business strategy

Business Strategy Name: Rumana Yasmin Rume ID: H1309379 Task 1 Introduction--------------------------------------------------------------------------------------------------------------2 1.1. Strategic Context of Fortune 500-------------------------------------------------------------------------------2 1.1.1 Mission------------------------------------------------------------------------------------------------------------2 1.1.2 Vision--------------------------------------------------------------------------------------------------------------2 1.1.3 Objectives--------------------------------------------------------------------------------------------------------2 1.1.4 Goals--------------------------------------------------------------------------------------------------------------2 1.1.5 Core Competencies--------------------------------------------------------------------------------------------3 1.2 Issues Involved in Strategic Planning---------------------------------------------------------------------3 1.3 Different Planning Techniques------------------------------------------------------------------------------3 Task 2 2.1 Organizational Audit of Fortune 500---------------------------------------------------------------------------4 2.2 Environmental Audit of Fortune 500---------------------------------------------------------------------------4 2.3 Significance of Stakeholder Analysis of Fortune 500-----------------------------------------------------5 Task 3 3.1 Alternative Strategies of Fortune 500-------------------------------------------------------------------------6 3.1.1 Substantive Growth Strategies------------------------------------------------------------------------------6 3.1.2 Limited Growth Strategies------------------------------------------------------------------------------------7 3.1.3 Retrenchment Strategies-------------------------------------------------------------------------------------7 3.2 Appropriate Future Strategy---------------------------------------------------------------------------------7 Task 4 4.1 Roles and Responsibilities for Strategy Implementation---------------------------------------------8 4.2 Resource Requirement for Strategy Implementation-------------------------------------------------8 4.3 Targets and Timescales for Achievement---------------------------------------------------------------9 Conclusion---------------------------------------------------------------------------------------------------------------9 References-------------------------------------------------------------------------------------------------------------10 Task 1 Introduction The strategic context of an organization describes various strategic aspects of an organization within its existing environment (Hill & Jones, 2009). In this part, the strategic context of Fortune 500 has been explained. After the analysis of strategic context, the issues involved in strategic planning have been reviewed. At the last stage, different planning techniques used by the companies have been discussed. Strategic Context of Fortune 500 Fortune 500 is based on the strategy of low cost advantage in the supply chain industry.The success of the business can be attributed to the following strategic context of Fortune 500: Mission The mission of Fortune 500 is “Save money, live better”. The mission says a lot about the strategies of Fortune 500. Vision The vision statement of Fortune 500 is to “promote ownership of Fortune 500’s ethical culture to all stakeholders globally”. Fortune 500 issued some guideline to uphold the vision of the company. They are: Respect others. Follow the laws. Have integrity. Be always fair. Embrace diversity. Objectives The key objective of Fortune 500 is driving aggressive growth, while improving return on investment. These objectives of high growth and improved return can be attained by expanding multi-channel initiatives. Goals To attain the objectives, goals are set to be achieved within short period. The goals of Fortune 500 are: Develop a global e-commerce strategy. Reduce operating expenses as a percentage of sales by at least 1 percent within 2017. To be supplied hundred percent by renewable energy. Energy efficiency and zero waste of resources. Core Competencies The core competencies of Fortune 500 include the following: Price leadership. Innovation enhancing shopping experience. Sharp focus on delivering greater value. Global e-commerce. Strong corporate governance. Issues Involved in Strategic Planning The strategic planning issues are discussed below: Scope and nature of the market. Location and preference of customers. The opportunities for growth. External factors affecting the opportunities. Resource requirement. Critical success factors. Key business objectives. Different Planning Techniques Scenario Planning: Scenario planning puts together plans based on the what-if scenarios in the future. Planning is formulated for each different scenario that may arise in the course of time (Sadler, 2003). Fortune 500 uses scenario planning for its supply management. If a supplier fails to provide materials within time, alternative sources are used. Decentralized Planning: In decentralized planning, the decision making power is distributed to the lower level management. Planning requires important insights into the present situation (Small Business, Chron.com 2013). Lower level executives are better in understanding the effects of planning. So decentralized planning is used by Fortune 500. For example, the regional managers are allowed to make separate sales planning. Centralized Planning: Centralized planning technique is followed only when the top management makes the whole organizational planning without the thoughts of lower level management (Thompson, 2001). This method is becoming less popular day by day. Task 2 Organizational Audit of Fortune 500 Fortune 500 has a worldwide customer base. The company serves the basic goods for the customers. So the economic cycle hardly affects the performance of the company. The mission of the company is to ensure better life for the customers by saving money. To achieve the mission, the company set the goal of increasing the return by 100% within 2017. The company successfully increased its return in the last three years along with sales revenue. The company increased its productivity by increasing sales turnover and decreasing the float. The company focuses on retaining the quality employee. The top management of the company monitors all the regional functions. Fortune 500 has established in the market as a brand. The people perceive the brand as a promising one. Its strategy is to be the cost leader in supplying the basic goods. The strategy became successful. Environmental Audit of Fortune 500 Fortune 500 ensures equal and competitive environment in the organization. The company focuses on the roles of women in the development process. Besides, the environment ensures the maximum practice of ethics. The offices are decorated properly. The work space is sufficient for employee movement. Everyone in the organization is treated equally. No discriminatory attitude is allowed. This view made the company a highly sought one to the customers. Further, the work environment ensures the creativity of the employees. The decentralized planning techniques want the employees to put their ideas before the top level management. Employees are motivated to think creatively. Different cultural events are arranged for the employees. The employees are highly trained to be adaptive to the cultures and norms of the organization. Various programs are taken to promote the skills of the employees. To ensure better environment for the society the following actions are taken by Fortune 500 last year: Increasing market access, career opportunities and training for nearly one million women worldwide. Twenty one percent of Fortune 500’s global need of electricity is met by renewable energy and the company is the largest green power generator in the USA. Hiring US veterans in the first year of active duty. More than one billion dollar has been contributed to support the communities. The environment is an important factor for the success of any organization. Fortune 500 ensures the optimum environment for the employees, customers and communities. Significance of Stakeholder Analysis of Fortune 500 Stakeholder analysis is an important task of managers before setting the goals of any organization. Fortune 500 has different types of stakeholders. The most important three stakeholders are customers, employees and stockholders (worldbank.org, 2013). Further the bondholders, suppliers, regulatory organizations and the community also have significant interest in the company. The different stakeholders have different types of interest and sometimes they are conflicting with each other. So the management needs to consider the interests of each stakeholder and set a goal that is congruent with everyone’s interest. To understand the interest of stakeholders, the stakeholder analysis is significant. At first the stakeholders will be ranked according to their ability to exercise power on the company. Then the interests will be analyzed to set a weighted interest. If the stakeholder analysis is not completed, the organization’s goal will not serve the interest of the stakeholders and the strategies formulated under the goal will be in vain. Task 3 Alternative Strategies of Fortune 500 Usually a business makes alternative strategies for the different scenarios in the future. Fortune 500 also has different strategies. Substantive Growth Strategies For the substantive growth of the company, Fortune 500 considers the following strategies: Franchising: Franchising is the most appropriate and widely exercised strategy for Fortune 500. The company makes franchise agreement with the owners of different outlets within USA and outside of the country. To realize the substantive growth, the company can issue more and more franchise without a significant initial investment (Rodrik, 2005). Horizontal Integration: Fortune 500 can acquire or merge with another company in the same industry and capture more market share than before. The competitive power of the merged company can promote substantive growth. Horizontal integration also increases the monopolistic power of a company. Sometimes regulations impede the strategy of horizontal integration (Rodrik, 2005). Vertical Integration: As the company is highly dependent on the supplier of goods, backward integration may accelerate the growth of the company. Just – In – Time (JIT) is an important success factor of the company. So vertical integration helps ensuring the JIT and the substantive growth of the company (Rodrik, 2005). Limited Growth Strategies Limited growth strategies of Fortune 500 are as follows: Do Nothing Alternative: In this strategy, Fortune 500 should not take any significant strategic change in the limited growth environment. The business operation will be continued normally. The strategy simply targets to retain the existing market share (Msi.co.uk. 2013). Product Development: In this strategy, Fortune 500 will modify its existing products or develop new products in order to increase market penetration (Msi.co.uk. 2013). Innovation: Innovation requires a radical change in the business to retain the market share. Fortune 500 tries to be innovative to retain the customers. Combination Strategies: Fortune 500 can follow more than one strategy in the limited growth scenario. Retrenchment Strategies Remedial actions are taken promptly when an organization faces the retrenchment. Fortune 500 has the following strategies in case of decrease in sales turnover of the company: Cost Reduction: Fortune 500 is a cost leader. In case of sales decrease, to boost up the profit, Fortune 500 can reduce its costs. Asset Reductions: Some unnecessary assets can be sold off if the sales fell permanently. Revenue Generation: In this strategy, Fortune 500 will focus on generating revenue by increasing the price level or by working on the debtor or stock turnover ratio (Thompson, 2001). So the above alternative strategies define how Fortune 500 will continue its operation in the uncertain future scenarios. Appropriate Future Strategy The appropriate future strategy for Fortune 500 should be the franchising. The company is experiencing substantive growth in its industry. The market is expanding day by day. To react to this opportunity promptly, Fortune 500 needs to increase the outlets and boost revenue. So without incurring any significant initial investment, franchising can solve the issue. The company can ensure its interest through collection of royalties and also meet the customer need. Franchising also involves the risk of quality insurance. So the monitoring capability of Fortune 500 should be increased. Task 4 Roles and Responsibilities for Strategy Implementation Different level of management has different types of roles and responsibilities for strategy implementation of an organization. The roles and responsibilities at different management level have been compared and discussed below. The top level management plays the key role of strategy implementation. They set the long term goal and strategy of an organization and define how the strategies will be implemented. The top level management monitors the middle level management and set the targets for them to achieve to implement the strategies. Middle level management carries the strategic view of the top management within the organization. They set the middle term strategies with the purpose of achieving the long term strategies set by top management. They monitor the lower level management. The lower level management also plays role in strategy implementation. They set the operations of the organization in a way that supports the strategies and goals set by the middle level management. Resource Requirement for Strategy Implementation Implementing a strategy requires some resources. The different types of resource required are discussed below: Financial Resources: The strategy includes a budget that shows how much financial resources are required to implement the strategy in a certain time period. The financial resources are required to support all the activities of the strategy implementation. Human Resources: Human resource is also a crucial resource for strategy implementation. The types of the strategy require different skills and competence in the employees. So an organization may need to develop skilled human resources for the strategy implementation. Organizational Resources: The organizational structure need to be consistent with the strategy. This is also considered a required resource for strategy implementation. Environment: The environment of any organization should be supportive to the strategy. So any change in the organizational strategy may require changing environment. Targets and Timescales for Achievement Here we discuss the targets and timescales for achievement for the market development strategy of Fortune 500. To monitor the successful implementation of the strategy continuous monitoring and control is required. So the targets and timescale for achievement have been set as follows: Assess the market size in every month to understand the success of market development. Assess the return generated from the new markets. In every month, assess the impact of market development on the existing markets. Thus the success of the strategy can be justified and the strategy implementation can be accomplished. Conclusion Strategic management helps an organization build its long and short term strategies and achieve the desired success. Without proper strategy, an organization is like a ship without sail. From planning to the implementation, strategies may be modified at any stage. 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