Academic journal article Journal of Global Business and Technology

Aligning Global Business Strategy Planning Models with Accelerating Change

Academic journal article Journal of Global Business and Technology

Aligning Global Business Strategy Planning Models with Accelerating Change

Article excerpt

ABSTRACT

This paper develops concepts for the alignment of two established strategic management tools, Product Life Cycle analysis and SWOT analysis, with the demands of a global, internet speed business environment.

Because changes in global business activities are frequent, profound and accelerating, the established strategic planning tools, Product Life Cycle analysis and SWOT analysis, need to be reengineered in order for them to continue to be effective instruments for achieving sustainable competitive advantage.

The global strategy planning models proposed here restore the effectiveness of SWOT analysis by adding "Change" as a new dimension: Internal Change (Ch^sub i^) and External Change (Ch^sub e^) which identify and quantify the impacts of major new business developments and form the bases for designing innovative strategies. Next the paper proposes a method for performing the new SWOTCh^sub i/e^ analysis in a global business setting.

The paper also models the impacts of globalization on the Product Life Cycle stages for a global business. It then proposes the addition of a new life stage called "Recycle for Life". When grafted onto the original PLC model, the new stage turns the PLC analysis into an effective strategic tool for maintaining sustainable growth by incorporating "Change" into the analytic framework and turning a vicious life cycle with a finite end into a virtuous life cycle that is regenerative.

ACCELERATING CHANGE

Traditional Product Life Cycle and SWOT Analyses

The PLC concept is based on the assumption of a single market and presumes that product life is finite and has a beginning and an end. This finite life can be divided into four stages:

* Introductory stage - in which the new product or service is entered into the market place with sales gaining momentum and sales volumes becoming meaningful.

* Growth stage - characterized by further sales growth which eventually slows down and starts to plateau.

* Mature stage - which manifests a relatively constant sales volume until it embarks on a path of continuous decline.

* Decline stage - in which the sales decline continues until the product or service offering is discontinued.

It should be noted that only the starting and the end points of the PLC stages are clearly defined. The starting and ending points of the internal stages are subject to judgment and are management defined (e.g. Colder et al 2004). Nevertheless, these points are significant, because they involve important strategy changes which impact on resource utilization and business performance. They determine the way the business is managed.

During Introduction the product is in an investment mode and the focus is on maximizing sales potential. The Growth stage is usually characterized by expanding sales and profitability. During Maturity the focus is on further improving profitability without negatively impacting sales. Finally, during the Decline, the focus is on maximizing the profit margin, while accepting that absolute sales and profits will be decreasing.

Figure 1 visualizes the profitability pattern of a product or business associated with the corresponding sales throughout the PLC stages.

Understanding the strategic implications associated with the traditional PLC model is important, because the revisions recommended to this model later in the paper will require significant changes in strategy.

It is also important to note that the actual shapes of the PLC Sales and Profit curves are generic and in practice vary greatly by industry, product, company and environmental factors. The variations can be in the length of the PLC stages and in the growth to decline trends. Another important characteristic of the traditional PLC analysis is that it has been tailored for single market analysis. Its application to global businesses has been an iterative approach on a market by market basis. …

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