Strategic thinking and planning is defined as "the process of developing and maintaining a strategic fit between the organisations goals and capabilities and its changing marketing opportunities" (Kotler & Armstrong, 1997). In today's competitive marketplace organisations must plan ahead and develop strategies for long run survival and growth. Strategic thinking and planning ensures organisations make the most efficient use of their resources and the opportunities presented to them in order to achieve these long term objectives.
Stakeholder Analysis
A Stakeholder Analysis is a tool used to identify and enlist support from stakeholders. It provides a visual means of identifying stakeholder support.
Stakeholders are defined as “individuals or organizations who stand to gain or lose from the success or failure of a system” (Nuseibeh & Easterbrook, 2000).
All organisations affect and are affected by different stakeholders, sometimes these are represented by interest groups (e.g. trade unions) and other times their power is reflected in commercial relationships (e.g. suppliers)
There are many stakeholders some with high power and high interest and some with low power and low interest. Some stakeholders are more influential than others.
In most organisations there are three broad types of stakeholders they are:
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Internal stakeholders (employees, management)
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Connected stakeholders (shareholders, customers, suppliers, financiers)
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External stakeholders (the community, government, pressure groups)
“A stakeholder with both high power and high interest will be more influential than a stakeholder with low interest and low power.”
I believe the above statement is false in some cases and true in some cases because of the matrix diagram below
In most cases I believe that stakeholders with low power but high interest are the most influential stakeholders (customers). For E.g. Jose Mourinho a person with mixed aspect of medium interest and medium power can influence all stakeholders around him. Because he could say to the Chelsea owner Roman Abramovich we want Ashley Cole and that’s it all stakeholders views change.
I also believe in some cases stakeholders with high power and low interest in the organisations are highly influential i.e. government policies. For example the Prime Minister Tony Blair has got high power over many issues but with some issues he has low interest. For example Tony Blair had high power over David Blunkett but low interest and went with ideological thinking of “good riddance to bad rubbish”
Procedure and Stages of an Organisational and Environmental Audit.
An organisation marketing environment consists of "the actors and forces outside marketing that affect marketing management's ability to develop and maintain successful transactions with its target customers" (Kotler et al, 1994).
Organisational Audit
The objective of an organisational audit is to clearly define the structure of the organisation and gain a clear understanding of the business operation to produce its strengths and weaknesses. The aim of the organisational audit is to acknowledge the long-term goals, recommendations for their achievement and the potential risks
The company I have chosen to do organisational audit about is Superdrug stores PLC
Identifying the Organisational Audit or Micro-Environment Audit for Superdrug
The micro environment includes those forces that impact on the Superdrugs ability to serve its customers. These are often referred to as internal forces as the company has direct contact with them. The company has the potential for level of control over these forces and may be able to reverse or lessen the impact of a negative trend or encourage a marketing opportunity. Superdrug should take these forces and trends into account when developing a marketing strategy.
Included in the micro-environment are the following factors:
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Superdrugs own internal environment
In developing marketing plans, Superdrug must consider the other departments within their organisation, such as top management, finance, research and development, purchasing, manufacturing and accounting. All these departments have their own objectives that must be considered and many of them will provide information relevant for the marketing plan.
- The marketing channel firms
Suppliers and intermediaries need to be examined before Superdrug develop a marketing strategy as their activities can significantly impact on the or Superdrug organisation. Supplier’s product availability needs to be monitored as well as their price and overall performance. Suppliers and intermediaries that appear to be becoming less `amicable' over time may need to be reviewed. Intermediaries are firms that assist in the distribution process and their performance and attitude towards the product need to be monitored closely as they often have direct contact with the end customers.
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The relevant customer markets
Superdrug must examine all five of its customer markets closely and look for changes in their particular needs and wants. These markets include:
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Consumer markets - individuals and households that purchase goods for their own consumption
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Industrial markets - organisations that purchase for use in their production process
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Reseller markets - organisations that buy goods and services to resell them to the end consumer
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Government markets - government agencies that purchase goods to transfer them to their customers who need them.
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International markets - overseas buyers including any of the above categories.
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Competitors
For Superdrug to be successful they need to satisfy consumer’s needs and wants better than their competitors. Therefore it is important to monitor the trends and behaviour of your competitors. Identifying customers' perceptions of your competitors and their strengths and weaknesses is important.
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The organisation's publics
A public is any group that has an actual or potential interest in, or impact on, Superdrugs ability to achieve its objectives. These could be financial, media, government, and citizen-action, local, general or internal publics. Increased attention from these groups may require you to make changes in your marketing strategy.
Source: Kotler, Adam, Brown and Armstrong (2003). Principles of marketing, 2nd Edition, Prentice-Hall
In the SWOT we mentioned then Strength, Weaknesses, Opportunities, and Threats of Superdrug:
Strengths –
- Superdrug have loyalty scheme
- Superdrug only leading specialise in body care products
- Superdrug is the best known retail name in the UK
- Superdrug is a market leaders
- Superdrug are more competitive in price
- Superdrug operates over 700 stores in high street and shopping mall locations throughout the UK.
Weaknesses-
- Undifferentiated Products or services (i.e. in relation to your competitors)
- High price needed
- High cost structure or high expenditure
- Too many brands,
- Too much competitors
- Low budget
Opportunities
- Lower cost
- Cheaper workforce
- Larger market
- A developing market
- Takeovers Mergers, joint ventures or strategic alliances
- Moving into new market segments that offer improved profits
- Customer needs not fully fulfilled
Threats
- National laws and directives
- Competition from existing/new competitors
- The cost of developing R&D against other competitors
- EU laws
- Competitors have more access to channels of distribution
- New regulations
In the PESTEL analysis or ENVIRONMENTAL AUDIT /Macro-environment which consisted of Political, Economical, Social, Technological, Environmental, Legal. Or demographical.
The findings we found included:
Demographic
Demographic trends are those concerning the human population in terms of size, density, location, age, sex, race, occupation and many other statistics.
These influence Superdrug through the population of teenagers i.e. 17-27 years olds Superdrug main target audience is 17-27 years olds if there are less in the population this will affect their decision in production.
Economic
Economic trends are those factors that affect consumers buying power and spending pattern.
Superdrug will be influenced by the economic trend because it would want to market its product in a rich environment so they can make maximum profit.
Natural
The natural environment includes those natural resources that are included in production or that are affected by marketing activities. Trends in this environment include shortages of raw materials, increased cost of energy, increased levels of pollution and government intervention in natural resource management. As Superdrug consumers are becoming more environmentally aware, these trends are having a more significant impact on As Superdrug marketing strategies.
Technological
The technological environment consists of forces that affect new technology, hence creating new product opportunities and market opportunities. This faster pace of technological change is also causing shorter product life cycles, higher research and development budgets, concentration on minor improvements, and increased regulation.
The influence of technology will affect Superdrug in many ways.
This faster pace of technological change is also causing:
- Shorter product life cycles within Superdrug
- Higher research and development budgets within Superdrug
- Concentration on minor improvements within Superdrug
- Increased regulation within Superdrug
Political and legal
Marketing decisions are strongly affected by laws, government agencies and pressure groups in society. Trends in the legal and political environment include, increased legislation regulating business, changing government agency enforcement, and the growth of public interest groups.
Superdrug will be influenced by political and legal factors; this includes pressure from local government agencies that limit various organisations for example legislation such as competition i.e. monopoly, fair trade practices, environmental protection, product safety, truth and honesty in advertising, packaging, labelling and pricing. Superdrug will be influenced to abide by these regulations otherwise they will be penalised. E.g. Microsoft was fined for monopoly.
Social cultural
The cultural environment consists of forces that affect society's basic values, perceptions, preferences and behaviours. Some cultural values, such as the idea that people should have a job, persist over time Superdrug will be influenced by social and cultural trends For example, the number of people that believe in physical fitness and a healthy diet has been increasing in recent years. This will influence Superdrug to market their ideas more and increase productivity, and just maybe the price.
How the information from the Audit contributes to the Strategic analysis
- A framework for identifying and analysing strengths, weaknesses, opportunities and threats.
- The force to analyse a situation and develop suitable strategies and tactics.
- A basis for assessing core capabilities and competences.
- Helps to identify potential problems
- Comparisons against competitors
- Accurate segmentation of markets
The information we found would help us in our strategic plan to identify any potential obstacles, problems and solutions.
The Benefits of the above are that it will let Superdrug know what it is good at Superdrug could then specialise it what it is good at. In addition Superdrug will be aware of it weak points and will develop solutions to become stronger. Superdrug will also know its opportunities and will do everything to take advantage of this Furthermore it will develop solutions to any threats.
Competitive Position
Many companies seek to achieve and maintain a competitive position in the industry they operate. Superdrugs being a PLC company want to gain a competitive advantage
There are many possible ways of doing this. Superdrug will have to look at many aspects of business strategy.
The differences in Marketing Ethics strongly affect Superdrug Marketing mix
Product
- Superdrug will have to differentiate their product
Price
- Superdrug will have to use psychological pricing
Place
- Superdrug will have to locate their business close to their target audience
Promotion
- Superdrug will have to promote their business more better than competitors
Competition
The marketing concept states that, to be successful, a company must provide greater customer value and satisfaction than its competitors do. Thus, we as Superdrugs strategic marketers must do more than simply adapt to the needs of target consumers. We also must gain strategic advantage by positioning our offerings strongly against competitors’ offerings in the minds of consumers.
Superdrugs have faced competition from the major supermarket groups. In 2004, Tesco for example, are understood to be preparing a price-cutting campaign across a range of products. This campaign will focus on more than 600 products including health, beauty and baby items including medicines, dental care and baby wipes. Each of these could be seen as occupying traditional superdrugs' territory. Tesco are believed to be prepared to spend £70 million on the cuts.
In the market for prescription medicines, where superdrug is one of the leading players, the main competition comes from UniChem (who own Moss Pharmacies) and Boots PLC.
Superdrugs Mission to Achieve and Maintain Competitive Position in the Market
Superdrug could adopt one of the four business strategies to gain a competitive advantage suggested by Michael Porter.
Picture source:
They are differentiation and cost leadership, differentiation focus and cost focus.
Differentiation focus and cost focus are four a niche hence they are not applicable to Superdrug, whereas Differentiation and cost leadership are for a broad market.
Superdrug could adopt differentiation or cost leadership to gain and maintain a competitive advantage.
The one I personally suggest is Cost leadership because if Superdrug become low cost producers they will benefit from the best profits. Cost leadership is normally associated with high volume output “stack them high sell them cheap” for example to produce a can of coke is cheap but the can costs more than coke source
If you make more it cost less. If you make less it cost more in business. For example rice pudding to produce little will in the long term cots more but to produce more in the short term cost less. Hence you can stack them high sell them cheap.
Benefits of Cost Leadership
- Profits are higher than competitors because of low costs productions and high output
- Can build market share with low prices
- Can enter various new markets with low prices
- Very good approach if customers are price sensitive
- Cost leadership creates a barrier to entry
Implementation of New Strategies within Superdrug
Superdrugs strategic program needs to well co-ordinated if it is to be effective. An overriding strategic plan should be added-on with useful plans from each business unit, including a marketing plan. These plans must be put into action, implemented, and then controlled to ensure corporate objectives are being achieved
Strategic plans are only effective if they are put into operation. The parts of an implementation process ensure that the business strategy will lead to the desired marketing performance. They are
The action program
Identifies the decisions and actions needed to implement the business strategy and assigns responsibility and a timetable for these tasks.
The organisation structure
Superdrug divides the company work into well distinct jobs and allocates these jobs to people and departments. Formal ties between people and departments coordinate the jobs by setting lines of authority and communication.
Decision and reward system
Strict and comfortable procedures that guide a Superdrugs activities such as planning, information gathering, budgeting, recruiting and training, control, and personnel.
Human resources
The employees Superdrug PLC has hired with the appropriate skills, motivation and personal character to fit in to the organisations structure and implement the marketing plan.
Managerial climate and company culture
The way managers and others work together in a Superdrug PLC. Their shared set of beliefs and values can have a large effect on the success of the implementation of a business strategy.
Some of the factors that cause implementation problems are:
“Implementation is not as easy as it seems”
There are many factors that have to be taken into consideration when implementation of new business strategies are taking place.
Below are several factors that cause implementation problems
- Plans are made by those who do not have a thorough understanding of the difficulties that those responsible for the implementation of the plan will face.
- The performance of those who implement plans is often considered in terms of short term success (rather than long term goals).
- New plans may be met with disbelief. Staff may resist adopting new plans when they believe that the 'old way of doing things' was comfortable and acceptable. (like the adoption of mobile phones in the early days i.e. introduction of the product)
- The plan may not provide details of how to achieve the goals of the plan. Time tables must be developed and individuals must feel responsible for exact tasks as well as being given the training required to undertake the tasks.
- The plan may be too pushy and it may be too difficult to achieve the goals as set out. Many people designing plans do not want to accept reality if it is not constructive and/or does not support their case.
Strategic Implementation Control Procedures
Strategic Implementation Control the process of measuring and evaluating the results of business strategies and plans and, if needed, taking corrective action to ensure that strategic objectives are attained. There are three types of strategic control:
Annual plan control - ensures that Superdrug PLC achieves the sales, profits and other goals set out in its annual plan. This can be controlled through sales analysis, market share analysis, expense-to-sales analysis and customer attitude tracking. (Through the clubcards)
Profitability control - measures the profitability of various products, fields, customer groups, channels and order sizes. This enables Superdrug PLC to decide which of its products and practices should be given increased resources and which should be downsized.
Strategic control - critically reviews the overall effectiveness of Superdrugs PLC business strategies and programs. This is usually done through a marketing audit which is performed by an independent auditor and comprehensively examines all the major strategic areas in a business.
Bibliography and References
Strategic Management, Professor Raphael Amit, Faculty of Commerce and Business Administration, University of British Columbia, Vancouver, B.C., Canada
Strategy formulation and complementation : Tasks of the General Manager, by Arthur A. Thompson, Jr & A.J. Strickland III, 1992
Competitive Advantage, Michael E. Porter, 1985
Competitive Strategy, Michael E. Porter (1980) and Thompson & Strickland (1992)
Gaining and Soustaining Competitive Advantage, Jay. B. Barney, Addison-Wesley, 1997
Contemporary Strategic Analysis, Robert M. Grant, 3th edition, Blackwell, 1998
Strategy for business A Reader Sage Publications
Kotler, P., and Armstrong, G., (1994) Principles of Marketing, 6th edition, Prentice Hall;
Kotler, P., (1996) Marketing Management: Analysis, Planning, Implementation and Control, 9th edition, Prentice Hall;
Kotler, Adam, brown and Armstrong (2003). Principles of Marketing, 2nd Edition, Prentice hall .
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