Strategic Framework Evaluation for HFL

Scenario 1

Introduction

In this report detailed analysis in the organizational context of High Flyers Limited (HFL) would be studied to interpret the present issues inside the company and the way they can handle those hindrances. As mentioned in the case study, HFL is a UK-based company that deals in products that are associated to gymnastics, like exercise mats, cosmetics, sports costumes, footwear, and bags. The way HFL Company must deal with its competitive pressures has been discussed properly in the report. Additionally, in the discussion part of this report, external environment of HFL Company and its impact over the strategic framework has been mentioned with proper references.

Discussion

The company, High Flyers Limited can be enlisted under small and medium sized enterprises (SMEs) as per UK business norms. Around 150 employees are working under this manufacturing and wholesale unit. The company is renowned for its handmade products that are of elevated quality standards. High Flyers Limited employs potential individuals who are passionate about their job and they are given proper training such that the quality standards of the products are not compromised. To better interpret the organizational environment, analysis of the internal and external environment are essential. SWOT analysis is important for analysis of internal environment whereas PESTLE or PEST framework is necessary for analyzing the external environment of a business. As the name suggests, external factors are majorly counted under the external analysis and Political, Economic, Socio-cultural, Technological, Legal, and Environmental factors are discussed under this model (Dhingra, Ottaviano, Sampson, and Van Reenen, 2016). Among the total produced amount, 60% of its products are sold in the domestic UK retail markets and rest 35% is exported. The USA and Canada are the major markets where the products are exported (Lewis, 2017). Additional advantage is the company has opted for digital marketing such that over 14% of the products are sold to the clubs and sports circle (Yin, 2016). Two reasons, first one is large duration of day to pay their invoices and second one is low level of gross profit margin for sales are reasons that UK retailers in the sports segment would lack interest in selling the manufactured products (Lawless and Morgenroth, 2019). Whereas personalized gymnastic costumes that are manufactured as per the requirements of the customers are mostly sold through website to clubs. There are around six competitive companies like HFL in UK although those companies are more towards lower quality products than HFL (Yankah, Aigbavboa, and Thwala, 2018). But the average price of HFL is way more than the price of the products of lower quality brands (Wellner, and Lakotta, 2020). HFL gains the competitive advantage in terms of high quality fabrics and craftsmanship of the workers. Customers obviously prefer long lasting costumes over lower quality fashioned products (Lewis, 2017).

Speaking of external environment, legal domain is essential for sales and marketing of the manufactured products in the domestic as well as international market (Lasserre, 2017). A number of sporting initiatives have been promoted by the UK Government that has influenced the uprising of products associated to sports and gymnastics (Tetlow, and Stojanovic, 2018). In fact, HFL has been given with the power that the company can sell all the manufactured products in the domestic market. The company has been permitted with the consent that they can increase the prices of VAT on sporting goods up to 22% (Wheelen, Hunger, Hoffman, and Bamford, 2017). This initiative would be helpful for them to uplift their revenue. But industry researchers mentioned that because of this decision the domestic sportswear manufacturing industry would be deceased (Lawless and Morgenroth, 2019). To understand the competitiveness in the market, in detailed discussion with the Porter’s Five Forces Theorem would be helpful.

Porter’s Five Forces Theorem

Michael E. Porter in 1979 took rivalry among market competitors, threat of substitutes, bargaining power of suppliers, bargaining power of customers, and finally threat of new entrants- as five elements that are competent for anticipating profitability and competition in the market (Lawless and Morgenroth, 2019). This theorem is an important macro tool in business analytics using which the organization can understand the level of competitiveness in the market and self-evaluate the position of the company amongst others in the UK retail market (Portes and Forte, 2017).

Competitive rivalry in the market: There are around six companies that are dealing in the same industry. But quality services and high standard products have aided the company to hold its position in the market.

Bargaining power of customers: The Company has been facilitated by the UK Government that they can regulate the prices and put TAX as per their consent on sporting goods. This would impact the customers buying behavior and they would become more prone to buy other brands.

Bargaining power of suppliers: Increased revenue must be divided proportionately otherwise suppliers and distributors may look for other alternatives.

Threat of substitutes: There have been many alternative brands that are presently dealing in the same segment in the domestic market of UK. HFL must implement lower price strategy and segment their products such that customers from lower economic background can also buy the products (Busch and Matthes, 2016).

Threat of new entrants: Presently the UK government supports the industry but they must be ready for any such situations. As more number of other companies can appear because of profit (Bloom et al. 2019).

Automated cutting process has been another step of the company to aid the labors and workers. Traditional work process has been embedded in the strategic framework of the company, though presently new steps have aided the company officials to reach its organizational success (Dhingra, Ottaviano, Sampson, and Van Reenen, 2016). In fact in the case study it has been observed that sports club can submit their preferred designs of gymnastics costumes such that fixed price quotation is attained for an item (Tetlow, and Stojanovic, 2018).

Conclusion

In conclusion it can be understood that HFL must look into implementing stable yet profitable business strategy to sustain in the market. The company must discuss with the business heads and executives for better decisions regarding impact of increased VAT on the prices of sporting goods, the import-export of the goods in the domestic and international market, and low gross profit margin for sales in UK sports retail market. Moreover, Porter’s five forces theorem enables the shareholders to evaluate the present positioning of the brand and competitiveness in the market. Additionally, the domestic political scenario and the exit of UK from the European Union in 2016 have impacted the import-export scenario of the retail market of UK severely. As reported from the newspapers and reports, because of this decision the price of imported products has amplified and demand of UK products in Canada and the USA is going to see an upsurge.

Scenario 2

Introduction

In this corporate appraisal report the internal elements of a business environment has been discussed under the context of SCH Company. It is known that the major purpose of a corporate appraisal report is to evaluate the strengths and weaknesses of the company through SWOT analysis. This report is essential for preparing the properly evaluated and impactful strategic framework of a business. It can be understood from the mentioned scenario that the company, SCH is a UK-based privately owned organization that deals in care services like home nursing care. This company aids the elderly group to lead a safe lifestyle with the help of a caretaker. This is a private organization so that the patients are charged accordingly for their given services. This appraisal report is based on the analysis using the strategic tools and models that include Strategic directional growth vector matrix of Ansoff, SWOT analysis, JSW model that would aid the shareholders to investigate the positioning of SCH.

Discussion

SWOT analysis

SWOT analysis would be performed in this part for analyzing the strengths, weaknesses, opportunities, and threats of the company (Boafo, NKraa, and Webu, 2018).

Ansoff's strategic directional growth vector matrix

Ansoff's matrix framework is considered as a market penetration strategy as this framework enable a company to evaluate the market after observing needs of an existing product in the market (Bhatia, 2016).

Ansoff matrix or better known as the Product/Market Expansion Grid comprises of Market Development, Diversification, Market Penetration, and Product Development as parts (ole Narikae, Namada, and Katuse, 2017). To target new areas of existing market, observations from SWOT analysis has been taken (Mukhezakule, and Tefera, 2019). From that new marketing strategy must be suggested. In the care service industry, customer service quality and standards of service must be improved (The Ansoff Matrix: Understanding the Risks of Different Options, 2020). Understanding the Risks would enable the company to cater better service in the existing market (Yankah, Aigbavboa, and Thwala, 2018).

Among Low impact/low probability, Low impact/high probability, High impact/low probability, and High impact/high probability, the last one is more important. As High impact/high probability considers higher risks along the higher impact that means in the context of SCH higher travelling costs, entrance of new market competitor, central government subsidies to home care patients, lack of capital aids from the government side, and lack of portable medical equipment may generate higher risks (Grossman, 2018). But the company must look for alternative options like more trained professional workforce along with portable medical equipment may generate more revenue (Bonelli, 2017).

Using this Nine-Box Grid of Ansoff matrix, SCH can understand how to expand the market fruitfully in the existing market. But the orange colored elements involve lack of diversification strategy and finally leaving the market.

The Johnson, Scholes and Whittington (JSW) model

This is another important model of modern strategic planning and development tool that include analysis, choice, and implementation as three elements (Loredana, 2016). For instance, in the strategic position/analysis stage, the best position is discussed, after that better one is chosen, at last the strategy is turned into action at the implementation stage (Business strategy, 2020).

The strategic position/analysis

This company falls under SMEs as overall 150 staffs are working under this company. The company has been giving services primarily to around two cities of England. The company has segregated their team into two teams. One team consists of call centre and another is comprised of nursing staff. Staffs are employed based on hourly-based, part-time to full-time. After assessing the strategic position of the company it can be understood that threats and weaknesses include higher travelling costs, entrance of new market competitor, lack of investment in training and portable medical equipment and aids from the government side, and lack of capital. Whereas better services and professional treatment at home, share up to 20% in the South east part of England are some opportunities (Yin, 2016). The stakeholders must employ more skilled human resource and buy more portable gadgets whereas provide more training also.

Strategic choice

SCH Company must consider internal development (organic growth) as well as external development of the company. But average visit time of SCH is 20% higher than the local authority of UK government. Additionally, SCH has to pay higher wage rate per hour to staffs. But the company has planned to increase visit time more than existing time. But for that more human resource is required. Speaking of demographical figure of the population, there has been a significant upsurge of elderly population. Additionally funding in the hospital and nursing homes have been reduced that resulted in the high demand of care services. Moreover referrals from local hospitals and doctors have enable SCH to receive of new customers.

Implementation

To handle the capital issue SCH can start joint venture and merge larger companies and start franchising and must provide licenses to the skilled caretakers. Whereas travelling costs must be cut by employing local people to such areas. Managing change and restructuring are crucial for SCH (Wellner, and Lakotta, 2020). Auxiliary staff and qualified professional nursing staffs are employed by the company and even after employment they are given training. After evaluating the opportunities of SCH the company is believed to attain around 20% profit on its present market share from the South east part of England. Spare capacity would be an important buffer point in such scenario (Lewis, 2017).

Conclusion

In conclusion it can be understood that this report would be essential for the stakeholders of SCH. This corporate appraisal report would aid them to interpret the strategic business framework of this company from its strategic position. Furthermore, evaluation of those options would enable the company to meet its goal and ensure organizational growth. Strategic tools and models like Johnson, Scholes and Whittington (JSW) Model, Ansoff's strategic directional growth vector matrix, and SWOT analysis have been included in this report to evaluate the strategic position and choose the most appropriate strategic options. In the market there are local government funded operators but in small number and rest are private organizations. One significant point is the travelling cost. The major portion of expenditure consists of the travelling costs, as the staff has to travel to patient’s home, this cost cannot be trimmed. This can be a potent threat to such privately owned companies as these companies cannot bare such extra expenses.

References

Bhatia, J., 2016. Porter's Five Forces Industry Analysis of Indian Passenger Car Industry. Pacific Business Review International, 8(7), pp.113-123.

Boafo, N.D., Kraa, J.J. and Webu, C.G., 2018. PORTER’S FIVE FORCES IMPACT ON THE PERFORMANCE OF COMPANIES IN THE BANKING INDUSTRY IN GHANA.

Bonelli, M., 2017. Leadership Within Strategic Management: Measuring Corporate Equity Value Using Igor Ansoff's Strategic Posture Analysis (Doctoral dissertation, Alliant International University).

Dhingra, S., Ottaviano, G., Sampson, T. and Van Reenen, J., 2016. The impact of Brexit on foreign investment in the UK. BREXIT 2016, 24(2).

Grossman, R.L., 2018. A framework for evaluating the analytic maturity of an organization. International Journal of Information Management, 38(1), pp.45-51.

Lawless, M. and Morgenroth, E.L., 2019. The product and sector level impact of a hard Brexit across the EU. Contemporary social science, 14(2), pp.189-207.

Loredana, E.M., 2016. The Use Of Ansoff Matrix In The Field Of Business. In MATEC Web of Conferences (Vol. 44, p. 01006).

Mukhezakule, M. and Tefera, O., 2019. The relationship between corporate strategy, strategic leadership and sustainable organisational performance: Proposing a conceptual framework for the south african aviation industry. African Journal of Hospitality, Tourism and Leisure, 8(3), pp.1-19.

ole Narikae, P., Namada, J.M. and Katuse, P., 2017. ORGANIZATIONAL POLICY FRAMEWORK AND STRATEGY IMPLEMENTATION GAPS. International Journal of Business Strategies, 2(1), pp.56-74.

Tetlow, G. and Stojanovic, A., 2018. Understanding the economic impact of Brexit. Institute for government, pp.2-76.

Yankah, J.E., Aigbavboa, C. and Thwala, W., 2018, July. An Integrated Holistic Conceptual Framework for Marketing Construction Business Enterprise. In International Conference on Applied Human Factors and Ergonomics (pp. 293-305). Springer, Cham.

Yin, N., 2016. Application of AHP-Ansoff matrix analysis in business diversification: The case of Evergrande Group. In MATEC Web of Conferences (Vol. 44, p. 01006). EDP Sciences.