Strategic Management: What is it and why is it important?

Task 1 

Strategy implementation can prove to be difficult than formulation if the change process is not supported by the employees. In order for the company to have a successful strategy implementation process, it ought to change its structures and systems. Matching the company’s structure with the strategy is imperative because structure dictates how strategies and objectives are created, as well as how resources are apportioned ( Speculand, 2011). This is not an easy task, as it requires the workforce as well as top management to be hardworking and highly motivated. It is therefore crucial for the organisation to anticipate resistance, and in this regard device ways in which they can counter the resistance to change. In order for management to handle any resistance towards change, they ought to be prepared for such difficulties. Managers are required to have great people management abilities so as to deal with the realities of any form of resistance that is basically found in all strategic initiatives. Top managers also ought to ensure that the strategies and rationales for the implementation process are clearly communicated and understood by all employees that are involved in the process (Larson, 2010). 

Also, external threats and opportunities should also be made clear to the employees and middle-level managers, and any questions should be addressed appropriately. This means that in order for managers to ensure that there is minimal resistance, they ought to ensure that the top-down flow of the communication process is good enough to develop the bottom-up support. In addition, it is vital for top management to involve strategists in the implementation process. This is because the genuine personal strategist commitment to the implementation process is powerful and necessary for motivating the employees and middle-level managers (David, 2013). In most cases, when strategists are not involved in the implementation process, this can be detrimental to the success of the strategy implementation process. 

Task 2 

In calculating the value of Litton Company, there are four different methods that can be used. 

The outstanding Shares Method 

This method involves the multiplication of the market price per share by the outstanding number of shares (David, 2013). The number of outstanding shares is 1million and the stock price is $20. 

(1, 000, 000*$20) =$ 20 Million. 

By Net Worth or Asset Approach 

=Common stock+ Additional Paid in Capital+ Retained Earnings-or +Intangibles 

= (15m+35m+6.75m)-0=$56.75Million 

Price Earnings Ratio 

This is calculated by dividing the market price of the common stock by earnings per share and multiplying the figure by the average net income for 5 years. 

Price Earnings Ratio=Market Price/EPS 

=20/4.75=4.21*6.75=28.43 

The Worth of the company is also calculated using the conservative rule of thumb which is calculated by multiplying the Net income by 5 times (Hitt, Ireland & Koskisson, 2012). 

=9.75*5=48.75 

Average=(20+56.75+48.75+28.43)/5 

Litten’s Company worth=$30.78 

Task 3 

It is wrong for a company to think that its products are useful to all humans in this world. It is for this reason that every organisation has its targeted market for their products. Companies, therefore, ought to segment their markets in order for them to be able to understand the consumer requirements. This segmentation of markets helps a company in fulfilling the critical gap that exists between the actual product, the idea and demand. Since the market is always flooded with competitors, it is, therefore, the role of the firm to reduce risks as compared to taking more risks (Dibb& Simkin, 2009) . In this regard, targeting a certain group of customers is a strategy that is used by management to reduce risks in a competitive way. Once the company acquires a territory, it is then able to move forward. 

Moreover, most companies aim to always dominate the market (Armstrong, 2015). In order to achieve this, positioning is very crucial. This is because it allows consumers to perceive services and products in specific ways. This, in turn, allows them to correlate the products and services to their demands and problems. Once a product or service makes an impression in the minds of consumers, it is thus positioned in a certain way. Therefore, the brand being an intangible aspect of the service or product, it ensures that there are quality and value. This means that without a brand, the service or product seizes to exist. Furthermore, the main aim of segmenting markets and positioning strategies is to ensure that the consumers get consistent quality, and in so doing, they are able to recommend the product or service to other consumers (Graham, 2008). For example, Yum has been able to position itself by targeting specific groups of consumers. Yum offers several brands of its products in a single geographical location. The flagship of the different brands has helped the company in dominating the segment. For example, 45% of the chicken business is owned by KFC, 60% of the Mexican fast foods is dominated by Taco Bell and 15% of the pizza segment is dominated by Pizza Hut which are all restaurant chains that are owned by Yum (David, 2013). 

Task 4 

Explain how a product positioning map can be used to target specific customer groups that fit with how a business has distinguished itself from the competition. Please post to the Lesson 9 Discussion Forum an in-depth and logically developed critical argument of 300 words or less for how these inform intuition and create value for strategic leaders. and what are the strategic implications for each of the quadrants you may find yourself in relative to competitors in the other quadrants? 

Position maps figuratively show how the products or services sell in the market. In positioning maps, fast food chains are mapped and presented across different attributes. For instance attributes used can be quality and price. To target specific customers in a non competitive position, a business firm should employ the intensive strategy. Intensive strategy is implemented to expand market and its operations. It employs market penetration, market development and product development. Market penetration improves market share through efficiency and innovation to make products more successful and attractive. It involves promotions, advertising, adding more sales persons and improving publicity efforts. For instance a snacks marketing firm can change its advertising slogan from low fat to great taste. Market development involves in introduction of products to new market. A market segment is identified and establishing promotions of products within that market segment. Product development includes modifying or improving product to increase its sale. Alternatively, the firm should consider horizontal integration which involves merging with other companies to strengthen economy or product, increase market or penetrate into new market. For example, Coca-Cola Company introduced enhanced tea, bottled water and alternative drinks with aim of reaching more customers who specifically needed drinks. Finally, the firm may use divestiture which involves disposal of firm’s asset as a way of management so that a company can focus on profitable line of business in the market as opposed to many business lines. An effective criterion differentiates a firm from competition distinctly and allows customer to anticipate for slightly less service compared to what a firm may offer. ( Cravens & Piercy, 2003) 

Products of major competitors are plotted in two dimensional position maps which contains four quadrants. The first and fourth quadrants are positioned in high competition. In the first quadrant which is upper right quadrant, a firm is excellently positioned to benefit from surrounding opportunities thrive over weakness from inside the firm and threats from outside. If a firm has many resources, forward, backward or horizontal strategies can be employed.. If a firm is focused much on one product, then diversification strategy should be introduced to avoid risks of one line of business. Example of a product is coke, since it has high caffeine and sugar content unlike Fanta, has low caffeine but high sugar content, which relies on children for its market. The fourth quadrant is the lower quarter quadrant. The quadrant signifies that the firm faces basic competition only and without much risks imposed on the firm. Therefore product development, market penetration and development needs to be realized The defensive quadrant is the lower left quadrant. It implies that has internal weakness which should be rectified and the firm should also avoid threats from outside. In the fourth or competitive quadrant which is the lower right quadrant, the firms should employ diversification into growth promising areas since it has high level of cash flow but low internal growth. Firms can also go into unrelated diversification or joint ventures. (David, 2013) 

In the following perpetual maps, fast foods chains are shown in two different competitive sets. In the maps, fast foods chains have been mapped and presented across different product attributes. It is important to note how the competitors within the market have different positioning each time new attributes are introduced into the market. A product is positioned in the market on the basis of its attributes, benefits, class, application, price as well as the level of quality. It also targets a product at specific prices and for definite market segments (Moller, 2013). The same product can be positioned comparatively to the competing products in the market and in the minds of consumers. The way to ascertain the current position of the product in the market is by comparing its physical characteristics such as the smell, weight, features and colour among others. 

References 

Armstrong, G., Kotler, P., Harker, M., & Brennan, R. (2015).  Marketing: an introduction . Pearson Education. 

David, Fred R. (2013).   Strategic management: Concepts and cases . 14h ed.  Saddle River, New Jersey: Pearson/Prentice Hall, 2013.  ISBN 978-0-13-266423-3 

Dibb, S., & Simkin, L. (2009). Implementation rules to bridge the theory/practice divide in market segmentation. Journal of marketing management , 25 (3-4), 375-396. 

Graham, H. (2008).  Marketing strategy and competitive positioning . Pearson Education India. 

Hitt, M. A., Ireland, R. D., & Hoskisson, R. E. (2012).  Strategic management cases: competitiveness and globalization . Cengage Learning. 

Larson, P. (2010, April 28). Strateg ic innovation and the dynamics of change.   

Möller, K. (2013). Theory map of business marketing: Relationships and networks perspectives.  Industrial Marketing Management ,  42 (3), 324-335. 

Speculand, R. (2011). Beyond strategy: The leader’s role in successful implementation. Strategic Direction , 27 (11).