The Competitive Business Environment - Case Study Example

STRATEGY BUSINESS PLANNING REPORT by + STRATEGY BUSINESS PLANNING REPORT Strategic planning is a process of management that aims at creating an alignment between the organisation’s objectives with the market opportunities. It involves the utilization of the organization resources in order to maximize the utility of the dynamic business environment (Bryson, 2011 pg. 06). Every organization is standardized on a given set of objectives and visions that oversee their whole business goals. They employ different strategies in the process of making sure that their businesses are at par with the aims of business management. Nature of Strategy Planning Zara is a retailer line that is involved in the clothing and accessories industry. The company possesses about 1770 stores that are distributed in about 86 countries; and it produces about 450 million items a year. The company aspires to expand its market command, and improve their marketing communications. They also want to expand their online advertising to allow for the access of a larger market that is beneficial to the organization. To achieve these objectives, Zara requires formulating the most formidable strategies in their business practices. Therefore, the business planning strategies are important for the growth of the Zara stores, and achievement of their objectives. The business planning strategy that this company is employing is very vital to its growth. It ensures that the company utilizes their resources in an optimum manner. Every business organization aims at minimizing costs and maximizing output. Zara Company is able to come up with better investment decisions that are creative and optimal. Therefore, with the strategic planning, they are able to invest in areas that have a high business potential. Planning also assists the future preparations of Zara Company. It projects the future, and devices the way of shaping this future in alignment with the company objectives. This can be achieved through influencing the business environment factors towards the business expectations (Simerson, 2011 pg. 17). The company can, therefore, anticipate the trends that enable it to acquire the benefits of effective decision-making. Strategic planning also gives a competitive advantage to Zara Company over the other competitors in the clothing industry. Since the clothing and accessories industry experiences a great dynamism in trade, it is a mandate for Zara Company to be highly competitive. Therefore, strategic planning is a vital venture that potentiates the existence of Zara Company in this environment (Esty & Winston, 2009 pg. 07). The Competitive Environment Zara Company is experiencing a huge competition in the field of fashion and design. They compete with both local and international fashion stores that provide the same goods and services. Zara Company possesses unique products and features that enable it to remain a significant and a superior competitor in this market. It is also a store that combines the fashion trends with the low costs, in order to provide their customers with high quality products at a low price. In their PEST analysis, the company has operated in different countries all over the world. The company produces an assortment of products that suits different countries. This is because different countries require different fashions. The potential customers have a high interest in these fashions, and, therefore, they tend to yearn for an up to date fashion style. Furthermore, the technological environment has allowed the use of E-commerce by Zara Company. The technology has allowed Zara Company to be able to monitors their trade and transactions, their supplies, as well as their sales. They produce most of their goods in the specific countries they are located. Therefore, they produce these goods at low cost, hence leading to affordability by the final consumer. This encourages the consumers to buy and use their products (Esty & Winston, 2009 pg. 07). In terms of Porter’s five factors, Zara has a focused team of designers and product managers. This allows it to differentiate its goods thus reducing the threat of new entry and substitution. They also produce their goods in the specific countries they are involved. This increases their control of their supply process hence potentiating sales and income in the market. They also try to compete effectively by forecasting their market trends, and responding quickly to their market demands. The ability to remain trendy in all aspects of fashion has enabled it to be a better brand, causing the customers to avoid the substitution of their products (Cunningham, & Harney, 2012 pg. 33). Therefore, Zara Company is a very formidable competitor due to employment of strategic planning techniques. Strategic Capability The business planning strategies also enables the company to carry out their SWOT analysis. They also examine on how the customers responds to their products using the value chain analysis (Brumfitt, 2001 pg. 09). They undertake activity and value analysis, and take the crucial steps towards the accomplishment of the planned actions. The SWOT analysis is a favourable tool that Zara Company can use in determining their viability in the business environment. The strengths enable them to be differentiated and competitive. The weaknesses provide the areas that the company requires to improve in their business venture. The opportunities will portray the ability of the company to grow, and the threats form a basis of business risk. The strengths of Zara Company arise from the fact that it is the world’s best international clothing line. It possesses fast changing collections, with a product cycle that is faster than its competitors are. It is also able to produce its products in a different way for each country, thus providing consumer satisfaction. However, it experiences weaknesses such as limited stocks and lack of marketing communications. It also experiences heavy dependency and dynamics in trading in different countries. Despite all these, it has opportunities such as advertising since it can expand in the online market and advertise their products. They can also improve their online sells through their own website that encourages international expansion. However, it experiences threats such as possible limitation of goods, and high competition. It also experiences a dilution of brand equity and economic downtown. The evaluation of these factors can help the company in value analysis for the sake of effective value analysis. The customers view the company in terms of a trendy fashion company. Therefore, strategic business planning is an effective tool of self-analysis and analysis of the customer reaction to the company brands. Strategic choice Zara Company uses Porters generic strategies in the determination of its success in the competitive market. The firm uses the differentiation strategy in production (Brumfitt, 2001 pg. 03). It develops products that are unique to the customers in different environments. Their products are alleged to be better than its competitors are because they make their products in terms of the culture of the countries involved. They have a highly skilled design team, and a corporate general reputation of innovation and quality. They are also a forecasted team that ascertains the future trends and uses this opportunity to create the most competitive and trendy fashions. The Company has also initiated the Ansof’s market development strategy in its growth. The company aims in expanding internationally and increase its distribution channels. They want to sell their products in new locations, and identify the potential users. They have also diversified their market when launching the products in the market. The strategies used include the conglomerate strategy where they develop new products for new markets. They create goods that suit the customer in different cultural, economic, and political settings. They also use the horizontal diversification to enable them to develop new and trendy products to the respective old customers. This allows them to expand, while maintaining the old customer’s loyalty (Cunningham, & Harney, 2012 pg. 45). This product mix allows the company to allocate the optimum resources, in order to maximize the expected returns of the portfolio. Management of Change The company employs the directive, the expert, and the negotiation strategies to manage change. In the matters that do not require deliberation, the manager uses their authority to allow change with minimal involvement of other parties. This allows for a quick method of allowing change in the organization thus increasing the decision-making efficiency. The company also uses the expert approach to manage the changes in the environment (Alston & Bryson, 2013, pg. 04). This involves the management of new branches, and technical problems. They employ experts who inform the management and the employees of the dynamics in the industry, thus allowing to adapt to the new changes. They also negotiate with the parties involved in order to effect a change. Concessions and adjustments are done in order to implement these changes. Those affected by the transformation will have the ability to share how it has affected them and their families. The can also be educate in order to effect the change in question. This includes persuasions, trainings, education, and selections that are led by the consultants and the experts (Simerson, 2011 pg. 14). Integrated Nature Business Strategies The strategy making process is interplay of factors that lead to the effective decision about the best strategies of planning. The company spells about its visions and objectives, and devises the strategies to the achievement of these objectives. The company analyses the external environment of the company by analysing the economic environment, technology, political factors, competition, and the social environment (Alston & Bryson, 2013, pg. 04). They also analyse the internal factors such as capital, employees, the shareholders, and the company technology. They then define the business and its mission that is the driving force in the achievement of these objectives. The corporate objectives are then set in relation to the factors of the business environment, in conjunction with the mission of the company. The strategies are then formulated and the tactical plans that potentiate these strategies are devised. Finally, the procedures of monitoring and controlling the strategies are then put in place. Performance management is carried out to determine the level or achievement of the stipulated objectives or goals. The company aligns its employees, resources and systems, to the objectives of the plan. The company encourages the development of teamwork in the realization of the company objectives that are in line with the goals. The employees are required to align their personal aspirations with the aspirations of the company. They enhance the use of the job mission statements in terms of the customers, products, purpose and scope of the strategy (Alston & Bryson, 2013, pg. 04). The employees and the management is then committed towards the realization of the goals. The employees are then evaluated in certain capacities to increase efficiency. Therefore, Zara Company uses a comprehensive strategic plan that ensures that its goals are met effectively in the fashion industry. Bibliography Smit, P. J. (1999). Strategic planning: readings. Kenwyn, South Africa, Juta. Brumfitt, K. (2001). The competitive business environment. Cheltenham, Nelson Thornes. Bryson, J. M. (2011). Strategic planning for public and nonprofit organizations a guide to strengthening and sustaining organizational achievement. San Francisco, CA, Jossey-Bass. http://site.ebrary.com/id/10483249. Simerson, B. K. (2011). Strategic planning: a practical guide to strategy formulation and execution. Santa Barbara, Calif, Praeger. Kerzner, H. (2001). Strategic Planning for Project Management Using a Project Management Maturity Model. New York, John Wiley & Sons. Esty, D. C., & Winston, A. S. (2009). Green to gold: how smart companies use environmental strategy to innovate, create value, and build competitive advantage. Hoboken, N.J., Wiley. Alston, F. K., & Bryson, J. M. (2013). Creating and implementing your strategic plan a workbook for public and nonprofit organizations. San Francisco, Calif, Jossey-Bass. http://rbdigital.oneclickdigital.com. Cunningham, J., & Harney, B. (2012). Strategy & strategists. Oxford, Oxford University Press. Hoffman, A. J. (2000). Competitive environmental strategy: a guide to the changing business landscape. Washington, D.C., Island Press. Williams, A. J. (1984). R & d strategies in a competitive environment: transactions of the 21st Annual Conference of the Canadian Research Management Association held jointly with lAssociation des directeurs de recherche industrielle du Québec, Montreal, Quebec, Canada, October 1983. [Canada?], Canadian Research Management Association. Read More