Strategic Adaptability Essay Example for Free

Strategic Adaptability Essay Strategic adaptability is the ability of an organization to make changes in the way they conduct business and look at the various situations which arise. It is imperative that companies remain flexible enough to make adjustments that will beneficial to the well being of the company. There are many different aspects of the business world which can be benefited by the company remaining open to new ideas and options thereby being able to adapt their strategic plan to the current situation. In the case of Queen’s Hotel, changes in the hospitality industry create the need to stay current and flexible in order to maintain a competitive edge. By adapting to the changes in the hospitality industry, Queen’s Hotel will be able to attract customers by offering better customer service. SendOutCards is a company which conducts business solely online. With the growing popularity and convenience of the Internet, more and more companies are seeing a dramatic increase in the electronic side of their business. Because of the wider competition base, it is necessary for SendOutCards to find ways to set themselves apart from the other companies out there. By offering additional services, such as gift baskets, gift cards and e-cards, SendOutCards will be able to increase their sales and customer base by offering more options which will appeal to more people. 3M is a company which manufactures a wide variety of products and has a bigger opportunity to find ways to be adaptable. They can use the example of other companies which are in similar circumstances and learn lessons without the need to experience the event. By adapting in this manner, 3M will be proactive in making sure they are current with the trends and forces which may impact them. Odwalla is in the food and beverage industry and must look to the consumer for the trends which will affect their business. By staying on top of what people are looking for in their snack bars and beverages, Odwalla can provide products which will not only be natural and healthy, but they will satisfy the ever changing preferences of the health conscience consumer. The forces and trends which affect each of these businesses are many and constantly changing. We will address a few of these trends and discuss how these companies can adapt and improve their business by making strategic changes which will turn what could be a potentially difficult situation into a chance to grow and improve. Trends in the Hospitality Industry Every industry has trends and they play a big role in our society. The bell-bottom trend in clothing, the DVD player in an SUV in the car industry, the flat screen T. V. in your living room, but the most important trend is in the travel industry. What is a trend? According to dictionary. om, a trend is the general course or prevailing tendency; drift. If this is a direct quote it needs to be in parenthesis and not italicized! In marketing, it is the direction the market is heading . In economics, it is the behavior of the society. In this synopsis, three trends will be identified, their relevance in the hospitality industry explained, and how Queen’s Hotel has used the trends to strategically plan ahead. The tren ds-Travel, Internet, Casino hotels Travel: According to Plunkett, the travel business is now emerging as a more streamlined, efficient and focused industry. Many of the biggest, most successful firms are becoming extremely global in nature Is this another direct quote? (Plunkett, 2008). Many people are finding ways to travel, either for vacationing, business, or personal reasons. Internet: The information technology highway has found a way to help the consumer plan all their needs with the click of a mouse. The internet provides a simple way for consumers to shop in the privacy of their home. Casino hotels: Many hotels are now casino ready in most parts of the developed world. Casinos have become a trend that people have come to gamble with. Casinos have become part of the entertainment industry and provide a way for clients to book hotel with such amenity. Relevance of the trends in the hospitality industry Because the hospitality industry has become a way of life, many managers face unlimited opportunities to grow their businesses through the rapidly changing demands of their clients. Many hotels are partnering with travel agents to provide package deals for their clients. The travel agents are able to book hotels, tours, and attractions included with the plane ticket. Customers are able to use the internet to find deals. Not everyone prefers travel agents as they also come with a fee, therefore, many people are using the internet to package their travel needs. The internet has become a way to reward people for doing it themselves with online discounts, etc. According to a web article, 15 million people are addicted to gambling, casinos gross more than $30 billion dollars annually, 49% of 15 year olds, 63% of 16 year-olds, and 76% of 18 year-olds gamble (http://www. overcominggambling. com/facts. html Not correct citing) and this statistic is only in the U. S. Many people are attracted to casino hotels as it’s a form of entertainment. Queen’s Hotel Strategic Plan to the trends Queen’s Hotel realizes that travel, the internet and casinos are popular trends in the hospitality industry. The hotel has a website that allows customers to book online. If they do, they are given a 10% discount. The hotel has partnered with many online travel agents to provide package deals to customers. The hotel is looking to undergo a renovation to add a casino. Adding a casino in a third world hotel will give it an edge. Carlos Gift Basket Giving This trend of giving gift baskets has grown extensively in the 21st century. Gift baskets are easily available for purchase online and even more personalized than other items that you can give someone, such as flowers or candy. They allow the buyer to be more creative in their gift choice and they are a little more exciting for clients to receive. â€Å"They are beautiful and brimming with unique gifts and tasty treats. They are a more personalized gift than balloons, and more practical than sending flowers† (James). This trend has given corporate America other alternatives to market to clients, show appreciation or just to increase customer loyalty. It gives them the ability of giving something to their clients, or potential clients, which doesn’t come across as too over the top or too cheap. Relevance The reason why the trend of giving gift baskets has developed so quickly and has gained lots of popularity is that people feel they have more of a personal touch; and with the ease of ordering your gift basket over the internet, the convenience has made it easier for people to choose their options, on their own time frame, without having to go shopping at different stores or even package it nicely for the intended person. Since SendOutCards does all of their business online and offers a wide range of cards for different occasions at prices which are cheaper than those found at your local stores, the option to offer a service to clients other than cards just makes sense. Adaptability SendOutCards has decided to take the time to take advantage of this part of online business as well. Not only is their business based on the same concept of internet ease and options, they are now giving the option to send out a gift along with your card, in the form of candy, books, gift cards, gift baskets and other items. The gift basket, or gift giving industry, is a simple and convenient way to promote more business and to take advantage of a growing need for online purchasing of gifts. As Jennifer James states in her article on Fabjob. com, â€Å"Not only is the work fun and creative, but you can also start a gift basket business easily from home, by setting up a small space where you design and build your gift baskets† (James). Gift Cards The giving of gift cards has become an automatic option for business owners to give to their clients, or even as gifts. It has become so popular that people tend to give them to their family and friends for holidays and birthdays instead of taking the chance of purchasing something that may not be wanted or appreciated. Gift cards have become increasingly popular and can be found in almost any retail business. They are even found in grocery stores. It is almost to the point that people expect to find a gift card at their local retail store. Relevance According to an article in USA today by Rhonda Abrams in 2004; Two recent studies (by the National Retail Federation and by the accounting firm Deloitte and Touche) show the explosive size of the gift card market: †¢ 74. 3% of consumers will buy a gift card this holiday season †¢ 81% of consumers received a gift card last year †¢ 50. 2% of consumers would like to receive a gift card †¢ 12% of shoppers bought gift cards for their own use †¢ 11. 5% of the average consumers holiday budget will be spent on gift cards. (http://www. usatoday. om/money/smallbusiness/columnist/abrams/2004-12-10-cards_x. htm) This is not listed in References and is not correct citing! As we can see, there is a demand for gift cards and corporations are taking advantage of them. Not only do the companies use the gift cards as a selling point for people to buy gifts, they will have the opportunity to get new business from people using the cards and spending more money than what is actua lly on the card because they cannot cash out the card. According to Abrams article, â€Å"Customers buy more. 1% of gift card users spent more than the face value of the card. The average face value of a gift card in 2003 was $47. 20; those who spent more averaged a whopping $90† (Abrams, 2004). Adaptability This is an area that SendOutCards has tried to take advantage of. They do offer gift cards, but only from other businesses. They have not made the move to offer their own gift cards for their own products. It probably is not as feasible for them to do so as it may be more costly for them to pay for the cards and not have people use them since people could only use it for their products. Since most people don’t send themselves a gift or a greeting card, it would be like giving them a gift card so that they can give a gift to someone else, which defeats the purpose of giving a gift. SendOutCards has taken advantage of offering gift cards from other companies because they know there is a demand for them. They have negotiated a deal with these companies and buy them at a discounted price and have created a win-win situation for both them and the retailers who will see the extra revenue. E-Cards E-cards have developed ever since the internet has taken off. You can find about any card and in almost every language on the internet. According to an article by Keith Regan in the E-Commerce times in 2005, â€Å"According to Branch Internet Services, the first e-mail Christmas greeting cards were sent 10 years ago this season, when Dominos Farms Christmas Light Display worked with Branch to offer Web users the chance to e-mail photos of the holiday display. Fewer than 15,000 cards were sent that year, according to Branch† (Regan, 2005). Free E-Cards are offered all over the internet, but the businesses are not making much money. They were relying heavily on advertisement payments through banners and popup on their websites. Sally Babcock, of the e-card giant American Greetings Interactive said, â€Å"Since its inception, AGI, the online unit of the cards giant, has gone from a paid model to a free, ad-supported approach and has returned to a blended, mostly paid model once again† (Regan 2005). Many customers are seeing them as a real alternative to sending out a card in the mail and are even willing to pay the fees for the services. Relevance Ecards are still very popular amongst many internet users. The problem is that they still don’t have the personal touch that a physical card has. According to Babcock, â€Å"Even those who sell them for a living acknowledge that the day may never come when electronic greeting cards replace paper cards. But eCards are already far more than just a time-wasting diversion or a low-cost alternative to the real thing† (Regan, 2005). Some backers like the ecard approach because of the environmental friendly aspect of it. Adaptability The way SendOutCards has adapted to this industry is to offer a service that the online E-cards have not offered to this point. They offer to actually send out a physical card to a client, family, friend or acquaintance directly to the persons’ home. They have even offered the option for their users to send the card in their own handwriting, which personalizes the card that much more. They know that the e-card business is good for their target market, but the market which SendOutCards wants to target is those who want to make a bigger impression. AGI has tried this in the past but has not been successful in its attempts. Babcock admits, â€Å"Also gaining traction are online options to have cards personalized, printed and in some cases even mailed. In those cases, the customer is paying for convenience, said Babcock. â€Å"AGI also offers a print-at-home line of cards, she noted† (Regan, 2005). SendOutCards wants to be able to make a difference in people’s lives. They have the idea that it is more meaningful for people to go to the mail box, open it up and have the physical experience of reading the personalized card. SendOutCards has made it more affordable to be able to send out a card from your computer than it would cost you to go to the store, pick one out, stamp it and physically mail it out. They will do it for you, which takes about 60 seconds to do it all (Eliason, 2008). This is their niche that the industry has not caught up to as of yet. Being able to adapt to the economy and your competition is what will set you apart from others. SendOutCards has the difficult task to stay on top of its competitors by being able to offer a service that other businesses don’t have. They have taken the example of the gift basket industry and implemented what they could to be competitive in the gift giving industry. They know that they can gain clients who want more than just a greeting card. With this knowledge, they have implemented the procedure of offering other options besides just the greeting cards. SendOutCards also applied the example of the demand for the convenience of a gift card. This is an option which they developed in partnership with various retailers. They receive a discounted price for the gift cards in exchange for offering clients the option to purchase them thus allowing both to make money from the proceeds of the card. This also gives clients a larger variety of options. SendOutCards has an advantage over the E-Card industry by offering not only to package and send an actual card, but to do so in the handwriting of the client. They have developed a system which allows people to send the card without leaving their home to shop for the card and the hassle of finding a stamp to send it. They are trying to appeal to the people who still feel it more personal to send a card by traditional mail rather than by e-mail. Johnson and Johnson, Inc. Johnson and Johnson, Inc. s an example of an organization that has had to adapt with strategy to forces or trends that have surrounded the corporation. Johnson and Johnson recently fell into a safety predicament which required immediate action by the company to salvage its image. Johnson and Johnson found themselves losing customers and sales due to the danger of one of their products. Following the death by overdose of several individuals, including youth and child ren, Johnson and Johnson was forced to recall thousands of unsafe bottles of Tylenol (Macdonald, 2007). The primary changes that the company made were in relation to the bottle the Tylenol came in and the removal of a potentially deadly ingredient in the Tylenol. Immediately Johnson and Johnson recalled the entire defective product line and removed all existing product from the shelves. This act alone cost the company millions of dollars and substantial time in revamping the new bottle and new Tylenol formula. Despite this great challenge, Johnson and Johnson was able to seize the opportunity to remarket their product as a newly revamped and safer product. After recalling and removing the defective product, Johnson and Johnson set out a new marketing campaign to reestablish their public image as a safer and more consumer conscience product. The ad campaign worked. Tylenol is now viewed as one of the safest products on the market. 3M could benefit from such a marketing campaign. 3M is a company much like Johnson and Johnson. They both manufacture and distribute millions of different products used all across the globe. Because of the expanse of the market that 3M is targeting, the potential for safety concerns and problems is dramatically increased. M must constantly keep a watchful eye to be apprised of any issues that should arise. An environmental scan will also keep 3M apprised of any safety concerns which arise within the market that could affect their company. Strategic planners with 3M can learn from those at Johnson and Johnson because of the accuracy and timeliness which they responded to the challenge, thus turning it into an o pportunity. In the future, 3M is sure to encounter environmental factors that will place their products in the path of new regulations or circumstances that could threaten the success of the organization. M must act as Johnson and Johnson did by using accurate environmental scanning and acting in a timely manner to save the company. Southwest Airlines Another paramount example of environmental scanning used by strategic planners to help an organization thrive is Southwest Airlines’ use of fuel hedging. â€Å"Using some simple and some complex investment strategies, Southwest has for a decade locked in the prices it pays for large amounts of jet fuel months and even years ahead of time. Its success at that has protected it from run-ups in crude oil prices and dramatically cut its fuel expenses† (Reed, 2008). One area of grave concern in the U. S. economy is the cost of fuel. People all across the country are looking for alternative fuel and cheaper transportation as a means of saving money. The airline industry, on the other hand, has no other resource available. There is no hybrid airplane neither is there one which can run on alternative fuel. Therefore, airlines are forced to look elsewhere to save money. Southwest Airlines has used environmental scanning to conclude that fuel prices are constantly on the rise and can be locked in a contract to be purchased in mass quantities for a cheaper price. By allocating additional funds to pre purchase fuel at a lower cost, Southwest Airlines is placing themselves in a win-win scenario. The oil company would be glad to secure an agreement for guaranteed sales and the Airline Company will jump at the opportunity to save money on fuel that they are certainly going to use. Fuel hedging has proven effective for Southwest Airlines and a similar approach can be an effective money saving technique for 3M as well. 3M constantly manufactures millions of products. The company is constantly receiving supplies of materials from distributors. M must always be on the lookout for trends in the environment that could affect the prices of the products they use in manufacturing. If the company can accurately predict which products will rise in cost due to extenuating circumstances, they can either look for an alternative product or seek some sort of pre purchase order price for said product similar to Southwest Airlines’ use of fuel hedging. Toyo ta Toyota Motor Corporation is a classic example of an organization that is constantly scanning the environment for forces or trends that can affect their business. This strategy has enabled Toyota to become the number one automobile maker in the world (Liker, 2004). When a customer purchases a Toyota they are getting a quality product. Toyota has been successful in environmental scanning in several areas, but in particular they have excelled in a market that is increasingly concerned with fuel economy. Toyota has constantly been at the forefront of knowing what the customer wants and when they want it. Amid the crisis we are facing with the economy, and especially the rising fuel costs, Toyota is able to provide customers with a fuel efficient car. The difference between Toyota’s fuel efficient cars and those of the competition is timeliness. Toyota had anticipated the need for a fuel efficient car long before it became a priority for the competition. Now while the competition scrambles to make a vehicle similar to a fuel efficient Toyota, Toyota is focusing on bettering their product and placing themselves even further ahead of the competition. This is an example of how Toyota has done accurate scanning of the remote environment. The remote environment includes: economic factors, social factors, political factors, technological factors, and ecological factors. Managers must consider the availability of credit, level of disposable income, and the propensity of people to spend when considering economic factors. Other things to consider are the prime interest rates and the gross national product (Robinson, 2004). Toyota has taken into consideration these factors. They have accurately looked at the environment and what the consumer is dealing with and they have catered to the customer accordingly. 3M would do well to follow suit. Much like Toyota, 3M manufactures products for their customers and is not immune to environmental factors. Because of these facts, 3M must adopt an environmental scanning strategy that will enable them to adapt to forces in the environment and come out triumphant. ODWALLA Functional Beverages â€Å"Functional beverages are drinks that have been enhanced with added ingredients to provide specific health benefits beyond general nutrition†¦Consumers are seeking specific health benefits in their foods and beverages and these functional drinks fit neatly into the ‘healthiness-on-the-go’ market† (Sharon Palmer, 2008). Functional beverages are gaining popularity over soft drinks as more and more people are looking for healthier alternatives. These drinks have added ingredients which help to promote a healthy image. Some of these functional beverages have FDA approved claims while others have only minimal amounts of vitamins and minerals and do not provide any real health benefit (Sharon Palmer, 2008). Many companies are beginning to offer a wider variety of functional beverages. Even companies in the children’s beverage market are capitalizing on the turn towards better for you foods and beverages. ‘[A]s more parents seek healthier beverage options for kids, I foresee the continued trend toward more products being all natural, organic, lower in calories, lower in sugar, or having more specific fortifications within their formulations,’ predicts Phan† (Goldschmidt, 2008) senior brand manager at Hansen’s. With this trend gaining popularity among consumers of all ages, it is more than just a passing phase; it is the new way of thinking. Relevance Because functional drinks are quickly becoming an industry staple, Odwalla Inc. is constantly gaining new competitors. With the increase in the number of competitors, Odwalla must always be innovative in its product development. While Odwalla’s products are all natural and retain as much of the natural vitamins and minerals found in the ingredients used, there is a more pressing need for Odwalla to make these benefits known to consumers as the options available are becoming greater. Strategic Adaptability As Odwalla analyzes the growing competition, they will need to remain innovative with their marketing and advertising. They will want to make sure that consumers are aware of the many health benefits already available in their products. They will want to emphasize the fact that their products have always been all natural and fresh with the least amount of processing possible in order to maintain the inherent nutritional value of the ingredients which go into each and every product made. By highlighting these strong points, consumers will be able to see why paying a little more for a much better product really is a better value. Probiotics â€Å"Probiotics are a host of healthful bacteria that help break down and assimilate food† (Kane, 2008) and can be found in a wide variety of foods. Yogurt contains probiotics and many food manufacturers are adding probiotics to their products because of the great health benefit. â€Å"WITH BENEFICIAL LIVE BACTERIA CALLED PROBIOTICS. yogurt bolsters the bodys ability to fend off certain infections and helps keep the intestines healthy, allowing them to absorb more nutrientsand energy-from food† (Boone, 2008). Relevance Odwalla prides itself on providing its customers with fresh, healthy beverages and snack bars and they are always looking for new ways to make their products the best they can be. Probiotics are both healthy and natural and fit right in line with the goals of Odwalla. Since more and more companies are incorporating these bacteria into their products, probiotic additives are going to become better known by consumers and thus sought out because of their natural benefits. Strategic Adaptability Odwalla has the ability to develop a new product which would incorporate probiotics. This would enhance the benefits already afforded by consuming the all natural products of Odwalla. With more people being educated on the benefits of probiotic bacteria, there will be a demand for products which incorporate this. By adding probiotics, Odwalla would help to fulfill its mission of â€Å"soil to soul† (Odwalla President Discusses Strategy with GreenMoney Journal, 2004) because it would allow more of the natural goodness contained within each bottle of juice to reach the soul of the consumer. Specialty drinks in a declining economy The world’s economy has been stagnant and is now in a state of decline. In spite of a tough economy, consumer products manufacturers have continued to experience growth (CPG Industry: Sales Growth in Challenging Economy, 2008). The economy is not showing signs of improvement and things are only going to be getting tougher. With commodities’ prices continuing to rise, consumer products manufactures will need to adopt successful practices in strategic areas in order to continue to grow (CPG Industry: Sales Growth in Challenging Economy, 2004). Relevance The cost of commodities greatly affects the profit margin of Odwalla. They rely on having fresh products available at all times and can be crippled by shortages due to natural disasters as well as price hikes caused by the increasing cost of doing business. These things take a toll on the bottom line and can lead to financial struggle within the company as well as strained relationships with suppliers. Strategic Adaptability There are different options available to Odwalla to help them through the period of economic hardship. As they contract with suppliers, they can negotiate pricing which will benefit both parties. They have the option of purchasing farms which would produce the produce needed for their products, thereby eliminating the need for a middle-man supplier. Also, plans to produce new products can be put on hold until the economy recovers. By holding off the added expense of developing and marketing a new product, Odwalla would be able to focus on their better sellers and allow them to carry the company through the difficult times. Conclusion The world of business can be challenging and exciting. By staying on top of current forces and trends, managers are able to help their businesses thrive in an ever changing market. Change is not limited to one area or aspect of a corporation and by following the examples of other companies, change can provide a new opportunity for growth and development. Retaining the ability to adapt the strategic goals of the corporation can mean the difference in being an industry leader, or a company which has already had its day and is on its way out.