Strategic Planning Is Becoming a Crucial Tool for Change in Public, Private and Volunteer Sector - Essay Example

Strategic Planning Your name:   Course name:         Professors’ name: Date: Part 1 Create a hypothetical strategic plan for your organisation, utilising a model that is most conducive to reaching goals. The strategic plan should address a pre-planning phase (Where is my organisation at this point in time?); a strategic planning phase (Where is my organisation wanting to go?); and a business/ operational phase (How will my organisation get there?) Introduction Strategic planning determines where an organization is moving in the next few years or more, how the organization is going to get there and how the organization will know how it’ll get there or not (Slack et al 2007). Strategic planning focus on the entire organization, and the way a strategic plan is developed will depend on the culture of the organization, organization’s leadership, size of the organization, complexity of the organization’s environment, expertise of planners, and so forth. As a document, the strategic plan provides a stable reference point for the organization to develop organizational programs (Slack et al 2007). Without it, an organization can move from its goals or mission and under-serve its stakeholders. There are many strategic planning models but this paper will use Goals-based strategic planning to discuss the strategic plan for a particular organization. Goal-based (or vision-based) strategic planning works from the future to the present. In this model, a strategic planner suggests specific goals that an organization tends to achieve in the future. Often, organization’s goals have specific accomplishments (Slack et al 2007). Pre-planning Phase Woolworths is a Retail Company based in Australia. It is the most known retailer of groceries in the region; this was supported by the fact that last year it was responsible for supplying 60 per cent of all the groceries in Australia. Woolworths was established in 1929 and has seen grown domestically, regionally and internationally. Woolworths mainly deals in provision of foodstuffs. In addition, the company engages in sales of electronics, clothes, alcohol etc. The more market Woolworths has, the more influence the retail supermarket has over its suppliers and this has been it easier for the retail supermarket to stamp out over smaller independent retailers. Woolworths has over 2000 stores globally and rang up global sale of 50 billion dollars in 2009, putting nearly 1.1 billion through the tills each week. Woolworth’s pre-tax profits were a massive 3.2 billion dollar. And in Australia alone the retail chain employs approximately 250,000 people, making the retail chain to be a leading private sector employer. Make no mistake; Woolworth is a giant in the retail sector. But Woolworth is not just content to dominate the world of retail; the retail chain also wants to change the sector for the better. Conquering new markets is certainly a large part of Woolworth’s strategic focus (Gómez-Mejía et el 2001). In the last two decade, Woolworths brought a lot of changes in its marketing strategies and these changes have made it to become Australia’s number one retail supermarket. Today in Australia, the retail sector has been the dominant force for more than two decades. Woolworths is also considered to be one of Australia’s fastest growing retail supermarkets in the world. Interestingly, Woolworths’ marketing strategy has entirely relied on its “Clubcard” scheme. The retail supermarket has been able to use the scheme effectively in retaining and attracting customers of all types. The Clubcard scheme has helped the company to strengthen its market share year-on-year in Australia. Woolworth’s has two types of customer i.e. internal customers and external customers. Internal customers are those customers found within the retail chain (Grant, 2003). It about treating part of the organization as different entities, this means retail chain ought to communicate effectively with internal customers to maximize productivity (Slack et el, 2007). External customers mainly consist of customers who buy different product directly for the Woolworths stores. They also consists those customers who order for products and services online. Such customers expect to find most of the products they need in the Woolworth stores. They also expect to find a lot of variety in the store. This means Woolworths need to have many brands which its customers can select. External customers also have higher expectations for the company in the provision of quality products. Strategic Planning Phase The battle to win customers will increasingly be fought not just on value for money, convenience, and range. But behaving responsibly, being good neighbors and seizing the environmental challenges (Weiss & Mark, 1989). The strategic planning initiatives of Woolworths will have an immense impact on the retail chain financial planning. In the past years, retail chain was focusing on the pricing their products and services at low prices. Low pricing strategy has helped Woolworths to be a market leader within Australia (Weiss & Mark, 1989). In 2011, Woolworths set out expansion strategy to grow its core business and diversify its new products and services in new markets. The strategy will enable the retail chain to deliver strong, sustained growth in the next 20 years. Woolworths is planning to follow customer into large expanding markets in the Central and Eastern European (CE) countries (Gómez-Mejía et el 2001). Currently, there is high growth rate that have been experienced by the convenience market (Gómez-Mejía et el 2001). And this is due to emergence of second wave development into smaller cities and regional towns, increasing purchasing power, expansion of non-food outlets, and creation of new-generation shopping/recreational style centers are all factors which have contributed to growth in the volume of retail sales in 2010. The Poland, Hungary and Czech Republic are estimated to have sales of 3.7 per cent, 6.6 per cent and 5.1 per cent respectively (Weiss & Mark, 1989). Furthermore, the retail sector in those countries are “still far from saturated when compared to Australia retail sector” where there is high competition which results in lower profit margins on products sold. The removal of fiscal and legal barriers propelled by European and EU legal standards assured by compliance with Acquis communitaire provide a better environment for global investments (Grant, 2003). If a company fails to pursue global opportunities in future the organization will lose domestic markets because the company will be pushed aside by competitive and strong global competitors (Drucker, 1990). Saturation of home markets, increased intensity of domestic competition and limited potential for domestic growth can result in a price war and this will put pressure on the profit margins of the company. Market diversification has the potential of reducing country-specific risks which is why Woolworths why want to enter EC countries. Likewise, a strong international brand has many benefits to the brand’s image in its local market (Weiss & Mark, 1989). Operational Phase SWOT Analysis a).Strengths Woolworths Company has a strong brand image, which represents excellent value; also its brand is being associated with good quality and trustworthy goods. In addition, In addition, the company innovative ways has improved and increased the customers shopping experience, also, the capitalizing into insurance and finance have increased its revenue stream. Woolworth’s online business is the biggest online supermarket in Australia. The retail chain was able to sold over 600 million dollars worth of products and services, the online business now operates in over 200 outlets in Australia alone. Therefore, online business has a strong platform to increase the company’s revenue stream. Woolworths in the past has successfully developed multi-format strategies, and these strategies have accelerated the company’s advantage. In Australia, Woolworth’s sales are reported to be 60 per cent larger than its competitors. Additionally, this has made it difficult for its competitors to challenge its scale. Woolworths at the moment has a strong position in Australia retail market. In the past years, Woolworth’s retail chain has increased its market share, at the moment the company holds 60 per cent of retail market in Australia. Its multi-format capabilities means the retail chain will keep growing in retail environment. In the near future, the company plans to open more shop outlets in CE countries. b). Weakness Woolworths largely relies on its Australia’s market, although its other markets globally have been growing, and in the next five years it is expected to contribute large amount of profits. In short term, over reliance of domestic market cannot be seen as a major weakness, but in future when there will be change in the retail market, it would have an effect on Woolworth’s balance of power and also affect it share market. Currently the retail chain has large capital expenditure as a result of many investments in opening new outlets. Since these business expansions are aggressive, the company does not have enough free cash for any other operation. c). Opportunities Woolworths’ beauty and health product lines continue to grow; currently Woolworth is the leading skincare product market in Australia. Additionally, the retail store is also leading retailer in the baby product markets. At moment Woolworth has been able to open more outlets that deal with skincare and beauty products. Non food retail sector is expected to grow by 15 per cent in CE countries over the next years. Woolworths will use its low cost structure and its improved merchandised skills to increase its growth. Additionally, global markets have been projected to increase the company’s earning and scale, taking the retail supermarket onto the virtuous circle of growth. d). Threats The structural changes in retail market has spark a price war, for example, Woolworths’ closes competitor have reduce their prices by up to 2 per cent, and Woolworth is likely to follow soot. The company expansions into new market has been expensive, entering into a new market with a new brand usually requires a lot of marketing and investment, in addition, the land prices which are low, also the company will incur heavy distribution and operation expenses (Goodstein 1993). Woolworth’s Entry Strategies a). Entry Mode Because globalization and internationalization are taking place so rapidly, entry mode selection is important for any business that wants to expand globally. Which entry mode a company will chose from will depend on the percentage of equity the organization owns in the foreign venture. There is a choice between equity mode and no-equity mode. Equity mode includes fully owned subsidiaries, whereas non-equity modes include contractual and export agreements. The entry mode that Woolworth has chosen to adopt when entering CE markets is summarized below. Country Name of the retail chain Equity capital (2012) Mode of entry Poland Tosco Polska Sp.z.o.o 98 % Majority acquisition (at first 79 %) Hungary Global TH 99 % Majority acquisition (at first 51.3%, then 57 %) Slovakia Woolworth SR a.s 100 % Complete acquisition Czech Rep Woolworth Cc R a.s. 100 % Complete acquisition b). Marketing Strategy Woolworth’s success will largely depend on its strong willingness to adapt to the local market without losing its core identity. This is the core strategy of Woolworth; the retail chain will approach each market differently in CE countries. Additionally, the retail chain will understand and respond to the needs of local customers, which include the needs of intermediate and final customers, the macro environment and competitors (Drucker, 1990). The outlet shop format is an important issue for adaptation in Woolworth’s strategy. The way a retail outlet is designed it should be in tandem with shopping patterns of the local customers. In Australia, Woolworth has many outlet formats. For example hypermarkets which focus on a strong one-stop offering both food and non-food products. In CE countries, there two types of shoppers: traditional shoppers (53 per cent of population) and modern shoppers (47 per cent). It appears that traditional shoppers prefer shopping in convenience stores, while modern shoppers tend to shop in hypermarkets and cash and carry formats (Drucker, 1990). Most of shoppers in CE countries are interested in shopping in western style hypermarkets. Therefore, it is important for Woolworth to offer localized products that are of high quality. Woolworth will enter into long term relationship or agreement with local suppliers and producers. Additionally, the retail chain will work with local farmers and food processors to produce cheaper costs products; this will help the Woolworths to produce its own-label products. Through quality products and won brands, Woolworths will be in a position to develop its own brand image and earn high profit margins (Drucker, 1990). In similarity to the Australia, the core strategy for Woolworth is offering low prices. In other regions, Woolworth in other regions have been in a position to over low prices for population where the purchasing power of its consumers was lower than that of customers in Australia. In EC countries, Woolworth strategy will consist of localizing the supply chain in order to low pricing can be achieved. Promotion Strategy Woolworth will use three different marketing methods to increase customer awareness of company. The most important promotional tactic will be word-of-mouth/in-store marketing (Harmer & Peck 2004). This method is cheap and most effective way of marketing the company’s programs. A new business requires a lot of advertisement and exposure to be recognized in the market. Posters would be place at strategic position displaying the name, address, product and services offered location of business and the working hours (Harmer & Peck 2004). A sign post would also be placed at the top of the premise. I will also advertise the business in radio frequencies latter on. There will also be demonstration of product and services offered since I have sales personnel. Most customers will also be my advertising agents, since they will receive high quality products and services and they will tell others i.e. friends, family and relatives by word of mouth hence making many customers attracted thus will be known (Gómez-Mejía et el 2001). Marketing Programs Word Of Mouth/In-Store Marketing Wall posters. Table tents. V.I.P party. Grand opening celebration. Yearly birthday parties. In-store tour given to every new customer. Local Media Radio campaign- three top local stations will be picked and used to advertise the restaurant. Direct mail piece- will contain interior picture of the company, item prices, “Theme Nights” and an explanation of the restaurant concept. Cable TV- it will only be used if the restaurant will be given favorable rates in advertisement with enough frequency. Newspaper campaign. Part 2 Question: Prepare a retrospective commentary on your research in this unit, citing things that you possibly have learned from this exercise that you did not know you needed to know (1000 words). From the study I have learned that the most problems in an organization are as a result of lack of distinguishing between strategy and operation effectiveness. I have also learned that strategic planning is the key to any organization success. There are many theories that support this assumption that when an organization lacks a proper planning and strategy, it will be difficult for that organization to survive irrespective of its size. I have learned from reading many literatures that many corporate organizations have been able to establish themselves, as a result of their superior strategic planning and implementation. I have learned strategic business plans are often classified according to function they provide to the organization. All functional business plans come from the strategic plan and have a way of defining themselves in the tactical plans. I have learned 4 common functional plans are: Personnel: for training and organizing human resources; Production: for creating a desired product or services within a timeframe; Financial: providing for capital expenditures and for meeting financing needs of the organization; and lastly sales and marketing: for developing new products and services, and for devising marketing plans for present or future plans of the organization. I have learned that each functional plan within an organization is interdependent and interrelated. For example, the financial plan deals with revenue coming from sales and production. Efficient and well-trained personnel meet production schedules. Salespersons that have been motivated will successfully market organization’s products and services. I have learned there are two timetables for strategic planning. The first is short range which covers a period of up to 1 year. Short-range strategic plans are usually derived from an in-depth evaluation of the long-range plans. A person can use the yearly budget to plan for the fiscal year. Additionally, can be used to control and guide day-to-day activities. Sometime, short-range planning is can be called tactical plan because it sets priorities in the near term. The second planning horizon is long-range strategic planning (Grant, 2003). Long-range strategic planning is extended beyond one year and but less than five years. I have learned long-range strategic plan often called investment plan or strategic plan, and is mostly used to establish goals and objectives from which short-range plans are made. I have learned long-range strategic plans usually support the organizational purpose and this is through providing clear statements of where the company is projected to go (Grant, 2003). I have learned successful strategic business plan will require time and effort and this must be in a systematic approach that involves: assessing the organization current situation; determining goals and objectives of the organization; anticipating market conditions and future profitability (Ruffian et al 2000); outlining a course of action for the organization; and analyzing both the short and long term financial implications on the organization (Ruffian et al 2000). I have learned that from a range of alternatives, management in an organization can have many interrelated choices that will enable the organization to form long-term business strategy. I have learned for small business owners and entrepreneurs, a successful business plan is the one that will be used to secure bank loans and attract investors. a strategic business plan will force an entrepreneur to small business owner to examine market conditions in which the business operates (Ruffian et al 2000). I have learned each strategic business plan will cover a specified planning period. Some of these plans are designed to get an organization to a funding objective, a defined sales level, or the achievement of some growth objective or goal. I have also learned a good business plan will have a time frame that has realistic beginning and end, and that framework can be measured along the whole process (Ruffian et al 2000). I have learned setting up a business schedule and committing to it is also another important thing for a business person to do. A strategic plan will depend on the kind of an organization an individual is running and at which industry the organization is moving. I have learned, some ventures will only need six months or less to prove themselves, while others will move slowly but growing securely. It will only depend on the kind of business the organization is doing. I have also learned, a typical strategic business plan, tend to use 1 year, 3 year, or 5 year benchmarks. I have also learned strategic business planning is an ongoing process. From year-to-year organizations will review, revise, and even make a complete overhaul of their strategic business plans. I have learned having business goals and objectives is an important part of strategic business plan. But knowing these objectives and goals will not be enough. Therefore, a person needs to establish and be accountable to a schedule that includes specific milestones along the business operations . I have learned an organization may use strategic business planning for a number of reasons: to identify a common vision, clarify direction, achieve goals, and/or solve problems. Strategic planning allows an organization to: Enhance the ability of managers to control resources critical to company survival; keep pace with changing customer needs, program and funding priorities; improve communication, increase corporate involvement and facilitate program coordination; enhance funding levels and increase legitimacy with government and corporate funders; and reduce internal and external uncertainty and to augment the capacity of executive directors to hold others in the organization accountable (Ruffian et al 2000). . . References Drucker, Peter (1990). "Winning Strategies". In: Managing the Non-Profit Organisation. Harper Collins, New York: pp. 59-71. Gómez-Mejía, Luis R. & David B. Balkin, and Robert L. Cardy. (2001). "Planning and Implementing Strategic HR Policies". In: Managing Human Resources. 3rd ed. Prentice Hall, Upper Saddle River, New Jersey: pp. 20-29. Goodstein, Leonard, Timothy Nolan and J. William Pfeiffer (1993). Applied Strategic Planning: How to Develop a Plan that Really Works. McGraw-Hill: San Francisco, p. 8. Grant, Robert M., (2003). "Strategic Planning in a Turbulent Environment: Evidence from the Oil Majors". In: Strategic Management Journal, vol. 24, no. 6, pp. 491-517. Haley, George T. (2000). "A Strategic Perspective on Overseas Chinese Networks" Decision- Making". In: Strategic Management in the Asia Pacific. Usha C.V. Haley, ed. Butterworth Heinemann, Oxford: pp. 411-422. Harmer, Wm. & Peck, Terrance.   (2004). Business Plans Handbook: a Compilation of Actual Business Plans Developed by Small Businesses Throughout North America.   Gale Research, Inc. Hellriegel, Don & John W. Slocum, Jr. & Richard W. Woodman. (2001). "Strategic Choices". In: Organisational Behavior. 9th ed. South-Western College Publishing, Mason, Ohio: 478-501. Horan, J 2004, The one page business plan: start with a vision, build a company, One Page Business Plan Co, New York. Hubbard, Morkel, Davenport, and Beamish, eds. (2000). Cases in Strategic Management. Pearson Education Australia, Frenchs Forest. Mintzberg, Henry, James Brian Quinn, & Sumantra Ghoshal (1999). "The Strategy Concept". In: The Strategy Process. Pearson Education Limited, Essex, England: pp. 3-21. Ruffian, F et al (2000). Organization Design in Operations Management. International Journal of Operations and Production Management. Slack, N et al (2007). Operations Management, 5th edition. London: Pearson Education Ltd. Thompson, Arthur A. & A. J. Strickland (2003). "Competitive and Managerial Resource Fits". In: Strategic Management: Concepts and Cases. 13th ed. McGraw-Hill Irwin, New York: pp. 344-353. Weiss, H. J., & Mark E. G (1989). Production and Operations Management. New York: Allyn and Bacon Read More