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The case study is for Business Strategy- A strategic plan can be developed for an organization

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Business Strategy

Introduction

In the modern era, developing effective and result oriented business strategy is vital for the success and growth of companies. Business strategy is defined as the action or working plan which is developed by an organization to accomplish its aim, objectives, vision and mission. Furthermore, the business strategy also plays a critical role in carrying out the optimization of a company’s financial performance and resources in the best possible manner (Hill, 2017).

The present study is based on Boots which is UK based health, beauty and pharmaceutical retailer and at present, the selected organization is operating with more than 2500 shops located in different areas of the country. Boots was founded by John Boot in 1849, and the purpose of the organization is to help its customers to look and feel better in every possible manner. This report outlines the impact of different macroenvironmental factors on the performance and operations of an organization. In addition to this, analysis of Boot’s internal environment and capabilities is also mentioned in the present study.

LO1 Analyze the impact and influence which the macro environment has on an organization 

P1 Apply appropriate frameworks to analyse the macro environment for a given organization

The vision, mission and objectives of Boots are mentioned below as:

Vision

The vision of Boots is to become the first choice of customers in context of beauty, pharmacy and well-being. Furthermore, the purpose of selected organization is to care for people and communities located in different areas of the world (Boots, 2018). 

Mission

To heap and support people in the world to live happier and healthier lives

Objectives

Environmental analysis

In simpler terms, the internal environment is defined as the environment which consists of different elements which are within a business environment. For example, organizational culture, management and employees are considered as the elements which form internal environment within a company.

The microenvironment is defined as the environment which consists of different small forces which affect the overall effectiveness and ability of a company to serve its customers (Hill et al. 2014). Customers, suppliers, employees, competition and shareholders are some examples of factors included in the microenvironment. 

The macro environment is defined as the environment which consists of big forces which are beyond the control of a business and which affect the ability of a company to serve its customers and accomplish its objectives.

The impact and influence of different macro environment forces on Boots is mentioned below as:

Political- At present, the political environment of UK is stable, and this has provided Boots with an opportunity to carry out the smooth flow of all operations and activities. Strong support from political parties and government to pharma, health and beauty companies has also supported the growth of the selected organization (Hitt and Duane Ireland, 2017).

Economic- The economy of UK has grown at a satisfactory rate and this has helped Boots in attracting the desired number of customers. However, it can be argued that the rising prices of fuel in the country have resulted in making an adverse impact on the supply chain of Boots.

Social- At present, the social factors in the country are in favour of Boots as people are now getting more and more aware and conscious about their looks, health and well being. The social factors are supportive because they have resulted in increasing the demand and consumption of products offered by Boots.

Technological- The advanced and upgraded technology in the country is also helping Boots to carry out the smooth flow of all operations and activities (Doz, 2017). Internet technology is supporting the selected organization in generating more than one-third of its overall revenue.

Legal- At present very strict the laws and regulations developed by UK government and businesses such as Boots are required to follow the same in best and every possible manner. Negligence of laws and regulations can impose several fines and penalties on the company. 

Environmental - Issues such as global warming and climate change has forced companies such as Boots in employing green and sustainable practices to reduce the impact of their operations and activities on society, environment, and economy.  

M1: Critically analyze the macro environment to determine and inform strategic management decisions

It has been identified that at present political stability is supporting Boots in carrying out the smooth flow of all operations and activities. However, Barney, (2017) has critically argued that political decision such as UK government encouraging supermarkets in the country to open pharmaceutical stores are affecting the operations and profits of Boots in a negative sense. The impact of such policies is that it will improve the healthcare within the UK and at the same time, they will result in increasing competition in the industry.

As per the views of Ginter et al. (2018) satisfactory economic growth has supported the company in attaining desired growth. On the other side of this, it can be critically argued that factors such global recession have resulted in making an adverse impact on prices of products and consumer spending. Meyer et al. (2017) have critically argued that technology is affecting the brand in a negative sense by increasing the overall cost of operations as Boots is required to employ new and advanced technology at regular intervals. Factor such as environment is also adversely affecting the brand by encouraging Boots to carry out major changes in its products and operations to become more sustainable.   

D1: Critique and interpret information and data, applying environmental and competitive analysis to produce a set of valid strategic directions objectives and tactical actions

From the data and information collected, it has been identified that at present, the environmental factors are affecting the operations and activities of Boots in negative sense. Furthermore, increasing competition in the pharma, health and beauty industry has emerged as the biggest challenge for the organization. The strategic objectives developed for Boots are mentioned below as; 

Quantitative objectives

•             To increase its market share by 20% by the end of 2019

•             To attain 15% annual growth

•             To expand operations in two new markets by the end 2020

•             To become leader in market of pharma, health and beauty within next 3 years

Qualitative

•             To carry out innovations in technology and employ innovative technological tools to serve the customers

•             To carry out continuous improvements in the quality of products and services delivered to the customers    

It can be expressed that the company innovations and continuous improvement in the quality are the two tactical actions which will be used by Boots to deal with issues and accomplish its objectives.

LO2 Assess an organization’s internal environment and capabilities

P2 Using appropriate frameworks analyse the internal environment and capabilities of a given organization

The SWOT analysis of Boots is carried out below as:

Strengths

•             Excellent, satisfactory and long term relations with customers

•             Historical reputation for its overall quality in products and services

•             Strong distribution network 

 

Weaknesses

•             High dependency on UK market

•             Less focus on international growth and expansion

•             Limited customer base

 

Opportunities

•             International expansion into new and potential markets of the world

•             Improving operational efficiencies by tapping the emerging economies of the world

•             Enhancement in the product portfolio

 

Threats

•             Increasing competition in the UK market

•             Government polices and plans

•             Heavy cost of regulations and operations

 

It has been identified that historical reputation of product quality and excellent customer relationship are the biggest strengths of the selected business enterprise. Furthermore, strong distribution network is also a big strength which is supporting Boots in creating high degree of satisfaction among its customers (Ethiraj et al. 2018). On the other hand, high dependency on UK market and lack of presence in international market are the major weaknesses of the selected business enterprise.  

VRIO analysis

VRIO analysis is also an important model or framework which is used by companies with an objective to carry out analysis and evaluate their resources and capabilities. The VRIO analysis of Boots is carried out below as;

Value: It can be expressed that at present, Boots is capable enough to exploit opportunities present in the marketplace. Its resources and capabilities can play a critical role in neutralizing different external threats (Bettis et al. 2015).

Rarity: The Company is taking complete control over its resources and capabilities

Imitability: At present, Boots is operating with more than 70000 employees and the skills, experienced and talented are not imitable. 

Organization: The firm is well organized and at the same time, it is capable enough to exploit its resources and capabilities

M2 Critically analyse the internal environment to asses strengths and weaknesses of an organization’s internal capabilities structure and skill set

From the analysis of the internal environment, it has been analyzed that Boots strength lies within its relationship with customers and the high quality of its products and services. The advantage of these strengths is that they are supporting Boots in attracting new customers and retaining the old ones in the best possible manner. On the other side of this, Ethiraj et al. (2017) have critically argued that to maintain its strength, the business is required to invest a considerable amount of human, financial and technological resources and this is the major drawback associated with its strengths.

It has also been analyzed that high dependency on the UK market has emerged as the biggest weakness of Boots (Lasserre, 2017). The advantage of this weakness is that it has provided the brand with an opportunity to become specialized in one particular market and enhance the effectiveness of its operations within the market. However, Bettis et al. (2016) have critically argued that the drawback associated with this weakness is that it has resulted in creating issues for the company in terms of increasing its volume of sales and profitability because of limited growth opportunities in the UK market. 

LO3 Evaluate and apply the outcomes of analysis using Porter’s five forces model to a given market sector

P3 Apply Porter’s five forces model and to evaluate the competitive forces of a given market sector for an organization

The application of Porter Five forces model and evaluation of competitive forces is carried out below as

Bargaining power of suppliers

Suppliers are considered as a vital component in the industry because they provide businesses such as Boots with an opportunity to carry out the smooth flow of all operations and activities in the long-run (Michael et al. 2017). The supplier power in the industry is low because they are wide ranges of suppliers operating in the industry and the cost of switching from one supplier to another is very low. 

Bargaining power of buyers

The bargaining power of buyers in the industry is also very low as customers of Boots are getting more and more loyal towards the brand along with the passage of time. It can be expressed that boots has introduced nectar card which has resulted in increasing customer loyalty and decreasing the power of buyers (Renz, 2016).

The threat of new entry

Considering the case of pharma and healthcare industry, it has been evaluated that the threat of new entry is very high. In the past few years, many new businesses have entered the industry and this has resulted in affecting the sales, revenue and growth of Boots.

Rivalry among existing businesses

From the application of Porter Five Forces model, it has been identified that there is a high threat of competition in the pharma and healthcare industry and this threat is affecting the success and growth of brand such as Boots (Morschett et al. 2015). Competitors of Boots such as Lloyds Pharmacy and Superdrug are expanding their operations at a very good pace and this has further resulted in making the industry more competitive. 

The threat of substitute products

At present, Boots is offering quality products and services to its customers at affordable prices and this has resulted in reducing the threat of substitute products and services. Customers are less interested in buying low cost and substitute products of Boots.

M3: Devise appropriate strategies to improve competitive edge and market position based on the outcomes

To improve the competitive edge and market position, it can be stated that innovation and differentiation is the best strategy which can be employed by Boots. After carry out the porter five forces analysis, it has been identified that increasing new entrants and competition are the biggest threats for Boots and to deal with these threats, the selected organization can now emphasize on carrying out differentiation in its products and services (Bettis et al. 2014).

The company can focus on developing and offering innovative products and services which no other players in the market offering. Product and service differentiation strategy is effective for Boots because it will provide the company with an opportunity to gain competitive advantage over other players operating in the market. Furthermore, the strategy will also play a critical role in supporting Boots in attracting new customers and retaining the existing customers. Apart from this, cost leadership is also a key strategy which can be employed by the selected business enterprise to gain competitive advantage over other players operating in the market (Bryce, 2017). Here, the brand can emphasize on offering products and services at lowest possible prices in the industry by reducing its overall cost of operations. 

LO4 Apply models, theories and concepts to assist with the understanding and interpretation of strategic directions available to an organization

P4 Apply a range of theories, concepts and models, interpret and devise strategic planning for a given organization

It can be expressed that Porter Genetic strategies and Bowman extended model of strategy are the two important models which can be used by the brand to understand its strategic positioning in the market (Trigeorgis and Reuer, 2017). The model of generic porter strategy highlights the fact that there are four different strategies which can be taken into consideration by a business enterprise to deal with different issues and gain competitive advantage (Frynas and Mellahi, 2015). According to the cost leadership strategy, Boots can gain a competitive edge over other players by increasing profits through cost reduction technique. In addition to this, cost leadership can also be attained by the brand by charging lower prices and increasing its market share.

As per this strategy, the brand will be required to make sure that all resources and efforts are directed towards minimizing the cost. On the other side of this, differentiation is a strategy in which Boots will be required to focus on developing and offering different products and services.

The brand can accomplish this objective by carrying out innovations and improving product quality (Engert et al. 2016). According to the strategy of cost focus, the brand will be required to concentrate on one particular and niche market and in offering products and services at low prices. According to the differentiation focus strategy, the brand will be required to focus on carrying out differentiation by focusing on offering innovative and differentiate products in a niche market.  

Bowman extended model of strategy

According to the bowman extent model of strategy, Boots is available with eight different strategies which can be taken into consideration by the brand to gain a competitive edge over other companies and players operating in the market (Stead and Stead, 2014). The strategies and their application are mentioned below as:

Low price and low value added

According to this strategy, Boots will be required to offer products and services which delivers low value at low prices.

Low price

Here, the selected business organization will be required to attain cost minimization so that it can offer products and services at low prices.

Hybrid

According to this strategy, Boots will be required to emphasize integrating some aspects of low price and some aspects of differentiation.

Differentiation

In this strategy, Boots will be required to emphasize on offering products and services which are innovative and are of the highest perceived value 

Focus differentiation 

In this strategy, the brand will need to position its products at the price level which are highest in the industry to attract customers (Durand et al. 2017). 

Risky high margins

According to this strategy, the selected business will be required to offer products and services at high prices without offering any additional value to its customers

Monopoly pricing

This strategy is useful when only one business is operating in the market, and there is no competition in the marketplace. Here, Boots can charge any price from its customers against the products and services. 

Loss of market share

In this strategy, Boots will be required to offer products and services of higher value in comparison with the competition.  

M4: Produce strategic management plan that has tangible and tactical strategic priorities and objectives

Executive summary

The present plan will emphasize on providing competitive advantage Boots over other players in the market. It has been identified that increasing competition is the major threat which is affecting the growth, success and operations of the business enterprise. Furthermore, the plan has been developed on the basis of Boots strength and capabilities. The selected plan is directed toward providing a competitive advantage to Boots through differentiation and new market entry. It can also be expressed that SAF model has been employed to evaluate the strategic plan.

Background statement

The selected business enterprise is Boots which is a Pharmaceutical and Beauty company founded in 1849. Furthermore, the brand is operating in lifestyle and retail sector of UK, and its slogan is “Feel Good”. It can be expressed that people who are conscious towards their health and who belong to upper and income level of society are mainly targeted by the brand. The management structure which has been adopted by Boots is a functional structure. Suppliers of pharma-related products are the key partners of the selected business.  

Organizational structure

At present, Boots is operating with functional organizational structure, and here the entire organization has been classified or divided into small groups which are based on their functional specialization (Morschett et al. 2015). The advantage of this structure is that it has helped in achieving specialization and in enhancing its operational efficiencies.

Mission statement

To heap and support people in the world to live happier and healthier lives

Vision

The vision of Boots is to become the first choice of customers in context of beauty, pharmacy and well-being. Furthermore, the purpose of selected organization is to care for people and communities located in different areas of the world. 

Values

It has been evaluated that encouraging trust, care, innovations, partnership and dedication are the core values of Boots (Trigeorgis and Reuer, 2017).

Market analysis

According to the Ansoff Matrix model, there are four key strategies which can be used by companies to attain the desired growth and outcomes in the marketplace. Considering the case of Boots, it has been analyzed that market penetration is the strategy which has been employed by the brand because at present, it is focusing on penetrating the UK market more effectively. However, it can be critically argued that in future, market development is the strategy which can be employed by the brand and according to this strategy; Boots will be required to focus on developing and entering new markets of the world (Frynas and Mellahi, 2015).

Competitor analysis

It has been identified that at present, the competition in the industry in which Boots is operating is very intense and therefore, the brand will be employing differentiation strategy to deal with this issue of increasing competition. Boots will offer different and innovative products and services to its customers to carry out differentiation in the marketplace.

SMART objectives

•             To develop three new products in every six months to create differentiation

•             To enter two new international markets within the next two years 

•             To improve and increase the product portfolio annually

•             To increase sales by 25% within the next one year

Resource implications

Boots will be required to make sure that adequate resources are available to implement the business strategy and accomplish its desired objectives. The human, financial and technological resources will be required in international expansion, hiring staff for new markets and to promote the different product and service introduced by the organization.

Evaluating and monitoring plan

The evaluation of the strategic plan will be carried out using SAF model the evaluation is mentioned below as:

Suitability – Boots is looking forward to improving the lives of people around the world and it has been evaluated that the current strategic plan is suitable because it will assist the organization in achieving its mission and objectives. High quality and strong brand image are the strengths of Boots and the plan has been developed on the basis of the company’s core strengths (Ginter et al. 2018).  

Appropriate – The appropriateness of the strategic plan has been evaluated through a method such as cost-benefit analysis and it has been identified that the selected plan is very appropriate for Boots. The brand will be required to bear a considerable cost in implementing the plan but the long-term benefits linked with the plan are very high.

Feasible- The plan is feasible because it has been developed on the basis of Boots resources, capabilities and strengths.  

Conclusion

From the above study, it can be concluded that strategic plans are important because they provide companies with an opportunity to accomplish their goals and objectives in the long-run. Furthermore, increasing competition and new entrants are the major threats which are affecting the success and growth of Boots.

Recommendations

It is suggested that Boots should focus on carrying out differentiation in the market by introducing new and innovative products.

It is also recommended that adequate and effective research should be carried out by the brand before entering a new market as research will help in understanding the business environment of the new country and carry out more effective operations.   

Personal reflection

The study was very helpful as it has helped me in getting insight into the need and significance of business strategy. I have learned about the way in which a strategic plan can be developed for an organization. In addition to this, I have also learned about different models of strategic management and the way these models can be practically applied.

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