Strategy: Case Study of Solar Company

Introduction

Karami (2003) reckons that Strategic Entrepreneurship is viewed as a significant component of a firm’s achievement. His born of contention is however that strategic formulation entrepreneurship is an area which highly under-researched, even though he recognizes that in recent times, this has become a research point in business and industry. His view of strategic management is of encompasses the establishment of the groundwork objectives of an organization, by selecting the best goals towards those aims, and seeking to satisfy them with time. ”Strategic management is the art and science of formulating, implementing, devaluating cross-functional decisions” that help a business entity or an organization to have its purposes (Karami, 2003). The case of Solar Company relates to the strategic formulation.

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The strategic formulation which is the second stage of strategic management entails ”the development of business mission, decisions both long term and short term objectives, and prioritizing strategies to pursue” (Karami,2003). It is associated with deciding which resource is for what and in what amount, deciding on diversifications, and the process of entering the international market arena or issues such as merging with suppliers or sale agencies to diversify (Bohm, 2008). The strategic formulation is business thus involves the perception of any strategy formulation process which has marked phases, which are time-bound (Karami, 2003). In this case, it would be deciding the role of photovoltaic panels, installation tools, and whether the company should expand or not. On the whole one strategy that can be applied to understand this case is BCG Matrix.

Boston Consulting Group (BCG) Matrix

BCG Matrix is ‘’a simple tool to assess a company’s position in terms of its product range’’ (Daft, 2005). The advantage of using it is that aids a company or an organization in thinking about the products/services it offers. The products here include all its products that are solar-related Based on that thinking the company can now make decisions and craft plans on which plans/decisions to forego and which ones to adopt, besides which ones to implement further. Generally, the BCG matrix functions to plan and organize a business in two ways: ‘’business growth rate and market share’’ (Daft, 2005).

The first component, business growth rate is concerned with the rate at which the whole industry is expanding/ developing. In this case, the company has expanded across different countries, and more expansion is needed. While the latter, market share, stipulates/analyses whether a business entity/company has commands bigger or small shares in comparison to other competitors in the market. Indeed, Solar Company has a big market share which should further be tapped.

A BCG matrix has four main components. These are Question Marks, Dogs, Stars and Cash Cows. Question Marks are produced whose expansions are faster. Because of this, they consume a lot of cash, while they generate little because having a low market share leads to large ‘net consumption’. It should however be noted that a question mark can mutate into a star when it gains market share, and later be a ‘cash cow’ when the augmentation in the market slows downward. Worth mentioning here is also the fact that it in due course might become a dog upon the turndown of market growth (Daft, 2008). In the case of the Solar company, could be solar products themselves.

Dogs: These have a market share that is low and therefore a low potential for the rate of growth. They are in the middle. ”They do not generate nor consume a large amount of cash”. Else how dogs are regarded as ‘cash traps’ because they represent money ‘tied up ‘ in business and has little perspective. Such businesses should be diversified (Daft, 2008). In this case, solar panels productions can be diversified. Cash cows are the leaders in a ‘mature market. They, therefore, exhibit a return on assets that is greater than the market growth rate (Daft, 2008).

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Possible strategies and their impacts for Solar Company

The most viable strategy that Solar Company to consider two: Market Penetration and Product development strategy. The market strategy would function to facilitate the expansion of their products to more across the world and attract much more customers especially when the right products are developed. This increases revenue. This grounding is informed by several factors such as increasingly empirical evidence for the need for the international market, and to cities that the services being offered by the company had not initially penetrated to (Daft, 2008).

Moreover, the world population is increasing and the companies being confined to just a few countries is not the way to go. Beyond this, while the Wednesday-morning meeting explained in the case for the two company components considered not accepting external capital, the demand for better products would necessitate that external capital is sought, but then they might want to increase their prices. Besides, the other way is to improve its internet services by slotting in price schedules among other attractive configurations (Daft, 2008).

References

  1. Daft, R (2008). New Era of Management, Second Edition. Beijing. Thompson South-Western.
  2. Bohm, A (2008). The SWOT analysis. Nordestedt: Books on Demand.
  3. Karami A (2003) Strategic Management in Small and Medium Enterprises. NewYork: Cengage Learning

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References

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