STR 581 W5 Implementing Strategy TeamB
STR 581 W5 Implementing Strategy TeamB
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Date Created: 11/12/15
Running head: IMPLEMENTING STRATEGY: STRATEGIC PLAN PART 2 1 Implementing Strategy: Strategic Plan Part 2 International Strategic Planning & Implementation STR/GM581 IMPLEMENTING STRATEGY 2 Abstract Expanding global operations is not an easy task. Careful consideration of potential strategies, measures of success, and the risks associated with the chosen strategy is necessary. Even though Riordan Manufacturing is an existing global operation, the company seeks to expand the international marketplace through product differentiation to the existing customers. This document contains the critical components necessary for Riordan to evaluate and manage the risk related to achieving one of its global strategies. IMPLEMENTING STRATEGY 3 Implementing Strategy: Strategic Plan Part 2 Riordan Manufacturing is an international organization with more than $1 billion in sales and locations stretching from the United States to China. To maintain current revenue and more important increase sales volume, Riordan evaluated several strategic options. The plans to considered include expanding beyond the current consumer market, strengthening the supply chain, upgrading production equipment, and expanding the customer base. Management elected to gain a competitive advantage through the latter option of expanding the consumer base. Given that Riordan’s customers compose both corporations and government consumers, the company is a position to differentiate its products. To continue the success, management must consider key success factors and the metrics it will use to determine success. In addition, analyzing the risks associated with the strategy will help ensure success is achieved Recommendations Innovation and teamwork increase revenues, profits, and employee satisfaction, which are some of the most important factors for a company. Riordan Manufacturing is facing declining sales and profits, low morale, minimal challenging work, and lack of career development. Riordan could increase sales, better customer service and employee satisfaction; however, Riordan must implement changes quickly. The primary way Riordan plans to make changes and solve problems relates to the manner in which the organization develops and sells its products. A key part of Riordan’s marketing strategies includes investments in product differentiation in various markets to create a competitive advantage. The purpose of this activity is to diversify the company’s products to ensure the initial demand for products and the IMPLEMENTING STRATEGY 4 cultivation of brand loyalty increase or at least maintained. Product differentiation can be achieved through various methods such as quality, efficiency, innovation, new features, design, layout, and packaging. In addition, adopting branded products through advertising and product development creates diversification. To support the marketing strategies and prices, Riordan should focus on creating a differentiation strategy that ensures quality, reliability, and long life of their products. To support this type of strategy, Riordan needs to designate funds for research, development, and testing of their products against competing brands. The redesign of packaging and developing an advertising campaign is key for product differentiation construction. The packaging should attract consumers and communicate the product quality, which can be accomplished through advertising and the media. This ensures consumers are more likely to choose products from Riordan and limit its competition. WBS and Gantt Chart Task 12 Task 11 Task 10 Task 9 Task 8 Task 7 Duration Task 6 Start Date Task 5 Task 4 Task 3 Task 2 Task 1 2/12/2011 12/24/2010 11/4/2010 9/15/2010 IMPLEMENTING STRATEGY 5 Analysis of Key Success Factors To understand the strategic path that Riordan management should decide upon, the definition of success needs defining. More specifically, four areas need consideration, which will guide an analysis for strategic success for Riordan Manufacturing. The four areas include: Success defined as protecting intellectual property rights (IPR) Success defined by reducing transportation costs Success defined by the level of employee satisfaction and morale Success defined by expanding the customer base A more indepth analysis of each of these areas can guide Riordan in determining success. Intellectual Property Rights (IPRs) Violations Although intellectual property rights are of a concern and warrants expansion later, it is necessary to mention that the risk of violating IPRs exists regardless of the filing location. Investing in the protection of these rights is costly and time consuming. Litteral & Finkel is a large international law firm that practices in all areas of the law, including customs regulations. Riordan pays a monthly retainer to ensure prompt response to any legal inquiries. Riordan has IMPLEMENTING STRATEGY 6 not faced any quantifiable IPR infringements; therefore, this factor, or level of less, does not determine success. Reducing Transportation Costs Riordan recently decided to move the production site from the Hangzhou location to the Shanghai location. The distance to transport product is less, which reduces some fixed costs. Although this move helps to reduce fixed costs, the move does not bring in additional revenue. Therefore, this factor is probably not the best factor to use in measuring success. Employee Satisfaction Intangible resources and capabilities such as “close relationships with customers,” “close cooperation among managers,” “a sense of loyalty to the firm,” and “brand awareness” are difficult to measure yet are often important determinants of a firm’s success (Barney, 2207). By using accounting measures, Riordan Manufacturing could gauge the level of production of its products that it can produce and distribute to its customers. However, the customer base would remain unknown. Customer Base Measuring the customer base that contributes to revenue source of Riordan Manufacturing is a quantifiable way to measure the success of the strategic plans that Riordan implements. This will show that the company’s customers are satisfied with the product. If or when the customer base expands, the stability of the company will sustain any temporary setbacks experienced. Risk Management Plan IMPLEMENTING STRATEGY 7 The Riordan strategy must be able to address the longterm structural issues at hand as well as the immediate problems (Global Risks 2010, 2010). The first of many risks is the defense of Riordan’s IPRs regarding the patented processes and products. China’s ineffective IPR regulations have cost companies more than $60 Billion for companies based in the United States, Japan, and the European Union. The potential for even greater loss exists as companies move more of their missioncritical research and development functions to China, creating ever greater exposures. In addition to lost sales, the potential to damage a company’s reputation and brand image—which are harder to put a dollar figure on—exists through IP theft (Marsh, 2010). Counterfeit goods apprehended by authorities upon entering the United States from China are significantly higher than any other country. They account for 10 times the amount by other countries importing goods into the United States. Another risk that warrants consideration is tariffs the company will face importing plastics into China. China's accession to the WTO (World Trane Organization) has provided significant benefits to the United States plastics and resins exporters. Specifically, the average rate dropped to a final average rate of 10 percent. In 2008, import tariffs on all polymer plastics fell one percent from 7.6 to 6.5 percent. Most quotas will be abolished on many plastic products. China has also agreed that any supplier or manufacturer can import most products, including plastics and resins, into China after a threeyear phasein period. Companies from the United States operating in China will also be able to distribute plastic goods freely in China (U.S. Department, 2010). This risk will be a low risk because of the longterm free distribution of plastics in China and potential longterm profit that are realizable. Ongoing Evaluation Plan IMPLEMENTING STRATEGY 8 Evaluating and maintaining control of the implemented strategies is achievable through several metrics. Pearce & Robins, 2009, discusses premise control, which is “designed to check systematically and continuously whether the premises on which the strategy is based are still valid (p. 140). Scanning several factors, including environmental and industry factors can provide ongoing evaluations for Riordan Manufacturing. Comparing the current and foreseeing future environmental factors, such as economic, political, social, or technological changes, can provide information to Riordan to evaluate their current strategies and modify accordingly. Further, evaluating industry factors, such as competitors and product substitutes, can also aid in company evaluation in meeting the ultimate goal of gaining competitive advantage and product differentiation. Strategic surveillance can also assist in ongoing evaluations for Riordan. Strategic surveillance is “monitoring a wide range of events inside and outside the firm” (Pearce & Robinson, 2009). Routine and nontargetspecific scanning of the implemented strategy can bring to light any deviations from the intended strategy. Such information can provide Riordan with the current status of Riordan as well as intended and unintended matters regarding the strategic plan. This control strategy is an excellent tool for ongoing evaluations of Riordan’s strategic implementation. Conclusion Riordan Manufacturing has achieved success over the last decade, recording over $1 billion in revenues. To make the next 10 years as profitable as the last, management must implement a new strategy. After evaluating several options and deciding that the best way to gain a competitive advantage is by expanding the customer base of both corporations and government IMPLEMENTING STRATEGY 9 entities. Management decided the optimal strategy is through product differentiation. The management team then developed key factors of success as well as accompanying metrics in which to evaluate themselves. The team also identified risks that could prevent the strategy from being achieved. Now Riordan is in a position to further increase sales volume based on customers who reach from China to the United States. IMPLEMENTING STRATEGY 10 References Barney, J. (2007). Gaining and sustaining competitive advantage (3rd ed.). NJ: Pearson Prentice Hall. Global Risks 2010 (2010). A World Economic Forum Report. Retrieved from http://www.weforum.org/pdf/globalrisk/globalrisks2010.pdf Marsh, (2010). Risk Alert: Understanding China’s Business Risk Environment. Retrieved from http://global.marsh.com/risk/china/chinarisk/Marsh_Risk_Alert_China_ Final.pdf Mintzberg, H., Lampel, J., Quinn, J. B., & Ghoshal, S. (2003). The strategy process: Concepts, contexts, cases (4th ed.). NJ: PearsonPrentice Hall. Pearce, J. A., II, & Robinson, R. B., Jr. (2009). Strategic management: Formulation, implementation, and control (11th ed.). NY: McGrawHill. United States Department of Commerce (2010). U.S. Commercial Service. Retrieved from http://www.buyusa.gov/china/en/chemicals.html#_section3 University of Phoenix (2009). “Riordan Manufacturing Virtual Organization” Retrieved from STR/GM 581 Materials Page Yip, G. (2003). Total global strategy II (2nd ed.). New Jersey: Prentice Hall.
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