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UNIT7ASSIGNMENT1BUSINESSSTRATEGYTASK1
STRATEGICPLANNING...
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Businessstrategyinvolvesseekingapositionwithinanenvironmentorindustrythatgeneratesasustainable
competitiveadvantage(implyingthatadiversifiedcompanyshouldhaveasmanybusinessstrategiesasithas
businesses)

AnalysingMacroEnvironmentalFactors:
Therearemanyfactorsthatwilleffectthestrategiesanddecisionsofmanagersofanyorganisation.Taxchanges,
newlaws,tradebarriers,demographicchange,etcaresomeoftheexamples.Tohelpanalysethesefactors,wecan
categorisethesemicroenvironmentalfactorsusingPESTELmodel.PESTELabbreviatesPolitical,economical,
social,technological,environmentalandlegalfactors.
PoliticalFactors:Theserefertogovernmentpolicysuchasthedegreeofinterventionintheeconomy.Whatgoods
andservicesdoesagovernmentwanttoprovide?Towhatextentdoesitbelieveinsubsidisingfirms?Whatareits
prioritiesintermsofbusinesssupport?Etc
EconomicalFactors:Theseincludeinterestrates,taxationchanges,economicgrowth,inflationandexchangerates
etc.
SocialFactors:Changesinsocialtrendscanimpactonthedemandforafirm'sproductsandtheavailabilityand
willingnessofindividualstowork.Forexample,inUK,thepopulationhasbeenageing.Thishasincreasedthecosts
forfirmswhoarecommittedtopensionpaymentsfortheiremployeesbecausetheirstaffarelivinglonger.
Technologicalfactors:Technologyisgrowingveryfastnowadays.Newandfastmachineriesareintroducedevery
nowandthen.Newtechnologiescreatenewproductsandnewprocesses.Technologycanreducecosts,improve
qualityandleadtoinnovation.Thesedevelopmentscanbenefitconsumersaswellastheorganisationsprovidingthe
products.
ENVIRONMENTALFACTORS:Environmentalfactorsincludeweatherandclimatechangeinmacrofactors.Change
inclimate,temperaturecanimpactonmanyindustries.Thesecanbenefitoneindustryandcanmakeotherindustry
downatthesametime.Forexampleinhotsunnydays,peoplelovetogooutandvisitbeachesinsteadofgoingto
restaurantsandplaceslikethem.Withmajorclimatechangesoccurringduetoglobalwarmingandwithgreater
environmentalawarenessthisexternalfactorisbecomingasignificantissueforfirmstoconsider.
LegalFactors:Thesearerelatedtothelegalenvironmentinwhichfirmsoperate.Theintroductionofage
discriminationanddisabilitydiscriminationlegislation,anincreaseintheminimumwageandgreaterrequirementsfor
firmstorecycleareexamplesofrelativelyrecentlawsthataffectanorganisation'sactions.

LIFECYCLEANALYSIS:
Generally,themodelassumesthatindustrygrowthfollowsanSshapedcurve.Theflatintroductoryphasereflects
theproblemsofestablishingthenewproduct.Onceproven,growthbecomesexplosiveuntilmarketsaturationis
reached.Salesnowarelimitedbytherateofreplacementsalesandtherateofgrowthofthepopulationinthe
market.Eventuallytheindustrywillcomeunderpressurefromnewertechnologiesandsubstituteproductswith
superiorpriceperformance.
Therearefourstagesinthismodel.i.e.introductionstage,growthstage,maturitystageanddeclinestage.In
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introductionstage,Pioneeringfirmsoftenafterconsiderableinvestmentandrepeatedfailures,introduceproducts
basedonanewtechnology.Coststendtobehigh,andqualitytendstobelowbecauseoflackofeconomiesofscale
ormanufacturingexperienceandtheproductitselfwillbeverybasic.Ingrowthstage,adominanttechnologybegins
toemerge,andcompetitorsstandardisearoundit.Thereislikelihoodofcapacityshortagesalthoughcostsandprices
fallasstandardisationandtheadoptionoflargescalemanufacturingmakespossibleeconomiesofscale.Atmaturity
stage,Overcapacitybeginstoemergeintheindustry,productsdifferentiationdeclinesastechnologicalknowhow
becomeswidelyshared,andpricecompetitionintensifies.Consolidationoccurswithintheindustryasweakerfirms
areacquiredbystrongerones.Salestolessdevelopedmarkets,andthetransferofproductiontolowerlabourcost
economiesaccelerates.Indeclinestage,Theindustrycomesunderpressurefromnewtechnologiesoffering
superiorperformance,althoughthismaybereducedbyfactorssuchashighpriceandswitchingcostsassociated
withthenewtechnology.Pricewarseruptasthesurvivingfirmsfightformarketshareinadecliningmarket,andexits
fromtheindustry,aswellasconsolidationwithintheindustry,becomesmorelikely.

AnalysingMicroEnvironmentalFactors:
Themicroenvironmentconsistsofstakeholderswhoaredirectlyorindirectlylinkedwithanybusiness.For
examplecustomers,consumers,suppliers,shareholdersetc.
Suppliers:Suppliersaremajorpillarsoranybusinessastheyprovideallthematerialsessentialforanybusiness.Big
dealwithsuppliersisthatcantheyprovidehighqualityproductsatlowprice.Cantheydothisreliably?Havethey
gottheflexibilitytorespondtoafirm'sdemands?Whatisthebargainingpowerofthesesuppliers?Howdependent
isthefirmonthem?Doestheirapproachtotheirstaffandresourcesfitwithyourethics?Firmsmustdecideon
issuessuchaswhotousetosupplythem,ontheresponsibilityittakesforthesesuppliersandonthetermsand
conditionsitadopts.Somefirmstakequiteanaggressiveattitudetowardstheirsuppliersbytryingtopushdownthe
pricesanddelaypayments.Othersviewtherelationshipmoreasapartnershipinwhichtheyareworkingtogether
withsuppliersandthatbyhelpingeachotherbothcanbenefit.Theimportanceofsupplierscanbeseenifthingsgo
wrong.
Distributors:Distributorsjobistodeliveryourproducttomarketplacewhereitcanbeselleasily.Imagineyousell
shampoowhatyouneedtosellthisistogetitontheshelvesintheleadingchemistsandsupermarketsbutthis
meansmovingsomeoneelse'sproductsofftheshelves!Sothechallengeistogetstorestostockyourproductsthis
maybeachievedbygoodnegotiatingskillsandofferingappropriateincentives.Thedistributorsusedwilldetermine
thefinalpriceoftheproductandhowitispresentedtotheendcustomer.Whensellingviaretailers,forexample,the
retailerhascontroloverwheretheproductsaredisplayed,howtheyarepricedandhowmuchtheyarepromotedin
store.
Customers:Customersarekeytosales.Managersmustkeeptheneedsofcustomersintheirmindandtryto
anticipatehowthesewilldevelopsothattheycanmeettheserequirementseffectivelynowandinthefuture.Tohelp
understandtheircustomersfirmsareincreasinglytryingtogatherinformationonthemthroughmechanismssuchas
loyaltycards.Bygatheringdataonshoppingpatternsandmatchingthistodataontheindividualshoppersfirmscan
buildupdetailedpicturesoftheirbuyersandthenofferthemappropriatedeals.
Competition:Thesuccessandbehaviourofanybusinesswilldependonthedegreeofcompetitioninitsmarket.In
somemarketsonefirmisdominant.Thisiscalledamonopoly.Ifyouareinamonopolypositionthismayallowyouto
exploittheconsumerwithrelativelyhighprices(assumingyourpositionisprotectedinsomeway)andyoumaybe
abletoofferaninferiorserviceifcustomershavenootherchoices.Inothermarketsafewfirmsdominatethistype
ofmarketstructureiscalledanoligopoly.Inoligopolisticmarketsthereisahighdegreeofinterdependenceandso
firmswillthinkcarefullyhowtheirrivalsmightreacttoanyactionstheytake.

KeyStakeholders,TheirNeeds&Expectations:
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Keystakeholdersofabusinessare
Employees
Customers,suppliersandcontractors
Shareholders
Investors
Communities
Government
Employees:arethemajorstakeholdersofabusinessastheyarestronglylinkedwiththebusiness.Theywantto
workinaplacewheretheycanmeettheirpersonalneedsandwants.Leaderswhocreatejobassignments,work
environments,andvisionshelpemployeesbebothcompetentandcommittedtotheirwork.
Customers:wantleaderstobuildcompellingproductsandservicessothattheycantrustandwhentheydo,
customerswillgiveshareofwallet.Customersarekeytosales.EspeciallyinfastfoodindustrieslikeBurgerKing,we
(employees)havebeeninstructedtofocusonqualityserviceandfood.Customersshouldbesatisfiedatanycost
becausewithoutthem,businessisnothing.Suppliersandcontractorswanttheirloyalconcernwithpaymentofgoods
andprofitrespectively.
ShareholdersandInvestors:arethosewhoboughtcompanysshareandarepartofownershipinthecompany.They
areconcernwithmaximumoutcomeintermsofcashfromprofit.Investorsarethosewhoinvesttheirmoneyintothe
businessascapitaltoearntheirsharefromtheprofit.Investorswantleaderstokeeptheirpromises,developa
compellinggrowthstrategy,aligncorecompetenciestothestrategyandthentoensurethatpeoplearecommittedto
deliveringonthesepremises.
CommunitiesandGovernment:Communitieswantleaderstobuildorganizationsthataresociallyresponsible,
throughhowtheytreattheenvironmentandhowtheyservethelargercommunity.Governmentarelinkedwith
businessastostartabusiness,licenceisrequiredandgovernmentissuelicence.Andfromtheprofitgainedbya
company,apercentageofprofitgoestogovernmentintermsoftaxwhichisusedtobuildinfrastructuresetc.

C)SUMMARY:
TheBurgerKingCorporation(BKC)wasfoundedin1954inMiamibyJamesMcLamoreandDavidEdgerton.
Followingthis,thefamousWhoppersandwichwasintroducedin1957anditquicklybecameoneofthebestknown
sandwichesintheworld.Today,withthecorporationsbrandpromise:Haveityourway,thereare221,184possible
waystoorderaWhoppersandwicharoundtheworld.BurgerKingnowoperatesmorethan11,300restaurantsin
approximately70countries.Foodisnecessaryforhumanstosurvive,butthewastes,chemicalbyproducts,and
inefficienciesinitsproductioncanhaveanimmenseimpactontheenvironment.Peopledemandperfectinexpensive
yearroundfood,whichincreasestheuseofpesticides,herbicides,andpreservativesdepletingthepreciousozone,
contributingtoglobalwarming,andpollutingourlakesandstreams.Tohelpprotectingallthedangerousfumesand
chemicals,BurgerKingisdoingitsbest.Tohelppreventcontaminationandotherdangerousthings,thereare
separatecontainersfordifferentthings.Strategyisaffectedbymajorchangestakingplaceintheenvironmentand
forthosechanges,strategyhastobechangeaccordinglyinordertostayinbusinessstream.Somechangeinmicro
environmentalfactorswillaffectstrategyindifferentways.Ifbusinessislosingcustomersthenmanystrategiescan
beapplieddependingonthelevelofbusinessloss.Pricesofproductcanbedecreased,ordistributionofvouchers
etc.OneofBurgerKingsmostimportanttasksistoensurethatthebusinessiscontinuallymeetingitscustomers
needs.Inordertoachievethis,theorganisationhasaresearchanddevelopmentteamdedicatedtoproduct
improvement.ItsmonoisHAVEITYOURWAY.Itmeansthatcustomerscanhavetheirfoodthewaytheywant,
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withorwithout,moreorlessofanythingintheirfood.

THREETOOLSTOANALYSE,SUMMARISEANDEVALUATE
EFFECTSOFCURRENTBUSINESSPLAN
POSITIONOFTHEORGANISATIONINCURRENTMARKET
COMPETITIVESTRENGTHSANDWEAKNESSESOFORGANISATION
PORTERSFIVEFORCESANALYSIS
ThecompetitivestructureofacompanycanbeanalysedbyPortersfiveforcesanalysis.Itanalysethe
attractivenessofacompanywithinthemarket.Portersfiveforcesmodelis:
Likelihoodofnewentry:itmeansthattheextentstowhichbarrierstoentryexist.Thelikelihoodofenteringamarket
wouldbelowerif:
Theentrycostarehigh
Therearemajoradvantagesforthosefirmswhicharealreadyoperatinginmarketbecauseofexperience
Governmentpoliciesprevententryormakesitmoredifficult
Existingbrandshavehighlevelofloyalty
Powerofbuyers:Thestrongerthepowerofbuyersinanindustrythemorelikelyitisthattheywillbeabletoforce
downpricesandreducetheprofitsoffirmsthatprovidetheproduct.Buyerpowerwillbehigherif
Therearefewormanybuyeroftheproduct
Thebuyerscaneasilyswitchtootherproductsprovidedhighqualityinlowprice
Powerofsuppliers:Thestrongerthepowerofsuppliersinanindustrythemoredifficultitisforfirmswithinthatsector
tomakeaprofitbecausesupplierscandeterminethetermsandconditionsonwhichbusinessisconducted.
Supplierswillbemorepowerfuliftheyarelessinnumberandthesuppliercanthreatentobuythefirmsoitisa
strongernegotiationposition.
Degreeofrivalry:Thismeasuresthedegreeofcompetitionbetweenexistingfirms.Thehigherthedegreeofrivalry
themoredifficultitisforexistingfirmstogeneratehighprofits.Rivalrywillbehigheriftherearelargenumbersof
similarsizedfirm,thecostsofleavingtheindustryarehigh,andthereislittlebrandloyaltysocustomerarelikelyto
switcheasilybetweenproducts.
Substitutethreat:Thismeasurestheeasewithwhichbuyerscanswitchtoanotherproductthatdoesthesamething
e.g.aluminiumcansratherthanglassorplasticbottles.Theeaseofswitchingdependsonwhatcostswouldbe
involved.UsingPortersmodel,firmscangeneratehighprofitiftheindustryis:
Difficulttoenter
Thereislimitedrivalry
Buyersarerelativelyweak

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Suppliersarerelativelyweak
Therearefewsubstitutes

BOSTONMATRIX:
TheBostonMatrixmodelisatoolforassessingexistinganddevelopmentproductsintermsoftheirmarketpotential,
andtherebyimplyingstrategicactionforproductsandservicesineachcategory.
boston_matrix.gif
CashCow:Therathercrudemetaphorisbasedontheideaof'milking'thereturnsfrompreviousinvestmentswhich
establishedgooddistributionandmarketsharefortheproduct.Productsinthisquadrantneedmaintenanceand
protectionactivity,togetherwithgoodcostmanagement,notgrowtheffort,becausethereislittleornoadditional
growthavailable.
Dog:thisisthatproductorserviceofacompanywhichhaslowpresenceinmarket.Thereisnopointofdeveloping
goodsandservicesinthisquadrant.Mostofthecompaniesdiscontinuetheirproductwhichtheythinkfallunderthis
quadrant.Businessesthathavebeenstarvedordenieddevelopmentfindthemselveswithahighorentireproportion
oftheirproductsorservicesinthisquadrant,whichisobviouslynotveryfunnyatall,excepttothecompetitors.
ProblemChild:Theseareproductswhichhaveabigandgrowingmarketpotential,butexistinglowmarketshare,
normallybecausetheyarenewproducts,ortheapplicationhasnotbeenspottedandacteduponyet.Newbusiness
developmentandprojectmanagementprinciplearerequiredheretoensurethattheseproducts'potentialcanbe
realisedanddisastersavoided.Thisislikelytobeanareaofbusinessthatisquitecompetitive,wherethepioneers
taketherisksinthehopeofsecuringgoodearlydistributionarrangements,image,reputationandmarketshare.
RisingStar:'star'products,arethosewhichhavegoodmarketshareinastrongandgrowingmarket.Asaproduct
movesintothiscategoryitiscommonlyknownasa'risingstar'.Whenamarketisstrongandstillgrowing,
competitionisnotyetfullyestablished.Demandisstrongsaturationoroversupplydonotexists,andsopricingis
relativelyunhindered.

SWOTANALYSIS:
Todeterminewhatacompanysstrategyshouldbe,themanagersmustconsidertheinternalstrengthand
weaknessesoftheircompanyandcomparethemwithexternalopportunitiesandthreat.Thisprocessisknownas
SWOTanalysis.
Strengths:areinternalfactorswhichafirmmaybuildontodevelopastrategy.Theymayinclude:
Marketingstrengths
Financialstrengths
Operationstrengths
HRMstrengths
Weaknesses:areinternalfactorswhichafirmmayneedtoprotectitselfsuchas:
Marketingweaknessessuchaslimiteddistribution
Financialweaknessessuchashighlevelsofborrowingandlowratesofreturn
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Operationalweaknessessuchasoldorpoorqualityequipments
HRMweaknessessuchashighrateoflabourturnoverandindustrialdisputes

TASK2STRATEGYEVALUATION
Toachieveanobjective,managersmustdevelopasuitablestrategy.Astrategyisalongtermplansettingouthowan
objectivewillbereached.Forexample,iftheobjectiveistoreducecosts,thestrategycouldinvolverelocatingor
reducingthelabourforce.Iftheobjectiveistoboostrevenue,thestrategymaybetolaunchnewproductsorto
investinabigpromotionalcampaign.Astrategymaybedevelopedbyusingafirm'sstrengthstoexploitthe
opportunitiesthatexist.Forexample,astrongbrandnamemaybeusedtoextendafirm'sproductsintonew
markets.Itmayalsousethesestrengthstoprotectitselfagainstthreatsforexample,aretailermayuseitsfinanceto
acquirekeylocationstopreventacompetitorbuyingthem.Strategiescanbeevaluatedbymanyways.Oneofthe
wayisbyusingPortersFiveForcesmodel.Inthismodeltherearefivedifferentsourceswhicharestrongly
connectedwiththebusinessandtheymustbekeptinmindwhilemakingstrategies.Whilemakingstrategyfora
businessincludeskeepingthosethingsinmindwhichwillruinthebusiness.Forexampleincaseofaretailbusiness,
ifanewretailbusinessenteredin,thenstrategyinthiswillbechangeaccordinglyinthiscase.Secondlyifbuyers
powerisstronginretailbusiness,thenitcouldbeanegativeorapositiveimpactonbusiness.Iftheyarestrongthen
theycanforcedownthepricesoftheproductwhichwilllowertheprofit,sointhiscasestrategywillbeevaluated
verycarefullyaseverystepcanchangethecourseofbusiness.Suppliersarethemajorpartofanybusinessso
keepingtheminmindisanecessarypartinstrategyevaluation.Afirmmayalsowanttoprotectitselfagainstits
weaknesses.Forexample,itmaytrytofindalternativesupplierstoreduceanoverrelianceonaparticularoneit
mayinvestinarebrandingexercisetorepositionitself.Fourthpartisdegreeofrivalry.Thismeasuresthedegreeof
competitionbetweenexistingfirms.Thehigherthedegreeofrivalrythemoredifficultitisforexistingfirmsto
generatehighprofits.Fifthandlastpartisthreatofsubstitute.Thismeasurestheeasewithwhichbuyerscanswitch
toanotherproductthatdoesthesamething.Keepingfollowingthingsinmindwillhelpeffectingbusinessinloss.If
thesecondindustryiseasytoenterinmarket,ifthereisahighdegreeofrivalrybetweenfirmswithinindustry,buyers
arestrong,suppliersarestrongetc.TheimplicationofPorter'sanalysisformanagersisthattheyshouldexamine
thesefivefactorsbeforechoosinganindustrytomoveinto.Theyshouldalsoconsiderwaysofchangingthefive
factorstomakethemmorefavourable.

TASK3IMPLEMENTATION
Evaluatingstrategiesisadifficulttaskbutimplementingtheminaregularandsmoothmannerismorecomplicated.
Theimportanceofstrategyshouldnotbeunderestimated.Changingthepriceofanitem,changingthedistribution
strategyandinvestinginnewequipmentareallimportantdecisionsbutifyouarefightinginthewrongmarketwith
thewrongproductsthenthedetailsarealmostirrelevant.Thestrategysetsoutwhereandhowthebattleswillbe
foughtandagoodstrategyisessentialtobusinesssuccess.Thisinvolvesanunderstandingnotonlyofwhat
happenswithinthefirmbutalsotheabilitytoforecastchangesintheexternalenvironmentandtheirsignificance
successfully.
Thisimplementationisinfactalandmarkwherevariousorganizationstendtofalter.Theextensiveresearchand
resourcesusedupforthedraftingofstrategicplansoftenmakeorganizationsbelievethatwhatevertheyhave
understoodanddevisedistheoptimumandthereforerequiresnosecondthoughts.However,whathasbeenignored
isthefactthatplanscanbetestedonlyiftheymeetactualusage.Onlyplanningortheoreticalapplicationcannotbe
guaranteecompletesuccess.Actualimplementationyieldsthetruepicture.Abusinessplanisthetextualversionofa
strategy,asitincludespertinentinformationregardingthecompany,including:visionandmissionstatements,
measurableobjectivessupportingthevision,actionabletacticsmeetingtheobjective,resources,milestonesand
timeframes,accountabilityandroledesignations,aswellasinternalandexternalrisks.Thebusinessstrategyisnot
evergreenandshouldbeevaluatedroutinelytoensurethecompanystillhasthecompetitiveedge.
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Abusinessplanincludestheprimaryandsecondaryobjectivesofyourorganization,ananalysisofcurrentpolicies
andprocedures,andthedevelopmentofnewpoliciesorprocedurestocorrectweaknesseswithintheorganization.
Strategyisfirstlyintroducedtolowermanagersandsupervisorssotheycanactonitandtelltolowerstaffinorderto
workonit.Iflaunchinganewproductorreducingthepriceofanotherproductbecauseofsubstituteavailablein
market,allthestaffmustbeawareofthat,afterthatthenewpromotionorproductordiscountedproductwillbe
advertiseinanattractivewayinTelevision,radioandbydistributingleafletstoletpeopleawareofit.Focussingon
excellentcustomerservicewilldefinitelyhelpimprovethebusinessbecausetheservicegiventocustomerwillbring
himbackagain.
Qualityassuranceoftheproductwillincreasethedemandofproductandwillincreaserevenue.Introducingnewand
latesttechnologyinthecompanywillsavealotoftimeandgiveresultmuchfasterandeffective.Givingtrainingtoall
newandoldstaffaboutnewtechnology,newproducts,andeverythingrelatedtobusinessandplanwillhelpstaff
deliveringabetterqualityservicerequired.
Forimplementationofplan,moneyisthemajorandimportantresourcerequired.Soinordertogetmoneythereare
manyways,sellingsharesofthecompany,retainedprofit,profitintermsofcapitalcanbereinvestedandbytaking
loansfrombanksetc.Afterimplementingtheplan,waitfortheresultanddosurveys.Droporputsmallquestionnaire
thatwillhelplettingyouknowhowgoodisthestrategygoing.Takingcustomersfeedbackandevaluatethestrategy.
Ifitisgoingthewaywewanted,thenthereisnoneedtochangeandifitsnot,thenreevaluateandcheckwhere
thereisamistakeandsortitout.

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