Case Study Project Plan
Company information
Kids R’ kids was established in 1985.The founders of the company are Patrick and Janice Vinson (Payne, 2006). Vinson has a lot of experience in caring young children. The experience dates back to 1961 (Payne, 2006). Patrick and Vinson have 44 years of experience in serving young children. Kids R’Kids Company serves young children. The main customers are young children as the company offers education services to young children (Payne, 2006). The company also offers an opportunity to entrepreneurs who like helping young children in their locations to succeed.The founders of the company decided to offer franchising opportunities (Payne, 2006). Kids R’Kids school provide education programs to young children. The school has great state of art facilities and well trained teachers to handle the children (Payne, 2006). The teachers handle s infants and children aged 12 years (Payne, 2006). Kids R’Kids customers are located in many places (Payne, 2006). The company has more than 130 centers located in different places. The centers are located in Florida, Georgia and North Carolina. (Payne,2006). The company has other centers in Ohio, Tennessee and Texas. Other centers are located in Kansas, Kentucky and Nevada. In addition, the company has centers in Missouri and Puerto Rico. The centers serve customers located in the areas. Thus, the company has diverse customers (Payne, 2006).
Key issues facing the company
Though, the company has a good environment for children to learn, the company has several issues (Harvard Business School Press, 2006). There are various issues facing the company that make it difficulty for the company to achieve its objective. Examples of the issues facing the company include employee turnover and retention (Harvard Business School Press, 2006). The company lacks strategies to maintain employees. Employee turn over is the main problem facing the company because of lack of skilled labor and economic growth. This makes it difficulty for the company to retain employees (Harvard Business School Press, 2006). Another issue the company is facing is pricing and cost. The company is also unable to differentiate services offered by competitors from services offered by the company (Harvard Business School Press, 2006). Another issue is strengths and weaknesses that are relative to the competition. In addition, the company lacks strategies to expand into other market segments in future. The issues affect productivity in the company (Harvard Business School Press, 2006).
Clients’ goals
Most of the clients complained of key issues facing the organization (Harvard Business School Press, 2006). The clients were not only concerned with enrollment, but they were also concerned with various issues like employee turn over and retention as the company lacks management strategies (Harvard Business School Press, 2006). Also, the clients were concerned with pricing and cost of services in the company. Another goal is how to differentiate company’s services from competitor’s services (Harvard Business School Press, 2006). The clients complained of how to identify strengths and weakens related to competitors and expansion into other market segments in future. The clients want the issues clarified in the project plan by identifying strategies to solve them (Harvard Business School Press, 2006).The main issues clients want to be clarified are employed turn over and retention (Harvard Business School Press, 2006). This is because the company does not have strategies to retain employees or manage employee.
The main cause is economic growth, lack of skilled laborers (Harvard Business School Press, 2006). In addition, the clients want the company to analyze strengths and weakness and how to differentiate competitors in the market. The company lacks strategies to determine the competitors in the market (Harvard Business School Press, 2006). This makes it difficulty for clients to differentiate services offered by the company and services offered by other companies. This affects the productivity of the company (Harvard Business School Press, 2006).The clients want the project plan to addresses pricing and cost. The company does not have good pricing strategies and cost. Also, the clients want the company to clarify its expansion into other market segments in future (Harvard Business School Press, 2006).The issues above have made it difficulty for the company to serve its customers well. The issues need to be addressed so as to improve customer satisfaction in the company (Harvard Business School Press, 2006).
Explain the scope of the project
The project is aimed at addressing various issues affecting the company and clients (Thompson &Strickland, 2003). The project will address issues like employee turn over and retention. It will also analyze company’s pricing and cost. Moreover, the project will also analyze the competitors in the market and how to differentiate the company’s services from competitor’s services (Thompson &Strickland, 2003). The project will solve issues like expansion into future market and strengths and weaknesses related to competitors.The scope of the project is divided into three sections (Thompson &Strickland, 2003).That is the external industry analysis and recommendation and action plan. Also, the scope of the project will involve internal analysis of the company (Thompson &Strickland, 2003). The three sections will play various roles.Industries differ in economic characteristics, competitive conditions and future trends (Thompson &Strickland, 2003). The technological change in the industry can be fast or slow and the competitive forces can be weak or strong (Thompson &Strickland, 2003). The characteristics make industries different.
Analyzing the industry helps determine the main features in the industry and how the industry changes (Thompson &Strickland, 2003).External industry analysis will help identify clients concerns and address them (Thompson &Strickland, 2003). Various concerns like service offerings and service differentiation will be addressed. Also, external industry analysis will help identify strengths and weakness of competitors in the industry and establish measures to addresses the weaknesses (Thompson &Strickland, 2003). It will also analyze pricing and cost and future expansion or growth of the industry. The section will address other issues like economic factors and industry trends (Thompson &Strickland, 2003). This subsection will analyze the market size and sales. Analyzing the market size and sales is important. Companies should analyze the market and the sales so as to increase productivity (Thompson &Strickland, 2003). It is difficulty to estimate the market size for new companies. In analyzing the market size, the company should analyze the total market share and market territories (Thompson &Strickland, 2003). Also, the firm should identify the competitors in the firm, the competitive product and pricing. This will make it easy for the organization to help customers determine the services offered by the company and competitors (Thompson &Strickland, 2003).
It will also help the firm determine the industry growth (Thompson &Strickland, 2003). Firms already in the market can use the current sales and competitors to build up the market picture. Market size is measured using the total sales .It can also be measured using the value of al sales in the market (Thompson &Strickland, 2003). The volume of sales is measured in terms of number of units of goods purchased. Estimating the market size is the first step used to calculate the market share of the company and competitors (Thompson &Strickland, 2003). Analyzing the size of the market will help determine the market share competitors occupy and the market share the company occupies. Researchers compare changes in market size within a given period and identify trends in the market (Thompson &Strickland, 2003). Market share is used to measure the proportion of the total market held by the company, its services. This will make it easy for the company to plan how to expand in future in other geographical markets (Thompson &Strickland, 2003). Thus, market size determines the growth of the company.
Market analysis is a process used to identify and quantify important factors in the market using various types of market research techniques (Thompson &Strickland, 2003). Researchers analyze consumers, competitors and other factors in the market. A market is made up of various characteristics like market classification, trends, and market share and market segmentation (Thompson &Strickland, 2003). Market analysis help study external environment of the business through external analysis of the environment (Thompson &Strickland, 2003).Another subsection under external analysis is sales growth (Paley, 1999). This section will address the increase in sales in the industry in a given period. This will help determine if the industry is progressing well or not (Paley, 1999). Analysis of growth of sales is carried out by researchers to determine the volume of sales companies have made in a given period. The volume of sales determines the profits made by companies (Paley, 1999). High growth indicates that companies in the industry are progressing well. The growth of sales is calculated using the sales of firms in the industry over a given time (Paley, 1999). The information gathered helps forecast future sales in the industry. Companies can use information obtained from the research to predict future growth of sales in the company (Paley, 1999).
For Kid R’ kid , predicting sales growth is important as it helps the company plan well and lay strategies to achieve the objective. If the industry does not show high sales growth, then the companies in the industry will not experience growth in the sales (Paley, 1999). Analyzing the environment is important as it helps the company focus on improving sales by eliminating factors leading to low sales (Paley, 1999). The industry life cycle section will analyze the various stages the industry will go through. That is from the first product introduced into the industry to the decline of the product (Paley, 1999). There are five stages in the industry lifecycle. The stages are different and they define the life cycle of the industry (Paley, 1999).The first stage in the life cycle is early stage (Paley, 1999). The main activities in this stage are establishing the industry boundaries, alternative product design and positioning (Paley, 1999). The second stage is innovation stage. In this stage the product innovation declines, begins and later on a dominant design is established (Paley, 1999). The third stage is cost. The company utilizes the cost stage. The company identifies the dominant product and achieves the economies of scale (Paley, 1999). This makes less competitive companies to quit the market and only competitive companies are left. The barriers to entry become common at this stage.The fourth stage in industry life cycle is maturity (Paley, 1999).
At this stage the company changes its focus and focuses on market share and cash flow, but not growth (Paley, 1999).The last stage is decline. In this stage, the revenue decreases and the industry collapses or overtaken by other industries. The five stages of industry life cycle will be analyzed when carry out analyzes on the industry (Paley, 1999).The section will also address clients concerns like type of services offered (Kahn, 2001). This section will help determine how to differentiate services offered by the company from competitors services (Kahn, 2001). Differentiation of services is the main problem clients are facing in the company. The differentiation strategies in the industry include product or service differentiation, marketing plans and unique selling propositions (Kahn, 2001). Most companies in the industry use service or product differentiation strategy to differentiate their services from competitors’ services (Kahn, 2001). The differentiation strategy allows companies to create unique services by using various strategies like technological strategy. This makes it easy for the companies to play well in the market place (Kahn, 2001). Lack of service differentiation strategy affects the client’s services and leads to low sales. Clients face problems like product differentiation as the company does not have differentiation strategies (Kahn, 2001). Differentiation strategy help eliminate threat to entry in the industry and acts as barrier.
Firms having good differentiation strategy remain active in the market place (Kahn, 2001). Another method used to differentiate company services and competitor services in the market is marketing strategy and promotional strategy (Kahn, 2001). The marketing strategy help companies in the industry to market their services and create customer awareness. This makes it easy for the customers to differentiate the company’s services from competitor’s services (Kahn, 2001). In addition to marketing strategy, companies use promotional strategy to promote products and create awareness. Other firms in the industry have developed unique selling propositions to differentiate their services. Thus, analysis of the industry will help identify differentiation strategies used by companies in the industry (Kahn, 2001).Other factors that will be addressed in the external industry analysis are scope of rivalry and key competitors (Kahn, 2001). Firms in the industry differ in terms of strategies used, products, and the size of market share. Competition is common in the industry and it occurs between the firms in the industry (Kahn, 2001). A firm can not achieve the goals set, if it does not analyze the scope of competitive rivalry.
The scope of competitive rivalry can be regional, national, local level (Kahn, 2001). This is because the firm operates at the local level, national level , international level and regional ;level and there are other firms in the industry that cause competition. So, the scope of rivalry should be analyzed to determine the key competitors (Kahn, 2001). Key competitors in the industry will be analyzed using competitor analysis strategies (Kahn, 2001). The analysis will help identify the key competitors, where they are located in the market segment, the size of competition and if the competition is fragmented or not (Kahn, 2001). This will help the customers differentiate products, services and competitors. There are many competing firms in the industry and they use strategies that help them achieve competitive advantage and remain active in the industry (Kahn, 2001). If the company does not analyze the competitors in the industry, it will be difficulty to know the services offered by the competitors and the market share they occupy (Kahn, 2001). It will also be difficulty to identify the strategies used by the firm and the weaknesses and strengths of the competitors (Kahn, 2001). The company should identify competitors in the industry so as to develop better strategies like service and product differentiation strategy and technological strategy (Kahn, 2001).
When deciding whether a competitor is well positioned to gain market share one should analyze if the company is able to do better or worse than its rivals (Kahn, 2001). Identifying the rivals that are poised to gain or loose market position helps one identify the actions the rival is likely to take next (Kahn, 2001).Analysts will identify key success factors in the industry (Drummond, Ensor &Chartered institute of marketing, 2001). This will help the company develop strategies to increase productivity. Key success factors determine the financial and competitive success in an industry. The factors highlight specific outcomes that are important to succeed in the market place (Drummond, Ensor &Chartered institute of marketing, 2001). They also identify the competences and capabilities that make firms remain active in the market place and achieve the best (Drummond, Ensor &Chartered institute of marketing, 2001). Identifying key success factors is important as it helps companies determine what is important to competitive success and not important (Drummond, Ensor &Chartered institute of marketing, 2001). Key success factors are important in the industry as they act as the cornerstone for developing a firm’s strategy (Drummond, Ensor &Chartered institute of marketing, 2001).
Most companies in the industry win competitive advantage because they concentrate on being distinctively better than other rivals in one of the key success factors or more (Drummond, Ensor &Chartered institute of marketing, 2001). Key success factors differ from one industry to another and it is important for the company to identify the key success factors in the industry (Drummond, Ensor &Chartered institute of marketing, 2001). Strategic analysts should identify key success factors that are unique to the company and major (Drummond, Ensor &Chartered institute of marketing, 2001). A company can have more than one success factor, but most of them are minor. Thus, strategic analysts should avoid concentrating on the minor success factors (Drummond, Ensor &Chartered institute of marketing, 2001). The main purpose of identifying key success factor in the industry is to make judgments about what factors are better to competitive success and which are not better to competitive success (Drummond, Ensor &Chartered institute of marketing, 2001). There are deferent types of key success factors in the industry. The key success factors in the industry include technology related key success factors and marketing success factors.
Technology related key success factors include scientific research expertise and expertise in a given technology (Drummond, Ensor &Chartered institute of marketing, 2001).Other key success factors in the industry include skills related key success factors (Drummond, Ensor &Chartered institute of marketing, 2001). Examples of skills related key success factors include superior talents. The skills are common in industries offering professional services (Drummond, Ensor &Chartered institute of marketing, 2001). Another example is expertise in a particular technology. Most companies in the industries have goods expertise in technology (Drummond, Ensor &Chartered institute of marketing, 2001). There are organizational related success factors in the industry like good managerial skills and experience. Apart from organizational related key factors, other factors include employees who are pleasant and courteous and good reputation (Drummond, Ensor &Chartered institute of marketing, 2001).Another important issue that will be addressed under the external industry analysis is structural factors that affect industry profitability (Drummond, Ensor &Chartered institute of marketing, 2001).
The important step in the industry analysis is studying the industry’s competitive process. This helps one to discover the sources of competitive pressure in the industry and how strong they are (Drummond, Ensor &Chartered institute of marketing, 2001). Analyzing the competitive process in the industry is important as it helps managers to devise successful strategies. It is difficulty to develop successful strategies without understanding the industry’s competitive character (Drummond, Ensor &Chartered institute of marketing, 2001). So managers have to understand the competitive character of the industry before devising an industry. This will make it easier for the firm to become competitive (Drummond, Ensor &Chartered institute of marketing, 2001). Though, the completive pressure differs from one industry to another, competition is similar in all industries. This allows analysts to use a common frame work to analyze competition in the industry (Drummond, Ensor &Chartered institute of marketing, 2001). The five forces demonstrated in porter’s model are common in the industry.
The five force model helps diagnose the competitive pressure in the industry and analyze each of the forces and how strong or important each force is in the industry (Drummond, Ensor &Chartered institute of marketing, 2001).Most strategic analysts use the five forces when carrying out competitive analysis (Drummond, Ensor &Chartered institute of marketing, 2001). Factors like threat to new entry and buyer power will be analyzed. Also threats of new substitutes, competitive rivalry and supplier power will be discussed (Drummond, Ensor &Chartered institute of marketing, 2001). There are five forces in the industry that determine the competitive power in the industry (Drummond, Ensor &Chartered institute of marketing, 2001). These include:The supplier’s power. Analysts will assess how it is easy for suppliers to drive up prices (Drummond, Ensor &Chartered institute of marketing, 2001). This is determined by the number of suppliers of each product or services and how unique their product and services are (Drummond, Ensor &Chartered institute of marketing, 2001). Also, the strengths of the suppliers over the company and switching cost determine the prices.
The competitive force depends on the market conditions in the supplier industry and the products and services they supply (Drummond, Ensor &Chartered institute of marketing, 2001). The competitive force of suppliers’ declines when the product they provide are available from many suppliers in the industry (Drummond, Ensor &Chartered institute of marketing, 2001). Suppliers in an industry become a strong competitive forced when the product they offer contribute highly to the cost of products in the industry (Drummond, Ensor &Chartered institute of marketing, 2001). They also influence the quality of product in the industry. Suppliers can affect prices of services in the industry negatively or positively (Drummond, Ensor &Chartered institute of marketing, 2001). Analysts should understand the effect of suppliers on the industry and the company so as to devise effective strategies (Drummond, Ensor &Chartered institute of marketing, 2001).Another force is buyer power. Under buyer power one analyzes how it is easy for buyers to drive prices down (McLoughlin, Aaker, 2010). This is determined by the number of buyers and the value of each buyer to the company.
The switching cost plays an important role in buyer power (McLoughlin, Aaker, 2010). If the company has fewer buyers, they are likely to dictate the terms to the company. The competitive force of buyers in the industry can be strong or weak. Buyers gain power when the cost of switching to substitute services is low (McLoughlin, Aaker, 2010). Buyers influence the demand of products in the industry. The switching cost of buyers depends on the services offered. If the services offered by the seller are well differentiated, buyers have to incur costs when switching from one seller to another. Buyers have different bargaining powers (McLoughlin, Aaker, 2010). For example, some buyers are more sensitive to quality and price of services offered whiled others are not sensitive. Analyzing the buyers power will help understand buyers in the industry and develop strategies to gain customer loyalty (McLoughlin, Aaker, 2010).Porter’s five forces have an impact on the industry and firm (McLoughlin, Aaker, 2010).The forces determine how the competition in the industry looks like. The stronger the competitive forces are, the lower the profits in the industry (McLoughlin, Aaker, 2010).
The competitive structure of the industry is unattractive if the rivalry among firms is strong, entry barriers are low and the rate of substitution is high (McLoughlin, Aaker, 2010). The structure of the industry is attractive when the competitive forces in the industry are not strong (McLoughlin, Aaker, 2010). The information above helps in designing strategies to become more competitive in the industry and increase profits. Thus, the five forces help determine the structure of the industry and strong and weak firms in the industry (McLoughlin, Aaker, 2010). Strong firms in the industry have strategies to achieve competitive advantage and remain in the industry. Weaker firms exit the industry when the competition is high (McLoughlin, Aaker, 2010).Competitive rivalry is the most powerful force among the five forces (McLoughlin, Aaker, 2010). The competitive rivalry determines how firms in the industry use competitive strategies to maintain strong market positions and win competitive edge over other firms in the industry (McLoughlin, Aaker, 2010). The competitive rivalry determines the sauces of the firm in the industry. The strategies developed by a firm to gain competitive edge should be based on several factors (McLoughlin, Aaker, 2010).
The strategies should be based on the competitive strategies and strengths of the rival firms in the industry. For example, when one of the firms makes a competitive move, the other firms in the industry respond with offensive or defensive counter moves (McLoughlin, Aaker, 2010). Thus, firms have to develop strategies to overcome the competitive pressure in the industry. The strategies developed by the firm depend on the resources the rival firms wish to invest in their competitive strategies (McLoughlin, Aaker, 2010). Analyzing the strategies and resources used by the rival firms in the industry helps the firm develop new strategies or similar strategies so as to become more competitive in the industry (McLoughlin, Aaker, 2010). After analyzing competitive rivalry in the firm one is able to determine whether the competitive rivalry is normal, weak or strong (McLoughlin, Aaker, 2010). The strength of rivalry among competing firms is influenced by several factors. The rivalry tends to become stronger as the number of competing firms’ increases and as firms become more equal in capabilities and size (McLoughlin, Aaker, 2010). Rivalry is stronger when the demand of services offered is growing slowly and when the switching costs are low. Moreover, rivalry is stronger when one of the firms is not satisfied with its market position and it moves to acquire other positions at the expense of other firms (McLoughlin, Aaker, 2010).
Thus, one has to understand how competitive rivalry works to develop strategies to overcome competition (McLoughlin, Aaker, 2010).The important factors under competitive rivalry are the number of competitors and the capability of the competitors (Haslam, Neale &Johal, 2000). For example, if the company has many competitors who offer quality products and services, then the company will have little power in the industry (Haslam, Neale &Johal, 2000). Also, if the buyers and suppliers are not satisfied with the services offered by the company they will move to other companies. If the company is the only firm offering unique services and customer satisfaction, then the customers will not move to other areas (Haslam, Neale &Johal, 2000). Thus, the company should improve customer satisfaction and services offered in order to retain customers (Haslam, Neale &Johal, 2000).Threat of substitution in the industry (Haslam, Neale &Johal, 2000). The level of substitution in the industry will determine the sales in the industry and firms. If the level of substitution is high then the company will have low sales (Haslam, Neale &Johal, 2000). Customers will be able to get services to substitute services offered by the company.
Thus, the level of substitution in the company should be low so as to increase sales (Haslam, Neale &Johal, 2000).Threat of new entrant of new entrants in the industry has negative effects on the industry. New entrants into the industry bring new products, services and production capacity (Haslam, Neale &Johal, 2000). Also, new entrants have the desire to establish secure market positions and bring resources. The degree of threat of entry in the industry depends on two factors (Haslam, Neale &Johal, 2000). That is barrier to new entry and how existing forms react to new entry. A barrier to news entry exists when it is hard for new companies to enter into the industry (Haslam, Neale &Johal, 2000). Examples of barriers to entry include economies of scale and regulatory policies. Strong regulatory policies in the industry make it difficulty for firms to enter the industry (Haslam, Neale &Johal, 2000). Weaker regulatory policies in the industry make it easy for firms to enter the industry. To reduce entry of new firms in the industry, existing firms in the industry should strengthen the regulatory policies and government policies (Haslam, Neale &Johal, 2000). In ability to access technology and know hinders new firms from entering the industry.
If new firms are able to access new technology and expertise they enter the market. Other barriers include, customer loyalty and brand and capital required to establish new firms (Haslam, Neale &Johal, 2000). If existing firms have customer loyalty, it is difficulty to for new firms to enter into the industry. The amount of capital determines the rate of new entry into the industry (Haslam, Neale &Johal, 2000). Low amount of capital makes it easy for news firms to enter into the industry. To avoid threat of new entry, firm s should increase capital required to establish businesses (Haslam, Neale &Johal, 2000). Access to distribution channels act as barriers to entry. Easy access to distribution channels increases the rate of threat of new entry in the industry. If the distribution channels are not easily available, the rate of threat to new entry decreases (Haslam, Neale &Johal, 2000).The reaction of existing firms determines the level of threat of news entry (Haslam, Neale &Johal, 2000). The existing firms can react when new firms enter the industry or they can fail to react. Existing firms can control threat of new entry (Haslam, Neale &Johal, 2000).
Existing firms can react aggressively to defend their market share by cutting prices, increasing advertising and improving products. They can also devise strategies that can prevent new firms from entering into the industry (Haslam, Neale &Johal, 2000).To test whether potential entry is strong or weak competitive force one can analyze the growth of the industry and the profits in the industry(Haslam, Neale &Johal, 2000). If the growth is not high and the profits are low then, the rate of new entry is low. Increase in growth and high profits make the market attractive to new entrants (Haslam, Neale &Johal, 2000). The threat of new entry changes as the industry. For example, technological change can create economies of scale and competitive advantage in the industry (Haslam, Neale &Johal, 2000). This increases the growth of the industry and profits. Marketing and advertising can act as barriers to new entrant. This is because existing firms build customer loyalty and this makes it difficulty for new firms to join the industry (Haslam, Neale &Johal, 2000).
It is easy to enter a new industry or market if the time and cost to enter the market is minimal. It is easy to enter the market place and compete with other firms if there are few economies of scale in the market. If there are strong barriers to entry, then it will be difficulty for other firms to enter the market place (Haslam, Neale &Johal, 2000). Thus, strong barriers to entry should be enhanced. For example, the economies of scale should be increased and the time and cost to enter the market place. The five forces will make it easy for the firm to take advantage of the strengths and improve the weaknesses (Haslam, Neale &Johal, 2000).Analysts will analyze the macroeconomic trends in the industry (Haslam, Neale &Johal, 2000). Various microeconomic trends like economic and social will be addressed. Other trend like demographic, legal trends, ecological and technology will be addressed (Haslam, Neale &Johal, 2000). The driving forces in the industry act as the main determinant of how the industry operates and will change. Strategic analysts should be careful when analyzing economic trends or driving forces in the industry (Haslam, Neale &Johal, 2000).
This is because not all forces in the industry act as driving forces. They should identify major forces and minor forces. Analyzing the driving forces in the industry is important (Haslam, Neale &Johal, 2000). First, analyzing the driving forces helps managers identify what external factors will have the greatest impact on the company (Haslam, Neale &Johal, 2000). Second, analyzing external forces allows managers to identify strategies to deal with the forces. Managers should investigate the implication and consequences of the driving forces in the industry (Haslam, Neale &Johal, 2000). Third, managers should be able to develop strategies that are responsive to the driving forces and their impact on the industry (Haslam, Neale &Johal, 2000). For example, strategic analysts can identify driving forces like technological change. Advances in technological change can change the picture of an industry (Haslam, Neale &Johal, 2000).
The changes can make the company to offer better services at a lower cost. Also, the technological change enables the company to expand into other geographical markets. Technological change can affect capital in the industry and affect growth of firms in the industry (Haslam, Neale &Johal, 2000).The strategic analysts can identify economic factors like changes in cost and efficiency and economies of scale in the industry (Haslam, Neale &Johal, 2000). Economies of scale affect the picture of an industry. For example, high economies of scale act as barrier to entry and prevent new firms from entering the firm (Haslam, Neale &Johal, 2000). This reduces the rate of competition in the industry (Haslam, Neale &Johal, 2000). Low economies of scale make it for new companies to enter the industry. Changes in cost and efficiency affect the position of the firm in the industry (Haslam, Neale &Johal, 2000).
Legal or regulatory policies influence firms in the industry. Changes in regulations and government policies cause changes in the industry and the strategic approaches used in the industry (Haslam, Neale &Johal, 2000).Social factors affect the industry (Haslam, Neale &Johal, 2000). For example, change in societal concerns, attitude ad lifestyle affects the position of firms in the industry and the overall industry. Social factors can affect the industry and firms negatively or positively (Haslam, Neale &Johal, 2000). They can lower demand of services or increase demand of services offered by the company (Haslam, Neale &Johal, 2000).The final step in external industry analysis is to review the overall condition in the industry and develop a reasonable conclusion (Pinson, 2008). The conclusion will include the relative attractiveness or unattractiveness of the industry. The conditions in the industry are either short term or long term (Pinson, 2008). If the assessment reveals that the industry is attractive, then companies are required to identify expansion strategies. If the industry conditions are not attractive, companies will be forced to develop strategies that will protect their profitability (Pinson, 2008). Stronger companies’ will have an opportunity to remain in the industry as weaker rivals leave the industry or merge with the rivals (Pinson, 2008).
The following points will be considered when writing the conclusion (Pinson, 2008). First, the team members will consider the industry growth potential when writing the conclusion. They will consider whether the forces prevailing in the industry affect the industry positively or negatively (Pinson, 2008). Further, the team members will consider the potential for major firms entering and exiting the industry. Entry of new firms in the industry reduces the attractiveness to existing firms (Pinson, 2008). The exit of major firms or weak firms opens up the market share for other firms. It also increases the opportunities for market share growth for firms remaining in the industry. Thus, team members should consider if there are new firms entering the industry and firms leaving the industry (Pinson, 2008). In addition, team members should consider the kind of demand in the industry and competitive forces when writing conclusion. They should analyze if the competitive forces will become weaker or stronger (Pinson, 2008).The conclusion should include the problems affecting the industry and the impact.
Also, it should show the risks and uncertainty in the industry’s future and the impact (Pinson, 2008).Team members should show the status of overall profits in the industry (Pinson, 2008). They should determine if the profits are above or below average. Though any industry overall picture can be unattractive, it can still be attractive to a firm which is already situated in the industry (Pinson, 2008). The industry can also be attractive to firms that have rescuers and skills to acquire an existing firm and turn the firm to a major competitor in the industry. When analyzing the attractiveness of the industry from the firms view, one should consider the following features (Pinson, 2008).One should consider the competitive position of the firm in the industry and whether its position is likely to grow stronger or weaker (Pinson, 2008). One should evaluate the firm’s potential to capitalize on vulnerabilities of weaker firms in the industry. This will enable the firm to convert an unattractive industry situation into rewarding opportunities for the company (Pinson, 2008). The analyst should identify if the firm is able to overcome the factors that make the industry unattractive and make profits (Pinson, 2008).
They should analyze whether continued participation in the industry adds to the success of the firm to venture into other market segments in future. The information should be included in the conclusion (Pinson, 2008).The second section is internal company analysis (Pinson, 2008). This section will identify clients concerns. The clients concerns will be addressed in this section. Various issues like employee turn over and retention and differentiation of services offered (Pinson, 2008). Other concerns include pricing and cost controls of the services offered and the internal strengths and weaknesses (Pinson, 2008). In addition, the clients’ ability to expand to other market segments will be addressed. This will make it easy for the company to promote customer satisfaction and retain customers (Pinson, 2008).Other issues will also be addressed in the second section (Pinson, 2008). For example, the project will analyze the internal environment of the company like the company description. Analyzing company description is important as it give detailed information about the company (Pinson, 2008).
The description will give details like the services offered by the clients and how to identify customers. Also, other factors like the size of the company and areas where clients operate will be included in the description (Pinson, 2008). A detailed description of the company’s history and growth will be provided (Pinson, 2008).The section will also identify clients’ mission statement and performance. Under performance several issues will be addressed. That is the clients’ strategy and its implementation. The performance section will also analyze the clients’ meets and exceeds key success factors identified in section 1(Pinson, 2008).The financial analysis of the previous year will also be analyzed. The internal company analysis will also involve analysis of resources and capabilities of clients and strengths and weaknesses (Pinson, 2008). Different companies have different strengths and weakness. The strengths and weaknesses are found in the internal environment of the company (Pinson, 2008). The strengths can be the advantages the company has over other firms in the industry, unique resources, marketing strategies and unique selling propositions.
The strengths are what people see important in the company like technological changes, resources, good management etc (Pinson, 2008). The strengths make the firm to have a competitive advantage in the industry unlike other firms (Pinson, 2008).Companies have weaknesses that need to be improved. The weaknesses in the company include what the company needs to improve like marketing strategies, management (Pinson, 2008). Weaknesses also include factors that affect sales in the company. The company should compare its strengths and weaknesses with competitor’s weaknesses and strengths. This will help improve the weaknesses and strengthen the strengths (Pinson, 2008).The internal analysis of accompany helps in understanding a firm in depth (Pinson, 2008). The analysis is based on analyzing the resources and capabilities in the firm. When identifying the resources in the company one should consider if the resources are tangible, intangible and human resources (Kurtz, MacKenzie &Snow, 2009). Tangible resources are easy to identify and evaluate. Examples of tangible resources include financial resources, physical assets in the firm.
One can identify and evaluate tangible resources using firm’s financial statement (Kurtz, MacKenzie &Snow, 2009).Though intangible resources are not visible, they are important to the firm than tangible resources (Kurtz, MacKenzie &Snow, 2009). They are more important to the firm than tangible assets in the firm as they offer the firm competitive advantage. Examples of intangible resources in the firm include reputation assets and technological asset (Kurtz, MacKenzie &Snow, 2009). Reputation assets in the firm include company’s brand and image. The company’s brand affects the performance of the firm in the industry (Kurtz, MacKenzie &Snow, 2009). The image of the firm affects sakes in the company and performance of the firm in the industry. If the brand and image in the company are not good then, the company becomes less competitive in the industry. This affects sales and customers (Kurtz, MacKenzie &Snow, 2009).Technological assets in the company include know how and proprietory technology. Technological know how affects the performance of the firm (Kurtz, MacKenzie &Snow, 2009).
For instance, if the company does not expertise, then it becomes less competitive and looses customers and sales. Firms having technological expertise have competitive advantage and they perform well in the industry (Kurtz, MacKenzie &Snow, 2009). Technological proprietory has negative and positive impact on the firm. Lack of technological proprietory makes it difficulty for firms to offer services. This renders the firm less competitive in the industry (Kurtz, MacKenzie &Snow, 2009).Another important resource in the company is human resource. Human resource refers to the productive services that worker in the organization offer the company (Kurtz, MacKenzie &Snow, 2009). Human resources include skills, knowledge and decision making skills. Human resource affects the company negatively or positively (Kurtz, MacKenzie &Snow, 2009). For example, if the employees in the firm do not skills required and ability to make decision, it is difficulty for the firm to increase sales or become competitive (Kurtz, MacKenzie &Snow, 2009). This makes it difficulty for the firm to remain in the industry and retain customers (Kurtz, MacKenzie &Snow, 2009).
apabilities are important in the firm as they determine the productivity of the firm. Capabilities refer to a company’s capacity to undertake a particular productive activity (Kurtz, MacKenzie &Snow, 2009). Resources are not productive on their own and they require other factors to make them productive. Productive activities require resources to collaborate within teams. The functional classification approach is used to identify company’s capability (Kurtz, MacKenzie &Snow, 2009). A functional; classification identifies capabilities in relation to each of the functional areas (Kurtz, MacKenzie &Snow, 2009). Examples of functional areas include corporate, information management, manufacturing marketing, sales and fulfillment. Capabilities under corporate area include financial management and skills in strategic control (Kurtz, MacKenzie &Snow, 2009). Other capabilities are resource management and management of the company. In information systems, the capability is an effective information system that allows managers to make decisions. Marketing capabilities include promotion and responding to market trends (Kurtz, MacKenzie &Snow, 2009).
The last part is conclusion. Team members have to write detailed conclusion after carrying out internal company analysis (Kurtz, MacKenzie &Snow, 2009). The conclusion should include a detailed description of the company. That is what the company does, customers, location and history and growth (Kurtz, MacKenzie &Snow, 2009). Also, the conclusion should include the mission statement identified and key success factors and how the client meets the key success factors and financial analysis of the company (Kurtz, MacKenzie &Snow, 2009). The conclusion should consider resources and capabilities of the client and strengths and weaknesses (Kurtz, MacKenzie &Snow, 2009).The third section in the project scope is recommendation. This section will address strategic issues you are facing and recommendations derived from the analysis carried out. This will help implement the recommendations (Kurtz, MacKenzie &Snow, 2009). The project will give recommendations on the issues clients face. There are several strategic issues that clients face. That is employee turn over and retention and pricing and cost (Kurtz, MacKenzie &Snow, 2009).
Also, clients face problems when trying to expand into the market segment in future and also differentiation of services offered by the c company from competitors services. Lastly clients face problems when identifying weaknesses and strengths associated with the competitors (Kurtz, MacKenzie &Snow, 2009).To solve the problems, the company should take the following steps. Most organizations face employee turn over and retention (Kurtz, MacKenzie &Snow, 2009). There are various reasons that increase the level of employee turnover and retention in the organization. Employee turnover and retention increases when the company does not have effective assessment. This leads to poor solutions being implemented in the organization (Kurtz, MacKenzie &Snow, 2009). The companies do not take time to analyze or diagnose the employees leaving the organization and why they are leaving (Kurtz, MacKenzie &Snow, 2009). But, the organizations rush to implement solutions without carrying out thorough investigation. This leads to more employee turnover in the organization (Kurtz, MacKenzie &Snow, 2009).
The solutions implemented do not reduce the level of employee turn over in the organization as the cause of employee retention is not identified and solved(Kurtz, MacKenzie &Snow, 2009).Another reason why employee turns over and retention is high in the organization is that the organization implements many solutions at once. The organization does not consider the most effective solution to implement (Kurtz, MacKenzie &Snow, 2009)t. Managers in the organization identify a lot of solutions and implement all of them. The solutions diffuse and weaken the efforts put to control employee turn over (Kurtz, MacKenzie &Snow, 2009).Also, employee turns over and retention is high in the organization because the organization does not have measures success to know what works and what does not work (Kerzner, 2009). This makes it difficulty to determine the best solution to control employee turnover and retention. Though the company works hard to control employee retention, the above reasons make it hard to control employee retention in the organization (Kerzner, 2009).
Most companies identify strategies to control employee turnover in the organization. Employee turnover and retention is expensive and the organization should work hard to identify the solutions to reduce the cost (Kerzner, 2009). The company incurs direct and indirect cost during employee turn over. The organization should use management strategies to overcome employee turn over and retention (Kerzner, 2009). First, the organization should develop positive organizational culture. Organizational culture includes things like beliefs, attitudes and shared values in the organization (Kerzner, 2009). Organizations have different types of organization culture. Some organizations have positive culture and other negative cultures. The type of culture in the organization will influence employee turnover and retention (Kerzner, 2009). To reduce employee turn over rate the organization should develop positive organizational culture. This will make it easy for employees to interact with each other and improve productivity (Kerzner, 2009). The organization should communicate the values of the organization to employees so as to increase motivation moral involvement (Kerzner, 2009).
nother strategy to reduce the rate of employee turn over in the organization is to give the employees the true pictured of the firm. This will help match the employee personality with the organization culture and environment (Kerzner, 2009).Further, to improve the employee turn over in the organization, the management should motivate the employees (Kerzner, 2009). Lack of motivation in the organization can lead to high employee turn over. Managers should reward employees for their performance and they should develop performance monitoring system (Kerzner, 2009). The performance of the employee should bed monitored and employees rewarded accordingly. The managers should avoids biasness while rewarding employees (Kerzner, 2009). In addition, the managers should review employee salaries so as to improve employee motivation and retain employees (Kerzner, 2009).The working conditions should be improved (Kerzner, 2009). The working environment can affect employee productivity and lead to high employee turn over.
To avoid high employee turn over the organization should create conducive environment for employees to work (Kerzner, 2009). The solutions above will help improve employed turn over and retention in the organization.Another issue is pricing and cost (Kerzner, 2009). Pricing is an important strategic issue. Managers can use different strategies to overcome pricing and cost issues (Kerzner, 2009). The managers should determine the demand of the product or service before setting the prices or cost (Kerzner, 2009). The prices and cost should not be set high. Setting prices and costs high will affect the clients. This will lead to low productivity in the organization. The company should fix the prices well so as to retain clients (Kerzner, 2009).Lack of clear strategies to differentiate company’s services from competitors’ services affects the clients (Kerzner, 2009). It leads to low productivity in the organization. To overcome the issue, the company should use differentiation strategy. Differentiation involves creation of services that are unique in the industry (Kerzner, 2009). Differentiation is important strategies that will help the company earn average returns.
This is because the company brand will win customers loyalty and lowers customer sensitivity to prices (Kerzner, 2009). This makes it easy for the company is able to fix high prices when offering services. Win the loyalty of buyers will help the company reduce threat of entry into the industry (Kerzner, 2009). It will act as a barrier to entry. This will force new firms to develop competence to differentiate their product so as to compete well (Kerzner, 2009). Thus, the differentiation strategy will help the company solve issues associated with service differentiation (Kerzner, 2009).The firm does not have strategies to identify strengths and weaknesses of the competitor. This has made it difficulty for the clients to know the competitors in the market, their product and the strategies they use to achieve competitive advantage(Kerzner, 2009).To identify competitors’ weaknesses and strength, the company should use competitor analysis strategy(Kerzner, 2009).
The strategy allows companies to identify important strategies used by the competitors that have made them succeed in the market. The company will be able to identify strategies used by the competitors to achieve competitive advantages (Kerzner, 2009). The firm will be able to identify the weaknesses of the competitors and use them to improve service delivery (Kerzner, 2009). Also, the firm will get to know the past and present records of the competitors. This will help develop strategies to achieve competitive advantage in to the industry. Hence, the company will get to know the competitors in the market place through competitor analysis strategy (Kerzner, 2009).Clients lack clear information on market expansion and this affects the market share occupied by the company (Kerzner, 2009). The company should use marketing strategy analysis and evaluation to determine the market share. The strategy will help the company identify customers in the market place and also suppliers. This will make it easy for the company to enhance market growth (Kerzner, 2009).
Clients’ deliverables
The client will be issued with summaries of the findings in the three sections (Kerzner, 2009). The summaries will be issued periodically (Kerzner, 2009). In addition, the companies will receive presentations about the findings in their location. Clients will expect to receive their written summaries and final comprehensive review as shown below (Kerzner, 2009).On 17th, September, 2010 clients will receive the Strategic analysis project plan. Also, the clients will receive the external analysis draft on 8th, October, 2010(Kerzner, 2009). On 5th, October, 2010 clients will receive the internal analysis drafts. Finally, the clients will receive final client presentation (Kerzner, 2009). They will also receive the comprehensive review of findings from the three sections and recommendations (Kerzner, 2009).The second section of the recommendation will list the recommendations made in section in order of priority (Lewis, 2007). The last part will give discussions about the action plan.Action plan help one structure the content of a plan. Action plans make it easy for companies to achieve the objectives set (Lewis, 2007).
The action plan contains elements like deliverables, the items and the resources needed to carry out various activities in the organization and achieve the goals (Lewis, 2007). An action plan is important in an organization and managers should utilize. Supervisors use action plans to separate activities into small sections so as to achieve the objective set. A supervisor uses an action plan to measure the success of the project. Action plans makes it easy to achieve the objective of the project by utilizing the resources in the organization well (Lewis, 2007).The second section of the project plan is aimed at establishing how the group will complete the project (Lewis, 2007). The section will help establish the ground rules to be used throughout the semester. The section has five subsections (Lewis, 2007). To complete the project plan all the members of the group should corporate. Clear communication and commitment will make it easy foe the project to be completed successfully (Lewis, 2007). The team members should commit themselves to the time and effort required so as to complete
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