Published on March 9, 2014
An Assignment on Business Strategy Submitted to Submitted by Date
Contents Executive Summary: ...................................................................................................................... 2 Task 1 ............................................................................................................................................... 3 1.1 Explain the role of strategy, mission, visions, objective, goals and core competencies of Autoglass ..................................................................................................................................... 3 1.2 Vital Issues in Strategic Planning ....................................................................................... 4 Task 2 ................................................................................................................................... 9 2.1 Produce an Organizational Audit for Autoglass .......................................................... 9 SWOT Analysis ................................................................................................................. 9 2.2 Carry out an environmental audit for Autoglass using at least two approaches......... 10 Diversity of Rivals: The rivals with new and different ideas of competing will likely cross each other’s path and challenge other’s position. ............................................................ 12 2.3 Explain the significance of stakeholders’ analysis in relation to Autoglass................. 12 Task 3 ................................................................................................................................. 14 3.1 Analyze possible alternatives strategies relating to substantive growth, limited growth and retrenchment............................................................................................................ 14 3.2 Select an appropriate future strategy for Autoglass ................................................... 18 Task 4 ............................................................................................................................................. 19 4.1 Compare the roles and responsibilities for strategy implementation of Autoglass ...... 19 4.2 Evaluate resource requirements to implement a new strategy for Autoglass ........ 20 4.3 Discuss targets and timescales for achievement for Autoglass to monitor a given strategy ..................................................................................................................................... 20 1
Executive Summary: The two companies named Windshields and Autoglass merged together in 1984 and from the inception of this merger the firm is continuously satisfying their customers with quality products and service. In this journey, they have won the heart of their customers by its unique approaches of doing business. Unlike other profit oriented firms, they have taken the growth of business and satisfaction of the customers as the main concentration. Autoglass has brought excellent compilation of services and their products. They are going for much larger market segment and expanding in a steady pace by starting from only a small family business to own 500 branches in all over the Europe. The objective of this report is to analyze the strategies that Autoglass is running behind their successful journey. Moreover, depending on several business strategy theories, some suggestions and alignments have been created for the company. This work has certainly helped to better understand the tactics and visionary strategies of Autoglass and thereby has been turned into an effective learning source of business strategies. 2
Task 1 1.1 Explain the role of strategy, mission, visions, objective, goals and core competencies of Autoglass Autoglass Company Mission Target of a business depends on the state of affairs and endeavor pointers the workers have to be compelled with accordingly, and to perform to achieve the objectives of the association(Ivanauskiene 2009). The foremost focus of the Autoglass business is on the customer’s approval and only windshield refurbishing services to the customers. Missions of a business guides to the vision of the organization. Autoglass Company Vision Relevant to the mission, the vision of the company is to serve the customer in a way that would make complete satisfaction and thus result into continuous growth for the company. A current statistics shows that Autoglass already hold around 92% customer satisfaction in rating. They believe to increase it with the strategies they are following for years. Autoglass Company Core Competency A core competency is a concept of theory that specifies the factors that a business sees as central to the way the company or its employees work (Grant M. R., 2010). The core competency of the Autoglass Company is that they can repair or replace any kind of broken or damaged glass of any model. Autoglass is providing fleet services to the customers to repair or replace any kind of broken or damaged glass (Autoglass Company). Strategic Intent: The strategic intent of Autoglass is to see itself as the market leader always. The concept of strategic intent implies that there is a general view on where the company should be going rather than a definite statement of an expected outcome and this means that there should be plenty of flexibility within the statement to allow for staff initiative, team contribution and adaptation in light of changed circumstances (Ivanauskiene, N, & Auruskeviciene, V., 2009).They are doing all the activities to remain leader. Role of Strategy of Autoglass 3
Autoglass has compiled their roles in strategy making in a way that the strategies maintain a specific time period in the execution (Autoglass Company).The primary task in strategic administration is normally the compilation and dissemination of the vision and the operation declaration. This outlines, in essence, the raison d'etre of an organization (Ivanauskiene, N, & Auruskeviciene, V., 2009). Objective and goals of Autoglass The main objective of Autoglass is to satisfy their customer by repairing or replacing broken windscreen of any vehicle. The goal of Autoglass is to make their business grow and serve the global customer (Autoglass Company). They are expanding their business by winning the hearts of the customers. Strategic Architecture of Autoglass The strategic architecture of any organization is the process of answering the five fundamental questions of making the strategy. The questions are compilation of “What”, “What Else”, “What More”, “What Now”, “How” (Grant M. R., 2010). By answering these questions Autoglass shapes their strategic structures of the company. 1.2 Vital Issues in Strategic Planning In order to set up strategies and implement strategies there are some important problems that must be thought of. Supported the case, Ansoff’s model are often accustomed to analyze the competitive benefits(Kentley 2013). Autoglass is putting their focus on the customer’s preference and customer service. They have reached the highest satisfaction level in the service industry just by replacing the windscreen in a cost effective way. Autoglass should be customer oriented and try to increase their service portfolio in order to meet with the competition. Given the situation in the case we can analysis the competitive advantages of Autoglass. Competitive Advantage As usage of automobile is growing day by day, Ansoff’s model to can help them in researching their competitive advantages Autoglass delivers the best service of replacing windscreen. They are providing many services to customers concerning windscreens and capturing a good share of the market. The Ansoff’s model is given below: 4
Figure: Ansoff Growth Matrix Igor Ansoff offered this matrix which described on the firm's present and potential products and markets (customers) to portray alternative corporate growth strategies (Kotler, P., 2000). Ansoff's matrix provides four different growth strategies: a. Market penetration- involves selling more established products into existing markets, often by increased promotion or price reductions or better routes to market, for example online. b. Product development– During this strategy Autoglass will bring a replacement product to the prevailing market of screen to capture new customers. c. Market development–This strategy mentions to the attainment of new clientele assemblies. Autoglass can boost their market segments to arrest new customers. d. Diversification– Autoglass can grow by diversifying into new businesses by developing new products for new markets. Autoglass Company has huge opportunities in the market. They can increase the growth rate very swiftly by satisfying the customer, acquiring and retaining them. They can set targets for three years to attain more customers and develop new products that are suitable to the market and building demand. During the targeted period the Autoglass Company 5
should prioritize its geographic area; where they will create a huge market and they should determine the criteria for selecting an efficient supplier who will supply quality products. Definition of Top-Down and Bottom-Up Informal Planning: Informal planning is important to ensure short term objectives of the organization. It is the process where the manager or leader of a team develops a plan without any conventional structure and rigid frameworks (Grant M.R. 2010). For certain instant situations managers use this approach where it is not essential to form any formal structure of planning or the timeline for planning is not enough. Top-Down: A top-down approach is essentially the breaking down of a theme to understand insight within the sub-themes. Autoglass is thriving in this approach in their development which they' are doing attractive shrewd in following this approach. Bottom-Up: A bottom-up approach is that the piecing of systems to produce increase to supplemental clear systems, so conceiving the first systems, sub-systems of the presenting system. Autoglass is relating this approach in their service development to convince the customers and they are victorious in exploitation of this approach. Behavioral Approach for Autoglass:among all the methods Top-Down method is the most suitable for Autoglass to capitalize their resources and to handle the competition in the future. Autoglass is a growing company in the service industry and the service they are providing will not be sufficient for them to hold on to the position in the market. They need to come up with several developments for their product and market so that they might a diversified market for the customers. 6
1.3 Explain minimum three planning technique for Autoglass The techniques that any organization needs to follow in the competitive industry. There are three basic techniques that an organization can follow. Autoglass should follow one of the strategies to flourish in the market and capture more customers. 1. BCG Growth Share Matrix Autoglass can divide their products in such a manner where they can prioritize their products and manage a synergy in the portfolio (Ivanauskiene, N, & Auruskeviciene, V., 2009). This matrix shows the organization 4 types of consequences that will be faced by an organization (Gudonaviciene, R, &Rutelione, A., 2009). It also helps the organization to know when to invest in the existing product, when to divest all earnings from the market segment and when to focus on a new business venture. Placing goods in the BCG growth share matrix Autoglass will face 4 types of consequences in the market. And they are: A. Stars: High Growth and High Market Share It requires a great quantity of cash for which managers need to take decisions from which the cash will be generated and used. If managers can make the business profitable and maintain a steady market share then it will result in the cash cow and the Company can harvest cash from the business. B. Cash Cows: Low Growth but High Market Share The product will attain low growth in the market but it will have the highest market share from which the organization will turn in revenues and maintain income. C. Dogs: Low Growth and Low Market Share The time when the product gradually stops to generate any kind of revenue, the organization should gradually divest from the project to start another. The organization should also be careful of incurring any unnecessary costs. 7
D. Question Marks: High Growth but Low Market Share It indicates to the products that are newly introduced in the market and will gradually earn mass acceptance. It also has the risk of making a Dog product. If the market share is not increased gradually then it would incur loss for the organization. 2. Strategic Position & Action Evaluation Matrix (SPACE) Autoglass can also use the SPACE planning technique to understand the market requirements and operate in order to expand the operation. This matrix has four quadrants indicating the positions of the business organization and how to react accordingly (Ivanauskiene, N, & Auruskeviciene, V., 2009). In consideration to Autoglass’s position in the market they can use aggressive strategy. It can also be used as the base for SWOT analysis. 3. Profit Impact of Market Strategy (PIMS) It is a type of database which provides concrete evidence to support policies and principles for gaining and sustaining competitive advantage (Melody, Y. & Kevin, H., 2000). Autoglass might maintain a customer service database in order to analyze their principles and planning process so they can keep track of their success and implementation of the strategies. 8
Task 2 2.1 Produce an Organizational Audit for Autoglass SWOT Analysis Strengths • Low cost • Safety • Visual Clarity • Avoiding further damage Opportunities • Increasing growth rate • High presence in emerging economy • New Product SWOT Weaknesses • Less promotion of the brand • Lack of advertisement Strengths Threats • Suppliers Competition • Geographic Location • Government Policy Autoglass is providing a premium service at low cost The safety features in the product are high Weaknesses The replaced or repaired windscreen provides the high visual clarity The glasses replaced or repaired by Autoglass is capable of reducing further damage. Autoglass is reluctant in promoting the brand. Lack of advertisement is present in the Autoglass Company Opportunities Autoglass has the opportunity to increase the growth rate in the industry as fewer providing such services. 9 firms are
Threats It is highly present in the emerging economy and has a huge opportunity to grab the market. As Autoglass is repairing and replacing the windscreen, they can also develop new product such as side view mirrors or rear view mirrors Suppliers’ competition is very high in the industry. It is difficult to determine the quality supplier. Geographic location is a common threat to any business if it is not situated in the proper market. The government policies play a vital role in shaping the business market 2.2 Carry out an environmental audit for Autoglass using at least two approaches PESTLE analysis helps any organization to understand the scenario of the environment where the organization will operate (Melody, Y. & Kevin, H., 2000). It is impossible for any single organization to affect the factors. It influences the strategic decisions that will be taken by an organization (Gudonaviciene, R, &Rutelione, A., 2009). PESTLE helps the organization to maximize opportunities and minimize threats. PESTLE analysis Political Political climate in different countries is different and the policies influence the business strategies. Stability of governments. This may affect the future conditions in a country. Taxation policies. Economical The buying capacity of people influences the purchases of the organization. Level of economic activity that affects need for windscreen. Socio-cultural 10
Lifestyle and preferences of people influences the industry. Social norms that impact the decision to own and use automobiles versus other means of transport. Technological Technology relating the designs. Technology of windscreen manufacture. Technological developments that may increase or decrease repair or replace of windscreen. Legal Legal provisions relating to safety measures. Law regarding consumer and employment is highly emphasized. Environmental Environmental aspects such as weather, climate, and climate change can affect in the business. Porter’s 5 forces analysis is a type of analysis which determines and helps the management to understand the overall context of the industry (Kotler, P. and Armstrong, G., 2006). Porter’s 5 forces: 1. The threat of new entrants Economies of Scale: This means scale economies in the production. In this industry, this is generally a very low threat Access to Distribution Channel: It is the ability to distribute the product in the market and create demand. Government Policy: Governments can limit entry to an industry through licensing requirements by restricting access to raw materials. 2. The bargaining power of customers Number of supplier Companies: The number of supplier companies controls the purchasing power of the customers. 11
Threat of Backward Integration: A buyer has the potential to integrate backward by producing the product itself. 3. The threat of substitute products Prices: Prices matter in the industry because buyers shift to the product which is offering high quality yet having low price. Access: Access in the industry for buyers has become much easier than it was in the beginning. 4. The amount of bargaining power suppliers have Number of Buyer Companies: The number of companies who are purchasing raw materials for manufacturing windscreen from number of suppliers. Threat of forward Integration: Supplier can integrate with customers to produce the same product. 5. The intensity of the competitive rivalry Number of Competitors: the number of competitors is comparatively low in this industry. Rate of Industry Growth: the industry has huge growth potentiality. Diversity of Rivals: The rivals with new and different ideas of competing will likely cross each other’s path and challenge other’s position. 2.3 Explain the significance of stakeholders’ analysis in relation to Autoglass Stakeholders can be divided into three categories: 1. The top left part refers to the stakeholder who influences strategies but they posses’ low interest in the organization(Merrettali 2013). 2. The bottom right part refers to the stakeholders who have high interest but low influence in the organization. 3. The bottom left part refers to the stakeholders who have low influence and low interest in the organization. 4. The bottom right part refers to the stakeholders who have no influence at all. 12
The stakeholders are kept in four classifications so that each stakeholder has their specific rights and duties in regard of the making the strategies for the organization which will be implemented for the betterment of the organization. Autoglass has mapped the stakeholders in the organization so that the stakeholders can perform their duty in regard of the organization’s benefit 13
Task 3 3.1 Analyze possible alternatives strategies relating to substantive growth, limited growth and retrenchment Market Entry Strategy •When a business organization achieves growth over its own business which is as same as the beginning of the organization, it is called organic growth. It excludes any growth that is gained by getting into any other business or merger or acquisition Organic Growth •This is the process where one particular company purchases another entire company and establishes itself as the owner. In this process 100% or near 100% ownership has to be bought Acquisition •It is the process through which a mother company (licensor) allows another company (licensee) to use its trademark and sell the products or services on the basis of agreements on several terms. The terms include the licensing fee that has to be paid to the licensor Licensing 14 •Merger is the process by which two companies gets united and turns into one entity through legal consolidation. The beginning of Autoglass was through such merger Merger •This is the process where two or more companies agree upon a number of common objectives and share each other’s resources to meet those objectives. This approach is actually an idea that stays between the concept of organic growth and merger or acquisition Strategic Alliance •It is the process, through which a company earns the right to use another company’s trademark, business model, operations where the franchisor gives the right to the franchisee. For acquiring market share abroad, Autoglass might use this approach by assigning franchises in different locations Franchising
Substantive Growth •In horizontal integration a company forms or acquires production facility of related or complementary products (Melody, Y. & Kevin, H., 2000). Sometimes it may also happen that a company purchases one of its competitors and form integration. Autoglass might form such integration by linking with other production that are related to its existing products Horizontal Integration •When a company expands its business with some diversification in the existing product line (Arazy, O, & Gellatly, I., 2012). The new productions are similar to the existing products Related Diversification Limited Growth 15 •In vertical integration a company links with the companies or partners of the supply chain and in many cases all the partners of the chain stay under a single owner (Melody, Y. & Kevin, H., 2000). Autoglass might engage into vertical integration by linking with the suppliers and distributors Vertical Integration •It is the process when a company engages into diversification by introducing new products and services that doesn’t match with the existing product line (Arazy, O, & Gellatly, I., 2012). It can be unrelated diversification if Autoglass starts selling home window glasses or beauty mirrors Unrelated Diversification
• It means penetrating the competitive market by offering competitive price against the price of the competitors. This approach is used to instantly attack the competitors by gaining their customers. It is often used to gain sales growth Market Penetration • It means developing new products that do not exist currently and thus attracting customers to buy more varieties of products or services Product Development Disinvestment 16 • It means targeting new customer segments and attracting the nonbuying customers of that segment. It helps to increase the market share by adding new portion of customers. It is possible for Autoglass to develop the market by geographically expanding the business and reaching the customers Market Development • It means searching out an entirely new need of the customers in the market and innovating a new product or service to meet that need. Autoglass might try to sort out such need in the market and introduce an innovated product or service Innovation
•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 Retrenchment •When a business or firm is terminated or bankrupt, its assets are sold and the proceeds pay creditors. Any leftovers are distributed to shareholders. Liquidating a firm is the last stage of the firm’s survival. If no alternative strategies comply with the organizations then it needs to sell its assets and then pay up the shareholders and stakeholders Liquidation Porter’s Generic Strategy 17 •Turnaround management is a process dedicated to corporate renewal. It uses analysis and planning to save troubled companies and returns them to solvency. Turnaround management involves management review, activity based costing, root failure causes analysis, and SWOT analysis to determine why the company is failing. In order to make a comeback in the industry organizations need to find out the root of the problems and based on those problems they need to make up new strategies and policies to overcome those problems Turn around •The process of selling an asset. Also known as divestiture, it is made for either financial or social goals. Divestment is the opposite of investment. It is the process of pulling out the assets in operation and sells those to meet the gap in the financial problems and in order to liquidate the organization divestment is necessary for any organization Divestment
Michael Porter described a scheming that contains three general strategies which are used by companies to gain the competitive advantage (Kotler, P. and Armstrong, G., 2006). The generic strategies are: Overall Cost Leadership According to the situation mentioned in the case, the Autoglass Company uses the cost leadership approach to enter the market and it is helping to grab more customers than the competitors (Kotler, P., 2000). Differentiation Only cost leadership cannot help an organization to flourish their business. The organizations need to put differentiations (Kotler, P., 2000). The Autoglass Company differentiated their service by introducing 24/7 customer advising operations and the fleet servicing. Focal Point Autoglass is the market leader and best service provider in the UK market in repairing and replacing windscreen. They are now focusing on the customer satisfaction and the services they are providing (Kotler, P., 2000). 3.2 Select an appropriate future strategy for Autoglass Autoglass should be following the vertical growth strategy to grow their business. They can go with alliance with automakers to capture the new market segment. Autoglass is in a strong position and they might be able to go with the alliance with new organizations. Because this strategy is appropriate for the organizations growth and their core capabilities match with the strategy. Alliance with related organizations will enable Autoglass to put more focus on the customer’s preference and can develop new product category to fulfill the needs of the customers. In order to expand the market segment Autoglass Company needs new strategies and new products which can be helpful for them to thrive the market. So considering future strategy they can analyze their market need and come up with some development of the new product to diversify their services and capture a new market segment. 18
The Autoglass is at present have a 92% satisfaction rate among the customers. But with expansion of the business the satisfaction rate might fluctuate and Autoglass need to build a timescale for the new goals and extension of the new services. Considering the position in the industry, Autoglass can provide a 5 quarters plan that will be sufficient for Autoglass to cope up with the competition and maintain alliance with the automakers to expand the business. Autoglass can benchmark next 5 quarters to comply with strategies they have taken and fulfill the commitment to the customers. Only starting new product line and expanding the market will not alone help the Autoglass Company to expand in the market. Autoglass should constantly review the feedback of the customers so that they might know what the customers are looking for and to what level of satisfaction customers want. Autoglass management needs to define the roles and responsibilities to the employees so that they can provide the highest level of satisfaction to the customers. Task 4 4.1 Compare the roles and responsibilities for strategy implementation of Autoglass Strategy and policy execution is one of the most vital issues related to doing business. The growth and profit of the organization solely lies on how wisely the decisions are being taken and how effectively the taken strategies are being executed. The top-heads of the organization has to be responsible enough to not just consider the work as a job but to look beyond to develop the organization and knock every single possibility to grow further and analyze every single threat to secure the organization. They have to look over a new idea or strategy and check the feasibility of it according to the market situations. For any company like Autoglass, understanding the market as better as possible and evaluating the ongoing and proposed strategies are one huge responsibility of the management where they have to play a real significant role. . 19
Top level managers are responsible for making policies and strategies. But it is also their responsibility to make it clear to the employees, because employees will be the key to performing those strategies. Managers got to be compelled to inspire the workers to execute the values that need commencing with efficiency and aptly. Assuring the aim, accomplishment can reside in employee happiness and coherence in job air. 4.2 Evaluate resource requirements to implement a new strategy for Autoglass In alignment to contemplate the assets of Autoglass, the organization ought to select correct elements and place them within the actual division to provide the services. Autoglass has prioritized its human assets as a result it became the best service provider of windscreens (Autoglass Company). Autoglass in addition has fleet repairing units that require man power. So Autoglass spend lots in advising and developing the skillfulness of the workforce In the given scenario the Autoglass Company is efficient in their resource planning and evaluating the resources thoroughly to provide the best service 4.3Discuss targets and timescales for achievement for Autoglass to monitor a given strategy Evaluation of the benchmark outcomes: Quarter Autoglass should review their customer’s feedback in order to implement 1 the desired planning’s to expand their business in a large market. For this reason the line managers are solely responsible for the collection process of the feedbacks of the customers and acting accordingly. Quarter During the period Autoglass should review the customer’s feedback and 2 implement the desired plan to expand the business. The line managers should be responsible for collecting the feedbacks and acting towards it. Quarter This is the quarter of gathering information and takes research note on the 3 implemented strategies. The management should find out the gap between the expected outcome and actual outcome. The GAP might occur because of lack of coordination or inefficiency of the employees and line managers. 20
Quarter Management should organize a training program to fill in the gap. So that the 4 employees can achieve the organization goal in desired manner. Quarter 5 In this quarter the organization might achieve the desired results based on the strategy making and the implementation method. If the management fails to achieve the objectives through the strategies, then they have to initiate actions based on information like training the employees or providing support to them. 21
Conclusion Market leader Autoglass has set a new standard of services to its customers. This example cannot be done without teamwork and Autoglass shows that they have a huge number of qualified and efficient workers by whom they have achieved which was once unimaginable in this industry. Now-a-day they are trying to expand their market and it may cause those facing new challenges but in order to become a global market leader every company should accept any kind of challenges. 22
References: Arazy, O, &Gellatly, I., 2012, 'Corporate Wikis: The Impact of Autoglasss in the Windscreen industry, vol. 29, no. 3, pp. 87-116. Armstrong, G., &Kotler, P. (2006). Marketing: An introduction (8th Ed.). New York: Prentice Hall. Addmour, H., &Ayish, H. (2005). The influence of marketing service mixed. Jordan University Journal, 1, 143-156 Autoglass Company. [ONLINE] Available at: http://www.autoglass.co.uk/Glass-repairand-replacement.186.0.html. [Accessed 19 December, 2013]. Grant M. R., (2010) – Contemporary Strategy Analysis, Amazon.co, Wiley Higher Ed; 7th edition. Gudonaviciene, R, &Rutelione, A 2009, ‘Deciding the way of communication, 'Corporate Communication: A Strategic Tool for Crisis Management', Journal Of Economic Development, Management, IT, Finance & Marketing, vol. 3, no. 2, pp. 5567iors', Economics & Management, pp. 397-406. Ivanauskiene, N, & Auruskeviciene, V., 2009, Change Management and Its preparation', Economics & Management, pp. 407- 412. Kotler, P., 2000. Marketing Management.5th Ed. New Delhi: Prentice hall of India. Melody, Y. & Kevin, H. 2000.“Market Strategies” Decision Support Systems.Vol no. 27, Pp 368-378. Michael A. (1999) A Handbook of Human Resource Management Practice.9th Ed. London: Schultz, H. (2006). Discover the Traits of Top Management [online]. s.n. Available from: http://www.nwlink.com/~donclark/leader/leadcon.html [Accessed December 26, 2013]. 23
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