Strategic Management Assignment: Case Analysis Of Pro-Go Pty Ltd

Question

Task:
Your strategic management assignment task is to present a White Paper outlining the preferred strategy option and evaluates strategic frameworks for justifying the strategy as being the best alternative for the organisation of your choice.

Answer

Executive Summary
The scope of this White Paper prepared in the strategic management assignment describes a preferred strategy and assesses a strategic framework to show that this is the best option. The impact on the company and the challenges it brings to overcome is also an integral part of this document. Pro-Go's is a camera manufacturer is facing huge losses. Although Pro-Go has been profitable since its inception in 2004, then demand for its products has declined significantly recently. From the very beginning, the company has developed innovative, high-quality cameras that deliver superior performance with efficiency and efficiency. The largest customer based in China has terminated the contract with the company, which further affected the company's assets and activities. The aim of the stakeholder team is to find suitable strategic alternatives in order to allow the company to overcome its current situation. Three strategic steps were identified that were deemed appropriate for the company, including new product development, market development, and diversification strategies. These strategic measures are a strategic opportunity to dominate the Australian market and have been adopted by leading Australian companies such as BHP Billiton and Coles Supermarket Pty Ltd. While all these strategic measures are market-based and acceptable to the company, there are consequences. The company needs to adopt a diversification strategy as being the appropriate strategic alternative to overcome its current scenario.

Introduction
Pro-Go Pty Ltd, a manufacturer of high-quality small cameras in Geelong, Victoria had been growing continuously since its establishment. The company had been innovative and technologically driven, delivering varied values to its customers through superior performance and increased operational capability. Due to its patented technological use, its products have not yet been imitated elsewhere. However, with the introduction of mobile phones, the products developed by Pro-Go have been suffering considerable loss and a decrease in market share. There have been other issues associated with the product as well. The Company's largest customer base in China has canceled its sales contract leading to sales getting halved. Thus, an immediate strategic course of action must be taken by the company to develop a modified strategic plan or white paper. This White Paper includes the requirement of a five-year strategy considering three strategy options for the company. These strategy options have been developed considering adjacent markets with related and differentiated products or technologies.

Aim
The scope of this White Paper outlines the preferred strategy option and evaluates strategic frameworks for justifying the strategy as being the best alternative. The implications for the business with the challenges that it represents also forms an integral part of this paper.

Discussion
The company currently faces tremendous amounts of challenges in the market hence it needs to consider a strategic course of action. As the company is facing deep trouble, it needs to consider three alternative strategic courses of action that will allow it to deal with its current situation and maintain steady profitability for the company. The stakeholder meeting will discuss three suitable strategic courses of action by evaluating such strategies existence and success in adjacent markets and with related or differentiated products or technologies.

The three possible strategic courses of action that Pro-Go can consider are new product development strategy, diversification strategy, and market development strategy. These strategic choices/ alternatives have been developed by using the Ansoff's matrix as given below and taking into consideration course of action undertaken by companies in the market with related and unrelated products (Dawes, 2018). The analysis of the preferred strategic choices has been discussed with specific implications for the business along with its challenges.

FIGURE 1: ANSOFF'S MATRIX
Source: (Loredana, 2016)

New Product Development Strategy: The company already has expertise in exclusive camera development. Its technological expertise can be transferred or expanded to manufacture mobile phones with cameras fitted into it. Pro-Go already possesses existing resources and capabilities for manufacturing cameras, it can easily introduce new products by gaining technical expertise to manufacture smartphones. Then it can patent their technology as well. This strategic alternative has been suggested by considering the case of BHP Billiton which has continuously diversified across related products by increasing its technical capabilities (Zacks Equity Research, 2016). Initially, it was into mining then gradually it has entered oil and gas exploration. This has continuously created value for its customers.
For Pro-Go this can be the best suited strategic option as one of its major strengths lies in technology and innovation. It already possessed a team of highly skilled professionals hence by expanding its team to include professionals who can manufacture smartphones, the company can once again regain its profit share and revenue earning capabilities. Developing a new product in the market will allow the extension of the brand name of the company as well and increase brand loyalty amongst its existing customers (David, & David, 2016). It will also attract new customers in the market, given the tremendous scope of market capacity for smartphones currently. The company with this new product development can consider expanding across markets outside Australia as well. This strategic option will allow key capability and expansion of core expertise by the company which can be used in meeting the external threats now facing the company. This strategic option will allow converting the strength of the company to take opportunities in the market. Moreover, it will be able to take advantage of the technological advancement scope currently existing in the Australian markets.

This strategic option might have several implications for the business in terms of long-term issues and short-term issues. The long-term issues posed by developing new product might impact on the resources of the company. Given the current situation of the smartphone market, the company will need to continuously innovate new smartphone product offerings. This implies that tremendous amounts of the company's financial and other resources will need to be diverted towards the research and development wing of the company. This might incur tremendous spending for Pro-Go in order to stay competitive and keep extending its core competencies. Short-term challenges that new product development might pose of the company is a loss of profitability and increased diversification of existing financial resources. As the company is already incurring huge amounts of losses, there might be tremendous challenges at the moment to diversify financial and other resources towards producing new products. Hence the company will need to create provisions for developing such products.
Diversification Strategy: Companies around the globe are diversifying for expanding their profitability and revenue base. Application of diversification strategy for Pro-Go can be in related products or it can be in unrelated products. Pro-Go can use its technical capabilities and expand the same for its diversification strategy. It can enter into the computer hardware market and start manufacturing parts along with components for several types of computers. It can start diversifying by the manufacturing of scanners, printers, and webcams which are related products. These products can easily gain market share in Australia and also elsewhere in the world such as in China. The company can devise innovative printers, scanners, and webcams, then patent such technology prior to selling them in the market (Ackermann, & Eden, 2020). It can undertake retailing and wholesaling of such products in Australia and then expand its consumer markets elsewhere. This will enable the company to retain its profitability and maintain its revenue earning.The company can also consider diversifying across totally unrelated products such as FMCG goods or software manufacturing. It needs to closely evaluate feasibility and possibility for FMCG goods and software manufacturing market in Australia, then start manufacturing such products. In the FMCG category, the company can manufacture air conditioners, chimneys, and refrigerators. For software manufacturing, the company can consider producing small software packages for small businesses.
Accommodating this strategic option has been learned from Coles Supermarkets Pty Ltd. Coles Supermarkets have been gradually expanding its business base by gradually diversifying across related as well as unrelated products (ATN, 2019). Coles had initially included its retail product offering by including a diversified range of offerings across its products. Currently, it is backward and forwards integrating by diversifying across the logistic chain and so on. Hence Pro-Go can easily diversify across manufacturing-related and unrelated products.

There might be implications for this strategic option in the short-term is again the commitment of resources of the company. Whereas its long-term challenges are going to be a long-term commitment of financial resources and spending in research and development resources in the capability.
Market Development Strategy: The company needs to adopt a market development strategy for its existing product. The market development strategy will need to be adopted for its current and existing product cameras. Pro-Go needs to ascertain markets where its offerings are currently its products, then consider other markets where potential opportunities for its products might exist (Langemeier, & Boehlje, 2017). Pro-Go needs to consider serious research into markets in Australia and in New Zealand so as to sell its products there. Market development strategy is relatively less-expensive in nature and can be undertaken by considering desk-research for understanding the demands of cameras in various countries. Pro-Go needs to consider market demands in Australia and New Zealand, also across neighboring countries. The company can also consider market development strategy in various Asian markets where there is the presence of a large number of consumers. As the company's existing strength is manufacturing innovative cameras, market development can provide the company is the capability to maintain its steady revenue earning. This strategic option is best suited as it comes at low-costs investment and moreover, it can allow expansion of the brand name of the company (Rothaermel, 2016). This will all increase the brand loyalty of consumers across the developed markets as well.
This strategic alternative has its long-term challenges which can affect the sustainability of the company. As demand for cameras is gradually declining world over with the emergence of smartphone cameras, the company can risk its sustainability with this strategy. The short-term challenge associated with strategic alternatives is the authenticity of research undertaken. The company might need to spend an increasing amount of expenditure to get valuable research reports that can allow it to develop markets where it can sell its products.

Conclusion
Pro-Go being a privately owned camera manufacturer have been currently facing a considerable amount of losses. Though Pro-Go had been enjoying profitability since its establishment in 2004, the demand for its products has fallen drastically recently. The company had been very innovative since the beginning producing excellent quality of cameras that could deliver superior performance with effectiveness and efficiency. Currently, some of its cameras burst int flames. Its largest customer based in China has canceled the contract with the company, which has further affected the capability of performance for the company. Its stakeholder meeting aims at ascertaining appropriate strategic alternatives to enable the company to bail out of its current situation. There are three strategic courses of action that have been determined to be appropriate for the company which include new product development, market development, and diversification strategy. These strategic courses of action have been considered by undertaking strategic options that prevail in Australian markets and have been used by leading Australian companies such as BHP Billiton and Coles Supermarkets Pty Ltd. Though each of these strategic courses of action has suitability to the markets and is feasible to be adopted by the company, there remain certain implications related to them. For each of the strategic course of action, the long-term issue and short-term challenges have been considered. Now the company needs to ascertain its suitable course of action to be considered.

Recommendations
Pro-Go has already been successful in the development of innovative cameras and gaining considerable market share. Considering its current technical expertise and loss in revenue situation faced by the company, the best suitable course of action that needs to be selected by the company is diversification. The company needs to consider related products and gradually shift its focus to them so as to maintain its revenue position and profitability. Once through diversification, the company is able to earn a considerable amount of revenues then it can consider market development and new product development strategy. This will allow the company to have a steady foothold in the market and then gradually increase its market share and brand name.

References
Ackermann, F., & Eden, C. (2020). Strategic options development and analysis. in Systems Approaches to Making Change: A Practical Guide (pp. 139-199). Springer, London. DOI: 10.1007/978-1-4471-7472-1_4.

ATN. [Dec, 2019]. Coles Adds Linfox Intermodal and Bevchain to Cart. Australian Transportation News. Retrieved from [https://www.fullyloaded.com.au/industry-news/1912/coles-adds-linfox-intermodal-and-bevchain-to-cart].

David, F., & David, F. R. (2016). Strategic management: A competitive advantage approach, concepts and cases. Pearson–Prentice Hall. 16th Edition.

Dawes, J. (2018). The Ansoff Matrix: A Legendary Tool, But with Two Logical Problems. Strategic management assignment But with Two Logical Problems (February 27, 2018).

Langemeier, M., & Boehlje, M. (2017). Evaluating Strategic Options. farmdoc daily, 7. Accessed from

Loredana, E. M. (2016). The Use Of Ansoff Matrix In The Field Of Business. In MATEC Web of Conferences (Vol. 44, p. 01006). Accessed from

Rothaermel, F. T. (2016). Strategic management: concepts (Vol. 2). McGraw-Hill Education. 3rd Edition.

Zacks Equity Research. [2016]. BHP Biliton’s (BHP) New Business Strategy to Driver Growth. Nasdaq. Retrieved from [https://www.nasdaq.com/articles/bhp-billitons-bhp-new-business-strategy-drive-growth-2016-06-03].

APPENDIX- TEAMWORK LOG