Table of contents:

Task Contents

1 Explain the importance of external factors affecting an organization

Analyze the needs and expectations of stakeholders of an

organization

Analyze the major changes taking place in the external environment

that will affect strategy

2 Use appropriate tools to analyze the effects of current business plans

Review the position of an organization in its current market

Evaluate the competitive strengths and weaknesses of an

organization’s current business strategies

3 Use modeling tools to develop strategic options for an organization

Develop a comparative understanding of activity from organizations in

the market

Create options to form the basis of future organizational strategy

4 Propose a suitable structure for a strategy plan that ensures

appropriate participation from all stakeholders of an organization

Develop criteria for reviewing potential options for a strategic plan.

Construct a agreed strategy plan that includes resource implications

Introduction:Simply put, strategic planning determines where an organization is going over the next year or more, how it's going to get there and how it'll know if it got there or not. The focus of a strategic

plan is usually on the entire organization, while the focus of a business plan is usually on a particular product, service or program. There are a variety of perspectives, models and approaches used in strategic planning. The way that a strategic plan is developed depends on the nature of the organization's leadership, culture of the organization, complexity of the organization's environment, size of the organization and expertise of planners.

Key componentsThe key components of 'strategic planning' include an understanding of the firm's vision, mission, values and strategies. The vision and mission are often captured in a Vision Statement and Mission Statement.

Vision

Mission

Values

Strategy

Task 1: Understand the external environment affecting the organization

Task 1.1: Explain the importance of external factors affecting an organizationMost successful business start-ups are owned by believers and proponents of good strategic management, a regimented 7-stage discipline involving vision and mission development, external assessment, internal assessment, long-term objective setting, strategy identification and selection, strategy implementation, and performance evaluation.

Well-meaning strategic management practitioners consider five (5) key external forces in doing the external assessment exercise, and these are political, economic, social, technological (PEST), and competitive factors. The scope of external assessment embraces the analysis of opportunities and threats impacting a certain industry or business. The following discusses the key factors covered by an external assessment:

1. Political Factors: This exercise dissects the political, governmental, and legal aspects of a particular business. Both local and global environments are studied because federal, state, local, and foreign governments are major regulators, deregulators, subsidizers, employers, and customers of organizations. The growing interdependence among economies, markets, governments, and organizations underscores the importance of considering the political variables affecting the conception, development, and operation of any business.

The complexity of today's political landscape is exactly the reason why strategists now spend more time anticipating and influencing public policy actions. Entrepreneurs make sure that they have more time meeting government officials, attending government-sponsored conferences, rendering public speeches, issuing press releases, and becoming visible in trade groups, industry associations, and other congregations where updated political developments can be learned.

2. Economic Factors: Economic analysis, a comprehensive study of national, regional, and global economic performance and trends, represents a highly important phase of strategy development for planned, start-up, and growing businesses. Economic factors have direct impact on the potential attractiveness of various business ventures.

The U.S and world economies have suffered extended severe distortions. As a result, businesses floundered and resorted to manpower cutbacks, with several thousands of small, medium, and big enterprises forced by economic circumstances to close. The U.S. housing meltdown is a clear example of how adverse economic factors could bring down huge businesses and industries. Millions of displaced employees are now being pushed to become entrepreneurs to make a living, with the United States becoming more entrepreneurial every day. This development reinforces the importance of analyzing economic forces before and during the course of any business.

3. Social Factors: The social component of strategic analysis relates to assessing the social, cultural, demographic, and environmental profiles of addressable markets.

In the U.S., for instance, cultural, demographic, and environmental trends are shaping the way Americans live, work, produce, and consume. America is an aging society, and getting less Caucasian in racial mix. The oldest members of America's no less than 76 million baby boomers plan to retire in 2011, creating deep concern as to who will pay their social security and Medicare. Americans age 65 and older will rise to 18.5% of the total population by 2025. The U.S. Census Bureau estimates that the number of Hispanics will increase to 15% of the total population by 2021, and will become a bigger minority group than Afro-Americans. More and more Americans move in a population shift to the South and West and away from the Northeast and Midwest. Americans are becoming less interested in fitness and exercise. Decimation and degradation of America's natural environment is the greatest threat to business and society, except for terrorism. World population passed the 6 billion mark, with the U.S. having just about 300 million people; this leaves billions of people outside the U.S. who may be markets for American products.

The sample inputs we had just presented typify the kind of information that an analysis of social factors can unravel for anyone who is in business, or who intends to go into it. This information helps pinpoint the segments or niches that need to be specifically served for competitive advantage.

4. Technological Factors: Technology is a business enabler that has revolutionary impact on the actual conduct of business. It contributes to achieving desired business productivity and efficiency. The Internet serves as a good example; what used to be impossibility in instantaneous global communication has become a cold reality and an urgent necessity for every business in order to succeed. The Internet, including its e-commerce and social networking adjuncts, continues to change the nature of opportunities and threats in business. It alters product life cycles, increases distribution speed, creates new products and services, changes economies of scale, redefines business relationships, and propagates borderless transactions. In short, the Internet has become an indispensable business tool.

Technology, however, is a threat, a disruptive element that can cause monstrous operational problems for businesses that fail to keep pace with technological trends and innovations. This disruptive impact amplifies the essence of evaluating the technology issues surrounding the viability of a business. For example, by combining high technology and low-cost massive manpower, China-based businesses have achieved unprecedented global competitiveness.

5. Competitive Factors: An equally important part of external assessment is identifying rival firms and ascertaining their strengths, weaknesses, capabilities, opportunities, threats, objectives, and strategies. Good competitive intelligence in business, like in the military, remains to be one of the key factors for success. Weaknesses of competitors can signify external opportunities, while major competitive strengths can mean key external threats. The more competitive information is collected, the more it is advantageous for a company as it possesses a good basis for strategies.

While collection of competitive information is a difficult task, the Internet has been the leading remedial source for such information. Many strategically-minded companies go to the extent of adopting a responsive competitive intelligence strategy, which is a systematic and ethical process for gathering, processing, and organizing information about competitor's activities and general business trends to support the attainment of business goals.

Competitive intelligence programs seek to provide a general understanding of an industry and its competing players, identify the vulnerabilities of competitors and assess the impact of strategic actions against them, and know the potential competitive moves that can jeopardize a firm's position in the industry. The outstanding benefits of competitive intelligence include increased revenues, lower costs, and better decision-making.

Task 1.2: Analyze the needs and expectations of stakeholders of an organizationStakeholders can be defined as all entities that are impacted through a business running its operations and conducting other activities related to its existence. The impact can be direct in the case of the business's customers and suppliers or indirect in the case of the communities in which the business chooses to place its locations. Businesses must consider the needs and expectations of its stakeholders, though it need not consider them to be of equal importance. Certain stakeholders such as owners and investors are more important than others.

Business Stakeholders: Stakeholder is a catch-all term that includes a broad range of disparate entities ranging from individual people to large-scale public and private organizations. In general, the business's most prominent stakeholders include owners and investors, personnel, customers, suppliers, creditors, host communities and the governments of those communities.

Stakeholder Analysis: Before a business can consider the needs and expectations of its stakeholders in the course of its planning, it must identify those stakeholders and sort them in their order of importance to the business. One method to accomplish this is to list the stakeholders and then determine the degree of their interest and influence in the business. If stakeholders have a high degree of interest, the business needs to communicate with them on a regular basis and keep them informed about its activities. The business also needs to keep them placated.

Stakeholder Needs and Expectations: Once the business has identified its stakeholders and their importance to the business, the organization can begin to plan, based on their needs and expectations. Each stakeholder has concerns that it expects to be met by the business. For example, the business's owners expect it to be profitable and to distribute that profit to them while local and federal government agencies expect it to obey the law and pay its taxes on time. The importance of each stakeholder to the business determines the degree to which the business attempts to accommodate the stakeholder in the course of planning its actions.

The impact of stakeholder needs and expectations on businesses is inescapable and ubiquitous. Businesses exist to meet the expectations of one specific stakeholder in the sense that businesses are set up and operated to produce profit for their owners and investors. Businesses also must consider the needs and expectations of other stakeholders because of their ability to help and hinder their operations. For example, a business should be considerate of its host communities because that improves its reputation and strengthens its market presence. On the other hand, if the business chooses to ignore its host communities, that disregard becomes a black mark on its reputation and can result in other sanctions if relations become bad enough. The only stakeholders that businesses can ignore are the ones with little interest and influence on their operations.

Task 1.3: Analyze the major changes taking place in the external environment that will affect strategyThe external environment of the company is made up of several economic, social, demographical, management and ecologic factors. It can directly or indirectly influence the activity and the evolution of a tourism company. The analysis of the external environment can lead to the possible identification of future trends. The evolution analysis is based at a company or geographical level as it can become a strategic opportunity; it can prove to boost cost efficiency and can increase income.

Taking advantage of such opportunities can consist in a better efficiency and productivity whilst the identification of opportunities depends on both, a close research of the environment and the capacity of the company to give a correct meaning to the collected information ahead of competition.

Employees play a significant role in identifying the opportunities thus reaching to the conclusion that environmental research will be not be enough as to create new opportunities. Success can only come as a result of a combination between the environmental research and company resources as the external environment of a tourism company is a highly complex structure made up of several factors.

Economic factors include highly complex structures. They include external and internal markets, the pace of economic development, the purchasing power, economic potential, fiscal and credit policies, inflation, the currency rate etc. These factors can truly influence the company simply by having an impact on the demand and the income. Statistic data for some tourist regions of Romania are not that promising. There are several regions with a high tourist potential but the local economy seems to have a decisive negative impact. One of the most import areas that are subjected to such influences includes the River Danube Delta and possibly the Black Sea Coast. Diminishing revenues is highly connected to the increasing prices in the tourism industry and basically leads to a decline in customers.

Task 2: Be able to review existing business plans and strategies of an organization

Task 2.1: Use appropriate tools to analyze the effects of current business plansThe PEST analysis is a useful tool for understanding market growth or decline, and as such the position, potential and direction for a business. A PEST analysis is a business measurement tool. PEST is an acronym for Political, Economic, Social and Technological factors, which are used to assess the market for a business or organizational unit. The PEST analysis headings are a framework for reviewing a situation, and can also, like SWOT analysis, and Porter's Five Forces model, be used to review a strategy or position, direction of a company, a marketing proposition, or idea. Completing a PEST analysis is very simple, and is a good subject for workshop sessions. PEST analysis also works well in brainstorming meetings. Use PEST analysis for business and strategic planning, marketing planning, business and product development and research reports. You can also use PEST analysis exercises for team building games. PEST analysis is similar to SWOT analysis - it's simple, quick, and uses four key perspectives. As PEST factors are essentially external, completing a PEST analysis is helpful prior to completing a SWOT analysis (a SWOT analysis - Strengths, Weaknesses, Opportunities, Threats - is based broadly on half internal and half external factors).

Task 2.2: Review the position of an organization in its current marketOver 20 years ago, the concept of strategic positioning was popularized by Jack Trout and Al Ries in their seminal publication Positioning: The Battle for YourMind (McGraw Hill, 1981). Although this concept has been enthusiastically embraced by many industries, its application in healthcare has been laggard at best.Because almost all healthcare organizations in the United States continue to operate in competitive environments, strategic positioning is a concept that warrants careful consideration.

Defining Positioning Strategies:

A healthcare organization’s strategic position can be defined around several parameters.

• Service• Quality • Access• Scope• Innovation

Task 2.3: Evaluate the competitive strengths and weaknesses of an organization’s current business strategiesEvery entrepreneur has been educated to understand that in their business plan the competitive analysis is a statement of the business strategy and how it relates to their competition. The purpose of the competitive analysis is to determine the strengths and weaknesses of their competitors within their market, strategies that will provide them with a distinct advantage, the

barriers that can be developed in order to prevent competition from entering their market, and any weaknesses that can be exploited within the product development cycle.

Task 3: Be able to develop options for strategic planning for an organization

Task 3.1: Use modeling tools to develop strategic options for an organization

CFAR’s view of strategy

CFAR maintains that strategy is what you do, not what you say. Strategy is built on assumptions about the external and internal environments. When the environment changes—sometimes noticeably and sometimes imperceptibly—leaders’ views of strategy may become out of sync with a dynamic reality. As leaders encounter the world from their different functions and perspectives, they need a way to synthesize their experience into a richer set of alternatives for the future. Uncovering and examining the assumptions that drive what organizations do, advances the fundamental work of leaders as they lay out the future direction of their business. In choosing a strategic direction, a business must say “no” to some alternatives or activities in order to focus on others, potentially creating a sense of winning and losing among organization members. Strategic Options helps you become clear about assumptions and choices while productively harnessing the tension, energy, and risk inherent in these choices.

CFAR’s strategy method

Strategic Options is one tool in CFAR’s approach to strategy, an approach that is rooted in merging hard analytics with organizational behavior. As an introduction to this approach, Strategic Options is an efficient, cost-effective, tested tool for getting to the heart of strategy issues, providing data that moves from difficult conversations among a team of knowledgeable executives, to real choice. It sets the stage for plans that envision a grounded path forward—one that has already dealt with the issues of execution that can otherwise derail change. When you engage CFAR, you get both our expertise in the content of strategy as well as in the process of change—you get our way of working. Our tools are designed to be delivered by CFAR trained consultants—experienced in the art and science of business—in a relationship with you, driving results together.

Task 3.2: Develop a comparative understanding of activity from organizations in the marketIn today’s highly competitive global markets, managers seek to improve organizational effectiveness by identifying organizational metrics linked to business performance. Market orientation is one such metric that has emerged as a significant predictor of performance and is presumed to contribute to long-term success. Market orientation the implementation of the marketing concept is the cornerstone of the marketing management and marketing strategy paradigms. This paper focuses on measurement of market orientation and business performance.

Task 3.3: Create options to form the basis of future organizational strategyObjectives are those destinations which ultimately satisfy corporate desires. Different organizations have different objectives, before starting any business, its objectives are defined. Though like many other profit making companies, Unilever UAE’s ultimate objective is profit maximization. Apart from profit maximization, business may have various other objectives.

Before defining objectives, the strategic management must make sure those objectives are not virtually impossible and mutually agreed upon. The objectives which are focused on results consistent, specific, measurable, related to time and attainable are usually mutually agreed upon. To attain such goals different sets of management strategies are implemented. It is less or more true that objectives of management strategy are same as that of the organization as a whole. Following is a brief summary of objectives by Unilever UAE;

Understand customers, competition and industry, and meet specific customer requirements.

Improve product / service / channel / customer congruency. Grow the company by reaching new markets through new channel partners. Develop company values and culture. Hire the best people. Some management strategies might succeed better than others. It

depends upon the three key success criteria which can be used to evaluate the viability of strategic options. These three key elements of evaluating the strategic options are suitability, acceptability and feasibility.

 

Task 4.1: Propose a suitable structure for a strategy plan that ensures appropriate participation from all stakeholders of an organization

The essence of organizational design is the manipulation of a series of parameters that determine the division of labour and the achievement of coordination. By all the timekeeping in mind the organizational requirements of the Unilever UAE I would like to suggest a

‘Matrix Organizational Structure’ based on the grouping by the market & functions.

This proposed structure will serve the Unilever UAE’s end markets and because theworkflow interdependencies are the important ones to some extent and theorganization cannot easily handle them by standardization adopting this structure willtend to favour the market bases for grouping in order to encourage mutual adjustments and direct supervision. By adopting the proposed organizational structure the Unilever UAE can takeadvantage of the followings key benefits;

Because key people can be shared, the project cost is minimized Conflicts are minimal, and those requiring hierarchical referrals are moreeasily resolved There is a better balance between time, cost and performance Authority and responsibility will be shared Stress is distributed among the team Improved ability to access resources across the old functional and geographicsilos. better coordination on shared technologies across the organization (such as IT) Faster decentralized decisions Improved access to a diverse range of skills and perspectives. Improved global or regional projects Increased communication and coordination across the business Reflects the needs of regional customers

Task4.2: Develop criteria for reviewing potential options for a strategic plan.An organization is viable if it can survive in a particular sort of environment. Although its existence is separate, so that it enjoys some kind of autonomy, it cannot survive in a vacuum. Hence in my opinion apart from the typical SWOT and PEST analysis, following benchmarking criteria should also be used for reviewing potential options regarding a management strategy. Managerial, operational and environmental varieties, diffusing through an institutional system tend to equate; they should be designed to do so with minimal damage to people and cost. The four directional channels carrying information between the management unit, the operation, and the environment must each have a higher capacity to transmit given amount of information relevant to variety selection in a given time than the originating sub-system has to generate it in that time. Wherever the information carried on a channel capable of distinguishing a given variety crosses a boundary, it undergoes transduction; the variety of the transducer must be at least equivalent to the variety of the channel. Further to that to review the potential options for the management strategy and organizational structure we must make sure that the best possible strategy clearly considers the age and size of the organization, technical systems, environment and the governing framework. Since the Unilever UAE has a long existence history and it is operating at a multinational level hence the proposed management strategy should more

elaborate its structure; that is’ the more specialized its jobs and units and the more developed its administrative components. The prospective strategy must avoid technological uncertainties; it should provide which production and operational technology will prove to be the most efficient? It should be free of strategic uncertainty.

Unilever’s pressure to develop products to meet demand is so great hence the proposed management strategy should make sure that bottlenecks and problems are dealt with expediently rather than as a result of an analysis of future conditions. Similarly implementing new strategy costs millions to the organization, hence it should make sure that reduce operative cost and increase the efficiency or the organization.

Alignment — employees should be encouraged to recognize, accept and buying to the organization’s vision and strategy.

Equity — employees should be made to feel a sense of equality in the way they are treated, recognized and rewarded.

Integrity — the organisation should be seen to be fair and respect people, regardless of status.

Consensus — management should seek to develop relationships based on mutual understanding and support

Achievement — individuals are motivated by pride and satisfaction in thequality and performance of their work. Achievement should therefore derecognized and rewarded.

Rationality — a systematic approach to problem solving and communication in the organisation encourages an environment in which people are honest, consistent and open, which creates greater trust and therefore engagement.

Development — Individuals should be made to feel that they operate in an environment which enables them to learn and grow.

Task 4.3: Construct a agreed strategy plan that includes resource implicationsManagement strategy is a systematic analysis of the factors associated with the external and internal environment to provide the basis for rethinking the current management practices. Its objective is to achieve better alignment of corporate policies and strategic priorities. In case of the Unilever UAE the key important points of the proposed mutually agreed strategies are the followings along with their resource implications:

There must be a workflow process in order to achieve results in the form of a product or service.

There must be an Authority Process in order to direct behaviour in the interests of the organization and its participants.

There must be a Reward and Penalty Process to induce people to behave in away required by the interests of the organization and its participants and / or to behave in a way making associated activity possible.

There must be a Perpetuation Process to maintain, replenish, and make adequate the quantity and quality of social and natural resources utilized by the organization and its participants.

There must be an Identification Process to develop a concept of the wholeness, uniqueness and significance of the organization. This is usually accompanied by efforts to select and define clearly understood emotionally toned symbols, concepts, or other such factors which will help individual participants identify the uniqueness of the organization as a whole, which in turn automatically helps to define the uniqueness of the organization in the larger environment in which it is embedded.

There must be a communication process to provide for the exchange of information, ideas, feelings and values etc utilized in all activities.

There must be an evaluation process which establishes criteria for and defines levels of utility and value for people, materials, ideas, and activities and which rates them and allocates them to these levels.

The key components of a complete Strategic Plan include analyses or discussions of following resource implication:

Human and other Capacity Requirements – The human capacity and skills required to implement the strategy, current and potential sources of these resources. Also, other capacity needs required such as internal systems, management structures, engaged partners and Network NOs and POs, and a supportive legal framework etc.

Financial Requirements – The funding required implementing the proposed management strategy, current and potential sources of these funds, and the most critical resource and funding gaps.

Risk Assessment and Mitigation Strategy – What risks exist and how they can be addressed.

Estimate of Project Lifespan, Sustainability, and Exit Strategy – How long the strategy will stand implemented, after how long and why strategy will require modifications (if feasible to do so), and how it will ensure sustainability of the corporate objective achievements. Management Strategic Plan’ may only be considered complete when these components have been defined, at least in broad terms. As the project moves into Implementation, several of these components are then defined in more detail and tested in reality.

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