Table of Contents
- Introduction to Strategic Planning
- Strategic Positioning
- Price for an Essay
- The Organisation
- Mission Statement
- The Major Analysis Tools
- The PEST Analysis
- Company SWOT analysis
- Long Term Goals/Objectives
- Viable Strategic Approaches
- Best Strategic Approaches
- Measuring the Success of the Strategy
- Limitations or Risks Associated with the Strategies
- Mitigation measures
- Related Free Economics Essays
Introduction to Strategic Planning
Strategic planning refers to a concept that an organization uses to define its strategy and direction (Menon et al. 1999). It incorporates the decision making process and the process through which the management team would allocate the available resources in order to achieve given short-term and long term objectives. The decisions taken at both the internal and external levels of the organization are important and require to be directed to a certain audience. There are also methods that are used to measure the rate of success of the strategy or its failure.
Menon et al. (1999) states that a strategic plan is usually comprised of several fundamental components of an organization. They include the mission, vision, values and the strategy that the managers would employ to reach the vision and mission. The vision and mission of an organization is usually displayed conspicuously within an organization premises to ensure that employees always perform the work in line with the company's aims. The mission states the primary purpose of the organization’s creation and is usually achieved during its daily running. The vision refers to the long-term goal that led to the inception of the organization. The vision shapes the understanding of what the organization wishes to be in future. The values are the beliefs that stakeholders within the organization follow to ensure that they develop and retain the organizational culture for their organization. Finally, the strategy refers to the outlay of the sequence of activities that would lead to the achievement of the other components of the strategic plan.
Strategic positioning of a firm refers to the position that the firm holds in the market (Fahey & Narayman 1986). It embraces the whole organization and not a specific product produced by the firm. When the position is created for a certain product, it is referred to as product positioning, while when the firm is involved, it is now referred to as strategic positioning. Generally, strategic positioning would eventually mean that any product produced by the organization would be accepted by the market (Fahey & Narayman 1986). In this case, most of the products are named after the company. A good example is the motor industry where the products are named after the company to create company brands. Toyota’s cars possess one common name regardless of their sizes, but possess different model numbers or names. However, this is usually insignificant and more attention is paid to the general product name that is named after the company or manufacturer rather than the name of the model (Menon et al. 1999).
Cambridge Satchel Company is a small company that is based in the United Kingdom (Eccles 2012). It is known for its production of leather satchel bags. They have classy fancy bags that are best suited for those who study as well as any other customized uses. The production of these bags was greatly inspired by the existence of fondness to Harry Potter. The founder of the company decided to make bags that were more modern to replace the old ones using hand stitching, unlike the others that were made using machines. This would be an upgrade, just as Harry Potter movies were upgraded and became popular. These bags differ from all the others in the market. They are very successful and people like them for their classy and fashionable look. They appear in different colors and sizes as well as patterns. This makes them assorted to an extent that anyone can choose from a wide range of the bags. They are made out of a high quality material; leather, that will never get out of fashion and will always look ‘cool’ through generations. The company sells the bags through different channels that include the use of retailers throughout the United Kingdom. They also have a website where people from all over the world buy products of the company. This makes the small company a success.
To be the most preferred company selling leather products in the United Kingdom.
To provide at an affordable price high quality leather products which are desirable to the customers, fashionable and long lasting.
The Major Analysis Tools
The process of strategic planning carries out a thorough examination of the organization to determine the internal and external factors that the firm is working in. From this, it determines the factors, which helps the firm achieve its goals, mission and vision. The internal factors are those that are determined by the firm, while the external factors are those that cannot be determined by the firm such as the process of policy making. The internal factors are measured using SWOT analysis that determines the Strengths, Weaknesses, Opportunities and Threats that an organization would face in the course of its operations (Hill & Westbrook 1997).
To examine the external factors, firms use the PEST analysis that looks into the Political, Environmental, Social and Technological factors that would affect their operations (Hill & Westbrook 1997). The firm would capitalize on the positive factors while trying to reduce the effects of factors that would inhibit progress. When the information from these two tools is effectively used, the strategic plan is usually successful. On the contrary, ineffective use of these tools would lead to dire consequences.
When the correct channels that ensure the proper use of the PEST and SWOT tools are used, another important feature is born: the value chain. This is another tool that ensures that the firm produces goods or services that are unique and desirable to the target buyers. Failure to use this tool would lead to low sale due to poor reception in the market. Value chain’s main aim is to ensure that the goods are well positioned in the market and fetch the desired demand and, as a consequence, sales.
The PEST Analysis
The Cambridge Satchel Company, is located in Cambridge, United Kingdom. The political status in the country is favorable and encouraging to the leather industry. This is because there are better policies that encourage the use of these products in order to create jobs, and support the economy of the country through the sale of products. In 2000, a code of conduct was developed to ensure that there was a better reporting structure with regard to the disposal of industrial waste from this sector (UKLF 2010). Further, there were other codes developed, such as the social code of conduct which was aimed at ensuring that there was an understanding between the industries and the general public.
Leather industry in United Kingdom has been hailed for its increased use of products that otherwise would have been wasted and even pose environmental issues. However, due to the increased meat consumption, more leather and hides are being produced. Leather industry uses this skin and hides to create high quality products that are sold overseas thus earning the country foreign exchange. They also create employment and increase Gross Domestic Product and per capita income. This also ensures that the exchange rate is favorable to the UK currency thus it results to an increased economic stability (UKLF 2010). This leads to the improved position of Cambridge Satchel Company which works in the leather industry.Want an expert to write a paper for you Talk to an operator now
The role played by leather industry in the UK is highly appreciated by the people. They see the work of this company as an important process which ensures less animal waste and a much better use of hides and skins. Moreover, the work of the factories ensures more workplaces for people; this contributes to the solving of unemployment problem (UKLF 2010). This is highly appreciated by the people as they see the industries improving their livelihoods. Further, they see the companies creating high-class products at a relatively lower cost. This is an advantage to Cambridge Satchel Company as the society appreciates its presence.
Technology has been improving every day. However, the Cambridge Satchel Company, do not use the innovations in their production but rather the manual workers in the processes such as stitching together the pieces of leather to create bags. However, they have used technology in their marketing and have set up online stores so that people can shop online.
Company SWOT analysis
The company products have become very popular among people. They are regarded as unique and classy. They also come in different colors and designs, giving the company an upper hand over its competitors. Further, the company products have been known to be hand stitched which makes them unique and attractive in the market.
The company has already taken a market that no other company has ventured into. Therefore, highly competent employees have been put together to achieve the goals of the company and to increase their sales and production. They also have highly competent online marketers who ensure that there is a perfect line up for the available products in the market. This is a very important step since it reaches more people. Further and most importantly, the founder has been named among the 100 most influential persons in fashion, creating an endless prospect of improvement and competitiveness (Eccles 2012).
The products are gaining their popularity due to their class and longevity. If changes in fashion trends occur, Cambridge Satchel Company could be in trouble as they have little room to improve. They have developed a brand that is unique and any changes in bag’s design might bring the loss of the market share.
The company is small and might not be able to reach out to all the desired customers. Further, it may not be able to conduct comprehensive survey to determine the other designs that would be desirable among the customers. At the same time, the firm may not be successful in their tracking of the movement of their products due to its small employee base which comprises of only eighty-four workers (Eccles 2012).
The company is well established and known to many people by now. It captures a given niche which ensures its existence to a certain level. Cambridge Satchel Company have also shown its reliability in terms of production of high quality products thus ensuring the demand for its ‘classy’ products.
The products from the company are in demand and despite the current production of 900 pieces per day, there is still a large backlog of orders that the firm is not able to beat (Eccles 2012).
The need for education among students has increased and this has led to the increased demand for school bags. Further, the improved technology has prompted scholars to look for better and reliable bags. This is because learning material is increasingly getting more fragile as tools such as tablets and other computer-related tools are being adopted ahead of traditional books which were less fragile and required relatively less care. The leather bags would provide the solution.
There are several other companies that are emerging, targeting the same niche that Cambridge Satchel Company is currently enjoying. Such include Bohemia, Modcloth and Zatchels.
Since there is only one main innovator and fashion innovator, the company may not perform the way it does if she has to leave for whatever reason. This poses the threat of unsustainability.
Long Term Goals/Objectives
The company’s long term objectives are;
- To remain the leading satchel producer in the country;
- To expand and effectively cover the whole of the United Kingdom through the expansion of factories and manpower in five years;
- To double production from the current 900 to 1800 bags per day in one year’s time;
- To increase the variety of products by presenting other leather products in three years period.
Viable Strategic Approaches
There are two main approaches that a firm can use to improve its position in the market (Martin 1995). The first one is the industrial organizational approach which is usually based on the economic theory. It focuses of the economic rivalry within the industry, economies of scale, and the availability of resources. It also uses the assumptions of customer behavior and profit maximization process (Martin 1995). As a firm is a small and young company, it would be irrational for the mangers in Cambridge Satchel Company to use this method because focusing on their competitors would make them fail. They have a small capital base and cannot boast about the firm’s production at large scale, producing 900 satchels every day at the moment. The nature of a small company would not allow it to compete with large manufacturers since they focus their sales on students and individuals, unlike larger corporations who target large scale retailers as their outlets.
The second approach is the sociological approach that focuses on the way people relate to the business. It also has assumptions such as the level of customer satisfaction and how much profits the firm should make without the complaints from the customers, since they would be getting value for their money (Lusch & Lusch 1987). This is the best approach that the company can use in making its sales and profits rise and keep its customers. First, it would be a social pride for neighbors to think of such humble beginnings which lead to a big success. Started as a simple bag making business with a capital of only 600 pounds, with an ultimate aim of sending a young daughter to school, it would make the society curious about the company and people would easily associate themselves with the business and its success. Further, the approach would demand that customer satisfaction is kept at its best, which is the biggest concern of the company at the moment. This is because the company has an easy contact with the customers as it uses few middlemen, if any, to reach out to its customers. At the same time, the firm has started to capture good clientele such as movie stars and radio presenters. This benefits the business because it provides focus from the media. Also, many bloggers have contributed to the popularity of the company right after it’s inception. This is a very important factor that the small company is enjoying and it should ensure that these means of gaining popularity remain well guarded to provide sustainability (Armstrong 2006).
The company also enjoys uniqueness within their industry. This is because there are no major companies that make pure leather satchels. Therefore, there is little competition and the products give little room for replacement form other industries. This is an important factor because the company would enjoy the customers who do not wish to buy any other bags, but long-lasting leather satchels.
Best Strategic Approaches
The best strategic approach by Cambridge Satchel Company would be the second, the sociological approach. This is due to the size of the company which limits its production. The humble beginning would eventually benefit the organization which cares about customers satisfaction. It keeps their touch with customers and ensure that they feel the touch that benefits their mutual co-existence (Armstrong 2006).
Today, the company has started to dominate media and is doing fairly well in its market. Along with the increasing of its capital base the company should start expanding the product line and thinking of other leather related products for their customers. Leather shoes, wallets, among other small leather product would be a good venture for the company to expand its target market and diversity. Currently, the firm has an excellent relationship with the customers and this could be a boosting factor to the company. This would increase their sales and curb the threat of little chances expansion. The company should also hire another designer and this would mitigate the effects of exit of the main proprietor and innovator as her absence would lead to low fashion innovation. This would provide the continuity of the company and there would be little competition from the current emerging companies that target the same market niche. In the long run the firm would emerge as a powerful company due to its unique line of products and first-hand relationship with the clients. The ultimate aim of increasing the company’s turnover and the number of its clients would be achieved and the general size of the company would soar within a shorter period of time than expected.
Measuring the Success of the Strategy
The strategies highlighted above would need to be measured to ensure that they work and the intended long-term objectives are achieved. The company has reached a good expansion position and would not have a big challenge, especially with a current 12 million pounds one-year turnover. The objectives highlighted with regard to the organization are very specific thus it will be easy to measure the success after the period of time stipulated to achieve every individual objective (Tracy 2000). For instance, the process of expansion which aims to cover the whole country would be estimated after 5 years and the production would double in a year’s time. An introduction of any new leather product within three years would be a measure of success with regard to the long-term objectives.
Limitations or Risks Associated with the Strategies
With the emergence of the small companies that target the same market, the company needs to improve and increase its innovativeness (Kono 1994). This could slow down the rate of increase in turnover and eventually decrease the chances of expansion and diversification of company’s products. There would be challenges of diversification because the company would require another expert to introduce any new products. This is because the designs might not match well with the current existing ones in the market. Eventually, there would be slow diversification of products (Tracy 2000). Finally, there are many logistical issues that must be handled with caution during the expansion. The products are popular among people in the region of the current firm’s location, but this might be not true in other locations. This would reduce turnover and could even result into losses which the company should avoid at all costs, especially at this stage of expansion.
The company would need to reduce the chances of the highlighted limitations to affect the progress of the company (Kono 1994). First, Cambridge Satchel Company should ensure that it covers the satchel bag market effectively to guarantee that any entrant struggles and does not replace it. This would retain the image of Satchel Company before it moves on to introduce any other products. Secondly, the company should carry out a thorough research to determine the areas where its products would be easily accepted. The expansion process should therefore be taken with caution in order assure that the most potent areas are covered at first.