Business Strategy: Exploring Elements of a Successful Business Strategy - Assignment Example

? Marketing Management Assignment Business Strategy By 19 March Business Strategy Exploring Elements of a Successful Business Strategy Business strategy is an integral element of today’s market place. All the firms need a well formulated business strategy for the alignment of their operations and structure. Strategy is the long term concept which in terms of a company, defines its scope and direction and establishes link between the optimal utilization of resource in the given competitive environment and the maximization of shareholders’ wealth. A business strategy which is immaculately formulated with a clear thought frame is the key to commercial prosperity. However, when the business suffers a weak strategy then the commercial well being is hampered and in severe cases may push the firm out of business. “The process of developing and implementing strategy enables managers to understand their customers and competitors.” (Kourdi 2003) A focused business strategy is the key element to corporate success and balance sheet results. “A business level strategy is an action plan the firm develops to describe how it will compete in its chosen industry or market segment. A business level strategy describes how the firm will compete in the marketplace on a day to day basis and how it intends to do things right.” (Ireland el at 2007) A successful business strategy is the pre-requisite of a successful firm. The companies are striving for more and more profits and maximization of their shareholders’ wealth. The numbers have become more and more important as it is not merely required to be in the corporate race but to win it has become the part and parcel of the corporate game. The three levels of planning for are firm involves corporate and business strategy which comes under strategic planning and functional strategy which comes under operational planning. A corporate strategy is the strategic plan for managing multiple lines of business. In essence, there is more than one business with in the corporation. A business strategy is the strategic plan for managing one line of business.” (Kourdi 2003) Thus firms having a single product line will only work with business strategy, or in other words, its corporate strategy will be same as its business strategy. However, firms working with multiple product lines will have a business strategy for each type of product and an over all corporate strategy. An integrated corporate strategy starts with a mission statement. “The mission statement is the foundation for all the strategies and plans in which your organization will invest its resources.”(Verardo 2000) The organization’s mission is the purpose of its formation and existence. A mission statement cover what type of business the firm is in now and what will the business the firm will be in the future. The firms should know exactly what business they are in, who their customers are and who their potential customers are. After the mission statement is another crucial step for the business strategy which involves all sorts of scanning. The scanning process also known as the situation analysis involves assesses the factors that directly affect the firm’s options and opportunities. The analysis is a three part step in which the firm analysis its industry and competition, company analysis and identification of a competitive advantage. All three parts are interlinked with each other and need careful assessment. In the industry analysis the widely used model is the porter’s five forces model. It identifies the buyer power, the supplier power, the barriers to entry in an industry, rivalry among competitors and the threat of new entrants. After analysis the industry comes the turn of the company, where firstly financial numbers are assessed to analyze the current position of the company. Then a SWOT analysis is conducted assessing the strengths, weaknesses, opportunities and threats for the firm. Also a PEST study is conducting explaining the political, economical, social and technological changes that will affect the firm. This analysis is followed by the competitive situation analysis in which the core competencies of the firm and comparison of its products with that of competitors is done. Having done all the analysis comes the tough part of setting goals and objectives. The goals and objectives are the framework over which the strategy will be formulated. Care and analysis should be done in order to formulate appropriate goals and objectives. Goals are broad targets and objectives are more specific and measurable ones. These goals are then used to develop the corporate strategy. The corporate strategy can be the growth strategy, stability strategy, turn around and retrenchment strategy or combination strategy. Volkswagen group – Strategic Analysis Mission statement: our aim is to make Volkswagen group the leading automaker by 2018 – economically and ecologically. www.volkswagen.com The automobile industry is a highly dynamic one. For the analysis we have used the five forces model. The buyer power of this industry is very high with the customers always staying ahead. The reason being few numbers of firms have major shares and the automotive parts are standardized. So the supplier power here is low. The rivalry among the firms is intense and with the declining market shares and growing costs this is sure to increase. The threat of substitute is low because the other transportation vehicles are no mach for the convenience and usage of the cars. This industry faces high barriers to entry because getting into this business requires huge capital expenditure. : The strength of Volkswagen is that it is people’s car and its target is the mass market as well as the elite niche. The weakness for the firm is its financial figures. The firm faces the threats of decrease in market shares; however, its diversity approach is a great strength for the company. The goal for the firm is to increase its share and sales by the year 2018. However, more specifically the firm has an objective of bringing newer and more diversified model in the market. The firm is using the growth strategy. In my opinion, the firm’s corporate strategy is “concentration’ strategy. The firm plans to increase its market share and become the leader in its industry by introducing newer models and technological advancement. Thus will good planning and focused strategy the firm is all set to take the future by storm. References: Ireland, R. et al. Understanding Business Strategy - Concepts and Cases, Mason: South Western. 2007 Kourdi, J. Business Strategy: A guide to Taking Your Business Forward, 2nd ed. London: Profile Books Limited. 2003 Verardo, D. Managing the Strategic Planning Process, Alexandria: American Society Inc. 2000 Volkswagen Publications, 2010 Available at: http://www.volkswagenag.com/vwag/vwcorp/info_center/en/publications/2011/03/Volkswagen_AG_Geschaeftsbericht_2010.-bin.acq/qual-BinaryStorageItem.Single.File/GB_2010_e.pdf [Accessed: 16th March 2011]. s Read More