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Assignment topic
‘Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its
configuration of resources within a challenging business environment, to meet the needs of markets and to fulfil stakeholder expectations'
Introduction:
Strategy is the trend and span of an organisation over the lasting, which configures its resources to achieve advantage for the organisation
within a challenging environment and to fulfil stakeholder expectations. These characteristics have some consequences, these are; by nature
strategic decisions are likely to be complex. Thus the defining feature of strategy and strategic decisions depend on this complexity. These
feature of strategy and strategic decisions are especially for organisations with wide geographical scope of multinational company or wide
ranges of products or services. Strategic decisions also depend on situations of uncertainty, its sometime really impossible to realize the
future and taking the right decisions. Strategic decisions are also depend on an integrated approach to managing the organisation. Porter
(1985) suggested that a firm is able to achieve advantage through product differentiation or cost leadership. These two sources of competitive
advantage coupled with the scope of activities for which the firm seeks a achieve them lead to three generic positions: A low cost strategy over
a broad target, a differentiation strategy over broad target and a focus strategy involving either a low-cost strategy over a narrow target or a
differentiation strategy over a narrow target. A unique asset is one that a firm has that has not been initiated by other firms and allows the
firm to carry out some activity or activities better than other firms.
A competence encompasses the skill, ability and knowledge that organization members have individually or collectively which allows them to
undertake an activity or activities to contribute to the transformation of inputs into outputs directly or indirectly (Williamson, et al, 2004).
By disaggregating a business organization's environment into a number of components, it is easy to introduce three important groups of
components. The external environment comprises all of those forces and events outside the organization that impinge on its activities. Some
of these events impinge directly on the firm's activities - these can be described as forming an organization's microenvironment. Other events
that are beyond the immediate environment nevertheless affect the organization and can be described as the macro environment. As well as
looking to the outside world, company must also take account of factors within other functions of their own firm. This is referred to as the
internal environment. (Palmer and Hartley, 2006)
As part of the normal production activity, businesses are involved in buying (inputs- like labour and raw materials) and selling (outputs- the
finished products). Buying and selling take place in markets and although there are many different types of markets the basic analysis
remains the same.
The quantity demanded refers to the quantity of a good or service that households are willing and able to purchase at a particular price. This
definition shows that it is effective demand that is important; although many people would like to own a Rolls-Royce they could not afford it
and so their demand is not effective on the market. The demand for a good or service depends on a number of factors (Worthington and
Britton, 2006).
It is also important to understand the expectations of different stakeholders in more detail and the extent to which they are likely to seek
influence over an organisation's purpose and strategies. Stakeholders are those individuals or groups who depend on the organisation to fulfil
their own goals and on whom, in turn, the organisation depends (Johnson and Scholes, 2003).
Good forecasting and successful business strategy can reach the company in top level; on the other hand the company will drop suddenly by
unsuccessful business strategy. In recent time the Tesco reached in highest level in UK for its successful business strategy but in few years ago
the General Motors felt in sudden death for its unsuccessful business strategy.
John Ibbotson, Director, Retail Vision, Retail Consultants told, What Made TESCOthe Best Retailer in the World? According to him following
is the reasons which made Tesco the best in world (www.retail-vision.co.uk):
Tesco has a retail strategy to find who their customers are in each market and what they want now and in the future. They implement all the
retail processes, systems and retail organisation that enables them to deliver to the customer. The secret is: Find out what the customer wants
and give it to them.
How are they doing this? Well they put the retail strategy into their business that finds out who their customers are, what they want, but
above all they are delivering their services consistently to the customer.
A crucial point in the concept of generic strategies is the need for a firm which wishes to achieve a competitive advantage, to make a choice
about the type of competitive advantage it wishes to achieve. This is at the heart of Porter's argument and in order to pursue his ideas it is
useful to examine his descriptions each generic strategy.
Sometime organisation selects one or more criteria for the product or service on the basis of customer needs in a market and then provides
specific criteria uniquely for specific customer. These specific criteria make the product different from others. This is actually differentiation
strategy. Normally in this strategy company use their strong brand image for their products. For an example: Mercedes and BMW cars.
Sometime company provide service and product in lowest price in the market, this strategy make them cost leader in the market. Tesco is the
very good example of cost leadership. In cost leadership it is not all time possible to provide good quality product or service. Company takes
another strategy which is mainly based on focus on niche market. It's may be on differentiation focus like niche retailers or specialist holiday
operator or may be on cost focus like discounted level products.
To get competitive advantage it is very important to build an organisation that consistently delivers the best customer offer. They get a clear
path to beat the competition, succeed in difficult markets, increase their sales and profits, but above all increase their customer's satisfaction
and loyalty.
Suppose for a beer company the quantity of beer consumed will be affected by the price of substitutes or complements. A substitute for beer
may be lager, and the price of the lager goes down, some individuals may switch from beer to lager; thus demand for beer goes down.
Complementary goods are one which trends to be consumed with another good. For beer, it is possible that individuals eat crisps or smoke
cigarettes at the same time as drinking beer. The relationship is the opposite of that for substitutes, if the price of a complement goes up,
individuals might be less likely to drink beer and demand will fall. If the price of a complement goes down, the demand for beer will rise.
Changes in disposable income will clearly affect demand. If the economy moves into recession, then retail sales and the housing market might
suffer. As incomes increase once the economy recovers, then such sectors will pick up again. Higher incomes will lead to increased
consumption of most goods. Thus an increase in disposable income will lead to an increase in demand for goods. As incomes fall the demand
for those goods will fall. There are inferior goods, however, that experience a fall in demand as a result of income increases. A good example is
hard toilet paper; as individuals become richer, they are likely to substitute more expensive soft toilet paper, and thus demand for hard toilet
paper will fall. Taste include attitudes and preferences of customers, and will be affected by such things as fashion and advertising campaign
by the government pointing out the effects of smoking would cause tastes to change and demand for cigarettes to fall.
On the other hand strategy should be also focused on different kinds of market structure in sense of different kinds of products or services.
Generally there are four kinds of market structure in business, these are; perfect competition, monopolistic, oligopoly and monopoly. In
perfect competition, a product or service of company falls in a huge competition with other same product or service in the market. Price
apparently is decreasing in this kind of market structure and it is not a positive sign for a better business. Monopolistic market structure is
the initial stage for going to monopoly market structure. In this market structure the competition exist but not like perfect completion.
Oligopoly market structure is the most stable stage among all of the market structure. Generally a few company compete with each other, it's
actually good for both customer and company. For an example, the retail market in UK the large super markets are in oligopoly market
structure. The last stage of market structure is monopoly, here only one company exist for a particular product or service and this company
fixed up the product price without considering anything. In this kind of market structure customer has no another choice or option.
pays suppliers, per-item, is a lot less than the corner shop. It achieves this, partly, through buying large volumes of goods. A small
supermarket chain can only buy a relatively small volume of goods, at greater expense.
Conclusion:
Failure and success of a business fully depend on its strategy. Strategy is nothing but a forecasting power by a company on the basis of
resources, market demand and variability, competitive advantage, uncertain business environment and its stakeholder expectation. It is
easier or it is not all time possible for a company to start any business by fulfilling all kinds of resources at a time. If we analyse all successful
company, they started their business with many lacking, but they took right strategy considering their lacking and they have overcome their
lacking step by step. Market needs is not stable it has reasonable up and down and it is depends on many factors. So while the policy makers
of a company is making a strategy should be kept in mind those factors and reasons. Competitive advantage is the main arms of a company
which gives the company long term profit and sustainability. Business environment is always unstable and uncertain in some factors. It's
actually a big challenge for a company and it is the main focused point of a strategy. Now stakeholder expectation is the main difficult issue
for a company while they are making the strategy. Because there are different kinds of stakeholder and their expectation is different and viesversa. So many successful companies focused on one's expectation and minimize other's expectation for their longevity and sustainability. At
the end strategy always find the way and the scope of business.
Recommendation:
The spotlight of strategy should beto makesure that products and services meet customer needs andthat developlong-term and profitable
relationships with those customers. To achieve this, any company will need to create a flexible strategy that can respond to changes in
customer perceptions and demand. At the same time it is very necessary for a company to make a friendly environment with the rest of
stakeholder in course of their expectation. It may also help identify whole new markets that can successfully target. Every company has to
face the uncertainty; they should be well prepared for all possible uncertainty with considering difficult business environment.
References:
1.
Johnson, G. and Scholes, K., 2003, Exploring Corporate Strategy, Prentice- Hall of India Private Limited, New Delhi.
2.
Williamson, et al, 2004, Strategic Management and Business Analysis, Butterworth-Heinemann, Oxford.
3.
Palmer, A. and Hartley, B., 2006, The Business Environment (5th edi.), McGraw-Hill Education, Berkshire, UK.
4.
Worthington, I. and Britton, C., 2006, The Business Environment (5th ed.), De Monfort University, Leicester.
5.
www.1000ventures.com.mht
6.
httpwww.corporateexecutivecoach.com.mht
7.
http://www.businesslink.gov.uk/bdotg/action/detail?type=RESOURCES&itemId=1073790720
8.
http://www.tutor2u.net/business/strategy/resources.htm
9.
http://www.tutor2u.net/business/strategy/stakeholders-introduction.html
10.
http://www.retail-vision.co.uk/index.htm
11.
http://www.321books.co.uk/catalog/tesco/pestle-analysis.htm