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Strategy experience provides an experiential lab that gives students an opportunity to create and manipulate the different market situations. These situations are tackled in segments and signify the different phases of business life and cycle.
In a nutshell, these cycles include the investment within a company during startup, wooing and retaining clients in their target market both locally and internationally, an analysis of their portfolio growth, the rise in share value and, looking at the factors in play to maintaining a positive growth rate through the life time of a given business.
In the strategic experience lab we are exposed to real market scenarios with real market forces. Though these scenarios are pseudo, we realized by the end of it all that much as the virtual investments and business decisions were involved, and that the market dynamics came into play, our intellect cum emotions into growth and expansion played a great deal.
The strategic management decisions one would have to make in order to effect growth and profitability of a company, we realized, may or may not have an immediate effect in the management of the business.
Strategic choices, if properly formulated and implemented, place the company well beyond the reach of its competitors while keeping a bunch of satisfied clients and a streaming clientele. These are the mark-ups of a growing company, with an increasing share value and market capitalization courtesy of good strategic decisions.
How to reach out to and assists clients globally
It is no secret that the effective maneuverability of any given business venture into a different economy or a different/ foreign country is strictly reliant on various factors. The acquisition of new markets altogether signifies a unique opportunity for the company to acquire more clients; the employees would broaden their experience in the midst of a barrage of totally new and foreign market.
For the business, it will have to surpass the political interference, the diplomatic wrangles and differences that may accrue and sustain through to normal operation. All these are attributed to an effective strategic decision making body.
The business, in its endeavor to expand outside its borders has to go through the incubation period. This process entails but is not limited to getting assistance on how to basically transact business in their new market. They will need to market, to network with strategic partners in the foreign country and even gain more investors.
Other than these, the business’ responsibilities to the new market involve creating employment opportunities for the citizens of the given country and providing assistance to governments in place without showing any political bias.
These would ensure the longevity of the given business given the fact that regimes change, but the business is an establishment meant to last through regime change. Moreover, the business has corporate social responsibility to the citizens and locals in and around its location.
Social responsibility in this sense would mean encouraging employees to participate in the local communal activities, offering aid and assistance as well as establishing amenities. Through this the locals won’t feel rejected, but as an integral part of the business establishment vital in shaping the perception and attitudes of other citizens in that respective country hence acceptability.
How to create and sustain a good shareholder value
After establishment, the company has to strengthen and develop a differentiation in their products from the locally available products or services. Key to this of course is for the business to work on building up on its recent progress and acquisitions. They should offer something new to the market or the same products and services into the market but with a different touch.
These products should appeal to their clients and assist the business to cut a niche above the rest in their market segment. These will not only assist them sustain and build up on their recent progress, but also assist in policy making and planning in the coming future. The company should also create a sustainable shareholder value basing on both the internal and external dynamics at play that influence profitability.
In the creation of and improving the shareholder value, it is paramount that the company takes into account the four key dimensions of creating a shareholder value. These are broadly broken down into two factors: the internal dynamics and the external dynamics. Internal dynamics to the above would entail innovation and repositioning itself in the market while maintaining costs and reducing risks the business may incur (Amel, 23).
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In the former, the company should put into consideration the generation of products and services that not only fit today’s client needs, but also be mindfully projected into the future by looking at today’s clients and try to determine what they would need tomorrow.
In this regard the firm typifies a growing company with an employee ratio of fifteen; this will have to be reduced in the wake of increased infrastructure that would facilitate innovation. It would consequently improve production and the quality of service.
This would either mean hiring new skill or manpower, it could also entail developing requisite competences within the company employees to cushion themselves from inadequate resources.
Embracing technology would also play a major role in this since it practically dictates tomorrow’s client needs basing on today’s advancement. Internally, therefore, creation of share value would solely depend on the ability of the company to creatively replace their current abilities in favor of tomorrow’s expectations in innovation.
The external factors to creating share values within the company entail having an elaborate growth pattern in the present and one that delves into the future. The company should articulate a clear vision that meets or even surpasses consumer expectation but it should be attainable.
They should inform the investors of new prospects in the business, their future growth strategy while also fishing for new clients, and offering new products to their consumers or tap into a virgin market.
The company should also create a good reputation with not only the clients, but also with their external stakeholders. These include their immediate suppliers, the market regulators, the media and even NGO’s.
Taking care of these players and their interests would go a long way in maintaining a good rapport with them hence; would also influence people’s opinions vital in increasing the market value. The good performance of the above four factors would go a long way to establish, retain and increase a company’s share value.
The ‘PESTEL’ analysis of the above given company would include a breakdown into the meaning to what word each letter abbreviates (Hart and Sharma 12).
The words describe the factors within which any business operates in and how they influence the strategic board’s decisions. These are the political, economical, social, technological, environmental and legal factors.
Political factors basically describe the extent to which a given government operates within its economy. Political factors much as they may sometimes be remote and seem rather absent, they are always there and each business is subject to it. Government intervention occurs in several ways such as the tax policies in place, the labor and environmental laws.
The government also intervenes by imposing trade restrictions and tariffs that influence a business. The government is also squarely responsible for political stability; it is also the largest stakeholder in health, education and the infrastructure.
Through this and many more avenues, it is pretty clear that the government in any given place is the largest player and therefore, its policies, laws and the regulations it metes out directly influence the business.
Economic factors are dictated by economic growth, the lending rate and the interest rates, the exchange rates between currencies and the rate of inflation. The above named factors directly dictate business operation and therefore the decisions made by the business.
In a nutshell, higher interest rates increase a company’s cost of capital, lower interest rates denotes the opposite consequently determining the amount of capital a firm may choose to retain. This has a direct impact on the degree of expansion a business may experience. The rates also affect import and exports, thereby directly influencing the prices of imported goods within an economy.
In the United States, establishing and running business has been a problem because of higher lending rates and inflation. This has scared away investors who view emerging markets such as India, China and Africa as the new business hubs. This is because the interest rates and inflation are lower engendering a business-friendly niche absent in the US.
Social factors are dictated by culture and, sometimes, religion. The aspects to social factors that affect market capitalization growth in any given company include health, the population growth rate, mortality rate, the dominant age group in the respective society, the peoples’ attitudes toward some products or services and a people’s general emphasis on safety.
The trends visible “within the confines of social factors directly affect the demand for given products and how the companies that provide them operate” (Hart and Sharma 14). For instance, a young population may imply a large workforce that is willing and able to work efficiently with the pressure of performance amidst meeting tight deadlines.
The above cannot be said of an aging population, which is not easily adaptive to new policies and practices as they may change drastically at the workplace. In an aging population the workforce is also less given the fact that people are less willing to work.
Technological factors majorly influence innovation. Technology determines “the entrants to new markets, dictates the minimum level to efficient production and also influences majorly the decision to outsource some services of a given company” (Hart and Sharma 12). Technology reduces the cost of production while on the other hand increases the quality of products.
Technology further increases a company’s visibility courtesy of internet marketing cum optimization. The higher the rank the more visible the company will be. This directly influences sales within a given company, aside from increasing its presence as a dominant player in its respective field.
Environmental factors include ecological aspects for instance climate change. Businesses should encourage efforts fronted on environmental conservation aside from making their contributions felt. Fighting climate change by way of reducing emissions and planting trees goes a long way in establishing a company as an eco-friendly institution.
Legal factors encompass laws governing discriminatory treatment, consumer, employee health and safety. Very stringent laws on employee protection sometimes hurt the business interest because sometimes employees may take advantage. A critical balance in legislation to protect the interests of both the employer and employee encourages business growth and investment within a given region (Hart and Sharma 12).
The SWOT analysis of the company is given as follows. Basing on the figures given, the strengths of this company, given that it seems to be a startup company include competence.
They are penetrating the market at a steady rate of about 53%, given by their client attraction and retention ratio. It is a well thought out idea given that it’s just a startup; their staff cost ratio is well about 60%, indicative of a good growth margin for a company whose price to earnings ratio is above 15.
The weaknesses of the above company may occur largely upon the entrance of new players in the market who may be trading in the same commodity. Rivalry in the industry may also bring it down in case they do not cut out the niche for themselves and, also, the availability of substitutes.
They should work to cushion against all these by either improving on quality, increasing their level of production so that they reap from economies of scale, or working to eliminate all forms of competition or substitutes by gaining loyal customers. They have opportunities for expansion as a business, which is always unlimited and given the fact that the market at this time favors them.
They also have opportunities to have an increased bargaining power from their suppliers given that they are just new and also the fact that they keep the same suppliers over time. Supplier bargaining power would also increase in case they get more supplies to expand their business since their bargaining power will have increased. The threats would however emanate from the well established players in the industry.
Amel, Geal. Leading the revolution. Boston: Harvard Business School Press, 2000. Print.
Hart, Seane and Sharma Sallim. Radical transactiveness and competitive imagination. Presented at the academy of Management Annual Meeting. Denver: CO Press, 2002. Print.