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Berkshire Hathaway Incorporated is a holding company, which owns subsidiaries engaged in different business activities including casualty insurance, property and reinsurance, energy ad utilities, finance, retailing, manufacturing and services. This company competes in global marketplace by being committed to creating and retaining satisfied customers. They know how to adapt to changing marketplace continously. They are practicing the art of oriented market strategic planning. This makes Berkshire Hathaway such a great place to work (Buffett, 2006).
At the same time, Berkshire recognizes the importance of engaging concerns of their stakeholders. The dialogue developed between the company, their customers and stakeholders allow them to better understand how their business goals can be achieve and to realize new perspectives aligned with their concerns. They continued their objectives to implement an open dialogue with different stakeholders, including non-governmental organizations, government representatives, the media, clients, community leaders, financial and industry analysts, environmental advocacy groups, and employees (Hayden and Wood, 2002).
On the other hand General Electric (GE) is a manufacturing company that paves the way for innovation to achieve concerns and needs of its clients. Such a time reinforces the strategic partnerships and engagement as necessary component. They work collaboratively with leading sectors and institution that help them respond to the current challenges brought by issues such as, climate change, health, human rights, and development (Blacconiere, 2002).
The integrated business strategy approach of GE is reflected in the way they manage the company. Their top managers are responsible for evaluating how management serves the interests of their stakeholders and shareowners. They are committed to manager such factors as social, environmental, regulatory challenges, global trends and risk management (Eckes, 2001).
Nowadays, there has been a rapid change in environment. There is no guarantee that products that were selling well last year will sell again this year.
These are the major problems facing these two companies. To keep up with change in the environment, management needs to perform effective logistic management through proper inventory management, transportation, warehousing of its products that will help the company in identifying opportunities and threats faces them. By performing analysis of inventory management, transportation, warehousing management can develop a logical, planned approach in selecting the most appropriate marketing strategies and programs (Carlson, 2009).
The objectives of these two companies on the distribution and processing period will be able to attract consumers on price to achieve plans to implement market oriented value. Based on the model they adapted, cost and profitability are considered but the primary basis for program selection is elasticity of demand (Prescott, 2008). The product strategy which consists of making customers aware of the quality or feature, advantage benefits of products, came out as the only strategy that correlates significantly with inventory volume. Logistics strategy that stimulates primary demand is designed primarily to increases the level of demand for a product form or product class either by current consumers or current non-consumers. This type of strategy can accomplish through effective logistics management and distribution (Eckes, 2001).
Moreover, according to consumers, they can initiate a purchasing and advertising process by visiting web site of GE and Berkshire and then clicking on the hyperlinked text for more information (Carlson, 2009). It is a two way system of communication process, with the internet provider which serve as a customized content that meets an individual needs. It has the capacity for multimedia content which is also important part of the whole process (Buffett, 2006).
Accordingly, there are at least three identified logistics processes to be address in this paper; inventory management, transportation and warehousing. These processes and functions take control of the logistics activities of the company. It also associates itself with the success and takes over the company's business function (Eckes, 2001). To improve these processes, the growth and development of specialized methods and technology which accounts for numerous kinds of products and goods enters into the channels of trade and commerce are necessarily demands the use of an efficient system of logistics. Examining the use of technology and how you will be able to integrate the company's services to your clients and partners is also important (Hayden and Wood, 2002). Specifically, their management strategy would like to focus on the improvement of inventory management process (Eckes, 2001).
GE and Berkshire located strategically at their main offices which considered as the top transportation hub and business city, it maintained its technological innovations in the current economic environment over the last couple of years. They are the best location for a distribution center that will serve the southeastern region business of its framework. The location will enable GE and Berkshire to maximize their effectiveness and aggressiveness in delivering their products on with the market (Buffett, 2006).
GE recognized the probability of strategic location to be able to make use of the advantages of external suppliers. Because of the ever changing climate of globalization, businesses are can now manage their industry to potential business locations and spread its risk in the different regions (Blacconiere, 2002).
Additionally, the location clearly exhibit that this is a strategic framework to be able to contend with these locations for distribution venture. To profile these locations as a good distribution center for southeastern region is an opportunity because the labor cost is low, the transportation is good and numerous public institutions support the local government (Hayden and Wood, 2002).
b. Understanding of the nature of strategic planning and its impacts on operational policies
In these two organizations, properly designed strategic planning was exhibited through supply chain network that help that implement effective supply management. The increasing growth and development of supply chain network with the utilization of specialized production and technology which accounts for numerous kinds of products and services enters into our channels of trade. The demands in the use of an efficient supply chain system of distribution in increasingly important (Hayden and Wood, 2002). The improved design can create value in customer service and lower costs, as well as promote timely delivery in terms of manufacturing, engineering and sourcing. The properly designed chain network has become not only important but almost indispensable in our organization (Eckes, 2001). Moreover, the value of this new design in our organizations have increasingly important than ever before. The best practice utilize by other company is the advance technology aided system. The company revitalizes information and data, even execute processes, payment and purchases all through the use of these technologies that can accomplish functions instantly, without resorting to the other means (Blanchard, 2007).
The inventory management of the Berkshire and GE has a direct responsibility of strategies and implementation, whereas top management is responsible for the implementation of strategic plans (Prescott, 2008). The advantage of this idea includes the tendency to be detail line by line budget items and tactical approaches that concerned with the rationale used in transacting plans. According to the data collected, Berkshire adopted an inventory perspective that integrates non-strategic orientation of corporate planning with tactical orientation that requires huge resources and budget allocation (Del, 2004). The plan is not specific to the target marketplace. In this perspective, the effect to the company is unorganized inventory profiles that affected the performance of sales and marketing mix. In this behalf, the company must set a central commitment for morally responsive concerns and defined contribution to sustain growth of the clients it serves (Eckes, 2001).
Effective inventory strategies using technological advantages for GE will tie the business more closely to their assets and sales. The speed and volume of data will be increased dramatically, as has the scope of the strategy with which data exchange and the depth to which internal systems are effectively engaged in the process (Eckes, 2001). By delving into all aspects of market and by the relationships with revenues enhancement and cost reduction, inventory management systems will have come to be important in immersing power over the form and nature of the modern business processing (Hertz, 2003). Concurrent with the increasing reliance on technology, it will be abreast to the increasing scale and complexity of systems. Specifically, these processing systems and technical tools combined to motivate Berkshire and GE to apply strategic planning will aim have a result impacting management for maximum benefit as well as the method to plan large scale efforts to attend every need of logistic system requiring multiple financial efforts with far reaching impacts on the company (Blacconiere, 2002).
Due to current global economic meltdown and financial instability many company failed and closes their doors. In this time of economic disproportion, these two companies desired to have an outcome improving the company's processing profiles through effective logistics management specifically inventory functions. Aside from financial circumstances, in some areas, failure of the systems happen automatically especially when there is a problem with the system itself and the integration of this information to a certain period in a company's profiling. While on the market continues to mature, the firms is seeking for opportunities and spreading its risk to advance their corporate interests in a highly competitive industry (Blacconiere, 2002). This issue is a subject of the study to set of standards in specific way. The desired outcome is aimed to be showed on the financial statements of the company and management functions particularly in the area of logistics. These processes are representative in nature and are not meant to cover all the possible scenarios, but to give an indication of how funds flow with the sales transactions (Hayden and Wood, 2002).
The competitive environment possibly referring to the current economic situation or current business situation arguably affects the increase of the transportation cost. With the advent of the current financial situation, many companies such as GE and Berkshire would take some financial expenditure. Their shareholders and clients and other stakeholders in the business will definitely be affected and this could translate into marketing plans being cancelled or strategy delivered but will never be used. It is important to take note of the status of the Distribution center locations undertaking the plan (Prescott, 2008).
Generally, if these companies have its own equipment before delivering the services, it will reduce the cost analysis for different locations. These companies should purchase software, equipments, hardware, and maintenance if they want to reduce the transportation cost. The analysis weigh in the cost in conjunction to the perceived benefits to be able to guarantee that the results are convincing that southeastern location will not totally affected by the increase. They must also address the sufficiency of funding to realize the cost analysis of the project (Blacconiere, 2002).
In order to fully appreciate the effect to GE and Berkshire, marketing communication strategic plans and must gauge certain success factors, the factors that contributed to the failure of other industries with the same situation and company's profile should also be looked into (Prescott, 2008).
In order to ensure the value and quality of their products and services, they set up interoperability events, changes on processes, and employee meetings. Product certification indicated with the established suitability of every service rendered. The products of the company have a certified ISO certification. This process certified the products after passing the quality and performance assurance according to standard regulations (Blacconiere, 2002). The criteria used to qualify a supplier in their organization include process standardization and quality assured manufacturing process of product. The document in hand showed that there are no visible weaknesses of this process. I just recommend that the processing of all the products must be intended for testing and should pass not only the ISO standard but also customer's satisfaction. The best practice that leading companies in our industry have embraced in the area of supplier qualifications and certification includes process of standard quality control measures and information quality (ISO, 2009).
Strategic planning is an organizational process of determining its plan, strategy, approach or direction, and making decisions on resources allocation to pursue this strategies, including its people and capital.
Strategic Location is defined as a social or geographical position which plays an important part in a predetermined plan.
Supply chain management is the management of an interconnected business networks involved in the ultimate service and product provision packages required by end consumers
Logistics is the flow of goods, resources and information management including people, energy, between the origin point and the consumption point in order to achieve the requirements of customers.