Abstract
Strategic planning encompasses various steps and processes ranging from defining the current need of the business to assessment level where performance is gauged against the strategies. In essence, strategic planning processes necessitate all the tactical arrangements and the ability of the organization to execute the strategies. Specifically, strategic planning process is the practice of making out and implementing the tactical policies of an organization. During the process, the firm’s competencies and capabilities must correspond to the environmental needs.
The strategic planning process begins from defining the current business and its mission to the evaluation process where the firm’s performance is assessed and measured against the strategies. Specifically, the strategic planning process involves executing the policies and evaluating the performance or outcome against the intended approaches. In the planning cycle, strategic execution and strategic evaluation are always the last steps. Essentially, strategic planning process involves the execution of considered steps in the planning cycle and the evaluation of designed performance.
R and K Financial Counseling Services
R & K Financial Counseling Inc. is one of the financial firms offering financial services and products to the transportation industry. The firm specializes in offering financial services to the commercial truckers, trailers, high-end and exotic automobiles such as limousines as well as other commercial trucks. The firm’s mission is to offer financial services to the trucking industry. The firm’s main objectives is to be part of the growth which is being experienced in the trucking industry through the provision of the financial capital as well as other related services. The firm is in the right position to offer financial services to the commercial trucking firms as well as trailers.
The firm’s operations target the owner operators of firms within the trucking industry as well as up-market transportation firms. Most importantly, the firm’s capabilities enables it approve start-up capital for firms within the industry. Moreover, the firm’s operations not only target the new owner operators but also dealers in the industry including brokers. The firm is the first to offer the financial services to the industry. In addition, the capabilities of offering the financial services are one of the distinctive capabilities of the firm. Further, the distinctive capabilities are in line with the firm’s mission and objectives of offering financial services to the trucking industry and grow together with the industry. Essentially, the new financial services and products offered and the target market make the firm distinct from other firms in the industry
The Current Direction of the Business
As indicated, strategic planning process includes various steps ranging from defining the current situation of the business according to its mission to formulating the strategies to attain the intended goals (Markides & Geroski, 2004). The main mission of R & K Financial Counseling Inc. is to be the first in offering distinctive and satisfying financial services to firms within the trucking as well as up-market automobiles industries.
The main goal of the firm is to expand and capture larger market share and increase its competitive advantage. Moreover, the firm aims to build its brand reputation and awareness within the target market. The three years strategic plan is aimed at attaining both the short-term and long-term goals. Specifically, the three years strategic plan is aimed at increasing awareness of the services offered by the firm, market share and sales as well as revenue growth.
In fact, the strategies of the firm should be in line with the mission in order to attain the desired outcome. However, in this case, the firm’s strategies are geared towards attaining enhanced growth and development both in financial services as well as products offered and other aspects of the firm. The first strategy is to identify the current distinctive and threshold capabilities that will enable the achievement of the strategic goals. In addition, the firms’ competencies have to increase the possibilities of exploiting available opportunities towards the desired growth path of the firm. In particular, the competencies must enable the firm attain increased growth in market share, sales and revenue within the specified timeframe. Essentially, the identified capabilities must be applied within the practicable framework that will enable the firm attain its growth as well as other long-term objectives.
In particular, the firm has to gauge its capabilities against environmental demands to achieve the competitive advantage (Abraham, 2012). In this stage of the planning process, the firm has to choose the path on which it will compete within the financial market. In other words, the firm has to decide the type of product or service it will bring into the market, how to differentiate its product or service and the place to sell the product. In essence, the firm evaluates its current position and the kind of business to be involved in given its strengths, weaknesses and opportunities (Abraham, 2012).
Managers, through the application of the firm’s mission, formulate the strategic actions that would enable the attainment of the objectives. Currently, the firm is offering distinct financial services within the financial industry. Moreover, the firm has applied its capabilities to develop differentiated financial services and products targeting unexploited markets. The formulated strategies should ensure the desired growth is attained.
SWOT Analysis of the Firm
Performing the environmental scan through the application of SWOT analysis is the second important step in the strategic planning process. In other words, in the second step of the planning process, the firm performs detailed audit of its internal strengths and weaknesses, the threats it faces from external environment and the opportunities the external environment brings (Warren, 2007). As indicated, the strategic internal and external audit is facilitated by the application of SWOT analysis.
Based on this situation analysis, managers of the firm should formulate novel business mission statement that capture the new form of business in terms of the type of financial services and product to sell, the geographical location in which it doing the business, the target market as well as how the services and product will be differentiated (Warren, 2007). However, decisions regarding the financial services and products, target market, geographical location and differentiation strategies have made and achieved by the firm.
Nevertheless, in this case, the firm’s quick environmental scan is as indicated in the SWOT analysis matrix
R & K Financial Counseling Inc. SWOT analysis matrix
Strengths
The firm’s holistic approach in the financial services as well as leadership in provision of financial products is one of the major strength of the firm. In addition, the financial products and services quality as well as design particularly to the trucking industry provides unprecedented competitive advantage. Financial services and product quality leadership provides a strong basis for quick expansion into the new markets. Besides, the firm offers diversified financial services ranging from low-cost start-up capital to no-cost in-house financing to the owner-operators. The diversification enables the firm to change its financial products and services mix that will meet the required demand resulting into increased sales. In addition, the firm has well established differentiated strategy that distinguishes its products from competitors.
The financial services and products the firm offers are unique and distinct to the target market. The reason is that the firm’s financial services are attainable with the least cost possible. The corporation also enjoys a strong reputation within the target markets because of quality, reliability, and exemplary financial services and products offered to its clients. Essentially, internal strengths of the firm include the fair prices of its financial services, quality financial services and products, increased customer services as well as superior brand. Generally, the firm’s holistic approach to the provision of its products is also one of the major strengths.
Weaknesses
One major weakness of the firm is poor marketing communication strategies. In fact, differentiated strategy needs to be well communicated to the consumers. The firm has not yet fully developed its financial services offered to the target market to allow speedy delivery of the services to the consumers. Besides, the size of the firm and its diversification strategy has lowered its penetration into the market. Moreover, the business model is not adaptable to the changes that might take place in the market particularly in hard economic times when smaller programs may not be preferable to the target market.
Opportunities
There are growth opportunities available to the firm given the fact that the target market is rapidly growing. Moreover, the financial services and products the firm offer is still new and distinct offering the firm growth opportunities. Essentially, the firm has the opportunity to develop and sell new financial products and services, target new customers and expand its geographical reach. Since there is a gap between the firm’s services and what other financial firms offer, this creates a vacuum for the R & K Financial Counseling Inc. to thrive. In addition, the firm has already established strong and long-term relationship with trucking firms thereby reducing most of the marketing costs. Therefore, clients’ dependency hitherto established and developed is another opportunity for the firm’s management to thrive. The diversification strategy will also enable the firm take advantage of many opportunities in various sectors of the fast growing industries.
Threats
The biggest threat facing the firm is competition.Competing firms find little difficulties entering this market with similar products and brand. The entry of new firms poses a potential threat to R & K Financial Counseling Inc. Another threat is the possible slowed growth in revenue resulting from decreased clientele because of numerous financial companies entering the market. The declined revenue may affect the firm’s growth strategy. In addition, the firm is planning to invest and offer financial services to highly competitive industries. The ever-changing environmental conditions due to increased competition pose a huge threat for the development and growth of the firm in the new market. In fact, the probable instability in the market has greater impact on the general sales volume. Besides, the firm is also facing the threat from ever changing prices of financial services and products as well as cost constraints. The volatility in prices may put more pressure in the margins.
Areas of SWOT to be Emphasized in Strategic Plan
The firm should emphasize on some of its strengths, opportunities, threats as well as weaknesses to ensure the attainment of the strategic goals. In fact, the strengths and available opportunities should be aligned with the mission as well as major objectives of the firm in order to attain the desired outcome. In addition, the firm should improve on its weaknesses and turn the possible threats into opportunities in order to attain the desired outcome. Areas that need more emphasis on the strategic plan include market leadership, quality financial services and products, differentiated financial services and products as well as fair prices. In addition, the strategic plan should focus on taking advantage of the rapid growth of the target market and improvements on its communication channels to increase the competitive capabilities of the firm. Finally, the strategic plan should focus on competitive threats coming from the external environment.
Reasons for the Focus Areas
The main reason for the emphasized areas is to increase the competitiveness of the firm. In other words, every focus area should be geared towards attaining the increased competitive advantage to the firm (Grant, 2001). Essentially, in the strategic plan, the company evaluates the internal strong points as well as limitations and matches them with corresponding external prospects and pressures to improve its competitiveness in the market. For instance, focusing on the product quality and fair prices will distinguish the firm’s financial services. In addition, improving on the communication channels will enable the firm to penetrate the market thereby improving its competitive advantage.
The Evaluation of the Strategies
As indicated, the last step in the strategic planning process is the evaluation of the strategies against the desired outcome. In this case, the firm will establish the quantitative frameworks that will measure the desired outcome (Aaker, 2001). For instance, the growth in market share will be measured through increased number and geographical spread of customers. In addition, the growth in sales and revenues will be measured through augmented balance sheets as well as other income statements. Generally, the success of the strategic plan will be attained when the firm sustains its competitive advantage. In addition, the success of the strategic plan will be achieved when the mission of the firm has been translated into strategic goals that are geared towards creating and enhancing the shareholders value. Further, the strategic plan will be successful when the firm sustains the higher rate of returns through strong balance sheets and maintaining high quality financial services and products that satisfy the needs of the customers.
Conclusion
As indicated, the strategic planning process involves five steps, which are referred to as the planning cycle. The first step is to identify the business and align it with its mission. The second step involves evaluating the business through the application of its internal strengths and weaknesses as well as the threats and opportunities that come from external sources. The third process is devising the novel business statements. Fourth process involves transforming the business mission into tactical objectives. The last step in the planning process is the implementation of the tactical objectives. In the simplest sense, the planning cycle helps businesses or firms identify their current position and forecast achievable goals through formulated strategies.
References
Aaker, D. (2001). Developing business strategies. NY: John Wiley & Sons, Inc.
Abraham, S. C. (2012). Strategic management for organizations. San Diego, CA: Bridgepoint Education, Inc.
Grant, R. M. (2001). Contemporary strategy analysis: Concepts, techniques, applications. Cambridge, MA: Basil Blackwell.
Markides, C. & Geroski, P. (2004). Fast second: how smart companies bypass radical innovation to enter and dominate new markets. San Francisco: Jossey Bass.
Warren, K. (2007). Strategic management dynamics. Chichester, UK: John Wiley & Sons, Inc.