Strategic Plan for Reorganizing a Business - Term Paper Example

 Strategic Plan for Reorganizing a Business Introduction In most cases, strategic planning is necessary where there is a need to change the performance of a business entity. This is because the business environment is not static but keeps changing from time to time. As such, for businesses to remain relevant or competitive in the market there is a need for a change in their strategy. In this sense, reorganization may involve establishing new goals or objectives, changing the business operations and restructuring the workforce to gain competitive advantage in the market. In essence, strategic planning ensures that a business enterprise establishes priorities with regard to how the available resources can be used to achieve the desired goal. In order to achieve success in any business venture, strategic planning is necessary because without a plan, the chances of failing are high in entrepreneurial ventures. In this regard, developing a plan ensures that entrepreneurs or organizations consider the various options available for improving their performance and select the best alternative that can meet the defined objectives (Calvin, 2002). On the other hand, strategic planning ensures that organizations make wise entrepreneurial or business decisions because through a strategic plan, organizations can identify a good and the bad idea for business. It also allows organizations to develop a clear vision and mission regarding what they want to achieve in the long run. In addition, having a strategic plan for reorganizing a business helps in the development of a differentiation strategy and provides an advantage over competitors in the same business. Overall, in order to develop a strategic plan to reorganize a business, it is important for the entrepreneur or the management of an organization to consider certain factors. For instance, this involves carrying out a SWOT analysis of their business, establishing annual and long-term objectives, improving skills, hiring and retaining experienced employees and how to counter the competition (Oliver, 2007). SWOT Analysis When developing a strategic plan for reorganizing a business, it is important for the entrepreneur or the management of an organization to carry out a SWOT analysis of their business. This is because the SWOT analysis helps in terms of evaluating the strengths, weaknesses, opportunities and threats that are involved in a business venture. When a business entity or an organization is developing a strategic plan, SWOT analysis can provide direction in terms of the action that a business or an organization can take. It also helps businesses or organizations to engage in various activities that include exploring different avenues for implementing new initiatives for the business. Further, SWOT analysis allows businesses make decisions concerning execution strategies necessary for a new policy. Through SWOT analysis, a business can identify the areas that require change and also helps to refine and redirect the efforts of an organization in realizing the defined goals or objectives. On the other hand, when developing a strategic plan, SWOT analysis plays a role in assisting businesses or organizations to organize the relevant information, present solutions, identify challenges and discover opportunities. In this regarding, carrying out a SWOT analysis is essential in terms of improving business operations and the decision-making process (Helms & Nixon, 2010). When reorganizing a business, SWOT analysis is beneficial because it enable businesses to identify the key areas where performance is positive and areas that need improvement. Regardless of the size of the business, issues pertinent to a business should not be carried out in an informal manner. Instead, businesses need to rely on a formalized SWOT analysis to evaluate the factors related to their ventures. As such, entrepreneurs or the management of an organization can develop better ways to utilize their business’s strengths and improve or minimize weaknesses. Where a business involves more than one person, SWOT analysis provides an avenue to include other partners in the process of the strategic plan to reorganize a business. In order to evaluate the efficiency or performance of a business or an organization over time, SWOT analysis can help in this regard by carrying out, for instance, a quarterly analysis of the business’s performance. In a larger business or organization, a focus on collaborative SWOT analyses provides workers with a better understanding and involvement in the business or organization. However, businesses or organizations should not consider SWOT analysis entirely as the ultimate tool for solving their problems (Helms & Nixon, 2010). Situations may arise where the tool is used inappropriately in a strategic plan for reorganizing a business. In this sense, a SWOT analysis requires the business or an organization to provide a true reflection of the performance to the key stakeholders. This allows appropriate measures to be taken in terms of capitalizing on the genuine strengths and opportunities of the business and eliminating the weaknesses identified correctly without any mystification. On another note, the key elements of a SWOT analysis are critical in identifying the forces that can determine a strategy or an initiative. Developing an understanding of the positive and negative elements ensures that a business or an organization implement an efficient and effective strategic plan. In addition, while carrying out a SWOT analysis, its four elements (strengths, weaknesses, opportunities and threats) can be divided into internal and external factors that influence the performance of a business or an organization. Internal factors in this sense are the strength and weaknesses that also denotes the resources and experiences readily available for a business or an organization (Valentin, 2001). When analyzing the internal factors of a business, the key areas that are covered include financial resources, for instance, capital and investment opportunities for a business or an organization. Other resources that can be analyzed into internal factors include physical resources owned by a business or an organization, human capital and other strengths that a business or an organization can used to gain a competitive edge in the market. In essence, when developing a strategic plan for reorganizing a business, identifying the strengths of the business ensures that it can capitalize on the advantage it has over competitors in the same venture (Valentin, 2001). On the other hand, identifying the weaknesses of a business helps to develop mitigation strategies when reorganizing a business. On the same note, weaknesses ensure that a business other than establishing mitigation measures future risks can also do away with the part of the business that is impacting negatively on performance and profits. In a business venture, it is important first to identify the strengths and weakness before looking at opportunities and threats. This is because change needs to start from within, and that means evaluating the internal factors of a business prior to assessing the external factors associated with a business venture. In developing a strategic plan for reorganizing a business, it is unwise to explore external factors of the business before an objective assessment of internal factors to know what can be gained from the external factors (Valentin, 2001). Conversely, the external factors affect all businesses in the market, and it is important for businesses to identify the external factors that have an influence on their business venture when developing a strategic plan for reorganizing a business. In essence, external factors are those factors that businesses or organizations do not control. Such factors include market trends that involve, for example, new entrants, technology advancement and shift in customer needs. These are factors that a business cannot control. Other factors associated with external factors in SWOT analysis include economic trends such as the financial trends. Other than economic trends, there are also demographic factors such as the age or gender. Additional external factors that a business or an organization cannot control include government regulations and the political environment (Helms & Nixon, 2010). Identifying external factors when carrying out a SWOT analysis enables a business or an organization to explore the existing opportunities in the market and minimize threats. For instance, opportunities in the market may involve taking advantage of technological advancement to improve efficiency and performance level in a business or an organization. On the other hand, threat may involve new entrant and a business can minimize such a threat by improving the quality of its products or services for instance or taking advantage of economies of scale to counter the threat from new entrants. Government regulations, on the other hand, can provide opportunities or threaten a business entity. As such, where the regulations are favorable for a business venture, then it is important to take advantage of such concessions from the government. However, where the regulations are a threat, a business can avoid such risks by shifting to another market that is conducive to business (Helms & Nixon, 2010). Establishing Annual and Long-Term Objectives When Reorganizing a Business When developing a strategic plan, it is important to set objectives that can be accomplished in a short term and those that are realized on a long term basis. As such, businesses when developing a plan for reorganizing a business should establish annual objectives that relates to the long-term objectives identified in the strategic plan. Such annual objectives are necessary for implementing a strategic plan because they represent, for instance, the basis for a business or an organization’s allocation of resources. In addition, establishing annual objectives provides businesses with a mechanism for evaluating their performance on a short-term basis. Where a business establishes annual objectives, it is possible to monitor the business’s progress in terms of achieving the long-term objectives. Annual objectives are also necessary for establishing priorities for a business venture. Conversely, establishing long-term objectives, when reorganizing a business provides an avenue for anticipating barriers and other problems that may impact negatively on the business (Grayson & Ramsay, 2015). When developing a strategic plan, establishing long-term objectives ensures that a business or an organization can anticipate the possible barriers to achieving success with a business venture. When reorganizing a business, it is important to develop a business plan, for instance, to outline all the activities of the business. Consequently, a business or an organization will develop an understanding of the dynamics of the business and also anticipate possible challenges. Establishing long term objectives also help to enhance the confidence of a business entity. This is because long term objectives in the strategic plan enables a business entity to plan for the future. Focusing only on the present and neglecting the future tends to create uncertainties in a business venture. Most businesses fail because they lack motivation to achieve the desired goal, in the long run. However, establishing long-term objectives in a business’s strategic plan ensures that businesses concentrate in achieving such objectives (Grayson & Ramsay, 2015). Training of Employees As a strategic plan in reorganizing a business, training employees helps to improve their skills at the workplace. The business environment today, is competitive and in order for an organization to remain relevant and not pushed out of business, it is important to improve the skills of employees at the workplace. In addition, technological advancement places a demand for organizations to keep updating their skills related to the use of technology in improving performance. Other than technology, the success of a business in a competitive environment depends on having highly skilled personnel that can adapt to the continuous changes in the business environment. As such, training of employees is an important aspect strategy change meant to reorganize a business and improve performance and profitability (Beltran-Martin & Roca-Puig, 2013). Hiring and Retaining Experienced Employees When reorganizing a business, it is necessary to employee personnel who can work towards the desired goal of the business venture. However, while hiring employees, an important factor to consider is the experience on the job. This ensures that the employees selected can help to improve performance after reorganizing the business. On the other hand, retaining employees depends on the practices adopted by a business. For instance, it is important to consider the needs of employees in an organization. Such needs include providing incentives and developing sound practices to guide the activities of employees at the workplace (Peterson, 2005). A business can retain experienced employees by providing a decent salary compared to competitors. It is also important to involve such employees in the decision-making process because the decision also affects employees directly or indirectly. Retaining experienced employees requires businesses to establish a positive environment at workplace where workers feel motivated. This in turn, plays a role in improving employee involvement. In most cases, a high employee turnover is often associated with poor practices at the workplace. As such, it is important when reorganizing a business also to change the culture that can impact negatively on employee retention (Peterson, 2005). How to Deal With the Competition When reorganizing a business, competition is one of the key factors that need to be considered. This is because if a business does not have a strategy to deal with the competition, it is easier for such a business to withdraw from the market. According to Porter (2008), there are five forces of competition and they include supplier power, buyer power, competitive rivalry, the threat of substitute products and the threat from new entrants. These are forces that a business reorganizing needs to assess when developing a strategic plan. With regard to supplier power, a business entity should assess, for example, how suppliers in the market dictate prices. For instance, when a business is engaged in a market with few suppliers for a product, the business is at the mercy of the suppliers. This is because few suppliers in a market can change the price at any moment thus affecting the business in terms of high costs for supplies and limit the competitiveness of a business. When the cost of supplies rises, the business also forced to increase prices for its products and, as a result, demand may decrease because of higher price for products or services (Porter, 2008). Consequently, to improve competitiveness of a business entity, it is important to identify a market with more suppliers and the demand for products or services is also high. Concerning buyer power, it is important to evaluate whether the buyers can push prices for products or services down. In this regard, in order to improve competitiveness of business, it is necessary to select a market where buyers do not dictate the price for products or services. As a result, a business can set price for products that can generate profits and is pocket-friendly to customers. Further, it is also important to assess competitive rivalry which helps to understand the capabilities of the competition in the market. Understanding the capabilities of the competition allows a business entity to make the decision whether to venture into a particular market depending on its capability to counter the competition. When dealing with issues related to competition in the market, threat of substitute products tends to affect the performance of a business. As such, businesses need to ensure that the products or services they provide meet customers’ needs. This help to prevent customers to shift to substitute products or services. With regard to the threat of new entrant, it is important to identify a market where the regulations safeguard against market saturation (Chungyalpa & Bora, 2015). In addition, prior to joining a particular market, it is important to assess a business capability to counter competition in a saturated market. However, the ideal measure for dealing with competition involves developing a differentiation strategy. When reorganizing a business, it is important to implement strategies that enhance competitiveness in the market. For instance, a differentiation strategy requires a business entity to develop a unique product or services not similar to the competition. As a result of developing a differentiation strategy, a business can maintain a competitive edge over other similar business in the market. In addition, product differentiation is significant particularly in a market dominated by larger businesses. It allows smaller companies also to compete in markets where larger businesses capitalize on economies of scale. Accordingly, dealing with competition when reorganizing a business requires the identification of an ideal market where a business can thrive despite stiff competition (Kim & Wang, 2014). Conclusion Strategic plan for reorganizing a business require the consideration of various factors that can impact on the business either positively or negatively. As a result, a business can plan adequately and improve its performance in the market. In addition, when developing a strategic plan to reorganize a business, it is also necessary to identify both short term and long term objectives. This ensures that a business does not lose direction with regard to its desired goals at present and in the future. On the other hand, competition is also an important factor to consider when developing a plan to reorganize a business. This is because the business environment is competitive, and business has to strategize on how to deal with the competition. In essence, strategic plan for reorganizing a business require the people involved to use a step by step process that identifies the strengths and opportunities and eliminates weaknesses or threat that can hinder success. 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