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A Critical Analysis of selected Strategic Processes within Company X

2.0 A Critical Analysis of selected Strategic Processes within Company X

Company X is a major multinational which produces and sells tobacco. The tobacco industry is highly regulated and heavily taxed in most parts of the world. The tobacco sector is made up of a small category of organisation. In this section, the author, who currently works as head of marketing for the East Africa Market cluster, will look at its marketing strategic management process.

2.1 Strategic Formulation – Porter 5 forces impact in the Tobacco Industry.

The tobacco industry plays a huge role in many countries’ economies through revenue generation. However, numerous health concerns have led to the fostering of legal and regulatory pressures on the industry. This has resulted in stunted growth of the tobacco industry. Governments have set strict entry barriers as wells as restricted marketing and advertising. Additionally, the number of firms that operate under the tobacco industry are few compared to the other sectors. This has led to an oligopoly market whereby the pricing power plays the main role of offsetting the declining volume. Most importantly, the industry experiences stable sales and earnings throughout the economic cycle. +++

The tobacco sector uses industry realignment to counter the impacts of a strict operating environment. To improve market positioning, various companies have used mergers and acquisitions. International business expansion plays a huge role in the industry since it offers better growth due to individuals’ rising income levels and limited regulation. The tobacco corporations have used the added scale to withstand competition from small discounters at the retail market level.

 

Strategic development can be incremental, transformational, or made under pressure depends on the internal and external operating environment (Mintzberg 1990). The macroeconomic environment leads to a transformational approach of Company X’s overall strategic direction regarding their; purpose, mission, vision, values, and objectives. They identified through their SWOT analysis that the traditional cigarettes would suffer further volume decline. Therefore, they decided to start focusing on new product categories with reduced risk like E-Cigarette and Oral nicotine. This was made at the highest level of the organisation, its Corporate level.

At The business level, the strategy is designed by the regional leadership team. The tools used are SWOT, ANSOFF Matrix, BCG, Porter 5 forces, and PLC. Business-level strategy in company X addresses innovation, brand name migration, rolling out the new product strategy, supply chain optimization, and business process simplification to reduce cost. The business-level strategy fits with corporate-level strategy.

The corporate level and business strategy development for company X follows a classical approach (Whittington 2000) and is more deliberate (Mintzberg and Lampel 1999) and follows the Design School planning framework (Mintzberg & Ahlstrand (2002).

The focus of this section will be on the functional strategies. The author will focus on how the marketing strategic management process is conducted to ensure East Africa’s business unit delivers the corporate- and business-level strategy effectively in terms of resources, processes, and people. At this level, the approach is more based on the modern school of thought and is more emergent (Mintzberg and Waters, 1985).

 

2.2 Marketing Strategic planning process – Functional Level

The Opportunity and Threats (OT) of the SWOT analysis for Company X could be summarised in 2 business challengers:

This lead to a transformation of the marketing approach, moving away from a business that has defined itself by the product they sell to the consumer needs that they needed to meet, to enable accelerated revenue growth over a 5-year horizon and expand gross margins to contribute to group profit delivery.

2.2.1 Business purposes redefined with five years Business objectives.

With the impact of the external forces and the need to deliver shareholder value, the company had to redefine its business purpose and a new set of financial objectives for five years to enable accelerated revenue growth over a 5-year horizon and expand gross margins to the group profit delivery.

To deliver the above business objectives, two key strategic priorities were defined:

To enable the execution of the above plan to deliver its strategic objectives, the company also had to redefine its implementation strategy across six pillars;

Technological innovation was a common thread across all the six pillars in the execution process. Clear ownership and RACI (Responsibility, Accountability, Consultation, and Informed) were design across four levels of the organisation; (Pls see appendix 1 for more details)

2.3 Strategy implementation plan

Company X adopts an Annual Marketing Planning cycle (AMP), which is in line with a five-year growth plan. The plan has a clear set of Balance Scorecard at different level (Kaplan 2009), which helps the organizations manage the value creation process at each level. The Balanced Scorecard creates a strategy map that links financial results with the business’s key drivers in each situation. This helps the organisation to ensure alignment and focus on the overall corporate strategy. To ensure the plan’s success, the company, to some extent, addresses the ‘six silent killers’ (Beer and Eisenstat, 2000) discussed in section 1. However, this is an area that could be improved and will be discussed in section 3.

2.4 The Global Annual Marketing Planning Process (AMPP)

The AMPP follows a very robust cycle with the participation of different stakeholders’ levels in the organisation, as explained in 2.2.1. Level 1, in the below illustrations, falls under the Global Marketing Leadership Team, while the regional business units would manage levels 2 and 3. The End market would drive the final stage with close supervision by the Regional business. There is a cascade plan at different stages of the process to ensure that the team is fully conversant with the plan. A planning process is an Emergent approach (Mintzberg and Waters, 1985) as it changes course based on market evolution.

To ensure process execution with corrective action, if needed, there are regular monthly and quarterly cycle meeting to assess the performance and intervention during this planning cycle.

 

2.5 The Marketing Management process at an End Market level.

At the End Market level, also referred to as a country level, the planning process follows a four steps approach described in the below diagram:

 

The marketing strategy management process comprises four keys steps; The marketing opportunity review is based on SWOT. This step leads into the marketing strategy refresh process, where the end -market participates in a deep dive to establish strategic options, which is validated by the GMLT to ensure overall global strategic alignment. Once aligned, there is an exercise of resource allocation, and the final phase is in-market execution. This goes into a repetitive cycle each year.

Conclusion

The tobacco industry is a highly regulated sector in many countries. Due to this, the industry has few organisations that operate, taking into account all the strict regulations set by various governments. As stated earlier, for easy operations in the severe market environment, the tobacco industry has developed industry realignment, enabling it to counter the extreme operating environment’s effects. Company X, one of the largest multinational tobacco firms, adopts various strategies to ensure its survival in the harsh business environment. For instance, the company is focused on innovation, supply chain optimization, the rolling out of new product strategy, and business process simplification to reduce cost.

The analysis of opportunities and threats of Company X, the company has a steady market in more than 200 nations. This implies that the company has a wider customer base, which increases its sales in the long run. Company X adopts the Annual Marketing Planning cycle based on the company’s five-year growth plan. The company adopted the strategy since it goes hand in hand with the Balanced Scorecard to help the organization control the value creation process at every level. Additionally, the Balance Scorecard has enabled Company X to create a connection between its financial results with the primary drivers. The company’s strategy adheres to a strict robust cycle and the participation of various levels of stakeholders in the firm. To ensure that the strategy attains its set objectives, Company X holds regular monthly and quarterly meetings to check on the planning cycle’s performance.

 

3.0 An assessment of the extent to which people within the organisation are engaged with and contribute to a selected strategy

 

The people aspect in delivering the strategic plan in Company X is given a high level of importance. This aspect is even more relevant and more prominent for Company X due to the nature of the products. Therefore, the company has made considerable efforts to ensure its workers’ high level of engagement within the workplace. There is a more genuine sharing of responsibilities between workers and management. The organisation gives its workers a chance to provide positive input to strengthen the company approach and strategic process.

The employees allow the organization to answer the question of where they deserve to be. The employees help the organization in the planning process, which triggers articulating the organization’s goals. This includes the long-term and short-term goals that restate and redefine the company’s value and the organization’s future direction. Communicating the vision and determining the organization’s purposes enables the managers and the decision-makers to reframe and restate the decision and operational strategies, thereby moving the organization to better positions globally.

The strategies reflect the strengths and weaknesses of the entities that are usually engaged in decision-making. For instance, a small region should recognize its size’s weaknesses and strengths concerning the activities that take place within its area. The business’s size determines the extent to which various operational activities can be supported (Mintzberg, 1994).

They facilitate the successful involvement of the stakeholders and articulate their support towards the organization. Strategic plan development entails considering and communicating the values and priorities that reflect any business organization’s main agenda. Managers and other executive officials are responsible for ensuring that the consumer and customers, in return, have accessed to the products offered by the company.

With the changing contexts- both internally and externally of the organization’s state, and determine how to capitalize on its strengths. Employees help the organization detect its weaknesses and strengths, enabling it to strategize the best approaches to overcome the shortcomings using its respective strengths.

4.2 The Role of the HRD department in driving employee engagement.

To support the employee’s contribution in strategy development and execution, the company has created a specific department called Marketing HR to ensure clear articulation of the HR strategy to support the overall corporate and marketing vision. The overall objective is to build the necessary capability that will enable the execution of the plan and, to some extent, formulate the plan at the senior level.

Besides the training aspect, the Marketing HR department is also responsible for cascading the Global and Functional strategies’ communication plan to the entire organisation. There is an annual ‘line of sight’ meeting conducted at the beginning of the year to cascade the annual operation plan. This is also a forum where employees get the chance to build into the exception plan. However, at this stage of the process, the plan is more or less locked.

Marketing HR also plays an important role in the change management process due to the transformational approach of the organisation’s strategic plan. There are regular employee engagement surveys that address various aspects of the organisation.

4.3 Challengers associated with driving employee engagement to formulate and deliver the strategic plan.

The company offers its employees an opportunity to provide constructive feedback to improve strategy and strategic process at Company X. However, it is questionable whether the input provided is used in the strategic formulation. The evidence confirmed that employees could have the opportunity for feedback to a limited extent, and the extent varies across the world’s countries. For instance, employees working at head office have more chance to provide feedback than the international business unit regarding the corporate strategy.

Since Company X operates across the world, it is difficult for them to communicate effectively with all employees, which is undeniably a barrier to employee engagement. The employees are less aware of the employer’s initiatives and goals, proposing that communication might lack in such a global context.

Conclusion

Employee engagement in any selected strategy plays an important role in the level at which the strategy will meet its set objectives. Company X has a high value of human aspect because of the nature of its products. One way that the company ensures employee engagement is by giving the employees a chance to provide new ideas on how to improve the selected strategy. Through this, the employees and other Company X stakeholders feel that they are part of the organization, making it easy for strategy implementation. Moreover, through employee engagement, it becomes easier for the company to point out how various weaknesses and strengths can later be used to plan on how to handle the highlighted weaknesses. To ensure that all employees take part in strategy development, Company X has created a unique department called Marketing HR, whose main goal is to ensure that the organization’s marketing vision has been achieved. Company X employees are involved at various stages of the planning process; at the corporate level, business level, and functional level. At the corporate level, the global leadership is responsible for defining the overall direction of the company. This is based on the comprehensive evaluation of the Micro and Macro environment. At the business level and Functional Level, the team is mainly expected to execute the plan. However, this is an area where one believes needs to be reviewed; this will have discussed in the next section.

 

 

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