Strategic Plan for XYZ Inc - Case Study Example

Running Head: Strategic Planning Strategic Planning Name Course Lecturer Date Introduction Strategic planning refers to a management tool which assists an organization to focus on its capacity in ensuring that organization members are functioning toward the achievement of same goals and to assess as well as adjust the firm's direction in reaction to a varying business environment. In other words, strategic planning forms a disciplined attempt to produce vital decisions and undertakings that shape and direct what a firm is, its key activities, and the reasons for the activities, while focusing in the future. The procedure is considered strategic because it entails preparing the paramount way to react to the situations of the firm's environment, whether the circumstances are identified in advance or not. Strategic planning has become an important tool for responding to change in all types of organizations (Goodstein, Nolan, & Pfeiffer, 1993). This essay will generate a hypothetical strategic plan for XYZ Inc. using goal-based strategic planning model. Strategic Plan for XYZ Inc XYZ Inc is a multinational organization that deals in computer software and related systems that are targeted towards both small and big business organizations. Its strategic plan will comprise of three phases which are pre-planning phase, strategic planning phase and functional phase. Pre-planning phase Vision XYZ’s vision is to be the world’s most customer-centred computer software organization, to pay attention to customers’ specific needs and deliver edge cutting technology, products and services which customers trust and are of great value to them. Mission XYZ designs, produces and also promotes advanced systems that are aimed at facilitating enhanced capturing of data as well as management of transaction processing for business organizations. The web-oriented systems work together with high quality hardware which is supplied by key integrators. XYZ sells its systems to small, medium as well as big-sized firms within the health, banking and industrial sectors of the economy for a wide assortment of professional applications. The company’s computer systems are very distinct from those of its rivals with reference to such features as scalability, ease of adjustment, sophisticated interfaces and they are comprehensively patented. The company makes its sales directly and also through main distributors both in the domestic market as well as abroad (Gómez-Mejía, Balkin, & Cardy, 2001). Corporate values XYZ Inc has two main corporate values which governs its growth and efficiency in its business activities. First, XYZ functions in conformity to the uppermost standards in its dealings with all its stakeholders which include customers, suppliers, business environment as well as the community around which it operates from. Second, the company promotes an organizational climate and culture that encourages innovation along with diligence among all employees and repays accordingly. Business analysis To give the current position of XYZ, an analysis of its internal and external environment which includes strengths, weaknesses, opportunities and threats is presented. Strengths The main strength of XYZ Inc is that, it has a strong brand name which is known all through the international arena which gives it a competitive advantage over its rivals. An additional strength of the company is that, it has a foundation for a stable management team. Moreover, since it is a multinational company, it has a broad and stable customer base both in the domestic as well as in the global market. The research and development department of the firm is well developed a case which enables it to carry extensive research especially on the industry in which it operates. In addition, the firm’s initial product which is computer software has the capacity to evolve into a wide variety of offerings. More so, the company is situated near a main city of excellence which increases its chances of attracting a large number of customers. XYZ is a well-formed and a well-run business with a very devoted management as well as staff. Weaknesses XYZ Inc’s greatest weakness is its overdependence on borrowed funds. The firm has inadequate cash resources which to some extent limits its expansion. Moreover, the mother company operates from small premises despite its big size which also limits expansion of business activities at the head office. Additionally, sometimes the firm is reluctant to adopt the current technology. In the computer world, new technologies keep on emerging hence chances of the market being moved to new directions are very higher. If this happens, the firm may end up losing a portion of its customers to its competitors. Furthermore, it has a very narrow Board of Directors which mostly comprises of executive directors\. This is a big weakness since there is no diversity in decision-making and planning. Besides, the firm depends so much on a small number of key staff. This puts it at a higher risk especially if those key workers were to resign or switch to another firm. Opportunities Several opportunities exist in the market for XYZ. To start with, the firm exports its products to several other countries around the globe and the export markets present great potential. The market segment where the firm operates in is poised, a situation which promotes rapid growth opening for the firm. Moreover, there is a wide scope for the company to penetrate associated market segments and draw new customers. This may expand the customer base for the firm. Additionally, there are a number of distribution channels that are looking for new products. Threats Technology keeps on changing day after day and new innovations are often being introduced into the computer systems’ industry. These developments pose a threat to XYZ because they may make the firm’s products obsolescent. Another threat comes from key players in the market since they may penetrate XYZ’s targeted market fragment hence leading to stiff competition. More so, the current economic slowdown may end up lessening the demand for products as well as services due to an increase in prices. Since the market segment is well balanced and has a high growth potential, the growth may draw high rivalry due to entry of new firms. XYZ is also threatened by fluctuations in exchange rates which mostly lead to depreciation of the dollar against major currencies like Euro. Moreover, the market may turn out to be price-sensitive leading to price instability for products as well as services. Strategic planning phase Goals XYZ has a number of goals which it intends to achieve in the next three to four years. In the first place, the firm targets to increase its sales by 25 percent in the next one year and by 70 percent by the end of 2015. In addition, it aims at increasing its workforce from the current 450 to 700 employees in the next three years. 65 percent of the employees to be hired will be technical experts so as to avoid its dependence on only few key staff. Moreover, XYZ wants to secure 64 percent of the domestic market segment in order to expand its customer base. Another goal is that, XYZ intends to be the biggest supplier of computer systems and other correlated applications in all the countries that it operates in within the next four years. It also wants to raise additional and adequate funds to avoid relying on credit and also be able to expand its business activities towards the end of next year. Besides, the firm plans to open additional outlets in the key markets and to have sales people and marketers to run the outlets in the next two or so years. According to Grant (2003), this goal enhances the securing of a portion of the home market segment. Lastly, within these four years, XYZ targets to report an annual net profit increase of 70 percent from this year’s profit. Objectives XYZ Inc has three major business objectives which are both long-term. In the first objective, the firm aims at expanding its business operations aggressively and to have a high profitability level so as to offer above-average profits to shareholders. In addition, the company intends to be the dominant, innovative systems firm both in the domestic as well as in the international market segments. Lastly, XYZ want to turn all its services in all the outlets to be customer-centred and to take its customers’ opinions into consideration in carrying out all its business decisions. Functional phase To help XYZ achieve its goals and objectives and to ensure that it constantly conforms to its vision and mission statements, a number of strategies will be undertaken. The firm will extend its connections with major technology centres so as to ensure that it presents its customers with products as well as services that match the latest technological developments in the market and also meet the requirements of its regulars. Haley (2000) suggests that, the implementation of such a strategy will also enhance efficiency in business transactions of its customers. Additionally, an Initial Public Offering will be carried out in efforts to raise more funds for the firm. Under this strategy, the company will issue shares to members of public. Initial Public Offering is one of the common ways that are used by companies that wish to raise large amount of capital for investing in business activities. Many companies prefer it to other forms of sourcing capital such as bank loans, trade credit and overdraft because it forms a permanent source of capital (Simerson, 2011). Moreover, XYZ has plans to employ non-executive directors so as to expand its Board of Directors which is currently very narrow. This will facilitate enhanced decision making as well as planning since both undertakings will be done based on a wide range of ideas from all the directors. Furthermore, the company will step up product and services launches through reinforcing its research and development team. According to Thompson & Strickland (2003), the launches will encourage extensive market research especially in search for new markets and customers for the company’s products and services. It will also help in identifying potential business opportunities that the firm may pursue and add to its current business operations as well as boost its strengths since research and development forms part of XYZ’s strong points. In addition, XYZ will enlarge its top management team in its sales and marketing department in efforts to bring in new strategies in the unit. The new ideas will aid augment the firm’s sales volume which will in turn help it reach its sales targets (Hellriegel, John, & Woodman, 2001). The firm will also strengthen its human resources department and initiate share alternatives for its employees. This will serve as a source of recognition on the part of the employees since they will be able to share in the firm’s profits. Drawing from Hubbard, Morkel, Davenport, & Beamish (2000), making the staff apart of the company also helps in retaining employees hence saving the company from high cost of recruiting new staff and the risk of its business strategies being revealed to its rivals in case some of its key employees move to other firms (Mintzberg, Quinn, & Ghoshal, 1999). Moreover, new business premises near the company’s head office will be bought to allow expansion of business activities especially manufacturing. The firm will also enhance its presence on the web and advertising in order to reach new customers as well as update the current customers on any upcoming events or products. The company’s website will too give the customers an opportunity to present the company with a feedback on its services along with their future desires. Carrying out all these strategies will aid in achieving the company’s objectives and goals (Drucker, 1990). Conclusion Strategic planning is a focus on the current position of a firm, its goals along with how it is going to achieve those goals. XYZ Inc manufactures and retails computer software and intends to be the leading company in the industry across the globe. Its main goals are to increase its sales volume, hire more employees, raise additional capital and open more outlets. The strategies to be used to attain the goals are conducting an Initial Public Offering, liaising with key technology centres, purchase new premises, develop a customer feedback services, and modify the sales management team and human resources division. Retrospective Commentary From my research on the importance of strategic planning to business organisations, a retrospective commentary will be prepared on the relationship between strategic planning and employee retention. A comparison will be done on the degree of employee retention in firms that practice strategic planning and those that do not. On the side of adoption of strategic planning, it presents a firm with a basis for assessing employee performance. Remuneration package that is based on the performance of each individual employee or a group of employees acts as a source of motivation for the employees. This is because; employees are paid according to their efforts a case which makes them feel appreciated and recognised. Measuring the performance of employees also encourages them to work hard since they expect to be compensated in accordance to their work efforts which in turn increases a firm’s level of profitability. High profits mean that the employees will get higher returns. In such a situation, employees have low chances of quitting work thus employee retention is high (Wittmann & Reuter, 2008). Effective communication is very important in an organisation since it gives staff a chance to express their views and complains about different issues in the workplace. Strategic planning is viewed as a very effective channel of communication within an organisation. While planning, the top management team ought to take into account the opinions of employees. A big percentage of workers who voluntarily leave their jobs do so due to lack of job satisfaction as a result of low pay, poor working conditions, discrimination and lack of career development opportunities. The adoption of strategic planning facilitates the communication of job issues by employees to the management. Once such issues are presented, appropriate measures are taken by the management to address the issues and ensure that all employees experience job satisfaction. The chances of a satisfied employee to leave job are very low (Wittmann & Reuter, 2008). According to Simerson (2011), strategic planning provides a chance for managerial training. The management personnel in all the functions of a business such as finance, human resource, procurement and sales and marketing have to undergo training before the implementation of any strategic plan. The training is intended to help the managers devise the most appropriate strategies for achieving a firm’s goals as well as objectives. Under normal circumstances, managers undergo different training in relation to execution of diverse plans. The training assists the managers to acquire new skills and knowledge which add up to their career development as well as personal growth both of which result in job satisfaction which in turn facilitates the retention of the management staff. In addition, strategic planning facilitates the setting of particular objectives to be achieved by all members of an organisation. Once goals are set, specific duties are delegated to each employee towards the achievement of the goals. This gives each employee a sense of belonging as well as helps employee realize their contribution to the operations of the organization. In addition, it makes workers to remain focussed since they are made to be answerable to all the outcomes that are related to their respective duties. The achievement of common organizational goals goes hand in hand with teamwork. Employees have to co-operate in discharging their duties in order for the activities of a business to be successful. Teamwork brings unity among employees and creates a favourable work environment. All these features enhance retention of employees (Simerson, 2011). On the contrary, Bryson & Alston (2005) argues that, firms that do not adopt strategic planning have poor communication channels. As a result, workers do not have means through which they can air their views or launch complains. In such a case, workers’ strikes are very common since they consider it the only way to convey their dissatisfaction. Strikes rarely solve job issues instead they result into lay down of employees. Poor strategic planning is thus associated with high employee turnover. In addition, there are no measures for assessing the performance of workers and thus most of the times both lazy and hardworking staff receive equal remuneration. This demoralizes industrious workers and may even lead to a decline in the productivity of a company. Besides, the demoralized workers have high chances of quitting their jobs because they just feel unappreciated and that their efforts are not being recognized. It can thus be concluded that, employee retention is high in firms that practice strategic planning as compared to those that do not have strategic plans to carry out. From my research, I have learned several things. To start with, strategic planning gives the firm a discipline which allows the Board of Directors along with the top management to take a break from routine business operations to reflect on the organization’s future. Without such a discipline, an organization may become exclusively devoted to solving arising issues without thinking about the big picture. Additionally, a strategic planning process compels a firm to set goals as well as measures of achievement. Setting of these measures obligates the organization to first identify what is vital to its incomplete achievement and then necessitates the setting up of objectives and placing these vital measures before the top management and board. Moreover, addressing functional matters rarely focus on the entire business and the relationship between its various components. Strategic planning assumes an organizational view and considers all the sections and the connection between the sections in order to institute a strategy which is most favourable for the entire firm and not a particular section. I have also learned that, strategy gives a mental picture about the future, substantiate the purpose and principles of a firm, develops objectives, elucidates business openings and threats, identifies ways to leverage strengths and lessen weaknesses. As such, strategic planning sets a structure and clear limits within which resolutions can be made and makes management as well as staff focus better on their efforts. The cumulative impact of such decisions may have a very substantial effect on the organization’s success (Mintzberg, Quinn, & Ghoshal, 1999). References Bryson, J. M., & Alston, F. K. (2005). Creating and implementing your strategic plan : a workbook for public and nonprofit organizations. San Francisco, CA : Jossey-Bass. Drucker, P. (1990). Managing the Non-Profit Organisation. New York: Harper Collins. Gómez-Mejía, L. R., Balkin, D. B., & Cardy, R. L. (2001). Managing Human Resources. New Jersey: Upper Saddle River. Goodstein, L., Nolan, T., & Pfeiffer, J. W. (1993). Applied Strategic Planning: How to Develop a Plan that Really Works. San Francisco: McGraw-Hill. Grant, R. M. (2003). Strategic Planning in a Turbulent Environment: Evidence from the Oil Majors. Strategic Management Journal , 24 (6), 491-517. Haley, G. T. (2000). Strategic Management in the Asia Pacific. Oxford: Butterworth Heinemann. Hellriegel, D., John, W. S., & Woodman, R. W. (2001). Organisational Behavior. 9th ed. Mason, Ohio: South-Western College Publishing. Hubbard, Morkel, Davenport, & Beamish. (2000). Cases in Strategic Management. Frenchs Forest: Pearson Education Australia. Mintzberg, H., Quinn, J. B., & Ghoshal, S. (1999). The Strategy Process . Essex, England: Pearson Education Limited. Simerson, B. K. (2011). Strategic planning : a practical guide to strategy formulation and execution. Santa Barbara, Calif. : Praeger. Thompson, A. A., & Strickland, A. J. (2003). Strategic Management: Concepts and Cases. New York: McGraw-Hill Irwin. Wittmann, R. G., & Reuter, M. P. (2008). Strategic planning : how to deliver maximum value through effective business strategy. Philadelphia: Kogan Page Ltd. Read More