INTRODUCTION

Business strategy is very important for an organization as it helps to attain specific goals and
objectives. It is managements game plan for strengthening the performance of the enterprise. It
also shows the way to achieve goals and without this it is really hard to compete in the market
with other competitors. But success is not always guaranteed even if the organization has good
strategy and execution. For that reason reviewing the business strategy is very important
otherwise it would lead to losing its momentum. Here, the strategic context of ABC Plc has been
explained. After the analysis of the strategic context, the issues involved in strategic planning
have been reviewed. At the last stage, different planning techniques used by the company has
been explained.

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TASK 1
UNDERSTAND THE PROCESS OF STRATEGIC PLANNING
1.1 Strategic Context of ABC Plc
Johnson et al (2011) defines strategy as the long-term direction of an organization .
According to this definition , the strategy has long-term direction of achieving organizational
goals. Here, ABC Plc, one of the largest insurance company in Sri Lanka, is evaluating the
possibility of diversifying thee business in to the Tourism sector in order to capture the
growing tourism market. The success of the business can be attributed to the following
strategic context of ABC Plc.

1.1.1 Mission
It is the basic aim of a business or an enterprise. It describes why it exists and what it does
to attain its vision. It is also important that the mission statement must be in harmony with
the companys operation. ABC Plc seeks to manage the customers travel requirements and
adds value to their travel spend. Their mission is to offer corporate travel solutions and
become one of the biggest travel agencies in the country.

1.1.2 Vision
The vision statement of ABC Plc is to help revolutionize the visitor experience through some
guidelines issued to uphold the vision of the company.
To be recognized globally as a destination which offers a range of unique niche
adventure tourism experience.
Connecting people, ideas and oppurtunities in meaningful ways.
Celebrates, protects and enhances our unique cultural heritage and natural
environment by showcasing these attributes.

1.1.3 Objective
The key objectives of ABC Plc are as follows:
To minimize negative social , economical and environmental impacts of mass tourism
and promote tourism which is sustainable.
To create and promote forms of tourism that provide healthy interaction oppurtunities for
tourists and increase better understanding of different cultures, customs, lifestyles and
beliefs.
Ensure Sri Lankas tourism resources are effectively managed and coordinated.

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1.1.4 Goals
Goals are long term aims that you want to accomplish.
Develop and grow into a successful tourism company.
Our tourism industry grows to be second only to manufacturing in number of jobs
by the end of the decade.
Maximize Sri Lankas tourism potential.

1.1.5 Core Competencies

It is a unique factor the business has advantage over its competitors. The core
competencies of ABC Plc are the following:
ABC Plc is a well established insurance company and is familiar with the public.
They can invest in more money for this industry as they are already established.
The insurance company would be their back up in case something goes wrong.

1.2

Issues Involved in Strategic Planning

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Planning is the most important thing for all organizations. A successful plan means a successful
mission of an organization. Planning will help you face challenges and oppurtunities. This will
enable the organization to deliver more efficiently to meet the needs of the people and also
strengthen the organization. Planning is the first step towards sustainable funding. Planning
should be a creative process ; simple and straightforward that brings demonstrable benefits.
Strategic planning is very important to attain organizational goals as it shows the way to reach
the targets. There are some issues involved in strategic planning and those issues must be
scrutinized properly and setting priorities in terms of importance and time. Sometimes top
managements face little bit difficulty to choose proper issues with respect to priorities as there
are some agreements and disagreements among the opinions of those members. If there are a
few incongruities about priorities and issues, it may be able to shift instantly to the
organizational visions then targets. But if there is no agreement among the decision makers
then it is important to indentify issue priorities and identify critical options. It can be possible in
different ways and some of the ways are describing in the following section:
First of all, board and staff can scan the internal and external environment of an organization
and select some certain issues which are strategic and have great impact on the organization.
They must prioritize the issues including why those issues are important, what is the positive
and negative consequence of those issues and so on. All these issues might involve a wide
range of other issues and programs like what will be the future demands, who will be the future
customers, where they will operate and how they will operate to attain their goals and with
whom they will work.

Another way is planning group or a consultant will work with the company and scan the
environment and find out the issues and then prioritize them in terms of feasibility, timing and
importance. There will be some set of strategic issues which will be the part of strategic
planning process. First set will get the most importance than any other sets. Board of committee
or appointed staffs will review those issues and prepare their strategic planning according to the
prioritizing issues.
Issues can be indentified in both ways but for the proper harmony there will be agreements
among the decision makers otherwise it is tough to prepare proper strategic planning. (1)

1.2.1 Impact on managers

Since planning is very challenging, managers should show their fullest commitment in order to
solve the strategic issues faced by the organization. Managers may not be willing to take extra
care on the planning as it would reflect their performance in the organization. This would
ultimately affect their careers and extra burden for all the issues faced by the organization.

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1.2.2

Targets / Goals

The level of targets that needs to be set during strategic planning process is very subjective.
Therefore, setting up a realistic target across all the functions in the organization is very
challenging. The targets that gets set should be realistic and motivate the employees. Any
unrealistic targets would demotivate everyone in their company and the ultimate goal will not be
achieved.

1.2.3 Ansoffs matrix

The Ansoffs matrix helps determine the future direction which the business should undertake
considering the risks and benefits associated with each ofthese endeavors. It basically provides
a business with four strategies to explore.

Market Penetration
Under this strategy, the business sells existing products in the existing market trying to
increase

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Either the number of consumers using the product that is bringing in new customers.
Consumption level of the existing consumers.
It mainly aims at 4 objectives

Enhancing market share of the existing products.

Securing market share of dominant products.
Restructure the existing market by thrashing out competition by aggressively
promoting the product.
Increasing consumption level s of existing consumers.

Market Development
Under this, the firm sells existing products in new markets which can be done through

Exploring new geographical markets.

Changing the packaging for the new markets.
Developing new distribution channels.
Differentiated pricing in different markets.

Product Development
Here, firm introduces new markets into the existing markets. This is mainly done to
adapt to the changing demands and accordingly modifying the products to create business.
Diversification
Under this, the firm ventures with new products into new markets. This is the most risky
strategy out of all the ones described above.
In our task, ABC Plc would be placed at the Product Development stage where they already
exist in the market as one of the largest insurance company in the country and is now
diversifying to a tourism company in Sri Lanka.

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1.3 Strategic Planning Techniques

Strategic Planning Techniques is an important factor as it provides a common focus point
for discussion. They also provide a common reference point. These strategic planning tools are
not the end in themselves; they are a way to help you to reach your main objective, developing
a strategy that creates a competitive advantage so that you achieve your goals and beat your
competitors. As Wittmann and Reuter (2008) explain, strategic planning can be differed
according to the context. Thus different planning techniques are needed for different
circumstances.
Most basic level of the strategy planning systems are:

Knowing where you want to end up

Knowing what to put your energy against
What to put your resources against
Knowing the methodology of using your energy

Following are some of the strategic planning systems that can be used for ABC Plc:

1.3.1 Informal Planning

This is usually found in smaller and medium sized organizations where the directors meet and
discuss the next years targets and goals. It is often found in successful entrepreneurial
organizations. One of the key advantages of this kind of planning is that it is not a very time
consuming exercise. It is also very flexible. Problems arise, however, when the business
environment becomes more complex, and this type of planning proves inadequate for control
and measurement.

1.3.2 Top Down Planning

In this system, planning mainly focuses on keeping the decision making process at the senior
level. Goals and quota are established at the highest level, and those at the top are often not
willing to take advice or any guidance from lower level employees. Senior level manager need
to be specific as possible when laying out expectations since those following the plan are not
involved in the planning process. Because employees are not included in any of the decision
making process and are often only motivated through either fear or incentives, moral can
become an issue.
(2)

1.3.2 Bottom up Planning

This method, in contrast to the top down planning, is developed at the lowest level of the firm.
These plans are then channeled through each next higher level for its participation until they
reach the board of directors for the final approval with bottom up planning. This level of planning
is more realistic since the lower level employees of the firm have a better understanding at the
bottom level than the managers and they are experts in the business process. They have
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contact with the end customers, employees are more motivated and morale improves, as this
gives them more responsibility.

In this case, the better approach for ABC Plc would be bottom up planning, as the lower level
employees would have a better idea on how to attract customers as they deal directly with
them.

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1.3.4 BCG Matrix

If youre the owner of an established company, you may wonder how best to deploy resources
to enhance your prospects. Since 1968, the BCG matrix, also known as the Boston or growthshare matrix, has helped companies answer that question by providing them a way to analyze
product lines in search of growth oppurtunities. Named after its creator, the Boston Consulting
Group, the BCG matrix aims to identify high-growth prospects by categorizing the companys
product lines in search of growth rate and market share. By optimizing positive cash flows in
high-potential products , a company can capitalize on market-share growth oppurtunities. (3)

Products are classified into four groups ; Star, Cash Cow, Question Mark and Dog. Analysing
products in this way provides a useful insight into the likely oppurtunities and problems with the
particular product.

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Following are a brief accounting of the four quadrants of the matrix:

STAR High share and high growth

Star products all have rapid growth and dominant market share. This means that star products
can be seen as market leading products. These products will need a lot of investment to retain
their position, to support further growth as well as to maintain its lead over competing products.
This being said, star products will also be generating a lot of income due to the strength they
have in the market. The main problem for product portfolio managers it to judge whether the
market is going to continue to grow or whether it will go down. Star product can become Cash
Cows as the market growth starts to decline if they keep their high market share.

CASH COWS- High share and low growth

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Cash Cows are the leaders in the marketplace and generate more cash than they consume.
They dont need the same level of support as before. This is due to less competitive pressures
with a low growth market and they usually enjoy a dominant position that has been generated
from economies of scale. They also provide the cash required to turn question marks into
market leaders , to cover the administrative costs of the company, to fund research and
development,to service the corporate debt, and to pay the dividends to shareholders.
Companies are advised to invest in cash cows to maintain the current level of productivity, or to
milk the gains passively.

DOGS- Low share and low growth

Product classified as dogs always have a weak market share in a low growth market. These
products are very likely making a loss or a very low profit at best. These products can be a big
drain on management time and resources. Dogs are generally considered cash traps because
businesses have money tied up in them, even though they are bringing back basically nothing in
return. These business units are prime candidates for divestiture. The question for managers
are whether the investment currently being spent on keeping these products alive, could be
spent on making something that would be more profitable. The answer to this question is
usually yes.

QUESTION MARK-Low share and high growth

Also sometime referred to as Problem Child, these products prove to be tricky ones for product
managers. These products are in a high growth market but does not seem to have a high share
of the market. These parts of a business have high growth prospects but a low market share.
They are consuming a lot of cash but are bringing little in return. In the end, question marks lose
money. However, since these business units are growing rapidly, they do have the potential to
turn into stars. Companies are advised to invest in question marks if the product has potential
for growth, or to sell if it does not.
(4)

There are some limitations in the BCG matrix. Some of them are stated below:

A high market share does not necessarily lead to profitability at all times.
The model does not reflect growth rates of the overall market.
The model neglects the effect of synergy between business units.
At times, low share or niche business can be profitable too.

In the case of ABC Plc, the company is currently on the quadrant of the Question Mark. For this
company, the market share is low but the market growth is high. ABC Plc has to invest more
cash to become a Star. Standing for too long on the Question mark quadrant could be fatal
and foolish. ABC Plc should market intensively to upgrade it to Star before it gets off the
market.

1.3.5 SPACE Matrix

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The SPACE matrix is a management tool used to analyze a company. It is used to determine
which type of a strategy a company should undertake. SPACE is an acronym for the Strategic
Position & Action Evaluation matrix. The SPACE matrix analysis functions upon two internal and
two external dimensions in order to determine the organizations strategic posture in the
industry. The SPACE matrix is based on four areas of analysis.
The analysis describes the external environment using two criteria:

Environmental Stability (ES) - it is influenced by the following sub factors:

technological change, inflation rate, demand volatility, price range of competitive products, price
elasticity of demand, pressure from the substitutes
Industry Attractiveness (IA) - it is influenced by the following sub factors: growth
potential, profit potential, financial stability, resource utilization, complexity of entering the
industry, labor productivity, capacity utilization, bargaining power of manufacturers

The inside environment is also described by two criteria:

Competitive advantage (CA) - it is influenced by the following factors: market

share, product quality, product lifecycle, innovation cycle, customer loyalty, vertical integration
Financial strength (FS) - it is influenced by the following indicators: return on
investment, liquidity, debt ratio, available versus required capital, cash flow, inventory turnover.

How do I construct a SPACE matrix?

The steps required to develop a SPACE Matrix are listed below:

Select a set of variables to define financial strength (FS), competitive advantage

(CA), environmental stability (ES), and industry strength (IS)

Assign a numerical value ranging from +1 (worst) to +6 (best) to each of the variables
that make up the FS and IS dimensions. Assign a numerical value ranging from -1 (best) to -6
(worst) to eachof the variables that make up the ES and CA dimensions.

Compute an average score for FS, CA, IS, and ES by summing the values given to the
variables of each dimension and dividing by the number of variables included in the respective
dimension.

Plot the average scores for FS, IS, ES, and CA on the appropriate axis in the SPACE
Matrix.

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Add the two scores on the x-axis and plot the resultant point on X. Add the two scores
on they-axis and plot the resultant point on Y. Plot the intersection of the new xy point.

Draw a directional vector from the origin of the SPACE Matrix through the new
intersection point. This vector reveals the type of strategies recommended for the organization:
aggressive, competitive, defensive, or conservative.
(5)

The strategic position of the company ad alternatives of the strategic behavior are the following :
Aggressive positionThe Aggressive posture in the SPACE Analysis Matrix occurs when all the dimensions are
positive. The implicit strategy is to aggressively grow the business raising the stakes for all
competitors. The main danger is complacency.

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Competitive positionThe Competitive posture arises when a firm has strong advantages in an attractive industry but
its financial strength is insufficient to compensate for environmental instability. The immediate
strategy is to improve its financial strength (raising capital, improving profitability, merging with a
cash rich parent) whilst maintaining its competitive position.
Conservative positionThe Conservative posture arises when the firm is financially strong but is unlikely to make
significant returns from the business. The strategy is to look for diversification opportunities in
more attractive competitive situations.
Defensive positionThe Defensive posture in the SPACE matrix occurs when all the dimensions are scored poorly.
Firms in this position are very weak and heading for failure unless the external environment
becomes more favourable. The firm will need to retreat from all but its strongest segments so
that it can concentrate its limited resources on a turnaround.

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1.3.6 Directional Policy Matrix

The Directional Policy Matrix (DPM) is a tool for helping you determine what your preferred
segments are.DPM helps you determine whether decisions made in the day-to-day running of the
organization are in its best interest.

Attractiveness of a Market Segment

Evaluating the attractiveness of a segment should include but not be limited to, these
variables:
Size of the segment (number of customers, units or $ sales)
Growth rate of the segment (a very important variable)
Profit margins of the segment to the sales organization
Ongoing purchasing power of the segment
Attainable market share given promotional budget, fragmentation of the market and
competitors promotional expenditures
Required market share to break even.

Capability of the organization

Evaluating the capability of the organization to meet the needs of the segments should include,
but not be limited to, these variables analysed against the competition:

Competitive capability of the organization against the marketing mix (product/service,

place, price and promotion)
Access to distribution channels
Capital and human resource investment required to serve the segment
Brand association of the organization in the eyes of the segment
Current market share/likely future market share.

Interpreting the Directional Policy Matrix

The directional policy matrix suggests tactics for each of nine sectors, as shown in the figure
below.

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The tactics for each sector descriptor are:

Leader Focus your resources on segments in this sector.

Growth leader Grow by focusing just enough resources here.
Cash Generator Milk segments in this sector for expansion elsewhere.
Phased withdrawal Move cash to segments with greater potential.
Custodial Do not commit any more resources to segments in this sector.
Try harder Determine if there are ways in which you can build your capability for
segments in this sector for low levels of cash.
Double or quit Invest in your capability or get out of segments in this sector.
Divest Liquidate or move assets used in segments in this sector as fast as you can. (6)

ABC Plc would be situated in the Try Harder column, where if they could be a successful
organization with a little bit of hard work and turn into leaders.

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1.3.7 GAP Analysis

Gap analysis is usually associated with marketing strategy planning, but it can be applied to
other types of strategic planning. It is one of the simplest planning tools ever devised, which
gives it some distinct advantage and disadvantages.
The first step in a gap analysis is to select relevant, measurable indicators that will describe the
gap. The fewer the indicators chosen, the less complicated the subsequent analysis and plan
development will be ; example of indicators might be gross revenues, profit margin, total sales
or production figures. The gap is the difference between the objectives and the current
situation in terms od the selected indicators. Generally, the gap is visualized as a chart.

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TASK 2
BE ABLE TO FORMULATE A NEW STRATEGY
2.1 Organizational audit for ABC Plc
Organizational audit is defined as an independent, objective assurance and consulting activity
designed to add value and improve an organization's operations. It helps an organization
accomplish its objectives by bringing a systematic, disciplined approached to evaluate and
improve the effectiveness of risk management, control, and governance processes. In other
words, organizational audit is referred to as an activity which is created to assist an organization
in improving its operations by identifying the strengths and weaknesses of the organization to
achieve its objectives.
Following are the different kind of analysis that can be used by ABC Plc:

SWOT Analysis
Value chain Analysis
Benchmarking
Product life cycle analysis

2.1.1 SWOT ANALYSIS

SWOT analysis (strengths, weaknesses, opportunities, and threats analysis) is a framework for
identifying and analyzing the internal and external factors that can have an impact on the
viability of a project, product, place or person.
As its name states, a SWOT analysis examines four elements:

Strengths - internal attributes and resources that support a successful outcome.

Weaknesses - internal attributes resources that work against a successful outcome.

Opportunities - external factors the project can capitalize on or use to its advantage.

Threats - external factors that could jeopardize the project.

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Once the SWOT factors are identified, decision makers should be able to better ascertain if the
project or goal is worth pursuing and what is required to make it successful. Often expressed in
a two-by-two matrix, the analysis aims to help an organization match its resources to the
competitive environment in which it operates.

Following are the SWOT analysis of ABC Plc:

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STRENGTH
ABC Plc is already
familiar with the
public.
They have a stable
political environment.
Attractive places and
famous culture and
traditions.
Can invest as they
already have money
and their existing
company as backup.
OPPURTUNITIES
The tourism market in
the country is rapidly
increasing.
Cheaper to operate as
the company target is
a 3-star hotel.
Would help the
countrys development
tremendously.

WEAKNESS
Its a new company in
the market.
Lack of infrastructure
facilities.
Cost of operation
would be very high.
There is an
intervention of the
govt. in between.

THREATS
Weather is unstable
and unpredictable.
Entering a new
industry is quite risky.
Competition is fierce.
Govt. policies on
tourism operators.

Benefits of SWOT Analysis

It provides a clear view of your strengths, and allows you to build on them to meet your
business objectives

It showcases your weaknesses and provides a chance to reverse them.

It gives you a sneak peek into the opportunities that lies ahead. Using this you can draft your
strategic growth plans based on your strengths and weaknesses.

It helps you analyze possible threats to your business, and make necessary changes to the
business policies and growth plans. Additionally, it facilitates making supplementary or
alternative plans, contingency plans, and so on.

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One of the major benefits of conducting SWOT analysis is that helps you create matching
and converting strategy.

It helps you employ a strategy to match your strengths and opportunities; and employ those
strategies for converting your weaknesses and threats into your strengths and opportunities.

The entire SWOT analysis process brings to light your resources, and provides motivation and the
necessary momentum to get going with your business plans despite all odds.

Limitations of SWOT Analysis-

The overall SWOT business plan could be misleading or impractical because of the following factors:

If improper data is used to analyze SWOT, incorrect decisions can be made.

External analysis may not be exact, as external factors are not in your control.

This process involves lot of resources and cost.

The analysis could be biased if internal teams wish to showcase only their team's strengths
and not weaknesses.

2.1.2 BENCHMARKING

Benchmarking is the process of identifying or comparing with best practice in relation to both
products and the processes by which those products are created and delivered. The search for
best practice can take place both inside particular industries and also in other industries.
The objective of benchmarking is to understand and evaluate the current position of a business
or organization in relation to best practice and to identify areas and means of performance
improvement.
Application of benchmarking involves four key steps:
Understand in detail existing business processes.
Analyze the business process of others.
Compare own business performance with that of others analyzed.
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 Implement the steps necessary to close the performance gap.

Benchmarking should not be considered a one-off exercise. To be effective, it must become an
ongoing, integral part of an ongoing improvement process with the goal of keeping abreast of
ever-improving best practice.

2.1.2.1 Types of Benchmarking

Strategic Benchmarking- Involves benchmarking how others compete.

This type is usually not industry specific, meaning it is best to look at
other industries.

Performance or Competitive Benchmarking- Allows the initiator firm to

assess their competitive position by comparing products and services
with those of target films.

Process Benchmarking- Focuses on comparing with best practice and

improving specific critical processes and operations.

Functional Benchmarking- A company will focus its benchmarking on a

single function to improve the operation of that particular function,
H.R, Finance.

Internal Benchmarking- Involves benchmarking businesses or

operations from within the same organization.

External Benchmarking- Involves comparing outside organizations that

are known to be best in class.

2.1.3 PRODUCT LIFE CYCLE

Product Life Cycle ( PLC ) is a term used to describe individual stages in the life of a product.
Product Life Cycle is an important aspect of conducting business which affects strategic
planning. Product life cycle can be divided into several stages characterized by the revenue
generated by the product.
The product revenue and profits can be plotted as a function of the life-cycle stages as shown in
the graph below:

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Stage 1-The introduction

During the Introduction phase, there will most-likely be heavy promotional and advertising
activity designed to raise awareness of the new product. This stage of the cycle could be the
most expensive for a company launching a new product. The size of the market for the product
is small, which means sales are low, although they will be increasing. On the other hand, the
cost of things like research and development, consumer testing, and the marketing needed to
launch the product can be very high, especially if its a competitive sector.

Stage 2- The growth

In this stage the demand for the product increases sales. As a result, the production costs
decrease and high profits are generated. The product becomes widely known, and competitors
will enter the market with their own version of the product. Usually, they offer the product at a
much lower sales price. To attract as many consumers as possible, the company that developed
the original product will still increase its promotional spending. When many potential new
customers have bought the product, it will enter the next stage.

Stage 3- Maturity
In the maturity stage of the Product life cycle, the product is widely known and is bought by
many consumers. Competition is intense and a company will do anything to remain a stable
market leader. This is why the product is sold at record low prices. Also, the company will start
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looking for other commercial opportunities such as adaptations or innovations to the product
and the production of by-products. Furthermore, consumers will also be encouraged to replace
their current product with a new one. There is fear of decline of the product and therefore all the
stops will be pulled out in order to boost sales. The marketing and promotion costs are therefore
very high in this stage.

Stage 4- The decline

Eventually, the market for a product will start to shrink, and this is whats known as the decline
stage. This shrinkage could be due to the market becoming saturated. This stage of the Product
life cycle can occur as a natural result but can also be stimulated by the introduction of new and
innovative products.
By this stage, the most important decision that needs to be made is when to take the product off
the market completely. It can be tempting to leave a declining product on the market
especially if it served the company well in its time, and there's a certain sentimental attachment
to it. (8)

In the case of ABC Plc, the company would be placed at the introduction stage. In order for the
company to grow reputed, theyll have to promote their company using different publicity
methods and promotional tools. They should set up several offers and promotions to attract
more customers. Their goals should be customer satisfaction before anything else, which is the
key marketing strategy nowadays. ABC plc can also collect feedbacks from their customers,
which will help the company to improve their performance according to customer needs. (7)

2.1.4

Value Chain Analysis

Value chain analysis describes the activities that takes place in a business and relates them to
an analysis of the competitive strength of the business. Its goal is to recognize, which activities
are the most valuable (i.e. are the source of cost or differentiation advantage) to the firm and
which ones could be improved to provide competitive advantage. In other words, by looking into
internal activities, the analysis reveals where a firms competitive advantages or disadvantages
are. Influential work by Michael Porter suggested that the activities of a business could be
grouped under two headings:

Primary ActivitiesThose that are directly concerned with creating and delivering a product.

Support ActivitiesPage | 24

These are not directly involved in production, may increase effectiveness or

efficiency. It is rare for a business to undertake all primary and support
activities.
The PRIMARY activities of ABC plc are as follows:
1. Inbound logisticsThe relationships with suppliers including all the activities required to
receive, store and disseminate inputs.
2. OperationsActivities which transform inputs to outputs.
3. Outbound logisticsActivities required to collect, store and distribute the output.
4. Marketing and salesActivities which inform buyers about products and services ,induces buyers
to purchase them and facilitate their purchase.
5. After sales serviceActivities required to keep product or service working effectively for buyers
after it is sold and delivered.

The SUPPORT activities of ABC Plc are as follows-

ProcurementPage | 25

Acquisition of inputs or resources for the firm.

Human resource Management-

Consists of all activities involved in recruiting, hiring, training,

compensating and (if necessary) dismissing or buying off personnel.

Technology developmentPertains to the equipment, hardware, software, procedure and

technical knowledge brought to bear in the firms transformation of inputs
into outputs.

Firm Infrastructure-

Services companys needs and ties its various parts together. It

consists of functions or
development such as accounting, legal, finance,
planning, public affairs, govt. relations, quality assurance and general
management.
The value chain can be used

To examine the firm in terms of the processes it uses to serve

customers, and the value added, to add more value or remove non
value adding activities.

As a basis to drive a competitive strategy of cost leadership r

differentiation.

Understanding the linkages between processes.

As a way to analyze competitors for their strength and weakness.

(8)

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2.2 Environmental Audit for ABC Plc

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Environmental audit is to develop a finite list of opportunities that could benefit a firm and
threats that should be avoided. The environmental audit is not aimed at developing an
exhaustive list of every possible factor that could influence a business; rather, it is aimed at
identifying key variables that offer actionable responses. In other words, it means that
environmental audit is the process of identifying the key opportunities and threats faced by an
organization to develop strategies which could benefit from the opportunities and avoid the
impact of threats. There are two types of environment:

Micro environment
Macro environment

Organizational audit for ABC plc is conducted by using following analysis:

Porters Five Force Analysis- for Micro environment

PESTEL Analysis for Macro environment

2.2.1 Porters Five Forces

Named after Michael E. Porter, this model identifies and analyzes 5 competitive forces that
shape every industry, and helps determine an industry's weaknesses and strengths.

Barrier to entry
Threat of substitutes
Bargaining power of buyers
Bargaining power of suppliers
Rivalry among the existing players

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Barrier to entry
This force determines how easy (or not) it is to enter a particular industry. If an industry is
profitable and there are few barriers to enter, rivalry soon intensifies. When more organizations
compete for the same market share, profits start to fall. It is essential for existing organizations
to create high barriers to enter to deter new entrants. Threat of new entrants is high when:

Low amount of capital is required to enter a market.

Existing companies can do little to retaliate.
Existing firms do not possess patents, trademarks or do not have established brand
reputation.
There is no government regulation.
Customer switching costs are low (it doesnt cost a lot of money for a firm to switch
to other industries).
There is low customer loyalty.
Products are nearly identical.
Economies of scale can be easily achieved.
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Threat of substitutes
Substitute products are those that exist in another industry but may be used to fulfill the same
need. The more substitutes that exist for a product, the larger the companys competitive
environment and the lower the potential for profit.
A high threat of substitutes will impact a companys ability to set prices that it wants. If a
substitute is priced lower or fulfills a need better than it may end up attracting consumers
towards it and reduce sales for existing companies.

Bargaining power of buyers

Buyers have the power to demand lower price or higher product quality from industry producers
when their bargaining power is strong. Lower price means lower revenues for the producer,
while higher quality products usually raise production costs. Both scenarios result in lower
profits for producers. Buyers exert strong bargaining power when:

Buying in large quantities or control many access points to the final customer.
Only few buyers exist.
Switching costs to other supplier are low.
They threaten to backward integrate.
There are many substitutes.
Buyers are price sensitive.

Bargaining power of suppliers

Strong bargaining power allows suppliers to sell higher priced or low quality raw materials to
their buyers. This directly affects the buying firms profits because it has to pay more for
materials. Suppliers have strong bargaining power when:

There are few suppliers but many buyers.

Suppliers are large and threaten to forward integrate.
Few substitute raw materials exist.
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 Suppliers hold scarce resources.

Cost of switching raw materials is especially high.

Rivalry among the existing players

This force is the major determinant on how competitive and profitable an industry is. In
competitive industry, firms have to compete aggressively for a market share, which results in
low profits. Rivalry among competitors is intense when:

There are many competitors.

Exit barriers are high.
Industry of growth is slow or negative.
Products are not differentiated and can be easily substituted.
Competitors are of equal size.
Low customer loyalty.

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2.2.2. Pestle analysis

PESTLE analysis, which is sometimes referred as PEST analysis, is a concept in marketing
principles. Moreover, this concept is used as a tool by companies to track the environment
theyre operating in or are planning to launch a new project/product/service etc. Pestle is a
mnemonic which in its expanded form denotes P for Political, E for Economic, S for Social, T for
Technological, L for Legal and E for Environmental.
It is very critical for one to understand the complete depth of each of the letters of the PESTLE.
It is as below:

Political: These factors determine the extent to which a government may influence the
economy or a certain industry. [For example] a government may impose a new tax or
duty due to which entire revenue generating structures of organizations might change.
Political factors include tax policies, Fiscal policy, trade tariffs etc. that a government
may levy around the fiscal year and it may affect the business environment (economic
environment) to a great extent.

Economic: These factors are determinants of an economys performance that directly

impacts a company and have resonating long term effects. For example, a rise in the
inflation rate of any economy would affect the way companies price their products and
services. Adding to that, it would affect the purchasing power of a consumer and change
demand/supply models for that economy. Economic factors include inflation rate, interest
rates, foreign exchange rates, economic growth patterns etc. It also accounts for the FDI
(foreign direct investment) depending on certain specific industries whore undergoing
this analysis.

Social: These factors scrutinize the social environment of the market, and gauge
determinants like cultural trends, demographics, population analytics etc. An example for
this can be buying trends for Western countries like the US where there is high demand
during the Holiday season.

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 Technological: These factors pertain to innovations in technology that may affect the
operations of the industry and the market favorably or unfavorably. This refers to
automation, research and development and the amount of technological awareness that
a market possesses.

Legal: These factors have both external and internal sides. There are certain laws that
affect the business environment in a certain country while there are certain policies that
companies maintain for themselves. Legal analysis takes into account both of these
angles and then charts out the strategies in light of these legislations. For example,
consumer laws, safety standards, labor laws etc.
Environmental: These factors include all those that influence or are determined by the
surrounding environment. This aspect of the PESTLE is crucial for certain industries
particularly for example tourism, farming, agriculture etc. Factors of a business
environmental analysis include but are not limited to climate, weather, geographical
location, global changes in climate, environmental offsets etc. (9)
The PESTLE analysis for ABC Plc is as follows:

PoliticalFactors include areas like tax policy, labour law, environmental law, trade restrictions, tariffs and
political stability.

EconomicFactors include unemployment rates, high interest rates and impact of globalization.

SocialFactors include culture aspects and include health consciousness, population growth rate, age
distribution and emphasis on safety trends.

TechnologicalFactors include R&D activity automation, technology incentives and the rate of technological
damage.
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LegalFactors include discrimination law, consumer law, employment law, health and safety law.
These can affect how a company operates its costs and the demand for its products.

EnvironmentalFactors include environmental issues and regulations.

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2.3 Stakeholder analysisIn general, a stakeholder is anyone who will make use of, develop, or have an impact on any
aspect of your project. Stakeholders can be either direct or indirect. Direct stakeholders are
those people (developers, managers, customers) whose actions can directly impact your project
- they are involved in the project life cycle, or are impacted by the project they use the system
or output the project puts in place. Indirect Stakeholders are those who have some political
power to influence the project or those who are interested in its outcomes. In short stakeholders are those who have a stake in the project.

Identifying Stakeholders:
Stakeholder identification and analysis is best conducted using brainstorming techniques. This
procedure is generally carried out in a workshop setting, with representatives of key participants
in a project.
The first step is to list all parties which are likely to be affected by the development, both
positively or negatively, directly or indirectly.
It sometimes helps to use categories and think of all the individuals and sub groups within that
category. Common categories include: Management, staff, customers, media, community,
finance.
Through the brainstorm process capture all the names of stakeholders who might:

Be concerned in any way with the project.

Hold an influential position,
Be affected by the problems addressed in the project.

Often the project team will know the stakeholders intimately and have a good idea of their
concerns. In other cases - particularly if the stakeholders are removed from the project - the
team will need to find out information to help assess stakeholder needs. To do this research is
conducted.
Prioritize your stakeholder: The next step is to prioritize our stakeholders. After the first step
we will get a long list of people who are interested or has some power on our business. We can
classify these stakeholders on interest/power basis as shown in the diagram below.
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KEEP SATISFIED: These are people with high power but with low interest. We need to
try to increase their interest level by consulting on their interest area
MANAGE CLOSELY: These are people with high power and high interest. They are the
key players and we should focus efforts on this group.
MONITOR: These are people with low power and low interest. We just need to monitor
them and inform them through general communications like newsletter, website etc.
KEEP INFORMED: These are people with low power but with high interest. We need to
show consideration to these people. Keep them informed and consult on interest area.

Understand Your Key Stakeholders

You now need to know more about your key stakeholders. You need to know how they are likely
to feel about and react to your project. You also need to know how best to engage them in your
project and how best to communicate with them. A very good way of answering these questions
is to talk to your stakeholders directly people are often quite open about their views, and
asking people's opinions is often the first step in building a successful relationship with them.
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You can summarize the understanding you have gained on the stakeholder map, so that you
can easily see which stakeholders are expected to be blockers or critics, and which
stakeholders are likely to be advocates and supporters or your project.
The stakeholder analysis for ABC Plc is shown below:

TASK 3Page | 37

UNDERSTAND APPROACHES TO STRETGY EVALUATION AND SELECTION

3.1 [a] Analyzing market entry strategies
The market entry strategies that GSM can adopt to enter into India are as follows:

3.1.1 [a]Organic growth

Organic growth is the process of business expansion due to increasing overall customer base,
increased output per customer or representative, new sales, or any combination of the above,
as opposed to mergers and acquisitions, which are examples of inorganic growth. It is a
indicator of how well management has used its internal resources to expand profits. Organic
growth also identifies whether managers have used their skill to improve their business.
Advantages of organic growth include:

Better control and coordination: Firms maintain control whereas external

methods lead to loss of control and ownership.

Relatively inexpensive: The source comes from retained profits, less risk as the amount
of capital involved is relatively lower than external.

The ability to maintain corporate culture: No problems related to culture clash that might
arise in acquisition environments.

Disadvantages of organic growth include:

Diseconomies of scale: Hierarchical structures may increase communication problems,

and there may be slow decision making.

Need to restructure: When a firm grows, there is a need to restructure (requires times,
effort, money), communications will need to be handled with more care, and there is a
need for training/retraining/updating the set of skills for staff.

Dilution of control and ownership: If a company grows from partnership to public limited
company, the original owners may need to share decision making with new owners
(shareholders), and there may be prolonged decision-making
and conflict of interest between shareholders.

Specialist managers will need to be hired as the workforce expands.

Delegation of decision-making powers to managers (reducing control of original owners)

will take place.
(10)

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3.1.2 [a] Merger and acquisition strategyMergers and acquisitions are both changes in control of companies that involve combining the
operations of multiple entities into a single company.
In a merger, two companies agree to combine their operations into a single entity.
In an acquisition, one company purchases another company, and has the right to sell off
operations, merge them into similar groups in the purchasing company, or close facilities or
cancel products altogether.
Advantages of Merger and Acquisitions:
The following are the advantages of the mergers and acquisitions:

Synergy: The synergy created by the merger of two companies is powerful enough to
enhance business performance, financial gains and overall shareholders value in long
term.

Cost Efficiency: The merger results in improving the purchasing power of the company
which helps in negotiating the bulk orders and leads to cost efficiency. The reduction in
staff reduces the salary costs and increases the margins of the company. Increase in
production volume causes the per unit production cost resulting in benefits from
economies of scale.

Competitive Edge: The combined talent and resources of the new company helps it
gain and maintain a competitive edge.

New Markets: The market reach is improved by the merger due to the diversification or
the combination of two businesses. This results in better sales opportunities.

Disadvantages of Mergers and Acquisitions:

The following are the disadvantages of the mergers and acquisitions:

Bad for Consumers: With the merger, competition can reduce in the industry and the
new company may have higher pricing power.

Decrease in Jobs: A merger can result in job losses. An acquiring company may shut
down the under-performing segments of the company.

Sometimes Diseconomies of Scale: The increased size may lead to diseconomies of

scale for the new company. It may not have the control required for running a bigger
company.
(11)

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3.1.3 [a] Strategic Alliance

A Strategic Alliance is a relationship between two or more parties to pursue a set of agreed
upon goals or to meet a critical business need while remaining independent organizations. This
form of cooperation lies between M&A and organic growth.
In general, here are some of the most common benefits and cautions of strategic alliances and
partnerships:

Advantages of strategic alliance:

Can capitalize on the individual strengths of each participating organization.

Can provide local contacts and links to local communities/stakeholders who may be
critical to the success of the program you want to launch or implement.

Involves shared responsibility for the development and execution of a particular program
or service.

Limits a participating organizations liability to the scope of project involved.

Provides reduced-cost opportunities and expertise for each participating organization.

Disadvantages of strategic alliance:

Some cautions or challenges that an organization may encounter in pursuing strategic alliances
or partnerships include:

Usually limited in scope to the objectives of the alliance or partnerships

Can become ineffective if one partner doesnt perform at the expected level or fulfill its
obligations to the agreement.

Can consume more human and financial resources than were anticipated.

Can require a significant time investment to develop an effective alliance or partnership.

Can result in a loss of flexibility for the organization to take quick action in another area
that may be in the organizations better interests than the area they are pursuing with a
given partner.

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Less efficient communication.

Poor resource allocation.

(12)

3.1.4 [a] LICENSING

A license is a legal contract authorizing one business to use the confidential business practices
of another business. Licensing a company's production processes can provide revenue and
name recognition advantages, but it can also create certain foreseen and unforeseen
disadvantages. A license allows another person or company to use confidential or proprietary
processes, which increases potential competition and potential risk.
Advantages of licensing:
There are numerous advantages in entering into a licensing agreement with a foreign national:

Licensing requires very little capital outlay (making it an accessible channel even to
small companies) and it should provide a high rate of return on the capital invested.

Should the licensing arrangement prove to be a failure, it will not result in heavy financial
losses.

The exporter does not face the risk of having assets nationalized or expropriated.

Because of the limited capital requirements, licensing enables new products to be sold
worldwide before competition develops.

Disadvantages of licensing:
Licensing, however, does have some disadvantages:

Governments can impose restrictions either on the remittance of royalties or on the

supply of components.

It is often difficult to control the quality of the product which, in most cases, is sold under
the licensor's brand name.

Although the contract should specify the responsibilities of each party,

misunderstandings and conflicts can arise during the implementation stage. Areas of
conflict might include; the marketing efforts of the licensee, the interpretation of
exclusivity and the extent of the licensee's territorial coverage.

The foreign partner also can become a competitor by selling its production in places
where the parental company has a presence.

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3.1.5 [a] Franchising

Franchising is the practice of using another firms successful business model. The franchisor is
the business who sells the right to another business to operate as a franchise-they may run a
number of their own businesses, but also may want to let others run the business in other parts
of the country or world. Once they have purchased the franchisee they have to pay a proportion
of their profits to the franchisor on a regular basis.
Advantages of buying a franchise:

Franchises offer the independence of small business ownership supported by the

benefits of a big business network.

You don't necessarily need business experience to run a franchise. Franchisors usually
provide the training you need to operate their business model.

Franchises have a higher rate of success than start-up businesses.

You may find it easier to secure finance for a franchise. It may cost less to buy a
franchise than start your own business of the same type.

Franchises often have an established reputation and image, proven management and
work practices, access to national advertising and ongoing support.

Disadvantages of buying a franchise:

Buying a franchise means entering into a formal agreement with your franchisor.

Franchise agreements dictate how you run the business, so there may be little room for
creativity.

There are usually restrictions on where you operate, the products you sell and the
suppliers you use.

Bad performances by other franchisees may affect your franchise's reputation.

Buying a franchise means ongoing sharing of profit with the franchisor.

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Franchisors do not have to renew an agreement at the end of the franchise term. (13)

GSM has to analyze each of these strategies carefully and weight out the pros and cons and
choose a suitable market entry strategy for GSM to India.

3.1 [b] The alternative growth strategies for GSM falling

substantive growth, limited growth or retrenchment.

into

3.1.1 [b] Substantive Growth

3.1.1.1 Horizontal Integration
Horizontal integration occurs when two businesses in the same industry at the same stage oof
production become one, or in other words it mean acquiring a business at the same level of the
value chain.
Advantages of horizontal integration:

Lower costs- The result of HI is one larger company, which produces more services
and products. The higher output leads to greater economies of scale and higher
efficiency.

Increased differentiation- The combined company can offer more product or

service features.

Increased market power-The larger company has more power over its
suppliers and distributors/customers.

Reduced competition-The result of industry consolidation is fewer companies

operating in the industry and less intense competition.

Access to new markets- New markets and distribution channels can be

accessed by integrating with a company that produces the same goods but operates in a
different region or serves different market segment.

Disadvantages of the horizontal integration:

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Destroyed value- M&A rarely add value to the companies. More often M&A fail
and destroy the value of the companies involved in it because expected synergies never
materialize.

Legal repercussions- HI can lead to a monopoly, which is highly discouraged by

many governments due to lack of competition. Therefore, governments usually have to
approve any larger M&A before they can happen.

Reduced flexibility- Large organizations are harder to manage and they are less
flexible in introducing innovations to the market.

3.1.1.2 Vertical Integration

Vertical integration is the process in which several steps in the production and/or distribution of
a product or service are controlled by a single company or entity, in order to increase that
companys or entitys power in the marketplace. There are 2 types of vertical integration; namely
Vertical Forward and Vertical Backward.

Forward integrationThis is a strategy in which companies expand their activities to control the direct distribution of
their products. This might be required, if companies would potentially benefit from handling.

Backward integrationThis integration can involve a purchase of suppliers in order to reduce supplier dependency with
regard to timely deliveries, innovation ability and so on.

Advantages of Vertical Integration:

Lower Prices All Around

One of the most beneficial things about vertical integration is that it gives the company
the ability to greatly lower its prices. They are no longer buying supplies or production
resources from people who are also trying to make a profit, so they can focus solely on
their product and their customers.

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Complete and Total Control

Vertical integration gives a company one hundred percent control of all aspects of their
business. They have the ability to dictate exactly the quality and types of materials that
they want to be used, how they want them to be produced, and how much they are sold
for. This type of control helps them to ensure the image and success of their company
on a very intense level.

Can Re-Create Products

Products that are very popular or trendy can be simply re created by a company with
vertical integration. This can lower the prices for things that consumers wants, as well
as allow the company to be much more competitive with other brands.

Internal Job Creation

A company that integrates vertically creates many new jobs for people within their
company. They have to hire people to run and work in the distribution centers, supply
centers, and production lines. This boosts the strength and size of the company as a
whole.

Disadvantages of Vertical Integration:

Flexibility Is Hindered
One of the biggest issues with vertical integration is the simple fact that company will
have extreme difficulty adapting to new things. Instead of simply being able to order a
new type of product, they must design it, as well as spend the time and money learning
how to produce it themselves. They are limited to what they can sell.

It Takes a Whole Bunch of Money

In order to integrate vertically, a company must have a very extreme amount of capital
Page | 45

to invest. They have to purchase factories, hire mass amounts of new people, and
control all of their new facilities. This makes vertical integration nearly impossible for
smaller companies.

A loss of focus
Most companies have a general goal and focus for their long term future. When you
start to incorporate large scale production processes, things will change. The focus
shifts from the customer experience, to running the distribution facilities. It is extremely
difficult to balance all things in the same way you did before vertically integrating.

Its a lot harder

Running the retail front of a business is one thing, and even that is not simple at all.
However, when you jump head first into things like production, you have to learn to run
an entirely new sector of the business world. This can be a lot to handle, and become
the bane and detriment of the company.

3.1.2 [b] Retrenchment

A strategy used by corporations to reduce the diversity or the overall size of the operations of
the company. This strategy is often used in order to cut expenses with the goal of becoming a
more financial stable business. Typically the strategy involves withdrawing from certain markets
or the discontinuation of selling certain products or service in order to make a beneficial
turnaround.
Different types of retrenchment strategies are given below. Retrenchment can be divided into
the following categories:

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3.1.2.1 Turnaround Strategies

Turnaround strategy means backing out, withdrawing or retreating from a decision wrongly
taken earlier in order to reverse the process of decline.
There are certain conditions or indicators which point out that a turnaround is needed if the
organization has to survive. These danger signs are as follows:

Persistent negative cash flow.

Continuous losses.

Declining market share.

Deterioration in physical facilities.

Over-manpower, high turnover of employees, and low morale.

Uncompetitive products or services.

Mismanagement.

3.1.2.2 Divestment Strategies

Divestment strategy involves the sale or liquidation of a portion of business, or a major division,
profit centre or SBU. Divestment is usually a restructuring plan and is adopted when a
turnaround has been attempted but has proved to be unsuccessful or it was ignored. A
divestment strategy may be adopted due to the following reasons:

A business cannot be integrated within the company.

Persistent negative cash flows from a particular business create financial problems for
the whole company.
Page | 47

Firm is unable to face competition.

Technological up gradation is required if the business is to survive which company

cannot afford.

A better alternative may be available for investment.

3.1.2.3 Liquidation Strategies

Liquidation strategy means closing down the entire firm and selling its assets. It is considered
the most extreme and the last resort because it leads to serious consequences such as loss of
employment for employees, termination of opportunities where a firm could pursue any future
activities, and the stigma of failure.
Liquidation strategy may be difficult as buyers for the business may be difficult to find. Moreover,
the firm cannot expect adequate compensation as most assets, being unusable, are considered
as scrap. Reasons for Liquidation include:

Business becoming unprofitable.

Obsolescence of product/process.

High competition.

Industry overcapacity.

Failure of strategy.

3.1.3 [b] Limited growth strategy

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Your business growth strategy should be one that brings you the maximum growth with the least
amount of risk and effort. Aggressive growth strategy requires risk: Growing too fast brings
financial problems and challenges to maintaining the same level of quality.
Market Penetration:
Here an organisation markets their existing products to their existing customers. This means
increasing revenue by, promoting the product, repositioning or changing the brand. However,
the product is not change and they do not look for any new customers.
Market Development:
Here a company market their existing product in a new market, which means that the product
stays the same, but it is marketed to a new customer. For example marketing a product in a
new area or sending out the product to different countries. However, the key issues are:
alteration to boost attractiveness to new section or niches, new uses for a product or service
and suitable for different countries with specific manner or requirements.
Product Development:
Here a company expand and plan new product to replace existing ones, and those products are
then marketed to their existing customers.
(14)

Limited growth might look like the smarter, low-risk option, but it has disadvantages, too.
Avoidance of Massive Debt
One benefit of a limited growth strategy is avoiding the massive amounts of debt that often
accompany rapid growth strategies. Managers looking to quickly expand their businesses are
typically unable to do so organically, meaning by funding growth through revenues. Instead,
they will either take on debt or further dilute the company's equity in order to fund expansion.
This debt can be very costly, particularly if the company's sales are not as high as expected.
Greater Ease of Management
Rapid growth is often a substantial burden for managers, who must balance existing operations
as well as managing expansion into new markets and more regions. The financial and logistical
challenges of rapid growth are often too complicated for even the most skilled managers to

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handle efficiently, meaning that a once lean and agile company is forced into a business model
that involves higher costs than it is accustomed to.
Competitors Taking Market Share
A disadvantage of a limited growth strategy is that competitors may be able to take market
share by adopting their own rapid growth strategy. It is generally easier to expand into a young
market with few or no players than it is to steal market share from a competitor that has already
established itself. A company engaged in a limited growth strategy may miss out on the
opportunity to capitalize on untapped markets.
Investor Pressure
Most venture capitalists and many shareholders are primarily interested in a limited duration for
their investments, typically no more than a few years. These investors want to put their money
in, make a profit and take that money out to invest in a new, growing company. A manager who
adopts a limited growth strategy for her organization may face substantial pressure from
investors to grow the company more quickly.

These are some of the possible alternative growth strategies for GSM falling into substantive
growth, limited growth or retrenchment. Each strategy has its own advantages and
disadvantages as discussed above. Therefore, the managing director of GSM has to analyze
each strategy mentioned above carefully and choose a suitable growth strategy for GSM.

3.2 A future strategy for GSM

A future strategy which GSM can adopt when entering into India is Vertical backward integration
and vertical forward integration.
In the tourism industry, vertical integration can reduce a firms tax liability in jurisdictions. By
vertically integrating backwards, firms can also eliminate the cost of having to frequently
negotiate the terms of supply with outside firms. If these economies are large enough, they can
give the integrated firm a competitive advantage over a non integrated firm. Because the
tourism product is highly heterogeneous, small firms can survive simply by finding the right
niche markets through product differentiation.
Merger/ Joint venture is a good strategy for GSM. Tourism joint ventures between communities
and private investors are an emerging trend in southern Africa. The term joint venture is not
used in the strict legal sense used in commerce, when two companies form a joint venture.
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Joint ventures are emerging for several reasons:

It is difficult for communities to develop their assets on their own, as they lack access to
capital, tourism expertise and marketing skills. So many view a partnership with a private
operator as a way to tap into the market value of their assets.
In a context where tourism is growing in the region, private investors need access to
new opportunities, and hence to the assets owned by communities.
Tourism companies are also responding to changing trends in the market, which
demands greater sophistication and variety. Joint ventures add cultural and ethical
components to the product.

Johnson, Scholes and Whittington suggest evaluating the potential success of a strategy based
on three criteria; Suitability, feasibility and acceptability.

Suitability deals with the overall rationale of the strategy. One method of assessing
suitability is using a strength, weakness, opportunity, and threat (SWOT) analysis. A
suitable strategy fits the organization's mission, reflects the organization's capabilities,
and captures opportunities in the external environment while avoiding threats. A suitable
strategy should derive competitive advantages.

Feasibility is concerned with whether or not the organization has the resources required
to implement the strategy (such as capital, people, time, market access, and expertise).
One method of analyzing feasibility is to conduct a break-even analysis, which identifies
if there are inputs to generate outputs and consumer demand to cover the costs
involved.

Acceptability is concerned with the expectations of stakeholders (such as shareholders,

employees, and customers) and any expected financial and non-financial outcomes. It is
important for stakeholders to accept the strategy based on the risk (such as the
probability of consequences) and the potential returns (such as benefits to
stakeholders). Employees are particularly likely to have concerns about non-financial
issues such as working conditions and outsourcing. One method of assessing
acceptability is through a what-if analysis, identifying best and worst case scenarios.(15)

The most suitable strategy for GSM for entry to India would be merger and strategic alliance
Licensing may work, but success is not guaranteed for this plan. One of the best strategies
would also be Vertical Backward / Forward if youre planning to operate for the local market.

TASK 4UNDERSTAND HOW TO IMPLEMENT A CHOSEN STRATEGY

4.1 Roles and responsibilities for strategy implementation
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Sadler (2003) introduces three main roles of strategy implementation. These roles are
envisioning future strategy, aligning the organization to deliver that strategy and embodying
change.
The first role is envisioning future strategy. This role involve with clear communicating the
strategy to internal and external party. The internal party includes the organization and the
external party includes all stakeholders. The next role is aligning the organization to deliver the
strategy. Under this role, it is expected that all people in the organization be committed to the
strategy. These people should be motivated to follow the strategy and should be empowered to
deliver the change. The final role is embodying change. The strategic implementation is highly
involved with the organizational change. Thus, strategic leader has a major role of following
strategic change process.
(16)
The success of strategy implementation in the new business environment strongly pivots on
strong managerial leadership .Strategic leadership requires that the Chief Executive Officer
holds and implement change. In so doing, the leader must do the following i.e. he/she should
explain strategic intent. Strategic intent mention to the future objective of an organization. With
this regards, the leader should set out a clear vision. Organizational leaders should be
conscious of the shareholder's expectations while clarifying the strategic intention.
Some organizations use responsibility charting to make sure that employees are clear about
their responsibilities. Responsibility charting will help them to explain any confusion and
misunderstandings. Also it can identify variety of issues, including gaps in responsibility and
areas where too many staffs are given responsibility for the same thing. One of the keys to
successful strategy implementation is that of communication throughout the organization.
The advantages of having a range of roles with their own responsibilities in an organization are
many; from ensuring the business stays moral to encouraging strong communication. By having
particular roles and responsibilities in an organization is necessary in upholding appropriate
records. One of the biggest advantages of having clear roles and responsibilities in an
organization is that it helps to preserve moral standards.
(17)

4.2 IDENTIFY AND EVALUATE RESOURCE REQUIREMENTS

Successful allocation of resources helps the organization to make the best use of available
resources and other assets. Human resources, operations, marketing, information system are
most important resources for every organization. A brief description of the resources of GSM is
given below
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Human Resources: Without proper human resources it is very difficult to run the business
effectively. GSM should hire and recruit right people to run their project smoothly. And in this
way they will have minimal error. Therefore human resources play a very important part in
strategy implementation
R&D Management: R&D is about how organizations make product innovation happen. It helps
senior managers engage in and support product innovation in a way that drives rather than
dissipates their business strategy.
Operational Strategy: A plan that details how a business will use its production resources to
meet its goals. Many business managers will put together a detailed operation strategy
in order to clearly present to subordinate staff their plans for how their portion of the business
should function in order to attain its objectives.
Marketing Strategy: An organization's strategy that combines all of its marketing goals into
one comprehensive plan. A good marketing strategy should be drawn from market research and
focus on the right product mix in order to achieve the maximum profit potential and sustain
the business. The marketing strategy is the foundation of a marketing plan.

4.3 PROPOSE TARGETS AND TIMESCALES FOR GSM

Strategic evaluation is defined as the process of determining the effectiveness of a given
strategy in achieving the organizational objectives and taking corrective action whenever
required. The process of monitoring the project will start at the beginning of the planning state
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and will continue up to the entire process of the project. Evaluation will happen in regular
meetings which will be held by the entire management. It is a common fact that the
organizations set targets and they wish to achieve them within a certain period of time, but this
is not easy as it seems. GSM have decided to go for a rapid expansion in order to achieve the
organization growth objective.

The timescale for GSM is as follows:

Timescale for GSM regarding sort term and long term

CONCLUSION
The success of any good enterprise is based on the measures that are laid out by the various
stakeholders. In commerce, business strategy is important for the achievement of the objectives
set. In a commercial setting, the main aims normally revolve around making lots and lots of
profits, growing and expanding, and most importantly, diversifying. These goals must be
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achieved for business success in any flourishing industry. There are very many business
strategies that can be utilized by new or old ventures in order to compete healthily in the market.
Most corporations that have taken the market by storm normally have a history of good and
functional strategies that have been set and adhered to strictly. Therefore, it is important that
once they have been drawn and enacted, the measures are implemented and put into the
system. There are various sources form which strategies can be obtained and put into use. The
main route is through the educational systems. Students here are trained on the various
commercial factors that are important for success. They are also exposed to various career
skills and aspects such as team building, branding, and marketing etc. that impact on the daily
operations of any businesses. In addition, there is the internet and enterprising talks and
conferences. Through these platforms, a lot of information exchanges have taken place to
highlight the various factors encountered in the enterprise world. There are lots of issues that
are discussed here. For instance, communication and entrepreneurship skills, as well as
financial accountability and management skills are expounded on immensely.
The various governing authorities across the universe have ensured that these strategies are
enacted and achieved through various support options by offering financial and moral support.
They have also organized a series of seminars and workshops for the business personalities to
sharpen their skills, expertise, and knowledge. All these factors are vital for any business. (18)

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