Analysis of Strategic Planning Essay Example | Topics and Well Written Essays - 1000 words - 1

Analysis of Strategic Planning - Essay Example He explained that the success of the company depends on the strategy they chose such as cost leadership, differentiation, and focus; and a firm, for its smooth running must choose one of the strategies and work on it. Cost Leadership The cost leadership strategy helps the firm to remain as a low-cost producer in the industry. To achieve the maximum result, this strategy must be utilized on a standardized product by trying to make maximum use of the cost sources. When there is a price war, or when the industry matures, a firm with cost leadership can remain profitable for a longer period than the competing firms. Differentiation Strategy Differentiation strategy means uniqueness within the industry, having specific dimensions that buyers are ready to value and willing to pay a price premium. Even if there is an increase in the price of the product, the producer still gets the profitability, because the product has the unique attributes and the consumers are not able to find a substitu te product easily. Focus strategy This strategy tries to achieve either cost advantage or differentiation advantage, concentrating on a narrow segment. The focus strategy focuses entirely on the needs of the group, and so enjoys greater customer loyalty. The following part of the paper will discuss how some prominent retail firms have been implementing the above-said strategies in their business operation. Tesco, a world-famous retailer firm, refers to generic strategies as a tool to determine the characteristics of retailers’ response to industry structure. Big concerns like Tesco can obtain the reasonable cutthroat benefit by following any one of the three generic strategies of Porter. By utilizing the first strategy of cost leadership, Tesco can try to have the lowest production cost in the whole industry and can offer their products and service to the market at the lowest cost. The cost leadership strategy shows the ability of the firms to control their operating costs so well that they can price their products competitively. Having a greater degree of competitive advantage, they are able to generate high profit margins. If differentiation strategy is to be established, Tesco has to offer products and services which has the unique feature that is not offered by any other firm. If so, the firm gets a brand loyalty and inelasticity of price. Between these two strategies, Tesco chooses to follow the cost leadership strategy. To select between the strategies, the management had made use of the last porter’s focus strategy. For the implementation of the strategy, they introduced different tactics, such as focusing on the internal efficiencies which helped Tesco to resist the outer force from the other firms. On the way to control their cost of production, they had regular communication with the suppliers, government, and the regulatory authorities. They made a policy to supply the specific products to the broad market. These helped them in attaini ng a high position and profitability.  

A)The financial crisis of 2007-2010 was it simply the result of lax Essay

A)The financial crisis of 2007-2010 was it simply the result of lax regulation, or were a range of factors at play (50 marks) - Essay Example The first phase, as explained below, is Novel Offering. Finally, I will discuss the link between the crises and the factors such as Crises of Financialisation and contradiction. The crises will also be explained from an economic theory pint of view (Peretz and Schroedel 2009). Novel Offerings Novel offerings are sources of revenue used by banks and other financial institutions by trading in different financial products. For the last few decades, the context of deregulation has greatly contributed towards development of these financial products. For example, since 1970s, different regulations controlling the actions of financial institutions in the UK and USA have been loosening up. This includes Glass Steagall, which had been instituted to disjoin the people’s savings from the riskier operations of investment banks. The banks resulted in creation of shadow baking system, which allowed them to circumvent the rule that required them to balance the risk on their books with some l evel of capital. Securitisation, Boom and collapse of shadow banking The shadow banking system is believed to have traded the worst performing and the riskiest mortgages. These systems put extensive pressure upon the traditional institutions hence forcing them to soften their underwriting standards and start dealing with riskier loans. These banks were later criticised for underpinning the financial system, though they were not accountable to the same regulatory controls. What’s more, these banks were susceptible because of maturity mismatch, implying that they borrowed short-term loans from liquid markets and bought illiquid, long-term, but risky assets. The uncontrolled practices of such banks are the core of the 2007 financial crises – the situation could have been better if regulation was imposed on all activities related with banking. In the spring of 2007, the securitization markets were helped by shadow banking systems, leading to a more or less shut-down in the fall of 2008. What ensued was disappearance from market of more than a third of the private credit market (Thompson 2005). Figure 1 shows how securitization market came near shut-down during the crises. Figure 1: Decline of securitization market Securitisation is the process by which a certain assets’ cash-flows are separated from the balance sheet of the primary entity and transformed into marketable securities (Thompson 1995). The purpose of securitisation is to convert illiquid assets into marketable securities. It is used by insures as a form of risk management, which is achieved through transferring, commoditising and reallocating of different types of risks such as interest rate risk, credit risk, and pricing risk. Securitisation of the US subprime mortgage, according to Ingham (2008), fuelled the global crises during the summer of 2007 by increasing the extent of lending to subprime borrowers, which was happening at a very high default rate. Between 2004 and 2006, the market for subprime loans expanded significantly as shown in figure 2. As a result, the European and the US banks were writing off a massive amount of financial assets as the securitised mortgages became illiquid. The public money was used by many governments to bail out the financial institutions that were entangled into crises. Although it is usually a regulatory requirement to undertake credit rating on