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Strategic Management Assignment

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Introduction

The case study analysis is based on Polaris Industries Inc. In terms of all-terrain vehicles (ATVs), Polaris Industries Inc. comes in second to Honda Motor Co., Ltd. as the world's largest manufacturer. Besides, Polaris also makes replacement parts and accessories like oils and chrome components and electric starters and accessories for the cargo box, amongst other things. As of right now, Polaris is active in more than 130 countries worldwide (Arora, 2018). In the following report, one will analyse the strategic management issues this company is experiencing. These strategic issues will be comprised of both internal and external issues. Internal problems like no clearly stated vision or mission statement disrupted organisational structure, ineffective production means, high selling, marketing and Research and Development expenses, and hurdles in proper segmentation. External issues like no adequate adaptation for safety regulations, uncontrolled environmental concerns, and high market competition.

Discussion

Analysis of Internal and External Strategic Issues

Improper Vision and Mission

The main reason behind the rise of strategic issues for the company is that it does not have a good vision and mission statement, and that is why it is not able to adopt a proper strategic direction. Employees need clear direction and purpose, and a company's vision and mission provide that (Arora and Chatterjee, 2017). Vision and mission are essential components of an organisation's strategy because they help determine priorities, allocate resources, and guarantee that everyone is working toward the same objectives.

Inadequate Organisational Structure

As discussed in the case, Polaris has an organisational structure that is a mix of divisional-by-product-by-region, which is not the best structure for the company. It makes unclear who had command and control over the various state operations, such as the U.S. Thus; the wrong organisational structure has resulted in a confusing mess of contradictions: confusion within positions, an absence of coordination across functions (Chopra, et al., 2017). Also, a failure to share ideas and a slow decision-making process that adds unnecessary stress to managers. 

Production Inefficiency

High-volume Polaris dealers can make ORV orders in two-week intervals thanks to the company's successful inventory management scheme, termed the Maximum Velocity Program (MVP) (David, et al., 2017). The new procedure aids in reducing expenses whilst also allowing inventory to remain under control. Snowmobile orders must be placed efficiently and secured by a deposit, unlike ORV orders, which can be placed at any time. Victory motorbike orders are through MVP testing right now, so they should be put to the test as soon as possible to increase sales as quickly as possible.

High Selling, Marketing and R&D Cost

Sales, marketing and R&D expenses are so high that money is not being spent efficiently on production operations, and they fall short of meeting client demand (Dzwigol, 2020). The case study shows that Polaris spent $210 million in 2012, up from $179 million in 2011, on marketing and $127 million in R&D, up from $106 million in 2011, which is a bad omen for the future viability of Polaris' business model.

Hurdles in Proper Market Segmentation

Polaris is also experiencing hurdles in market segmentation. As discussed in the case study, Sales in the Asia-Pacific region increased by 21% in 2012, as detailed in the case study. Due to incorrect market segmentation, these regions have a minor impact on total revenues. It has resulted in higher segmentation costs and distinct Promotion and Distribution expenditures for different market groups used

Lack of Safety Regulation

Polaris is not adapting safety regulations appropriately; as discussed in the case study, Polaris' goods can be hazardous if they are not adequately adapted to safety regulations, as shown in the case study. ORVs, ATVs, snowmobiles, and motorcycles are all federal and state legislation targets to increase product safety and awareness. Governments around the world have taken similar actions. The National Highway Traffic Safety Administration (NHTSA) regulates Polaris motorcycles and other small electric vehicles. The government is continuously enforcing better vehicle suspension, breaks, and distribution (Dzwigol, 2020). Polaris is under enhanced government scrutiny to ensure that its dealers conform to safety requirements and regularly monitor them.

Uncontrolled Environmental Concerns

As detailed in the case study, recent governmental regulation has limited the amount of lead paint used on products intended for children 12 and younger. ATVs, ORVs, and snowmobiles have been restricted or prohibited entirely from various national parks, federal areas, and state lands to protect the environment better. These limitations will have a significant impact on Polaris sales. To comply with present and future rules, enterprises must raise their R&D investments to improve emission technologies.

High Competition

Arctic Cat, Honda, Harley-Davidson, and Kawasaki are major Polaris competitors, and John Deere has entered the side-by-side market (GURL, 2017). Polaris is four times bigger than Arctic Cat, but Honda is 30 times bigger. As a result of the fierce rivalry in the market, Polaris must take strategic measures to remain competitive. 

Possible Alternative Solutions

SWOT

A SWOT analysis can help determine where a company stands and what steps need to be made for future strategic planning (Fuertes, et al., 2020). Using SWOT analysis, Polaris can see where it is now and how it will perform in the future. To better penetrate the market and accomplish commercial objectives, it will allow a company to examine its strengths. It will provide a clear picture of their strengths and shortcomings and identifies opportunities for progress. This data will aid in anticipating and mitigating potential problems, which promotes long-term corporate growth. Polaris can develop a strategic plan to fulfil its targeted goals and react to changing market conditions by employing its SWOT analysis. For Polaris, it will provide a better understanding of the impact of both internal and external forces. This information can help Polaris be more proactive in a dynamic market by making appropriate decisions to keep up the momentum.

Concerning the case study, one can determine the company's strengths, weaknesses, threats, and opportunities.

Strengths

  • A vast number of locations make up Polaris Industries' strong distribution network.
  • It boasts a highly trained, innovative, and diversified labour force.
  • It's active on social media, with a large following.

Weaknesses

  • Compared to the previous years, the company spends relatively more on R&D.
  • It has low employee morale and little motivation, resulting in a high employee turnover rate.
  • Disrupted organisational structure
  • Un clear mission and vision statement
  • A low quick ratio creates liquidity issues, as current assets are below current liabilities. There are also issues with the company's cash flow.

Opportunities

  • Consumer expenditure is rising along with household income. Economy-wide inflation is likely to be below.
  • Product and service development that is environmentally friendly is expected to grow in popularity. The government is providing financial assistance in the form of subsidies.
  • Because interest rates are so cheap, massive projects are an attractive option for investors.

Threats

  • New entrants to the market pose a threat.
  • The currency has lost value as a result of the devaluation.
  • The cost of fuel has increased recently, making inputs more expensive.
  • The industry is becoming more competitive.
  • There are now a more significant number of alternatives on the market.

VRIO

To determine if Polaris Industries has a sustainable competitive advantage, the VRIO Analysis will examine each of the company's internal resources one at a time (Joannides de Lautour, 2018). Additionally, the Polaris Industries VRIO Analysis discusses if these resources should be enhanced to create a more competitive advantage at each step. Finally, the analysed resources are summarised based on whether they provide a continuous competitive advantage, an underutilised competitive advantage, a transitory competitive advantage, competitive parity, or a competitive disadvantage.

Resources

Value

Rare

Imitation

Organization

Competitive Advantage

Human resource of the company

The human resource of the company helps them in working in an effective manner in the firm and delivering high quality work which makes them valuable resource for the company.

The effective workforce is an rare resource for the company as all the companies are not having availability of better workforce.

Human resource is an imitable resource for the company.

The company is making effective use of their better human resource as they are developing new ideas and leading the company towards success and development.

Employees indeed have a short-term competitive edge right now.

Financial resources

The financial resources of the company are always the most valuable resource for the company.

The better financial capital of the company is always an rare resource as all the companies are not having better financial resources.

The financial resources of the company are inimitable. The Polaris Industries VRIO Analysis found that copying Polaris Industries' financial resources was prohibitively expensive. These assets have been amassed over time as the company has made consistent earnings. New entrants and competitors would require an extended period of equivalent gains to build enormous quantities of financial capital.

The company is making better use of this resource by investing better capital in the new ideas.

The financial resources of the company are helping them in gaining competitive advantage over others by investing in new external prospects. Also this resource aid Polaris Industries in fending off external dangers as well.

Distribution network of Polaris

This is one of the highest valued resource for Polaris

This is a rare resource for the company as it is helping them in reaching to their customers and managing their business operations in an effective manner.

The effective distribution network of the company is hard to imitate by the new entrance and the competitors as well. Since Polaris Industries has a more extensive distribution network, it would be difficult for rivals to catch up. Only a small number of companies in the sector have these as well.

According to this it can be said that this resource is helping the company in getting competitive advantage over others.

The distribution network is an essential resource for Polaris Industries, according to the Polaris Industries VRIO Analysis.

The Polaris Industries VRIO Analysis reveals that distribution networks provide a long-term advantage over other business models.

Product range

The effective product range of the company is a valuable resource for the company.

Now all the other competitors of the company are also offering similar product range and due to this reason the product range of Polaris is not an rare resource for the company.

This is an imitable resource for the company.

Polaris is not making effective use of this resource due to which this is not an organised resource for the case industry.

The product range of the company Local ORVs, snowmobiles, and on-road goods are having competitively equal thus, it can be said that this resource is offering competitive advantage to the company.

Investment made in R&D

Investing in R&D puts you at a competitive disadvantage due to which it is one of the most important and valued resource for the company.

Innovative snowmobile features such as front suspensions, long-travel rear suspensions, liquid-cooled ski brakes, and ski hydraulic brakes, as well as Polaris' three-cylinder engine, help to keep the brand unique so this an rare resource.

This is an imitable resource but only for those who are having better financial capital to invest in the research and development department.

The organisation is making effective use of this reason and getting benefitted from it so it is an organised resource for the company.

Polaris has a technological and product innovation advantage over the competition. In order to maintain their competitive edge, they often develop items that are one step ahead of their competitors. Several alternatives are available for customers to achieve the exact engine specifications they want for their leisure vehicles.

Conclusion

It has been concluded that at the current moment, Polaris is facing many internal and external issues which need to be sorted out to central sustainability and business growth. SWOT and VIRO analysis are the essential factors for improving the company's strategic management in this regard. The company needs to focus on their strengths and the valuable and rare resources for getting competitive advantage over others and leading the company towards great success and development.

Recommendations

Following strategies are suggested for Polaris to adapt for better strategic management.

  • Decide a clear vision and mission statement whilst conducting the meeting with organisational members and adopt a suitable organisational structure to eliminate the communication gap and better corporate performance.
  • Research and development departments should be strengthened whilst expenditures are lowered, and personnel should be trained as a result.
  • It needs to launch a new promotional campaign in the southern zone also join the market of Canada.
  • Use the company's social media presence for marketing and client attraction so that selling and marketing expenses can be reduced to a certain level.
  • Create low-cost, environmentally friendly items through innovation to sell them at a reasonable cost whilst adequately following safety regulations
  • Offer discounts to market things at a reduced cost whilst conducting proper segmentation. Since inflation and prices are low, this could help improve sales volumes.
  • Invest in intellectual property rights with its strong financial position. It would provide them with an advantage when the market's competitiveness heats.

References

Arora, S. (2018). Polaris India International: moving boundaries. Emerald Emerging Markets Case Studies.

Arora, S., & Chatterjee, R. (2017). Using experiential marketing to sell off?road vehicles in India: The Polaris way. Global Business and Organisational Excellence36(5), 20-25.

Chopra, S., Andreas, I., Gee, S., Kolasi, I., Lhoste, S., & Neuwirth, B. (2017). Polaris Industries Inc. Kellogg School of Management Cases.

David, F. R., David, F. R., & David, M. E. (2017). Strategic management: concepts and cases: A competitive advantage approach. Pearson.

Dzwigol, H. (2020). The methodological and empirical platform of triangulation in strategic management. Academy of Strategic Management Journal19(4), 1-8.

Fuertes, G., Alfaro, M., Vargas, M., Gutierrez, S., Ternero, R., & Sabattin, J. (2020). A conceptual framework for the strategic management: a literature review—descriptive. Journal of Engineering2020.

GURL, E. (2017). SWOT analysis: A theoretical review.

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Joannides de Lautour, V. (2018). Strategic Management Accounting, Volume II.

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Makadok, R., & Ross, D. G. (2018). Losing by winning: The danger zone of adverse competitor replacement. Strategic Management Journal39(7), 1990-2013.

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Rascão, J. P. (2020). Strategic Management and Entrepreneurship. International Journal of Strategic Decision Sciences (IDS)11(1), 35-55.

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Valente, C., Modahl, I. S., & Soldal, E. (2019). Competitors analyse lignin with addition.

Velikorossov, V. V., Genkin, E. V., Balakhanova, D. K., Sidorov, M. N., Maksimov, M. I., Sulimova, E. A., & Loshkov, B. D. (2020). Strategic management.

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Zhou, K. (2020). Marketing Experience: Analysis of Competitors.

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