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One of the strategic planning models used by the organization is the evaluation of the external and internal environment of the organization (SWOT analysis). As per this planning tool, it has been found that the marketing position of BMW is very good and the company should implement a new program to maintain its successful position in the highly competitive environment and motivate the employees and attract customers in order to handle competition (Pearce & Robinson, 2005).
The change management model used by BMW is the," analytical hierarchy process (AHP) that offers a structure to deal with multiple criteria situations involving intuitive, rational, quantitative, and qualitative aspects"(Alberto, 2000; Varma, Wadhwa, & Deshmukh,Â 2008, p. 346). "A hierarchical depiction of a system describes how changes in priority at upper levels affect the priority of criteria in lower levels" (Chan, 2003; Varma, Wadhwa, & Deshmukh,Â 2008, p. 346). AHP used in combination with balanced score card (BSC) creates an efficient and effective change management model. "This model bases organizational changes that require a need for performance measures to gauge progress toward organizational goals. Performance measures relates to strategic intent. Measures and metrics validate strategic goals." (Varma, Wadhwa, & Deshmukh,Â 2008, p. 346)
Process to identify strategic goals and values
Organizations have exceptional mission statements to clearly state their role in society. A vision statement depicts the long term goal that a firm wants to reach. Vision forms the source of motivation and inspiration and depicts an optimistic view for the future.
Vision, mission, and values give support to an organization to achieve the desired goals and objectives. A vision statement depicts the long term goal that a firm wants to reach. Vision forms the source of motivation and inspiration and depicts an optimistic view for the future. Mission and vision statement of an organization describes about the company's present and proposed future position (Hunger & Wheelen, 2007). Typically all the organizations follow some core values according to their business strategies to serve the customers with better products and services. Best quality services are the bases of the working strategy of this organization.
Performance management is very important for an organization as it ensures success to every employee and attempts at bringing out the best in every employee. Managing performance helps align the goal of an employee to learn and grow or progress with the organizational goal of succeeding in a highly competitive environment.
It is very essential to manage performance to be able to direct and channelize the efforts of the employees in the right direction. Moreover the skills that are developed should be strategically useful to the organization and can be utilized to develop a stronger employee force. It is also very important that performance management be considered as a process to form and create better opportunities for employers and employees rather than view it as an evaluation process. The balance or equilibrium required to be maintained between responsibilities of the employees as well as the responsibilities of the employer can be achieved through employee performance management.
Ideal performance management is one that is integrated into the system as well as the processes. It should not be required to conduct performance management separately. Performance appraisal adopts a post-mortem approach where in evaluation occurs after the activities. But performance management should be an ongoing process and take place on a concurrent basis. It is very essential that performance management takes place with identification and prioritization of desired results and establishment of means to achieve those results. Performance management also requires setting of standards, measuring progress, controlling through corrective action and a feedback mechanism.
Ideal Performance management is based on a clear idea of what is to be measured, how it is to be measured and how are the goals to be achieved. Ideal performance management looks into the contribution of various programs to the human resource management as addition of competencies to the existing talent pool. It helps develop a clear understanding of the strengths and weaknesses of different methods and then adopts a method that suits the requirement of the organization's strategy. It is very essential that the performance management system used is suitable for the organization and fulfills its requirements as per its goals and strategy. Performance management should act as a catalyst to achieve the organizational objectives in a more effective and efficient manner, and creating better employee satisfaction simultaneously or at the same time.
"Strategic planning ascertains the direction in which an organization is heading towards in the years to come, how it's going to accomplish its objectives and how one will know if it reached the desired position or not (McNamara, 2008)." The central focus of a strategic plan is generally on the entire organization as a whole, whereas the focus of a business plan is normally on a specific "product, service or program" (Stahl & Grigsby, 1997). At present, a variety of perspectives models and approaches are used in strategic planning. The manner, in which an organization formulates a strategic plan, depends on the nature of the organization's leadership, culture of the organization, complexness of the organization's environment, size of the organization, and expertise of planners.
In regard to a strategic plan the most prominent mean to make evaluation is the environmental analysis that renders organization with the ability to deal with its environment. Environmental analysis can render the organization with all the prevalent environmental issues that it may confront at some point of its operations. Environmental analysis renders an organization with its present situation along with an all-inclusive analysis of its environment that has a significant impact on the ability of an organization to achieve its strategic goals (The Strategic Planning Process, 2007).
Environmental analysis, serve as a good tool in the direction of strategic planning of healthcare organization as it assist the organization in thinking and understanding what basically affects the organization and its healthcare services (Internal and External Analysis, 2005). The environmental analysis will help the organization in identifying the opportunities and threats that exist in the environment and in turn this understanding will help the hospital in making their strategic plan regarding expansion and enlargement of communities served by them (Ryall & Craig, 2003).
An environmental analysis is the four proportion of the external analysis. The interest that can be attained from environmental analysis is the economic, technological, political-legal, socio-cultural and future trends and events that have the potency to affect a firm's strategy (Internal and External Analysis, 2005). This analysis will help the organization in identifying such trends and events along with the estimation of their likelihood and impact. Economic factors including interest rates, inflation, energy availability, disposable income and market structure may have a tremendous impact on the operations of a firm like BMW.
In addition to these economic factors the other legal and regulatory issues that may have an effect on the operations' of the firm are governments rule and regulations in regard to healthcare services, tax and incentive patterns and type of government and its efforts. With the help of environmental analysis various factors regarding the firm's operations can be identified and considered so that on the basis of it further strategic plans can be made effectively and efficiently.
Competitive advantage and Value Chain
The value chain process also helps the management to implement effective solution and various innovative technological programs in the organization. In addition, value chain serve to achieve the targets of the organization on time, and serve the customer with cost effective and quality based services.
Value change analysis describes the activities within and around the organization. This analysis reveals the competitive strength of the organization in evaluating each particular activity that adds value to the services provided. Competitive advantage requires inclusion of outsourcing in the value chain in order to improve the position of BMW.
Outsourcing refers to giving out a portion of the work to another nation in order to have it done in a better and more efficient way. It may be within the country or may be given to a firm in another nation. Outsourcing helps a firm give out some portion of its work and ensure that it carries out only the main aspects of business thus focusing on the major aspects of work and value addition activities. This makes it very important for a firm to take outsourcing as a strategic decision. It is important that the firm does not take this decision very casually, but treats it as a decision requiring strategic importance.
Outsourcing begins usually when a firm's operations exceed its limit of being able to perform efficiently. As the operations of a firm exceed its capacity and are not a part of its core competencies, then it becomes important for the firm to outsource these activities to those who can perform them efficiently and also can do them effectively. A job is done better by a firm who is a market leader or an expert who specializes in certain critical areas. It helps the firm achieve ease at work and also benefit out of economies of scale. This will help the firm move ahead of other firms who do not specialize, but still perform certain functions as a part of their total business. Though they can perform them, they would be putting in more time and efforts, thus increasing the overall cost of production of goods and services.
In cases of not being able to perform a task efficiently and effectively, outsourcing becomes a blessing and helps the firm achieve a lot of savings of effort, time and capital. A firm might not be able to handle a order completely, but would be extremely competent at delivering some of the tasks. In such cases, it is essential that the firm opts for outsourcing and delivers the completed product or service to the final customer. It is very crucial for a firm to take the decision of outsourcing based on a number of factors including its internal processes as well as its external associates, suppliers and outsourcing partners. All of these factors will help a firm analyze the need and feasibility for outsourcing along with the various benefits and disadvantages of outsourcing .Outsourcing requires transformational leadership as there is a huge requirement of co-ordination. An effective environmental management system requires transformational leadership
Outsourcing can be based on technological outsourcing or outsourcing of a particular business function. In any of these cases there is a requirement of consideration of certain factors which includes the cost benefit analysis as one of the most important considerations. It really matters as the cost of the final product is greatly influenced by this strategic decision of outsourcing.
It is very important to consider the benefits and disadvantages of outsourcing to be able to make the right decision. It is extremely important to be able to make this strategic decision correctly as it could otherwise cause a company or a product is success as well as its competitive position in the market.It is extremely important that a firm should analyze its strategic position in the market. A firm can analyze its strategic position by an analysis of its internal as well as external environment.
This would help the firm formulate its outsourcing strategies in a well-planned and strategic manner. It would be able to analyze its own position in the market as well as the position of other competitors and understand that it is possible to be able to make this decision on a strategic basis and not on a pure cost analysis.
Organizations in developing countries before globalization were very different. They were usually family owned businesses or government owned or even union led organizations. All of this has now been taken over by professional management and company administrations. These firms now look into the concepts of management, leadership and performance management along with quality control and change management.
Such leadership helps create a dynamic work environment where in people can work as a team and participate in various activities voluntarily and also change can be easily implemented. It helps create a group of self-aware people or employees who have the freedom and opportunity to be creative and solve complex problems. Such leaders would strive to improve quality and provide outstanding service. Transformational leaders are dynamic and work towards motivating everybody. They encourage people to come up with new ideas and are not over controlling. They are not self-focused but accept others as a part of the team. In fact they sometimes believe themselves to be a team leader only for directing and co-coordinating, but work as a part of the team.
Outsourcing requires leadership as well as strategic vision to a great extent. Leading is not a complex endeavor, but an extremely important managerial trait and a requirement in today's complex business environments. Leadership is even more essential as environments become uncertain as it is leaders who are more capable of unstructured decision making rather than administrators who are used to structured decision making. Outsourcing can be based on technological outsourcing or outsourcing of a particular business function. In any of these cases there is a requirement of consideration of certain factors which includes the cost benefit analysis as one of the most important considerations. It really matters as the cost of the final product is greatly influenced by this strategic decision of outsourcing.
Future Challenges and Opportunities
Organizational development (O.D.) provides strategic direction to the organization. Human resources (HR) develop and manage incentives programs that align with the organization strategic business goals. This helps develop a strategy to deliver a competitive benefits package and to optimize compensation programs to address recruitment and retention objectives. In addition, HR works on improving the effectiveness of leadership teams through coaching sessions. Further, technology another strategic resource includes process automation used to support the value chain activities.
Globalization and technology are two important economic factors that have made the world a smaller place as now it is much easier to communicate and know about other countries. This has enabled people to gather a lot of information and in turn be able to visit places for various purposes including education and occupation. Globalization has greatly benefitted a number of developing countries, through international trade as well as providing them with a number of opportunities in the form of outsourcing and information technology plays a major role in having enabled this.
Globalization has led to developing countries being technologically advanced; implying that organizations operating in these countries are advancing with technology and using technology to develop at a rapid pace. They are able to manage great amounts of information in such a way that they are becoming knowledge capitals. A knowledge capital becomes a place with better opportunities for people and hence causes migration. People also go back to their native countries and share the knowledge that they gain from migration with the people there, thus causing further progress for the nation. International migration is considered to benefit individuals and society as they have better opportunities when they travel around the world for their own benefits, with the aim of learning and achieving.
International Business Environment
International business helps a firm explore new opportunities and extend its boundaries. International business involves huge investments and so is considered as on of the most crucial strategic decisions for any company. Going international helps discover new markets with extending demand and revenues. But with this also come a lot many challenges including political, social, demographical, cultural, geographical and legal barriers.
A company like BMW involved in car manufacturing should look at new markets which are not as saturated as the American market and offers opportunities for the company to grow and establish itself. Moreover international markets would have lesser competition than that in the USA market. So, it is important and extremely beneficial for a top class automaker to strategically enter international markets.
The product being a newly designed mid-size car should be marketed in developing economies. This is so because the purchasing power in these economies is constantly improving and the demand for automobiles shows an upward trend. From a long term perspective, growth is a very essential component for strategic success and this is possible more easily in growing markets.
Currently entering the Indian market looks like a great opportunity. The Indian market has great sustainability. With a huge population base, it offers a market that easily accepts and is open to new products, technology and innovation. The Indian market is quite suitable for the launch of a new car. There are various automobile brands already available in India. Yet a new product is usually well received.
Creating a hype and attraction are very important to sustain competition in the initial stages. The promotion and marketing aspect has to be considered on an extensive scale. The people possess reasonably good purchasing power and are willing to pay a premium for quality. The infrastructure is also well developed.
Market research provides an estimate that the Indian automobile will have a double digit growth rate (Indian automobile industry thriving despite recession, 2009). There is a threat of new entrants in the market at a later stage. But this is the ideal time to enter the Indian market. Effective marketing and providing a quality product catering to the needs of the Indian consumer that matches or outdoes his performance and design preferences is bound to succeed.
The Indian market should be entered using franchising. Franchising would help an automobile company enter India with an extensive reach. Since the required infrastructure is present, it is easier for a car making company to launch and sell its cars through franchise. Franchising is a great investment opportunity as India has a growing economy. It has various benefits as a strategic entry mode.
The smart car can reach the markets through a direct retailing arrangement where the company uses its own outlets or showrooms to sell the car (Introduction to Franchising, 2009). The existence of Indian partners would ensure that the entry transition is a smooth process and there are no legal issues. Investing in India can be only up to 51% of the total investment. So this necessitates partnering with Indian entrepreneurs. Now they would be more interested in exclusive dealership franchise.
The smart car being an innovative product, can be sold at exclusive showrooms, rather than combining it with other brands. The product should be made available in different colors and designs so as to meet the preferences of the Indian customer. The American brand name, training and technology, supported by Indian entrepreneurship provide great business opportunity for a car similar to the smart car.
The next market that provides sufficient opportunities is the South African market. The fact that the design of the car can easily be modified to suit the geographical conditions in South Africa makes it a suitable destination. This market provides tremendous growth opportunities, but is also very risky.
The car would have to be presented as a technology revolution. The manufacturing base in South Africa is very strong and offers various backward integration opportunities in the future (South Africa's Automotive Industry, 2008). South Africa does providing a tremendous market, but also provides great partnering and business opportunities.
The South African taste and preferences, purchasing power and competition in the automobile sector are such that the product may or may not be accepted. If it is well received then it provides the company an opportunity to expand all over Africa. Then it can establish itself in Africa through combination of entry strategies.
Looking at the population base and demand, in the initial stages of strategic entry, exporting would be a favorable option (Merwe, 2009). This is mainly to avoid huge investments in the initial stage of business. Exporting cars to South Africa would give the firm a first hand experience of the African market. Through exports the demand and taste and preferences can be easily assessed. The market can be well understood. An opportunity to work with various car dealers in South Africa would help establish a strong network which would then benefit the business in the long run in more than one ways.
Smart car being a technology product would help beat competition effectively. Just another car would not get accepted in the South African market as easily as a technology product. The current economic recession has made South Africa not preferred a destination for huge investments. This is one of the main reasons for opting out for exporting as a entry strategy.
The car design would need to be altered or modified to suit the taste and preference of the African consumer. It would have to be made such that it can sustain the geographical requirements of the South African market. There is a lot of local competition as well as competition from foreign brands. In case of not being able to survive retreating options are open in case of exporting strategy. Other entry strategies would prove to be more rigid.
Export as an entry strategy would help the firm leverage investment costs and be able to provide the product at highly competitive prices. This is both crucial and essential for survival in the South African market. High levels of competition can be easily sustained as the car is backed by a highly successful brand name.
But running a complete business in South Africa requires high levels of establishment in South Africa. Achieving this would take a while. So, it is important that the initial business entry strategy is exporting and not partnering with existing businesses in South Africa.
If it had not been for the current recession, Africa could have been considered as an investment opportunity. But the fact that the automobile industry has been badly hit in the times of economic set back, it is crucial to wait for a while before approaching South Africa with foreign investments.
Thus a product similar to that of a smart car, should be used by a leading, US based car manufacturer, to enter the Indian market through franchising and enter the South African market through exports. These measures would increase opportunities and profits along with internationalization of this automobile brand.
Summary and Conclusion
BMW has integrated knowledge and understanding of its external business environment, its management and leadership potential, and its ability to change, develop and implant business strategy. BMW can be expected to adopt al the above stated measures as well as strategies in order to achieve its strategic objectives.