INTRODUCTION TO STRATEGIC PLANNING
The plan of action or procedure that assists the business unit in attaining stated objectives and goals is mainly known as the strategy. If the business strategy that is framed by company is effective then organization will attain successful position among rivalries (Meyer, 2003). The present report is on UK's top supermarket chain that is Asda Stores Ltd. The supermarket chain mainly deals in selling the variety of grocery products, home ware and clothing etc. Asda is being acquired by the American retail company that is, Walmart in the year 1999 and became the UK's third largest supermarket chain. The company currently operates more than 568 stores in different locations to serve their market customers.
The main objective of report is to understand the process of strategic planning through measuring the vision, mission and objectives of organization. The report will also measure the strategic position of company by conducting the organizational and environmental audit. Along with that, the report will also analyse several strategies and will select the appropriate strategy for organization so that they would easily accomplish their objectives.
LO1 UNDERSTAND THE PROCESS OF STRATEGIC PLANNING
1.1 Business missions, visions, objectives, goals and core competencies
Asda stores Ltd. occupies the second position in UK's retail sector with having the operating income of £1 billion. The organization along with other clothing brand, that is, George is capturing the clothing market of UK sector. The role of strategy is important for each and every organization as it depicts the path for business to attain goals. Main key terminology used in the strategy includes:
Mission: The mission statement mainly focuses on current activities for which company exists in the market. The Asda's mission is to become the top retail supermarket chain in UK that mainly serves the needs and requirements of customers (Strategic Planning Tools, 2015).
Vision: Vision is termed as the predicted long term future plan for organization so that they would run their business in future marketplace among their rival companies. The vision statement of Asda is to be at the top position in delivering the cost effective products to target market customers.
Objectives and goals: Asda mainly focuses on three objectives or beliefs that are to render the quality products to the customers, respect the individual customer’s requirement and third objective is provide excellent service. However, main goal of Asda is to save the customer’s money by providing them low price products and services (Wootton, 2013).
Core competencies: The UK retail market is captured by two giant supermarkets that are Tesco and Sainsbury. For competing in this market, core competencies of Asda are to present new offers of products with innovative features for their customers so that they would ensure the loyalty of customers. Another core competency of organization is that it is having effective marketing strategies as compared to their rival companies.
1.2 Factors that have to be considered while formulating strategic plans
Formulating the strategic plans is effective for Asda as it will assist the company in achieving objectives and in generating profit for the company. IN order to formulate the strategic plan for company, they need to consider several factors that are:
Availability of the resources: While formulating strategic plan for Asda, it is essential to determine adequate availability of various resources like physical, technological, human etc. so that they would formulate an effective plan for company (Auzair and Langfield-Smith, 2005). If the resources are short-handed then it will result in gaining the failure for Asda and they will not be able to meet the expectations of market customers. It is also important that the company must possess capable and qualified personnel as they are responsible for framing effective policies for Asda.
Needs of the customers: While formulating the strategic plan, it is also essential for company to ensure the strategic thinking about expectations and requirements of customers so that they would design the proper strategic plan. Customers are the one that purchase the products and services of Asda and contribute in generating revenue for the firm. Hence, the requirement of customers should be analyzed while designing strategic plan for the unit (Astrachan, 2010).
Maintaining competitive advantage: Another factor that must be considered at the time of designing strategic plan for Asda is that they should maintain competitive advantage in the market. Maintaining competitive advantage among their rival companies will benefit Asda in attracting large customers and even for gaining higher profits of the firm.
1.3 Effectiveness of techniques that are used while developing strategic plans
While, developing the strategic plan Asda must analyses the Boston Consulting Group model (BCG) matrix as it will assist the company in assigning the resources efficaciously so that it will result in enhancing the market share of the company. It will also help in rendering the indication of the generation of total cash and also consumption of the cash (William, S., 2013).
Cash cows: Cash cows emphasis on creating huge Cash. Asda should use up little investment funds in the marketplace as because small investment funds should be worthless in the wholesale industry with the low growth rate.
Dogs: In this Asda should yield hardly currency to hold its position in the market UK. This point is also known as the break-even point as Asda features the absolute low market share and even the low growth rate that results in neither generating and consuming the cash (Nunnington, 2010).
Question marks: In this area Asda would broadly increase with consuming huge amount of cash with the low market share. Here, the company need to examine the marketplace area to find out that they are worthy in investing the market to grow their market share.
Stars: Stars generate ample amount of money or cash with the absolute market share. Asda need here vast financial support to compete with their rival competitors in the retail industry and also maintain the position in the UK marketplace.
LO2 BE ABLE TO FORMULATE THE NEW STRATEGY
2.1 Strategic positioning by organizational audit
Strategic positioning reflects the company's position within retail industry among rival companies. It also involves making effective choices for the Asda products that is different from their rival competitors so that it will result in gaining competitiveness in the UK market (Kozami, 2002). The strategic positioning of company should be measured by Ansoff matrix and it is also measured by expansion of the activities into global marketplace. The Ansoff matrix is the tool the assists the business in deciding their product and market growth strategy and selecting the appropriate strategy to survive in the market. With the help of SWOT analysis and the scenario planning Asda will carry out the organization audit.
SWOT analysis: It help the Asda in determining their strength and weaknesses so that they should minimize the weakness and maximize the strength to ensure the strategic positioning in the market (Turner, 2012). It also examine the threat and opportunity for the firm to grow their activities.
Value-Chain analysis: In Value-Chain analysis model it determine the primary activities that are most valuable to the business unit so that it could be reinforced so that it may gain competitive advantages to survive in the market (Rich, 2003). The primary activities of the Asda include operations, marketing and sales etc. all the primary activities are supported by the& infrastructure of the firm, human resource management etc. so that it will result in gaining the competitive advantage that heighten their net profit and also assist in yielding the revenue for company.
2.2 Environmental audit
The environmental audit is being carried out to determine the position of the company in the surrounding environment while, it also measure the environmental performance of the organization (Wheelen and Hunger, 2010). The environmental audit can be conducted with the help of PESTLE analysis. PESTLE stands for political, economical, social, technological, legal and environmental factor.
Political factor: This component aid the Asda store ltd. in deciding the level by which the UK government influences their activities. For example, the UK government enforce the new tax regulations that ensure the company in changing the while structure and the system to implement in the company so they can purchase the limited product form the different countries (McGee and et.al. 2010). Further, due to modification in the government policy, the purchasing power of the buyers has reduced thereby Asda will feature the reduction in the sales turnover.
Economical factor: The economic factor immediately effect the Asda operations and it also result in affecting the distribution and the production of the company. For example, hike in the inflation rate of the UK economy will directly affect the buying process of the buyers as, the prices of the product will also increase.
Social factor: Social factor also render the huge impact while company frame the strategic plans to accomplish the goals and objectives. The various social factors are, geographical locations, cultural trends etc (Lynch, 2012). For example, the company mainly supply the different clothing to different age group such as children, adults, youngsters etc. the taste and preferences of all the groups are different from each other.
Technological factors: The continuous up-gradation of the technology mainly benefit the Asda in targeting the large customers from the different region. With the advanced technology the company also ensure in rendering the quality services that is company will ensure the online trading of the product and services so that they can meet the requirement of the customers effectively.
Legal factors: The legal factor also help the Asda to ensure the abidance of the legal and regulatory framework that are framed by the UK so that company should ensure ethical consideration in conducting the business activities (Bose, 2008).
Environmental Factors: Now a days the company consider the environmental factor while formulating the strategy. For example, while formulating the strategy management of company should design the strategy in the effective manner so that it may also create the employment opportunity in the society and also lend towards devising the environment clean.
2.3 The significance of stakeholder analysis when formulating new strategy
It is important for the management to measure the several stakeholders of the Asda while, designing the strategy (Burns, 2014). Thus, it will help in accomplishing the goals and objectives along with meeting the requirement of the various stakeholders. The different key stakeholders of the Asda are customers, banks, governments, suppliers, employees etc. the significance of the stakeholder analysis can be measured by stakeholder significance grid. This grid assists the management in categorizing the key stakeholders with the increasing power and interests. This also help in prioritizing the stakeholder so that it should formulate the new strategy.
Keep informed: The stakeholders in this quadrant features the high interest in the business activities but they features the low power. The stakeholders of Asda in this section are employees or the bank, government etc (Allen, 2000).
Manage closely: The stakeholder in this section features the high interest and high power. The stakeholder need manage properly if they are not managed properly then it will result in formulating the ineffective strategy. The major stakeholder in this quadrants are managers, suppliers etc.
Keep satisfied: The stakeholders in this quadrants possess the high power to take the decision but they have low interest in the organization. In this quadrant the investors, directors, shareholders etc exists (Porter, 2001). They need to keep informed about the working in the business unit.
Monitor: The stakeholder in this quadrant posses the minimum effort or monitor as they have low power and low interest in the organization.
2.4 New strategy for the organization
After analyzing the strategic position of the Asda by conducting the organizational audit and the environment audit. Now the management need to formulate the new strategy for the company so that they should strengthen their existence in the competitive market. For adopting the new strategy the management mainly focuses on Ansoff matrix. This matrix consists of several of strategies that will assist the Asda in gaining the market share that is the company should adopt the product development strategies for launching the new product in the present marketplace (Meyer, 2003). This strategy will contribute in delivering the new product according to the requirement of the market customers. Further, Asda also ensure the market perpetration strategy to capture the existing market with the existing product services. Thus, it will help in improving or modifying the product so that it might meet the expectation of the customers.
On other hand, the Asda might also adopt the diversification strategy that is serving new products in the new markets (Wootton, 2013). This will help in targeting the new customers so that the organization should increase the brand image among the new market customers. While, this strategy also assist the Asda in generating profit for the firm.
LO3 UNDERSTAND APPROACHES TO STRATEGY EVALUATION AND SELECTION
3.1 The appropriateness of the alternative strategies
There are numerous strategies that can be opt by the Asda to sustain in the competitive scenario among their market customers. These strategies are market entry, substantive growth, limited growth and divestment strategies.
Market entry: Market entry strategies are the effective strategies that assists the Asda in growing their market share and also ensure in attracting the large customers from the different region (Strategic Planning Tools, 2015). There are different market entry strategies like merger and acquisition, franchising, direct market entry etc. all these help the Asda in generating the sales, increasing the brand awareness among the different market.
Substantive growth: This growth strategy mainly focuses on generating the revenue for the Asda. This strategy mainly focuses on targeting the customers so that they should serve according to the need of the customers (Auzair and Langfield-Smith, 2005).
Limited growth: There are several growth strategies like market penetration, product expansion, diversification and market development. With the help of adopting market penetration the Asda will reduces the prices of their product. While, with the product development strategies the Asda should launch the innovative or the modified product in the current market so that they should attract the customers.
Divestment strategies: This strategy is also effective for the Asda as, this reduces the expenses by divesting or liquidation of the assets or the unit so company can get along more profits. The company can also adopt the turnaround strategy for rectifying the wrong judgment that the company had made (Astrachan, 2010).
3.2 The selection of a strategy
From the above several strategies the management of Asda select the appropriate and feasible strategy according to the market situation. As, with the changing demand of the customers and entrance of the new competitors in the business will result in adopting the market entry and the limited growth strategy for the Asda so they can attract and satisfy the large customers (William, 2013). The selection of the strategies are as follows:
Market entry strategy: It is an effective strategy that is selected by the management of Asda to expand their activities through the online transactions. This strategy is suitable for the position of the Asda because through with direct marketing Asda company would continuously be in contact with the international market customers. While, the market growth strategy by adopting the direct market entry is also feasible for the Asda as now a days customers mainly prefer to purchase the products through online as it is convenient option for the customers (Nunnington, 2010). Thus, this will result in generating the higher profits with capturing large market area.
Limited growth strategy: For development in the market, Asda must utilize the market penetration strategies by which Asda decreases the prices of their branded product to capture the market customers. Thus, reduction in the monetary value of the product Asda will result in generating the sales of the products that will ultimately increases the net profit of the firm.
LO4 UNDERSTAND HOW TO IMPLEMENT THE CHOSEN STRATEGY
4.1 The roles and responsibilities of personnel who are charged with strategy implementation
The chosen strategy for Asda stores ltd. Is market entry strategy and limited growth strategy. While, implementing these strategies in the company they require the personnel so that they can implement the chosen strategy in the Asda. There are certain roles and responsibilities of the personnel who is incharged with the strategy implementation, these are:
Communication: It is the responsibility of the personnel to communicate all the necessary information and activities to the staff and employees so that they should properly follow while, implementing the strategies. Communication must be effective so that it should avoid any consequences or the misrepresentation while implementing both the strategies in the Asda (Kozami, 2002).
Programming the activities: The role and responsibility of the personnel who is the in-charged with strategy implementation include that they should be effective and prompt in programming all the activities while implementing the strategy. Programming of the activities will assist the employees and staff to follow the sequential activities that will help in eliminating any deviation or the issues in strategy implementation (Turner, 2012).
Identifying the teams and individual roles: While, the in-charge should also determine the teams within the Asda that will assist in performing the activities and tasks in the collaborative manner. While, teams will divide and allocate the proper work and tasks to the individual member so that they should activities implement the strategy (Robert, 2012).
Resource allocation: While, implementing the strategies the Asda personnel features the responsibility to determine the adequate requirement of the resources for implementing the plan. While, they also have responsibility to allocate the resources adequately according to the requirement of the strategies. Whether the resources are financial, human resource, technological resources or physical resources. The in-charged or Personnel should carry the impressive resources to adjust the resources with the objectives of the company (Rich, 2003).
4.2 The estimated resource requirement for implementing the new strategy
For implementing the selected strategy in the Asda stores ltd. The estimated resource requirement include:
Financial resources: The most important resource that is being required for implementing the selected strategy include financial resources. With the assistance of suitably allotment of the financial resources to each and every department of the Asda will result in proper functioning of the department (Wheelen and Hunger, 2010). Asda is the supermarket that deals in selling the grocery, home ware, toys etc will primarily concentrate on assigning the major fund to the marketing department so that they musty design the effective strategy for the organization so that they should promote or marketing their product among the customers. While, the adequate financial resources in the organization will also assist in aligning the resources to achieve the goals and objectives (McGee and et.al. 2010).
Human resources: The another estimated resources that is important for the Asda in implementing the new strategy is adequate manpower inventory. With the help of human resource planning Asda would calculate the required manpower in the future situation so that it would effectively implement the strategy. While, with the short-handed manpower in the company it will result in gaining the loss for the Asda. As, the company require highly qualified and competent personnel for implementing the strategies (Lynch, 2012).
Physical resources: These resources are often consists of various raw material, assets and different accompanying component that contribute the Asda in creating their brand image by rendering the superior quality of the services and products to the market customers. Management have to set up the essential resources that will help the company in ensure agreeable flow of production in implementing the strategy. It serve to cater the requirement and the need of various kind of buyers in the market (Duke, 2005).
4.3 The contribution of the SMART targets
SMART objective is the effective way to develop the objective so the Asda so that it should be meet in the specific time period. By accomplishing the SMART objectives of the Asda they will be successful in the attaining the top position in the marketplace.
Smart: Specific goals must be broad and clear for the Asda organization. The specific goal of the company include that company would gain the 30% profit in the next year through expanding their business activities in the different nation and the countries around the world (Burns, 2014).
Measurable: while, the objective that is framed should also be quantify in terms of achieving the objectives. The company is financial sound in the competent market and they also feature the adequate resources in measuring the objectives.
Achievable: It is also achievable as company possess the adequate human resource. For example, Asda must features the qualified and competent human resource within the unit so that they should attain the objectives. While, it is also measurable because through direct marketing they will attain the objectives (Bose, 2008).
Reliable: The stated goals are dependable in achieving as the company mainly depend upon the marketing department activities that frame and design the effective policies for promoting and marketing the products.
Time frame: The objective defined the adequate time period that will help the Asda in achieving the goals in the stated time period. The company has settled the time period for accomplishing the goals is 1 year.
SMART objectives is the effective measure for assigning the adequate resources so that they should attain the desired result (Allen, 2000). It has been measured that without framing the SMART objectives the company can't implement the strategy as, Asda will not move ahead without accomplishing the certain small objective of the company.
Conclusively, it can be stated that strategies for business can be for short term period or for attaining the goals for long term period so that they can sustain in the competitive marketplace. The report has suggested the process of strategic planning through measuring the vision, mission and objectives of organization. This will assists the organization sin gaining the competitive edge among their rival companies. The report has also concluded that the organization also select the appropriate strategies that would help them to sustain in the long run.
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