Strategy Formulation and Execution - Assignment Example

Stag International Case Study Student: Course: Tutor: Date: Question 1 An intended strategy is a plan of action that the company hopes to translate into realised strategy through clearly defined manner. It follows, therefore, that there must have been precise intentions in the organisation, articulated in a detailed manner, to outline what was desired before actions were taken. The intentions are mostly expressed through the organisations objectives and mission statements (Mintzberg & Waters, 1985). One of stag’s missions is to be among the top three table tennis brands in the world by volume of table tennis tables shipped. Stag also intends to be number one exporter of sports goods from India. It is clear that stag has fulfilled the first requirement of an intended strategy approach. the environment in Stag’s core business pin table tennis tables and sports accessories is fairly predictable given the long experience and distribution network Rakesh and Vivek have established over the years. An intended approach can only succeed when the environment is predictable to a large extent (Mintzberg & Waters, 1985). With predictable environment, the management can be able to outline the action plan from intentions to realized strategy. An intended approach requires that there is a central source of control and direction in the organisation (Mintzberg & Waters, 1985). This ensures that the whole organisation is able to stick to the laid out action plan towards the realised strategy. Rakesh is firmly in control of the operations as well as strategic aspects of Stag. Rakesh is the final authority regarding matters such as finances, marketing and strategic orientation of the business. This places Rakesh as the central authority in Stag. The rest in the organisation have to consult and seek Rakesh’s consent before reviewing any part of Stag’s strategy or operations set up. An intended approach will be best suited in formulation of a strategy for the core business of Stag. Stag operates in a fairly predictable market for its branded sports goods and equipment mainly in table tennis sport. This coupled with the centrality of decisions and operations in Rakesh and Vivek guarantee a successful formulation of a strategy using the intended approach. In entrepreneurial approach to strategy, there is a single individual with a vision for the organisation. The individual is in firm control of the organisation and is thus able to influence the rest in the organisation to support his/her vision for the organisation. The individual’s vision overrides all other opinions and visions in the organisation. In entrepreneurial cases, the individual harbouring the vision doubles up as the ultimate leader in the organisation (Mintzberg & Waters, 1985). Rakesh is the central authority and the vision bearer in Stag. Rakesh believes that stag can establish itself as strong brand in the sports good marketing and distribution for the Indian and international markets. This is the main diversification opportunity that Stag’s management headed by Rakesh is considering. The entrepreneurial approach is adaptable according to the vision bearer’s decisions which may vary from time to time. Rakesh’s vision is of course adaptable according to information he gets and advice he receives from consultants. The entrepreneurial approach will be suitable in developing a strategy for the diversification opportunities available to Stag. Question 2 For an organisation to survive and generate adequate profits for its shareholders, it has to develop a solid strategy. Choice of strategy is normally influenced by the organisational features such as size, structure and environmental factors such as market size, legal and social issues (Simerson, 2011). There are two main strategic options for an organisation. The first option is the deliberate strategies. Deliberate strategies are realized as intended. This is usually a situation where the strategy outcome is just as intended by the formulators. For a strategy to be perfectly deliberate, it must have been planned for in the first place. The planning puts into actionable steps the intentions of the management. The intentions have to be detailed in a clear concise action plan that members of the organisation ought to stick to. This gives the strategy a collective vision, goals and intentions as expected by the management. A deliberate strategy can only work if there is the absence of external forces such as market dynamics, politics and technology. If external forces exist then their impact on the deliberate strategy must be very minimal (Mintzberg & Waters, 1985). The second option is emergent strategies are realised irrespective of the presence or absence of intentions towards strategic focus. For a strategy to be emergent, there must be order or an established consistency in the organisation. The consistency might not have been planned for explicitly at the initial stages of strategizing. Emergent strategies may come up when the environment forces the firm to adopt a pattern of actions that become consistent over time. For example entry of strong competitors in the market may force a firm to diversify into an entirely new market. In such case, the strategy adopted is emergent (Mintzberg & Waters, 1985). Choice of strategy may differ depending on the size of an organisation. A resource-rich multinational can stick to a deliberate strategy for as long as it can be able to influence some external factors to favour the business (Simerson, 2011). Multinationals can manage to influence regulatory and economic factors to be more favourable to the business. A multinational can also improve public perception towards its brand through long-term marketing campaigns. It takes a long time to revise strategies in big organisations due to the large number of individuals and complex bureaucracies involved. Small enterprises on the other hand have minimal influence on external environment. Small organisations prefer to adopt emergent strategies in order to absorb unexpected shocks to survive. Small enterprises also take advantage of their flexibility to exploit new opportunities. An emergent strategy is usually favourable to small enterprises. Choice of strategy is also influenced by an organisations scope of operations (Simerson, 2011). A hospital may for example be limited in terms of considering an emergent strategy. Hospitals need a deliberate strategy that allows for clear articulation of vision and goals expectations. Such an organisation has specific outcomes to pursue with little room for deviation from the main goal. A retail store chain may on the other hand be able to adopt an emergent strategy. A retail chain will most likely be interested in profiting and will therefore be adaptable to environmental changes to cut costs and take advantage of opportunities. Question 3 Stag has already established structures and operations plan around its manufacturing business model. This model has allowed the company to manufacture and sell its branded items through a distribution network across different countries. A change in business model to allow distributorship of several global brands will definitely affect Stag in varied ways. Cultural issues Stag will experience issues such as vision and mission realignment. Stag’s organisational culture is built around the company’s missions. One of stag’s missions is to be number one exporter of sports goods from India. In order to motivate its staff into appreciating the new role of the business which involves distribution of global brands, Stag will have to develop an additional or new mission statement that accommodates the company’s activities and goals. Stag also believes in the philosophy of making quality sporting goods affordable to the target market. Global brands might not necessarily be affordable as defined by Stag. This brings a philosophy conflict between Stag and its would-be partners in distribution business. Stag may need to apply globally successful practices in sports brands distributorship. This might require the company to employ marketers and brand managers who may have not worked at stag or in India. Such people may find it difficult fitting into Stag’s organisational culture. Organisational effectiveness and cohesion among teams may be affected by such existing and perceived differences amongst individuals. To overcome this, stag’s management may be forced to develop diversity policies to reflect the new image of the organisation. Change management issues Stag is likely to receive resistance to change from its own employees. In cases where employees are not involved in change management, they become less accommodating of the process (Randall, 2004). Change of Stag’s business model may result in additional duties and roles for certain employees particularly in marketing and sales. Such employees may not have anticipated such changes and thus their first reaction is likely to be hostile to the change efforts. It is important, therefore, that Stag prepares its employees to handle additional duties and roles to make the transition successful. Implementation issues Adopting a distributorship model necessitates Stag to work closely with several global brands producers. This requires stag’s major departments such as sales, logistics and finance to interact with other organisations around its core business. Such a situation may result in conflicts between departments in Stag and the Suppliers’ side due to inconsistencies in operations and priorities. This “teething” problem will be more pronounced in the initial stages of transforming the business model. Introduction of new brands under stag’s portfolio requires the company to reformulate its strategy particularly in marketing and sales. The stores branding and target market focus will all be redefined to accommodate the new image of Stag as a distributor of international sporting brands. Stags organisational structure and management roles will need to be adapted to the new business model. This will clearly outline what is expected of each and every individual in implementing the changes in business model. Question 4 Stag’s diversification into Shoes and clothing is intended to increase the revenue stream for the company and guarantee continued growth into the next stage of the business. The following SAFe criteria will evaluate the suitability, acceptability and feasibility of the opportunity for Stag to diversify into production and sale of Shoes and clothes. Suitability The sports goods market in India was to grow by between 10 and 35 percent per annum through 2011. The sector is very important to the government as it is labour intensive and export oriented. The Indian government has put in place institutions to promote local production and export of sports goods to provide employment and boost India’s trade internationally. More and more Indians are embracing sports to keep fit and also as a leisure activity. Additionally, the disposable income amongst Indians is increasing. These factors offer an opportunity for Stag to diversify into shoes and clothes for the sports goods market. Stag has a strong brand that is associated with quality products in 16 different sports. The products are recognised internationally by sporting bodies and individuals too. Stag has structures and facilities in place to venture into this new product line successfully. Rakesh’s experience in sporting goods marketing and Vivek’s production management will help Stag produce affordable quality merchandise for the market in line with Stag’s value proposition. Acceptability Stag is a family business owned by the Kohli family members. Rakesh and Vivek are the key shareholders and decision makers in the organisation. Both Rakesh and Vivek understand the sporting goods business very well and as such will agree on most things. Venturing into the new business is an accepted risk considering Rakesh and Vivek want to grow and expand Stag into the next stage for the new generation in the family to take over. Stag’s brand is recognized domestically and internationally. In fact, stag’s brand is a major asset to the business. The sports goods business is poised to grow according to data reviewed by Rakesh. Given stag’s strong brand, manufacturing efficiency and distribution network, the chances of failing in the new venture are minimal as compared to the high likelihood that success will be achieved. Rakesh further predicts that Stag will reach INR 500 crore (US$ 100 million) in annual turnover in 5 years. This is a very ambitious yet achievable growth that will most certainly impress Stag’s shareholders including Vivek and the rest of the family members. Feasibility To be able to diversify into shoes and clothes production and global brands distribution, Rakesh admits that Stag requires between US$ 14 and 20 million in external funding. Stag’s strong brand and long history of operations makes it easier to source for external funding. However, external funding will reduce the family stake in the business. This may be objected to by sections of the family. Stag has enough manufacturing space in its 100, 000 sq ft facility. Stag has 300 permanent employees and the capacity to employ more. Additionally, Stag has a well coordinated distribution network capable of moving its new products to the target market. Stag’s key market interfaces (Rakesh and Vivek) have strong networks, experience and influence in the industry to help promote the new products in the domestic and international markets. Clearly then, the opportunity for stag to diversify into shoes and clothes production and sale is likely to be successful given to suitability of the opportunity to the company, its acceptability to the shareholders and the capabilities of Stag in terms of finances and human resource. However, it will be important for stag’s management to consider an alternative financing method to avoid diluting Kohli’s family stake. Stag will also need to invest in employing staff in production of shoes and clothes as it is currently involved in such activity. References Mintzberg, H., & Waters, J. (1985). Of Strategies, Deliberate and Emergent. Strategic Management Journal , 6, 257-272. Randall, J. (2004). Managing Change, Changing Managers. New York: Routledge. Simerson, K. (2011). Strategic Planning: A Practical Guide to Strategy Formulation and Execution: A Practical Guide to Strategy Formulation and Execution. ABC-CLIO. Read More