Business strategy plays a vital role in the establishment and progress of any business as it determines the long term goals, objectives, action plans and the required resources to achieve those goals. Thus a business strategy formulates an organization’s approach to establish a market or bring out a business component. This strategy is developed by internal analysis of an organization that what is the current situation, what are the strengths, weaknesses and opportunities.
Internal analysis is also significant in order to explore the resources and to develop the competencies to reevaluate the value adding activities to be more established and to address the weaknesses that might hinder the progress of the business. The next Step is future planning to determine the goals and then the most important step is to think and formulate an action plan to achieve the goals. A case study of a small private trading company is going to be discussed below in which I am going to suggest a business strategy for a business organization that will be certainly beneficial for its stakeholders. . The Company Safely. S. A (Quito, Ecuador) is jewelry trading private company. This many has been operating in the silver jewelry trading world for the last four years. The chief executive of this company is a single person. He has contacts with the jewelry shops in the city and provide them on the whole sale rate. He employed five people who sell this jewelry in other cities. He pays his employees on monthly basis. The aim of this company is to become one of the biggest jewelry trading companies in the city and to earn more profit. 2.
Products: This company imports the sterling silver jewelry with and without precious stones like ruby, emeralds, sapphire, and turquoise etc. His jewelry is usually imported from Thailand which is famous for its best quality silver in the world. 3. Target Market The target market for ‘Safely. S. A’ is both men and women. It offers variety of ornaments like rings, earrings, pendants, bracelets, bridal sets. The company believes in providing the original sterling silver jewelry to the customers. Therefore, for the reliable¶y’ of the customers, every single piece of the jewelry has its originality stamp 9. 5 by the factory, so that customers could feel confident in buying the original things for which they are paying. Being original this company’s products are a little bit expensive and because of this customers’ ratio is not as high as most of the people like to buy cheap stuff. Usually during Christmas, there is peak season and this company can earn more than during the rest of the year. So the plan of the company is to reevaluate its strategy to maintain its income throughout the year. The employees of the company are not working hard because of their fixed salaries.
Therefore, from the last one year income of this company is not as much as it was in the beginning of the business. STOW and PESTLE analysis is very important for strategic planning as it depicts to an organization about the environment that how it affects to the achievements of the desired goals. 4. STOW Analysis: In the case of ‘Safely S. A. ‘ the foremost specialist of the company is that it sells original sterling silver with original stones. For the customers’ reliability each single piece of the jewelry carries stamp of 9. 5. The jewelry which is sold by this company is famous for beautiful and unique designing. Most of the customers are loyal to the company and are permanent patrons. These customers are usually well off people who love to buy unique and expensive bits of jewelry so they spend money generously. This jewelry is imported by Thailand and the owner of the company has direct dealings with the jewelry factories and is also a regular client so he is able to buy his stock on cheaper rates than other traders.
The weaknesses that cause the decrease of income of the company gradually are mainly because of the shortcomings in the management strategy. First of all there is only single person who deals with all the matters Of the company like contacting the factories, dealing with preventatives in other cities, selling on whole sale in the city and visiting the fares and events on the beach areas where generally people come for outing and like to buy unique things. Therefore, to manage all this by single person is not possible to do everything properly at the same time.
Salesmen working in other cities are not taking interest in selling the stuff because they have their fixed salaries so even if they don’t sell anything but they can take their monthly wages regularly. There is no one to monitor them. There is no advertisement of the company at all except the mouth of the people. Modern ways of selling like selling through internet, T. V are not used. Only high quality silver jewelry with or without precious stones are being sold. Therefore target market is only rich people and consequently no high range Of customers that leads to less profit.
Most of the jewelry is bought by the selected same factories so there is no much variety in designing. In spite of these weaknesses, however, there are bright chances for ‘Safely S. A’ to develop its business and go on peak. There are many opportunities like, if the owner of the company will take advantage of the Government?s policy of vying loans for self employment and import jewelry in bulk then he will be able to get it on low cost and he could earn good profit.
Having unique styles of jewelry it could be sold in the events or fairs where such people are expected to come frequently who love this type of jewelry. There is also another opportunity for this company to develop its business by diversification. As in jewelry trading diversification could be easily managed by not selling just stones with silver jewelry but by selling silver look like jewelry or with Other cheap metal can also be sold beside the silver ones. In such a way customers’ range could be higher than before.
Visits to the neighbor countries are also good opportunities as being an Ecuador national; no visa is required for South American countries. There he can expand his clients’ circle. There are some political factors that always play a threatening role for the importers. Same is the case with this company that if the Government announce for the custom duty on the import of this jewelry then the profit margin will be less. There are also chances of foreign trade policies in the country from where this jewelry is being imported.
Ups and owns in the economy of the country is also a threat for this kind of business because people buy jewelry when their basic needs are fulfilled easily and if average of the country is suffering from inflation then there are always chances of loss in this type of business and Ecuador is also a third world country where majority of the people is not financially strong. Customers’ choice and preferences are also subject to change due to the modern communication ways which play their roles in developing people’s liking and disliking and that might affect this business.
There are some more traders in he city who are doing the same business but they are selling the look like silver jewelry, thus there is always chance of the regular clients to go to these traders because of the cheap rates. 5. PESTLE Analysis Political situation of a country always plays a vital role in the progress of any business. The political situation can be beneficial and harmful also for ‘SAFELY S. A’ as if there is any change in the tax, or custom duty on the import of jewelry. Economical situation of the country can also effect on the buying ratio of the company.
Because of social changes in the society, people’s thinking and liking can effect on the company’s business. Advancement of tech oenology is very sign efficient for the business growth and in promoting new trends in jewelry it can also bring change in people’s liking and buying habits. Environmental and legal issues are also very important for consideration because changes in these rules and regulations could be valuable in growth of this company’s business. By keeping in mind the STOW and PESTLE analysis of ‘Safely S. A. ‘ there is a proposed business strategy to implement in place of the current business strategy. . New Business Strategy 6. 1 Changes in Management: There is need of change in the structure of the company. So instead of centralization, decentralization is required where delegation of authority is converted to subordinates as well. Therefore, there should be managers who manage different fields of the business. As one manager deal with imports’ issues, other manager look to the customers’ in the city and one manager should appoint to monitor the sales men in other cities and all of these managers have to report about their specific areas to the owner of the company. This is also called Matrix Structure.
To increase motivation of the salesmen there should be incentives for them as for the increase of their selling there should be more commission on achieving certain selling target. Instead of the fixed salaries there should be commission system which should be based on their selling and discounts for them on their own purchasing etc. To expand the business circle, more salesmen should be hired to send in other cities. 6. 2 Sales Strategy Advertisement plays a vital role in promotion of any business so up to date ways of advertisement should be used like internet, newspapers, T. V channels that work for selling things.
There should be offers during specific period in the year like on Christmas or Easter when people usually buy more than during the year and on buying certain amount something free or cheap. There should be special discounts for the permanent customers to increase their loyalty. Such strategies can motivate customers to buy more and they always prefer to buy from such company again and again because of the discounts. 6. 3 Financial Consideration: To meet with the problem of finance partnership could be done. In this way o manage finance as well as business structural problems could be easily overcome.
In this way the responsibilities could be shared also. After dealing with the financial problems some strategic changes are required to improve the income Of the company. When there is big amount Of money because of the partnership, then to importunately in bulk will be very beneficial for the company because in this way per item cost will be less and profit margin will increase on the other hand. Instead of taking jewelry by one factory, try to develop good business relationship with other factories as well so that variety f designs could be introduced in the market by buying some amount from them. . 4 Diversification As there is only a selected type of customers buy from this company because mostly people in this country are not so strong economically so diversification is very important for it to expand the customers’ percentage. For this purpose besides the sterling silver jewelry, artificial jewelry and silver look like jewelry should be introduced as well so that the customers who could not afford the original silver jewelry they might buy the artificial on lower rates.
For the customers who love stones for them jewelry could be imported with stones but in any cheaper metal instead of silver. Thus customers range could be extended. 6. 5 Research & Development: Research and development is a significant aspect of a business thus the visits to other traders who are doing the same business can be beneficial that how they are doing that business. To go in the market is also good to know about the new trends and people’s likings and for current prices prevailing in the market. Diversity management is very important in every business and same s with the jewelry industry.
By visiting such places where many people come, diverse choices of the people can be seen and clever managers note them and consider these experiences in planning and modifying their strategies. In this industry there is tough competition so by introducing new styles and stuff and understanding the capacity of buying of the customers, this company can earn more. 7. Significance of New business Strategy for Stakeholders The new business strategy is noteworthy for the stakeholders of ‘Safely S. A ‘because it can increase their profit margin higher than before.
The stakeholders of this company are the shareholder, who is business partner, customers, Government, suppliers and salesmen. If we see the new business strategy in perspective of these stakeholders’ benefit, then we can understand that this strategy is very beneficial for them. As if the owner of the company has partnership with another person who can invest some money then he can buy more jewelry in bulk and can earn more profit. It s also advantage for the shareholder that with less effort he can share in already settled business.
By diversification of artificial jewelry besides silver allergy can give boost to the customers who can’t afford the expensive jewelry. Thus customers’ ratio will increase and bring more profit to the company. The suppliers will also be at benefit because of the new policy as they have to supply the more quantity of jewelry which can increase their income. Government can earn more by custom duty and taxes on the import export business. The salesmen of the company who sell in other cities for the company can also increase their salaries by selling more as because of variety in jewelry they can sell it to various types of customers.
Thus the new reposed strategy can be more profitable for the stakeholders of the ‘Safely S. A’. The new suggested strategy can be examined to see its results at least after one year, because to hire competent managers who can deal with their specific area appropriately is, time consuming and hard task. For example the manager who would be delegated to manage the import concerning issues should be aware of all the aspects of import/ export system. Same is with other managers who will monitor salesmen in other cities and the one who deal within the city must have competencies in their fields.
The companies which are good in business always make their “talent strategy part of their strategic planning process and integrate it into daily operations”. (Burgeon 2004) Therefore selection of talented managers is inevitable for successful business. Good communication among all the managers and the owner is also very essential. After one year period of time the success or failure of the new strategy could be proved on the following grounds; annual income is increased or decreased by comparing the previous profit and loss records, ratio of the loyal customers, reputation of the company among other allergy trading company etc.