Understanding Strategic Management - Assignment Example

Strategic Management Introduction Strategies are implemented by businesses to achieve objectives and goals. Strategies can be described as long term business planning. Companies before implementing and establishing strategies make a detail analysis of its internal and external environment. Industry and environment plays a vital role in strategic development of the company. Implementation of effective strategies contributes a lot in the success of business. As a consultant I will advice my client to do environmental analysis for enhancing its business opportunities. It will highlight different problems and opportunities of business. According to that organization forms its strategies to get benefit of opportunities or to handle industrial or environmental problem. Strategies of business focus on diversified ways to achieve success. Environmental analysis establishes a linkage between business and its operating environment. Various socio economic and sustainable issues are highlighted in this analysis. In this case study three important framework are used to explain importance of environmental analysis in growth and success of organization. External environmental analysis gives a detail idea about industry. There are some major forces which controls and influence the entire business environment of a country. In this case study environmental analysis of United Kingdom is done. Explaining and analysing various factors of environment organization develop its future actions and events. This analysis also gives information about other players present in the market. The companies form a clear idea about existing competition and its competitive position in the market. PESTLE Analysis Figure 1: PESTLE Analysis This framework analysis highlights unpredictable and important environmental factors of UK market. PESTEL analysis explains six macro level environmental factors. These factors play a vital role in affecting business decisions of a company. Political: UK has many political rules and regulations which affects the establishment of business strategies. UK government has imposed several laws and regulations regarding retail management and its waste disposal. Wide range political factors affect Tesco’s operation and business process. Different types of taxes are levied by UK government on the business activities of Retail Company. For example Tesco have given many taxes for conducting its business operations (Meckel 79). Tesco forms strategies to reduce its tax burden in its operating market. The government of this country also encourages the retail company to develop and expand its business operations. UK has a good political relationship with other countries which help Tesco to implement the strategy of business expansion in those countries. Economical: Economic situation of the country are close related with growth and development of retail industry. UK is a developed country .It has a good economic situation. According to this situation Tesco forms its business strategies which help the company to attract large number of buyers. Maximum people of UK have good income (Baker 68). Therefore their spending capacity is also high. The company has established its pricing strategies in such a way that it has been able to capture a vast market share in retail industry of UK. Some of the economic change in UK market has affected the business. Change in interest rate, wage rate etc have created an impact in company’s strategies and decisions. Social: This factor explains lifestyle, behaviour, preference and taste of customers. Society of UK is very much modern. Consumer behaviour in this society has changed a lot for past few years. With the increase in income of people there fashion has changed a lot. This change has contributed a lot in modernizing the society. Tesco have changes its business structure and its strategies according to the fashion and lifestyle of its customers (Ulwick 35). Culture plays an important role in social factor. UK’s people have the culture of purchasing quality products. They focus more on quality than price. The retail company Tesco have formed its business strategies in UK market after analysing these factors. The company sells a large variety of quality products at an affordable price. Technological: UK is technological very much developed. Various modern technologies are used in this country for growth and development. Retail industry of this country is also benefited by advanced technology (Wintzer 83). As a result retail companies are able to use mane specialized equipment and machines in its business operational processes. It helps the companies to improve its product and service quality. Technological advancement of UK facilitates Tesco to provide effective training to its workforce. Development in internet communication in this country provided a vast range of advantage to its retail industry. Legal: Companies in retail industry of UK have to perform its business activities as per the legal regulations of the country. My client has to forms its business strategies as per the legal rules of UK for doing its business in UK market. Government of UK has a rule that companies have to maintaining minimum standard for performing its business activities in the country. For following this rule Tesco has set up its strategies in such a way that organization gets various benefits for this (Henry 57). Legal rules of UK also set guidelines about the minimum wage limit of employees. Industry follows these rules for its growth and success. Environmental: Physical environment is one of the important issues for doing business in UK market. Several companies are present in the market of UK. Therefore maximum industries of this country face a tough competition. The country is very much concerned about protecting its environment for various damages. So the companies operating in this market implements different business strategies which helps the companies to provide different types of benefit to societies or environment of UK. For this reason Tesco implemented its business strategies for reducing carbon footprints and managing its waste products. Porter’s five force analysis Figure 2: Porters five force analysis The five force model of Porter’s gives an overview of industry of a country. This environmental analysis framework highlights different factors which influence business. For developing strategic environmental analysis system for his retail organization my client needs to consider these factors: Bargaining power of suppliers: In the retail industry of UK suppliers has high powers which regulate the whole industry and strategies of companies. Suppliers provide different types of goods in UK market. There is a huge demand in UK market for various types of products. A large number of companies are involved in this industry of UK. So demand for supply of product is always high in UK. Few suppliers are present in UK market. Therefore they can bargain a lot about with companies about prices (Cheverton 54). Bargaining power of buyers: The buyers of UK market have high bargaining power. Many retail companies are present in UK market. A very tough competition prevails in between them. As a result all of these companies offer almost same product at a same price. In the UK market switching cost of the customer is very low. So they can easily change the company if they are not satisfied with its price and quality. Online shopping facilities are also present in this country which helps the buyers to compare between different price and products. Threat of substitute: The business industries of US have a broad range of product and services. So many substitute products exist in the market of UK. Many small stores and grocery stores are present in Europe which acts as a substitute of retail market. The country has a diverse nature of business which attracts the people of UK. Threat of new entrance: UK market has become saturated. Different types of companies are established in this market to satisfy the rising demand of people. Many strong players are present in various industry segment of UK (Joshi 89). Therefore threat of new entrance is low in UK. For entering into this market a company needs to have a huge amount of capital. Moreover the big companies dominate the market of this country. So they act as barriers to new entrance. Competitive rivalry: Existence of various companies creates a huge completion in UK market. Tough competition has become an important characteristic of UK’s industrial sector. Competition is very high in retail industry segment. Companies in this industry competitors with each other on the basis of price, product quality etc. Various companies in this industry segment are present for a long period of time. They fight on several other business factors by implementing unique business strategies. Strategy Group Mapping This environmental analysis tool framework is implemented by companies to understand its competitor’s activities and strategies. UK has various types of industries. With this analytical tool particular industrial sector or market is selected for analysing and implementing different business strategies. Different businesses of this country have some similar characteristics. So these businesses implement some unique strategies for expanding their market and attracting more customers. Companies present in the retail industry segment of UK have almost same characteristics. So they use some unique price or product differentiation strategies which help them to get noticed by its targeted customers (Peng 64). For example the retail company Tesco has used cost leadership strategy for getting competitive advantage in the market of UK. The company has priced all of its products very low which helps to attract many customers. As a result by maintaining low cost Tesco is able to make huge revenue. Strategic analytical tool will help my client to understand its different competitors. This model also helps the company to change its business operation from one strategy to another. Business environment of UK changes with time and situation. So the companies need to develop its business strategies according to changing environment. By this process the firm can improve its business operations. This tool plays an important role in discovering future business opportunities. Company can solve its problem by implementing effective strategies. It helps to create a way for company’s future development. Strategy group mapping tool analyse the environment for developing the customer base of the business. The purpose of this framework is to analyse different wants and needs of its customers for developing its business strategies. By implementing this tool my client will be able to evaluate top five companies in a particular industry of UK. According to the analysis result my client can understand its position in the competitive market of UK. Figure 3: Strategy group mapping The framework of strategic group mapping is divided into three parts. These parts are beneficiary needs, company’s key feature and key features of its competitors. For applying this model my client first has to analyse key features of its business. Then it will analyse and understand the important features of its competitors in UK market. This process will help my client to understand various advantages its competitors are getting in UK market for its strategies and features. According to that my client will analyse its own business position in respect of its competitors. Assessing all of these environmental factors my will be able to understand its needs and requirements of its business for developing itself. The combine process of these factors will facilitate my client to establish its business process in UK market. Conclusion In this case study as a consultant I have assisted my client to develop a strategic environmental analysis system. I have considered different framework or models for analysis the business environment of UK. By this process my client will be able to understand different strategic decisions he should implement to develop its business. Examples of retail market of UK are given to illustrate many things in this case study. PESTLE analysis, Porter’s five force analysis and strategy group mapping framework are used to analyse external business environment. Various types of factors are present in UK market which influences business performance and growth. The companies in this country develop and implement different business strategies according to the impact of these external factors. By implementing all of these models my client will understand about the present business environment of UK and its impact on his business. Strategy plays an important role in establishing business and developing competitive advantage for the business. These models will help my client to understand advantages of various strategies. It will also facilitate him to develop its business framework according to the needs and requirements of UK’s business environment. Works Cited Baker, Michael. Marketing Strategy and Management. New York: Palgrave Macmillan. 2014. Print. Cheverton, Peter. Key marketing skills: strategies, tools and techniques for marketing success. Great Britain: Kogan Page Publishers. 2005. Print. Henry, Anthony. Understanding strategic management. New York: Oxford University Press. 2011. Print. Joshi, Rakesh. International marketing. New York: Oxford University Press. 2005. Print. Meckel, Matthias, et al. "A taxonomy of e‐business adoption and strategies in small and medium sized enterprises." Strategic Change 13.5 (2004): 259-269. 2004. Print. Peng, Mike. Global strategy. USA: Cengage Learning. 2013. Print. Ulwick, Anthony . Business strategy formulation: theory, process and the intellectual revolution. Westport: IAP. 2005. Print. Wintzer, Erik. Global competition and strategic management. Germany: GRIN Verlag. 2007. Print. Read More