Published on March 9, 2014
An Assignment on Business Strategy Submitted by: Name: Id: Submitted to: Date of Submission: 1
Table of Content: Executive summary 3 Task- 1 4 1.1 Explain the role of strategy, mission, visions, objective, goals and core competencies of Autoglass 1.2 Review the vital issues involved in Strategic planning in Autoglass 4 1.3 Explain minimum three planning technique for Autoglass 7 Task-2 9 2.1Produce an Organizational Audit for Autoglass 9 2.2 Carry out an environmental audit for Autoglass using at least two approaches 2.3 Explain the significance of stakeholders’ analysis in relation to Autoglass 11 13 Task-3 14 3.1 Analyse possible alternatives strategies relating to substantive growth, limited growth and retrenchment 3.2 Select an appropriate future strategy for Autoglass 14 Task-4 19 4.1 Compare the roles and responsibilities for strategy implementation of Autoglass 4.2 Evaluate resource requirements to implement a new strategy for Autoglas 4.3 Discuss targets and timescales for achievement for Autoglass to monitor a given strategy Conclusion 19 References 5 18 20 21 22 23 2
Executive summary: Autoglass was formed in 1974 and, by 1983, had over 40 branches and 100 mobile fitting units. In 1984, the two firms merged to become initially Autoglass Windshields and a year later the second part of the name was dropped - the name Autoglass remains to this day. The company presently has 180 branches and 900 mobile fitting units. The merger in 1984 brought together two very different firms, one a family business and the other much more process orientated. Nevertheless, the two complemented each other and this enabled the development of a „people first‟ culture. Above all, Autoglass wanted to change from simply a garage service company into a customer service company. On average, a motorist will need to replace a windscreen every ten years. It is a rare occurrence, but nonetheless stressful. Autoglass recognises that a new windscreen is a „grudge purchase‟ and that most of its customers truly wish they did not have to call. With new laminated windscreens and the ability to repair minor damage, the need to replace the whole windscreen has become even less common, but unfortunately there has also been a rise in smash and grab car crime. This can serve only to heighten the consumer‟s frustration and anxiety. Autoglass has had at the core of its business, the objective of becoming and being recognised as a world class service provider. As such, Autoglass wants its customers to regard the company as amongst the best of all the service providers they encounter. This strategy has been developed into the circle of success. 3
Task -1 1.1 Explain the role of strategy, mission, visions, objective, goals and core competencies of Autoglass Mission:Mission of a corporation is predicated on this state of affairs and action pointers according that the staff unit are to perform to realize the objectives of the organization (Kotler, P., 2000). The vision of a company can be set up through fulfilling its mission. The mission of Autoglass is fulfilling customer satisfaction and providing best service. Vision:Vision of a company is that the future intentions associated in nursing the target that an organizations attempt to win by process the missions and setting goals and objectives to get done (Kotler, P., 2000). The vision of Autoglass is that This will lead directly to greater customer satisfaction. If customers are impressed with the service they receive, they are more likely to use Autoglass in the future, should the need arise. Repeat purchases lead to better business results and greater potential reward that will, in turn, reflect in improved employee satisfaction. Core Competencies:Core competency refers to the core actions of a corporation that form the business missions and visions of that individual organization (Kotler, P., 2000). Autoglass can easily replace or repair any reasonably damaged windscreen. Strategic Intent: 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). The strategic intent of Autoglass is to see itself as the market leader always. They are doing all the activities to remain leader. Role of Strategy of Autoglass: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). Autoglass has compiled their 4
roles in strategy making in a way that the strategies maintain a specific time period in the execution (Autoglass Company). 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 Review the vital issues involved in Strategic planning in Autoglass There are few issues that need to be addressed in regard to planning strategies (Grant M. R., 2010). As this industry is new comparative to the other service industry, new companies have a possibility to start up a windscreen repairing service because the returns are attractive. So Autoglass might face competition in near future. 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: Autoglass is rapidly grabing the market share through providing the best services of replacing windscreens. As usage of automobile is growing day by day, Ansoff‟s model to can help them in researching their competitive advantages 5
• New Product • Existing Product • Existing Product • New Product Market Penetration Product Development Market Develpoment Diversification Ansoff’s Model Based on the situation and analysis we learned that Autoglass is increasing its market step by step and has the capacity to serve more than they are doing currently (Kotler, P., 2000). The four different methods areA. Market Penetration: Through this way Autoglass can grab more market share by commercialism. B. Product Development:New product will facilitate Autoglass Which will go together with existing product. Three is a great risk in this way. In case of not purchasing new product by consumers may cause a great risk and may decrease revenue. C. Market Development: To extend its market share Autoglass can promote and develop market and grab new consumers. D. Diversification: Autoglass should make a product portfolio so that the revenue cannot reduce. Autoglass should adopt these four growth strategies so that they can increase the rate of expansion. 6
Top-Down and Bottom-Up theories Top-Down: Autoglass is being benefited by using this approach. Top-down refers to a approach of breaking down of a system to identify insight in the subsystems. (Grant M. R. 2010) Bottom-Up: This approach refers to a approach creating the initial systems as subsustems of emerging system to provide rising of additional complicated system. Autoglass has been successful by utilizing this approach. Informal Planning: Informal planning 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. It is important to ensure short term objectives of the organization. 1.3 Explain minimum three planning technique for Autoglass 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 7
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. Figure: BCG Matrix 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 8
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. Task 2 2.1 Produce an Organizational Audit for Autoglass SWOT Analysis Strengths 1. Safety 2. Low Cost 3. Visual Clarity Opportunities 1. Emerging Economy 2. New Product 3. Growth Rate Weaknesses 1. Promotion 2. Advertisement Threats 1. Geographic Location 2. Government Policy Strengths • Autoglass is providing a premium service at low cost. • The safety features in the product are high. • The replaced or repaired windscreen provides the high visual clarity 9
• The glasses replaced or repaired by Autoglass is capable of reducing further damage. Weaknesses • 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 firms are providing such services. • 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. Threats • 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. To maximise opportunities and to minimise threats companies are conducting PESTLE analysis. (Grant M. R, 2010). There are many significant factors regarding operating a business. 10
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. Political • Political climate in any country determines the attractiveness of the business. • Government stability is important because it may affect the future decisions. • Organizations need to pay taxes and taxation policies affect the industry. Economical • Purchasing capacity of the people determines cost and level of service in the industry. • The need for replacing windshield is represented by the level of economical activity Socio-cultural • Lifestyle and preferences shapes an industry. • The decision to own an automobile and need to replace windshield depends on the social norm. Technological • Technology relating the designs. • Technology of windshield manufacture. Legal Environmental •Law regarding safety measures is important. •Employment and consumer law is highly emphasized. •Some things are beyond control of the organizations such as weather, climate and climate change. 11
Porter‟s five forces analysis helps the management to determine and understand the overall context of the industry (Kotler, P., 2000). Porter‟s five forces are: 1. The threat of new entrants • Economies of Scale: This is generally a low threat and it measures the scale of economy in the production. • Government Policy: Government policy can limit the entry and exit barrier in an industry. 2. The bargaining power of customers • Threat of Backward Integration: Organizations face the risk of backward integration with the suppliers. 3. The threat of substitute products • Prices: Prices play an important role in any industry. Buyers may shift from one product to another just because of price sensitivity. • Access: Buyers access in the industry is now a day’s much easier than before. 4. The amount of bargaining power suppliers have • Threat of forward Integration: Organizations face the risk of forward integration with the suppliers. With the help suppliers, buyers can make the same products that are offered by another company. 5. The intensity of the competitive rivalry • Number of Competitors: Competitor’s number plays an important role in pricing strategy. • Diversity of Rivals: The rivals challenge and cross each other’s path in making and implementing strategies. 12
2.3 Explain the significance of stakeholders’ analysis in relation to Autoglass Stakeholder’s Grid: High Influence Low Interest (Latent’s) High Influence High Interest (Promoters) Low Influence High Interest (Defenders) Low Influence Low Interest (Apathetic) Stakeholderr’s Grid a) Promoters:Stakeholders who influence the strategies and also have high interest. b) Latent‟s:Stakeholders who influence strategies but has low interest. c) Apathetic: Stakeholders who has low interest and seldom influences the strategies. d) Defenders:Stakeholders who have low influence in the strategy making but high interest. 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 Analyse possible alternatives strategies relating to substantive growth, limited growth and retrenchment Tony Bates started a little corporation in 1969 and the company Autoglass started in 1974. Thecorporation,AutoglassWindscreen was fashioned by a merger in 1983 and a year later the latter half was removed and therefore the name Autoglass remains (Autoglass Company). The entry strategy of Autoglass within the business of windscreen repairing was by merger. The firm is step by step increasing its market share and until these days Autoglass has one hundred eighty branches and 900 mobile fitting units everywhere United Kingdom. Market Entry Strategy Organic Growth: 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. Merger: 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. Acquisition: 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. Strategic Alliance: 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. Licensing: 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. Franchising: 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 14
franchisee. For acquiring market share abroad, Autoglass might use this approach by assigning franchises in different locations. Substantive Growth Substantive growth indicates the objectives and goals of a company to expand its business and attain the most market share (Kotler, P., 2000). Substantive growth recommends to maximize the profit and improvement within the business from that the organization will subsidies different shortage (Kupritz, V.&Cowell.E., 2011). Horizontal Integration: 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. Vertical Integration: 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. Related Diversification: 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. Unrelated Diversification: 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 Limited Growth Here it is recommended the observation of the achievements(Kotler, P. 2000). Many organizations management does not take decisions right away to implement the strategy. They are not ready to accept changes. This growth strategy is advantageous but holds additional disadvantages. Autoglass is looking forward to expand its business during a steady manner. 15
Market Penetration: 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 Development: 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. Product Development: It means developing new products that do not exist currently and thus attracting customers to buy more varieties of products or services. Innovation: 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. Disinvestment 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. Turn around: 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. Liquidation: 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. Divestment: 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 16
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. Porter’s Generic Strategy 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: 1. Overall Cost Leadership 2. Differentiation 3. Focal Point Overall Cost Leadership • Based on the case it can be inferred that Autoglass is following the cost leadership in the industry and they are offering their services in the lowest cost possible (Armstrong, G., &Kotle r, P. 2006). It is helpful to attract more customers and enter in the new market. Differentiation Focal Point •Cost leadership alone cannot help an organization to enjoy profit from the market. Differentiation is necessary to bring in more profits and grabbing more customers (Armstrong, G., &Kotler, P . 2006). The Autoglass is offering 24/7 customer services to differentiate them from the others. •To improve business in the industry organizations needs to focus on a specific objective (Armstrong, G., &Kotler, P ., 2006). Autoglass is focusing on serving the customers and satisfy them for their money worth. Autoglass has become the best windshield repairing or replacing service providers. 17
3.2 Select an appropriate future strategy for Autoglass 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 analyse their market need and come up with some development of the new product to diversify their services and capture a new market segment. 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. 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. 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. 18
Autoglass can benchmark next 5 quarters to comply with strategies they have taken and fulfill the commitment to the customers. Task 4 4.1 Compare the roles and responsibilities for strategy implementation of Autoglass Management needs to motivate the employees to attain the target level. Policies and strategies should be executed in a proper way so that company can grow at high rate and take over all other competitors. Techniques and policies should be well planned and developed so that they can be performed well. Otherwise principles will fall and will fail to score significantly torn into unproductive one as well. (Gundala, R, Jack, A, & Gomes, R., 2012) Autoglass management has to determine the marketing and sales strategies to ensure the maximum market share and sales. The sales team should be developed in a way that can keep up with the competition in the market. Effective advertisements in relevant areas might help a lot in this regard. The core competencies should be clearly focused to attract the customers. Autoglass should use deep filtering procedures of the principles to grab the market share and grow rapidly. They should analyse the perfect process which is suitable and the most appropriate at that particular situation. Mixing of necessary processes is highly recommended. CEO is the person who turnsover ideas into reality performs the assessment among the enterprise. (Westphal, J, Park, S, McDonald, M, & Hayward, M., 2012). Autoglass should make the use of portfolio and mix processing. 4.2 Evaluate resource requirements to implement a new strategy for Autoglass Autoglass always gives priority to their human resources. Because they believe that if their employees are satisfied they wll serve the customer well and the customers will be satisfied as well. So they provide the best opportunity and compensations for their employees. They 19
also provide the best service to their customers by providing security and durability and delivering quickly in ashort span of time. In the given scenario the Autoglass Company is efficient in their resource planning and evaluating the resources thoroughly to provide the best service. 4.3 Discuss targets and timescales for achievement for Autoglass to monitor a given strategy Evaluation of the benchmark outcomes Quarter The company should be bring up with the strategies and find out the feasibility of 1 the strategies whether the strategies would reflect in the expected outcome. They can take the feedback of the customers and find out what else they are looking for in the windscreen repairing service. There should be weekly and monthly monitoring by the line managers of the divisions. 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. 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. 20
Conclusion Being the current market leader, Autoglass has been the best in what they do. Their top priority is the satisfaction of their customers. They are committed to provide the best service in the windshield repairing and replacement industry. But they still have to go a long way if they want to keep their position untouchable. By following the above mentioned strategies, they can prosper in near future. 21
Reference Gundala, R., Jack, A., & Gomes, R., 2012, Communication Management and Its Implication', International Journal Of Business, Marketing, & Decision Science, vol. 5, no. 2, pp. 35-50. Kotler, P., 2006. Marketing Management. 5thed. New Delhi: Prentice hall of India. Kupritz, V.& Cowell, E., 2011, 'Productive Management Communication', Journal Of Business Communication, vol. 48, no. 1, pp. 54-82. Westphal, J., Park, S., McDonald, M.,& Hayward, M., 2012, 'Actions of CEOs: Social Exchange and Impression Management Support among CEOs in Communications with Journalists', Administrative Science Quarterly, vol. 57, no. 2, pp. 217-268. Autoglass Company. [ONLINE] Available at: http://www.autoglass.co.uk/Glass-repair-andreplacement.186.0.html. [Accessed 06 October, 2013]. 22
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