LO1 Understand the process of strategic planning

1.1.            Explain what is meant by missions, visions, objectives, goals, and competencies? What are Morrison supermarkets mission, vision, and goals?

 

Strategic Planning is very important for the growth of organizations. It refers to the future goals of a company, and how it is charted for the future, keeping the present conditions and resources in mind. It is a road map by which the purpose of the organization is delineated, and how it is to be achieved, goals, vision, mission, objective, ways of achieving these. It provides a guideline on how these resources are allocated and used in this direction.  Strategic planning envisages many things. It charts out a vision for the future, a vision as to how the company sees itself in its environments and in the years ahead and the place it aims to reach or to maintain. It also details out the roadmap on how to achieve this mission i.e. the tactics. This would include procedures, setting goals and targets, and ways to reach these goals. It would also entail the development of effective communication systems throughout the organization to ensure that all parts are in the loop with the goals. It would incorporate feedback mechanisms to monitor how the organization is doing.

     A strategic plan documents the following: Missions, Visions, Objectives, Goals and     Competencies and Strategies (WorldBank, n.d.) The Mission refers to the basic purpose of the organization .i.e. what is its purpose and how it will achieve it. It also mentions who all are part of it and who it is targeted for. The Vision refers to how does the organization sees itself in its immediate context and the world in a certain period of time.  Designing a vision helps provide motivation and inspiration for the organization as well as a direction to proceed in. The three parts of achieving the vision are  Goals, Objectives and Strategies. Goals- are actual descriptors of the current and future set of actions to be taken to achieve the vision, usually for the immediate few years. Objectives are the aims to be completed in pursuance of the goal. Strategies are the tactics and methods which are detailed out in an action plan to enable successful completion of the objectives for the goals. These are time dependent.Competencies are defined as the attributes/skillsets/knowledge required for the successful completion of a task. Every task would require a certain amount of core competencies for its success. Competencies help to define how the mission and vision can be achieved. (What are competencies career development, 2014).Values- Beliefs on which its functioning and its relationships with core customers are based.

Morrison Supermarkets, being an old established supermarket chain, finds the need to align its existing strategic plan with the current and future requirements. Our mission, vision and goal statements are as follows. Mission- We serve to combine the traditional with the modern in our services, to serve our customers, far and wide with our outstanding products with the help of our passionate and motivated staff, engaging in practices which are consistent and helpful to the community we live in. Vision- Quality and Trust is the cement of our relationship with our customers and stakeholders.  Our Goals are:

a.      We seek to strengthen our existing supermarket chains and add more stores

b.     We aim to establish ourselves in the convenience store segment, where we plan to start around 70 stores in two years time, after checking out how the model works out.

c.      We aim to introduce new distributer sites in order to strengthen these new stores

 

(adapted from  Safeway Supermarkets Company Mission Statement 2014, Morrisons 2009)

1.2.Review the issues involved in strategic planning

Strategic planning involves a lot of work and many issues have to be considered during this process.  Let us look at some of them. Accountability is a process that involves the top management, under the aegis of the CEO and hence the top leaders and top managers are accountable as to the success and fruition of the plan. Hence, the process has to be carried out with due diligence and taking as many factors into consideration. Planning needs to take into account both long-term and short-term plans. Strategic planning is a long-range plan extending over many years and has to be flexible enough to take into account changes, necessitated as a part of changes in the environment, both external and internal. This means feedback mechanisms have to be in place. And the organization has to modify its goals and resources to take into account the changes. Long-term planning helps an organization to thrive in periods of instability. Strategic planning revolves around creating a plan which measures the performance of an organization as a whole, in achieving the goals laid out. Strategic planning may appear to be intimidating for managers, who are more comfortable or familiar with the daily goals.  Strategic planning involves the top executives of  a business including Executive Committee or Board leaders, Senior and Middle level management officials, and stakeholders who have an influence on or are impacted by the organization.  It involves focusing on the few but major issues which will determine how successful the organization would be. This is especially important with regard to how resources will be.  It should be undertaken when the organization is in a relatively stable period. And sufficient time should be given to it as this is an issue of the organization’s growth. Usually, companies start off with consensually defining the mission statement and short-term planning for around a year and then proceeds on larger scale for more than a couple of years, which requires concerted and sustained efforts. (Worldbank, n.d., Strategic Planning Principles, 2014)

1.3 Explain different planning techniques

       There are different strategic planning techniques available, which would take into consideration the various critical environmental factors, which will affect the implementation of the plan. Some of these are:

a.      SWOT analysis ( Strengths, Weaknesses, Opportunities and Threats) gives an assessment of the strengths and weaknesses of the organisation   ( internal environment) as well as the perceived risks and chances created by the external environment

b.     Performance Management Tools: which can be used by management to monitor how well the staff is performing on their assigned tasks and measures a wide gamut of areas ranging from financial to non-financial areas. E.g. Balanced Scorecards

c.      Scenario planning- visualizing different scenarios for the future by trying our permutation and combination of known facts and trends. The advantage of this method is it allows for complex situations to be visualized and factors which cannot be defined or measured.

d.     Root-cause analysis or Inter-relationship digraphs- used to prioritize projects within a company, to find out which are the ones with the highest priority.

e.      Metrics- They are used for measuring the performance of a project, whether it is achieving the desired impact or not.

f.      Affinity diagrams- are used to priorities projects on the basis of their similar attributes

             (Key Strategic Planning Tools, 2014)                                                        

Task 2

LO2 Be able to formulate a new strategy

2.1 Produce an organizational audit for Morrison supermarkets

Synopsis

Morrison Supermarkets was established in 1958, it currently has ~450 stores after taking over Safeway, across Scotland and Southern England. It supplies high quality products at reasonable prices and the Company has 10000 employees as of now. At present, it is facing couple of challenges of falling sales in the supermarket and weak consumer confidence as well as fighting to increase market share. It is currently Britains fourth largest supermarket group and intends to enter into the convenience market, where it currently falls behind Tesco and Sainsburys and has plans to open over 70 convenience stores to be opened in two years. The Vision and Mission is designed with emphasis on customer service and dedicated professionalism as priorities with long term view to serving the community. The objectives are

1.     To improve overall sales in the supermarket sector in Britain.

2.      To establish ourselves in the convenience market, and to improve upon our current 4th position and increase our market share from 15 % to 40 % in UK.

3.     To introduce innovation in our marketing strategy including promotional methods

We conducted surveys to estimate the current company size and manpower in relation to previous years and noted any significant trends as well as research into it. We also carried out opinion polls and interviews of selected branches to determine how significant is the demand for convenience stores. This helped us to understand customer demands and changing trends. We also determined strengths and weaknesses as in terms of competencies and infrastructure requirements at present.( SWOT)

We also analysed the Strategies in place. The team devised multipronged strategies aimed in different directions including blunting competitors, protecting existing strengths and efforts, enhancing reach across the country as well as enhancing resource capability for expansion .Training programs was also planned for current employees to enhance their core competencies. An internal code of conduct and ethics was put in place to deal with ethical  issues. Programs for enhancing engagement with community as well as measures to manage current market weakness were put in place.

2.2 Carry out an environmental audit for Morrison supermarkets

An environmental audit was done for Morrison supermarkets. Environmental audits are used by companies to monitor the contexts they are functioning in and to determine whether they are operating in alignment with the current environments.  Such audits include monitoring political, social, economic, legal, technological and environmental factors. For Morrisons, the audit carried out took into consideration the following:

1.     Current political situation on the operation of the business. Instability is lowering stock prices and hence the time may not be too ripe for drastic changes

2.     Legal factors- checked whether our business is not involved in legal complications.

3.     Global economy severally impacted the manufacturing and services sector as well as leading to shooting prices of raw materials. This in turn led to increase in our prices, which did not go down too well with customers.

4.     Technological factors- Brilliant opportunities for marketing and promoting ourselves with the rise of social media and new innovative technologies. This will be considered when designing our strategies

5.     Social and environmental concerns- It has been our custom to maintain adherence to standard environmental regulation norms. We are also refining our activities and products which need a relook

6.     Assessed the effect of competitors, suppliers, buyers and other factors.

(What is PESTE Analysis, 2014)

 

2.3 Who are Morrison supermarketsstakeholders? Explain the significance of stakeholder analysis

The principal stakeholders are: customers, sellers, suppliers, producers, staff and management amongst others. Businesses need to understand, prioritise and target their stakeholders effectively for the success of the business. Stakeholder mapping can be used to determine priorities. (Stakeholder analysis, 2014)

 

LO3  Understand approaches to strategy evaluation and selection

3.1.Analyse possible alternative strategies relating to substantive growth, limited growth or retrenchment for Morrison supermarkets

Following organizational and environmental audits to assess the current climate of the companys operation, the next step in strategic planning is to choose the appropriate mix of strategies to lead the company forward. This is not as easy as it looks as each set of strategies has their own potential strengths and weaknesses. Also, selecting too many strategies can make the whole process go in tangent i.e. ultimately confusing and directionless. Choosing a strategy also has to suit the business, be compatible with the industry, help in positioning yourself, based on the type of market, take into account the available resources and competencies which will give an edge over the competitors and competitiveness.

Some different strategies are based on whether the overall aim is to overcome existing weaknesses, maximize strengths , and whether it will involve resource sourcing and allocation from within the company or outside. For reducing existing weaknesses companies can choose to go for vertical integration, conglomerate formation, diversification, turnaround, divestiture, and liquidation.  Retrenchment and divestiture may be good strategies for shearing off the weaknesses while horizontal integration, market development, and product development  may serve to build up the strength.(Strategy Selection Matrix Diagram, 2014)

Some alternative strategies to substantive (horizontal and vertical integration, related and unrelated diversification), limited growth (market penetration, market development and product development) and divesting/liquidating (retrenchment) include organic and inorganic growth strategies.

Organic growth strategies involve using, reallocating and redistributing the organization’s own resources to drive growth. It focuses on developing your customers to improve your profits. It is organic because it is self-generated and self-sustaining.  This may be very necessary for new companies as well as companies that may be interested in breaking away from established strategies that have not worked as well as they should have.  The advantages are: these kinds of changes are within your control and changes can be tailored which fit the companys basic nature. You can allow it to grow at its own pace and sell when it is needed. The disadvantages are in times of fast economic changes and competitiveness, depending solely on your own strength may be more disadvantageous.

However to have faster growth and reach a higher level of profits faster, one may need to resort to strategies, which are inorganic in nature such as acquisitions and mergers, which will lead to a build-up of resources and capabilities to strengthen the competitiveness. Other ways include Strategic Alliances- Entering into agreements with companies where each can share resources and can benefit. Joint Ventures- Where there is a partnership between two companies with ownership being shared to different extents.

(Kragelund,n.d.)

When it comes to establishing competitive advantage, which is vital for the enduring  success of companies, Porter highlights the three critical factors which are central to determining competitive strategy. These are:

1. Cost-strategies which ensure that you deliver products to customers at a price which suits them while at the same time, bringing in a return of profits.

2. Differentiation- uniqueness in what it delivers, with respect to fulfilling certain needs

3. Focus- focussing attention on specific sectors of an industry, rather than dissipating its strengths and resources trying to get a foothold in all.

(Three kinds of business strategy, Nickols, 2014, Porters generic competitive strategies, 2014)

3.2 Choose the right approach for Morrison supermarkets

Based on the current position of Morrison supermarkets, which are ranking fourth in the convenience stores market and are interested in expanding in that direction, one possible strategy is to shifting focus from the more unstable supermarket to the convenience shop sector.  This can be carried out by gradually distributing and allocating existing resources and push more investment in this direction. Tie-ups is possible option with some brands, to improve their visibility. At the same time, they can use limited growth strategies for the supermarket sector, focus on keeping existing customers by introducing new and improved versions of products. Divestment and retrenchment is an option to be kept in future if the supermarket still remains bad and does not see many prospects.

 

LO4 How to ensure the plan is implemented

Once the strategic plan is in place, following discussions with the board  and the management and after having taken feedback from the key stakeholders, the The next step would be to implement the plan. This is challenging as it ensures that the roles and responsibilities be allocated to the right persons, monitoring and evaluation has to be done to ensure that it is being implemented.

1.1.           Compare the roles and responsibilities for strategy implementation in Organisations

The roles during implementation would be to ensure that the designed plan (with goals and objectives) is put into action and it involves the commitment of all the personnel and the resources. It would involve delineating the tasks and actions required for ensuring the fulfillment of objectives. It would also involve that all the activities are aligned with the broad plan. It involves raising enthusiasm and keenness in people to change. Many times failure of plans occurs at the implementation stage. It requires effective and efficient implementation.

While charting the overall directions, vision and mission, strategies and objectives is a role played by the top the leadership of the company (CEO, CFO, Heads), the implementation of it, would be mainly under the guidance of the senior and middle managers and would involve a great many decisions with respect to reorganization, reallocation of tasks, projects and people, space, resources etc.  It would also involve those who are affected by it, monitoring it, It would need clear cut communication and feedback mechanisms and clear division of labor to reduce conflicts and ambiguities, which may occur and interfere in the implementation, otherwise.

In this regard, the structure of the organization becomes critical to how it will impact the strategy. Structure-based on function has organization arranged in a top-down manner in order of their specialization. For e.g. the CEO and the top heads of Finance, HR, Research will be involved in the planning and the department heads under them will be in charge of implementing in their own departments. This is basically a top-down implementation and is more rigid with less feedback mechanisms in place. Another kind of structure, which is seen in companies with more diversified functions, is the divisional structure, where there is greater freedom for the divisions to implement their tasks and goals.  Each division has its own set of departments looking into various aspects like Finance, HR, and so on. It is more flexible to change (Strategy implementation and control, n.d.)

 

1.2.Evaluate resource requirements to implement a new strategy in Morrison supermarkets

The management of Morrisons supermarkets have to evaluate their existing resource levels before proceeding to implement the strategies. This includes checking whether the existing infrastructure- buildings, space, location etc are suitable and adequate.  In light of expansion plans, more space may be needed, as per evaluation. We also need to evaluate the quality and workability of our manufacturing and processing equipment- Are they up to date? Are they of the capacity to cope with the amount of work expected from them? As of now, they seem to be adequate. Another aspect which comes under evaluation of resources would be to gauge the quality of our human resources- are they competent, trained enough? Is there sufficient manpower available? Is there sufficient on the job training opportunities for staff to build their skill? Some programs are being introduced in this direction to up the quality and quantity of manpower. The Budget is vital to the success of a strategic plan. Questions that we are delving into include whether the budgetary allotment is sufficient? Will there be enough independence for departments to generate their sources of money, when and if required? We need to also evaluate whether the Marketing and promotion resources are enough to ensure that product promotion and publicity requirements are met?

As of now, all the resource may be sufficient for the present one year but may need to be enhanced for the subsequent years.

1.3.Discuss targets and timescales for achievement in Morrison supermarkets

No strategic plans would be successful, if they did not have targets and timescales to gauge and evaluate their progress. Constant monitoring will ensure the discovery and rectification of hindrances in the plan as well as ensuring the plan remains flexible and adaptable to the changing environment.  In this regard, we have established guidelines, where will be monitoring the current sales, profits, distribution, revenue, production costs with our estimated ones with the use of metrics. Performance monitoring mechanisms  of staff to ensure that steps are in place that they remain in place.

 

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