Basic strategic management plan for PPQ Parts

Managing Resources and Operations

Strategic planning is a critical activity that begins with the process of issuing the statement of the vision of the company, defining the objectives, and undertaking SWOT analysis to define the strengths and weaknesses of the business. This is important because it helps to identify the available opportunities that can be scoped by the business as well as avoid possible threats to the business.

A strategic business plan must clearly outline the objectives upon which the activities of the business are based. The analysis of macro and microenvironment underscores ecological, technological, political, social and economic factors that pose threats opportunities, strength and weaknesses.

Additionally, the paper undertakes to analyze the operating environment within which PPQ will carry out its business activities.

Keywords: strategic planning, financial strengths, environmental scanning, strategic goals

Managing Resources and Operations

Strategic planning is an elusive asset to an organization or business because it helps to achieve short and long-term goals. Additionally, strategic planning sets a framework in which values, growth, cohesive vision among other things are defined. PPQ has plans to expand its operations to a new production facility that will require it to increase its pool of employees to five thousand in the next four years.

Besides, financial capital will also be needed to facilitate and sustain its activities. Consequently, the company focuses to escalate is overall turn-over through increasing its employees return and its share through its stock. Effective implementation of these aspects requires management to use a well thought off strategic planning as focused in this paper.   

Plan Overview

Vision:  To become one of the central players in the global market within the next five years, through extensive expansion of business operations.   

Mission: To expand the company’s market shares in the global market, increasing productivity and profitability through verifiable, legal, and ethical ways. 

Objectives

• To increase employee retention by reducing the rate of employee turnover to 17% within the next four years in order to minimize cost-to-hire expenses.
• To escalate its three years average profit margin from six percent to thirteen percent within the next four years.
• To increase the company’s stock value from ten percent per share to 22 percent per share in a timeline of five years.
• To improve PPQ market share from five percent to nine percent within the next four years.

Macro/Remote Environment

According to Shields et al. (2015), remote or microenvironment is a business environment in which a company has no or little control over demand or supply of goods and services. Regardless of the fact that business has minimal control, it is worth noting that these aspects have a considerable effect on the business operations. These factors include; ecological, technological, political, social, and economical.

Ecological Factors

One of the factors that the business is likely to battle against is that of ecology. However, it is important to note that the U.S. is an environmentally stable economy which has favorable legislations and policies that protects the business in its environment. Therefore, the ecological condition of this country will pose minimal problems for PPQ operations.

Economic Factors

This is a term that is used to refer to the prevailing economic conditions within which the company is expanding (Kim & Mauborgne, 2014). Because PPQ expansion runs both international and local plants, its operations will be influenced by diverse economic factors.

Currency exchange is one of such economic factors that will affect the operations of the business because it will be holding assets and transactions in different currencies. Consequently, the variation in these exchange rates will have a direct effect on the company’s economic resources. PPQ will also be paying its operations in different currencies depending on where it receives its revenues. 

Though there are likely losses associated with currency volatility, nevertheless, the United States has proved a major stability in relation to other major currencies for the past five years (Hill, Jones & Schilling, 2014). Most importantly, interest rates have the ability to affect the financial operations of the company. However, the United States interest rates are kept at a favorable level.

Finally, the company needs to handle inflation rate with care. This is because the inflation rate is on the verge of increasing which is likely to affect the cost of commodities and that of labor.   

Political Factors

The political environment is one of the critical factors that have a significant impact on the operations of the business. Unstable political environment increases the business risks and is likely to lead to high cost of operations. More so, political environment interferes with the productivity levels of the business (Bennett & Sharpe, 2014). Besides the insecurity caused by potential terror attacks, the U.S political environment is stable for business operations. 

Social Factors

The U.S. demography is characterized by the presence of people from diverse racial and ethical backgrounds including; whites, Hispanic, African Americans among others. The diverse population is fairly educated at affair rate of eighty percent and contains different ability and talents that will guarantee the company the availability of skilled and competent manpower (Hill et al., 2014). Moreover, the United States population consists of youthful individuals who are energetic and focused. This is a potential advantage and good market to PPQ in terms of the labor availability. However, as a result of the continued rise in the cost of living in the U.S., it is most likely that the cost of labor will be high. 

Technological Factors

The United States has advanced technology due to its proximity to an innovative and well-educated population. In fact, the development of this technology in the country is facilities by the availability of adequate expertise and capital. Additionally, in case the need technology is not available, this will not pose a significant problem because it can be exported from other countries.

Industry/Micro Environment

According to Shields et al. (2015), industry or microenvironment represents the direct environment in which the business has no influence or control over it but has the ability to influence its productivity and profitability. The industry environment underscores various factors including; the bargaining power of customers and suppliers, threats of the new entrance in the market, substitute and competitive goods. Considering that the company operates at a global market, it is therefore critical to understand that the existing competition will not change.  The company will have to strengthen its competitive edges for various economic resources such as labor and capital (Hill et al., 2014).

Threats to the new entrance in the market are insignificant due to the fact that the initial capital requirement to join this industry is huge. However, the company needs to be aware of threats of new substitutes that are offered at lower cost from companies such as China that manufactures cheap alternative products.

With the recent measures introduced in the automotive industry in the United States, the company prefers to operate in the country since the production cost will be significantly reduced.  The company also faces stiff competition from motor vehicle manufacturers, in particular, the SUV Company and thus, this threat needs to be overcome through developing a resilient rapport with the SUV. Additionally, the threat of dominant suppliers in the industry does not pose a significant challenge because manufacturing components are made available through the labor supply.

Operating Environment

According to Shields et al. (2015), operating environment of a business represents its internal environment where most of its operational activities take place. As such, this paragraph seeks to analyze threats, opportunities, weaknesses, and strength that organizations encounter from its internal environment. PPQ brand is a source of strength since it is generally known globally, as a result, this acquits PPQ with a competitive and comparative advantages. Human resource is also another source of strength (Cummings & Worley, 2014). 

In fact, this concept is supported by the fact that the company has geared in significant resources and efforts towards developing a highly skilled team of workers. Consequently, this has served to provide the company with a competitive edge over its competitors. On the other hand, the company faces the weakness of high employees turnover rates, as a result, this has skyrocketed the cost of operations as seen through the cost of training, orientation, selection, and recruitment.  Moreover, experience other weaknesses that are associated with the high cost of labor and production.

 There is the availability of cheap labor in the company’s branches outside the U.S borders where it aims to establish its manufacturing plants such as Mexico. The cost of labor in this country is essentially at a reasonable rate compared to the one available in the U.S. (Hill et al., 2014).

Thus, PPQ can take the advantage of this resource aimed towards minimizing the cost of operations. Indeed, the company is set to enjoy the tax incentive that has been channelled towards the motor vehicle industries both locally and internationally to encourage private investments (Bennett & Sharpe, 2014). The availability of oil reserves will also help to reduce the operation cost however, currency exchange rates fluctuations pose a critical threat to the PPQ operations.