Assignment Sample on BMG758 Strategic

Introduction

Strategy can be defined as the process of setting up goals and making plans to achieve them effectively (Gray, 2018). The report aims at analysing the strategies AlternateLabs takes into account for improving their business growth and success. AltLabs was incorporated in 2014 and operates in the business and domestic software development sector. Their primary aim is to make the online e-commerce business more inclusive by developing new digital products and software. In this report, PESTLE analysis is used to identify the external market environment that can drive the business changes. It will be helpful for the company to modify its software as per market needs and competitiveness. Other than that, scenario planning is used to make predictions for the future and plan strategically for responding.

Part 1:

Overview of Alternate Labs

Alternate Labs operates in the business and domestic software development sector and was incorporated on December 11, 2014. The owner of the company is highly passionate about growing and launching a digital-first business. They have great experience in running the software agency by building numerous applications for their international clients. Their software includes Google Fonts, Niice, WIP, Sonic, Monotype, and many more that are used by millions of individuals (Alt Labs, 2021). They primarily aim at making online commerce more inclusive. The company operates in a micro-business environment having about 10 employees with a turnover of £2 million.

They primarily bring a unique mix of businesses with technical skills for launching digital commerce products and aims at making them financially sustainable. The company established Payhere that allows every individual to charge a one-off subscription and make donation-based payments online. Their product Nine helps in bringing simplicity to e-commerce and the same speed to subscribed products. Its mission is to make online commerce an easy, affordable, and no-code business so everyone can partake.

PESTLE analysis

PESTLE analysis is the framework used to monitor the external market environment that can drive the change in businesses. The external factors are also responsible for affecting the business growth if changes are not made adequately (Perera, 2017). PESTLE stands for Political, Economic, Social, Technological, Legal, and Environmental. Every factor can influence the business decisions and if adapted adequately then it can drive the business growth as well.

Political factors: Political factors highlight the changes in political laws and rules that can affect business growth. For instance, the government imposing new taxes on any product then it can impact the revenues of the company (Phan, 2021). Being operating in the micro-business environment they can take advantage of the political stable environment of the UK and enhance their business performance. Other than that, the UK government also offers diverse benefits to micro and small businesses like they can take loans.

Economic factors: The economic stability of the company is highly responsible for increasing the company’s financial revenue. The economic stable environment of the UK can drive the business changes and if changes are made adequately then they can achieve huge market success. Other than that, a rise in the inflation rate can also impact the price of software developed. It can be analysed by looking at the consumer power their potential customer has. There can be seen increased spending of the customer on technological services nowadays and it can be highly beneficial for the company in adopting the change.

Social factors: The spending pattern of potential customers needs to be monitored so they can take advantage of it and adopt software development accordingly. The frequent fluctuations in customer demands continuously can force them to bring changes to remain market competitive (Gaspar et. al. 2018). If they are not able to bring the changes then their business performance will be affected as they face tough market competitiveness. The company must identify the fluctuations in customer’s requirements so they can adopt them and attract more customers.

Technological: It is the most essential factor in the software development industry for driving the change in the company. The technological environment is essential to determine whether the idea built by the company can help them in acquiring future profits (Shtal et. al. 2018). In the competitive market, it is mandatory to bring technologies that are unique and highly demanded in the market.

Legal: Government regulations can affect the business both internally and externally and no one can predict the changes they can bring. The major focus company has to put on is the privacy and security concerns of the individuals that will use the law.

Environment: The environmental factors don’t play that important role in the software development industry until the software is developed for the agricultural and farming industries. Other than that, the company must focus on adopting sustainable operations like using renewable energy for their machinery and equipment. The company should use green products and recyclable materials to reduce its carbon footprint.

Part 2 Scenario planning process

Scenario planning

Scenario planning is a process for businesses that helps to make decisions for identifying the potential impacts in the future while analysing and forecasting both positive and negative aspects of organisations (Berbés-Blázquez et. al. 2021). With risk factors attached to varied external and internal capabilities within organisations. The scenario planning tool is needed to forecast the complexities to identify and make changes to the strategy gaining competitive advantages. Scenario planning is more than just a way of determining the risk factor for future planning. The tool is more of a way to visualise the organisation’s future with various external and internal forces driving the market for good and bad impact. It is a process of alerting the decision-maker to gain a competitive advantage due to the prediction of the future scenario quickly through the tool.

Focal area

The focal area is the Alt Labs is planning to grow digital business all over the world and to make sellers get the availability of digital-friendly online commerce business at a reasonable price. However, the main question arises the problem of competing with e-commerce well established online products businesses that have been penetrating the world market vigorously (Nyaupane and Buzinde, 2017). The future sustainability of the company is difficult due to major competition in the digital market. Therefore, with varied resource capabilities analysis and through scenario planning the implications of the strategy will be evaluated for forecasting the impacts to make decisions and build an effective strategy.

Environmental scanning

The internal and external environmental scanning will help to understand the capabilities of the strategic resources i.e., the resources and competencies of Alt Labs. This analysis will help to identify the value of both the factor’s capabilities in bringing changes to the business.

Resource-based View

The first way to scan the strategic capability is the utilisation of the Resource-based view that will help to understand the firm’s capabilities and the competitive advantages that can add to the list of the strategic advantages for sustainable future growth (Schühly et. al. 2020). The resource capabilities of tangible and intangible nature, strategic capabilities, the capability to meet dynamic needs of the industry, the customer changing demand competencies will be analysed.  Through the use of the RBV model the core competencies, the market value capabilities, and the strategic viability will be analysed for understanding the scenario for future sustainability.

RBV will help to acquire the skills that can increase the performance by exploiting the external opportunities through analysing the existing resources which can be suggested to implement for future growth. The two resources that Alt Labs have as competitive advantages are:

Tangible resources: Physical assets can be one of the advantages with software, online portals, apps of payment-based online transactions of money, nine product displays on online portals for selling in the e-commerce retail industry. The financial security and the record are transparent with online payment facilities (Schroeder et. al. 2019). And the usage of Stripe for directly checking the payment into the Stripe account during the transaction makes the feasibility of the financial competencies very unique and effective. The people are the employees, customers, and the vendors who will be connecting to the product portfolio of the digital website through their own subscription adding 9 new products within 9 minutes. The internal human resources are very few with three technical software expertise looking forward to adding more customer base in 2020 forming cheap digital business across the world.

Intangible resources: The information of the company is not very familiar to customers due to a new passionate digital business (Bokrantz et. al. 2017). The company has a customer base mostly from the USA and Payhere app for one store payment method which can display the payments at once in one link over the website of the customer. The brand is recognised across the world for growing awareness about digital business targeting small and medium-size firms at a lower price.

Another part of the RBV model is the heterogeneous and immobile resource capabilities that act as an advantage for the firm to compete in the industry through customer focus with new market entrants. They are:

Heterogeneous: The resources that differ the firm from other competitors increasing the value of inimitability and delivering value to the customer with new opportunities. However, in this particular company, the rareness in the product offering is not found. The offering of digital marketing through an increase in online business through product display is very similar in terms of the e-commerce market (Pervan et. al. 2018). But the variety of the offering through online payment apps overpaying via email, social channels, and dropping of the websites links to varied business owners only by one payment link is very unique. But 9 express commerce digital displays are very common. The opportunity of the 9 display is very few because of the existing competition but the specialty of payment links and the cheap subscription price can be a competitive advantage for new market growth creating value to the customer across the world.

The diagnosing dynamic strategic capabilities will also help to understand the capabilities and the competitive sustainable advantages through the VRIO model as a part of the resource-based view analysis tool.

VRIO framework will be able to identify the firm’s capacity to sustain itself in the long run.

Competencies valuable Rare Inimitable Organised Competitive implications
9 subscription e-commerce products yes no no yes Temporary competitive advantages
Payhere yes yes no yes Competitive advantage
Weekly, monthly, yearly option for subscription yes no no yes Temporary competitive advantage
Low cost online e-commerce opportunity yes yes no yes Competitive advantage
People yes no no yes Temporary competitive advantages
Brand value yes no no no Competitive disadvantage

The physical assets: The 9 subscription and the Payhere apps are two definite products available in the firm but the e-commerce online products selling opportunities are very few due to common features of products and the features of the product can be imitated very easily. The products are also available in the market (Adyana and Hanani, 2020). Payhere is providing one specific feature of link website payments but the specific inimitable parts are missing.

The payment options: The opportunity for the payments options is very valuable and easy to attract vendors, but the features and the competencies are very common and the competition within the industry will be very stiff.

People: The resources of the organisational culture are very imitable and the three employees working as partners can be overwhelming when the business increases.

Low-cost opportunity: The cost is very low and they are targeting only small and medium vendors which are rare and are a competitive advantage. However, imitability is very possible by other digital product companies.

Brand value: The market new entrants are not very rare as the idea is very common with no brand recognition so far and it is a competitive disadvantage.

Internal SWOT analysis

Strength

·       Value for money

·       Targeting small vendors

·       Payment option through Payhere website links for businessmen and individuals via transparentness.

 

Weakness

·       Very common products

·       Stiff competition

·       No inimitable features within the firm

Opportunities

·       Common vendors use the apps as per budget easily.

·       The widespread of the firm due to cheap range of subscriptions

Threat

·       Vanish and not sustain in the long run

·       The breach of customers due to competition from brands like amazon.

 

 

From the resource capabilities analysis through environmental scanning, it is evaluated that both the internal and external exploitation are valuable but not competitive within the market for future sustainability due to very common features. The internal factors and external factors are weak and need future planning for effective growth.

Scenario Matrix of Alt Labs

The scenario of the world that is going to impact the firm by 2050 will be forecasted with the help of the driving forces of the matrix for understanding the certain issues and the uncertainty within the company trying to plan the sustainability aspect for future growth.

More significant

  • The extinction of resources Slow buying habits
  • The cost of living increasing Low health condition
  • Freelancing increase
  • Digital market shopping increase
  • Virtual reliability increases Low population with few workforces

                                                                                    Higher inequality

            True AI with robots

CERTAIN                                                                                                         Uncertain

  • Creation of e-waste

Increase in space tourism                               Majority of religious disputes (PESTLE)

                                                     Less significant 

The World scenario will change and by 2050 the cause and effect of the environmental factors will have a huge significant and less significant effects on the company (Sardesai et. al. 2021). The cause and effect of more significant and certain aspects, more significant and uncertain aspects must be considered while planning the scenario for competitive advantage and decision making.

More significant and certain cause and effect

Cause Effect
Social: The consumer buying behaviour will change and the sellers might extinct from the list of online selling. Environment and economic: The high inflation and resource scarcity might set up more criteria for the sellers to sell in online portals (Selvi, 2017). Due to a lack of financial stability, the small and medium vendors might step away from the online business.
Social: Freelancing and self-sell online might decrease the sustainability of the business with increasing competitors. Technology: The knowledge in the technology and own business ideas can lead to freelancing with new innovativeness without opting for choosing other product online business e-commerce help for growing business.
Social: The business will grow if digital marketing advertisement and virtual other portals are increased. Technology: The effect of technology and dependence on virtual AI is one factor for increasing the business sustainability with other products design.

More significant but less certain cause and effect

Cause effect
Social: The world by 2050 might slow the buying habits due to homebound jobs with virtual connection The seller will vanish and small sellers cannot be targeted due to less buying habits of people regarding fashion (Okraszewska et. al. 2018). However, sustainability increases in terms of groceries, payment apps, and machinery trades.
Social: The health consciousness increases with more demand for online products The health benefit products might increase
Social: Less workforce and lay off The AI and the machinery dependence are causing to cut off economic stability through workforce retrenchment increasing the chance of low buying habits.

The above matrix showed the certain and uncertain events that more significantly can occur in the future in terms of which the changes must be considered as scenario planning for effective sustainability and worldwide spreading the business for virtual growth.

Developing scenario planning with strategic implementation

Strategic Map

After the scenario planning consideration till 2050 around the world the strategic map will be planned for scenario planning sustainable competitive advantage.

 

2021-2050

 

Value to your customer

Customer value

Customer value

Support the digital marketing and payment methods with variety of options that ease the virtual learning and connectivity.

Help solve the complex problem with learning apps for virtual classes and AI IT training for clients.

 

 

 

 

Increase talented intellectual staff

The staff and workforce will vanish so we will increase staff with AI robots for instant rectification in technical issues.

Improve operational excellence

Enhance the current resources with added products variety

Strategic implication

Without the above scenario planning consideration and map the company cannot survive in the future as the mission and current products availability is very imitability features for sustainable competitive advantages. Therefore, if the above considerations of scenario planning and the strategic map are not considered with the driving forces changes the implication will be massive (Fossum et. al. 2019). The company will extinguish with the increasing competitors and the complications of people wanting a variety of products available at one-stop agencies for digital appearance will lead the firm to fail.

The new development can exist with proper staffing of AI robotics and marketing departments for new market development in the future of 2050 for sustaining in long run (Femenia-Serra et. al. 2019). The flexibility of the strategy is important and the rigid strategy of only developing the market worldwide through digital business is obsolete as per the scenario matrix analysis. It can only add losses with stock market collapses for rigidity. People will want changes and the scarcity of the resources with the same old mission without valuing humans can eliminate the market opportunity for the firm.

The sudden unpredictable and less significant events which may be a wildcard for the future must be considered as strategic implications because the strategy map needs flexibility with financial stability (Davenport et. al. 2019). The preferences of the scenario planning must be considered with varied product portfolios like AI, Digital marketing, portfolio product subscription, payment apps, learning apps for balancing the wildcard effects. The lack of a varied portfolio only will support the forces that are against the changes increasing the consequences of failing before 2050.

Part 3 Recommendations

The recommendation for the Alt Labs starts with PESTLE and ends at the scenario planning process where the future strategy development will be chosen for suggesting valuable points.

  1. The first recommendation is to monitor the financial reports for the effective functioning of the business. The firm is a small size business planning to penetrate the digital business online. However, the rigid mission of only considering the forward plan with no strategic plan can ruin the sustainability of the firm (Vilkkumaa al. 2018). The firm is a small business and the starting should be added not with the worldwide business but worldwide business alongside a variety of product portfolios as business to sustain the scenario of the upcoming demands.

The PESTLE analysis showed the wildcard’s unpredictable future which is not certain or significant but can have a huge impact on the future course of business. Therefore, to overcome the external factors the suggestion is to plan a systematic flexible strategic map with product variety consisting of virtual and robotic operational skills for virtual connectivity.

  1. The scenario planning showed the uncertain social changes which can have a continuous effect on the firm’s clients due to constant changes in consumer behaviour. In the future, the chances of consumer buying will decline with an increase in the cost of living. The cost of living and technology advancement is very certain and the changes will have an immense effect on the firm’s clients with the cost of subscription increasing and the buying of the goods online decreasing (Metzger al. 2017).

Therefore, the developing scenario strategy is to implement operational excellence to analyse the market with newly added departments of CSR, marketing specialists, and artificial robots.  For digital product handling to keep the clients constantly satisfied for the future sustainability of the firm via retainment of the clients. The suppliers who are the clients of the firm can also be retained through minimum price availability in subscription with an increase in the variety of the products offered.  As a digital marketing agency for gaining sustainable competitive advantage.

  1. With the increase in competition and AI availability, the transparency and the excellence in services will increase with businesses trying to provide more services through fewer fees to the clients as the consumer buying habits will decrease. Therefore, the balanced scorecard strategy must be implemented for strategic performance analysis (Collier and Lambert, 2018). The monitoring of the operational departments with varied roles is not easy to track and execute the determined plan Freelancing and self-business can lead to a workforce crisis which is very certain. So, to overcome the crisis of workforce and retain them without overwhelming them can be through tracking of the performance regularly with proper reports. The customer services, financial efficiency, operational effectiveness, attraction of newly qualified hiring will increase with the measurement via a balanced scorecard.
  2. The business cycle drops after they reach the maturity level however with scenario planning and implementation of the OODA loop the dynamic business and the competition can be predicted and changed faster for sustainable competitive advantage. The OODA loop will help to make decisions at a faster rate before the competitors can adopt with continuous observation of the volatility environment (Lepenioti al. 2020). The internal and external factors are very volatile in terms of Alt Labs and the business is too common with no inimitability features in the business cycle. So, the target of small and medium business owners’ concept will fail after a while.

Therefore, to remain in the business till 2050 the suggestion is to first observe the issues that will occur in the coming years and analyse the current, past, new market opportunities, product differentiation of the firm for feeding the required information for the feasibility of the business. The third step is to formulate alternative choices like adding staff, adding more other digital products, adding more payment apps, adding low subscription costs for existing clients, and so on. This alternative decision must be decided by extra research teams with technical skills for effective evaluation. The last is to take action after choosing the best goal from the alternatives that need immediate attention. Like the Alt Labs need staff as an immediate action plan to expand the new market for sustainable resource competencies.

  1. The next is to understand the market before expanding the products and it is suggested to use Ansoff’s matrix for growing the business in terms of market penetration, product development, market development, and diversification (Muff, 2017). The firm can penetrate into the new unexplored market with new products that have more value in the future. Virtual learning, more payments through online websites, adding digital marketing advertising for customer awareness, adding organic products into the portals are some common product varieties.

These features will help to diversify the market with retention of the consumer for the clients helping them to stay for long-term gaining the sustainable competitive advantage. The Ansoff model helps to segregate the market in terms of the requirement of the company in the target market suggesting to implement the Ansoff model with the uncertainties as consideration for future growth and sustainability.

Conclusion

The report has analysed the importance of external and internal factors on the organisation’s growth and success. The company chosen in the report is Alternate Labs operating in business and domestic software development. External analysis is done using the PESTLE analysis to monitor the drivers of change. It can be changes in political and legal laws that will force companies to change their business models and strategies. Other than that, their business will be highly impacted by the technological and social factors as they operate in the software development sector. From the above analysis, it has been examined that the company’s strengths are targeting small vendors, whereas their product similarity and tough market competitiveness can affect their business growth. It has been suggested that they must focus on increasing their research before product development so they can build products that are not imitable.

References

Books and Journal

Adyana, A.A. and Hanani, A.D., (2020), September. SBH strategic planning of new business development. In Contemporary Research on Business and Management: Proceedings of the International Seminar of Contemporary Research on Business and Management (ISCRBM 2019), 27-29 November, 2019, Jakarta, Indonesia (p. 32). CRC Press.

 Berbés-Blázquez, M., Grimm, N.B., Cook, E.M., Iwaniec, D.M., Muñoz-Erickson, T.A., Hobbins, V. and Wahl, D., (2021). Assessing Future Resilience, Equity, and Sustainability in Scenario Planning. Resilient Urban Futures, p.113.

Bokrantz, J., Skoogh, A., Berlin, C. and Stahre, J., (2017). Maintenance in digitalised manufacturing: Delphi-based scenarios for 2030. International Journal of Production Economics191, pp.154-169.

Chatzoglou, P., Chatzoudes, D., Sarigiannidis, L. and Theriou, G., (2018). The role of firm-specific factors in the strategy-performance relationship: Revisiting the resource-based view of the firm and the VRIO framework. Management Research Review.

Collier, Z.A. and Lambert, J.H., (2018). Evaluating management actions to mitigate disruptive scenario impacts in an e-commerce systems integration project. IEEE Systems Journal13(1), pp.593-602.

Davenport, M., Delport, M., Blignaut, J.N., Hichert, T. and Van der Burgh, G., (2019). Combining theory and wisdom in pragmatic, scenario-based decision support for sustainable development. Journal of Environmental Planning and Management62(4), pp.692-716.

Femenia-Serra, F., Neuhofer, B. and Ivars-Baidal, J.A., (2019). Towards a conceptualisation of smart tourists and their role within the smart destination scenario. The Service Industries Journal39(2), pp.109-133.

Fossum, K.R., Aarseth, W. and Andersen, B., (2019). Exploring scenario development–a case study of two collaborative research projects. International Journal of Managing Projects in Business.

Gaspar, M.L., Popescu, S.G., Dragomir, M. and Unguras, D., (2018). Defining strategic quality directions based on organisational context identification; case study in a software company. Procedia-Social and Behavioral Sciences238, pp.615-623.

Gray, C.S., (2018). Theory of strategy. Oxford University Press.

GURL, E., (2017). SWOT analysis: A theoretical review.

Lepenioti, K., Bousdekis, A., Apostolou, D. and Mentzas, G., (2020). Prescriptive analytics: Literature review and research challenges. International Journal of Information Management50, pp.57-70.

Metzger, J.P., Esler, K., Krug, C., Arias, M., Tambosi, L., Crouzeilles, R., Acosta, A.L., Brancalion, P.H., D’Albertas, F., Duarte, G.T. and Garcia, L.C., (2017). Best practice for the use of scenarios for restoration planning. Current opinion in environmental sustainability29, pp.14-25.

Muff, K. ed., (2017). The collaboratory: a co-creative stakeholder engagement process for solving complex problems. Routledge.

Nyaupane, G. and Buzinde, C., (2017). Scenario Planning: A Planning Tool for an Uncertain Future.

Okraszewska, R., Romanowska, A., Wołek, M., Oskarbski, J., Birr, K. and Jamroz, K., (2018). Integration of a multilevel transport system model into sustainable urban mobility planning. Sustainability10(2), p.479.

Perera, R., (2017). The PESTLE analysis. Nerdynaut.

Pervan, M., Curak, M. and Pavic Kramaric, T., (2018). The influence of industry characteristics and dynamic capabilities on firms’ profitability. International Journal of Financial Studies6(1), p.4.

Phan, S., (2021). The effect of PESTLE factors on development of e-commerce. International Journal of Data and Network Science5(1), pp.37-42.

Sardesai, S., Stute, M. and Kamphues, J., (2021). A methodology for future scenario planning. In Next Generation Supply Chains (pp. 35-59). Springer, Cham.

Schroeder, A., Ziaee Bigdeli, A., Galera Zarco, C. and Baines, T., (2019). Capturing the benefits of industry 4.0: a business network perspective. Production Planning & Control30(16), pp.1305-1321.

Schühly, A., Becker, F. and Klein, F., (2020). The validity of traditional scenario planning. In Real Time Strategy: When Strategic Foresight Meets Artificial Intelligence. Emerald Publishing Limited.

Selvi, G.P., (2017). Critical success factors of integrated strategic planning in IT sector: Future scenario. South Asian Journal of Marketing & Management Research7(8), pp.4-19.

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Online

Alt Labs. (2021). [Online]. Accessed through: <https://alternatelabs.co/>

Appendix

Reflection

From the above analysis, I have gained knowledge about the importance of strategy in enhancing business growth. Strategy can be defined as the process of planning and implementing them to achieve the desired goals and future objectives. The major purpose of strategy is to enhance the company’s strengths so they can stay market competitive so they can increase their profitability. Implementing a strategy will also help the company in making long-term plans for the company that helps them in growing their business. For this purpose, the company is AlternateLabs operating in business and domestic software development. They operate a micro business having about 3 main software partners. PESTLE analysis is used to determine the drivers of changes from the external market environment. I have analysed that PESTLE is an effective tool to identify the external factors and plan strategies accordingly. There can be various external factors like economic, political, legal, environmental, and many more. Each factor has its impact on business performance. It is depicted that every company must use this framework as a guiding tool for having positive impacts on external factors.

Furthermore, scenario planning can be described as the process of making decisions after analysing the potential future impacts after identifying the positive and negative aspects of the company. The tool is essentially required to resolve the risks associated with the internal and external factors affecting the firm. In this case, Resource-Based View is used for monitoring the capabilities of gaining competitive advantage and planning strategically for achieving sustainable future growth. As per Chatzoglou et. al. (2018) VRIO framework is utilised to identify the resources that are offering a competitive advantage to the company. I have learned about the importance of resources as they are the major source for the company helping in gaining market competitiveness. In the case of AltLabs, their brand value is described as a valuable resource but it is not rare, inimitable, or organised so it offers a competitive disadvantage to the company.

Along with that, I have gained excellent knowledge related to the essentiality of identifying the internal factors affecting business growth. For this purpose, SWOT analysis is done showing the company’s strengths, weaknesses, opportunities, and threats (GURL, 2017). It has depicted that the company offers very common products and stiff market competitiveness that can impose a future threat on the company’s future growth. From the company’s analysis, I have found that it must focus on researching the products and try to be innovative to exist and stay market competitive for future growth.

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