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The lecture under power point view from lecturer definitely helps us in understanding what strategy really is:
Strategy is a plan of actions, direction and scope of an organization over the long-term or short-term. These strategies tend to create advantages for the organization through the configuration of resources in a competitive environment in order to keep up with the markets' needs as well as satisfy stakeholder expectations.
Strategic management is the ongoing process that evaluates and controls the business and the industries in which an organization is involved in order to enable to achieve its long-term objectives. It is the process of specifying the vision, mission, objectives, and developing plans or policies of a company. Programs and projects will be designed to achieve these objectives and then allocating resources to implement the plans and policies. On the other side, strategic management is also the process of analyzing the external and internal environment of a company, then select one or more strategies to use to create value for customers, stakeholders, and shareholders.
Through the strategic management, we will come out for the definitions of vision and mission as well as the internal and external environment of a company:
Vision is considered as a picture of a company in the future. A vision statement will be the inspiration for the firm's employees to realize the future aspirations of what the firm may become and to help establish a framework for strategic planning as well as ethical behavior. A good strategy will be an action plan designed to achieve the vision of company.
Mission of a company tends to focus on the products it provides and the markets it serves. The mission statement defines the company at the most basic level. It should tell the firm's intent and the business that it intends to operate.
For example: research on Thai airway,
Vision of Thai airway:
Be the first choice world class aircraft and the first choice carrier with touches of Thai.
Smooth as silk.
Increase revenues and profitability of Thai airway's business
Increase customer satisfaction
Improve productivity of staff and assets
Ensure proper management of its key project
External environment is considered as a set of conditions outside the company and it may affect the company's performance.
Internal environment is a set of conditions inside the company such as: resources, capabilities, strengths and so on. These will affect the company as the choice and use of strategies.
Strengths of a company are resources and capabilities that can help the firm to complete its important tasks.
Core competencies are capabilities the firm focus and perform especially well to reach its vision.
Understanding of Change Management, What Triggers of Change are
Change management is the process of approaching to transitioning individuals, teams, a group of people and organization from a current state to a desired future state.
Triggers of Change
There are two kinds of trigger of change, include external and internal. The external and internal triggers may include:
External Triggers of Change
Acquisition, Joint venture
Engage in Research &Development
Engage Research &Development
Activities and innovation of competitors
Taking over other companies
Internal Triggers of Change
New product and service design innovations
Market share/ position
Low performance and morale, high stress and staff turnover
Loyalty and reputation problems
Training and Development
Office and factory relocation
Over productivity and efficiency
Understanding Business Tools
SWOT (Strengths, Weaknesses, Opportunities, Threats)
Strengths of a company are resources and capabilities that can create the competitive advantages over its competitors such as: strong brand names, good reputation among customers, patents, etc.
Weaknesses are the absence of certain strengths. Weaknesses of a company are also considered as the limitation of capabilities and resources compare to firm's competitors. Weaknesses may include: lack of patent protection, a weak brand name, poor reputation, etc.
The opportunities are the particular things that company may get in the future. These will bring the advantages for the company in running business. The opportunities may include: arrival of new technologies, removal of international trade barriers, etc.
Threats are some things that could influence company badly in the future. They may include: new regulations, changes of customers' tastes, etc.
PESTEL (Political factors, Economic factors, Social factors, Technological factors, Environment factors, Legal factors)
The political factors have a big influence upon the regulation of businesses such as: labor law, tax policy, political environment, etc.
Economic factors have major impacts on how business running and decision making. These factors may be: interest rates, economic growth, inflation rate, exchange rates, etc.
The social factors may influence a business in various ways from country to country. These factors may include some cultural aspects such as: population growth rate, religion, career attitudes and emphasis on safety,etc.
Technological factors seem to be a vital for competitive advantage of a company. They include ecological and environmental aspects such as; automation, research and development, rate of technology change, etc.
Climate change will be able to impact on some of industries such as: farming, tourism and insurance. Because of global warming, it causes the change in weather, temperature. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities.
Legalfactors include may affect the operation of a company, its costs, and the demand of products. These factors may include: consumer law, employment law, health and safety law, etc.
Reflection of lecture and understanding
The lecture was useful for me and it really provided me necessary knowledge in running a business. I have understood the meanings of vision and mission, objectives and how important they are in finding out the best strategy for the company. Besides that, understanding how to analyze the internal and external environment of company is also important experiences I have captured through the lecture.
Some business tools like SWOT, PESTEL help me in understanding clearly the operation as well as current performance of a company. I also can see the factors that may influence the company in running business.
Coca-Cola Case Study
We have been provided a video about "People and Coke". The video is actually about the biggest marketing blunder ever of the most famous product in the world. It talked about the establishment of Coca-Cola Company and its strategy is to get the share market and become the most famous brand name in soft-drink market. However, the appearance of Pepsi Challenge's strategy has pushed the position of Coca-Cola down. In respond Coca-Cola has created a new strategy to solve this matter and it is start of a story about "New Coke".
Through the case study, I really can realize what I have learnt from strategy and strategic management lecture in the operation of a company like Coca-Cola or Pepsi.
Vision of Coca-Cola Company
Wherever people go, Coca-Cola will be there
Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs.
Be a highly effective, lean and fast-moving organization.
Mission of Coca-Cola
To refresh the world
To inspire moments of optimism and happiness
To create value and make a difference
Beginning Story of Coca-Cola
The story began in 1886, John Pemberton, a civil war veteran and Atlanta pharmacist, was inspired by simple curiosity. He's interested in tinkering with medicinal formulas. In one afternoon, searching a quick cure for his headache, he concocted a caramel-colored liquid in a three-legged pot. This mixture was carried to a few doors down to Jacob's Pharmacy. At the pharmacy, the mixture was combined with carbonated water and it was tested by customers. The customers all agreed that the new drink was quite special. So Pemberton actually distributed a new product and the customers could enjoy it with five cents per glass at Jacob's Pharmacy. The product was named Coca-Cola, which becomes a famous brand name in the world now.
Unfortunately, Pemberton was more about an inventor than a businessman. He had no idea that he had invented one of the greatest products in the world. After three years, he sold the company to Atlanta business Asa Griggs Candler with $2300 for a total. Asa Candler turned an invention of Coca-Cola into a business. Many years later, Coca-Cola had been marketing as a popular brand name like no other products in history.
Coca-Cola marketing strategy
The vision of the president of Coca-Cola from 1981 to 1993, Donald Keough is: wherever people go, we want Coca-Cola to be there. For this vision, the Coca-Cola came out for a strategy of marketing campaign. The company make sure Coca-Cola will be everywhere in America from service stations to cinemas and banks. Wherever people travel, they can see a big size of Coca-Cola image on a poster, a balloon in so many events. This really attracts the customers' attention and it becomes a part of American people life step by step. The Coca-Cola also appeared in World War II, and stayed besides each uniform of soldiers. The world's domination has begun. Over the next twenty years, the Coca-Cola drink seems to be the physical drink in American people life.
Quite similar to Coca-Cola, Pepsi-Cola was invented by a Pharmacist named Caleb Bradham. He started serving his customers refreshing drinks, a mixture of carbonated water, sugar, vanilla, pepsin, rare oils and cola nuts, that he created by himself. The first name of this drink was 'Brad's drink' and created in 1893, and it was renamed Pepsi-Cola in 1898. Pepsi-Cola also had been marketing as a very famous brand name in soft-drink like Coca-Cola, but no matter how hard it had tried, the Coco-Cola still remained the position in front.
Appearance of Pepsi Challenge
After a long time of being the second best of soft-drink behind Coca-Cola, Pepsi finally had discovered the change that could help them to beat Coca-Cola and it was the 'taste'. The taste of Pepsi had been changed to sweeter and less carbonated taste than Coca-Cola. Pepsi had come out with thousands of tests to get the customers feedbacks about taste of Pepsi, whether it is better than Coca-Cola. Surprisingly, the people in America tended to choose Pepsi when they tried both of taste of Pepsi and Coca-Cola under invisible brand. Pepsi came out with marketing campaigns and suitable strategies and it step by step gained more market shares from Coca-Cola. In 1975, finally Pepsi became the number one in supermarket's sales of soft-drink and really was a big challenge of Coca-Cola.
Respond of Coca-Cola and appearance of Diet Coke and New Coke
Coca-Cola could see the real challenge from Pepsi, and it tried everything like: more advertising, more marketing, and better distribution but Pepsi's sales continued to grow.
In 1981, Roberto C. Goizueta became chairman of the Board of Director and CEO of the Coca-Cola Company. He released Diet Coke with very first extension of Coca-Cola trade mark. Within two years, it had become the top low-calorie in the world.
But the development of Pepsi Challenge seemed to be a big test for Coca-Cola in reclaiming the first position of the supermarket's sales. So the President, Donald Keough and Charirman of Coca-Cola Company decided to go one step further besides Diet Coke's success. They invested to invent a New Coke with new formula that they thought it could beat the taste of Pepsi Challenge.
In late 1984, a New Coke with new taste completed, and they made hundreds of thousands of taste test from customers in America. The feedbacks of consumers seemed to be good with 61% preference of new taste of New Coke.
In 1985, they did declare the New Coke with better taste will be released and the Old Coke will be stopped after ninety nine years. Besides that, they also redesigned a new packaging for New Coke. A huge marketing campaign ever in history was made for New Coke. The company wanted to make sure New Coke will appear everywhere in different events of United State.
Respond of other parties about change in Coca- Coola
The parties of Coca-Cola are the customers, supermarkets, and others. The strongly responds came from customers. Their reactions were not like the Coca-Cola Company's expectation. The consumers tended to consider the appearance of New Coke as a negative view. The old Coca-Cola with the people in America seemed to be the irreplaceable thing in their everyday life. It is not only a product but also a physical thing in American consumers' life. The consumers could not imagine, when the New Coke came out, they would not be able to buy a product of Old Coke which was too familiar with them in ninety nine years.
The consumers in America as well as the loyal customers of Old Coke felt very angry and they started calling to the Headquarters of Coca-Cola to complain. They came out with strikes to reclaim their product. Some of customers said that: they would never buy Coke again. The strong reactions from customers could influence the Coca-Cola's Board of Director and they thought they made a serious problem in strategy management.
To respond to the reaction of customers, Coca-Cola Company released the old Coke with old formula under the new name: Coca-Cola Classic that would stand alongside New Coke. It had to spend millions to billions of dollars for this change.
Reflection of Case Study and Understanding
Through the case study, I can clearly understand the important role of strategy and change management in a company. The Coca-Cola and Pepsi were so successful in delivery the image of its product to customers. Both of companies tended to create a good strategy and change management to maintain and develop their position in the market.
Coca-Cola and Pepsi Challenge used "new material, new product and service design innovation" as triggers of change. Pepsi did develop Research and Development about Coca-Cola's product and discover new material with new formula that can create competitive advantages over Coca-Cola. This change of taste actually influenced customers in soft-drink market and brought success for Pepsi Challenge.
In respond, also using the same triggers of change, Coca-Cola wanted to reclaim its position from Pepsi. It released Diet Coke, and researched for a new formula that can beat Pepsi Challenge. Coca-Cola invested in the new material to create new formula in order to bring out a product that could be a winner. They finalized the research and invention by declaring the birth of New Coke. To support and manage this change, Coca-Cola made hundreds of thousands taste tests for customers and it also opened the huge marketing campaign ever. Unfortunately, Coca-Cola did not take full control of the change. The loyal customers of old Coke objected to Coca-Cola's change, they struck to force Coca-Cola bring back their products which had been too familiar with them for ninety nice years. Soon later, Coca-Cola realized it could be a problem in its change management. Quickly, Coca-Cola adapted to the situation, it returned the Old Coke under a new name: Coca-Cola Classic. However, this change did cost Coca-Cola millions up to billions of dollars.
I experienced from this case study an important lesson about strategy and change management. I know how to manage the changes in organization and come out for the possible actions. We also need be flexible to deal with the changes in any good or bad situation.