Business Policy and Strategy

BUS 4302, Business Policy and Strategy 1

Course Learning Outcomes for Unit III Upon completion of this unit, students should be able to:

3. Analyze external and internal audit processes. 3.1 Examine a company’s internal and external strengths and weaknesses.

8. Assess the strategy evaluation process.

8.1 Determine the effectiveness of a business strategy. Required Unit Resources Chapter 3: The External Assessment Chapter 4: The Internal Assessment Unit Lesson

External Assessments During this unit, we will explore the factors that impact an internal and external assessment. Let us begin with the external assessment. To effectively develop a successful strategic plan, the organization must be aware and adapt to the external environments. These environments include identifying and incorporating trends affecting their stakeholders. These trends can shift and be affected by the economy, competition, tax burdens, and many other factors. As an example, consider Chipotle Mexican Grill. Chipotle is a chain of about 1,700 restaurants in the United States and in several other countries. Chipotle Mexican Grill is considered as a fast, casual dining establishment whose vision statement is Food With Integrity. It extends many benefits to its salaried, part- time, and entry-level workers. It tries to meet society’s expectations for the humane treatment of animals. Unlike its competitors, it is experiencing revenue growth of about 20% a year. The restaurant sector grows about 1% annually. Consider the sustainability of the Chipotle business strategy that invests in its workers, promotes its managers from within, and insists on humane operations. Do you think it will be able to maintain its revenue growth in 5, 10, and 20 years in a changing economy and with potential new competitors? What strategies would you recommend for them? Let us also consider external assessments outside of the United States. What happens when a company has reached its fullest potential within the United States? Should they remain steady, or should they seek global opportunities? Many organizations to include retailers, fast food, and other entities have expanded internationally to grow their companies. Examples include Starbucks, McDonalds, and Walmart, which can be found in many different countries. In addition, you may notice outside companies expanding within the United States. A prime example is Ikea, who continuously grows their North American operations. Organizations also consider the economic outlook before proceeding with development in a country. For example, China has had a decade long economic boom, and many corporations have taken this opportunity to expand into new territories, thus increasing our overall reliance on a global-based community. Other external factors often affecting a corporation include political, governmental, and legal challenges both domestically and abroad. One issue with a clear divide is minimum wage and a living wage. The minimum wage is determined by the government, while a living wage can be influenced by the corporation and other competing factors. Another governmental external factor is the Health care Reform Act, which requires corporations to provide health insurance for their employees. This cost can be expensive to the company and

UNIT III STUDY GUIDE External and Internal Assessment

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UNIT x STUDY GUIDE Title

is generally passed on to consumers and also may decrease the overall salary of the employee. Another challenge is deciphering whether to tax or not to tax Internet commerce. Many states feel they are losing out on needed revenue due to the tax-free association with Internet sales. Some states have lobbied and passed bills to formally tax all internet sales transactions. Amazon.com has been an opponent of taxation but must abide by the state requirements. As we have learned, the external assessment can be a very powerful tool if approached with the correct perspective. If the external assessment is used in a punitive way to restructure leadership or redesign the business structure, we have missed the boat on the real power of the external assessment. As leaders, we need to have a general understanding of the industry and be able to identify areas in which competitors are vulnerable and be able to predict potential moves that competitors might make that could be a threat to us. Successful businesses are constantly looking in the rear-view mirror while, at the same time, looking well into the economic future (David et al., 2020). The key is to constantly be aware of the needs of the customer.

Internal Assessments There is not a one size fits all related to an internal assessment of an organization. There are multiple types of organizations to include colleges, hospitals, retailers, and government. These entities all function differently and often need a customized assessment to truly assess their performance. An internal audit is the organization’s self-evaluation of their strength and weaknesses. The audit can better illustrate how an organization’s departments are incorporated and how modifications and updates can be implemented. It is also just as important to ensure the organization properly communicates their intent and expectations of an audit to their employees. Every organization has an organizational culture. Let us use an example of the U.S. Armed Forces; the Army and Air Force have a very distinctive culture, even though they are both on the same side and work toward the same goals. An organizational culture is defined by a pattern of behavior that an organization has developed to handle a problem or external threat. New members coming into the organization will often be integrated into the organization’s culture, thus continuing the pattern of behavior. These examples include ceremonial, values, beliefs, and rituals.

Management and Marketing There are five main characteristics related to the activities of management. These include planning, organizing, motivating, staffing, and controlling.

Function Description Stage of Strategic Management

Example

Planning Preparing for the future

Strategy formulation Planning for the next release of a product or service

Organizing Job description, control and coordination

Strategy implementation

Coordinating the efforts to release the product to include where and how

Motivating Shaping human behaviors

Strategy implementation

Encouraging the company’s sales associates to become excited and motivated by the release of the new product—this excitement will trickle down to the consumer and other stakeholders.

Staffing Human resource management

Strategy implementation

Identifying the right personnel for the organization to include implementers, managers, and leaders

Controlling Results oriented, rewards, sanctions

Strategy evaluation Identifying goals and rewards for top salesperson(s) for the new product release

Marketing

Marketing includes the process of creating and fulfilling a customer’s needs and wants for a particular service or product. Let us use an example of the energy drink Red Bull. Who are the commercials targeting for this beverage? The target audience can be a demographic of adventurous young adults who are seeking new

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UNIT x STUDY GUIDE Title

challenges. The commercials promote that Red Bull “gives you wings,” thus you will feel a huge rush of energy and will have the ability to keep going well into the night. Red Bull must also consider pricing and distribution in an effort to remain relevant and profitable. For example, do you feel Red Bull would be a drink of choice at an affluent sushi bar, or would this drink be more appropriate at a sporting venue or a late-night concert?

Reference David, F. R., David, F. R., & David, M. E. (2020). Strategic management: A competitive advantage approach,

concepts and cases (17th ed.). Pearson. https://online.vitalsource.com/#/books/9780135203736 Suggested Unit Resources In order to access the following resources, click the links below. The chapter presentations below will provide you with additional information on this unit’s concepts. Access the Chapter 3 Presentation. Access the PDF version of the Chapter 3 Presentation. Access the Chapter 4 Presentation. Access the PDF version of the Chapter 4 Presentation.