Competitive Strategies of Riordan
The decision to begin, enter, or continue with a business venture has a specific amount of risk associated with the undertaking and once begun specific goals and objectives need outlining and measurement devises put in place to confirm the future success of the entity. In a simple form, a strategic plan determines where an organization is going during the year to two years, how it will get there, and if it can reach the objective desired. There is a variety of approaches in a strategic plan but what need the most consideration is the leadership in an organization, organizational culture, and the organizational environment. One manner of ensuring the continuity and attainment of a company is by way of a comprehensive strategic plan in which a business “lays out its future direction, performance targets, and strategy” (Gamble, Strickland III, & Thompson, Jr., p 30, 2006). When crafting a strategic plan the roles of ethical and social responsibility, competitive advantages, sustainability in foreign and domestic markets, measurement guidelines, internal dynamics, cultural and structural leadership concerns, and assessment and feedback controls need consideration to move the company in a direction that promotes longevity of the business. Riordan, a manufacturer and supplier of high-grade plastic products will incorporate each of the individual requirements outlined as well as employing the specific strategies and tactics essential to remain competitive and successful in an ever-shrinking market. Why Riordan Needs a Strategic Plan
Riordan, like other companies, needs to have a specific strategic plan laid out for every employee as well as stockholders to see. It sets a guideline for managers and employees to obtain to make a goal set for a company. Measurements come from the strategic plan to determine the area of responsibility of each individual in the company. Employees as well as managers can track themselves to determine if they are exceeding, or under exceeding the responsibilities given to him or her. It is not encouraged that the self-tracking method by employees be the main source of data, but it is available as a resource. Once the identification of how the
organization is doing internally the lessons learned and the adjustments of the internal components made to reach a higher level of success. Riordan is a tool that can make this a seamless process for a company organization. A strategic plan for a company such as Riordan is not sitting down and consistently writing out rules and regulations at one time. As time progresses managers make strategic plans that consistently watch the measurements that employees have set for them and make accommodations for the company to run smoother. No matter the size of a company, it should also prepare a strategic plan as it will help the results of the company and provide guidelines for employees as well as management (Olson, 2012). Ethics and Social Responsibility in Riordan’s Strategic Management Plan Ethical and social responsibility needs consideration when setting responsibilities for employees and management team. Because locations are set up globally, a global consideration will need to take place. Regulations and laws are different for states and countries and therefore need deliberation to make sure no violation of laws occurs. In developing a strategic plan, there are various methods to consider as most effective, the understanding of the competitive strategies, sustainability and organized performance, and global markets all bear attention. The leadership of any organization can identify initiatives or departmental objectives that can assist in the development of the strategic plan. In the corporate strategies that Wal-Mart and Starbucks have comprised, the unintended consequences and the possibility of an existing need for improvement throughout the development of the plan, has been obviously a part of the plan. In possessing an effective strategic plan, both organizations consistently limit the occurrence of an unintended consequence. The focus has been a strategy that involves the proper resource allocation, employee training and development, asset accountability, and a high consumer demand for products. Starbucks, for example, has a mindset that a proprietary approach to coffee, brewing in-store, an online community for loyal consumers and expanding retail relationships globally enhances their ability to be effective. There are other companies with good business practices but putting a good strategic plan in place ensures them a successful direction for the achievement of all goals. Competitive Advantages and Strategies of Riordan
Horizontal growth with companies, such as Starbucks, Wal-Mart, Sears, and even Riordan strives to hit multiple markets in the United States and even globally. Horizontal growth develops when a company merges, buys or is bought by another similar company. This expands the company and increases the market value, whereas possibly eliminating the suppliers once used. By doing this, a company can increase the profits by decreasing the up sell that suppliers place on products and services used. Doing this also eliminates the competitors that may have once competed against the company by merging them and combining the resources and providing a greater experience for the customer.
Starbucks and Wal-Mart has shown a prosperous improvement by implementing horizontal growth. Unfortunately, for smaller companies, the prosperous improvement with these large companies tends to decrease the smaller market. By using horizontal growth, these larger companies can decrease the competition and bring more consumers to the company’s stores. Merging with other companies can increase assets, competencies, and markets (Investing Answers, Inc., 2012). Whereas Riordan can merge with other companies, they must first prepare for the cultural differences between Riordan and the combining company. When merging two companies together, cultures are one issue that will be difficult to encounter and the restructuring of the company by reducing the duplicated work and selecting a management team that could take on a responsibility of realigning the company. The positives of one organization can be the negatives of another or vice-versa, but the focuses of identifying strategies that work establishes the standards for a merger to be successful. Riordan should look into acquisitions once they are large enough to purchase smaller companies. Measurement Guidelines Used to Verify Strategy Effectiveness
The measurement guidelines to verify strategy effectiveness are consistent and tracked have more to do with the training of employees in an organization and the implementation process of the strategy used. In many cases, employees receive new and improved tools that can establish metrics and standards that state what objectives need completing. In the same process, a training module that breaks down the tasks and responsibilities of all stakeholders and their expectations needs inclusion. This will enhance how each employee affects the organization and the strategic plan. After completion of the developmental process of the employee through training, the organization can use methods from the Riordan as well as tracking financial data and departmental metrics through key performance indicators. These indicators need setting and reviewing and subsequently presented on a monthly or quarterly basis for the accountability portion of the methods required. “Regardless of the function, good metrics are those that are consistent, measurable, and actionable. These factors truly define what is measureable. Regardless of the performance, systems, people, or processes tracked, the metrics should be simple and straightforward. If the metrics you are trying to manage are overly complex or onerous to maintain then it is less likely that your organization will continue to track them. Reports are the most common method that managers and leaders use to view their organization’s key performance metrics. They serve as a channel to convey performance metrics to users in an organized and clear manner. In many cases, the onus of running reports rests in the hands of IT resources because the data are not in an easily accessible format” (Shared Services.com). IT is the informational hub for most organizations; their responsibility is to implement data tracking systems and software that will assist the administrative role in the strategic strengths and weaknesses.
Apple and Microsoft have shown that their companies rely on vertical growth. Implementation of vertical growth has allowed them to expand their services and products within the customer base and continue to acquiring additional customers with new innovative products. Apple has already established their customers by providing them with the latest and most advanced technology gadgets, which allows their customers to have the best experience. Apple continues to provide the best products to their customers by releasing new and improved products that are at a reasonable price so all customers can afford them. One of the biggest trends to hit the market has been the ability to shop and buy online, and Apple takes full advantage of the opportunity. Microsoft bases its business on their customers as well. Microsoft’s customers are mostly companies that build computers and use Microsoft software, such as Hewlett Packard and Dell computers. By keeping these customers happy with the newest and most advanced software, Microsoft can continue to grow vertically. Riordan strives to be a solution for their customers and not part of their challenges. Riordan guarantees long-term relationships by maintaining rigorous quality controls, innovative solutions, a responsive business attitude, and reasonable pricing. Riordan is similar to Apple because Apple also believes that their products should help their customers and not be a challenge for them. Riordan is more like Apple in all of their relationship goals, such as quality control and innovative solutions and reasonable pricing. All of these goals and objectives will allow Riordan to grow vertically to gain and sustain all of their customers.
The competitive strategy for Riordan is vertical growth, which is to position the company for future horizontal growth opportunities in the market. The determination of evidence of the company’s strategy is through specific indicators, which show the business’s intent to increase sales to its existing customer base by 40% to increase revenue and the desire for the entity to gain more control over its supply chain. By controlling the company’s supply chain the business seeks to “reduce costs, gain control over a scarce resource, and guarantee quality of a key input, or obtain access to potential customers” (Wheelen & Hunger, p 208, 2010). In addition to the control component, there is also the minimizing of overhead for the organization. Currently Riordan shares a similar strategy structure as practiced by Wal-Mart and Apple in that the companies’ internal components, marketing, price advantages, and customer satisfaction are what drive success for each entity. Wal-Mart’s business strategy has an unmatched effort to appealing to all of their consumers’ needs, while focusing on being the best in their market in the consumer’s view of them as a retailer. Consumers often displace business perception with most organizations, when profit is the driving factor for success. Apple’s and Riordan’s customer service practices are comparable because Apple dedicates 100% of the company’s efforts to its products and customers and Riordan focuses its energies on becoming a solution to its consumers issues and not part of the problem. Riordan also strives to maintain relationships with its stakeholders through rigorous quality controls, creative solutions, a responsive business attitude, and a responsible pricing policy. Riordan’s current strategy will have an effect on the business’ long-term organizational performance as the business looks to the future and adopts a horizontal strategy. Riordan has branched into the Chinese market and is at the beginning stages of establishing global growth but the company needs to update its internal processes and systems and once these tasks are accomplished, the business can begin focusing on horizontal growth strategies. By setting a long-term goal of expanding to the global market through combining with other similar entities Riordan could improve the company’s financial structure through internally generated funds, implement broader marketing strategies, and relocate soft lines to other branch locations to improve product inventory and sales.
The competitive strategy to go global would mean Riordan would need to implement information systems, ensure that each location had connectivity to outsource if needed and import, and export goods. A global business strategy would simply identify business without borders and Riordan currently has the upward mobility through the China, which would ensure a gateway into the global market. The effects from the global market on the organization would understand the social responsibility and establishing a positive relationship with society to help the business become more profitable. Internally, an organization would also get a demographical preview of how the global market would respond to current and upcoming products that can enhance profit and lend to the organization’s global presence. Riordan would need to have Headquarters in the United States while selling and offering products in not only China but also other countries to expand its market and investing in foreign economies. Internal Dynamics, Cultural, and Structural Leadership Considerations Used The risks to horizontal development for a company as Riordan is the competitive strategy that markets in other countries need the products such as plastics in relation to the markets in America. The global market economies would affect the financial and outsourcing the business would depend on to operate in another country. Entry in some countries may not be as easy as others, depending on the political, social, and economic climate condition. Riordan Inc. needs to establish competitive strategies, such as TQM, a lean Sigma to understand both international and national development within the organization. Riordan’s vertical growth encompasses many attributes of Wal-Mart, Sears, and Apple, but to grow horizontally and be successful in foreign markets like Microsoft and Starbucks, a strategy to understand foreign policies, regulations, society, analyzing expenditures required to entry and social responsibility establishes sustainability and long-term benefits for Riordan. Assessment and Feedback Controls for Riordan Manufacturing
In order for Riordan to determine what business direction to follow it is imperative that the company implements a comprehensive assessment and feedback control system that identifies elements that affect the business. To accomplish the task of evaluating the elements that guide Riordan the company must identify any internal and external market forces using various measurement tools that analyze the business’ strengths, weaknesses, opportunities, and threats (SWOT), or through the examination of political, economic, sociocultural, technological, legal, and environmental (PESTLE) data. By investigating and measuring each of the external and external forces the company can determine specific goals that will act as a guideline to success. Some methods evaluate and measure the internal processes of Riordan include individual performance reviews of employees and comparing planned versus authentic achievements regarding company objectives, recorded on a strategic implementation worksheet that determines the who, what, where, and when of the plan. A record of the deviations from the strategic plan can aid in identifying areas the business strayed off the determined business path with either positive or negative results. One method for Riordan to determine if the company is following the predetermined path is through milestones using a balanced scorecard, which the company uses to evaluate and record progress of the business’ strategic plan. The balanced scorecard is “a set of measures that are directly linked to the company’s strategy. Developed by Robert S. Kaplan and David P. Norton, it directs a company to link its own long-term strategy with tangible goals and actions” (Pearce & Robinson Jr., p 202, 2009). Riordan Manufacturing’s balanced scorecard breaks areas of strategic direction into strategic objectives and current year agendas, such as financial, consumer, market, and employee metrics that define areas for improvement and company growth. The performance side of the balanced scorecard identifies business processes and their results in areas of human resources, lean practices, leadership, employee relations, and financial data. When to Alter Riordan’s Strategic Plan
Riordan should examine constantly and evaluate its strategic plan through a current state analysis in response to ever changing forces in the market. Major changes in Riordan’s external or internal environments may signal the need to change the business’ strategic plan. New product innovation, new competition entry, bargaining issues arising from substitute products, consumers, suppliers, and changes in the economy are just a few of the reasons forcing Riordan proactively or reactively to alter its strategic plan. Conclusion
Riordan’s decision to continue to pursue operations in both the domestic and global marketplaces requires the company to take on a certain amount of risk. The method the company adopted to alleviate some of uncertainties is through its strategic plan, which details the roles of ethical and social responsibility, competitive advantages, sustainability in foreign and domestic markets, measurement guidelines, internal dynamics, cultural and structural leadership concerns, and assessment feedback controls. The incorporation of each of the individual requirements as well as the employment of specific strategies and tactics ensures Riordan’s competitiveness and success in an ever-shrinking market. As the economic forecast changes from month to month and from year to year, organizations restructure and adjust to the unforeseen but Riordan’s risk factors should have them prepared to address all and any circumstances in their strategic plan. .
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http://www.investinganswers.com/financial-dictionary/businesses-corporations/merger-1821 Olsen, E. (2012). Does every company need a strategic plan? Retrieved from http://www.dummies.com/how-to/content/does-every-company-need-a-strategic-plan.html Pearce II, J. A., & Robinson Jr., R. B., p 202, (2009). Strategic