The current business environment could be considered rather complex. The increased importance of business resulted in the appearance of small and medium enterprises functioning in the same sphere and trying to conquer the market. This also preconditioned the increased level of rivalry and the importance of a certain competitive advantage needed to support the evolution of a certain business venture and guarantee its further rise. At the same time, great international companies also face significant problems as several global corporations control the international market and create a specific framework that limits the functioning of new actors and might be considered a significant challenge that every fast-growing company should face. In this regard, companies at a certain phase of their evolution realize the necessity of the further extension and usage of new more efficient tools to guarantee that the overwhelming pressure of rivals will be overcome and the new perspectives for the rise appear. The choice of the expansion strategy is extremely important as it will precondition the final outcomes, the companys profitability, competitiveness, and survival. In this regard, the paper is devoted to the investigation of the given aspect of a theoretical companys functioning and the strategic planning needed to support the accepted extension strategy.
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Hypothetical SORA company, Miami, Florida, could be used as the background for the investigation. The company was founded in 1990 by Ken Smith, Michael Orwell, Rick Richards, and Bill Atkinson. The first letters of their last names were used to create to companys logo. It was organized as a local business that was focused on the manufacturing and distribution of bicycles. At that period of time, SORA possessed a small assembly-room to create bicycles using details manufactured in the same hall by its owners. The partners were able to manufacture all necessary details like bicycle frames, wheels, etc. on their own. They only needed tires and some other components. The comparatively high quality of the final product combined with the low price conditioned the companys further rise and increased the level of demand for its products. For this reason, the decision to expandwas accepted. SORA opened new a line of shops in different cities of the state.
Moreover, to meet the current requirements for the number, quality, and appearance of bicycles, additional facilities were introduced. A company obtained new assembly lines and new suppliers. The efficient marketing strategy combined with the increased level of demand for bicycles resulted in the company’s further rise and its functioning at the state level. At the moment, SORA has its departments in the biggest cities of Florida and in some other states. The company does well and benefits from stable revenues. However, a new challenge appears. The company experiences pressure from the closest rivals like American Bicycle Company, Bike Friday, Dahon, etc. and obviously feels the great need for new outlets or sources of income. However, entry to the new market demands new facilities and production assets. For this reason, an efficient decision is needed.
Companys Position Statement
When cogitating about an appropriate strategy that should be chosen by the SORA company, it is also vital to mind its mission and position statement. Thus, since the first stages of its evolution, the company has been emphasizing the high quality of bicycles combined with affordable prices. It is achieved by the usage of the local workforce, avoidance of overpays for fashion brands and components, and usage of high-quality materials. Besides, the company also tries to create bicycles with a unique appearance for them to differ from the rest of the cycles that could be found in the market and attract peoples attention. The combination of these factors resulted in the increased popularity of the company and its gradual evolution. Furthermore, the company also emphasizes the fact that its main aim is to guarantee satisfaction to its customers by providing them with unique and customized bicycles.
Besides, the company also tends to grasp a certain segment in the market. Traditionally bicycles are associated with youth as it is part of their mode of life. For this reason, individuals aging from 13 to 25 could be considered the main target audience of the SORA company. However, at the moment it also creates versions for middle-aged and old people to help them to choose a bicycle that fits their demands and current needs. The broadening of the target audience could be considered an efficient strategy that will help to increase the level of revenues. At the same time, it also introduces new demands to the companys functioning as it has to create new assembly lines and guarantee that high-quality products will be created. This factor should obviously be taken into account when choosing the expansion strategy and deciding how to guarantee the companys further rise.
In this regard, considering the above-mentioned facts, it is possible to state that SORAs perspectives are rather promising. At the moment, there is a great demand for bicycles as they become an integral part of a specific lifestyle. Under the impact of mass media, young people apt to buy these means of transport. Furthermore, the tendency towards the increased importance of the environmental concerns preconditions the shift of priorities towards the usage of environmentally friendly vehicles, and bicycles could be considered one of them. In this regard, we could predict a further rise in the popularity of this very sector. SORA could benefit from the positive forecast and improve its current position. Therefore, the given tendency could also be considered a good supposition for the extension and the further company’s rise. That is why the strategy appropriate for the current setting should be accepted.
In such a manner, outsourcing could be considered one of the appropriate strategies for the company’s further rise and improvement of its position. SORA could open new departments in other states to guarantee that new outlets and customers will be found. Moreover, as stated above, there is a great need for the empowerment of the production assets and the introduction of new models. For this reason, the creation of new facilities in different states could be considered an appropriate choice. China and some states of Eastern Europe will be chosen as the locations for new departments and assembly lines. The choice of the given strategy will also help SORA company to evolve and become one of the most influential actors in the market. A significant competitive advantage could be acquired in case the company manages to act efficiently and explore the given strategy (Cullen, Lacity, & Willcocks, 2014).
Pros and Cons
Among the advantages that come from the exploration of the given strategy, the ability to use steels manufactured in China without extra spending for shipping is one of the most obvious ones. The company needs more materials to manufacture new cycles as well as new suppliers. In this regard, in case new departments appear in China, the company will enjoy a more advantageous position and will be able to guarantee its further rise. At the same time, the given areas are also characterized by the lower cost of labor and demands for the personnel, insurance, working conditions, etc. (Holweg, 2012). For this reason, the company will be able to hire new workers, improve its position, and become more powerful (Holweg, 2012). Furthermore, the new outlets will also result in a significant increase in the number of revenues preconditioned by the broader target audience (Halim et al., 2017). At the same time, there are also several challenges a company should face in case it decides to run internationally and open new departments in different states. First of all, the high probability of culture conflict should be taken into account. SORA workers and managers do not have any international experience and might suffer from serious problems. Moreover, there is a certain risk of failure in case the change strategy turns out to be less efficient as it is expected. Finally, the financial aspect should also be considered because the alteration of the nature of the company will obviously cost a lot.
In this regard, efficient operations management should be considered the key to the companys successful extension and it is becoming an international corporation. The company should operationalize a unique financial strategy that will help it to initiate the procedure of outsourcing. First, a specific fund devoted only to these needs should be created. It is obvious that the restructuring procedure is a long-term process that should be accomplished in several phases. For this reason, it should not become a great burden for the financial aspect of the companys functioning. A well-thought-out strategy that calculates potential spending along with expected revenues should be introduced. Finally, successful and efficient financial operations are crucial for SORA. That is why a new pricing strategy that considers the new setting should also be introduced to guarantee that the main goals will be achieved.
The outlined change actions will also affect the sphere of marketing. At the moment, the SORA company could be characterized by an efficient marketing strategy. It incorporates such elements as affordable prices, appropriate quality, and recognizable appearance. The given approach guarantees the existence of a certain target audience. However, considering the fact that the company initiates the outsourcing procedure, alterations of the strategy are inevitable. Specialists state that international companies adhere to a specific marketing model that includes the focus on new outlets combined with the creation of a new approach to sales (Stevenson, 2014). SORA will obviously preserve the current brands image; however, it also has to affect consumers in other regions. For this reason, peculiarities of the area should be taken into account to create an efficient marketing strategy. It could be recommended to emphasize the products belonging to the mass culture, their unique appearance, and fair price.
Speaking about the most important operations, SORAs main aim at the current stage of its evolution is to attain the increased efficiency of the management decisions combined with the outstanding quality of suggested products by excelling five main objectives of the operations management. It means that the company is focused on such aspects like cost, dependability, flexibility, quality, and speed (Heizer & Render, 2013). The new conditions of its functioning demand increased flexibility to adapt to new conditions and evolve. The given goal could be accomplished by the creation of new product lines and broad choice. SORA is going to go international which means that a number of new customers with unique demands will appear. That is why the main requirements for the most crucial operations are their sustainability, high efficiency, and low costs. In this regard, the company has to operationalize a strategy that is focused on excelling in the five objectives of the operations management and acquisition of significant competitive advantage.
Considering all the above-mentioned facts, the following plan should be suggested. SORA company should accept the decision to use the outsourcing strategy to guarantee that it will be able to evolve and preserve its current position. Besides, a specific fund should be introduced to create new facilities in the chosen locations. China and some countries in Eastern Europe should be chosen as potentially beneficial areas. The materials needed for manufacturing could be obtained from new partners located there. Moreover, labor laws are beneficial there, and lower costs could be spent. Furthermore, the company should reorganize its approach to operations management to guarantee positive final outcomes. Finally, there is a need for new approaches in marketing strategies that will help SORA evolve. The expected term of the complete reorganization is from 8 to 12 months.
Analyzing the advantages and disadvantages of the new strategy, we should state that the following outcomes could be expected. First of all, the company will obviously increase its revenues by acquiring new outlets. The broadening of the target audience is expected to provide greater benefits along with more stable incomes. At the same time, the alteration of the companys character will help it to compete with the closest rivals and create the basis for its further evolution. Besides we could also admit the product-line expansion which is a good tendency for the company (Sims, 2016). It will be preconditioned by the diverse needs of customers and new segments that should be covered. Finally, the international character of the company will also precondition the increased level of the interest to its products and help it to obtain new customers which is extremely important for its further rise and evolution.
Altogether, we could conclude that the SORA company has good perspectives for further rise. At the moment it is a prosperous organization with a stable level of income and a certain target audience. However, not to be swallowed by giant international corporations, it has to run internationally and explore the outsourcing strategy. This very strategy is given preference because of the current companys situation, its needs, and main goals. In case SORA manages to maintain the efficiency of main operations, the quality of final products, current pricing, and other aspects of its functioning, the outcomes could be considered positive. However, it should be ready to operationalize specific approaches to financial, marketing, and operational aspects of the companys functioning. SORA should be ready to resolve any conflict that could appear in the course of the implementation of the new strategy and reorganize its functioning in accordance with the suggested strategic plan.
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Halim, H., Ahmad, N., Ho, T., & Ramayah, T. (2017). The outsourcing dilemma on decision to outsource among small and medium enterprises in Malaysia. Global Business Review, 18(2), 348-364. Web.
Heizer, J., & Render, B. (2013). Operations management. New York, NY: Pearson.
Holweg, M. (2012). Outsourcing complex business processes: Lessons from an enterprise partnership. California Management Review, 54(3), 98-115. Web.
Sims, M. (2016). Outsourcing: Build great company with outsourced team, work less and earn more. New York, NY: CreateSpace Independent Publishing Platform.
Stevenson, W. (2014). Operations management. New York, NY: McGraw-Hill.