Business Strategy 2
Examine approaches to strategr5y evaluation and selection Analyse possible alternative strategies relating to substantive growth, limited growth, and Market entry strategies, and disinvestment strategies Ikea has marketed its products well and has dealt with all the problems easily. But there have been some constraints that came in the way of IKEA and alternative strategies have to be developed for them. These strategies are as follows: Substantive growth: In any business strategy growth is the most important factor. To achieve substantive growth the firm needs to go through a lot of planning.
Some of the key advantages of substantive growth are: • Exponential Growth: Once IKEA achieves substantive growth in their business then they can be confident that it will lead to more growth in the future. There is a tendency of the growth of wealth at an exponential rate and the company can use these funds for other project to generate gains in future.
While an organization achieves substantial growth the main benefit is that it helps in investing them for future benefits and achieving potential wealth gains. This is always a welcome consideration. Competition: Substantive growth of IKEA will help them to understand the strength of the competition and developing the business strategy accordingly. The faster a company achieves substantive growth the easier it is for them to beat the competition. The added wealth that IKEA gains from substantive growth can be utilized to gain the market share from different competitors.
The best thing about substantive growth is that it acts as a motivator. Once a business starts gaining substantive growth it can be more than sure that it has gained advantage over the competition. Priorities: It is very important to decide the priorities in any business. Making clear strategies and deciding which goals need higher levels of importance will help the business in understanding the key priorities. Substantive growth acts as the best indicator and helps the strategists to make each and every step clear.
It helps in rationally planning and deciding the goals that can be successful with time. Limited Growth: To achieve long term success and maximum growth IKEA needs to make sure that it is going through a period of limited growth.
Limited growth will reduce risk and financial problems. To achieve limited growth the firm should make sure that the business is not running ahead of the expected goals. There should be consistency in the growth of the business that can only be achieved through limited growth. Limited growth can be attained by monitoring the business continuously and responding well to each and every situation.
Market entry strategies: Till date IKEA has entered most of the markets successfully and has been able to adapt with the local conditions.
The best marketing strategies that can be adapted to enter the markets successfully is to understand the wants of the locals and promote the product through different mediums. If the company uses an effective marketing mix in the markets of different countries then the market entry will be very easy for them. Disinvestment strategies: Disinvestment means liquidation of stock that leads to some policy change. Disinvestment can be used as an effective strategy by IKEA to liquidate its assets and build good relations with the local government.
This strategy can be used to bring in positive changes and make the decision making process easier.
To develop a strong disinvestment strategy the firm should analyse all its investments properly and focus on increased profitability. P8 Select an appropriate future strategy for a given organisation o Examine the approaches to strategy evaluation and selection and select an appropriate future strategy for the chosen organisation IKEA is one of the top furnishing companies in the world. They provide well designed home furnishing products at cost effective rates. The business model created by IKEA has helped them enter new markets and get to the nerves of the consumers.
The strategies of IKEA involve competitor analysis, market analysis, environmental analysis, customer analysis, etc.
The company continuously evaluates the strategies and plans their action according to the research made. The best part is that IKEA has been very good when it comes to successful implementation of its policies. One of the future strategy that can help reach out to its customers easily is the internet marketing strategy. Among all the marketing strategies used by IKEA the change in socio-cultural trend should be properly analysed and they should use the internet marketing technique effectively.
Internet is acting as the best way to reach out to the customers and there are many social networking sites where prospective customers can be found.
IKEA already has its website and it just needs to use the social networking websites effectively to promote its products. Since effective promotion acts as the best way to reach out to the consumers IKEA should look out for this option to increase its reach. This is better than any other medium as it is not limited to one specific location and helps the firm to reach out to whole world.
Since IKEA operates in different parts of the world this is the most effective advertising tool for them. Understand how to implement a chosen strategy Compare the roles and responsibilities for strategy implementation in two different organisations The roles and responsibilities of for proper strategy implementation differ in different organizations.
For example the strategy implementation in IKEA would be completely different to the roles in companies like Nike. The roles of the people in NIKE need to be different from that of IKEA. In NIKE the managers need to know the footwear and the apparel that is in trend.
While conducting the market research the team in NIKE needs to understand what people like to wear and the wants of the people in different markets all over the world.
Since NIKE has been developing its footwear since its inception everything in their R&D would be related to shoes and mainly sports apparel. Innovation is required in different fields and developing new things would surely catch the consumer’s eye. But before developing an effective strategy and implementing it the organization needs to understand itself and the product that it is selling.
They need to understand whether their plans and policies will be effective enough. While developing the plans NIKE needs to understand the trends in the footwear market and develop the footwear according to the response of the consumers.
The company needs to conduct the process in a cost effective manner but many times they are likely to face loss. If the new footwear range developed by NIKE does not go down well with the consumers then that range would go to waste and they will suffer loss over there. As compared to NIKE the roles in IKEA are totally different.
IKEA is involved in furnishing and designing modern furniture for different places. So the roles totally change in the strategy planning and implementation here.
IKEA needs to have a look at the furnishings that are in trend and that are loved by different customers. They can be more flexible with the innovation of their products. If the new product launched by them is not liked by one consumer then there are chances that it can be sold to other customer, as compared to NIKE where the whole footwear range can go to waste if there is a negative response.
NIKE designs footwear for humans whereas IKEA has to focus on the look of the house. So the strategy is totally different. As you need to make the place look as beautiful as possible IKEA would need to understand the place much better and make the strategies according to that.
Evaluate resource requirements to implement a new strategy for a given organisation The resources required for the implementation of a new strategy are: • Action planning: The organization needs to have a team that can develop a good plan of action.
This will help in detailing the strategy and assigning responsibilities to every individual in the organization. The planning stage decides the future steps and provides a direction to the goal of the strategy. The planning phase needs to have experienced professionals and people who can design proper goals for the future of the organization. The strategy can be successful if the action planning phase is successful. • Organizational Structure: The strategy should be favourable to the current organizational structure.
If the strategy developed is conducted in an organized way then it will surely be successful.
The R;D team should convey the required information to the respective teams and develop a proper structure. • Human Resource Factors: Human resource is an important factor when it comes to successful implantation of plans. Every individual needs to understand their responsibilities and there should be good communication among individuals. Whenever there is a need to implement a new strategy the goals should be made clear to every team. In human resource the team leader and the managers have huge role to play.
They need to guide the team and motivate them to implement the strategy effectively.
Discuss targets and timescales for achievement in a given organisation to monitor a given strategy As discussed above IKEA has been constantly aiming to expand its market size and provide a range of products to its customers. However for any company of the size of IKEA to grow and reach newer heights it is very important that they have a set target and are aware of when these need to be achieved. Some of the targets with timescales which would help them achieve the following objectives: • Lower prices and provide better quality by 30% by the end of 2015: Here the objective is pretty clear.
The specified target for the company is to better the quality of products they have on offer along with the prices they offer. In order to do so the company needs to analyse about the possible ways to cut costs so that it could be passed on to the customers.
With the view to 2015 being the target year the company should check if they have achieved at least half of what they expect by the year 2015. At the end of 2013 and 2014 the company would need to analyse the prices, costs, and the quality of its products which would be clear from the increased/decreased sales.
This should be compared with the data for the earlier year and company would need to take the right measures in the way forward. • Enhance customer service by 25% by the end of 2013: Customer Service cannot be measured but service coverage and the number of people serviced can be. So the company needs to keep a record as well as ensure taking feedback from the customers they service. Comparing it in the mid of 2013 would be ideal to check whether customers were much happier than the year before.
Here the company can know about its weaknesses and work upon the possible solutions so that their target of 25% could be achieved. • Increase awareness of the product: This could be done only through advertisements Here the company should prepare an advertising strategy to implement it while putting up ads on various media sources. It needs to be backed up by adequate availability of the products advertised. Seasonal discounts are the recommended ways to increase awareness and sales. • Add several of new products by 2014: A phased out strategic implementation for rolling out new products seems ideal.
Here the company should not bring out new products all at once rather should plan out launching products at regular intervals.
Probably a product each month till 2014 should be the best way to go ahead and expand on its portfolio. Therefore a planned strategic move seems to be the answer for IKEA so that it could achieve the targets it has and expand across its markets. With planned implementation and scheduled operations things would be way easier as compared to an unplanned approach for marketing as well as promoting the company’s products.