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Business Strategy Impacts

University: Nelson College London

  • Unit No: 32
  • Level: High school
  • Pages: 18 / Words 4577
  • Paper Type: Assignment
  • Course Code: N/A
  • Downloads: 250
Question :

This sample will let you know about:

  • Discuss about the impacts of macro environment.
  • Discuss about the SWOT or TOWS analysis.
Answer :
Organization Selected : McLaren company

INTRODUCTION

Business strategy involves combination of decision as well as actions which are performed to secure the competitive position and accomplish business goals. It is used to carry out desirable performance by securing core position within the market (Akter and et. al., 2016). An effective strategy outline the process by which business needs to be carried out in order to reach desired ends. To better define the topic McLaren company has been selected which is the automotive company of United Kingdom. The company manufacture as well as sell sports cars globally by dealing customers via physical stores and online platform. This report cover topics like determine the process by which macro environment can impact the strategies of an organisation. Critically evaluate internal environment on the basis of internal capabilities, structure as well as skill set. Prepare appropriate strategy by using Porter's five force model to gain competitive edge and establish unique position in market. Further, produce strategic management plan by using set of theories and model.

MAIN BODY

P1. Appropriate frameworks for the analysis of influences and impacts of macro environment on selected enterprise and its strategies

Organisational overview: McLaren Automotive is well popularise automotive manufacturer of UK. Its main products are super cars that are manufactured in house by production team having full facilities. It serves worldwide areas with its services and products to sustain its position in international market. The vision statement of McLaren Automotive is to achieve excellence within all its businesses (McLaren Automotive, 2017). Considering its mission statement, it is to innovate, grow, create and sustain business through developing people addition to culture. Objectives of the respective institution is to preserve along with promote motoring history together with related heritage, to become guardian together with conservator of motor-sport memorabilia that involves motor sport trophies, photographs and many more. .

Macro environment: The environment that resides outside business boundaries and have huge impacts on operations and performance of firm is described as macro environment (Charter, 2017). Various elements are part of this environment which viable influences strategies that the company is either implementing or is willing for implementations. To analyse and monitor macro environment and its impacts on enterprise together with key strategies, various frameworks are used by corporate strategy manager of McLaren Automotive. Few frameworks are discussed underneath. Order assignment help from our experts!

PESTLE Analysis

It refers the the framework through which is majorly opted with the purpose to scan environmental components and determining key change drivers is defined as PESTLE analysis. It allows companies to assess existing situations within external boundaries and potential changes. Following is the application of such framework within McLaren Automotive:

Political factor: It refers to the dimensions given by politics. It indicates political situation of a nation that influences programmes, strategies, tactics, actions and operations adopted by a corporation. In UK, it has been analysed that there is stable and fair system of politics that provides ample opportunities to automotive industry to gain growth and expansion objectives. With respect to McLaren Automotive, grabbing the opportunities and gaining growth will impact positive on the employed strategies as this will help in achieving international goals of institution. In contrary, post- Brexit news resulted in threats for the respective firm as it causes various issues in context to increasing trade barriers, vehicle costing as well as lower sales that resulted in reduces operation ease and sustainability which impacted drastically on strategies to manage the company.

Economic factor: Entire economic performance of a country is described within economic factor (Feldman, Amit and Villalonga, 2016). UK's economy is seen as highly developed and have orientation with market. McLaren Automotive offers its super cars in hundreds of nations which posses different exchange rates as well as consumer disposable income. When there are some business cycle changes in economy of UK, in such situation, various impacts on strategies of company arises. For instance, in recession period, sales volume might decrease. Moreover, more production then market requirements or demands increases inventory cost and lower revenues that impacts negatively on strategies of company. However, there are some periods in which sales of company increases because of multiple auto-mobile purchasers that will help in boosting profits and capturing wide segment within commercial market can impact positively on existing strategies of McLaren Automotive.

Social factor: Elements that scrutinise social environment of country and gauges determinants such as cultural trends, analytics of population, attitude for product an so on. UK's population have various preferences, interest and positive attitudes for super cars. For satisfying preferences, McLaren Automotive time to time manufactures new models of super cars that shows positive impacts on the set strategies to meet preferences of wide population. In contrary, improvisation or changes in some systems of super cars creates situations related to decreasing product demand that can impact negatively on employed strategies of similar business.

Technological factor: Advancement and automation in technologies are involved within this factor (Grant, 2016). In present era, various changes in technological aspects are noticed by the entities and it is mandatory for them to adopt latest and advance technology for staying in market for long time. McLaren Automotive is investing more on research and development actions that assist in meeting or adopting latest technology available in automotive sector that influence positively on employed strategies as with these techniques, the institution manufactures luxury sports cars and maintaining competing position.

Legal factor: Factors have close interlinkage with political components are defined to legal factors (Grayson and Hodges, 2017). They impacts internal and external business environment. UK's political system have the responsibility for governing legal acts for automotive industry. Various legislatives like employment act, advertising standards act, product safety act and many many mare are important to be followed by all organisations that are based on UK. McLaren Automotive comply all workings by adhering all legislatives while running operations that helps in properly applying strategies to gain beneficial outcomes. However, when some acts get modified by government due to market conditions or other reasons then strategies that are presently employed by the form are impacted negatively as it will create troubles for making changing within existing policies and plans in limited time.

Environmental factor: Dimensions having relevance with ecological concerns are environmental factors. Situations including adverse weather, climate changes and others are some environmental factors which influence operations of all companies. Within UK, various plans are implemented for improving situations concerned with environment. The major market of McLaren Automotive is United Kingdom wherein diverse regulations are governed for protecting environment. For the entity, it is significant to pay attention towards all for executing strategies properly. The respective firm is working on the concept to optimally use scare and renewable resources in maximum ways which impacts on its employed strategies and practices positively. Need Assignment Samples?Talk to our Experts!

Stakeholder analysis

It is the tool or framework that assess powers and interest of organisational stakeholders and the manner in which employed strategies are impacted or influenced (Hill, 2017). Within McLaren Automotive, major role is played by all its stakeholders while making decisions and modifying strategies. Following is stakeholder matrix that illustrates about powers and interest of few stakeholders in respective organisation:

 

Interest Level

 

 

Power Level

 

HIGH

LOW

 

HIGH

Owners

Sponsors

 

LOW

Employees

Consumers

The mentioned stakeholders analysis matrix defines about power or authority and interest that stakeholders have with the company and its products. Following are the impacts of stakeholders on McLaren and its emerged strategies:

High Power with high interest: Owners are the stakeholders of McLaren Automotive that have high powers along with high interest in devising strategies and implementing them appropriately. These stakeholders considers external situations and then guided other to work on some actions to gain benefits that impacts positively on set strategies.

High power with low interest: Sponsors are the one who have high power but they are least interested in business (Johnson, 2016). When sponsors of McLaren Automotive makes decisions to lower their sponsor amount on the company then it will impact negatively as major programmes are dependent on such amount such as organising press meetings or any event. When these are not organised properly then it will hamper organisational position in market.

Low power with high interest: Employees of McLaren Automotive are part such stakeholder category. They provide huge information and ideas for improving production efficiency as well as completing all the operations promptly that impacts favourably on emerged strategies for growth.

Low power with low interest: Organisational customers have low power as well as low interest in strategies of company. Customers of McLaren Automotive only emphasis on strategies while making purchase decisions and when they gains satisfaction with vehicles offered by it then it impacts employed strategies of making revenue in positive modes.

M1. Critical analysis of macro environment to determine as well as inform strategic management decisions.

McLaren Automotive is top brand which offers sports cars to worldwide areas. For determining factors that impacts organisational functioning and devising strategic management determinations, demeanour of macro environment analysis is very important for a company (Morden, 2016). With this, corporate strategy manager of business like McLaren Automotive can form and further inform about strategic decisions to top authorities. For example, Political factors like stability in politics impacts positively as it offers huge opportunities to grow. However, changes in decisions by political system hampers emerged strategies to gain benefits. Moreover, adoption of advances and latest technologies to manufacture innovative automotive product impacts positive on strategies of selected firm. Where as, it requires huge money for such adoption that destructively impacts organisational employed strategies.

P2. Appropriate framework for analysing internal environment along with capabilities of chosen organisation.

Internal environment is defined as organisational internal circumstances which influences the decisions at huge level (Müller, Buliga and Voigt, 2018). It is made of insider factors including culture, work processes, practices of management, human resources and climate. To analyse internal environment of McLaren Automotive, suitable tool is SWOT or TOWS analysis which is discussed below in context to the selected business:

SWOT or TOWS analysis

SWOT analysis is model that assist managers to conduct a study for identifying internal strengths along with weaknesses and its outsider threats and weaknesses. With this analysis, McLaren Automotive manager will be able to evaluate organisational strategical position. SWOt analysis of McLaren Automotive is as follows:

Strengths

Weaknesses

A strong brand image among the customers is a strength of McLaren Automotive because of its superior auto-mobiles.

Production of fewer cars is a weakness for McLaren Automotive as its competitors are producing more cars (OrtizdeMandojana and Bansal, 2016).

High quality auto mobiles offered by McLaren Automotive are one of the best of its kind. Thus, the consumers get high-quality products for the price they pay and thus it is a strength for it.

The higher price of cars as compared to its rivals also hampers McLaren Automotive's chances in a price-sensitive market where customers want to pay less price for the products.

Opportunities

Threats

Introduction of Hybrid Cars also offers an opportunity for McLaren Automotive as there will be a demand for these type of cars in the future (Trevisan, 2016).

Sanctions on Russia poses a threat for McLaren Automotive as its suppliers are from Russia.

Penetrating into various markets across the globe offers McLaren Automotive a scope to increase its presence there and emerge as a global brand.

Technological advancements are rapid in a dynamic environment and McLaren Automotive is slow to react to them which poses a threat.

VRIO analysis

It is analytical framework to evaluate resources and capabilities that company have in competing market (Wood and Logsdon, 2017). Using this tool, McLaren Automotive can gain understanding about the key resources and capabilities which provide competitive advantages for long term. Majorly, the tool is opted by corporate strategy managers with the purpose to devise business decisions that are effective in nature. Following is VRIO analysis in context to McLaren Automotive:

Capabilities

Valuable

Rare

Inimitable

Organised

Patents

✔

✘

✘

✘

Global distribution channel

✔

✔

✘

✘

Brand image

✘

✔

✔

✘

Product manufacturing secret

✔

✔

✔

✔

Valuable: As per mentioned VRIO analysis table, it is identified that the valuable resources of McLaren Automotive are its patents, global distribution channel and product making secret. Patents of the company are valuable as they helps in selling automotive vehicles in market without any competitive interference. The firm has huge distribution chain routes to provide sports cars at wide locations that makes global distribution channel in valuable category. Product making secret falls in valuable criteria as the firm has some unique manufacturing technique which is only accessible with only certain internal population.

Rare: The resources of company that are unique in competition are classified as rare ones (Grant, 2016). In relevance to McLaren Automotive, brand technique, product manufacturing secret and global distribution channel are rare as the entity uses distinct types of strategies to manage all in competing environment.

Inimitable: the resources which other can not copy are part of inimitable. Patents and global; distribution channels of chosen company are not inimitable as other companies can make huge investment to copy them. But, brand image as well as product manufacturing secret of McLaren Automotive are costly to imitate by others as top authorities pays huge attention on managing them.

Organised: Organisational resources which are organised for exploiting together with using other variables are categorised under organised aspect. McLaren Automotive have unique product manufacturing secret as the entity follows step by step process to design and manufacture sports car which assist it to grab opportunities for sustaining advantages of competition.

M2. Critical evaluation of internal environment.

From the above information, it has been critically evaluated that internal environment is composition of factors that are present inside the company (Morden, 2016). Through SWOT analysis along with VRIO analysis, it is evaluates that McLaren automotive have strengths of strong brand image and high quality auto-mobile offerings. At same time, it is evaluated that weakness of similar firm are limited production of sports car and higher product prices. With application of VRIO analysis, resources and capabilities of the company that falls under valuable, rare, inimitable and organised aspects are patents, global distribution channel, product manufacturing secret and brand image.

P3: Evaluate the use of Porter's five force model in competitive market

Porter's five force model comprises of five different competitive forces whose strength or weakness shape the internal operations and accordingly structure the industry. It is applied to determine competition level existing with the industry based on which company can plan out effective strategy and long term profitability (Habib and Hasan, 2017). Explanation of different external factors in context to the McLaren automotive company are determined below:

Barrier of new entrant: Globalisation has increased the tendency for company to carry out operations both in national as well as international market so it becomes easier for foreign auto-maker to diversify their business in the domestic market. But automotive sector involves huge investment in terms to acquire the new space for plant, install latest technology or machinery and hire the skilled workforce. Thus, due to lack of economies of scale it is not easy for new entrant to make immense expenditure in terms to expand the business operation in foreign market. Low threat from new entrant positive affect McLaren automotive company in terms to carry out their smooth operations.

Threat of substitution: Most of the people invest in automotive industry because they consider it their need or requirement due to which on the basis of their purchasing power and preferences buy desirable vehicles. This lead to the emergence of high threat of substitute in UK so McLaren company on the basis of market research address the changing preferences of customer. Along with that investment in the innovation and modification can assist company in terms to remain competitive and suitably match changing trend and requirement.

Competitive rivalry: Automotive industry is considered as highly competitive industry which undergo both price and non price wars. Certain sports car manufacturer of UK like McLaren company constantly update their design and feature in order to retain the interest of existing customer and accordingly reach out to potential prospects. Therefore, dependency on the advance technology and latest innovation assist respective company to deliver the unique values for which it can even set the higher prices without affecting loyalty of current customers.

Bargaining power of supplier: Supplier plays valuable role in terms to satisfy the requirement as well as demand of automotive manufacturer by offering them the quality raw material within specific time period. As McLaren company deals with the global customer so they effectively manages the cooperative relation with their vendor or supplier. Similarly, due to wide operation of company the bargaining power of supplier is low. This leads to affirmative impact in terms to systematically carry out the operations without any delay or lack in quality.

Bargaining power of buyer: Buyers are basically the final user of commodity that makes final decision based on various factors like availability of substitute, purchasing power, preference and so on (Lehmann, 2016). As within automotive sector the customer have huge number of choices available in market due to which the bargaining power of buyer is high. Thus, to engage the customer company needs to maintain long term relationship and accordingly set the strategy in order to engage the interest of premium buyer that love sports.

Thus, on the basis of framework it has been analysed that McLaren company needs to significantly upgrade its design on the basis of innovation in terms to satisfy target market. This can effective help to wipe out the competitive pressure by establishing desirable strategy to gain organisational success.

M3: Produce appropriate strategies to improve competitive edge and market position of company

McLaren company has made significant efforts in terms to effectively build the market position and appeal the interest of customer through traditional as well as social media. Accordingly the managers of company set viable strategy in order to overpower the competitive pressure (Meckling, 2015). For better positioning McLaren company on the basis of porter's five force model need to differentiate its strategies in order to gain competitive advantage and establish renowned position.

P4 & M4: Using range of theories produce strategic management plan to gain business objective

Ansoff matrix encompasses diverse strategic options that help to effectively plan out strategy for the sustainable growth and development of business. Application of this matrix can help McLaren company to adopt desirable strategy options to devise the operation in affirmative direction.

Market penetration: Within this strategy the company concentrate to sell existing offerings in the prevailing geographical market. Application of this strategy can help McLaren company to widen its market share because here low prices are set to deliver supreme quality of product in order to maintain strong customer base.

Product development: Based on this strategy the manager of company takes decision to launch new product in the existing geographical region. This can help the customers of McLaren company to gain wider options in the product line of company. Also the latest technique is designed on basis of innovation after taking constructive feedback from the customer.

Market development: Here the company diversify its offering in new market which may be alike existing ones. This strategy can assist McLaren company to expand its customer base and enhance the profitably margin by catering needs of foreign customers.

Diversification: This strategy involve extensive market research because it involve huge risk as company launch innovative product within new periphery (Orna, 2017). Herein, McLaren company have effectively adopt this strategy in terms to carry out global operations and address the needs of diverse customers systematically.

Therefore, amongst different strategy it has been recommended that McLaren company can adopt product development strategy where it focuses to understand the market dynamics and accordingly build up new strategy while introducing innovative product in market. Adoption of new technique helps to carry out desirable operations of an enterprises.

Strategic management plan: It is the written document which comprises of effective strategy in terms to set priorities and configure resources which strengthen the internal operations of an organisation (Prajogo, 2016). Herein, McLaren company strategic business plan is designed to launch the new product which is electric bikes (e-bikes) to satisfy the requirement of people within existing market.

Vision: The vision of McLaren company is to gain the excellence by modifying current product based on advance technique.

Mission: To bring innovation and safeguard the interest of society as well as customer by launching electric or zero emission vehicles.

Objective: The objective of company is to spread the awareness and rapidly increase the sales of e-bikes by 10% within 6 months.

Promotion: Promotion helps to spread the awareness about innovation which finally leads to increase in sales of commodity. McLaren company depend more on the digital technology such as use of website, social media, affiliate market, SEO and so on to reach out to the prospects for electric sports bike. Along with that company can use sports magazine where it can deeply demonstrate the design and features of innovation.

Research and development: This strategy will be used by McLaren company to determine the preferences of customer and gain insights about market dynamics. This can effectively attract the interest of potential customer towards new product.

Funds arrangement: It is huge investment for McLaren company to introduce electric bike in the prevailing market. So the financial manager are responsible to look for desirable source in terms to raise the funds. The fund can be arranged from internal as well as external which includes retained earning, debenture, bank loan etc.

Advancement of technology: McLaren company highly depend upon the advance technique as well as innovation in order to launch the technical advance product which is e-bikes in market. Thus, the manager of company needs to take significant efforts in order to undergo vital investment fro the welfare of customer.

STP

Segmentation: It helps in dividing the large market into similar sub sets for better classification of market (Teece, 2018). The company on the basis of geographical and psycho-graphic segment launch new product.

Targetting: Targetting refers to the process of selecting potential customers to whom the company target. The manager of McLaren company has targetted to high income group people that can be part of different occupation like sportsmen, professional or entrepreneur and are inclined towards sports vehicle.

Positioning: The company can significant position its electric sports bike as zero emission vehicle which does not leads to carbon footprint.

D1: Apply environment and competitive analysis to produce strategic direction, objective as well as tactical actions

Environment refers to the surrounding that needs to be evaluated by organisation in order to grab the systematic information required to product the strategic direction. It basically involves the factors like political, economical, social, technology, environment and legal condition that can either positively or negatively affect the routine operations (Wirtz, Ullrich and Göttel, 2016). Based on this McLaren company need to articulate the strategy and build desirable tactics in order to carry forward actions the strategic actions desirably.

CONCLUSION

From the above report it has been determined that business strategy is an essential part of management that is used to formulated desirable plan in order to attain predetermined target for organisational success. While formulating strategy the organisation need to analyse the role of both internal as well as external environment which include SWOT and PESTLE analysis to enrich organisational capabilities. Therefore, application of appropriate strategy based on Porter's five force model helps to gain competitive advantage by maintaining sustainable performance.

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