Strategic Management is often considered to be an integral part of an organization as it goes a long way in assisting the organization to ensure that it is on the right track and is being able to successfully ensure that it gains competitive advantage in the long run (Williamson et al.2013). The report is based on the strategic issues and opportunities being faced by one such organization named the High Flyers Limited (“HFL”), the company is based in the United Kingdom. The second scenario relates to a heath care company called SCH. In the business environment today, it is very important for any business organization to ensure that it takes adequate measures to ensure sustainability of the different business (Rothaermel 2015). The report will be dealing the health care company SCH and will be discussing the different components related to the future alternatives available to the given business organization
The strategic issues being faced by the organizations will be discussed and analyzed. The report will be discussing the different issues being faced by the different companies in the two scenarios followed by the competitive pressures and lastly the external environmental factors having an impact on the company will also be discussed effectively.
As the business environment is very competitive, it has been facing different issues as to the competition and changing norms regarding the taxes set by the government. The different strategic issues being faced by the company have been given as follows:
The gym wear industry in the United Kingdom is highly competitive in nature. This is because there is an increase in the different initiatives as adopted by the government regarding fitness. For this, there are various low cost competitors present in the industry which tend to provide intense competition
(Rothaermel 2015).
The government of the United Kingdom is planning to increase the tax rates on the sporting goods to around 22% in order to gain additional receipts. For this purpose, it has been estimated that the sportswear market will go down to by 5%. Hence, the increase in the tax rates will have a negative impact on the company in the short run although it may contribute to the welfare of the company in the long run. The government is thinking about the overall welfare of the organization, however the immediate survival of the company will become increasingly difficult.
The industry needs to rejuvenate by introducing new designs and new material combination. However this is not being possible as there is a lack of skilled designers in the given industry. Moreover, the company has been trying to introduce new technology and automation, however the industry is highly labor incentive and thus the company has been facing problems with respect to this. The lack of laborers is restricted the company to get into a more innovative sphere and take out new designs for the welfare of the firm.
Figure 1: The Sports Brands in UK ranked. (Source: Statista.com. 2018).
The given representation shows the most popular sports wear apparel as present in the United Kingdom. There has been average purchase from Adidas from around 5.7 million people. The Nike and Slazenger have been ranked consequently. The sales in the footwear has increased considerably and the market is expected to reach to around 636.14 billion by the end of 2018. Globally the given industry has been growing rapidly and has made over 150 billion US Dollars in revenue. The given figure is expected to reach around 185 billion US dollars by the end of 2020 (Statista.com. 2018).
According to the given study, there are 6 ore companies who are involved in the same industry as the company HFL. Furthermore, there are various companies who sell goods at a quality lower than the HFL Company. On one hand HFL sells the different products at 65£ on an average whereas the lower quality rivals tends to sell the products at £25 which the s serves as a tough competition to the given business. Although the company has based this on a high quality dimension, the consumers often prefer to buy such products for themselves. Hence, due to this HFL is getting affected severely and needs to plan accordingly.
In order to be able to successfully determine the strategy which needs to be adopted by the organization, it is very important for the company to ensure it conducts an extensive analysis of the external environment (Vogel and Güttel 2013). The PESTLE Analysis will be used to make the analysis.
Political factors
The political rules and procedures of any country needs to be followed when the business functions. The different political forces helps in the determination of the success of the business organization. These mainly refer to the taxation system and other related rules (Morschett, Schramm-Klein and Zentes 2015). The company tends ensure that all the rules and regulations are carried on effectively. Furthermore, with the Brexit in 2016, the cost of the imported products has increased considerably and this can have an impact on the overall operations of the company. Furthermore, the company has to follow all labor laws and consumer safety regulations as well.
Economic factors
The sports industry is highly concentrated. The 50 companies contribute to 70% of the firm’s revenue. The items created by the company are the leisure items and there are different low quality products as well which provide tough competition to the company. The lack of skilled labor tends to serve as a problem in the given sector. Furthermore the cost of labor is very high in the given industry and therefore, this contributes to the higher costs of the company.
Furthermore, there are many counterfeit products which further tends to have an impact on the operations of the company.
Social Factors
The designs of the different sports wear company’s needs to be changed regularly as they need to be matched with the interest of the different consumers. The products need to be available for the different age groups and genders along with lifestyles as well. The core target market of the company shall be the health conscious customers who love engaging in sports activities. Hence, keeping these social factors in mind the company needs to ensure that they are keeping up with these trends effectively.
Technological factors
With the advent of technology, new developments can be made in the field of manufacturing and for this purpose, it becomes important that the organization in this field is successfully able to manufacture products of new design and type. However, the requirement of skilled labor doesn’t change and the incorporation of technology makes the entire procedure very difficult.
Legal factors
There exists various intellectual properties and patents related to the manufacturing of the products belonging to a unique design. The company needs to protect its patents so that it is able to gain a sufficient share of the market. This way it will be able to protect itself from any counterfeited business. This way the HFL Company will have to trademark its production and ensure success in the long run.
Environmental factors
It lies the duty of any business enterprise in the sports wear sector to monitor the hazardous substances and eliminate them. They are required to use natural materials in their products. This way they will be able to contribute for the welfare of the society.
The company needs to engage in ethical practices in order to ensure that the supplies are followed effectively.
Therefore, it has been recommended that the company takes up the given strategies to assure that it performs well in the business environment:
The company, in order to compete with the low quality different suppliers needs to ensure that it enters into the given segment to extend its market share in the given domain (Wheelen et al. 2017).
The company needs to see to it that better supply chain channels are adhered to so as to be able to supply goods at the right price and at the right quantity.
As the company has also been facing labor problems, it can call in for laborers from different parts of the world like the emerging markets so as to ensure t can achieve success.
In order to analyze the strategic positioning of the company and to be able to predict the strategic options available to the company a SWOT Analysis. A SWOT Analysis is an effective tool in strategic management which can be analyzed to determine the strategic positioning of an organization (Vogel and Güttel 2013).
Strength
The strength of a company can be described as an effective capability as possessed by an organization to ensure the long term positioning of the company is ensured in the future. The strengths of the company have been given as follows:
Weakness
The weakness can be described as a shortcoming of the organization which tends to restrain it from performing well in the business domain. The weaknesses of the company have been given as follows:
Opportunities
The opportunities can be described as those options which are available to the external which tend to help the company to become better or expand. The opportunities available to SCH are as follows:
Threats
The threats can be stated to be described as such circumstances present in the external environment of the business which will lead to a loss for the firm. The different threats that are faced by SCH are the competition it faces from the competitors of the business who tend to offer cheaper services.
Analysis of Strategic Options:
The different challenges which are being faced by the company are being given as follows:
The Ansoff matrix is popularly used to analyze the different growth and strategic opportunities which are largely available to the organization and assists them in determining the best opportunity for the given firm. The four basic growth strategies are:
Market penetration – The market penetration strategy is a simple strategy which means that the company can sell similar but more in quantity products to the present customers. For this method, SCH will be required to sell more of its services to different customers. For instance, it can get into the short term care service which will be looking after the needs of the customers for a shorter time period.
Market development – The market development strategy can be largely used to attract new customers to the existing offerings. In this strategic option SCH, can extend its areas of operations and get outside the South East region. However, SCH needs to analyze the untapped demand for this.
Product development –The strategy is used to create new products for existing clients. Using this strategy the company can get into the home care medical tests option which will provide the medical tests to the customers at the convenience off their homes.
Diversification – The diversification strategy is a risky strategy which can be used by SCH in order to sell new products to new markets. This cannot be adopted by SCH and thus cannot be applied in the given scenario.
Figure 2: The Ansoff Matrix (Source: Williamson et al. 2013).
There are various strategic options as available to the company in the long run of the organization but due to limited resources and time frame, all of them cannot be adopted. It is the same for the SCH Company and thus, these can be evaluated using the framework as provided by Johnson, Scholes and Whittington (Wheelen et al. 2017). They stated that the potential of any strategy needs to be based on three primary criteria’s. These criteria’s are the follows:
Suitability
The suitability aspect tends to deal with the overall rationale of the strategy by analyzing its scope. A strategy which is suitable tends to fit into the organizations mission and capabilities. It needs to drive competitive advantages.
Feasibility
The feasibility aspect deals with the fact whether the organization will be able to have the adequate resources to deal with the strategy and implement them adequately.
Acceptability
The Acceptability aspect tends to look after the different expectations of the stakeholders and the financial outcomes involved. It looks into the employee perception as well.
Strategy 1
S- The company already has a strong brand name and experience which can be utilized.
F- The travelling costs of the home care employees is already very high and this, can actually increase the costs of the firm to a great extent.
A- The company would not earn much revenue out of it.
Strategy 2:
S- The company already has a strong brand name and experience and the given opportunity is viable.
A-The alternatives available is very attractive and can be accepted by different stakeholders as it is a profitable
F- Being in the industry for long, the company can invest adequately and provide training to the employees.
Strategy 3:
S: The Company has a good brand name
F: It does not have adequate resources
A; May not be accepted by the firm
Therefore from the given analysis it can be suggested that the second strategy looks the most viable strategy. The second strategy is potential in terms of suitability, feasibility and acceptability framework.
Conclusion
Therefore, from the given analysis it can be stated that, the company has been operating in the UK Industry since a long time and produces high quality garments so that it can cater to the needs of the target market and assure that they are successfully being able to gain their market share. However the report highlighted various challenges being faced by the organization at large and also made an analysis of the external environment in order to ensure that it will successfully be able to attend to the changing needs of the business environment.
The trend in the home medical tests and related services have been increasing and SCH can take advantage of the strategy and expand its operations to this option. It can provide adequate training to the employees and ensure success in the long run.
References
Morschett, D., Schramm-Klein, H. and Zentes, J., 2015. Strategic international management (pp. 978-3658078836). Springer.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Statista.com, 2018. • Statista – The Statistics Portal for Market Data, Market Research and Market Studies. [Online] Available at: https://www.statista.com/ [Accessed 28 Jun. 2018].
Vogel, R. and Güttel, W.H., 2013. The dynamic capability view in strategic management: A bibliometric review. International Journal of Management Reviews, 15(4), pp.426-446.
Wheelen, T.L., Hunger, J.D., Hoffman, A.N. and Bamford, C.E., 2017. Strategic management and business policy. Pearson.
Williamson, D., Cooke, P., Jenkins, W. and Moreton, K.M., 2013. Strategic management and business analysis. Routledge.
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