Strategic Thinking and Effecting Change Essay - 4400 Words

Strategic Thinking and Effecting Change (Essay Sample) Content: Strategic Thinking and Effecting ChangeName:University:Course:Instructor:Date:1.0 IntroductionDoman Synthetic Fibres (DSF) is a UK textile and fibre company founded by Wilfred Doman in 1946. The companyà ¢Ã¢â€š ¬s founder is the grandfather of the current Managing Director of the company, Wendy Doman who has struggled to lead the company in the difficult market of fibres in the UK. DSF mainly deals in Britlene which accounted for about 95 percent of total sales made by the company in 2008 (Jones 2010). According to Jones (2010), heavy reliance on one product is a familiar characteristic of DSF for the last 20 years as it had initially heavily depended on Aslene and later (in 2000) adopted Britlene as the main source of its sales. However, it is important to note that the company is treading on dangerous grounds considering the gloomy market of fibre, and the fact that DSF has only been able to survive the turbulence in the fibre market because of the patent protectio n on Britlene. It is against this background that this paper conducts a strategic analysis of DSF in order to advice ità ¢Ã¢â€š ¬s Board of Directors on how to improve the companyà ¢Ã¢â€š ¬s strategic competition. To achieve this objective, the report focuses on the companyà ¢Ã¢â€š ¬s strategic position, discusses resource planning implications of change, evaluates the strategic options available to the company, and provides recommendations for future direction and growth.2.0 Analysing the Environment2.1 PESTEL AnalysisFigure 1: PESTEL AnalysisSource: Pearce and Robinson (2005)2.1.1 Political factorsPolitical factors relate to the governmental policies that influence business operations within a country (Barrow 2011). It is on this premise that DSF business activities in the UK will be affected by minimum wage legislations, competition laws, and business taxation laws among other legislation that regulate business operations in the UK. However, DSF will benefit from the good regu latory environment provided by the U.K. In addition, the company will benefit from the Reshore UK, an initiative by the UK government targeting textile industry among other industries with a number of business supports (UK Trade and Investment 2014).2.1.2. Economic FactorsEconomic factors relate to how a countryà ¢Ã¢â€š ¬s GDP growth or economic performance impact business performance (Thomas 2007). According to UK Trade and Investment (2014), the country boasts a combination of stable and strong economy as well as competitive corporate tax rates which have positively reduced the cost of doing business. Thus, the fact that DSF operates a business-to-business model allows it to benefit from the larger textile industry based on the strong and stable economy as well as economic initiatives targeted at the textile industry by the UK government.2.1.3 Sociological factorsFor any organization to succeed, it must understand the society within a country in terms of preferences, tastes, and practices of the people. According to Bergloff (2011), the population in the UK exhibits a tendency of consuming high-end products that are characterized by the latest technology. This explains why DSF must invest more in research and development in order to provide the UK consumers with high quality fibre.2.1.4 Technological factorsGenerally, technological factors influence operations as businesses with superior technologies experience efficient operations which contributes to reduced costs of production (Johnson, Scholes and Whittington 2011). The fact that DSF has improved on its production facilities gives cost efficiency as well as the ability to meet high quality demand of the UK market.2.1.5 Environmental factorsEnvironmental factors will have a huge impact on the business operations of DSF just like other businesses. In particular, it will face the challenge associated with the acquisition as well as disposal of substantial amounts of complex chemicals and large volumes of w ater (Environmental Technology Best Practice Programme 1997). As noted by Johnson et al. (2011), there is increased concern about environmental issues due to increased shortage of raw materials, global climate change, and increase in carbon footprints by business. Being environmentally responsible is a major stakeholder expectation that determine corporate image and reputation among stakeholders.2.1.6 Legal factorsLegal factors relate to legislations of a country that guide the establishment as well as the running of a business enterprise. According to UK Trade and Investment (2014), UK provides not only a good regulatory environment for businesses, but also offers a business environment with strong legal framework. Although the general legal framework in the UK is conducive for DSF, the fact that the government offers patent protection on DSFà ¢Ã¢â€š ¬s products on a periodical basis threats the long term business operations of DSF.2.2 Portersà ¢Ã¢â€š ¬ Five Forces Model2.2.1 Thr eats of substitute productsDSFà ¢Ã¢â€š ¬s products have been facing strong threats on its market share from substitute products in the UK market. For instance, within the synthetic fibre market that has 40 percent of the UK textile market, Teklatite fibre market which has been the main area of DSF only accounts for 3 percent (Jones 2010). This demonstrates that the DSFà ¢Ã¢â€š ¬s Teklatite products are faced by increased threats of substitute products.2.2.2 Threats of new entrantsThe textile and the fibre industry in particular is characterized by a number of restrictive barriers of entry and therefore the threats of new entrants are minimal. A new entrant would require huge capital to start a business in the fibre industry. However, established players in the textile industry are likely to produce superior Teklatite fibres to that of DSF. Other international firms may also enter the UK synthetic fibre market (Jones 2010).2.2.3 Bargaining power of suppliersSince the company source for raw materials from independent suppliers, it has reduced bargaining power over them (Johnson et al. 2011). In essence, its suppliers can at any time, adjust prices to meet additional cost. Moreover, DSFà ¢Ã¢â€š ¬s reliance on independent suppliers means that its business operations can be dictated by its suppliers.2.2.4 Bargaining power of buyersThe intense competition in the textile industry and in particular the fibre market means that there is high bargaining power of buyers. The fact that other firms are producing Teklatite fibres means that DSF has reduced bargaining power over its customers. However, with its superior Teklatite product, Crylon, DSF can expect to improve its market share in the UK synthetic fibre market.2.2.5 Competitive rivalryThere is increased competitive rivalry in the UK fibre industry. For instance, DSF faces competition from both local firms and international companies dealing in synthetic fibres which means that DSF must adopt effective strategies in order to gain market share in the UK synthetic market with its Crylon product.2.3 Boston Consulting Group (BCG) MatrixHighStarsHigh Market Share and High Market GrowthGreat opportunities for making profits with its new product Crylon Question marksLow Market Share and High Market GrowthDSF does not know what to do with the opportunities in the UK synthetic fibre market; they are to decide on whether to invest on Crylon or to consolidate its current market Cash cowsHigh Market Share and Low Market Growth (Crylon)Expectations are high that with Crylon the company would do well in the UK market which offers limited opportunities DogsLow Market Share and Low Market Growth (Britlene)DSF is struggling in the market and finding it difficult to make profit with Britlene Market growth Low LowHighMarket share3.0 Resource and competencies3.1 Competitive Strategic Position1704340252730Figure 2: Strategic clockKey: 1. Low price and low value; 2. Low price; 3. Hybrid; 4. Different iation; 5. Focused differentiation; 6. Increased price/product standard; 7. Increased price/low quality; and 8. Low value/ standard priceUsing a strategic clock model, it is clear that DSF has always focused on differentiation strategy in order to distinguish its products from similar or substitute products in the synthetic market. This is demonstrated by its strategy to concentrate on a single product at any given time which is protected by patent to ward off duplication by competition. Differentiation strategy enables firms to develop strong market share since buyers based their choices on perceived superiority of a product (Capon 2008; Bowman 1998). This is a strategy that has been employed by DSF with its Britlene product and is expected to be used when launching Crylon. Therefore, Crylon is likely to have a higher price than other products in the market as this would communicate its superior quality and enhance its growth in the market.3.2 Resource Analysis of DSFAs noted by Jo hnson et al. (2011), the resource or competence analysis of a company involves a comparison of the companyà ¢Ã¢â€š ¬s resources such as raw materials, employees, and technology with those of its key competitors. However, resources can be divided into tangible and intangible resources which are inputs into a companyà ¢Ã¢â€š ¬s production process. Looking into the resources of DSF, the company boasts of some of the best superior technology in the market and innovative capability as its RD department has been able to come up with a new product (Crylon) and upgrade its facilities in a manner that would reduce production cost. However, it is important to note that the firm is faced with financial challenges owing to the failings of Britlene in the market during 2006-08 ...