Strategic Planning: A Dynamic DutyTiqila Bryson-FinneyOrganization Theory And DesignAugust 7, 2000Coca-Cola and Pepsi Cola are household names. Together they control soft drink market. Their success can be attributed to their overall strategy to produce and promote their products. They both decided to build global brands to bottlers throughout the world.
And a portion of the proceeds goes toward advertising to build and maintain brand awareness. The bottlers are responsible for producing and distributing to vending machines, supermarkets, restaurants, and other retail outlets. However, the advertising is left up to Coca-Cola and Pepsi. In addition, the bottlers must sign an agreement that prohibits them from distributing competing cola brands.
Their strategy is simple, yet dynamic. It forces bottlers to enter into exclusive agreements, which creates a high barrier to entry into the industry. Any potential competitor must create their distribution network rather than use the existing one.
And the large amounts of money spent on advertising helps to develop a global brand name and differentiate their products. Furthermore, brand loyalty allows both companies to charge high prices. Accordingly, managers must study the way other organizations behave and identify their strategies. In an uncertain or unstable competitive environment, managers must hold fast in thorough planning to find a strategy that allows them to compete effectively. Strategic planning involves three major steps: determining an organization’s mission and major goals, choosing strategies to realize the mission and goals, and implementation of the strategies.
Determining the organization’s mission and goals is the first step of the planning process. To define the mission managers must ask themselves “Who are our customers, are their needs being satisfied, and how are we satisfying them?” These questions allow the manager to identify the needs for the present and future. They also help the managers to plan and establish appropriate goals and disregard inappropriate goals. Developing goals give an organization a sense of direction. Coca-Cola’s mission to maximize shareowner value over time is backed by six key beliefs: 1) Consumer demand drives everything we do. 2) Brand Coca-Cola is the core of our business. 3) We will serve customers a broad selection of the nonalcoholic ready to drink beverages they want to drink throughout the day.
4) We will be the best marketers in the world. 5) We will think and act locally. 6) We will lead as a model corporate citizen (Cola, 2000). These objectives are their strategy to increase sales to improve profit. Their goals are ambitious and require that managers continually improve performance capabilities.
Once the mission and goals are agreed upon and formally stated in a corporate plan, the next step is to formulate a strategy.Strategy formulation involves managers analyzing an organization’s current situation and then developing strategies to accomplish its mission and achieve its goals. It begins with analyzing the factors within the organization and outside, in the environment, that may affect its ability to meet its goals now and in the future. SWOT analysis is a technique used by managers to analyze these factors.
Its planning exercise identifies organizational strengths, weaknesses, opportunities, and threats. Based on SWOT analysis managers are capable of implementing the best strategies to achieve its organization’s mission and goals. It is assumed Coca-Cola has a well-developed strategy, brand name reputation, good marketing skills and differentiation advantage as strengths.
One of their opportunities was expanding into foreign markets. One of their weaknesses would be their recent conflict and politics. And a potential threat would be an increase in industry rivalry (Pepsi). With the SWOT analysis completed, and strengths, weaknesses, opportunities, and threats identified managers can determine strategies to achieve the organization’s mission and goals. These strategies should enable the organization to attain its goals by taking advantage of opportunities, attacking threats, building strengths, and correcting weaknesses. After identifying the strategies needed to achieve an organization’s mission and goals, managers must confront the challenge of putting those strategies to action.
Strategy implementation requires managers to allocate responsibilities to appropriate individuals or groups, draft detailed action plans that specify how a strategy is to be implemented, establish a timetable for implementation that includes precise, measurable goals linked to the attainment of the action plan, allocate appropriate resources to the responsible individuals or groups, and hold individuals or groups accountable for the attainment of goals (Contemporary, 1998). Implementation requires that the total organization be in agreement to the full plan. It requires that the strategies be documented and communicated.
Room should be left for adjustments or corrective actions. It is also wise to track performance and compare expectations. According to enTarga business, the Balanced Scorecard concept should be used to study in the implementation process. It involves analyzing the cause and effect of business processes needed to implement the strategy. Then, organizations must build into their culture processes to facilitate learning. Building knowledge is keen in supporting the strategy. However, all efforts will be wasted if not carefully implemented because people are naturally resistant to change.
Coca-Cola recognizes there is a right time and place for their product; therefore, their strategy makes room for adjustments. There is more than one way to enter and compete in any industry; however, gaining efficiency, quality, innovation, and responsiveness to customers requires that a strategic plan be in tact. It can help an organization achieve a competitive advantage by lowering the cost of creating value, or by adding value above ad beyond that offered by rivals. Coca-Cola strives to create value for their consumers, customers, bottlers and the community. They believe their success depends on their ability to satisfy their beverage consumption demands and their ability to add value for their customers.
Nevertheless, attaining efficiency, quality, innovation, and responsiveness to customers requires a strategic plan.Business Reports