STRATEGIC PLANNING

STRATEGIC PLANNING

Introduction

The management of every company needs to conduct effective strategic planning in order to achieve business growth. To create organizational strategies, the company’s management is required to define their goals and target. Most of the companies are concentrating on future planning which is the most useful for increasing their growth rate (Kogan and Bobchek, 2007). The present report is based on a UK-based company, which deals in online services and acts as a web-based intermediary between independent takeaway food outlets and customers. The mentioned company operates in more than 13 countries (JUST EAT, 2016). In this report, the strategic planning of JUST EAT is discussed along with different aspects that can affect the organizational behavior, i.e. the environment, business plans, modeling tools for strategic planning and factors that affect the organizational strategies have been examined. This is a local takeaway restaurant where customers can place their order online.

Activity 1

Review of current position of the company in the market

JUST EAT provides a platform to customers to search for a local takeaway restaurant so as to place orders online, and to choose from pickup or delivery options. The customers preferred it as the most convenient service, therefore, the mentioned company has large number of customers who visit and use the company’s website. According the secondary data collected from the company’s website, there are 8,000,000 visitors on the company’s website every month. However, around 50% of them, approx. 4,000,000 customers place an order, by which the company generates revenues of +25% from online orders as compared to orders by phone (JUST EAT, 2016)

Through BCG matrix (see Figure 1), JUST EAT has to describe their long-term planning and the basic idea behind the use of this strategy is to get bigger market share with faster growth rate

STRATEGIC PLANNING

Figure 1: BCG matrix

(Source: Crowley, 2004)

According to the BCG matrix, the company is currently at the cash cow position where it has a high market share but it is not able to get similarly great growth in the business. The organization generates cash, which fulfills the needs to maintain the business. Low investment will not help them to get higher growth rate (Beekun, 2006).

  1. Dogs – The Dog section within BCG generally possesses low market share with lower growth rate, not generating large volume of cash. JUST EAT does not belong to this sectionas they have relatively large share within the UK market. Therefore, customer base within this section is low as the company’s market share as well as its growth is low. Customers are less attracted towards the services of JUST EAT.
  2. Question marks – Another section is question marks that generally depicts increasing market area and growth by delivering quality and online food services within the UK. With the increasing market growth rate, the company features capturing low market share as online food services and takeaway services are not preferred by all the customers that are residing in the UK. Customer base of JUST EAT is low as compared to other companies which are delivering food.
  3. Stars – However, the star section in BCG depicts that company is in the position to dominant the marketplace by making online delivery of the food services to the UK customers. In addition to this, star section also features strong market share with higher market growth that is beneficial for JUST EAT in increasing their image. Customer base within Stars section is very high as they are in dominant position as JUST EAT possesses relatively very high market share and growth that assist them in attracting large number of customers.
  4. Cash Cows – The last section in the BCG depicts the situation of cash cows that possess low market growth rate but have high market share that result in gaining possible profit. However, the products and services of JUST EAT lies within the cash cows’ section as they have high market share with lower growth rate within the market that is beneficial for the company to invest low amounts to sustain in the market. Customer base within cash cows is high as JUST EAT has high market share as they are providing online food delivery to the customers that is beneficial for the company in the present scenario.

1.1. Importance of external factors that have an impact on organizations

The external factors are the most important attributes that can create impact on the development of any company. External environment plays vital role in the future of the business. To keep the business moving for the profits management needs to evaluate the external factors like competitor analysis, political, economic, social etc. External environment provides the activities of outside the boundaries of the organization. Stakeholders are the most important part for the growth of the organization they invest the money in the organization for the better expansion. Sometimes they may be the employees because they hold the share of the organization. The main role of the stakeholder is to invest large amount of money and share the profits with the directors. Competitive environment help the management to recognize the competitors in the market and try to identify the current trends in the market. It helps the manager to design the innovative policy by which business can compete in the market. These factors can be described by the PESTLE analysis (see Figure 2).

STRATEGIC PLANNING

Figure 2: External factors which have an impact on the organization (PESTLE)

(Source: Steiner, 2010)

 PESTEL analysis assists the organization to identify the external environment and try to make the policy according to the market trends. The analysis assists the manager to gain the competitive advantage in the market by designing the policy according to trends. For example of a business is selling the products and have various substitutes in the market then PESTEL analysis facilitate the organization to design the different strategy that gain the competitive advantage from the market. External factors, which have an impact on the organization, are as follows.

  • Political: this factor deals with the government interference with JUST EAT, i.e. the economic and different development policies regarding taxation, environmental issues, and labor, law or trade restrictions. Political stability and predictable political environment are also crucial issues for companies/JUST EAT when choosing on which markets to operate in. As the company is doing its business virtually, hence there is not much interference of the government in its business (Wallace, 2006).
  • Economic: this factor includes economic growth, interest rates and exchange rates. This factor has a major influence on the company’s operation and decision-making.
  • Social: this factor includes cultural and health-consciousness aspects. Currently, online shopping is increasing; therefore, this aspect presents a major opportunity to the company.
  • Technological: as the speed of technological advances means that the existing equipment, IT solutions and systems quickly become outdated, JUST EAT has to introduce different technical machines and software to maintain the standard of their products (Wallace, 2006).
  • Legal: these factors include consumer law, employment law, and health and safety law. These can affect how a company operates, thus the laws, especially laws regarding online businesses; need to be followed by JUST EAT.
  • Environmental: such factors include weather, climate, climate change, which definitely affect companies operating in the food industry. JUST EAT also needs to take into account that its operations and activities do not have a negative impact on the environment.

1.2.         Analysis of the main stakeholders and their needs and expectations

The main stakeholders of JUST EAT are its investor, suppliers, society and customers. Supply chain management function uses these factors in planning their strategies for the organization. These all can have a huge impact on the development of the organization.

  1. Investors: they are the initial suppliers of the industry. There are different investors that help the company regarding financial factors such as bank loans, financial institutions and partners. The investors’ essential interest is to know the financial position and credibility of the corporation before investing their money in it (Matthews, 2005).
  2. Suppliers: they are the distributors of raw materials, which are used in manufacturing company goods. Suppliers are connected to different retailers from where they obtain resources for the company. Suppliers expect the company to adopt a fair credit and purchase policy.
  3. Society: In ideal cases, the company conducts a research on the society’s needs and designs its product line accordingly. The society needs to know whether or not the company’s products and services are having any negative impact on the societal functions such as healthcare and reliable quality levels of sourced raw materials.
  4. Customer: these are the main external stakeholders of the company. The customers demand good quality products with proper information at competitive prices from the organization (Matthews, 2005).

The stakeholders’needs and expectations

Organizations have to identify their stakeholders and their importance for the growth of the business. The needs and expectations of stakeholders are very high regarding the company. JUST EAT has to fulfill the expectations of their stakeholders by trying to take into account each and every need of the different stakeholder groups. However, this is not possible as they contradict as for instance suppliers are interested in increasing their profits, but this can drive prices up which customers will find unsatisfactory.

http://www.supplychainquarterly.com/topics/Strategy/20120622-six-steps-to-successful-supply-chain-collaboration/

There will be model which need to consider for a successful collaboration: Where to collaborate? Collaborate on those areas where JUST EAT has a solid footing. Change the win lose JUST EAT situation to a win -win models. Select the right partners based on their capabilities and their strategic alignment is significant for JUST EAT.

How to collaborate: collaborate for the long term. Develop the right infrastructures and manpower. JUST EAT need to build and collaborate for a long term decision.

Supply chain collaboration assists the JUST EAT to get the significant improvement for the long term and provide the attractive consumer packages at the reasonable prices in order to sustain in the market. Collaboration assists the management to improve the services and expand the business by merging the resources of two organizations. Business can increase the brand value through supply chain collaboration.

JUST EAT should fulfill the expectations of the stakeholder in the better way like provide the interest time to time. Classify the expectations as the foremost objective of the organization and evaluate the performance of the organization in the fixed tenure. JUST EAT should do the effective communication with the stakeholders in order to retain them. Stakeholders have the expectation that business must provide the interest on time and make them the part of the decision making process.

STRATEGIC PLANNING

Figure 3 Stakeholder analysis

(Source: Stakeholder analysis, 2016) 

1.3 & 3.2 Understanding development taking place within similar organizations and analysis of the changes of the organization

There are many factors due to which the internal environment of the company is going through several changes. These external factors – the economic, social, management, ecological and geographical factors – affect the internal operations of the company as well. Analyses of different changes in the organization reflects some particular areas such as social-political changes, technological changes, development changes, customer analysis and competitor analysis (May, 2010). This factor is directly or indirectly based on the evolution of new customers in the society. For getting advantages of these aspects, they have to get better efficiency and productivity. Ecological aspects are used to get different resources that are used in manufacturing their products, and this will define the evaluation of their products. Technical changes are necessary for the development of the company to be able to serve better meals to their consumers (Cassidy, 2005).

In today’s scenario markets are expanding globally, and competitors are increasing in numbers as compared to earlier years.

JUST EAT needs to develop its products with new and different tastes. Therefore the company used benchmarking and portfolio analysis. Benchmarking is a method to compare business processes and performance metrics to the industry’s best practices and much-valued companies. Portfolio is used to analyze groups according to their environment. These are used to ensure growth and development of business in the ever-changing environment(Simerson, 2011). PESTLE analysis encompasses the external environment factors. PESTLE stands for political, economic, social, technological, legal and environmental. These factors are uncontrollable; these are beyond the control of the company management. The external factors are as follows:

  • Political Factor: These factors are related to government policy and its administrative practices which determine the extent to which governments or regulatory bodies influence the industry. Political factors include import export rate, tariff rates, tax rates, etc. Thesewill highly influence the strategic plan framed by the organization (Kogan and Bobchek, 2007). For example, if the UK’s government may enforce new tax ratesapplicable to the industry or the organization, this will directly influence the revenue-generating structure of the company. Hence, the organization might change itsstructure as per the new enforce rate.
  • Economic Factor: These factors also contribute to the external environment that directly influences the organization’s strategic plan. These factors include interest rates, inflation rate, foreign exchange rate, etc. When JUST EAT determine the company’s strategic policies it’s inescapable to take the economic factors into consideration.
  • Social Factor: These factors examine the changing environment of the UK market. Change occurs due to change in taste, preferences, demographics, etc. For example, there is a wide range of different foods available online (Nelson, 2008). JUST EAT should cater all different types of food items to attract customers from different demographic regions.
  • Technological Factor: The continuous innovation in technology also directly influences and changes organizational policies and procedures. JUSTEAT, armed with the new, improved technology, is now capable ofproviding wider selection of dishes, including various national specialties. The introduction of the new supply chain enabled quick and quality service with increased volumes.
  • Legal Factor: Legal factors include various laws enforced by the governing body that every organization have to follow while in operation, for example labor laws, health and safety law, consumer law, etc.
  • Environmental factor: Environmental factors include all the elements that create waste or have an impact on the environment. JUST EAToperates digitally, mostadministrative work is done electronically. The focus should be on upgrading equipment and machinery tomore energy-efficient versions as the primary carbon footprint of the company is due to its energy consumption. Logistics is a field demanding similar level of attention. Another fieldcan be choosing the right environment-friendly packaging materials for food items.Offering biodegradable packaging is compliance with the country’s regulationsis a must and also a unique sales factor for environmentally consciouscustomers.
  • SWOTAnalysis: It is a valuable technique for understanding, evaluating our company’s strengths and weaknesses, as well as to identify the opportunities and threats you face (see Figure 1).
  • Strengths: it is the capacity or unique point which helps the company in developing a unique image in the market.
  • Weaknesses: it highlights the weak side(s) of the business.
  • Opportunities: it comprises actions that can be taken for boosting the operation of the company.
  • Threats: elements that can affect the operation of the company

Swot Analyses

  • Customer Analysis: Customer analysis is the most important section in the organization that assists the business to identify the needs and wants of the customers. The analysis aid the management to recognize the targeted customers and produce the food items according to their needs. Customer analysis aids the organization to create the good relation and try to manage the productivity of the organization.

STRATEGIC PLANNING4Figure 4 Customer analysis

(Source: Customer analysis, 2016)

  • Competitor Analyses: This is a critical part for the marketing planning, to know the individuals/ competitors on your market where you are planning to grown. Evaluating competitor’s strategies and to define their strengths and weaknesses relative to those of your own product or service.

Competitor Analyses template

Competitiveness analysis

            The analysis assists the management to identify the policies and prices of the competitor in the market and provide the alternative to compete in the market. Through this analysis the business can easily indentify the current market trends and to expand the market with suitable strategy.

Benchmark: Management set the benchmark for the employees and instruct them to perform according to the set benchmark. It is the standard for the work performance to achieve the goal o time. Benchmark is the predefined criteria in which all employees have to perform. Benchmark helps the organization to recognize the set targets on time to achieve the goals on time with the allotted time duration.

Market segmentation: Under this method, JUST EAT segments the market and targets the customers according to the market. Organization categorizes the customers according to their age. For example, JUST EAT launch, the products for the small kids like burger, ice-cream etc to sell this kind of products business will target the 6-12 years children. Under market segmentation management target the different customers according to their age, gender, income etc.

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