SWOT Analysis, Vision & Balanced Scorecard For The Business

SWOT Analysis of The Business

As highlighted in the Case Study, the entire company structure of The Business is about to undergo transformational improvement with effect from its acquisition by a Grocery and Liquor retail chain. In order to introduce the necessary modifications, it is imperative on part of the acquiring company to conduct an objective analysis regarding the market share of its products, net financial value, its operational assets, infrastructural facilities, sales team and customer relations. This objective is achieved through SWOT analysis which portrays a clear view of the internal and external liabilities of The Business along with its potential to overcome those liabilities (Gupta and Mishra 2016). 

Strengths:

1. The Business has 23 stores across Victoria, New South Wales and Queensland. The Company was able to make 1 billion Australian Dollars in sales in its last financial year. New South Wales and Victoria happen to be the major centres for hardware and building supplies. With 23 stores across such major locations definitely provides the company with an upper hand in attracting customers and increasing its annual revenue through bulk sales.
2. The Business, after its acquisition by a Grocery and Liquor Retail chain has come up with a structured 5-year plan for expansion. It has planned to open more stores in addition to its already existing 23 stores in Victoria, Queensland and New South Wales. By increasing the number of stores, the company plans to accelerate its sales by 5% from the succeeding years thereby proposing to increase its market share value to approximately 11% in the 5 years duration.
3. Along with its future forecasts on improving the sales and annual returns, The Business plans to invest around 2 Billion Dollars for improving the existing stores. Infrastructures that cater to enhanced aesthetic and systematic administrative values often aid in attracting more customers. Having an organised arrangement also facilitates the sales team to take the customers through a varied range of their requirements without wasting time in looking for it in the store. Therefore, the company through this investment, has decided to achieve a positive operating income with a Return on Sales of 5%.
4. Even after acquisition, The business still hold power with respect to most major areas like decision making with regards to expansion, the range of products sold and other basic activities associated with business process.

Weaknesses:

1. The prime stores of The Business were located quite inconveniently in the market place where there was hardly any space for car parking, much to the disadvantage of customers. Also, it failed to offer the customers an aesthetic appeal with dark rooms and disorganised arrangement. The disorganisation caused too much trouble to the sales team as they had difficulty in searching for the necessary product, without a price tag, in a dark room.
2. The products that were sold in these stores were outdated and practically valueless to the customers when compared to those of the competitors’ products. Moreover, those products were sold at a rate of 20% discount and those which were relatively in a better condition were sold at 5% discount. The customers perceived this a misguided advertisement and it led to lesser sales figures.
3. One of the major weaknesses of The Business corresponded to its lack of quality staff to attend the customers. Most staff were either unskilled or untrained with lack of proper knowledge about the product. They were also quite resentful towards the top management and their employer in general.
4. Lack of proper infrastructure, product knowledge of the staff members, and low quality after sales service made The Business the least sought after company for home improvement products and hardware supplies. This also caused the firm to have low competitive advantage which had adverse effect on its operating income.

Opportunities:

1. The home improvement industry is a relatively fragmented industry, which is why all firms involved in delivering such products have considerable opportunity with respect to customer acquisition. These firms are small, employing less than 20 staff and having an annual revenue of approximately 2 Million Australian Dollars.
2. Being recently acquired by a Grocery and Liquor Retail, The Business was able to diversify its product range and also, set up a proper future forecast regarding improvement in internal structure and the company’s finances. It was able to get an outline for a much necessary systematic plan for transformation.
3. Home Improvement products have a consistent demand in all regions especially that in developed nations like Australia. This is an important indicator for growth of this industry. Also, the products are not subjected to immense technological advancement. As a result, frequent up-gradation is requited only in external structure.
4. Being able to diversify, The Business acquired scope of growth by keeping more than one kind of product available in the store. Through this diversification, customers were able to avail more than one kind of service, such as advice on the use and instalment of the new products as well as about the availability of related items.

Threats:

1. The major thereat for The Business was the high competition from other companies within the same region. Victoria, New South Wales and Queensland happened to be the foremost centres for home improvement and hardware supplies. As such there were a large number of fragmented stores all set up nearby to each other, selling similar goods at competitive prices.
2. The Business had not gone through any transformation, with respect to its business structure for a very long time. As such, the goods it sold were mostly outdated and overpriced. This lent it little or no competitive advantage against the better quality cheap products sold by its major competitors like Bunnings, Mitre 10, Home Timbre and Hardware.
3. The annual growth of The Business was relatively slower in the last five years due to lack of innovation and adequate publicity through seasonal offers and discounts.
4. The sales team of The Business is untrained and do not possess the necessary customer skills to acquire huge sales volume.

Post-Acquisition, The Business plan to introduce organisational strategies with respect to each of its major segments. This strategic reformation begins with stating a firm Mission and Vision towards laying the foundation of a sustainable future.

• Mission: The mission statement of The Business aims to unfold its company goals in the shortest format that serves to attract the stakeholders. It seeks to emphasise on fulfilling its initial purpose of achieving the target conditions of a successful organisation which is attainment of customer loyalty through superior quality products and competitive pricing.
• Vision: It indicates the long term goals that The Business wishes to be recognized by. The vision focuses primarily on deliverance of excellent customer service and creating a nation that is self-sufficient in terms of regular home-improvement needs. Other than that, the company also draws reasonable attention towards maintain corporate values such as honesty, integrity and respect through building a workforce that can contribute productively to mankind.
• Corporate Level Strategy: The Corporate level strategies enable to provide the organisation with the fundamental objectives of Growth, Stability and Renewal Strategies (Kuo2013). A business is primarily driven by distinct market needs and aims. Fulfilment of these needs help in determining how stably the company would be surviving in a competitive environment. Growth strategies are impacted by how innovation in the products and services are able to familiarise potential customers about their latent needs and thus help the organisation in earning considerable financial returns on the promotional investments towards attracting the customers. Larger the revenues earned, better the scope becomes for acquiring greater market share. When the company has acquired a reasonable market position, it aims at expanding through horizontal or vertical integration or diversification. Successful strategies in the past are likely to be used again with infusion of technological advancement and innovation. It helps to ensure stability in its business operation.
• Business Level Strategies:It can be explained through Core Competencies, Porter’s Generic Strategies to gain competitive advantage, Value Chain Analysis and Competitors Analysis.

  The core competencies of an organisation like The Business lies in the following—

• Efficient supply chain management
• Purchasing operations that are centralised
• Brand Image
• Customer service
• Several competitors giving the customer a hoard of options to choose from
• Strong distribution chain helping in expansion from being a regional store to a global store
• Brand loyalty in domains such as plumbing, electrical fitting, paintwork, flooring, hardware appliances
• Achieving cost efficiency through competitive pricing.

The harmonized combination of these above resources help in positioning a company involved in home improvement and hardware supplies gain the necessary competitive advantage needed to sustain its growth and acquire stability.

Porter’s Generic Competitive Strategy aims to provide a company an insight on its relative position in the industry or market. This position is essentially determined by the firm’s profitability in light of its competitive advantage over firms delivering similar products which it achieves either through low cost or differentiation. The Business being acquired by another firm that specialises in grocery retails, there is a huge scope for differentiation. Customers are usually attracted by such business that can provide for multiple utility based services. The three aspects of Porter’s Competitive Advantage consist of:

• Cost Leadership- It is achieved by a company by being the lowest cost producer. The company pursues this strategy by means of several factors such as economies of scale, preferential access to the important raw materials or proprietary technology. To attain this competitive advantage, the company needs to exploit one or all of these above factors. When it successfully achieves cost leadership, the company is able to establish itself as an above average performer in the industry (Rothaermel2015).
• Differentiation- This strategy is utilised by the company in its pursuit to become a unique supplier of distinguishable products that is able to cater to the consumer’s needs. However, to avail these unique products the customers have to buy it at premium prices.
• Focus- This particular strategy includes competitive scope within a narrower segment of both cost and differentiation whereby either the customers have unusual needs or the delivery system catering to those needs is unique.

Value Chain Analysis consists of a tool that aids a firm in identifying its primary and secondary activities that contribute in formation or materialisation its final product. After the activities have been identified, it proceeds with the analysis of these activities that either set cost reduction strategy or enhancing the differentiation strategies. Therefore, Value Chain Analysis is primarily an analysis-based tool that engages a firm to identify and develop its internal resources that can bring about a transforming effect on the inputs and result in quality assured outputs. Through value chain analysis, an organisation is able to develop a concrete understanding about which resources to prioritise that can yield high productivity. In its pursuit to identify such resources, the organisation also acquires knowledge about developing the necessary strategies to aim competitive advantage (Eadie et al. 2014). The cost and differentiation, yet again play an important role in this analysis. The organisation makes considerable effort in understanding the cost related factors, such as the price levels at which the raw materials or core resources were bought, that yield its competitors with cost advantage. Likewise, the organisation which wants to go with differentiation as its competitive strategy, tries to evaluate by which factor or factors does its competitive firm acquires advantage or face disadvantage.

Overall Strategy for The Business

Through Competitors’ Analysis, an organisation aims at evaluating all such relevant sources by which it can gain valuable insights about its competitors’ strengths and weaknesses and using those insights, it strives to provide strategic contexts towards forming offensive and defensive approaches to identify their respective opportunities and threats. The organisation achieves this goal through effective monitoring, adjustment and implementation of formulated strategies to combat the challenges posed by the competitors’ market value (Valmohammadi and Ahmadi 2015). This analysis forms and important component of the business level strategies by which a firm gains valuable insights on its target customers, their preferences, their own strengths and weaknesses with respect to price, inventory, convenience, service. By assessing these strengths and weaknesses, the organisation constructs a matrix that serves to rate each of the competitor’s success factor against their own and thus provides them with a weighing too for strategy implementation.

• Market Level Strategies:The market level strategies are implemented based customer

segmentation and product segmentation which form the two fundamental parameters for judging the ongoing performance of an organisation. There are multiple factors that serve to impact the productivity and thereby, performance of an organisation including, marketing and promotion of its products or services, customer satisfaction, effectiveness of distribution channels, speed of delivery, after sales service, customer satisfaction and quality of the product or service delivered (Kim and Mauborgne 2014). Higher performance also justify the incremental investment made by the company to reach the heights of sustainable management along with allocation of resources. Therefore, market level strategy and planning can be regarded as that tool that helps the firm to determine what level of increment, with respect to investment made, must be met with a certain level of performance so as to let the firm obtain profitable outcomes. The quality indicators of the performing units forms the baseline to evaluate the company’s current rate of progress with that of its previous years’. Therefore, budget allocation and cross-unit optimisation forms the reference frame for evaluating which input yields the opportunities to result in high performing outputs.

The Balanced Scorecard was introduced to managers across the world as a useful strategic tool for measuring the outcomes of the organisation (Zizlavsky 2014). The tool is constructed on several unit objectives that are meant to create values for current and future customers. These unit objectives are not only relevant in financial terms but also for improving the overall internal capabilities of the organisation like its investment towards creating a sustainable environment for both its employees and customers, its future long term financial return earned through careful assessment of its present competitive advantage, its relation with its stakeholders and the skill development programmes arranged for its employees. The crux of all these unit objectives consist of the mission and vision of the organisation (Kazaure et al. 2016). Through fulfilment of its mission and vision, the organisation aims at:

• Presenting such valuable propositions that would help in attracting and retaining its target customers of a specific market segment
• Producing such financial returns that would satisfy the expectation pf its valued shareholders
• Deliver complete satisfaction of the business units’ performance in the targeted segments.

1. Financial Perspective:

• Productive strategy: It aims to provide a company an insight on its relative position in the industry or market. This position is essentially determined by the firm’s profitability in light of its competitive advantage over firms delivering similar products which it achieves either through low cost or differentiation (Ross2017). The Business being acquired by another firm that specialises in grocery retails, there is a huge scope for differentiation. Customers are usually attracted by such business that can provide for multiple utility based services. There are multiple factors that serve to impact the productivity and thereby, performance of an organisation including, marketing and promotion of its products or services, customer satisfaction, effectiveness of distribution channels, speed of delivery, after sales service, customer satisfaction and quality of the product or service delivered (Mirchandani and Lederer 2014). Higher performance also justify the incremental investment made by the company to reach the heights of sustainable management along with allocation of resources.
• Growth strategy: The organisation achieves this goal through effective monitoring, adjustment and implementation of formulated strategies to combat the challenges posed by the competitors’ market value. This analysis forms and important component of the business level strategies by which a firm gains valuable insights on its target customers, their preferences, their own strengths and weaknesses with respect to price, inventory, convenience, service (David2014). By assessing these strengths and weaknesses, the organisation constructs a matrix that serves to rate each of the competitor’s success factor against their own and thus provides them with a weighing too for strategy implementation. It is achieved by a company by being the lowest cost producer. The company pursues this strategy by means of several factors such as economies of scale, preferential access to the important raw materials or proprietary technology. To attain this competitive advantage, the company needs to exploit one or all of these above factors. When it successfully achieves cost leadership, the company is able to establish itself as an above average performer in the industry.

1. Customer Perspective:

Balance Scorecard for The Business

There are multiple factors that serve to impact the productivity and thereby, performance of an organisation including, marketing and promotion of its products or services, customer satisfaction, effectiveness of distribution channels, speed of delivery, after sales service, customer satisfaction and quality of the product or service delivered (Sakas, Vlachos and Nasiopoulos 2014). Higher performance also justify the incremental investment made by the company to reach the heights of sustainable management along with allocation of resources.

1. Internal Perspective:

To achieve reliable information, the past and present performance records are taken into consideration in order to outline the future strategies. The evaluation pf such internal processes gives the organisation the necessary overview about employee satisfaction that paves the way for customer satisfaction and the overall organisational effectiveness (Coleman 2013). Thus, the balanced score card tool goes beyond the financial perspectives and brings the manager’s attention towards circumstances to ensure adequate employee motivation. It provides the manager with the necessary tactics develop, maintain and improve that motivational level so that employees become efficient enough to make transitional decisions that are aligned with the organisational goals (De Waal 2013).

A business is primarily driven by distinct market needs and aims. Fulfilment of these needs help in determining how stably the company would be surviving in a competitive environment. Growth strategies are impacted by how innovation in the products and services are able to familiarise potential customers about their latent needs and thus help the organisation in earning considerable financial returns on the promotional investments towards attracting the customers. Larger the revenues earned, better the scope becomes for acquiring greater market share. When the company has acquired a reasonable market position, it aims at expanding through horizontal or vertical integration or diversification (Campbell and Reyes-Picknell 2015). Successful strategies in the past are likely to be used again with infusion of technological advancement and innovation. It helps to ensure stability in its business operation.

The primary objective behind implementation of a balanced score card lies in improving the employment conditions of the workers so that they are intrinsically motivated to perform their individual duties (Box 2014). The first step by which balanced scorecard, as mentioned above, tries to achieve this is by improving the financial aspect of the business. It ensures that the necessary perspectives in this field are strategically executed to achieve the bottom-line improvement. Proceeding further, this tool also carefully assesses the flaws within individual resources of the organisation as their contribution is the most valuable aspect. To achieve reliable information, the past and present performance records are taken into consideration in order to outline the future strategies. The evaluation pf such internal processes gives the organisation the necessary overview about employee satisfaction that paves the way for customer satisfaction and the overall organisational effectiveness (Aguinis 2013). Thus, the balanced score card tool goes beyond the financial perspectives and brings the manager’s attention towards circumstances to ensure adequate employee motivation. It provides the manager with the necessary tactics develop, maintain and improve that motivational level so that employees become efficient enough to make transitional decisions that are aligned with the organisational goals. The manager tries to achieve this by first allowing the workers autonomy to make decisions regarding their areas of work. This results in initiating another concept which is that of goal-congruence. Goal congruence refers to organising employee’s objectives in line with organisation’s values (Babnik et al. 2014). For this purpose, it is essential that employees have clear knowledge about their own goals and also that of organisation’s values and objectives. It highlights the fact how general human perspective to achieve an objective is linked with self-interest and how far their efforts is serving to pay off their investment in a particular task. In order to ensure that none of the organisational ethical means are breached in the employees’ pursuit to fulfil their self-interest, it is critical for the organisation to develop strategies as per its present circumstances, improve those of the past and make a clear forecast of its future endeavours (Baker 2014). Organisational learning helps in enriching its valuable resources to become self-motivated and align their pursuits of development through organisational values.

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