The term strategic management is "the art and science of formulating, implementing and evaluating cross functional decisions that enable an organisation to achieve its objective". It can be used to determine mission, vision, values, goals, objectives, roles and responsibilities, timelines etc.
The strategic management process is a on - going process of formulating, implementing and controlling broad plans guide the organisation in achieving the strategic goods given its internal and external environment". The strategic management process does not end until the firm decides what strategy or strategies favourable to them. This must be a translation of strategic thought into strategic action .It is much easier when managers and employees of the firm understand the business, feel a part of the company and through involvement in strategic formulation activities have become committed to helping the organisation succeed.
Stakeholders' participation in developing management strategy
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Stakeholders are the specific group of people, groups or organisation that has direct or indirect stake in an organisation, because it can affect organisation's action, objective and policies. Key stakeholders in a business organisation include creditors, customers, directors, employees, government (and its agencies), owners (shareholders), suppliers, union and the community from which the business collect its resources.
Stakeholders are divided into two
Internal stakeholders are those stakeholders within the organisation. They engage economic transactions with the business. Internal stakeholders are known as primary stakeholders.
Employees have stake in a business because of their salary, bonus and other benefits. They have a crucial role in business because they motivate the customers to buy more. It leads to organisation development and goodwill of the business.
Managers are the specific group of people who sets the goals or objective and also work for company's growth. By achieving the goals indicates a better performance of the business.
They are the most important stakeholders of the business. They provide direction and motivation to the business and also they can earn profit and goodwill from their business.
External stakeholders are known as secondary stakeholders. These stakeholders are external to the business. In other words, they do not engage in direct economic exchange with the business. They are affected to the business according to their actions.
The external stakeholders are
The suppliers have a crucial role in a business because they provide the products and service used in the end product for the customer.
Society has interest in a business by way of employment, their involvement in a business, environmental issues and also holding shares of a particular business.
The government stake in a business through collecting tax from the business, providing rules and regulation and also organisation can also reducing the unemployment level of the economy by staffing.
Creditors include banks and other financial institution. They help the business by giving financial aid for the smooth running of the organisation. It will increase the profitability and goodwill of the creditors. But they should check whether the organisation is sound or not.
Customers interest in a particular business because of value and quality of the product. Besides this, products give customer care or customer satisfaction. Customers have the right to check whether the product is ethical product or not.
Criteria for judging managing strategic options
For getting maximum benefit from the process of strategic planning, we have to develop some criteria to determine the efficiency of strategic options. The two criteria are discussed below.
The main objective of feasibility study is to assess the economic viability of the proposed business. It must answer the question" Does the make economic sense?"The study should deliver through the analysis of business opportunity. And it also can overcome the difficulties in the way of the cooperative's success. The result of the feasibility study will depend up on the proposed study whether it can proceed or not. If the feasibility study shows a positive sign, then the cooperative can develop a business plan.
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The components of feasibility study are listed below
Market feasibility includes a description of the industry, current market, anticipated future market potential, competition, sales projections, potential buyers etc.
The technical feasibility study evaluates the details of how can we deliver the product or services (materials, labour, transportation, where the business is located, technology needs etc). In other words it is a logistical plan of how the business will produce, store, deliver and track its products or services.
Financial feasibility studies assess the financial aspect of the organisation. It considers many things include capital, expenses, revenues and investor income and disbursements.
Risk assessment is the determination of quantitative and qualitative value of risk related to a concrete situation and a recognised threat. Risk assessment is the overall process of risk analysis and risk evaluation. The following are the three analysing stages of risk assessment.
This stage identifies the organisation's uncertainties. It requires .a deep knowledge of the organisation, the market in which it operates, the legal, social, political and cultural environment in which it exists as well as the dev elopement of a sound understanding of its strategic and operational objectives.
The objective of risk description is to display the identified risks in a structured format. The risk description can be transformed in the form of a table. The table describes the description and assessment of risk.
It assign the probability and consequences of a risk which can be consider cost, benefits, the concern of stakeholders and other variables as appropriate for risk evaluation.
After the completion of risk analysis it is necessary to compare the estimated risk against risk criteria which the organisation has established .Risk criteria includes associated costs and benefits, legal requirements, socio economic and environmental factors concerns of stakeholders etc. Risk evaluation is used to make decisions about the importance of risks to the organisation and whether each specific risk should be accepted or treated.
A case to gain competitive advantage
Competitive advantage has a greater role in modern business. A competitive advantage can be attained by offering the consumer a greater value than the competitors such as by providing lower prices or providing quality services or other benefits that justify a higher price. The strongest competitive advantage is the strategy that cannot be following by other companies. It creates a superior value above its rivals.
Case: marketing strategy of Tesco
Tesco mainly focus on four areas for their business namely grocery business, non -food, international expansion and retailing services, the dotcom business and telecommunication packages. Tesco focus new riskier areas for growth. Pushing further into non-food in the next phase (Johnson g schools k, Whittington (2005)) lid in currently " destroying" the market by selling the products below cost price. So that Tesco's generic strategy will have to be cost leadership. Unless Tesco can be successfully differentiate its line of clothing. So they can change a premium price.
A marketing strategy is used to analyse the market. The strategy implemented through marketing tools which involve detailed decisions about factors such as price and the way of product is distributed. So that Tesco can decide its model in terms of their own strategy internet selling or joint venture with an existing national retailer.
Suggested strategy for Tesco
Michael porter introduced three generic strategies that firm may use to gain competitive advantage. In my opinion this strategy may helps the organisation to achieve its goal easily. These generic strategies provide direction for firms in designing in incentive systems, control procedures and organisational arrangements.
The strategies are discussed below:
Overall cost leadership requires firms to develop policies for becoming and remaining the lowest cost producer or distributor in the industry. The low cost producer can attain its competitive advantage by setting its costs of production or distribution lower than those of the other firms in the market.
In this strategy, differentiate the product or services. It requires a firm to create some modification to their product or services .So that, it perceived at unique
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throughout the industry. It will attract the customers; they must perceive the product as having desirable qualities not found in competing products. Differentiation may be attained many features that make the product or service appear unique. Possible strategies for achieving difference may include: warranties, brand image, technology, features, service, quality, dealer network etc
The final porter's focus strategy is also called niche or segmentation strategy. More precisely, it concentrating a particular customer, product line, geographical area, channels of distribution, stage in production process or market niche. It focuses on a limited segment more efficiently than competitors can serve a broader range of customers. By using this strategy, firms can simply apply a cost leader or differentiation strategy to a segment of the large market. This strategy is most effective when customers have different preference or specialised needs.
Vision, mission, objective and measures
Objectives of Tesco
Stronger controls of supplier relations
Better reporting on labour standards
Action on climate change
Commitment to protect environment
A code of ethics of staff
Code of conduct for suppliers
To increase cultural products and services to different nations
To provide customer awareness for their products
Diversity of products and consumer choice
Tesco want to be able to keep their carbon emissions down by making new buildings.
Reducing energy consumption
Minimising water use
Recycling, local sourcing
Tesco offering organic products
Tesco opened six regeneration partnerships
Two thousand and two hundred new jobs created
Thousand and three hundred of these employed through the jobs guarantee many previously long-term unemployed people
Other partnerships announced which will create another 6600 jobs.
To maximise sales
To grow and maintain the number one retail company in the UK
Tesco wants to outshine their competitive and remain the market leader
Creating value of customers
To earn their lifetime loyalty
Contributing a clear sense of community
These objectives are eminent in the current economic climate.
Mission and Vision statement
Planning and setting of organisational objectives is the starting point of managerial action. In other words organisation strives is termed as "mission, purpose, objective, goal, targets etc.
A mission statement indicates purpose and primary objective of the business. The basic function is internal- to define the key measures of the organisation's success and its audience are the leadership team and stockholders. Mission statements are the starting point of an organisation's strategic planning and goal setting process. It tries to understand its internal and external stakeholders what the organisation is attempting to accomplish. It helps the organisation to link its activities to the needs of the society and it justify its existence.
A. Be the best employer for our people in each community around the world
B. Deliver operational excellence to our customers in each of our restaurants and
C. Achieve enduring profitable growth by expanding the brand and leveraging the strengths of the McDonald's system through innovation and technology.
"To make people happy"- Walt Disney
Vision statement focuses the ideal image of the organisation in the future. They create a limit between strategic planning and are the time bound, with most vision statement projected for a period of 5 to 10 years. The vision statement elicits both the purpose and values of the organisation. It tries to understand the customers, why they should work with the organisation.
Example of vision statement
McDonald's vision is to be world's best quick service restaurant experience being the best means providing outstanding quality, service, cleanliness and value , so that we make every customer in every restaurant smile".
Vision of Tesco
We talk about every little helps a lot, but it's not just a catchphrase or marketing slogan. It represents everything we stand for, for our people and our customers and how we run our business from china to Chorley.
Evaluate and monitoring process of environmental objective
Tesco aims to apply the principle of sustainable development meeting the present without compromising the future requirements. Some process of monitoring are listed below
Tesco its direction officers and employees are conscious what the laws and regulations relating to the environment.
Tesco will develop, maintain and implement policies, procedures and management systems to assess and monitor on a continuous basis, the environment impact of our operations.
Tesco will set targets annually in order to achieve continuous improvement.
They will incorporate to their environmental practices with the best available technology that is economically attainable.
Tesco minimise the use of all materials and energy and not use any materials from endangered species.
It will aim to apply the principles of reduction, reuse and recycling of its product and their packing.
Tesco informs regularly with their stakeholders, including shareholders, staff and customers on their environmental policy and practices.
Tesco provides information about their environmental policy through their website and channels.
Implementation of the strategy
Time scales for strategy implementation
Strategy implementation depends on the requirement of resources and time. Monitoring process Check whether the strategy implementation is going on the right way, efficient utilisation of resources on time. The time period required for development of a plan is difficult to predict. Actual estimation of market forecasting is generally limited to 3-5 years. Usually economic changes tend to produce 5-10 years of investment activity but some other factors can have immediate impact on demand. The following are the three approaches for timescale.
Long Range(10-15 years)
It includes long term objective for development, desired rate of development to ensure sustainability, justification if heavy investment (eg: airport), measures to protect and enhance the resources. Means of monitoring changes and correcting imbalances. Measures to control the land necessary for future requirements.
Short term (4- 6 years)
Strategic plan of region (structural). Detailed development plan in each area. Establish standards and principles ensuring implementation of necessary projects.
Urgent plan (1-2 years)
Steps to require land necessary for planning. Introducing controls to protect resources. Enforcement against development in default action areas requiring urgent planning.
Factors lead to change the time scales
Change in interest rate
Flexibility of interest rate causes the time laggings of the strategic implementation. So they can not finish their within their time limit.
Changes of taxation rate also affect the organisation's strategic planning and implementation. If the tax rate is stable then it has no impact on the strategic implementation. On the contrary, it elicits any increase or decrease may affect positively or negatively to the organisation's strategic implementation.
Inflation and currency value
Changes of currency value and price may adversely affect the organisation due price changes of its raw materials.
If the organisation accepts new technology then it will increase the efficiency of the organisation when employees are capable to operate them. Otherwise it will negatively affect the organisation because rivals can earn the particular advantage.
Rules and regulation
Sudden changes of government policies may negatively affect the organisation because they cannot change their planning and implementation very quickly. Clear cut efforts to plan change process management goals and objective may help to reduce unforeseen problems of an organisation.
Effect of unplanned change in an organisation
The term "unplanned changes" means sudden or unexpected changes in an organisation. Flexibility of change management is one kind of unplanned change it will adversely affect the organisation as a whole. It may affect instability of setting goals, productivity, efficiency and profitability of the business. Some other changes are flexibility of interest rate, changes of the government rules and regulations, inflation and other economical changes.
Importance of monitoring and evaluation
Monitoring is a systematic collection and analysis of information as a project progresses. The objective of monitoring is to improve the efficiency and effectiveness of an organisation. It is based on aims and activities planned during the formulating phase of work. And it helps the organisation work is going on the right way and evaluation. Apart from this, it checks the resources whether it sufficient or efficient to the organisation.
It compares the actual project impacts against the agreed strategic plans. It focuses on planning, objective and how to achieve these objectives. It can be formative or summative. Formative means evaluate during the life project of organisation. But on the contrary, summative evaluate the completed project or organisation that is no longer functioning.
Monitoring and evaluation check the bottom line of development work.
It helps to review progress
Identify problems in planning and/or implementation.
It helps to make adjustments
Suggests possible solutions
Share information and insight.
In my opinion, if Tesco may use paper bags instead of polythene bags then they can meet their environment objective successfully.
If Tesco may extend their business into non food items then it will increase their profitability and market share than their rivals.
In strategic marketing strategic formulation, evaluation and implementation are the major stages. Formulation is the primary stage of strategic marketing. Planning activities have crucial or committed role in an organisation. Before implementing a project we have to analyse or understand what are major plans and commitment of the business. Without clear understanding strategic implementation face problems. Strategic implementation affects the organisation from top to bottom; it impacts all functional and divisional areas of business. Undoubtedly clear vision is necessary before taking plan and action.