Strategic thinking can be defined as an ability of a business to come up with effective plans to meet organisational objectives, successfully. This would help entrepreneurs to review policy issues, set goals and determine priorities, perform long term planning as well as identify potential risks and opportunities (Goldman and Scott, 2016). The present assignment is going to make a discussion on some strategic thinking where a company can develop plans, to gain high profitability. For this process, Buttles Plc is taken, which deals in construction sector. It is an independent Timber and Builder’s Merchant that headquartered in London in 1919. Hereby, an analysis is done to give some recommendations to this company, by which it can launch its market in new segment.
Overview of company
Buttles Plc is one of the longest established company of London, which is known as best timber and builders’ merchants. It has given employment to near about 70 employees who are much skilled and experienced in respective field. It purchases materials from leading manufacturing companies of UK, at effective and competitive price, then provide the same to end customers on right price. This company mainly recognised the opportunity to diversify its business at intense marketplace (Shapira, Ketchie and Nehe, 2017). Through adding a full range of building materials like blocks, bricks and underground drainage, including a fleet of crane-offloading vehicles, it has become a successful timber as well as builder’s merchant. Its customers mainly include local developers, national house builders, public sector organisation, general contractors, national house builders and more. Offering products to these customer aid respective merchandiser in getting profitability. But due to presence of many competitors Kenham Builders, SRAYMAX London Ltd. and more, Buttles’ Plc has faced lots of issues in generating revenues. Therefore, its managers are concerning to develop effective strategic plans in order to get an edge over its competitors.
Strategic thinking refers to a sect of processes that shows the manner in which business persons can think about ways to gain assess as well as create future for getting sustainability in business. In context with Buttles’ Plc., in order to identify a perfect marketplace or particular product, strategic thinking is considered as an extremely valuable and effective tool. By applying the same within business, it can arrive at decisions to accomplish business objectives, in certain period of time. For this purpose, it is essential for business developer of given company to possess a set of critical skills. It includes creative and high thinker, develop an action plan with clear goals to meet requirement of business and more. With this assistance, managers have adopted the concept of Two Dimensions of Bowman’s Strategy Clock.
This framework shows how an organisation can acquire a good position at marketplace by developing innovation in its product and service, which is based on two dimensions. Here, on one hand, this model concerns on price and on other hand, it emphasis on perceived value as well. Therefore, by looking at various combinations of these two dimensions, the Bowman Strategy Clock provide eight possible strategies (Wolf and Floyd, 2017). All these strategies mainly divide into four main quadrants, that are displayed in a clock, as shown in given figure. These strategies offer the most competitive advantage, where a company can implement any strategy among eight fundamental strategic positions. It includes low price and low added value; low price; hybrid; differentiation; focused differentiation, risky high margins; mono-policy and loss of market share. This would make business person able to better analyse the marketplace and evaluate current strategy accordingly. Therefore, by concerning on these strategies and evaluating the position of business in given marketplace, managers of Buttles’ Plc can make changes in operational activities and improve its competitive position (Bowman’s Clock, 2018). To develop strategic thinking and identify the product category where, developing strategies can give opportunity to respective company in attaining a good position, managers need to concern on following eight main strategies:-
Position 1: Low price and low added value- This strategic position of Bowman’s model emphasis more on volume of sales. Here, offering products on low price or low valued model is essential command, to get highest share in marketplace (Baumgartner and Rauter, 2017). Therefore, organisations offering products or services on lowest price, gain chance for getting the same. In context within cement construction sites, offering building materials on such price often leads to perceived negative value of business by customers. As products like building and sheet materials, landscaping, tools, fixing & iron monger, kitchen and bathroom furnishing etc. could not offer on lowest price, because people will make questions on durability and quality of such products. Therefore, Buttles’ Plc cannot implement such strategy for position itself in intense marketplace.
Position 2: Low price- Implementing this strategy, organisation can be positioned itself as producer of large quantities and their products are more valued. But selling goods at a low price, leads Buttles’ Plc to get low profit margins as well on individual products (Pherson and Pherson, 2016). Since high volume of output may generate high profitability but this position might regard as cheaper market leaders, because it focused on cost minimisation, use economics of scale, cheap and fast production etc. As prices are pushes down therefore, margins for Buttles’ Plc also become low, which may put negative image for quality of its products.
Position 3: Hybrid- A hybrid strategy of Bowman's model combines all certain aspects of low price and product differentiation, that utilizes the strengths of both above mentioned strategies for adding value of business for targeted customers. A hybrid model attracts consumers by offering related products and services of business at a lower or reasonable price rates, by creating differentiation in the same, which is difficult to imitate by others. Therefore, implementing such strategy may prove beneficial for Buttles' Plc to gain high performance. But as it is difficult sell its variety of concrete products on lower price. Thus, in this regard, manager thinks to concern on another strategies of same model.
Position 4: Differentiation- The main goal here to execute such strategy in business is to offer customers with maximum level of perceived value. For this purpose, company needs to concern on product quality also, that plays an essential role in building the brand image of business(Pattinson, 2016). In this context, top quality of concrete and other building materials as well as deliverable service with loyalty and robust brand awareness, will probably best-placed to Buttle's Plc in competitive marketplace for attaining high prices and added-value in business.
Position 5: Focused differentiation- This targets to position of a company at the utmost price levels of its products or services, where customers willing to purchase the same by perceiving high value. In context with merchandisers that deals in timber and building industry like Buttle's Plc, this positioning strategy is generally embraced by luxury brands. Such organisations mainly target to attain best prices at competitive marketplace by targeted segmentation and distribution. As products of respective company are highly priced and its target customers are willing to purchase the same at any cost. Therefore, implementing such strategy in successful manner, give opportunity to attain result in utmost profit margins.
Position 6: Increased price/ Standard Product- It is the most high-risk positioning strategy, where a company can set high prices of its products, without adding extra efforts in products to perceived value(Young, 2016). If targeted customers are willing to purchase the commodities or services of an organisation at high prices, then it will gain opportunity to such organisations to gain high return on investment. But due to intense competition at concrete business, ultimately customers can discover a better-positioned builder that offers its products having more perceived value at less price. Therefore, being able to retail goods at a premium price without differentiation is hard to sell for Buttles' Plc in competitive market.
Position 7: Mono-policy or Higher price, lower value- This strategy proves effective when there is less competition or presence of substitutes in marketplace. Along with this, customer willing to purchase such product in monopoly situation or isolated market. Therefore, it focuses more on needs rather than wants of people. In this regard, as there is an intense competition at era where Buttles' Plc operates its branches like Kentish Town, so implementing such strategies may put negatively on its profitability. As people have many option to complete their needs on affordable price. Thus, respective company needs to concern on other strategies of Buttles' Plc.
Position 8: Low value/ Standard Price- It is also known as loss of market share strategy whereby, a company concerns on taking an inferior goods and pricing it for matching the value proposition of substitute products. Therefore, it may considers as effective in such marketplace where trends changes in rapid manner. Along with this, it also alienate the targeted customers also that results in loss market share as well. In this regard, setting up a standard or lower price of a good with perceived value seems to be implausible for Buttles' Plc to get an edge over competitors and win customer satisfaction.
Strategies to gain competitive advantage
The main basis of strategic choice of Buttles’ Plc is mainly dependent on three main factors viz.- Generic Strategy decision, Strategy Direction and Method of pursuing strategy (Goldman, Schlumpf and Scott, 2017). Here, generic strategy decision shows the choice as the company can positioned itself from competitors present at same marketplace. While, strategy direction reflects alternative growth and direction i.e. choice of products or markets available to conduct a business very well. While last aspect shows how they can pursue or execute such strategies to gain competitive advantages. Therefore, using Bowman Strategy framework, managers can focus on two main directions that are- differentiation and focused-differentiation. Both concepts help in diversifying its business in competitive era (Barca, 2017). As this company operates its business in six main branches within UK such as St Albans, Leighton Buzzard, Enfield, Plumbers Plum Enfield, Kenish Town and Plumbers Plum Kentish Town. Therefore, to create product differentiation it is recommended to its managers two concern on Plumbers Plum Kentish Town, which is considered as one of the most famous place of London. This place is known for its building site, innovative design and more. Henceforth, targeting customers of this area and offer innovative products accordingly, will prove beneficial for Buttles’ Plc to position itself as highest competitor in among other builders.
Differentiation can be defined as unique qualities of a product or service, perceived or real and distinguished from others. Therefore, to make differentiation in own goods, Buttles’ Plc, its managers should concern on how to get control or produce something that other builders do not have, by designing a strong competitive strategy that exploit competitive advantage. For this purpose, they have to identify what customer really wants to seek and they perceived value of their business (Freedman, 2017). This would help in offering best quality of products accordingly. In context with chosen market of Kentish Town, it has evaluated that people wants high quality product for constructing their homes or to make modifications. In this regard, by delivering goods like bricks, block, aggregate, kitchen utilities and more for home furnishing directly to end customers, will help in offer more attractive offers and gain their satisfaction, because it will reduce extra charges for delivery. Along with this, making arrangements with local and national ready-mixed concrete to supply customers, where they are allowed to pay cash at the branch, reflects that customers won’t need to open an account with the concrete company.
Hereby, offering concrete products at competitive price and help in finding goods at best rate, also give opportunity to Buttles’ Plc in gaining attention and retention of targeted audience for longer period. because we always shop around to find you the best rate. Similarly, another main strategy which is difficult for other builders to match are lifting service (Sadovnikova, Pujari and Mikhailitchenko, 2016). As this company supply and package all its materials and gods for loft conversion projects, which includes building and sheet materials, tiles, lead, timber, flooring, plastic rainwater drainage, wallboard, insulation, roof windows and more, as well as lift them into place through high-reaching cranes, consider as one of the best strategy. This would help in delivering the loft materials straight within loft space or roof level scaffolding. But it takes charges for this service because it is performed by specialist vehicles and drivers. Therefore, negligible charges of such service that save time and money both, is also an extremely cost-effective option which helps in creating differentiation from other builders present at same marketplace.
By developing focused differentiation strategy, Buttles’ Plc may get opportunity to provide high perceived value of its products or services benefits to targeted audience. For this purpose, its managers need to concern for unique resources as well as core competencies, in order to adopt this strategy (Moutinho and Vargas-Sanchez, 2018). Through creating difficulties of imitation like vehicle tracking, loft lifter services and develop standard for safety, lawfulness, efficiency and environmental protection, this company can also gain sustainability in business. For this assistance, its managers are recommended to focus on identifying the gap analysis. This would help in seeking out difference between actual position of business and where it wants to be. Along with this, through gap analysis, they can also analyse where the product and market are still rough, within same industry. Through this process, it proves beneficial in setting strategy to develop market or adding more feature in existing services to enhance sales performance.
It has been comprehended from this project that in order to gain sustainability in business, a company needs to be better than competitors in such a way, which matters to its customers. This would help in developing strategies to reach potential customers and gain their loyalty for getting engagement with business, for longer period of time. To understand preference and desire what actually targeted audience needs, market research is considered as main key. Therefore, using this key, business persons can develop more competencies and gain high competitive advantages as well.
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