Strategic Implementation and Planning Assignment 1 PDF

Preview

Summary

Crafting and Executing Strategy ,assignment one ...

Description

Sherri Edwards, MBA Student # 8447 Strategic Implementation and Planning Assignment 1 Assignment Questions 1. What are the three criteria for determining whether a company has a winning strategy? A: The three criteria for determining whether a company has a winning strategy are the following three tests:  The Fit Test (for both internal and external fit) – determines how well the strategy fits the company’s present circumstances. The strategy must match well to both its industry and its competition, in addition to its best market prospects. It must be compatible with the company’s ability to execute. The strategy must also exhibit good external fit to existing market conditions. Company resources and competitive capabilities must be aligned with the strategy and supported by standard daily functional activities. Both the internal and external features of the company’s overall state must exhibit good fit in order to produce winning results. Over time, those winning strategies exhibit dynamic fit if they maintain close and effective alignment with the company’s situation even as conditions change and evolve. 

The Competitive Advantage Test – asks if the strategy is helping the business attain a maintainable competitive advantage? Winning strategies aid the business in achieving a long-lasting competitive advantage. The bigger and more robust the competitive advantage, the more prevailing it is. Strategies that do not produce a determined competitive advantage over it’s rivals will not likely experience greater performance for any substantial length of time.



The Performance Test – gauges whether the strategy is producing greater company performance. Strong company performance, particularly in the areas of market standing/competitive advantage and financial strength/profitability, indicate that the company’s strategy is liking a winning one. When the company produces above average financial performance or market share increases/competitive position increases, the mark of a winning strategy is realized.

2. Based on your experiences as a coffee consumer, does Starbuck’s strategy (as described in Illustration Capsule 1.1) seem to set it apart from rivals? A: Starbucks’ strategy does absolutely seem to set it apart from and give it a competitive advantage against it’s rivals, through the customization of individual specialty drinks to the customer experience within the store, the high quality of the coffee beans used, a strong commitment to corporate responsibility, continued plans for growth both domestically and overseas, continuous product refreshes, and growth of the brand through outside of stores sales.

Page | 1

Sherri Edwards, MBA Student # 8447 Does the strategy seem to be keyed to a cost-based advantage, differentiating features, serving the unique needs of a niche, or some combination of these? A: The strategy includes many differentiating features, many noted above, along with the unique needs of a niche (those being the coffee drinkers who tote their laptop and use the store Wi-Fi). The cost based strategy is actually an inverse one, and within the realm of their corporate responsibility strategy in that Starbucks chose to pay above-market prices to its growers and suppliers and then use this as a marketing strategy. What is there about Starbuck’s strategy that can lead to sustainable competitive advantage? A: Starbuck’s has fashioned a creative distinctive strategy which is likely their most reliable method to developing a sustainable competitive advantage over its rivals. Without the strategy being distinctive, there would not be competitive advantage, since Starbucks would not be meeting their customer needs nor operating any more efficiently than any other coffeeshop. 3. Elements of Wal-Mart’s strategy have evolved in meaningful ways since the company’s founding in 1962. Prepare a one- to two-page report that discusses how its strategy has evolved after reviewing all of the links at Wal-Mart’s About Us page, which can be found at https://corporate.walmart.com/our-story . Your report should also assess how well WalMart’s strategy passes the three tests of a winning strategy. A: Walmart’s strategy has evolved in many ways since its inception in 1962. Their strategy began as it’s initial “Every Day Low Price” (EDLP) beginnings. Walmart still maintains this strategy to this day, and even considers it the cornerstone of their business strategy. Yet, they have grown and evolved that strategy to incorporate low prices across a broad assortment of departments, from grocery to arts and crafts, clothing, sporting goods, electronics and more. In addition to such one-stop shopping experiences in brick and mortar stores, Walmart has also added newer alternative shopping methods through their website at Walmart.com and through their mobile smartphone apps. These new strategies keep Walmart current with new technologies and competitive against other online shopping sites. Additionally, Walmart’s current strategy includes being a partner in the communities it serves. Examples of this can be seen wherein Walmart is seeking to employ almost a quarter million veterans, they provide the prospect to build a career for hourly workers, and work to better local communities. Walmart maintains multiple store formats in their US stores, with store formats each being tailored to its local community. Walmart also supports its workers by seeking to promote from within and works to promote hourly associates into store management. About 75% of Walmart’s store management teams began as hourly workers. Walmart’s commitment to give back to the communities in which it serves is also apparent in their community giving programs, and through the Walmart Foundation, as well as a a $2 billion pledge to fight starvation in America. Walmart is also the largest onsite green power generator in America and maintains Page | 2

Sherri Edwards, MBA Student # 8447 sustainability initiatives both in the US as well as around the globe. Additionally, Walmart maintains 150+ distribution centers, with their distribution process being one of the biggest in the world. Walmart maintains a fleet of 6100+ tractors, over 60k trailers, and employs more than 7800 drivers, driving 700 million miles per year. How well does Wal-Mart’s strategy passes the three tests of a winning strategy, one might ask? Walmart passes the Fit test of having matched its strategy to both its industry and its competition through competing in the mobile app and online web spaces, thus staying current amongst its competitors and in this retail industry space. Walmart exhibits good external fit to its existing “go-green” type market conditions through its commitment to environmental stability, through its community giving, through reduction in “empty miles driven”, which resulted in efficiency improvements of 87.4% in 2014. Walmart’s driver fleet is noted to be one of the largest and safest fleets in the world, thus validating how company resources are aligned with this strategy and supported by standard daily functional activities. Walmart’s strategy can be seen passing the Competitive Advantage test through their extreme success in maintaining a competitive advantage in the low-price leader space, proving how Walmart has attained a maintainable competitive advantage. Walmart has also achieved a long-lasting competitive advantage through its assortment of convenient one-stop shopping departments as well as it’s variety of ways to shop, maintaining every online and offline way to shop in order to reach every possible customer and maximize its ability to compete. Lastly, Walmart’s strategy passes the Performance test through the it’s year over year strong company performance, with increasing sales, profitability, and stock price increases which have led Walmart’s stock to be traded at its highest price ever this year, since inception. This strong company performance provides indication that the company’s strategy is likely a winning one. With Walmart producing produces above average financial performance and its market share is increasing, the mark of a winning strategy is realized.

4. Should a company’s strategy be tightly connected to its quest for competitive advantage? Why or why not? A: Companies routinely pursues enhancing its own performance and developing competitive advantage via the use of home-grown competitive stratagem built upon things such as better pricing, better publicity, a broader selection of models, more attractive performance and/or quality, lengthier warranties, a better image/status, and so on. A company’s strategy should be tightly connected to its quest for competitive advantage because in doing so, its value chain activities differentiate the company from its rivals, and capabilities are built which are not easily matched by competitors. Page | 3

Sherri Edwards, MBA Student # 8447

What difference does it makes whether a company has a sustainable competitive advantage or not? A: A sustainable competitive advantage is one which is durable over time, giving consumers lasting reasons to prefer one company’s products and services over their competition. For a corporation to succeed, their strategy must be perceptive, original, and quick to market. Next, it must be executed skillfully, in order to continue such success in the long term. If a company does not have a sustainable competitive advantage, they will be unable to meet customer needs in a manner which exceeds that of their competition, and thus in turn, potentially lose customers, and lose their success over time. 5. Good strategy + good strategy execution = good management. True or false? Justify and explain your answer. A: It is true that good strategy + good strategy execution does equal good management. Indeed, good strategy and good strategy execution are the most telling and trustworthy signs of good management. The better conceived a company’s strategy and the more competently it is executed, the more likely the company will be a standout performer in the marketplace. (Thompson, 2018 p. 13). Nothing will affect a company’s success, or lack thereof, more than how well the management team plans the company’s course, develops strategy, and does what it needs to do within to yield good execution and operational efficiency. In disparity is a company without direction from management, with flaws in their strategy or execution thereof, and this likely leads to financial performance issues. 6. What determines whether a company’s strategy is “ethical?” Why should a company care where its strategy can pass the test of moral scrutiny so long as each of its strategic actions fall within the bounds of what is considered legal? A: A company’s strategy is considered “ethical” when their business is conducted in a socially responsible and sustainable manner, when the strategy of the organization passes a moral inspection and is authentic in the sense of avoiding dissolute or unacceptable actions to others or to the environment. Ethics in strategy involves both right versus wrong and what should be done as compared to what should not be done. A company should care that it’s strategy passes the test of moral scrutiny because simply keeping the company within the boundaries of the law or in compliance with government regulations will not solely insure strategic success, but when the company functions in step with an ethical strategy the chances for business success are markedly increased, the company performs better, and market success can be linked directly to the ethical strategy employed.

Page | 4

Sherri Edwards, MBA Student # 8447 7. Read Case 01 – Mystic Monk Coffee pp. c2 – c5. 









What recommendations would you make to Father Daniel Mary in terms of crafting and executing strategy for the monastery’s coffee operations? o Recommendations to be made in terms of crafting and executing strategy for the monastery’s coffee operations include crafting and executing a strategy for expansion outside of the Catholic community and into the broader market as well as crafting and executing a strategy for marketing more to the “mystic” branding and promoted to be “monk created”. This strategy should align with the Fit test for exhibiting good external fit to existing market conditions. Also recommended is crafting and executing a strategy for pursuing a streamlining of operations inclusive of upgrading the current roaster to a larger capacity roaster, in order to increase the net profit margin, insuring the Performance test for strategy can be met. Crafting and executing a strategy for adding more customer support/order entry staff to increase and grow a call center to take orders could be yet another strategy following the competitive advantage test for strategy. Are changed needed in its long-term direction? o Changes are needed in Mystic Monk’s long-term direction, if they are to grow the business large enough to support the vision of purchasing and sustaining Irma Lake Ranch. Expansion of the business through the purchase of the new roasting machine, to generate the additional funds necessary, must occur. Once an increase in coffee production has occurred, increasing marketing to drive sales up while working to decrease operating costs, must also occur. Its objectives? o Changes to objectives include a first objective of increasing coffee production, as current production won’t produce high enough revenue to meet the costs. Buying the new coffee roaster and working the schedule of staff to allow for more coffee bean roasting, has to occur, in order to increase production. If only the new coffee bean roaster is purchased, but hours used remain at 5 hours per day, then coffee production will only increase from 540 pounds now to 780 pounds (130 pounds an hour times 6 hours = 780), which is barely a one-third increase. Its strategy? o Changes needed to the strategy include those as noted above, generating more profit through additional productional activities and increasing marketing activities to spread the word outside of the original Catholic community, and adding to order taking/customer service capabilities. Its approach to strategy execution? Explain. o The biggest change needed to strategy execution is that of the number of hours in which monks roast coffee beans. Increasing either the number of hours beans are roasted, or the number of staffers (monks, in this case) working the same hours in more than one roaster, will lead in turn to an increase in sales and profits. Marketing in other lines of business, such as wholesale stores or retail stores, should also be done. Page | 5

Sherri Edwards, MBA Student # 8447

Sources: Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2018). Crafting and executing strategy: the quest for competitive advantage: concepts and cases. New York, NY: McGraw-Hill Education.

Page | 6...