This is a research paper on strategic planning of a selected company dealing in foods and beverage. By using the company, the paper explores the structures and modalities involved in strategic planning while at the same time looking into how and why strategic planning is critical for an organizations successful operation and existence. The paper looks into different scenarios of strategic planning while exploring its relevance in an organizations existence and operation. By using the food and beverage company as an example, the research paper delves deeper into the aspects such as decision making, consensus, and agreement onto what entails strategic planning.
Strategic planning provides meaning and guide for the day to day operations and activities within an organization or business. It analyses a business status, environment, and values and it compares these factors to the general goals and objectives of the organization. It is an exercise that spans a given period of time such as a ten year plan, two year plan, or a five year plan. Strategic planning is not only limited to, a business, but also public agency, school, organization, or institution, and or a program. Strategic planning is only necessary if changes are necessary within an organization. It is basically a process of transformation or renewal. A strategic plan entails examination of an organization within its environment and how it may adapt to its new found activities and services while at the same time strategizing on the requirements of the environment. On one end, it involves programs of restructuring, evaluation, management, and collaboration of a given organizations development step and efforts.
The main aim of strategic planning in an organization include setting priorities, focusing on a given issue, strengthening operations and activities in addition to ensuring that employees and all stakeholders involved in the day to day management of the organization work towards achieving the set objectives (Bird & Smith 2016) . The objectives and agreements enable an organization to adjust its strategies toward the intended goals while at the same time and ensure that the goals are in line with the changing. It helps shape an organization’s actions, decisions, and guides towards shaping all that the organization engage in while carrying our similar daily actions. According to Bird and Smith (2016), proper strategic planning helps the organization make progress in order to succeed in its desired field.
1. The importance of feasibility studies to an organization
According to Abdallah & Langley( 2014) a feasibility analysis is essential for any organization to measure the capability of its idea before starting into a market. The Porter’s five forces model plays a significant role in evaluating a company’s position in its industry and in determining its attractiveness and competitive intensity in a market. Similarly, conducting a product or service feasibility ensures the business provides the customers with the most appealing products. However, it is important to do a financial feasibility check to identify the most efficient ways to fund the business. This discussion presents an industry analysis and a strategic plan for a California-based firm seeking to operate in the food and beverage industry. It would operate business as an importer and distributor of fresh and healthy foods and beverages around California.
- Functions of the feasibility study of the business organization
Feasibility analysis is the study, determination, and evaluation of a proposed project to determine if it can be conducted within the set budget, time, and resources and still reach the targeted goals. For example, according to Abdallah & Langley (2013) in this case, the feasibility study will be carried out to determine if the proposed business of importing and distributing food and beverages in California is profitable and can be done with the estimated cost and resources. In case the feasibility study indicates that it will be costly to conduct the business and the targeted revenue and growth objectives will not be achieved, the business idea and plan will be revised, or the whole business proposal is dropped ( 2015). Otherwise, if the feasibility study shows that the business will be profitable, then the company will invest in the business.
- Porters Five Forces
- Description and Function of Porters Five Forces
It is possible to use Porter’s analysis to assess the strengths and weaknesses of competitors within an industry. The results of such an analysis can also be a reliable indicator of the level of attractiveness to investors for particular industries. When an industry is perceived to have attained a level of pure competition, it becomes less attractive to investors(Cho 2014). This is because investors would make a normal profit when they set up firms in such industries. Porter’s theory of industry attractiveness spells out a number of factors that influence the perception and decision of investors whenever they seek to invest in a particular industry. These factors include the perceived bargaining power of buyers, available product substitutes, barriers to industry entry, prior existing rivalry in the industry, and bargaining power of sellers. The barriers to industry entry is a critical factor that determines the threat levels posed by new market entrants. Such threat levels are shaped by factors like brand equity, switching costs, access to distribution, barriers to exit or entry, economies of scale, government policy, financial capital requirements, customer brand loyalty, and industry profitability (Bird & Smith, 2016).
Porter’s second factor for analysis is the competitive threat for the business that comes through existing product substitutes in the industry. It is determined by aspects like product depreciation, available range of substitutes, propensity for substitution amongst buyers, price of substitutes, available substandard products, and ease of substitution amongst buyers.
Porter’s third factor for analysis is the bargaining power held by the buyers within a particular industry. Such power is shaped by factors like buyers’ price sensitivity, information held by buyers, product uniqueness in the industry, the ratio of buyers to available firms in the industry, existing dependency on product distribution channels, bargaining leverage, and available product substitutes (Ioppolo et al., 2016).
Porter’s fourth factor for analysis is the bargaining power wielded by suppliers. Suppliers get more confident with the industry’s prospects if they possess the ability to differentiate their inputs. According to Kachaner (2016), other factors that influence their bargaining power include the existing competition levels among suppliers, labor union action, costs that buyers incur by trying to change their suppliers, strength of distribution channels and available substitute inputs (Kiambati $ Itunga 2015).
The extent of established industry rivalry plays a critical role in shaping the competitive levels within an industry. On the other hand, the intensity of firm competition is influenced by factor like industry transparency levels, competitive strategy for individual firms, advertising costs, firm concentration ratio, use of innovation to main competitive advantage, and new competition levels occasioned by online firms (Mbugua & Rarieya, 2014).
- The Company’s Competitive Advantage
Porters model enables a business come up with a methodical and structured examination of market formation and viable situations. According to (Mbugua & Rarieya, 2014), the model can be utilized in a given business segment or region, since in a particular industry, all market participants face the same circumstances. However, the impact of the forces may differ depending on different processes, competencies, and strategies. However, various elements may not make it necessary to apply the five forces with the same level. However, application of the model cuts across given companies, regions, or segments within a particular industry (Nadler & Moodie 2012).
- Reasons for conducting the feasibility Study
- The customer with the most appealing products
There are several compelling reasons that informed the need to conduct a feasibility study for the proposed fresh foods company in California. First, a feasibility study would ensure that the proposed business offers its customers the most appealing products. This would go a long way in ensuring successful market entry for the proposed fresh fruits firm (Novis et al, .2015).
- Increase Customer Loyalty
According to Papke et al. (2015), conducting a feasibility study would also increase the levels of customer loyalty, as their needs would be predetermined before launching the business. Customer loyalty further rises as a result of having the best product and services in the market.
- Identify the most efficient ways to fund the business
Conducting financial feasibility studies would also enable the business to identify the most efficient ways to fund the business. The outline will give how much and where and how capital will be utilized. For example, through the feasibility study, the business owner will know how much the business will require in terms of marketing strategies, how much to budget for production and the amount of capital to put aside for operations (Spee, 2011).
- Determine the correct amount of money that can finance the business.
It would also be able to determine the correct amount of money that would finance the business by way of outlining the budget and operational costs. These amounts of money will go into ensuring the business focuses on meeting production costs, operational costs, and marketing strategy’s costs among other major financial activities (Wadsworth et al., 2016).
III. Description of the Company
The proposed fresh foods company will be engaged in the business of importing fresh and healthy foods and beverages from other countries outside the U.S.A and distributing it to the local market in California. Buyers would also order directly from the stores.This would improve the overall health of persons living in the American society and help solve the problem of child obesity. This company would have a competitive advantage against
Many companies that rely on misleading advertisements to sell unhealthy foods, and consequently thrive in the US food industry (Wolf & Floyd 2013). Most of the contemporary advertisements encourage intake of unhealthy foods, and this trend help to put kids off from making good food selections. Businesses that promote ready-made foodstuff concentrated with lots of salt, fat and sugar content often young adults in media commercial promotions to boost sales. In the US, the companies that make unhealthy foods tend to pay for more media advertisements as compared to those that sell healthy food. This proposed company would change the common approach and strategically market itself as a healthy food provider.
In California, young adults consume sugary beverages containing high calorie value, but with less nutritional value. The proposed fresh foods company in California would differentiate its service by importing highly nutritive foods that have enough calorie content, thereby helping consumers to live a healthy life and avoid obesity. The current food market is flooded with high-calorie foods such as energy drinks, fries, creams, fast foods, and sweets. Fast food vendors, convenience stores and restaurants often offer unhealthy foodstuffs at low prices in many regions owing to their low nutrient levels. This proposed company would seek to fill the gap in the provision of healthy foods in poor neighborhoods around California by selling wide-ranging, hale and hearty foods such as fruits and vegetables, which greatly minimize probability of nutrition-related illnesses.
I.Industry and Market Feasibility
The food and beverage industry is a profitable industry with very little or negligible fluctuation due to price changes. It is also a ready market. By offering competitive prices, I can drive growth and revenue in the California market the market is positive, and the demand for food and beverage is high making the market attractive for the selected business.
There is less competition for the supply of fresh fruits and beverages in California. The market for fresh foods and fruits, has few participants because there is insufficient land for agriculture. Secondly, the business faces a threat of new competitors. This industry is lucrative considering that there are a few food and beverage importation and distribution companies in California. The industry is a perfectly competitive market, which allows entry of new businesses.
Thirdly, there is little threat of substitutes in this business venture. Moreover, fresh foods and fruits comprise a crucial part of every American’s diet, making them irreplaceable. Fourthly, the demand for raw foods and beverages is high in California. Therefore, the buyers find themselves lacking sufficient bargaining power. Nevertheless, setting competitive prices will certainly be important to prevent situations where customers switch to other similar businesses. Numerous suppliers of fresh foods and fruits exist in neighboring states around California, creating diverse market entry options available to the firm. The business will attempt to create long-term strategic partnerships with vendors, which will benefit both the supplier and the company.
- Product or Service Feasibility
Products such as fresh fruits, vegetables and other farm products like Juice and packed products are in high demand in California. California is a state with mostly skyscrapers and modern building. Agricultural lands in California are limited because houses and other development projects cover over 70% of the land, and the remaining areas are bushy mountains and water bodies. Getting fresh fruits, vegetables, and good healthy beverages can be a problem, especially during dry summers and mild, moderately wet winter seasons. While fresh fruits and vegetables cannot be found in California during summer and winter, they can be imported from other states.
An essential aspect of the business that would ensure the proposed company’s products remains appealing to customers is the need to maintain their freshness. To achieve this need, the business will have to invest in cooling systems, storage and just in time inventory system that will keep the beverages, fruits, and vegetables fresh and appealing to customers. Such an investment may be expensive, but it will bring high returns that will offset the cost of investment over a short period. The second aspect that the business will have to consider is packaging. Moreover, packaging will have a brand identity and shelf impact of the products.
Packaging the fresh juice in attractive bottles will ensure the business remains environmentally friendly at the same time healthy which will attract consumer more than packing in plastic bottles which consider unhealthy. Additionally, packaging the fresh vegetables in plastic zip-top plastic BRA-Free bags will ensure that the products retain their freshness. Finally, the take home bags will be an essential packaging aspect of the business, mainly, for the customers who will be ordering from the stores. Such packaging will have to be affordable for the firm, since it can have the package materials supplied in bulk to gain trade discounts.
- Financial Feasibility Analysis
Importing food and beverages to California is less expensive because there are transportation and licensing costs involved. The goal is to look for cheaper transportation means to California. The company will evaluate many logistic providers to determine the cheapest transporter and remain with a decent profit.
The business will require many financial resources to start and operate in the Californian food and beverage industry. Therefore, it will be important to source for adequate funds through affordable and efficient ways. The most viable method of financing the business will be through venture capital investors. Many professional investors, for example, Accel Partners who invest in qualified startups exist. However, they invest only in lucrative opportunities. Importing and distributing fresh foods and beverages in California is a profitable business as shown by the market or industry feasibility analysis. Therefore, it will be easy to attract interested venture-capital investors.
The proposed fresh fruit company seeks to join the California industry by financing its initial entry through joint venture capital. Thereafter, it would seek to invest back its retained earnings in subsequent financial years as a way to improve its stake in the joint venture. Going into the future, the company’s management would make considerations to acquire business loans for purposes of expanding the business. This would be done long after the business has gone into operation.
The management would be constituted in accordance with local laws governing the management of joint venture companies. The management will be charged with the task of determining the specific business niche to invest in. They would be guided by an investment principle that priorities profitable opportunities over non-profitable ones. The company currently considers it profitable to import and distribute fresh foods and beverages in California. Whenever circumstances will change in the future, the management would be expected to change their investment decisions, with a keen focus on profitability.
In summary, investing in the food and beverage industry in California is a profitable business opportunity. The industry or market feasibility analysis shows that the firm is attractive. Similarly, the packaging and storage strategies identified in the product feasibility study will attract many consumers. The company also uses just on time inventory system to keep the beverages, fruits, and vegetables fresh and appealing to the consumers. Therefore, to meet the high demand, the business will seek for venture-capital investors that will avail funds necessary in starting up the business. The proposed business will have fewer competitors in the short-term. It will gain the first mover advantage, and this will help it retain most of its customers when more suppliers join the industry in the long term.
VII. Customer’s Demand
- Improve Customer Service
In order to sustain the necessary high demand by customers, the company would seek to establish and maintain a highly responsive customer service. This will be aimed at establishing a positive and healthy public relations exercise that focuses on building a solid customer base within the specific region of operation.
- Offer high-quality Product
The company will also offer high-quality products to sustain the demand of customers and create opportunity for customer referrals. Existing customers would be more willing to recommend new clients to the business if they also approve of the quality levels of the product. In the long term, the company will be able to gain market entry in an industry currently dominated by retailers of less healthy foods. Offering high quality products will give the company a competitive edge over its competitors and penetrate into new markets as it seeks to expand its operations beyond the current target market.
Abdallah, C., & Langley, A. (2014). The double edge of ambiguity in strategic planning. Journal of Management Studies, 51(2), 235-264.
Bird, S., & Smith, E. (2016). Strategic planning is HARD . Texas Library Journal, 92(1), 10-11. Retrieved from http://www.txla.org/sites/tla/files/TLJ/TLJ%2092_1_Exhibits.pdf
Cho, C., & Lee, S. (2014). Strategic planning using service roadmaps. The Service Industries Journal, 34(12), 999-1020.Hoffman, D. L., Bechtold, D., Murphy, A., & Snyman, J. (2016). Strategic planning and field based consulting. Small Business Institute Journal, 12(1), 1-9. Retrieved from http://www.sbij.org/index.php/SBIJ/article/viewFile/252/196
Ioppolo, G., Cucurachi, S., & Salomone, R., Saija, G., & Shi, L. (2016). Sustainable local development and environmental governance: A strategic planning experience. Sustainability, 8(2), 180.
Kachaner, N., King, K., & Stewart, S. (2016). Four best practices for strategic planning. Strategy & Leadership, 44(4), 26-31.
Kiambati, K., & Itunga, J. (2015). Managerial skills and corporate strategic planning. International Journal of Management Science and Business Administration, 2(8), 16-23. Retrieved from http://researchleap.com/managerial-skills-corporate-strategic-planning/
Mbugua, F., & Rarieya, J. F. (2014). Collaborative strategic planning: Myth or reality? Educational Management Administration & Leadership, 42(1), 99-111.
Nadler-Moodie, M. (2012). Strategic planning: Part 1 – APNA’s inclusionary process. Journal of the American Psychiatric Nurses Association, 12 (2), 127-128. Retrieved from http://journals.sagepub.com/doi/pdf/10.1177/1078390312442959
Novis, D. A., Mudge-Riley, M., & Raich, M. (2015). Requisites to strategic planning. Archives of Pathology & Laboratory Medicine, 139(3), 305-306.
Papke-Shields, K. E., Boyer-Wright, K. M. (2017). Strategic planning characteristics applied to project management. International Journal of Project Management, 35(2), 169-179.
Spee, A. P., & Jarzabkowski, P. (2011). Strategic planning as communicative process. Organization Studies, 32(9), 1217-1245. Retrieved from http://journals.sagepub.com/doi/pdf/10.1177/0170840611411387
Wadsworth, B., Felton, F., & Linus, R. (2016). SOARing into strategic planning: Engaging nurses to achieve significant outcomes. Nursing Administration Quarterly, 40(4), 299-306.
Weigand, K., Flanagan, T., Dye, K., & Jones, P. (2014). Collaborative foresight: Complementing long-horizon strategic planning. Technological Forecasting and Social Change, 85, 134-152.
Wolf, C., & Floyd, S. W. (2013). Strategic planning research: Toward a theory-driven agenda. Journal of Management. Retrieved from http://journals.sagepub.com/doi/pdf/10.1177/0149206313478185