Strategic management plan is an important tool through which organizations can focus on their core competencies. It
provides a formalized process that establishes a common vision or goal to develop strategies for the future growth of organization (Olsen, 2007). With the help of strategic planning, companies can keep regular updates about the changing business environment and can develop appropriate actions and strategies to gain competitive advantage and organizational goals. Precision Part is operating business in United States and company wants to expand business at international level. A strategic management plan for the development of company for 4 years will be developed. In this assignment help plan, mission, goals, measures, situation analysis, resource analysis, benefits and limitations of expansion are included that will be discussed in this report.
Economy: The Company operates a business in US that is the largest and most technologically powerful economy in the world with a per capita GDP of $48,100. The country has market oriented economy, where private individuals and business firms can take most of the decisions related to business expansion (United States Economy 2012, 2012). In the US, firms enjoy greater flexibility in the decisions of expand business, capital plant, layoff surplus workers and develop new products. US firms have technological advancement in the field of computers, medical, aerospace and military equipment. This country also faces recession by mid 2008 due to global economic downturn, the sub-prime mortgage crisis, investment bank failures, falling home prices, and tight credit policies. At present, this country has favorable economic condition for market expansion.
Competition: In US, competition law prohibits agreements aimed to restrict free trading between business organizations and their customers (Albers, 2008). The company has faced competition from the competitors of industry those gained 6% profit margin. Along with this, industry has 25% employee turnover rate, while this company has 28% employee turnover rate. The company has faced perfect competition in this industry, where commercial firms provide new products, services and technologies for customers at lower prices. Through this, customers get great selection and high quality products.
Political stability: The United States has a stable democratic political system and a strong legal system. The country has strained relationship with international communities and other countries that is helpful for the company to expand business at international level. The country has very low political risk due to stability of government and society, effective international diplomatic relations, efficiency of the government bureaucracy and effective government policies and business infrastructure (USA International Business Publications, 2009).
Internal resource analysis Internal resource analysis of the company is useful to identify the strengths and weaknesses of the company. It will provide an overall view about resources that is helpful to make decisions and develop strategies related to business expansion.
Managerial resources: The Company has 5000 employees in the organization that is currently employed in US. It is enough quantity of human resources, but company has high employee turnover rate that is the weakness of the company. For the business expansion, company will hire new employees from outside the US. Along with this, company has achieved its goals and objectives with the help of human resources that is strength of the company (Wittmann & Reuter, 2008). Company will plan to increase the number of the employee up to 10,000 in 4 years.
Financial resources: Market share and profits of the company show that it has a strong financial position. The company has attained high profits in past excellent financial years and it is the strength of the company (Allison & Kaye, 2005). It has gained high profits that are equal to industry profits. Along with this, the company has 5% world market share. For the business expansion, the company will increase its world market share. At the same time, company fulfills its corporate social responsibilities through giving 0.5% of profits in charity. It will make a positive image of company in the minds of customers. Company has high employee turnover rate that increases the hiring cost, training cost and reducing profits of company that is the weak area of the company. Company should improve financial and managerial weaknesses through effective working environment, suitable rules and regulations, flexible working conditions, good rewards and incentives and other motivational tools for employee retention. Along with this, company should provide effective training and development programs to increase skills and abilities of employees that are helpful for improving overall organizational performance and achieving strategic goals. You can also contact us for business case study assignment help.
Short-term and long-term strategic goals In this, 4-year strategic management plan, company has various goals and objectives that are classified in short term and long term strategic goals. These goals are as follow:
Short-term goals: These goals are achievable in less than 1 year.
- To increase the sales of the company up to 10%
- To reduce employee turnover rate from 28% to 25%
- To improve profits and satisfaction level of customers
Long term goals: These goals can be achieved by the firm in 2-4 years. The main goal of the company is to expand business at international level. The company has various long-term goals under this strategic management plan.
- To increase number of employees up to 10,000
- To capture 9% world market share in 4 years
- To enhance profit margin from 6% to 13%
- To increase employee retention by lowering annual turnover to 17%
- To enhance contribution in charities from 0.5% to 5% in 4 years
- To develop a positive brand image at global level
Benefits and limitations for expansion The company wants to expand business in China due to fastest growing emerging market and largest economy on the globe. Along with this, China offers an entrepreneurial economy for expanding businesses. The country has enough human resources, so, the company can find cheap labor for its production. The country has a mixed culture that has easily adopted the ethics of western business (Chan, 2006). China has experienced big changes in economy that has transformed a limited private sector into manufacturing base of the world. It opens the door to vast opportunities for starting a business in China in all major sectors such as energy, technology, engineering, healthcare and finance. On the other hand, the company can face various challenges in China. In the country, rules and regulations are different for every region. In the starting of a business, company can face local protectionism and intellectual property violation that are not favorable for non-local business organizations in the country (Chen, 2009). Along with this, company can face issues from large population that is also advantage of the country, because of second largest consumer market in the world. So, company can gain various benefits and opportunities in China to fulfill its strategic goals, but can face some issues.
Conclusion : From the above discussion by our business assignment help experts, it can be concluded that PPQ has strong financial and human resources within organizations that will be helpful to achieve long-term goals of the company. Along with this, China is a better option for the company to expand business at global level.
References: Albers, M. (2008). Lufthansa in Its Competitive Environment. Germany: GRIN Verlag. Allison, M. J. & Kaye, J. (2005). Strategic planning for nonprofit organizations: a practical guide and workbook, 2nd ed. USA: John Wiley and Sons. Chan, K. Y. (2006). Business, innovation and society in Asia. China: Hong Kong University Press. Chen, Y. (2009). Transition and development in China: towards shared growth. Great Britain: Ashgate Publishing, Ltd. Olsen, E. (2007). Strategic Planning For Dummies. USA: JohnWiley and Sons. United States Economy 2012 (2012). Retrieved April 03, 2012 from: http://www.theodora.com/wfbcurrent/united_states/united_states_economy.html USA International Business Publications (2009). Ethiopia Country Study Guide. USA: Int’l Business Publications. Wittmann, R. & Reuter, M. P. (2008). Strategic Planning: How to Deliver Maximum Value Through Effective Business Strategy. UK: Kogan Page Publishers.
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