The contemporary business world is highly competitive. In order for an organization to achieve an intended share of the market, it has to plan to strategize its activities. This will be demonstrated in the business plan shown below.
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Sample Business Plan for Expanding the Computer Business
DAM Computers Company is an innovation of the partnership between two brothers who came up with an idea of starting up a business dealing with the sale of computers and its accessories and has been in operation for two years.
Objectives of the Business Plan
Dam Computers has been in existence for 2 years. The business has been flourishing well but without any definite future forecast. Therefore, in order to define clearly the future of the business, the management during the end of the business year meeting decided to formulate the business plan for the company so as to ensure the company strives towards its vision of becoming an international firm. Thus the objective of this plan is to provide a guideline on the business’s mission towards its vision.
How the Plan was developed (stages)
In conjunction with the management board, the expert selected for the task set out for the work. It was agreed that the draft is ready within a week’s time such that the business plan developed to be adopted and become effective from the beginning of February 2012. Since the plan is the first one of its kind of business, the strategic plan adopted was a vision-based type. Therefore, the plan set has assumed the following stages as represented by the diagram below:
Dam Computers Company’s Values, Vision, and Mission
The company will aim to be a leader in both the local and international market of computers and their accessories.
The mission of DAM Computers is to maximize all the opportunities available both nationally and internationally for the sale of computers and their accessories through proper investment, quality care of human resources, and proper handling of all customers.
Values or Operating Principals
The operating principles of the company are honesty, integrity, customer care, and high technical adoption. The company shall live to ensure information technology is ‘a must’ achieve knowledge for everyone irrespective of race, sex, location, and status.
Internal Environmental Scan
History of DAM Computers Company
DAM Computers Company is an innovation of the partnership between two brothers who came up with the idea of starting up a business dealing with the sale of computers and their accessories. The business has been in operation for two years and has been expanding well. The latest quest has been for it to become an international company.
The Structure of the Company
The company is a private limited liability company organized as follows:
From the structure of the company, it means that the company has all the necessary manpower in place and has the ability to raise capital from the shareholders.
Business Internal Situation and Trends
An assessment of the company’s strengths and weaknesses has been reviewed and will be reviewed periodically. According to the review done, it has been identified that the business has the potential to support the expansion due to the following reasons: the current manpower has the ability to handle export and large scale business due to their prior experience from their previous employers though some additional manpower will have to be done. The directors and shareholders are willing to raise more equity close to 500,000 British pounds although more will be raised through profit plow back. Finally, the business is valued at £2 billion meaning that it has a very good asset base to support it for a long time.
The External Environment of the business
National Situation and Trends
The business country of location, which is England, has a good climate for the business of computers. Due to its policy of maintaining a good postcolonial relationship with its former colonies, there is hope for securing good market grounds from some of these colonies. Since the relationship is likely to remain, the business plan adopted will be a long-term one although this will depend on the success of the first-year plan that shall be reviewed for success and failures.
Recently, the national trend in the economic arena has been to stabilize the pound through export promotions. The legal formalities involved in the exportation process have been simplified. This means that the business will not encounter so many hurdles in its course of export documentation. Another trend in the nation has been an acceleration in the technological climate whereby the government is encouraging everyone to be computer literate beginning at an early stage. This spells good fortune for the computer business. Other external factors such as political and community values will be assessed by the team in the plan.
Summary of opportunities and threats for computer business
- Potential make both nationally and internationally
- Potential capital
- Potential manpower
- Unpredictable markets
Strategy formulation process
Since the business plan is vision-based, the organization has formulated its strategies based on the vision of the organization.
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The Vision and the Plans
The vision of the company is to expand the local market and venture into the export business
The company has planned to:
- Raise more capital from shareholders and directors within a year and in later years also. This will be facilitated by the managing director. The director has already pledged to play their part by increasing the investments. And thus the funds will be availed to the company’s account by October this year.
- Advertise/market itself globally through DSTV and the internet, the process will commence on the 1st of February spearheaded by the marketing manager. The advertisement activities will be directed at creating awareness of the existence of the company. The adverts will be created by the company’s marketing staff.
- Identify companies from Africa dealing with the sale of computers and link up with them for possible supply business. The sales department has been allocated this task and will commence as soon as the capital has been raised from the shareholders.
- Identify new suppliers of computers at a good factory price. The potential supplier has already been found and the negotiations are going on spearheaded by the purchase manager.
- Increase its human resource to meet the demand for expansion. The human resource manager will be responsible for hiring extra sales and technical personnel that will be needed when the company expands its activities. Advertisements for the positions available will be made in June.
- Expand its local market. Two shops will be set up in Liverpool and leister cities. The strategic planning committee selected will start negotiating for the premises in August and the findings will be communicated at the end of that month.
The detailed plan is as shown in the table below:
The Annual Plan
|Activities||Person In Charge||Start Date||MidPoint Review||Finishing Date||Target||projected expenses|
|Raising capital||Managing director||01/02/2012||1/05/2012||1/08/2012||Would have raised £500,000||Nil|
|marketing||Head of marketing||01/02/2012||1/03/2012 and every month||continuous||Would have identified and linked with potential customers locally and internationally||£10,000|
|Looking for supplier||Head of procurement||Already in place||1/05/2012||1/08/2012||To have linked with the already identified supplier||Nil|
|Linking with serious overseas customers||Sales manager||1/04/2012 or depending on the report from the marketing department||01/05/2012||continuous||To have got a network of potential and reliable customers from Tanzania and Egypt||£5000|
|Documenting of export business||Sales manager||1/08/2012||15/08/2012||01/09/2012||All documents for export procedures to be ready||£1000|
|Addition of labor||Human resource||When needed||Every month||continuous||To acquire all required manpower in place||nil|
- The company has already identified a local computer manufacturer called Intercom, which is offering a relatively low price than the former supplier Bidcom.
- The shareholders have agreed to raise a capital worth £500000 before the end of the year.
DAM Computer Company after five years
After five years, the company would have achieved the following targets using resources such as capital and human resources.
- Established computer godowns in Arusha Tanzania, Addis Ababa in Ethiopia, and Cairo Egypt.
- Employed more than 200 workers
- Established three more branches in the city
- Become a long term partner of supersport in the advertisement
- Been known in more than 50 states.
Goals and Priorities
In order to achieve the five-year vision, the company will prioritize its activities in the order of importance for each year.
The important goal is to expand the market so priority will be on marketing and capital acquisition.
The strategies adopted to achieve the above goal are:
- Marketing through global advertising media, which in this case is the DSTV channel network provider from South Africa and the company’s website. Others will be reviewed by the company’s marketing department.
- Capital acquisition from shareholders and profit plow back
Monitoring and Reviewing
Monitoring the Progress
The company has selected a committee for the project consisting of 10 members. Every department has been represented in this committee and their names are on the company’s website. The committee will be monitoring the progress of each department based on the assignment given and will be responsible for setting targets for every party involved with penalties given for the group that will fail. The major progress is expected at the end of every year, while periodic progress is expected depending on the task as shown in the plan (Mitchell n.d., p.23).
Plans for Reviewing and Refining the Plan
Due to the fact that the business world is dynamic, the plans will be reviewed considering each item separately for the period stated in the plan and then refined accordingly. The monitoring committee will be responsible for reviewing the plan. The whole activity will be headed by the managing director and the monitoring committee.
The strategic plan put in place for the Dam computers has been set to determine its destiny that is unknown. It has been prepared with faith that some factors will remain constant. This is the main undoing of the whole idea since the future is always not known. Nevertheless, there can be no success without planning.
Alternative Strategy for the Company
Although a strategy has been drawn for the company in question three, this is not the only option available. In fact, it may not be the best one. In order to get the best option for the company, various options will have to be evaluated.
The vision-based strategic plan adopted by the DAM Computer Company is not the only strategy that would have been taken by the company. There are other available strategies for the company to explore. They include substantive growth, limited growth, and retrenchment, among many. The choice of a strategic decision will depend on some external and internal factors of the business (Ansoff 1965, p.76).
This alternative is dependable on corporate business and the functioning strategies. In the case of corporate strategies, the emphasis is on resource allocation. Such strategies involve retrenchment, growth; concentrations, or diversification (Whelan & Hunger 1995, p.106). The corporate strategies available for the DAM computers company are retrenchment and expansion and diversification (Wheelen & Hunger 1995, p.78).
In the case of functional strategy, the functional units of the business assemble all management aspects of the business for proper functioning. Since the company is geared towards functional strategy, cooperative strategies are not applicable to it at this moment. Therefore, the company is forced to evaluate options available for a functional strategy to be in place.
In order to evaluate these options, the company should use one of the marketing tools to evaluate its growth options since it is still in its initial growth stages. One such marketing tool that is recommendable is the one called Ansoff’s Matrix. This matrix presents the organization with four categories of options in order for the company to meet its objectives. This matrix can be represented diagrammatically as shown below.
|The Market |
Diagram 2: the Ansoff’s marketing matrix (Ansoff 2010, p.1).
If the company had to adopt the above diagram of Ansoff’s marketing and product matrix, then it means that it will have four options that can be analyzed as follows (Mind Tools 2008, p.2):
Penetration of the Market
From this option, the company that has the present product in the market may choose to market the existing product by penetrating through the market and have a bigger market share consequently increasing its revenue. In the case of DAM computers, this option means that since it already has some considerable market coverage, it may concentrate on the marketing of the current computer products.
By employing this strategy, the business will achieve a considerable increase in revenue and will not incur any risk. In spite of its benefits, market penetration has its disadvantages. If the company adopts this strategy, it will imply that no new customers will be sort after and that the company will not have an opportunity for bringing new products to the market or develop the existing ones. In addition, market penetration has its saturation point or limit to the consumers when it reaches that point, the company will be forced to develop an alternative strategy (Ansoff 1965, p.88).
For this option, the company is in a position to market its current products to formally unexploited places. Such activities may include exportation to newfound markets in overseas countries or selling to new regions formally not covered by the company. For the case of DAM computers, this option means not altering their computer products and selling them to overseas countries and other parts of the country.
The benefits of this strategy are that the product is not altered and is relatively cheap compared to the product development technique. Also, the wider area is covered and more customers are found (Proctor 1997, p.16). However, the product is not developed and is prone to becoming less competitive with the improvement in technology. In addition, the exploitation of markets does not guarantee an all-time gain to the company.
Product Development Strategy
In this strategy, the company adopting it is the one that has a new product that ought to be marketed to its existing customers. In most cases, the company in question is compelled to be more innovative and thus invents an improved product from the existing one or completely come up with a new one to replace the existing one but with the same ability. These instances are prompted by the improvement in technology that is being witnessed in the market. The trend is to come up with the most efficient and cost-effective product. In the case of DAM computers, this option means that they come up with new models of computers that suit the market at every particular stage. This is of paramount importance since computer technology and models keep on improving every day.
This strategy is good since it improves the company’s image of innovation. Also, the specific needs of the customer are met as new technology is exploited. The strategy also helps to maintain the uniqueness of the company in the market. However, the process highly risky as the new technology may fail to impress the customer. In addition, the cost involved in the process is too high. This method is only suitable for manufacturers.
The company seeks to acquire new customers in this strategy. The process usually takes two forms; related and unrelated diversification. In the case of related diversification, the company remains in the range that it is familiar with. For instance, if the industry is a manufacturing business, it may jump from one line of business to another such as from bread manufacturing to soap manufacturing. In the case of interrelated manufacturing, the business may decide to completely change the range of business. For instance, it may change from the manufacturing business to the service industry.
This option is not viable for the DAM computers since its vision is pegged in the computer business. Diversification strategy is the riskiest strategy and also the most inefficient one. Since the customers have already been established, it becomes hard and inefficient to shift. The only hope lies in the fact that this strategy can be more profitable to an organization if the area of the shift was calculated well (Proctor 1997, p. 34).
The Most Suitable Strategy
From the analysis of the four strategies presented above, it is evident that each one of them has its own outstanding path from another one. Furthermore, each one of them has got its disadvantages which are not desirable. In planning for the best strategy, an organization may want to do away with the majority of these disadvantages and maximize the advantages. Although this is desirable for many, it is impossible for it to be achieved by using only one strategy. Thus, the best alternative is to make use of multiple of these strategies so as to reap their benefits.
In the case of DAM Computers Company, the alternative strategy will be a combination of three strategies; product development, market penetration, and market development. The reasons for the chosen combination are because the company’s vision is to maintain the current market while at the same time exploring new markets both locally and internationally. Also, the company’s vision is pegged on computer business thus there is no way it is going to change its line thus diversification strategy is not in their picture (Pearce & Robinson 2004, p.106).
Therefore, the company will opt for market penetration since it will ensure the company maintains its current customers, market development since it is in the process of venturing into export business, and product development since computer technology is changing rapidly; they will have to keep themselves abreast with the trend by purchasing from the manufacturer who is keeping the trend. For this reason, the combination of the three mentioned strategies will be taken for the best result
There exist many strategies for any business organization or company to explore in order to reap maximum operational profits and also to sustain itself on the market. They include substantive growth, limited growth, and retrenchment, among many. The choice of a strategic decision will depend on some external and internal factors of the business (Ansoff 1965, p.76). This alternative is dependable on corporate business and the functioning strategies. In the case of corporate strategies, the emphasis is on resource allocation. Such strategies involve retrenchment, growth; concentrations, or diversification. It is upon the company to explore all the available strategies in order to come up with the best.