ANTA is a well-known sport equipments and apparels company in China. Indeed, it is a fast growing public listed company on Hong Kong Stock Exchange, with respectable track records in the past five years. The company is the Chinese Olympic Committee Official Partners. The logo of the company is shown in Figure 1 below. Besides, the company successful and fast growing track records are shown in Figure 2 below.
Figure 1: Logo of ANTA
Source: ANTA Annual Report 2010
Figure 2: Track Records of ANTA
Source: ANTA Annual Report 2010
Although ANTA is a successful company, the company is soon hitting its bottleneck in grow opportunities in China. This is because the company had already having brand presence and operations in most of the big cities in China. Thus, the company is in real need to formulate new strategic direction for further growth of the company in the future. For this, the company will be required to expand overseas, as there will be more opportunities and bigger market shares in the other part of the world. Consistent with the era of globalization, it is also crucial for the firm to expand to other region of the world to enhance brand awareness and reputation around the glove, before it can work to become the market leader in the industry. As such, it can be observed that it is indeed crucial for the company to expand overseas, in the process of transforming itself into international sport apparels and equipments powerhouse in the next decades.
In this report, management toolkit will be designed to assist the company to formulate its strategic directions and options in order to sustain its growth rate and profitability in the future. To be specific, the toolkit will be useful for the company to scan the external environment, as well as the internal conditions facing the firm. By having understanding on the situational factors influencing the company strategic directions, better plan and actions can be formulated or implemented. Apart from that, some other tools or framework useful in assisting the management to formulate viable strategic actions, after having comprehensive understanding on the environment will also be suggested. For all of the tools suggested, the respective strengths and weaknesses will also be presented, so that the management of ANTA can have better understandings on the applications and the limitations of these tools.
Two powerful tools will be suggested for the applications of management in ANTA. The first tools is designed to scan the external environment, while the second tool is design to formulate the best possible strategic actions and directions to be taken, after accurate and comprehensive understandings on the internal and external environments of the firm is achieved.
Before the management can form viable strategic plans, actions and understand new ventures for expansion purposes, it is particularly crucial for the management to scan and comprehend the external environment (Markides, 1999). As discussed above, it is management imperative for ANTA to expand to the global arena. Thus, a tool will be developed for ANTA management to scan both the global environment and the company internal conditions. For this purposes, the traditional SWOT framework will be adjusted and combined with other models. The adjusted SWOT analysis is presented in Figure 3 below.
Figure 3: SWOT Analysis
As shown in Figure 3, traditional SWOT analysis is powerful to analyze the opportunities and threats existed in the external environment, while as the similar time the strengths and weaknesses of the firm. By having understandings from these two perspectives, management can formulate strategic options that fit the strengths of the firms to capitalize on the upcoming or existing opportunities in the external environment; while mitigating its weaknesses pr avoidance from potential threats through specially designed strategies (Adams, 2005).
For this, it is also suggested that PESTLE analysis should be incorporated into understanding the respective opportunities or threats in the external environment. The PESTLE framework is highly useful, as it presented a comprehensive model on the relevant and major factors to be considered by management in assessing the business landscape (Thompson, 2002). By having understanding on all of the six factors in the PESTLE framework, management can form better expectations on potential profitable trends in the marketplace. Apart from that, there is also another factor, namely the industry competitiveness factors, shall be incorporated and considered by management. In order to understand the competitive landscape of the industry, Porter Five Forces framework can be applied. In fact, Porter five forces framework is powerful as it complements the PESTLE analysis in understanding the macro environment (Mintzberg, 1987). Thus, with both the PESTLE and Porter Five Forces framework, the ‘opportunities’ and ‘threats’ elements under the SWOT framework can better be identified and researched.
From another perspective, the internal conditions of the firm can be understood by separating the analysis into respective functional department. By doing so, management can have more comprehensive and details analysis of the internal situations of the firm. Besides, the weaknesses of the respective department can be identified, and in certain situation, corrections can be made. Such a framework enables the management to see the interactions between the various functional departments in the firm as well. By having understood on the internal competencies on each of these functional departments, the management can better formulate possible strategic actions take capitalize on the opportunities discovered in the analysis of external environment, with the internal competencies.
As discussed above, such a new framework develop is powerful as it is highly comprehensive and holistic in nature. The many different internal and external dimensions are investigated. By adopting the framework, management is forced to think deep and research the many elements relevant to the business organization, and as a result, will equip management with the necessary and more complete picture on the situational factors affecting the firm before they move towards formulation of strategies for their organization (Pearce et. al., 2005). Besides, such a framework is also widely known, and as such, its application is relatively easy. The strategic options formulated from the process of finding the best way for the organization to capitalize in its strengths and opportunities in the external landscape is also highly rational.
However, there are certain drawbacks from such framework. Firstly, it is somehow complicated. The applications of the framework require quite a lot of time and efforts from the management. In many cases, assumptions are necessary. Due to the complexity of the framework, management may be induced to analyze, and may fall into the trap of ‘analysis paralyses’. Secondly, the framework must be used to scan the external environment from time to time, in order to make relevant decisions consistent with the new changes in the business or industry landscape. The framework is also not touching on the human psychological problems in managing the organization. Issues highly related to people management, such as knowledge management, innovation and creativity as well as change management is not really incorporated into the framework. In order to improve the framework, management should also try to understand the people factors in the organization before moving directly to formulate strategic goals and missions for the firm.
After the situational factors, both internal and external are known; another tool will be presented to assist the management to formulate the best possible strategic directions and goals for the organization. The tool is presented in Figure 4 below. It is a framework developed from combining the traditional famous analytical methods of Porter Generic Strategic Framework and Ansoff Growth Matrix.
Figure 4: Porter Generic Strategic Framework and Ansoff Growth Matrix
In this framework, it is assumed that there are generally three strategies that can be followed by ANTA, namely, the low cost strategy, differentiation and lastly, the niche or focus strategy. However, these three types of strategies are only a description on the general statement about how a firm will position itself in the marketplace. It is a broad statement, whereby, only an overall guidelines are researched on how firm can attain competitive advantage in the competitive marketplace. However, after the strategy is employed, the framework is relatively silent on how the company should growth itself in the market through such a positioning in the market. For example, when ANTA had derived that it should have a low costs strategy in the global market, the management must still decide on which types of growth strategies, namely, the market penetration, product development, market development, or diversification in the global arena. For example, when the existing company products is priced at a high margin, due to better perceived quality and established brand name in China, to growth through low cost positioning in a less developed nations, such as countries in Africa, will demand the company to employ a product development strategies in the region. Specifically, the company should develop new products with a different brand name to target to the consumers in the new marketplace.
As per discussion above, it can be observed that both the Porter Generic Strategic Framework as well as the Ansoff Growth Matrix are theoretically sound framework widely used in the academic field, as well as by practitioners in real business management activities. Besides, these models are also widely known. Thus, by combining the two models for analyses purposes, more comprehensive analyses can be obtained. The management will also be forced to think more deeply on the many possible scenarios after analyzing the possible strategic options for growth purposes for the firm.
However, such a framework is not without limitations. For example, common sense would inform researchers that in different regions of the world, different model should be employed. For example, it is understood that the market environment, and thus, the respective most promising or viable strategic options in different region, such as in South East Asia to the Europe region should differ. Thus, such a framework cannot be used to formulate a single broad strategic mission in all places in the world. However, in different region, different analyses will be required. Secondly, the framework is also subjective to interpretation of management. Depending on the perspective, different best possible strategies can be formed. Thus, there is no a single best answer from the applications of the framework. The management experience and judgments will be highly influential in affecting the research results (Burtinshaw-Gunn, 2008).
Overall, it is presented two main frameworks as the toolkits for the management in ANTA to develop best possible strategic goals and directions for the company to expand into the global arena, for sustainable growth and enhancement of the company brand presence in the next decade. Overall, these frameworks are powerful it the management understand their respective usages and strengths. The framework will be able to guide the management team to come out with promising and reliable strategies in the global landscape. However, as with any tools, there are limitations (De Witt et. al., 1995). It is very crucial for management to understand that they still have to apply their common sense and certain degree of flexibility and adaptability to utilize these frameworks effectively in their decision making process.
Adams, J. (2005). Analyze Your Company Using SWOTs, Supply House Times, Vol. 48 Issue 7, pp. 26-28.
De Witt, B., and Meyer, R. (1998). Strategy: Process, Content, Context, 2nd Ed., Oxford: International Thompson Business Press.
Hill, T., and Westbrook, R. (1997). SWOT Analysis: It’s Time for a Product Recall. Long Range Planning, Vol. 30 Issue 1, pp.13-16.
Markides, C. (1999). Six Principles of Breakthrough Strategy. Business Strategy Review, July-August, pp.30-34.
Mintzberg, H. (1987). Crafting Strategy, Harvard Business Review, November-December, pp.21-25.
Pearce, J., and Robinson, R. (2005). Strategic Management, 9th Edition, New York: McGraw-Hill.
Thompson, J. (2002). Strategic Management, 4th Edition, London: Thomson.
Weihrich, H. (1982). The TOWS matrix: a tool for situational analysis, Journal of Long Range Planning, Vol. 15 Issue 2, pp.12-14.
Rigby, Darrell K (1994) ‘Managing the Management Tools’, Planning Review 22 (5). pp 20-24.
Burtonshaw-Gunn, S. & Salameh, M. (2009) Essential tools for organizational performance: Tools, models and approaches for managers and consultants. Wiley.
Burtinshaw-Gunn, S. (2008) The Essential Management Toolbox: Tools, Models And Notes For Managers And Consultants . Wiley.
Van Assen, M., van den Berg, G. & Pietersma, P. (2008) Key Management Models: The 60+ Models Every Manager Needs to Know. Financial Times Prentice Hall, 2nd.edn.