Essay: Concise Analysis of Strategic Plan Part 3 Strategic Evaluation and Recommendation

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SAMPLE EXCERPT:

[. . .] Operational restructuring involves withdrawing from underperforming markets, ceasing unprofitable offerings, scaling down the product range, and eliminating, creating new, or combining business units. Restructuring organizational design may involve changing organizational structure and downsizing the workforce (Johnson, Scholes & Whittington, 2010).

Corporate-level strategies are important for the long-term performance and growth of the organization. Nonetheless, they involve more resources, time, effort, and risk (Johnson, Scholes & Whittington, 2010). For instance, acquiring a rival involves millions or billions of dollars, and presents challenges such as inherited risk, lack of organizational culture fit, and loss of proprietary information. Similarly, venturing into new markets presents more market and operational risks. Therefore, the benefits and risks involved must be carefully weighed to avoid wastage of time and resources in an undertaking that may not be fruitful or which may turn out to be detrimental to the organization.

Global Strategies

Operating in the global environment is without a doubt a complex undertaking. An organization must consider a plethora of factors in the local environment (political, economic, social, technological, environmental, legal, and industry factors). These factors influence mode of entry the organization selects, how it reaches out to consumers in that market, and how it interacts with other relevant stakeholders such as suppliers, competitors, and regulators. In addition to mergers, acquisitions, and strategic partnerships, a firm can increase its presence in the global market through joint venture agreements, wholly owned subsidiaries, exporting, as well as franchising and licensing (Segal-Horn & Faulkner, 2010).

Joint venture agreements involve sharing ownership with an entity (public or private) in the domestic market. The agreement facilitates sharing of risk, resources, and technology. A wholly owned subsidiary entails full ownership of a business in a foreign market. This may be achieved through acquisition and greenfield investments. Exporting encompasses retaining production operations in the home country, but selling products to other countries through distributors, intermediaries, or sales representatives. This strategy is common with manufacturers. Though they are quite different, licensing and franchising agreements allow firms or business owners in foreign markets to produce a firm's proprietary product or utilizes its intellectual assets (trademark, copyright, brand name, and so on) (Segal-Horn & Faulkner, 2010).

Though global strategies facilitate international expansion, they often involve a great deal of risk. These include political instability, cultural difficulties, relationship management complexities, economic risks (such as foreign exchange risk), information asymmetry, longer time-to-market, loss of control, and loss of proprietary assets (Segal-Horn & Faulkner, 2010). Without effective management, therefore, a global strategy may turn out to be a disaster for the organization.

Recommendations

With its headquarters in the U.S., WEX has operations in Canada, Brazil, UK, Italy, Singapore, Australia, and New Zealand. This means fairly limited presence and brand recognition in the global market. Indeed, the firm is heavily dependent on the domestic market. Furthermore, compared to its rivals, the firm focuses on a limited range of corporate clients. More importantly, despite considerable revenue growth in the last few years, the firm's profitability has been diminishing. These challenges are further compounded by immense competitive pressure, underscoring the need for a more aggressive growth strategy.

With its resources and competencies in payment processing, especially in terms of high customer satisfaction, payment security, lengthy operational experience, affordability, and strategic partnerships, the firm should take advantage of the following two strategies. First, as the firm predominantly focuses on clients in the fleet, travel, and healthcare industries, it should extend its offerings to more industries as well as individuals. Market development would expand the organization's customer base and give it valuable advantages in terms of economies of scale. The firm should also expand its operations to more countries to minimize reliance on the domestic market. With impressive economic growth in the last few decades, emerging markets such as China and India present a particularly promising global growth opportunity for the organization.

References

Hill, C., & Jones, G. (2012). Essentials of strategic management. 3rd ed. Boston: Cengage Learning.

Johnson, G., Scholes, K., & Whittington, R. (2010). Exploring corporate strategy. London: Prentice Hall.

Segal-Horn, S., & Faulkner,… [END OF PREVIEW]

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Concise Analysis of Strategic Plan Part 3 Strategic Evaluation and Recommendation.  (2017, February 26).  Retrieved July 18, 2019, from https://www.essaytown.com/subjects/paper/concise-analysis-strategic-plan-part/6297080

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" Concise Analysis of Strategic Plan Part 3 Strategic Evaluation and Recommendation."  Essaytown.com.  February 26, 2017.  Accessed July 18, 2019.
https://www.essaytown.com/subjects/paper/concise-analysis-strategic-plan-part/6297080.