the railways. Thus, based on the comparative analysis of the two divisions, it can be inferred that the performance of its airlines division was increasing with greater rapidity, as compared to railways due to lack of strategic management and accounting efficiencies (Botten, 2009). Moreover, from the analysis of the performance it was evident that there was no significant change in the market trends and thus, it can be concluded that the market was stable for the company to grow. However, as can be observed with reference to the case scenario, the railways division of the company faced a decline due to lack of management coordination wherein airlines faced an increase of 2% in its profitability and ROCE. Recommendations for Increasing Individual Contribution to the Future Development of the Group With regard to Fransoko’s airlines division, the management should review the strategy of the divisions so that the company is able to meet with the competitive challenges presented by the changes taking place within the international environment. Moreover, as per the strategy of the company, the selling price as well as the operating costs of the business should be monitored on a regular basis for enhanced services. It is noteworthy from the analysis that the number of passengers and routes have increased to an extent. However, to obtain advantages from the same, Fransoko needs to invest more funds, which will assist it to expand within the targeted market preserving its consistency throughout. To be precise, it is evident from the case that the market for economy class consumers, in this particular division is expected to see an upsurge of 3% in the coming years. Therefore, it is important for the company to take advantages of this aspect and capitalise on the total market. In this regard, it is vital for the company to increase the staff member in the airline segment so that the demands of the customers can be sufficed accordingly. Moreover, from the case it has been observed that the company has a good reputation and therefore, to ensure that the advantage is not lost due to wrong strategic measures, it needs to preserve the same maintaining effective relationship with its stakeholders. To be recommended in this regard, the price should be maintained and the routes must be undertaken effectively and efficiently. It is thus recommended that the company should focus on the most profitable route rather than diversifying its focus. These aspects shall altogether help the organisation to a considerable extent. With respect to the Fransoko railway, it has been analysed that the profitability is static and a proper strategic decision must be implemented. It is thus stated that through proper decision making, the management can increase its fare and decrease the operating costs along with the capital employed. The reduction in the number of passengers has also been negatively affecting the perceptions of others wherein the lack of punctuality might have affected the business. A decrease in the profit has also been observed due to the lack of strategic decision within the organisation, and therefore, with improved performance, the company can increase its profitability. It is expected that the railway market share for Fransoko would increase to 5%, if it expands its services. However, in doing so, the issue that the company might face can be identified with regard to the regulator and therefore, must address the same. For increasing the effectiveness and performance, the company must also ensure punctuality and proper services in its railways division. The decreasing number of the customers must therefore be addressed for better performances in the future (Botten, 2009). Advise to the directors of Fransoko The brand name of Fransoko is strong and reputed, which would help the company to enter into the new markets. In this context, if the company introduces new products and services, it will immediately gain recognition in the market. This particular aspect can be regarded as the competitive advantage for Fransoko, as it will have to spend lesser amount on the promotional activities than the competitors. Therefore, brand name of the company will be an important consideration in this context. The brand extension strategy will also be effective for Fransoko in order to enter the new market and gain success due to the reputation of the company. However, if the product fails to sustain in the new market, the brand image of the company would suffer significantly (McManus & et. al., 2008). Therefore, it is vital for the company to create brand awareness, so that the organisation is able to gain benefits from the competitive advantages it has obtained in the unknown market. For the successful establishment of the brand name, the company will also have to focus on the enrichment of its financial, human resource and physical factors. It is advisable that the directors should plan the entry effectively of the basis of the said aspects. Accordingly, Fransoko will have to evaluate the market by conducting a wide research that will further help in gaining effectiveness through the brand extension strategy. Moreover, the activities of the director must be conducted in a manner that the media attention is grabbed, which in turn will facilitate in enhancement of stakeholder relationship maintained by the company. Also, the managers should take into consideration the impacts of culture wherein Fransoko intends to expand its brand. Proper evaluation of the culture is an important consideration on which, the success of the brand in the overseas market depends. The major area of concern for the expansion is regarding proper promotion of product and creating brand awareness amid people. Moreover, brand extension strategy will be successful where the brand is unknown at present, on the basis of various aspects. Fransoko will therefore have to invest more capital for the expansion of the operations and brand awareness. In this regard, as per the case scenario the company might require additional fund. However, this would increase the financial burden of the company by increasing its debt substantially. Subsequently, the expansion of the brand in the countries will increase the need for proper human resource management. Suggestively, as a part of expansion strategy, the company can collaborate with other companies (Vedd, 2003). It is therefore advisable to collaborate with the companies having knowledge about the market and the consumer demand. This will again help in reducing the risks and help in facilitating the brand image in the market for long term success. Main Factors Contributing to Fransokos Commercial Success Based on the facts presented in the case scenario, the charismatic personality of the Chairman of Fransoko can be regarded as one of the significant success factors for the organisation’s leadership practices. The personality and the activities conducted also helps in attracting the public attention towards the group. However, in order to be successful in the long run, the company needs to perform a few strategic activities. The strategic factors for the commercial success of Fransoko are stated hereunder: Creating an organisational culture with a strong employee relation Association of the brand with consumer goods creating value Developing a strong corporate image Motivating the staff for future development to enhance customer loyalty Improvement and consistent effectiveness in the management style of the Chairman The Chairman of a company controls the process and therefore must take into consideration the aspects of stakeholders while making any strategic management decision. It is evident that the stakeholders and the partners of joint ventures expect to earn more revenue, capital growth as well as dividends. Moreover, for the success of the organisation, the Chairman needs to ensure that the stakeholders are satisfied (McManus & et. al., 2008). In addition, it must also be ensured that the internal customers are provided with equal opportunity so that they are able to deliver their best by analysing their skills. The chairman should also ensure that the employees are able to deliver quality products and meet the demands of consumers. These activities imply that the Chairman of Fransoko has greater responsibilities towards the success of the company. Conclusions and Recommendations From the above analysis it can be comprehended that Fransoko is a well known brand and should use its image for expansion. During its intended expansion, the company should be careful regarding its investment policies and activities to raise awareness about the brand. Customer and employee satisfaction must also be taken into consideration by the company’s Chairman to ensure its long term success. The company, to expand its business, also needs to conduct a market research and understand the market for better results. It is therefore recommended that Fransoko should evaluate the recent performances of its two divisions and enhance its profit by making proper strategic decisions. Therefore, Fransoko should use its brand image to get hold of the market and derive profit, which will be sustainable in the long-term. References Botten, N. 2009. CIMA Official Learning System Enterprise Strategy. Elsevier. McManus, J.T. & et. al., 2008. Managing Global Business Strategies: A Twenty-First-Century Perspective. Elsevier. Vedd, R. 2003. Management Accounting and Strategic Human Resource Management. Deep and Deep Publications. Read More