Strategic management helps an organization to realize its current situation and figure out the best strategies to put it at a competitive advantage in the market (Rouse 2019). Since the business environment keeps on changing, strategies have to be updated from time to time in accordance with the changes experienced. Strategic management can only be predicted through the knowledge of an organization’s goals and visions and the values and culture that will lead to the realization of its future goals. Strategic management undergoes a process with five stages (Osborn 2018). They include assessing the organization’s strategic situation in the current state, understanding its internal and external weaknesses and strengths, formulating and executing an action plan, establishing the success of the plan and making changes where relevant (Juneja 2019). The strategic management process, therefore, relies entirely on communication, research, feedback, and organizational culture since they are all imperative in giving a true situation of the organization.
Key Performance Indicators
One of the key performance indicators, KPI, is the customer retention rate (Newburry, Deephouse, and Gardberg 2019, p. 12). Illustratively, while at Sneakers Inc., the team was able to improve on the rate of customers retained and the number of referrals. Customer retention is not only a sign of good customer service but also an indication that products sold are of good quality thus making customers satisfied (Reh 2019). Customer satisfaction is most cases leads to referrals, which improve the number of sales achieved. The team was also able to meet the sales target. In the past, it was rare to have someone in the sales team succeed at meeting the targets set. However, with new strategies, the sales team was able to meet and at some point exceed the target. An increase in sales led to an increase in revenue collected. As such, KPI is essential in monitoring the customer situation in the firm, which in turn helps to enhance the rate of return on investment.
The kind of feedback that the team at Sneakers Inc. received also confirms that my performance was successful. The complaint rates went down and the rate of positive feedback went up; that means that the customers were happy with the kind of products we sold them and the customer service that was offered. The organization’s mood also completely changed. Before, the company used to register several sick leaves on a daily basis. The habit changed and the employees were hardly absent. They enjoyed working and providing the best in a bid to meet their targets. They became creative and could share ideas openly without any fears. Thus, the ideas that they came up with were used to boost sales and to promote the company brand.
Strategy Assessment
To assess the external business environment, I introduced the PESTLE analysis. Most of the factors that contribute to the external environment are beyond the control of the company (Opentextbc.ca n.d.). Therefore, a company needs to be aware of these factors so that it can be armed with the right means of dealing with them. The PESTLE analysis helps consider the political, economic, social, technological, legal and environmental factors (Alanzi 2018, p. 72). The PESTLE analysis provides a guide on how to analyze the external environment and comes up with the relevant precautions to take considering the effects they will have on the business (Free Management Ebooks 2016). At Sneakers Inc., we used several questions that guided us while conducting the analysis. They included, what are the key political factors that would affect the business? In this perspective, we sought to understand the various political aspects that would affect the company, how they would affect the company and for how long.
The next essential question was which economic factors would influence the company? The question guided the aspect of economic changes within the analysis. Which cultural aspects would be important to the business? Sneakers Inc. operates within various societies that have varying cultures. Identifying the cultural aspects that would affect the business was vital since the company needed to plan for any eventualities (Free Management Ebooks 2016). What technological changes are likely to happen? Technology keeps on changing. Sneakers Inc. uses technology in most of its operations. Therefore, it is important for the company to be ready for any changes and updates that may affect any of its operations. How are the current and impending legal structures likely to affect the company Global Journals? (Global Journal of Computer Science and Technology 2015, p. 2447). The final question was about the environmental considerations that the company needs to adhere to. All the questions gave a framework to the team to conduct the relevant analysis and build feedback that helped the company plan and strategize properly.
To analyze the internal environment, I introduced the SWOT analysis. A SWOT analysis identifies the gaps, strengths, opportunities, and threats surrounding a company (Olsen 2019). Using the strategy, the team could identify the company’s weaknesses and strengths. For example, the company, according to the analysis could produce large volumes due to its limited resources. With the results from the analysis, the team could strategize and identify the areas that needed to be improved and those that needed to be developed (Teece 2019, p. 10). It is through the SWOT analysis that the company realized its potential. With the information gotten from the analysis, the management could identify how to grow the company and the strategies to implement in order for the company to efficiently grow (Kumar 2018, p. 7). A SWOT analysis enables the company to realize its challenges (Mirkovic 2019). Overall, it enables the management to make proper decisions on strategies to implement.
The competitive strength of every company is vital to its success (B2U – Business-to-you.com 2016). According to Porter’s Five Forces, businesses are affected by several factors other than the strength of their competitors. Even though the businesses keep a close watch over their rivals, they should also consider the five forces (Omalaja and Eruola 2015, p. 60). One of them is competitive rivalry. It analyses the number of competitors that a company has, who they are, their strengths, and the quality of their products (Chappelow 2019). By analyzing this, a company can strategize and come up with methods to help have a competitive advantage. For example, where the competition is intense, they can counter it by ensuring a strong and efficient marketing strategy with strategic price cuts (Ansoff et al. 2018, p. 17). The other force is supplier power. It analyzes how unique the products supplied are, how costly it would be to shift from one supplier to the other, and how effective the supplier is (Martin 2019). Buyer power, the strength of substitution and threat of new entry are other forces covered by the model.
The strategies that I introduced to Sneakers Inc. enabled the company to grow and realize its strengths, weaknesses, and potential. We grew the sales volume of the company since through the strategies; we recognized how the company can perform (Morden 2017, p. 45). The company’s management was initially unaware of the competition and how to go about streamlining its operations in order to suit its goals. After introducing the strategic management concepts, the management formulated concepts that put the company at a competitive angle (Rothaermel 2017, p. 22). With the company’s’ quality products, competing in the market was not a challenge. Having identified its main competitors and other details regarding competition, the company strategized and formalized means for use to stabilize its competitiveness. In the end, the strategies included strategic pricing, vigorous marketing, and mass production.
Evaluation of Success and Failures of Sneakers Inc
One of the success factors of Sneakers Inc. is the quality of its products. The company produces quality and authentic products that enhance its competitive advantage. Another company’s strength is the opportunities for growth. The portfolio enables the company to have a vast opportunity for growth. According to the BCG Matrix, it is important to decide where to invest by considering the portfolio of the company (Hanlon 2019). The company’s portfolio is quite flexible, which allows it to provide means for growth and expansion.
The weaknesses include the fact that the company rarely upgrades its strategies. In strategic management concepts, it is vital for every company to update its strategies to include the ever-changing times. Its technology is also rarely updated despite the fact that it is the core part of the business distribution channels (Vliet 2019). The failures have posed as an obstacle to the company’s growth. According to the core competency concept of strategic management, a company has to have multiple resources, talents, and skills that will distinguish it from other companies in the market. Sneakers Inc. does not have vast resources, which made it weak in the market.
Recommendations
To attain future successes, the company has to consider the concepts of strategic management to ensure that the strategies will be aimed at growing the company. There is a development opportunity of the company globally, which would increase its competitive advantage. Therefore, the strategy chosen should be able to cover the development plan for the company in line with the company goals and vision. Another recommendation is to analyze the company’s competition before formulating the strategy. Both the external and internal aspects affect a business (Hitt, Ireland and Hoskisson 2016, p. 22). As a result, failure to conduct an analysis of these aspects will lead to a failed strategic management. The final recommendations that should be considered before implementing the new strategies are the competitive strengths of the company. The company as seen above has weaknesses and strengths. The two may lead to derailed growth. As a result, they should be considered before any strategy is formed. Being aware of the company’s strengths and weaknesses will inform the decision on which strategy to implement.
The two recommendations will increase the competitive advantage of the company since they inform the company on the possibilities of a market in the outside world (Reh 2019). Analyzing the external and internal environments will ensure that the strategy implemented is in line with the goals of the company and therefore, it will enhance the competitiveness of the company. Analyzing the competitive strengths of the company will inform the strategic managers on which areas to cover during strategy formulation and implementation (Business Jargons 2019). Every strategy implemented should be in line with the company’s vision and goals. Using the recommendations, the company will identify the strategy that aligns with the culture, goals, and vision of the company. Thus, identifying the strengths and weaknesses of the company ensures that the strategy formed suits the company and favors its processes.
Conclusion
To conclude, strategic management is informed by a keen analysis of actors affecting business both internally and externally. Using various concepts and theories such as the SWOT and PESTLE analysis, a company can identify the factors that are likely to affect its business operations. In this regard, the company can understand its weaknesses and strengths and how well they can be utilized to enhance its competitive advantage. In addition, a business that uses these strategic management tools can predict the future aspects of the business environment that may affect its operations. For instance, as seen in Sneakers Inc.’s scenario technology keeps on changing, and it is imperative to keep adjusting based on the current market demands, test, and preferences. A company should be able to program its operations in a way that will not be affected by the technological changes that happen from time to time. All in all, company’s strategic management entails diverse aspects and use of tools that all help in enhancing the company’s competitiveness.
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