Question

Choose a company you admire, any company. Then, put together a strategic planning process by selecting an international market for the company to expand into (it must be a market that company does not already have a significant presence in). Describe some of the key factors of the strategic planning process the company needs to be keenly aware of.

Answer 1

Strategic Planning Process refers to an organization’s way of building its plan of action or strategy of operation. This is done to make sure that the company moves in the correct direction and allocates its limited resources most efficiently. As companies are getting increasingly competitive, it is imperative for a rational company to plan way ahead. Not only planning ahead, but also having back-up plans is vital for the company’s security. All these fall under the broad heading of strategic planning.

Usually when one hears the words “company” and “international” in one frame, names of conglomerate giants come into one’s mind. But since here my focus is on explaining the concept of strategic planning, I’d like to keep it simple by selecting a very small ice-cream company from India called Natural Ice-cream. This company which was started by a single person in 1984 became well celebrated because of the fresh and rich-in-flavour ice-cream that it served to its customers. What sets this company apart from other retail ice-cream chains is that, none of its flavours are synthetic. All the flavours are made out of natural fruits (hence the name Natural Ice-cream) and a tender coconut ice-cream one a hot summer day will surely make one’s troubles vanish!

This company is fairly small and even though it has above 100 retail stores all over the country, making a place in the international market will require some serious strategic planning. Before I specifically start building up a strategy for Natural Ice-cream, I’d like to brush through the core highlights of what strategic planning exactly involves. While there is no one set model that defines strategic planning, there are a few basic guidelines which more or less all strategies adhere to.

1. Objectives of operation:- The company must be clear about what its goals and objectives are.
2. Inspecting the Environment:- Here the company should perform both an internal (its own self) and external (competitors and surroundings) analysis
3. Formulate a Strategy:- After having done a thorough internal and external analysis, the company should harmonize its own strengths and weaknesses with that of its external environment and strike the perfect balance.
4. Implement the strategy:- The plans on paper must now be converted into action through various budgets and programs.
5. Assessment and Control:- Merely executing the strategy isn’t enough. It’s compulsory to constantly monitor whether the strategies are working. If required, necessary changes should be made from time to time.

Following these broad guidelines, let us assume that my favourite little Natural Ice-cream wants to expand into New York City and materialize its own American dream.

1. The aim of every rational producer (or company) is maximizing profits. However, this maximization of profit can be done in many ways. A small domestic firm starting out internationally cannot magically expect to earn supernormal profits immediately. Its first step is to breakeven and recover all its costs. A fairly small company like Natural Ice-cream should thus be very clear of what its goals are. Thus comes into action “Objectives of Operation”. Initially its goals might be to reach a particular sales target. Marketing tactics should be adopted accordingly, which might include giving a few free samples to passersby. Later, the goal might be reaching and maintaining a particular per-annum growth rate. It is very important to note that, a company cannot start with one goal in mind and plan the rest along the way. Every company, big or small, must plan ahead and have forward-looking goals for expanding future opportunities. The bottom line is, Natural Ice-cream must be very clear as to why it is operating and why specifically in New York.
2. After Natural Ice-cream is clear with its objectives, it now moves on to “Inspecting the Environment”. Here, first Natural does an internal analysis. Based on years of experience in its own country, it identifies its ‘strengths’ and ‘weaknesses’. For example, one of its many advantages is that it stands out when it comes to flavours. In a world full of synthetic flavours, Natural boasts of fresh-fruit flavours like Watermelon, Kiwi, Tender Coconut etc. Other strengths can include cost advantages, excellent distribution networks, etc. One of its weaknesses might be in its preservation methods. Natural Ice-creams cannot be kept in the refrigerator for as long as a Baskin Robbins can. One also has to very careful about the temperature at which it is stored. It should not be too cold. This becomes a hassle for the consumer. Other weaknesses include weak brand name, poor advertising, etc. After this step, it should now do an analysis of its competitors and of its surroundings, i.e. an external analysis. It should be very aware of its ‘opportunities’ like availability of new technologies, and also its ‘threats’. These include emergence of cheaper and better substitutes or a shift-away of consumers’ tastes from its flavours. These four subparts of internal and external analysis is what will comprise of Natural Ice-cream’s “SWOT” analysis.
3. Next comes a part where Natural should “formulate the strategy”. The strengths that were identified from the SWOT analysis should be matched with the opportunities. For example, excellent networking can be linked with being well informed about newer and better technologies in the ice-cream industry. Similarly, its weaknesses should be addressed along with its threats. The existing weaknesses should be worked on and measures should to be taken so that potential threats do not materialize during their operation. This strategy should also give Natural a competitive advantage over its rivals like Cha Cha Matcha and Black Tap. This can be in various forms like a low-cost advantage or through product differentiation.
4. After the strategy has been formulated, Natural should “implement the strategy”. Putting the strategies into practice first requires financial capital. Then, it requires several procedures and programs. The company's resources should be efficiently allocated at this stage to get maximum returns and employees should be motivated to realize the objectives. Since Natural is a fairly small company, the ones formulating the strategies can also implement them. But usually, people who specialize in implementation of strategies are hired for this mammoth task. How the strategies are implemented shapes the initial path for the company and hints at whether it’s going to be a success or not.
5. Lastly, after the implementation, Natural should undertake “assessment and control” regarding these strategies. Here different limitations in the existing strategies should be addressed and targets should be defined to rectify them. Performance of the company should be constantly evaluated and necessary changes should be made to push Natural’s graph towards north.

This was the strategic planning process for Natural Ice-cream to shine in New York City. Now if someone at NYC gets a heavenly taste of fresh watermelon ice-cream from India, you know who to thank.