STR 581 W3 Evaluating Options- Strategic Plan- team B
STR 581 W3 Evaluating Options- Strategic Plan- team B
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Date Created: 11/13/15
Evaluating Options 1 Evaluating Options Strategic Plan University of Phoenix International Strategic Planning and Implementation STRGMS 8 1 Abstract The objective of a strategy plan is to provide an effective assessment of the supply chain and demand and be able to formulate an eXit strategy and operations management of stocks Product differentiation allows Riordan minimize the threat of direct competitors and maximize profits This document contains a brief description of the organization39s mission vision and values statement and how it can help create a competitive advantage for the company along with a situational analysis Evaluating Options Strategic Plan The objective of the strategic plan is to find an effective way to succeed in the highly volatile world of today s business Riordan Manufacturing must understand the different implications of each strategy these include attracting non users and increasing the purchase level among Riordan39s existing customer base with cost leadership and product differentiation Riordan Manufacturing must use a combined strategy of quotproduct differentiation and market segmentationquot this way the company can affect both sides of the chain of supply and demand Company Background Riordan Manufacturing is a global firm that specializes on manufacturing plastics including plastic beverage containers custom plastic parts and plastic fan parts Company employs 550 people and has projected annual earnings of 46 million The company is wholly owned by Riordan Industries a Fortune 1000 enterprise with revenues in excess of 1 billion Company maintains facilities in Albany Georgia Pontiac Michigan and Hang Zhou China Among major Riordan39s customers are automotive parts manufacturers aircraft manufacturers the Department of Defense beverage makers and bottlers and appliance manufacturers University of Phoenix 2009 The company was founded by Dr Riordan in 1991 and owned several polymer processing patents Initially being just research development and licensing firm later Riordan could raise venture capital and add production activity Company purchased a fan manufacturing plant in Pontiac and in 1993 eXpanded into production of plastic beverage containers In 2000 Riordan Manufacturing made a decision to eXpand internationally and opened its operations in Hang Zhou China and entire fan manufacturing was moved from Michigan plant to China Vision Statement Riordan makes a difference through innovation and leadership Mission Statement Customer satisfaction is paramount to our success as such the best people will continue to develop the best products We encourage our employees to aid in the advancement of the company at all levels Additionally Riordan an industry leader shall provide a diverse array of the highest quality products to the consumer while ensuring our competitive advantage within our industry will provide optimum return to our investors and shareholders Values Statement The guiding principles at Riordan are honesty integrity and commitment to excellence Our employees are the key to our success We value their competence imagination creativity and communication We promise to treat each employee with the utmost respect and trust Riordan makes every effort to ensure the safety and security of the world we live in We strive to not only improve our corporate standards but also improve our production processes and ensure that we minimize the impact on the environment Situational Analysis To develop a corporate strategy Riordan Manufacturing will conduct a situational analysis concentrating on the company s internal and external position environmental forces and industry structure This analysis will enable Riordan to formulate the strategy and ensure it aligns with the company s values A situational analysis is necessary in developing a company strategy and an essential part of a business plan Margarit 2010 The situational analysis should include the following components 0 Product situation Identify current product offering and supporting services 0 Competitive situation Determine and evaluate main competitors 0 Distribution situation Review the channels used to move the product to market 0 Environmental factors Consider internal and external factors that affect performance 0 SWOT Analysis Evaluate the company and the industry Competitive Advantage and Potential for Value Creation Information taken from the income statement of Riordan identifies that the level of sales increased 154 from 2003 until 2005 This level of sales is almost identical to the rate of direct cost of goods sold Still value creation could be pursued in the form cost savings identified in the competitive advantage of production location as it relates to the proximity of the exporting port in China In a confidential memo stated by Hugh McCauley he identifies a competitive advantage that Riordan has that he would like to exploit so that cost savings from shipping expenses can be realized Hugh McCauley notes that historically Riordan could use trucks to carry their products to the exporting port in Shanghai As production increases they can realize cost savings by relocating the plant to Shanghai to avoid the transportation costs related to using trucks to carry their products to the Shanghai port from their current location Hugh notes that the relocation of the China operations to the city of Shanghai will result in significant cost savings will provide our operations with a more substantial urban infrastructure and will put us into a better position to market and ship our Chinese products throughout Asia and Europe China Relocation memo In addition to the five year plan Riordan could also look at how value creation can be identified by investing in either refurbishing their old equipment or buying new equipment so that they can reduce the level of depreciation of their production assets Since 2003 Riordan has seen a 219 loss of depreciation Riordan can incorporate the move of the China operations to Shanghai within the next five years into the strategic planning of Riordan Manufacturing and Riordan Industries so that value creation can be maximized Hugh McCauley is asking management to begin drafting strategic plans for how such a move would impact the target areas of responsibility and to gauge how their areas will facilitate the relocation Polymer Industry Analyzing the polymer industry structure is necessary for a thorough situational analysis Comparing Riordan s two strategic options with its competition in both current and potential future markets is critical in evaluating the firm strategy and rivalry Vlachopoulos 2003 Polymer processers include tens of thousands of small and medium sized companies around the world Even though the industry is in the maturity stage growth is likely to continue in developing countries Factors like research and development grants risk capital and investments may be problematic for the smaller companies as access to resources are likely limited Other key areas to analyze are the demand conditions S WOTAnalysis A SWOT Strengths Weaknesses Opportunities and Threats analysis is a framework for generating strategies as part of a situational analysis SWOT Analysis 2010 The two classifications of SWOT are internal aspects strengths and weaknesses and external situational factors opportunities and threats A few SWOT components for Riordan include 0 Strength Innovative in providing solutions for customers 0 Weakness Unable to analyze customer needs because of not implementing a Customer relationship Management CRM application 0 Opportunity Economies of scale in buying raw materials 0 Threat Demand depends on the health of the economy By evaluating these four components a company can leverage its strengths improve its weaknesses realize opportunities and prevent threats from occurring Assessment of Competitive Advantage The current customers of Riordan Manufacturing are composed of corporations and government sectors that purchase in bulk to satisfy their consumption needs Although the customer base is welldeveloped one of the ways of gaining competitive advantage can be made by expanding the consumer market Riordan manufacturing has a research and development plant in California Investing efforts by developing products for smallbusinesses and individuals every day use can give Riordan a competitive advantage against its competitors For example Hangzhou plant produces all of the various models of Riordan s fans The employees have the foundational skills to produce commercial and small fans A costsaving method to further gain competitive advantage of adding new models can be achieved by restructuring the Hangzhou plant to mirror a plant within a plant PWP strategy This method can aid Riordan Manufacturing in reaching a new consumer base without a large financial constraint of developing or expanding a new production facility The existing customers are spread out more than 13 countries Gaining competitive advantage will further be done by expanding the number of marketplaces as well as exceeding the needs of the current customers Riordan Manufacturing has already taken the necessary steps to be recognized as a quality producer in the industry With such notion already in place offering customization to the current loyal customers can give the industry a competitive advantage against its competitors For example offering distinct brandrecognizable water bottles for a particular beverage distributing company can be advantageous Further accommodating special medical device request with the fastchanging medical industry can keep Riordan at the top of the industry against other competitors Such approach can increase loyalty among the existing customer attract new industry customers as well as build a more recognizable name that re ects Riordan Manufacturing s mission and value statements Conclusion By living up to the creed stated in the mission statement of Riordan Riordan has enabled themselves to tap into the resources of all available skills talents and resources that the company invests in This company re ects an intimate relationship within the company and the consumers Employees are the engine that drives the innovative spirit that Riordan speaks about in their vision statement to make a difference through innovation and leadership Riordan takes the time to challenge itself to offer distinct high quality products that are affordable enough that exiting customers will want to continue to purchase although the vast supply chain network enables Riordan to reduce transportation expenses needed to transport goods from the current location to the port in Shanghai In addition to the decision to relocate the production plant Riordan can revitalize their production equipment to reduce depreciation Leadership is important to have a successful outcome with this strategic plan After this the organization will become stronger and will be able to rebuild their relationships with stakeholders and consumers References Barney J B 2007 Gaining and sustaining competitive advantage 3rd ed NJ Pearson Prentice Hall Margarit A 2010 Elements in the Situational Analysis Retrieved from httpmarketingaboutcomodmarketingplanandstrategyasituationanalyshtm Mintzberg H Lampel J Quinn J B and Ghoshal S 2003 The strategy process Concepts contexts cases 4th ed NJ PearsonPrentice Hall Plastic and Rubber Products Manufacturing Industry Profile 2010 First Research Retrieved from httpWWWfirstresearchcomIndustryResearchPlasticandRubberProducts Manufacturinghtml Riordan 2010 China Relocation Memo Retrieved from httpsecampusphoenixedusecureaapdcistvopBusinessRiordanOpsChinaMovepdf SWOT Analysis 2010 Strategic Management Retrieved from httpWWWnetmbacomstrategyswot University of Phoenix 2009 Riordan Manufacturing Virtual Organization Retrieved from STRGM 581 Materials Page Vlachopoulos J 2003 An Overview of Polymer Processing Retrieved from httpWWWpolydynamicscomfra1ibraryhtm Yip G S 2003 Total global strategy II 2nd ed NJ Prentice Hall
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