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Key Topics
Requirement
BUSINESS STRATEGY
Solution
Introduction
The brand Puma is taken for this report in order to study the business strategy as it is a multinational of Germany which manufactures and design causal and athletic footwear, accessories and apparel. The brand Puma is headquartered in Germany. The company was established in 1948. The company offers products and services across the globe. Moreover, the company faced issues from the competitors like Nike, Levis, etc. Further, the report will suggest the most suitable alternative strategy which will be related to the limited growth, retrenchment, and substantive growth. And on the basis of selection techniques i.e. suitability, acceptability and feasibility and the risk analysis the best strategic alternative is chosen. Further, the implementation of chosen strategy will be given with respect to the roles and responsibilities of the personnel and the estimated resources. It will be made sure that the chosen strategy will be the contribution of targets of SMART goals. And the implementation will be understood by the help of project management tool.
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Analysis of the Alternative strategies
The alternative strategies are given below which are in line with the objectives and mission statement of the brand Puma:
•Substantive growth strategy-
Horizontal integration- The brand Puma can merge or acquire the other company of the same sector or industry as this will help in capturing market share and value to a great extent than before (Peng, M.W., 2002). The power of competitiveness of the company which is merged or acquired can raise the substantive growth. This will help in reducing rivalry among the competitors and will also help in maximising the bargaining power. But the drawback for this strategy is that there will be issues with the merging managers, cultures and operations.
•Limited growth strategy-
Innovation- The brand Puma needs a radical change in the operations of the business in order to retain and maximise the market share. The company should try to come up with the innovative products which the competitors are not offering. Further, this will help in maximising the profitability, and the company will be able to engage more customers and retain them (Kaplan, R.S. and Norton, D.P., 2001). As a result, the company will be able to attain the sustainable competitive advantage. This will help in achieving early benefits to the curve of learning and will also help in creating barriers for the new entrants. The drawback for this strategy is that there is uncertainty in the demand for products, the buying behaviour of the buyer's change according to the advancement.
•Retrenchment strategy-
Cost reduction- The brand Puma can use this strategy of retrenchment in order to retain and attract more customers. The company should attempt to reduce the prices of the products which they are offering like footwear, apparels, etc. This will help in giving tough competition to the competitors because the customers prefer to buy the products which are low in price and further the products of the best quality (Miles, et al., 2001). This will help in facing the competition from the competitors and will help in achieving a sustainable competitive edge but for a short period of time as the preferences and the taste of the customer's changes with the time and the competitors try to come up with new strategies in order to compete.
As a result, it can be clearly understood that the alternative 1 is the most suitable for the brand Puma because the total score of sustainability, flexibility and feasibility is more as compared to other alternatives. Therefore, the horizontal integration will be more suitable for the company in order to maximize profitability, and this will help in attaining sustainable competitive edge for long term period and the company will be able to expand its operations in more countries than before and moreover will help in engaging more customers (Rothaermel, F.T., 2015).
Justification for the Selected Strategy
This section will help in understanding that the selected strategy is justified or not. Further, the advantages and disadvantages of each alternative are given in order to know the negative and positive impact of each alternative on the company.
•Alternative 1: Horizontal integration
The positive impact of horizontal integration strategy on the brand Puma is:
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This will help in maximising the profitability by reducing the structure of the cost and maximising the economies of scale.
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This will help in reducing the replication of resources among the two companies.
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It will help in maximising the product differentiation and will provide the wide range of products to the customers by saving their money and time. It will further help in leveraging the created relationship with the customers.
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The strategy will help in replicating the business model in the new segments of the market.
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The strategy of horizontal integration will help in minimising the rivalry in the industry and will further help in implementing the coordination of price with the rivals.
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The strategy will help in maximising the bargaining power, and this will further help in gaining more control.
The negative impact of horizontal integration strategy on the brand Puma is:
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The strategy of horizontal integration will give rise to the monopoly, and it is not encouraged by most of the governments because of less competition.
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As the Puma is a large organisation so the strategy might reduce the flexibility.
•Alternative 2: Innovation
The positive impact of innovation strategy on the brand Puma is:
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The strategy of innovation will help in capturing the great market share as the company will manufacture unique products in footwear, apparels, etc.
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The strategy will help in achieving the benefits of monopoly in the market.
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The strategy of innovation will help Puma in dominating the distribution and supply chain.
The negative impact of innovation strategy on the brand Puma is:
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It will result in the imitation of the low cost.
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The innovation strategy is not appropriate for a longer period of time because of the changing behaviour of the buyers and their needs according to the situation
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The adoption of the innovation strategy might be a problem for the company in long run as a there uncertainty of demand in the market.
•Alternative 3: Cost reduction
The positive impact of cost reduction strategy on the brand Puma is:
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It will help the company to improvise the competitiveness and profitability.
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It will help the company is minimising the cost of the products and improving the quality of those products.
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It will be indispensable in order to gain the higher productivity.
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If the product's price remains stable, then the company will be able to maximise the sales and the workforce.
The negative impact of cost reduction strategy on the brand Puma is:
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The flexibility and the process of improvement will minimise, and it might impact the company to a great extent.
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The company will not be able to innovate because of the reduction in the prices.
As the objective of the company is to become the fastest brand of sports in the world, the strategy of horizontal integration strategy will be the most suitable alternative strategy for Puma.
Responsibilities and the Roles of the Personnel
The implementation of the horizontal integration strategy requires a strategic project manager and the consultant who will lead the other personnel and would divide the work among the employees as per their role in the company Puma. For the effective implementation, the project manager has to make sure that the responsibilities and the roles of the personnel are clearly defined so that they can work accordingly without any chaos.
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The strategic project manager will monitor the project which will contribute to the success of the company. This will help in demonstrating the opportunities for the company in order to acquire with other brands. The project manager will design the strategic plan to minimise the operational cost and identifying the defects and the wastes. Further, the consultant will analyse the strength, weakness, opportunities and threats of the company by using the management tool in order to find that how the company will get impacted from the strategy of horizontal integration.
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The strategic project manager will ensure that the resources are completely used without any wastage. Further, he will make sure that the organisation has an adequate personnel in order to complete the desired tasks and responsibilities. The consultant helps in making documentation and advice the strategic project manager during the planning phase and even during the time of implementation.
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The project manager will monitor the jobs of the employees to make sure that the strategic plan gets completed on time and it is being implemented effectively. He will ensure that the employees are given adequate strategic training. Further, the meetings will be conducted with the stakeholders in order to know their opinion about the implementation of horizontal integration strategy. Moreover, the project manager assures accuracy and scheduling and also maintain and monitor the consistency of the effective implementation. Further, the role of the consultant is to provide guidance at the time of reviewing the project report.
Therefore, the Gantt chart is used which is a project management technique, and it demonstrates the activity schedule and the responsibility chart in order to understand the effective implementation of the alternative strategy i.e. horizontal integration.
Estimated Resource Requirements
To implement the strategy of horizontal integration effectively there could meet a requirement of various resources which can help in the continuity of the activities and the operations of the company Puma. The company require adequate resources in order to focus on the process of strategic implementation. Further, the estimated requirements of the resources which are required for the effective implementation are given.
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Raw materials- It is the most important resource which is required by the company for the horizontal integration as this will help in expanding the business. It is very important that the resources are available in adequate quantity as this will help in improving the quality of products, and the target market segment will be justified.
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Financial resources- The financial resources will be required in order to acquire the raw materials which will help in improving the quality of products. Financial resources are significant for the company because it will help in achieving the expected results of the strategy. It is very important that the company has a strong financial base in order to implement the horizontal integration strategy. Further, the financial resources will help in bringing profitability and stability in the operations and the activities of the business.
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Human resources- Human resources are also the most important resource of the company which are taken into special consideration because it consists the personnel of the organisation. For the effective implementation of the strategy, it is important that the personnel is creative and innovative. The attitude of the personnel should be disciplined and innovative. Further, the competency of the human resource will become the strength and identity of the Puma, and this will help in effective implementation of alternative strategy i.e. horizontal integration. The personnel should have the potential to create the innovative products which will further help in gaining competitive advantage and the sustainability.
Therefore, the above-given resource is significant and are required for the effective implementation of the horizontal integration strategy.
Contribution of SMART Targets
In Puma, the SMART targets will help in gaining the objectives and goals in a planned way. The SMART targets ensure the stability and the movement of the organisation into a set direction. Below is the SMART target description (Haughey, D., 2013).
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‘S' is for the specific targets that are the accreditation in the profitability and the market share for the Puma. The company is committed to maximise the market share by 7 percent quarterly.
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‘M' is for measurable targets which are set by Puma. It contains 8 percent of accreditation in the market value which is measurable by calculating profitability or simply counting the sold items.
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‘A’ is for achievable targets. It can be clearly understood that the above-given strategy is implemented effectively then the target would be achieved in an appropriate manner. As a result, Puma will definitely achieve the desired results on the basis of selected alternative strategy.
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‘R' is for realistic targets. It can be clearly understood that the objective which is set by the Puma is realistic in nature. There is no claim of unrealistic which is being done by the organisation in order to maximise the market share by 7 percent.
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‘T’ is for the approach of time bound of Puma in accordance to SMART goals. It can be clearly understood that the approach of time bound depends on the quarterly assessment. The targets can be revised in every two years only if the each quarter delivers the accreditation of 7 percent in the market share (Puma US. 2016). Therefore, the objectives will help in avoiding and handling the slowdown of the operations and activities of the business.
Conclusion
With the help of this report, it can be clearly understood that the strategies of the business are the crucial elements which impact the rate of the future growth of the brand Puma or any other business. And further require focusing on the strategic plan of the business in the desired way. The main learning of this study is in relation to gain the knowledge about such factors that are considerable in the planning of strategy. Further, the project management tool and the SFF matrix is used for the better understanding of the effective implementation of the chosen alternative strategy i.e. horizontal integration. Then, the role and responsibilities of the strategic project manager and the consultant are given in the strategic implementation. Then the resources which are required in the strategic implementation are given which will help the company in achieving sustainable competitive advantage and maximise the market share and the profitability. The other learning of this study is relevant to the usage of alternative strategy application to improvise the present market position of the brand Puma.
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Haughey, D., 2013. SMART goals. Project start. co. uk: Exploring trends and development in project management today.
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Kaplan, R.S. and Norton, D.P., 2001. The strategy-focused organisation. Strategy and Leadership, 29(3), pp.41-42.
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Miles, R.E., Snow, C.C., Meyer, A.D. and Coleman, H.J., 2001. Organisational strategy, structure, and process. Academy of management review, 3(3), pp.546-562.
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Peng, M.W., 2002. Towards an institution-based view of business strategy. Asia Pacific Journal of Management, 19(2-3), pp.251-267.
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Puma US. 2016. Shoes, Clothing and Sportswear - PUMA® Official Online Store. [online] Available at: http://www.puma.com [Accessed 25 Nov. 2016].
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Rothaermel, F.T., 2015. Strategic management. McGraw-Hill.
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