Refletion On Thinking Strategically
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Thinking Strategically
“Strategy, in business, is the combination of foresight, planning, and decision-making that prepares an enterprise to achieve long-term goals and manage the consequences of contemporary decisions”. (Simulation) In this simulation, I was the Vice President of BJs Pro Sports, a one-stop shop for bikes. My goals were to decide on a long-term objective and identify the strategies to achieve the long-term objective. The CEO, Mark Walten entrusted me to formulate the strategy that will guide BJs actions.
In deciding on a long-term objective, my first step was to determine the companys needs. Secondly, assemble the critical internal and external information. Although the internal information was free, I had to purchase the external information, which was to be covered by my budget of $15,000. Based upon the advice of Kensington Sherman, Strategy Consultant, I decided to purchase the U.S. Specialty Bicycle Consumers Study for its statistical significance at a cost of $7595 and the U.S. Bicycle Retailing Industry Analysis for its level of detail at a cost of $5995. The U.S. Bicycle Retailing Industry Analysis features trends analysis, statistical data, and information specific to specialty bicycle retailers. The total for both reports purchased was $13, 590, which was well within my budget.
The decision was then made that BJs would aspire to be the industry leader in terms of revenue. This could be done by ramping up top line growth by expanding retail presence in the geographies where demand was growing. Some key factors included:
BJs cash position was strong enough to support expansion.
BJs drove more sales into the stores through a sustained marketing program. This could consolidate existing product and customer categories, and address untapped one such as women customers and the extreme bikes segments.
The end result was that the long-term objective chosen was most suitable to the internal and external situation. The information package compiled definitely aided my decision making.
My next step was to create a SWOT Analysis. BJs SWOT is as follows:
Strengths
Strong cash position.
Brand equity of the Anti-Gravity range.
The in-store advisory and service networks.
Weaknesses
Low representation of bicycle lifestyle products.
Brand image as a male retailer.
Low brand recall (12-24 yrs.)
Opportunities
Government spending of physical education.
Extreme sports market.
Women customers.
Threats
Maturing of Mountain Bike segment.
Low cost imports from Asia.
Lack of interest among Generation Y.
Next, I performed a Matched Pair Analysis. It was determined that BJs low brand recall needed to be addressed. Some solutions included: creating products specifically for them or retailing the entire Anti-Gravity range through other specialty bicycle retail chains and stores. This could be accomplished by using our strong cash position to improve brand recall among women consumers to increase sales. Other suggestions include:
Shifting focus from Baby Boomers to women consumers.
Create a range of bikes appealing to women consumers.
Sell Anti-Gravity bikes through other specialty bicycle retailers.
Developing Grand Strategies
A Grand Strategy can be defined as a comprehensive general approach that guides a companys key actions (Simulation). My objective in this simulation was to devise strategies for the Oz Toy Company by applying my knowledge of Grand Strategies to guide the strategic choices of the company and secure its competitive advantage in response to a rapidly evolving business.
Oz, the 3rd largest toy manufacturer in the U.S., has recorded sales of $3.5 billion and a profitability of 9.89% more than 4,000 stores in the U.S. including 120 Exclusive Oz boutiques. Lisa Flemming, CEO, has entrusted me to find a suitable strategic response to the recent industry report which predicts a flattening of the sales curve. Oz needed a proactive strategic response to an industry situation impacted by consolidation among the manufacturers. Asian imports that have led to an influx of cheap toys and changes in trends such as increasing purchase power of consumers.
My first objective was to decide Ozs position in the Grand Strategy Clusters Matrix (GSCM). Next, I was to select a strategic alternative that secure Ozs competitive position. I took Jim Sheridans advice to tighten our hold on our current markets using our current product range. He also suggested that we consider creating a line of clothing based on our toy characters by partnering with a garment manufacturer for that venture, or license the characters. In addition, a movie deal would have a great payoff in terms of brand building.
In the first year, Oz was positioned in Quadrant I (Strong competitive position/rapid market growth) of the GSCM. The strategy that I adopted for Oz was to acquire a resin producer, that strategy gave Oz a lever on its most critical material import Ðplastic. This strategy helped Oz protect its profit margins by ensuring better control over the cost, quality, and volume of plastic. By acquiring a resin producer lead to the most optimal increases in sales and profitability.
During the second year, my objective was to decide on a strategic alternative that would improve Ozs competitive position as Quadrant II (Weak