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The world is like a unique global village in the recent era. More and more countries are adopting the free market economic structure to open the gate for the foreign companies to pursue the business in their home market. As the consequences there are more foreign companies in each of the domestic market. Therefore there is a huge competition among the organisations. They have to do everything to survive and to gain the competitive advantage. Communication with the consumers through the advertising is essential for products and services to be sold. The more they are communicated, the more will be their demand. To alteration approaches or performances, to development practice or policy, you need to connect with the persons and groups that matter.
“Business strategy is concerned with the match between the internal capabilities of the company and its external environment.” (Kay in Armstrong, 1999) From these we conclude that business strategy is the process of creating a strategy to meet the market requirement and providing the goods or services accordingly. In the present market scenario there is a gap between the external environment and the business, so in order to cope with these scenarios/gap the business develop strategy both to fight with internal and external environment. Strategy is the essential step of the any business. Strategy shows where the business is at present, at which position you would like to reach your organization, what will you do to achieve your goal. Most of the manager of organization able to know that at which position they are in at present. In the organization so many strategies are use but sometime strategies are good and terrible for the organization. Strategy has advantage as well as disadvantage but its all depend on the manager which strategy he or she is uses.
Scope of the organization
Scope of the organization means the nature of the business. How the organization do the business? Their business is domestic or international? Business going to sell one product or so many products. Here I give one example of the FedEx Company. FedEx provide Domestic as well as International service for shipping , logistics and supply chain management. FedEx Express wants to transform the company from a small package delivery service into the major force in overnight delivery. Here, need to decide direction for the future so, to stay in market it required to do continue grow and success.Overnight delivery service would become an important part of doing business. For FedEx it had taken more than 3 years for the concept which gives profit to the company. The “Express Mail” service was challenged; it could be challenge in terms of price and service. So, FedEx has to always focus on their service which provided by United Parcel Service (UPS). they introduce MCI mail system which could send important documents within hours instead of days.
FedEx take ZapMail facsimile service, to compete with MCI mail system. Zapmail service stay ahead in competitive market but problem arise like number of business has to buy their own FAX machines for this service. Afterwards FedEx discontinue with them.
FedEx goal is to start business globally but there are no. of difficulty arise like specific foreign delivery route, government policies and restrictions, couple of high cost of flying small packages in planes, created spotty network of service running at high cost. So, to overcome these problems they acquire Tiger International, the world's largest cargo hauler. This gives direct advantage to FedEx in such nations like Australia, Malaysia and Philippines.
Before starting any business the owner has to check what his responsibilities towards the business are and also has to see how the business is going to affects his business. We do this check with the help of the PESTLE analysis, where a both internal and external environment affects our business.
Now as per Peter Fitzroy and James M.Hulbert we are going to have look on PESTLE
Political environment is depending on the government. In this environment government build the policy for all the organization. i.e. duty policy, foreign trade regulations and so on.
Every business needs to be economically stable. And more they do business to achieve economic gains. So, the maximise these gain the business needs to company with market exchange rates, interest rates, credit availability, cost of living.
The product should be made in such a way that it can be socially accepted and it should not affect the sentiments of the society, should not effect the heath of the consumers and more over it should also check the population growth rate.
Now in the present generation there are many updates in the technology sector. The things that was not possible to do before 10 years are now able to do very easily at our finger tips. These checks are important so that our competitor cannot over take our business in on the bases of technology. For example Bluetooth was not there in mobile before 5 years, there were no wireless remote control for the play station, and there were no online gaming zones available.
Legal changes are the changes that took place in our county regulation. The county at certain intervals keeps changing the legal rules for any firm. The county may update the rules regarding the plant layout, size of the firm, labour unions etc.
Activities that took place inside the organisation have a indirect impact on the environment. So the business has to see that I does not at any point it does not destroy the external environment. Moreover there are certain standards set by the government for the business activities so we have to check that we do maintain that level settled by the government.
Here is an example of PEST analysis of the Unison limited. We will try to relate various aspects with the PEST. Here first is the political factor where the government has framed some rules for the migrants that come to UK for work purpose. So Unison also has to accomplish with this rules and regulations. From the economy point of view many people migrate from a underdeveloped country to a developed country. The minimum standard pay in Poland was £500 while in UK was 2500£ so people can have abetter life style. More over the economy benefits that migrants receive are also more useful to them. A number of social factors also attract many people to come to UK for work. As a result to this attraction there is a population growth and this population growth result in more demand of social needs. The change in technology refers to the automation of most of the activities of the production unit and the development of the internet; these two things have completely changed the look of the business and have also made the business process very easy.
So by the above PEST analysis I recommend that PEST plays an important role in the strategic development of the business and also helps the organisation to fight in this challenging business environment.
A competitive advantage means to give something to the customer in the better quality, lower cost or offering superior profit and facility more than its rivals. The objective of any business strategy is to reach sustainable advantage. [quickmba.com, 2007]
Cost advantage: [quickmba.com, 2007] when we are doing the business and our rivals are doing the same business at that time we distribute same quality of the product or services as rivals but in the lower prices than the rivals.
Differentiation advantage: [quickmba.com, 2007] the process of differentiating your product with your competitor on the bases of product size, design, quality and composition is called product differentiation.
Here is an example of competitive advantage Carphone warehouse and Argos both organization has same business. Both organizations sell the mobile. But in carphone warehouse all the mobiles are cheaper then the Argos. In carphone warehouse they do not sell only mobile but also sell sim card of different network like Vodafone, orange, virgin and so on. While in argos they only sell mobile phones and that too at a higher price. Mover over carphone warehouse also provides insurance and warranties on your purchased product at very low prices than argos. Here carphone warehouse uses two strategies low cost strategy and customer specification strategy. With these strategies car phone warehouse selling more mobile then Argos.
From the above example I found out that carphone warehouse has adopted cost leading advantage while is very difficult to obtain in the present economy. Moreover it has also been able to differentiate its products from argos. So, to conclude it I would say that a proper strategy is very necessary to face the present challenging business
There are various types of needs. All this need are to satisfied at and when required. The can be explained as follows.
Whenever a consumer pays a price for the purchase of the product he has some expectation from the product. The business has to identify what are the consumer needs and at what level would the consumer be satisfied. Business needs to find out the answers to the questions with the help of survey or interview and on the bases of these results the product should be prepared accordingly.
The only point of our producing the product is to satisfy the end users of the product and to gin maximum profit. But we also have to take into consideration the interested parties in our product. [businesslink]
Not only we have to look at our sales figures but we also have to keep a check on the competitor's sales figures. This check can be put with the balance available on the various sources. You also have to check that the product provided by you is best in all way in quality, price and shape. Your product should be able to replace your competitor's product.
Apart from the competitor before developing a new product we have to plan out the following things:
- How and by what means were the costumer's needs satisfied previously.
- When can you make a costumer switch to your product?
- What are the after sales services provided on your end?
- What are risks involved in the new product development and is the business aware about it. [businesslink]
Are the people who supply you raw materials, labours, finance at regular intervals so that you can run your business smoothly. These suppliers do expect a certain type of return from you.
It is our duty to make these suppliers happy at nay cost and we can do these by the follows:
- Make the payments to the raw material provider on regular time.
- Make the bank interest paid regularly.
- Employing more and more labourers.
- Providing dividends to stakeholders at regular intervals.
Here I can relate this market needs with the following example.
During the previous years there was the facility of internet available but that internet connectivity was very slow, the costumer needs was that they want to have high band with connectivity which can make faster downloads. So the SKY took this opportunity and then they did the market research about the internet requirements of the costumers. After many research days they developed the highest band width internet.
So by this example I came to know that how the costumer needs are met and presented. So in this way I suggest every business to adopt a strategy that can help the business to fight in the challenging business environment.
“Any individual or group or parties who are interested in the business profit and working pattern for there own personal gains are termed as stakeholders”
Generally two type of the stakeholders first is internal stakeholders who are woke in the organization for example employee, manager and so on. Second stakeholders who are related to external factor for example government, bank, shareholder and so on. [tutor2u.net, n.d].
Shareholders means the person who is invest his/her money in the organization as share. [tutor2u.net, n.d] For example BT group wants to launch new mobile services. For that they need money so BT group issue shares in the market and they get the money from the shareholder. BT group give dividend to shareholders to buy shares. Share holders are the part owner of the BT group.
Employees are the internal part of the organization. Employees are the backbone for the organization. So as the employees being is one of the strong person for the company success, the company should foresee what the employee foresee deserves with regards to their salary, promotion, job security, health or other services and so on. [tutor2u.net, n.d]
Customers are like God for the organization. Without customers business is zero. So it is the organization responsibilities how to attract the customers. An business has to prepare a product keeping in mind costumers requirements. Customers need is to buy high quality of the products in low prices. They also need better services and accurate information. [tutor2u.net, 2009]
If any firm wants to start business than they have to take the permission from the government. Firm must have to pursue the rules of the government. If the firm wants money from the government than government give the money but the firm has to pay interest for that money. Government doesn't concentration in the profit of the firm.
Here I have explained BMW case study related SWOT analysis and Porter five forces.
BMW the only company that strictly concentrates on premium standers and outstanding. Quality for all it brands. Across the universe it has brands like mini and Rolls Royce motor cars and it has been choosy in premium segment. International automobile markets in 2000 BMW launch the BMW1 series introducing expansion of the model for the lower middle class. In 2003 introduces the new model for Rolls Royce motor cars to know current market position of BMW we can have look or BMW SWOT analysis where in we will see where improvement is require within the business and what are the external threat. It may face as well as what are the new opportunities available for BMW in short and medium periods.
- BMW has different rang of product.
- BMW has enough liquid case flow.
- Continues high profit.
- BMW has best premium quality manufacture.
- BMW has proper application of resources.
- It can introduce new product making a market shift in the whole world.
- To meet customer needs for more comfortable and cheap car.
- They only weakness that BMW has are its brands high prices value.
- Changing laws in environment pollution.
- Customer has lack of knowledge towards brands and technology.
- Competition with new and old company.
- Fluctuation in prices of fuel.
- Changing demand of oil across the whole world.
- Global economic recession.
- High competition between brands for can and resources.
We will try to have a look potler five forces model.
- A potential entrant is not a significant threat for BMW.
- Many of the segment were already populated
- High prices of different brands ex. Audi, Volvo.
- Brands like ford entering the market with low cost pricing strategies.
2) Substitute product
- Substitute for car were available ex. Motorbikes, boats.
- Many people choices to select leisure product ‘cruises'.
3) Power of buyers
- Many people has limited budget to buy a car.
- BMW had no area for bargaining.
- Car Rental Company played an important role.
4) Power of suppliers
- Good relationship has to be maintained with suppliers.
- Suppliers provides customer made
5) Competitive rivalry
- BMW has high level of competition between the other brands.
- No changes of product
BMW to over come is weakness of management sold rover before it resulted potential threat. BMW to over come it's conventional design. Subsidiaries its design by giving an emotional message of ‘customer bondage' hence they had a slogan for its customer ‘ultimate driving machine'. The market diffraction was a big concern EU. Hence BMW adopted the concept of market penetration and new product development. Moreover due to the labor laws of EU BMW developed production unit. In far east countries to gain cheap labors.
From the above case study I concluded that BMW though being a big brand. It had some weakness to over come this weakness it had adopted different business strategy at different point of time those strategy are well reflected in the above case study. During the time when BMW did not had enough cash flow it sold out it rover group as a result there was a strong financial resources in terms of positive flow. When there was tough competition for brands to earn profit they adopted the police of market penetration and when it found that there was cheap labor available in east countries. It shifted production unit to that places. It use it brand image to increase the market share to walk hand in hand with the changing technology. It started training it's labor for the same. [ukessays, 2005]
So we can say that BMW to become a leading brand in present economy had done its PESTEL analysis and prepare the strategies plan to over come its weakness and to match the present business challenges. So it adopted proper strategy.
In this report I have tried to critically explain about the business strategy followed by various business units for their survival in this challenging business environment.
I have tried to explain how an strategy guides the organisation top its goals and it is important to develop a long term strategy .And I have focused on the role of PESTLE, how its helps the business to react in this challenging business environment.
I have also tried to explain the role of consumers, competitor, suppliers, in this environment and how there needs are meet by the business.
Moreover there are stakeholders who hold the most reputed place in any business, it is necessary to have fulfil the requirements of this stakeholders as these stakeholders are people or organisation or institute which provide finance, raw materials, labour, etc. whenever we require it. And we cannot rely that the business environments will always be in our favour so in unfavourable condition we need to take there help.
Hence at the end I would conclude that strategy is the scope and direction which helps the business to attain advantage through optimum utilisation of resources and moreover satisfying the market needs and fulfilling stakeholder's expectation one business can over come this challenging business environment.