- By analysing impact and influence of the macro environment
- By assessing the internal environment and capabilities
- By evaluating industry using Porter’s Five Forces model
- By developing a strategic direction for the organisation
Business strategy refers to the process in which managers formulate policies and plans that render direction or guidance to various other departments for attaining their set targets and objectives in defined time period. It is a action plan for long term according to which tasks are performed by employees and at the same time minimize the risk (Al-Swidi and Al-Hosam, 2012). It is the duty or responsibility of management of company to oversee all external & internal factors at the time of formulating strategies. This will help them in carrying out all the activities and operations in an effective and cost efficient manner and at the same time also assists in completion of work on time. In the present assignment, chosen organisation is Unicorn Grocery that offers household items to their potential customers. It is a cooperative grocery store which is headquartered in England, United Kingdom. The report includes application of PESTLE framework for analysis of macro environment. Internal environment and capabilities of firm are also analysed along with application of Porter's five force model. At last, range of theories and models are applied to interpret strategic planning of organisation.
1.1 Application of appropriate framework to analyse macro environment
Fundamentally, business environment is a mix of two variables, that is, internal and external. Internal forces are those which exist inside the business enterprise and are controllable one. On the inverse of this, external forces are those which are present outside the company and are uncontrollable. That is the reason behind determination of external variables and its effect on activities of business organisation. These factors may influence either in negative or in positive way on operations and activities of firm. To distinguish positive and negative effect of macro forces, firms are using a tool called PESTLE analysis. This tool assists manager of Unicorn Grocery in determining impact of political, legal, economical, environmental, technological and socio cultural factors.
Political factors: Legal authority of UK set a few guidelines by covering the components such well-being and security, risk control, risk identification and some more. Unicorn Grocery did not take after these standards and disregard the health of their workers and they get injured which hamper the positive picture of firm (Avramenko, 2012). Because of this organizations bear huge loss that is the reason to consent and execute its activity according to the standards set by government. This helps the company in performing its operations in well manner and increasing its productivity and profits.
Economic factor: Inflation rate, interest, loans, deflation etc. are the factors that go under economic variables. Any kind of change or alteration takes place in these forces may highly influence activities and functioning of business (Bansal and Hoffman, 2012). For instance, In United Kingdom, if banks or financial institutions will increase their interest rate on loans, than this will make a deterrent in development and growth activities of company as sufficient amount of funds are require for it.
Social factors: Prevailing trends of market, taste and preferences of customers, buying behaviour of customers etc. are the variables that comes under social factors. Firms are required to carefully analyse these factors and considers those in order to make products accordingly which completely satisfies needs and requirements of customers.
Technological forces: Technology plays fundamental part in case of retail industry. So, it becomes fundamental for organizations to use high end technology in operations and processes of firm so that high quality products can be delivered to customers. For this it is extremely important that situation of brand ought to be spoken with clients consistently. For this Unicorn Grocery need to put more in its advertisement exercises. Further, to keep up its market share, it is fundamental for firm utilize updated technology for communicating with its clients and to manufacture final items for them.
Legal factor: legislations and regulations made by government are change frequently . Because of this firm do different endeavours to keep refresh with new enactments. Firm additionally do change in its well-being and security legislation in order to guarantee health and safety of employees.
Environmental factor: Today, purchasers of each item are winding up more sensitive about environment protection. This reality impact firms to make items with quality crude material and utilize standard process for making last items (Bill Pasmore and CMC, 2010).
Above mentioned are all the factors that influence operations and activities of company. Various forces exist in business condition influence capacity of an organization so all these must be distinguish and assess by the chiefs of so firm can design its future exercises.
Ansoff's growth matrix to measure strategic position of company:
Strategic position is upcoming position of company by considering different perspectives, for example, inner powers, changing condition and so forth qualities and shortcomings of firm characterizes by situating system which helps them to distinguish existing necessities of purchasers and fabricate solid market position (Boons and Lüdeke-Freund, 2013). Primary motivation behind executing techniques is to make the exercises of association more successful with the goal that it empowers to contend in advertise. This will put coordinate effect on efficiency and also gainfulness of organization. Ansoff matrix is one of the vital instrument that helps with figuring methodologies that aids business improvement.
4 strategies includes in matrix are:
Market penetration: By the way of adopting expansion, profitability of firm can be increased. It is a procedure in which firms predominantly underscore on selling existing products to the potential clients. Utilization of this strategy gives a chance to organization to expanding its market share and keep up their strong market position.
Market development: It is likewise an extension procedure in which new market is created with existing services or products. Primary point of embracing this system is to build their buyer base by growing more new markets. This will help Unicorn Grocery in drawing in extensive gathering of clients. By utilizing this system firm extend their tasks all through the world or at different nations.
Product development: Under this, company develops new items and processes with a specific end goal to fulfil needs and requests of their potential clients. Firm can done this by the help of executing innovative technology so as to draw in extensive gathering of clients. In this view, strategic alliance is done by company with different organizations to access new technology.
Diversification: In this, all things are new to business enterprise. Here market is new and in addition item is likewise new. Company extend its market by growing new item and bring it into a totally new market (Gebauer, Paiola and Edvardsson, 2010). Usage of this methodology enables Unicorn Grocery in growing their market share and also broadening of business activities in new territories.
P2 Analysis of internal environment and capabilities of firm
Internal capabilities of the firm can be determined through conducting SWOT Analysis. These are those components that are available inside the association and have adverse impact on organization's task and capacities.