A STUDY ON STRATEGIC PLANNING AND IMPLEMENTATION

Strategic Management:

According to Chandler, “Strategy can be defined as the determination of basic long term goals and objectives of an enterprise and the adoption of the courses of action and the allocation of resources for carrying out these goals”. In simple words, Strategic management is the tactical action in various functional areas of the company to attract the market towards its product and business units.

Company Profile:

AAA limited, which is originated in the late 1960’s is said to be one of the most well known financial lending company having its branches to the total of 23 with in the country. The business is all about financial lending for heavy commercial vehicles as well as medium commercial vehicles. Taking in account the departments that operate in this company each department has its own reason for existence and play a major role in the business as interdependency is highly present. The following departments have a direct contribution to the business and thus shortly discussed.

CARE – Customer Acquisition & Retention Dept:

This department is wholly responsible for generating lead for finding out potential customers in the market and also to sell the products of the company. Marketing information systems are used up to a greater extent as the study is confined to human resource information systems the discussion further is thus limited.

CAP – Customer Appraisal Process: This department is wholly responsible for appraising the potential customers demand for the loan and hence contributes for further business.

CAMP – Customer Asset Management Process: This department is responsible for collecting the lended funds and ensures atmost retention of existing customers and proper receivables management on time.

HRD – Human Resource Management Department

Attracting, Training, developing, retaining competent and productive people is the basic reason for existence of this department and hence this mini – case study deals with the information systems that are highly reliant on the entire human resource management process.

Electronic Data Processing: This case study is all about the integration of the E.D.P department with that of all other departments in the company. This mini case study examines the existing bonding that exists between the H.R department and the company as a whole. And hence they are responsible for maintaining proper records for all the process of human resource process through proper management and effective and efficient use of information is the question here.

Strategic Management & Implementation Team: As most of the companies do have a strategic team this company is said to have an active team of members involving in the strategic formation and implementation.

Corporate Values

Customer orientation

Clearly communicate mutual intentions and expectations Listen and respond to our customers, suppliers and stakeholders Deliver innovative and competitive products and services Make it easy to work with us Be vendor of choice

Results orientation

Set challenging and competitive goals Focus on output Assume responsibility Constructively confront and solve problems

Execute flawlessly

Quality

Achieve the highest standards of excellence Do the right things right Continuously learn, develop and improve Take pride in work

Risk taking

Foster innovation and creative thinking Embrace change and challenge the status quo Listen to all ideas and view points Learn from success and mistakes Encourage and reward informed risk taking

Great place to work

Be open and direct Promote a challenging work environment that develops the workforce Work as a team with respect and trust for each other Recognize and reward accomplishments Manage performance fairly and firmly Be an asset to Intel’s communities world wide

Discipline

Conduct business with uncompromising integrity and professionalism Ensure a safe, clean and injury-free workplace Make and meet commitments Properly plan fund and staff projects Pay attention to detail

Structure of Strategy:

The strategic structure of AAA limited is

1. Internal Scanning2. Strategic formulation 3. Strategic implementation4. Evaluation and Control5. Feed back/ Learning process

The flowchart which depicts the structure is as follows:

This is the structure of strategies of AAA limited and in the below session we shall have a discussion on this part one by one.

Internal Scanning:

Internal Scanning is an overview/analysis on the industry, organization, competition and functional areas with its internal strength and weaknesses and external opportunity and threats. This includes industrial analysis and organization analysis. One of the approach of industrial analysis is Porter’s five force model.

Porter’s Five Force model:

This theory deals with Industry analysis and Business strategy development, which was published in the year 1979 by Michael E Porter of Harvard Business School.

According to Porter, the collective strength of these factors determined the ultimate profit potential of the industry where profit potential is measured in terms of the long-run return on investment of capital.

As the name suggests the industry has five forces from internal and external environment they are depicted below.

Industry Competitors

Rivalry among Existing Firms

Industry Competitors

Rivalry among Existing Firms

Potential EntrantsPotential Entrants

BuyersBuyers

Other StakeholdersOther Stakeholders

SuppliersSuppliers

SubstituteSubstitute

Threat of Substitute of product and services

Bargaining power of Buyers

Threat of New Entrants

Relative Power of Govt

Bargaining Power of suppliers

Ist threat – New Entrants: The entrance of new customer poses high capital expenditure and confidence of customers so the market might become sensitive.

IInd threat – Substitutes: Many retail companies are available as a substitute of its products.

IIIrd threat – Bargaining power: As this industry has very strong competitive rivalry the bargaining power is also strong enough.

IVth threat – Suppliers: They have suppliers through out the world. Due to dual sourcing strategy the threat is low in this industry.

Vth threat – Stakeholders: Stakeholders are the relative power of Unions, Government, etc. as a financial servicing company AAA limited is having the threat the regular check of Government through audit.

Strategy formulation:

Strategy formulation is often referred to as strategic planning or long-range planning and is concerned with developing a corporation’s mission, objectives, strategies, and policies. It begins with situation analysis: the process of finding a strategic fit between external opportunities and internal strength while working around external threats and internal weaknesses.

Types of Strategies:

Business firms usually consider three types of strategies and the Company is said to follow any or many of these types and formulate the strategy to capture the market in wide range.

Corporate Strategy Business Strategy and Functional Strategy

Corporate Strategy:

Corporate Strategy provides the overall direction of the organization in terms of its general attitude towards growth and management of business. Typically, they fit in three main categories of stability, growth and retrenchment.

Growth Strategy:

The company is having an excellent growth in its life span of 98 years. Its present growth rate is 11.9% and the rate of increase in the year 2009 is 2.16%.

Diversification Strategy:

Since from the foundation of the company, they have a strategy to continuously diversify the business in terms of product and market location. Starting as a small store now they have globally diversified by capture foreign markets.

To prove the growth of the company, BCG growth strategy is been explained about the company market and its growth range.

In this model the company’s SBU’s are classified into two dimensions:

Market share on the Horizontal axis: This dimension serves to measure the strength of the market position of the SBU.

Market Growth on the Vertical axis: This dimension provides a measure of market attractiveness and can identify its capacity to diversify as per its growth.

Market Share High Low

Mar

ket G

row

th

L

ow

Hig

h Stars

(Financial service) Question Marks

Cash cows

Dogs

(Food and Clothing)

The financial service industry of AAA limited is start 30 years before. Now the financial service is enjoying ‘Star’ phase. In the starting of the business or product the particular SBU is said to have high growth rate in the competitive market where they are relatively strong than their competitors. In order to sustain their growth they may need heavy investment frequently. Later on automatically their growth will go slow and they their market share also will be low, which leads to cash cows.

As the Food and Clothing of AAA limited is focused on differentiation generic strategy, its market share is low with low industry growth. Thus the product is facing ‘dogs’. The company has to renew strategy to raise its share and growth thus it can be turned as ‘star’. But it is weaker with both the key factors so its expectation to be a ‘star’ is very less.

Business Strategy:

Business Strategy is the strategy followed at the business unit or product level. It normally aims at improving the competitive position in the market served by that business unit. Business strategy purely deals with the companies’ strength, weaknesses, threat and opportunity of the company posed by internal and external forces. In business strategy SWOT Analysis is a basic analysis based on which the company can make effective decision on strategy.

SWOT Analysis is an analysis of a company’s internal and external environment in order to identify its Strength, Weakness, Opportunities and Threats.

Strength and Weaknesses can be identified by an internal analysis of the corporate. This will bring a better understanding that Marks and Spencer is strong enough or where is requires improvement within the business.

Opportunities and Threats can be identified by an external analysis, i.e., by an overview from outside the company. This helps to understand the availability of new opportunities of the company and its threats forces by external environment, in the short and medium term.

The SWOT of AAA limited is:

Strength

One of the Top Retailers in UK. Diverse ranges of Products Brand Image Large number of customers Financially strong 80000 numbers of talents Globalised supplier chain

Weakness

Financial hindrance Finance are new products Product price Competitors products Substitutions

Opportunities

Variety of new products Innovation as corporate value Diversified products Entrances of free new customer Overseas Supply chains Globalized market

Threats

Competition Rivalry Volatility in Price of raw materials Political Force Market shift to Globalization Strategy

Functional strategy:

Functional strategy refers to the approach in a functional area to achieve corporate and business unit objectives. It is concerned with the development of a distinctive competence to provide an organization or a business unit with competitive advantage.

Market Strategy:

AAA limited poses a wide market where 21 million people visit the company in a weak period.

Food products are procured from UK and Europe territories Atmost 90% of the non-food products are procured from foreign market including India,

China, Bangladesh, Turkey and Sri Lanka territories.

Initial Strategy: Primarily the strategy of Marks and Spencer’s focus are,

To expand product and to reach the market

o by exploring new opportunities and

o by establishing a strong brand image

Recent Strategy: In line with the initial strategy, the company is now emphasizing on expansion in Eastern Europe and Asian markets. The company is exploring new businesses inspite of expanding the product portfolio.

Strategy Implementation:

Strategy implementation is the sum total of the activities and choices required for the formation of a strategic plan. It is the process by which strategies and policies are put into act through the development of programs, budgets, and procedures. Although implementation is usually considered after strategy has been formulated, implementation is a key part strategic management. Strategy formulation and strategy implementation should thus consider as two sides of the same coin.

Evaluation and Control:

Evaluation and Control information consists of performance data and activity reports. If undesired performance results because the strategic management processes were inappropriately used, operational managers must know about it so that they can correct the employee activity.

Top management need not be involved. If, however, undesired performance results from the processes themselves, top managers, as well as operational managers, must know about it so that they can develop new implementation programs or procedures. Evaluation and control information must be relevant to what is being monitored.

Feedback/Learning Process:

Task – 2

Social, Cultural and Ethical Background of the AAA limited:

An effective tool to understand the background of a company is PESTLE analysis. It is an analysis of factors like Political, Economical, Social, Technical, Legal and Environmental issues which will affect the company positively and/or negatively. Let us see the PESTLE of AAA limited.

Political: Following the European Integration and Free Trade Agreements, the market is let open for the British Companies to invest in Eastern Europe territories. AAA being a British company started to globalize and diversify it business to Europe and UK market during this period. But Tesco and Lidl have already captured maximum of the market in the same period.

Economical: Retail sectors are highly prawn to recession and sensitive enough to changes in interest rates. Economically Marks and Spencer have faced depression many times during the event of 9/11 and economic recession. Whole economy is collapsed and the market too heavily suffered. After the post 9/11 now the consumers are become optimistic and this make again the retail industry is booming.

Social: Social issues are concerned to changes in consumer taste and lifestyle, which might give opportunity or pose threats. Company enjoys opportunity when new market is open and new customers enter into the company. Threats are the variability in social acceptance to alcohol. As Marks and Spencer is giving importance to CSR activities it gained opportunities from its stakeholders.

Technical: Technical issues are that now the management is following paperless operation, online trading and it involves certain changes in retailing methods of sale of clothes. These technologies are undertaken by IT system which benefits the company to work flexibly and security.

Legal: All kind of companies have certain legislation to be followed for the sake of health and safety both in terms of consumer rights and production of own natural renewable resources for producing clothes.

Environmental: The renewable sources of resources used in producing clothes are cotton and wool, which is eco friendly. With regard to this Marks and Spencer have made a five year of Plan A to reduce the waste.

Mission Statement:

The mission statement of AAA limited can be viewed in three parts which include:

Vision – To be the Standard against which others are measuredMission – To produce quality products and best serviceValues – Quality, value, service, innovation and trust.

This mission statement has been framed in the year 1911 i.e., that is since the start of the company AAA have worked to achieve this mission. AAA have kept to their even though they have faced certain ups and downs.AAA is one of the top retailers in UK, but yet they have to compete with many retailer giants like tesco, M&S, Lidl, etc.

Objectives of Intel

The objectives of Intel is to extend the silicon technology and manufacturing

Evaluation and Control:

Evaluation and Control information consists of performance data and activity reports. If undesired performance results because the strategic management processes were inappropriately used, operational managers must know about it so that they can correct the employee activity. Top management need not be involved. If, however, undesired performance results from the processes themselves, top managers, as well as operational managers, must know about it so that they can develop new implementation programs or procedures. Evaluation and control information must be relevant to what is being monitored.

Evaluation Process:

The process of evaluation is as follows,

1. Determine what to measure: Top managers and operational managers need to specify what implementation process and results will be monitored and evaluated. The processes and results must be capable of being measured in a reasonably objectives and consistent manner. The focus should be on the most significant elements in a process the ones that account for the highest proportion of expense or the greatest number of problems. Measurements must be found for all important areas, regardless of difficulty.

2. Establish Standards of performance: Standards used to measures performance and detailed expressions of strategic objectives. They are measures of acceptable performance results. Each standard usually includes a tolerance range, which defines acceptable deviation. Standards can be set not only for final output, but also for intermediate stages of production output.

3. Measure actual performance: Measurements must be made at predetermined times.4. Compare actual performance with standards: if actual performance results at within

the desired tolerance range, the measurement process stops here.5. Take corrective action: If actual results fall outside the desired tolerance range, action

must be taken to correct the deviation. The following questions must be answered:

Is the deviation only a chance fluctuation? Are the processes being carried out incorrectly? Are the processes appropriate to the achievement of the desired standard? Action

must be taken that will not only correct the deviation, but will also prevent its happening again.

Who is the best person to take corrective action?

Flowchart which depicts the evaluation process

Task – 3

Strategy Implementation:

Strategy implementation is the sum total of the activities and choices required for the formation of a strategic plan. It is the process by which strategies and policies are put into act through the development of programs, budgets, and procedures. Although implementation is usually considered after strategy has been formulated, implementation is a key part strategic management. Strategy formulation and strategy implementation should thus consider as two sides of the same coin.

Action Planning:

Activities can be directed toward accomplishing strategic goals through action planning. At a minimum, an action plan states what actions are going to be taken, by whom, during what timeframe, and with what expected results. After the program has been selected to implement a particular strategy, an action plan should be developed to put the program in place.

AAA limited is a forward vertical integration (relatively balanced give and take of cultural and managerial practices) through the acquisition of a retailing chain as its growth strategy. Now that it owns it own retail outlets, it must integrate the stores into the company. One of the many programs it would have to develop is a new advertising program for the stores.

Reengineering and strategy implementation;

Reengineering is the radical redesign of business processes to achieve major gains in cost, service or time. It is not in itself a type of structure, but it is an effective way to implement a turn around strategy.

Reengineering strives to bread away from the old rules and procedures that develop and become ingrained in every organization over the years. These may be a combination of polices, rules and procedures that have never been seriously questioned because they were established years earlier. These may range from “credit decisions are made be the credit department” to “local inventory is needed for good customer service’. These rules of organization and work design were based on assumption about technology, people, and organizational goals that may no longer be relevant. Rather than attempting to fix existing problems through minor adjustments and fine-tuning existing processes, the key to reengineering is to ask if this were a new company, how we would run this place.

Plan to implement the strategy:

1. Organize around outcomes, not tasks: AAA limited can design a department’s job around the company with an objective or outcome instead of a single task or a series of tasks.

2. Have those who use the output of the process perform the process: with computer-based information system, processes can now be reengineered so that the people who need the result of the process can do it themselves.

3. Subsume information-processing work into the real work that produces the information: Departments that production information can also process it for use instead of just sending raw data to others in the organization to interpret.

4. Treat geographically dispersed resources as though they were centralized: with modern information system, companies can provide flexible service locally while keeping the actual resources in a centralized location for coordination purposes.

5. Link parallel activities instead of integrating their results: instead of having separate units perform different activities that must eventually come together, have them communicate while they work so that they can do the integrating.

Developing Dissemination, coordination and commitment:

AAA limited has to go for restructuring the organization chart to encourage the communication facility so that they can meet the coordination within staffs.

The company has to conduct certain programs on effective working, organization have to go for learning organization program so that the staff can be seen committed.

Conclusion:

Thus I would like to conclude that AAA limited is having a very good growth due to the growth strategy. Another impressing strategy that they are following is