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Understanding Strategic Management

Anglia Ruskin University

Code: MOD001115

Task:

Write the topic on "For strategic management: Company - Nespresso"

Learning Outcome:

LO 1. Understand the nature of strategic management and its competitive and institutional context;

LO 2. Appreciate the strength and limitation of strategic analysis and how it fits into the overall strategy process;

LO 1. Design a viable strategy for an organisation, which takes account of the reality of strategic decision making and make appropriate recommendation;

LO 2. Identify and critically utilise relevant tools for strategic analysis


Answer

Introduction

The main part of the study includes with the strategic management that needs to be carried out in the organization. The main purpose of the strategic management involves with achieving the set goals that are formed by management of the firm. While carrying out of the strategic management process there are certain analysis rises from the external and internal environments. The strategic management helps in providing the exact directions from which the company's set objectives could be achieved (Mintzberg and Waters, 1985, p. 260). This helps in development of the policy plans that are set from the given objectives. his provides exact planning of the resources that are implemented while working in the company. In this case, the strategic management are carried in the company of Nespresso. The firm Nespresso is formed with the brand name of the Nestle. This firm is located at Switzerland with the unit of Nestle group. This firm develops the coffee products that would be available among all the consumers. 


The company has been reached its annual sales of more than 2 billion in the coffee pricing. The organization also sells coffee machine that are useful for the other customers. The coffee machines are mostly used in the well-known manufactures equipments in the kitchen areas. However, this firm provides the largest producer of the coffee in a worldwide. While carrying out this study, the company mission, goals and the objective statements needs to be focused to yield more profit (Porter, 1996, p. 67). The environmental and capability analysis needs to carry out for knowing the strategic management. There is a high needs to carry out the exact strategy for the planning of the strategies that assist in the development of the firm.


Missions, goals and objective statements

Missions:-

1. The company Nespresso mission statement lies with serving the best coffee among the customers.

2. In order to serve their products among the customers, the firm maintains a high quality service of the products. 


Goals:-

The main set goals of the company is to serve the products among the customers to get the better service keeping in mind with the brand. 

Objective Statements:

1. To identify the main success factors of Nespresso

2. To analysis the internal and external factors of the company

3. To evaluate the current strategic planning used by the firm

4. To analysis with capability of the firm 


Environmental analysis 

While carrying out the environmental analysis there is certain analyses that are based on macro trend analysis. These are PESTLE analysis.


Political:-

In the political factors, the company provides more service that is flexible with the customers keeping the good product quality. The company has adopted new model of business that assist the manufacturing of the better products (Collins and Porras, 1996, p.70). The firm has found different structures model that form the better innovation for developing the good conditions of environment. 


Economical:-

The company has made new coffee development of machines that assist in providing servicing of products among the customers. Moreover, consumer could purchase the coffee machine from GBP 118 to GBP 1400. Some coffee capsules are sold among the customers.  

Social:-

In the social factors there lies with the brand name that helps in spreading the coffee brands among several consumers. Nespresso has made several groups that helps in selling the coffee machines properly designed in every parts of the world. The company has targeted the market premium to introduce their products in a high quality. The firm has formed a high brand image keeping intact with the social impacts. 


Technological:-

The company has successfully launched innovation technologies that are based on three main processes. This are new launching of the product, development of new products and proper protection set for intellectual property (Schoemaker and Day, 2009, p. 85). Moreover, the company has launched in new designs of products that would create the development of the future generations. 


Legal:-

Nespresso has launched their new coffee machines under the proper made license that are available in many stores. The firm has made the new innovation products based on the legal factors. 


Environmental:-

The company is trying to meet up with the environmental hazard that does not cause any type of problems in environment. While making of new products the company has kept in mind about the environmental impacts. Nespresso has made certain approaches that bring in the development of high market (Ofek and Wathieu, 2010, p. 128). 


Industry issues Porter’s 5 force:-

Bargaining power of the consumers (internal):- There is a high presence for the bargaining of the consumers at the time of buying of the products. This power increases with the profit that is exerted by the company.  


Bargaining power of the suppliers (internal):- This lies with the internal pressure that is exerted by the suppliers upon the company. This power increases with the profit made by the firm.


New threats of the competitors (External):- There is an always a high threats of the new coming competitors at the time of carrying out of business. This creates a rivalry for the existing firms and increases a high competition rate. 


Existing rivalry (External):- This lies with the external factor that exists with the competitive forces. This forms a high competition among the existing company that is carrying out their business in the market. 


Substitutes threats (External):- This substitutes lies with the external factors that happens with the increasing chances of the business planning. The new chances help to gain more consumers. 

This analysis helps in identifying the threats and opportunities of the Nespresso Company. From the first analysis made that is PESTLE assist to know the political, economical, social, technological, legal and environmental factors that creates opportunity and threats of the consumer as well as from other companies (Watkins and Bazerman, 2003, p. 76). From the second analysis, Porter 5 forces helps to know the threats present in external and internal areas of the competitors. 

Porter 5 forces

Figure 1: Porter 5 forces

Source: (Schoemaker and Day, 2009, p. 85)


Capability Analysis

Value Chain Analysis:- 

The framework that has been chosen in the strategic capabilities that assist in making the exact framework based on the value chain. This depends on the infrastructure, management in the human resources, developments in the technology and the procurements.  This value chains helps in the development of Nespresso Company. There are certain techniques that assist with providing of logistics based on inbound and outbound policies (Porter, 2008, p.85). The value chain helps in carrying out the sales of coffee products and coffee machines. The consumers in developing the firm take various services. The value chain analysis rise with the micro environment.

Value Chain Analysis

Figure 2:  Value Chain Analysis

Source: (Denrell, 2005, p. 117)


Measures of Performance:-

There are various types of performance performed by the company of Nespresso for improving the economic, social and environmental factors. The company has performed AAA techniques to achieve the better sustainability of the coffee products. The social factors lie with proper practices of the products that assist in improving the condition of the market (Denrell, 2005, p. 117). The environmental factors includes with the good practices of coffee seeds and proper cultivation of agricultural practices. In the economic factors there lies with incorporating the knowledge for improving the market planning. The economic factors also states to increase the productivity of the areas and develop the cost that are invested in the production (Kim and Mauborgne, 2004, p. 79). However, the economic factors also states with improving the principles of the economics and business. This factor helps in identifying the set objectives of the company, industry trends and set benchmark. Organizational factors are formed with improving the quality of the management. The proper market analysis helps in the development new trends of the company. 


VRIO criteria:-

The VRIO criteria have been carried out to make the exact schemes of strategy that helps in the development of business. The VRIO comes out with the internal analysis, evaluating with the capacity of the company. There are several tools that are carried out to know the external analysis. VRIO analysis helps in calculating the exact framework that is based on the resources of the company. While carrying out the VRIO activity there are certain step that helps in the development of the firm based on the fixed resources (Narayanan, V. K. and Fahey, L., 2005, p. 217). This resource helps the organization to make a huge mark in the competitive market. 


The first steps follow with properly identifying of the resources that have a high value in the costing. The second steps includes with the resources that needs to be protected at the time of contributing high in the competitive market. The third steps includes with the firm that helps in exploiting the used resources. This helps in building the exact use of the resources that helps in combining the resources that builds the motivation of the company.


Competitive implications:-

There are certain amounts of strength and weakness arises from the capability analysis. 


Strength:
Strength provides the   better products and services that follow with the exact value chain. The   exact performance is based on the three factors that states with the   economic, social and environmental effects. The VRIO criteria make the exact   distinctive capabilities to know the competitive market strategies.
Weakness:
The weakness lies with   certain factors that lie with the excess demand of the customer for the   company Nespresso.   


Proposed Strategy

SWOT analysis:-

Strength:- 

The company performs the best experience of the coffee. The firm provides a variety of products related to the coffee. It also provides coffee machine that are available among the customers. In order to save the time of the consumers, the organization has made counters to pick the coffee. The firms also provide a high range of the coffee products (Barney, 1991, p.111). The organizations conserves properly of the coffee capsules that assist in making the recycle of the products. 


Weakness:-

The customers are unable to identify many brands that are introduced by the organization in the market. The firm is located at limited places that creates problem among the consumers to find the product. 


Opportunity:-

There is an immense opportunity as the firm provides high demand in creating the market strategy. The firm location provides a variety of new consumers that attract the coffee products. Firm has the opportunity to collaborate with the other companies by keeping the exact brand of coffee products. There are another important opportunity lies with expansion of product and service portfolio. 


Threats:-

There are few threats that the company Nespresso faces while working in the market. The products are increasing at a high rate of competition that is Price War. Several firms manufacture coffee keeping their best product services (Prahalad and Hamel, 1990, p. 80). There are varieties of the other constituents’ products of coffee available in the market.  


Business level Strategy:-

In this study, the business level strategy needs to be carried out to know the present and exact operations of business. Mostly all the large firms perform the business level strategy that assists in carrying out the exact functioning of the business. The business level strategy helps in providing proper guidelines to the management. The staffs and managers to increase the working of the business focus these guidelines. While carrying out the business level strategies there are five steps that need to follow for the better working of business. These are based on the activities based on the proper coordination at the time of performing business. The different planning strategies assist in making the better products and services. The business level strategy helps in utilizing the proper human resources that are required in Nespresso. The exact market niche helps in identifying the proper analysis of the economy that is required at the time of fulfilling of the demand of customer (Kim, 1998, p. 510). Developing a high competition creates of making the firm successful. 


The business level strategies are better planning that could be carried out by the organization of Nespresso. This strategy helps in making the business plan properly calculated to expand the operations of business. The important five steps assist in developing the operation of business. The business level strategies are applicable for small and big firms. This business level strategy helps in building proper guidelines that assist the staff and managers to be focused on the business (Kaplan & Norton, 1996, p. 79). 


Bowman’s Strategy Clock:-

While carrying out the Bowman’s Strategic clock helps to provide a proper framed structure that are based on the price of products and service benefits that are obtained by the consumers at the time of consuming the coffee products of Nespresso. There are certain strategies that are carried out in this planning. This includes with the non-competitive strategy, hybrid strategy, low-price strategy and differentiation strategy (Teece et al. 1997, p. 520). These strategies are formed with the value chain analysis at the time of operation of business. 

Strategy Clock

Figure 3:- Strategy Clock

Source:- (Richard et al. 2009, p. 730)


Ansoff Matrix:-

The ansoff matrix provides the tools that helps in calculating the framework based on the growth that arises from the future aspects. This matrix provides the exact strategy for building the product market planning (Richard et al. 2009, p. 730). The ansoff matrix is formed with the existing and new market strategies. Four steps need to be calculated based on development of product, diversification, penetration of market and development of the new planning in the market. The ansoff matrix helps in the development of strategic methods that are based on development of the company (Heracleous & Wirtz,  2010, p.143). 


The strategic management is based on the proposed strategy that helps in the development of the business planning. These statements are formed with the company’s vision, objectives and mission statements. The proper strategic planning needs to follow with the fixed objectives that help in achieving the set goals. 

Ansoff Market

Figure 4: Ansoff Market

Source: (Kumar, 2006, p. 106)


Strategic statement:-

The strategic statements assists in the competitive planning that are required to achieve the scope, advantage and main objectives that are set by the firm that is Nespresso. The strategic management helps in communicating the made strategy that assist in making a new startup of the business operation (Kumar, 2006, p. 106) The main parts of statements lies with scorecard with the balance planning, vision, values, strategy, mission and the set objectives formed by the firm.  


Strategic Evaluation

Suitability, acceptability and feasibility (SAF):-

Sustainability:-

This deals with the main rationale of the proposed strategy. This process reflects with the SWOT analysis. This also creates high opportunity in avoiding the threats that are formed by external environment. 


Acceptability:-

This deals with different stakeholders that are associated with carrying out the business, there are certain risk associated with the based strategy. 


Feasibility:-

This deals with implementing the required strategy that helps in improving the operation of business.  The most important methods are the analysis of the break-even areas.

In the proposed strategy, the suitability assists in creating opportunity based on the external environment (Parnell, 2006, p. 1140). The company's mission is reflected upon the highest capacity of the firm that can be understood. The external environment assists in developing of opportunity and thus reducing the threats. This helps in building the Nespresso strength and avoiding the weakness. This creates by making a higher advantage of the competition as compared with other firms.


The proposed strategies help in meeting the expectations of the various stakeholders that are associated with acceptability.  It is concerned with the expectations of the various stakeholders that are associated with the two outcomes that is non-financial and financial process. There is certain risk associated with the strategy plans. 


The stakeholders mapping helps in building the exact relationship based on carrying out the business work. These are based on interest and influences made by the stakeholders (Laurie et al. 2006, p. 85). These are basically divided into four parts that states with informed made by stakeholders and thoroughly managing of the work.  


The strategic outcomes are unpredictable based on the acceptability criteria. This are based on the various expectations rises by the management of the firm. The proposed strategies are effective upon the based working conditions of operating the business (Sharp & Dawes, 2001, p. 745). There are certain risks that rise from the based strategy. 


The resources and competences exist in implementing the strategy planning by the feasibility. The feasibility deals with the resources that are required to carry out the operation in business. There are certain strategies that includes with time, expert etc. The analysis is made upon the break-even to analysis properly the feasibility. While carrying out the analysis there is certain inputs that assist in the generating higher outputs. The customers are involved with the product cost that involves with the coffee. There is a high necessity for feasibility as the resources are required to make the proper operation of business. An involvement of the strategic planning is required to implement the exact resources required for the development of the business (Nippa et al. 2011, p. 55). 


Conclusion

It has been concluded that the proper strategic management assists in carrying out the successful planning of the business operation. This is based on the fixed programs that helps in combining the resources required to operate in the management. The exact strategic management are developed by the leadership that helps in the development of the firm. The strategic managements help in the development of the Nespresso farms. There are certain planning involved in the strategic management that helps in creating of the proper structure of the firm. 


It has been also concluded that the strategic management are followed with the environmental analysis and the capability analysis. However, by carrying out the strategic management helps in knowing the SWOT analysis and PESTEL analysis. The exact evaluation helps in knowing the  strategy that needs to be used by the operation of business. In the Nespresso, it has been concluded that the exact strategy helps in the development of the products that includes with coffee. This strategy helps in serving the customers with the coffee as well as by making the coffee machines. This strategy is based from the business line planning that helps in carrying out the good operation of business. The strategic management helps in improving the work of the manager and staff. It is very important to carry out the exact strategic management for the development of the firm.    

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