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Strategic planning is the process of establishing goals, policies, and objectives to increase a company's or organization's competitiveness. Typically, strategic management focuses on the most effective use of people and resources to accomplish these objectives (Thomas, 2021). Strategic management establishes general direction by establishing plans and policies to accomplish goals and then assigning resources to carry them out. In the end, strategic management exists to help organisations acquire a competitive advantage over rivals.
Generally, strategy implementation is seen to offer both financial as well as non-advantages. A strategy formulation assists an organisation and its leadership in considering and planning for the future of the company, which is a primary duty of the board of governors. Strategy formulation establishes the institution's and workers' orientation. Unlike static strategic goals, good strategy formulation develops, analyzes, and evaluates an organizational strategy continually, leading to increased organizational effectiveness, customer base, and revenue (Tarigan and Siagian, 2021).
Regarding this matter, this particular report has entitled the appropriate sources of theories of strategic management in the organizational context of HCL informational technology organization. Alongside, this particular report has implied its focus on the challenges that can create obstacles in the progressive milestones of the company.
HCL Technologies is an Indian multinational IT services and consulting firm located in Noida, Uttar Pradesh. It is wholly owned by HCL Enterprise. The firm was named Hindustan Computers Limited on 11 August 1976. HCL Technologies originated as the research and development division of HCL Enterprise, a firm that was instrumental in the creation and expansion of the information technology and computer industries. The company's primary business is in the provision of software development, work processes outsourced, and utilitie
For many years the company has constantly grown its development across the globe. All over the world, this company has rapidly invested in its strategic approaches that have given them a great advantage (Singhal et al., 2021). Since 2009, HCL has supported over 22 Global 2000 businesses in France, including Alstom, Aperam, Luminus (EDF Group), and Biomerieux, Airbus with technological innovation, complex engineering, and business transformation.
HCL Technologies (HCL), a major global technology firm, recently announced that it is awarding a one-time special incentive to workers worldwide in appreciation of reaching the $10 billion revenue threshold for 2020. Attaining this significant moment in technology, business, and design software and applications – less than two decades after HCL Technologies’ initial public offering – is a testament to the company’s employees' passionate attempts and coherent accomplishments, numerous long-term, deep relationships with market leaders across all industries, and an extensive network of members and suppliers (Aich et al., 2021).
In September 2020, the Global Development Centre in Sri Lanka revealed its intention to create 3,000 employments over the next three to five years. In keeping with its pledge, HCL Sri Lanka successfully filled 550+ positions in the first 2 months despite the difficult pandemic conditions. HCL, a global technology leader, recently celebrated a decade of achievement and creativity in France. Today, HCL has over 340 workers in France, assisted by hundreds of colleagues servicing our French clients globally.
1. Challenges in Strategic Management
It is a reality that despite having a systematically crafted strategic management plan about 67% of the companies in the global market fails to achieve their desired results. Both internal and external factors impede the organizations and force them to detour from their charted path, much away from their strategic management goals. In the case of the selected company, that is HCL, the internal functions are well organized, but owing to some external challenges the company’s efforts towards accomplishing their strategic management goals have been greatly impeded. Two of the most significant issues among these are the rising degrees of competition in the industry and the company’s inability to handle it, and the challenges of poor customer service management. These problems have affected the company’s overall strategic management approach and taxed its performance is a significant way. The difficulties associated with the mentioned challenges of strategic management will be detailed below.
Competition reduces the market share and dwindles a company’s client base, even more so if demand for its products or services has been low right from the start. Additionally, a competitive market might drive the organization to cut its pricing in order to remain competitive, lowering its profit margin on each item it creates and sells. Carvalho (2018) suggest that when an excessive number of firms manufacture identical goods, the market becomes inundated. Inventory accumulates as a result of overproduction. When inventory levels reach unsustainable levels, a business may find itself with too much capital invested in unsold products and insufficient cash on hand to cover immediate expenditures such as rent and wages.
As per Pekgün et al., (2018) if inventory levels remain high over time, a company may find itself laying off employees whose manufacturing capabilities are no longer required. Even if it prevents layoffs, it may need to cut employees’ planned hours to keep payroll expenses in check.
Poor customer service may have a detrimental influence on a firm in a variety of ways, not just on current/future sales standards. This is particularly true for firms that rely heavily on repeat business and favourable word-of-mouth promotion. Mmutle and Shonhe (2017) suggest that along with the danger of alienating current consumers, consistently bad service can have a negative influence on the business’s ability to acquire new clients.
A reputation for substandard service can be difficult to overcome. It has the potential to deter other firms from collaborating or cooperating with it. Mukasa (2018) opines that additionally, it may deter qualified job seekers who believe that if customers are treated poorly, staff would be treated unfairly as well.
In most cases, poor customer service results in fewer customers, which results in decreased sales and earnings for a firm. This might set off a vicious cycle in which a business attempts to save money on personnel or customer service training, further lowering service levels. Feith (2018) has pointed out that a firm that cannot keep up with the financial needs of running a business will incur rising operational debt and, eventually, will cease to exist.
Poor customer service may drive even the most forgiving consumers to abandon a business. Consumers typically conduct business with a firm because it is convenient, because it is a habit, or because they are seeking for a certain product or service that is difficult to obtain elsewhere. Even stalwart clients might be swayed away by substandard service, believes Mukasa (2018).
Poor customer service has the ability to cost a firm a significant number of consumers even before they make a purchase, holds Feith (2018). When new customers enter a firm and are ignored, spoken down to, or subjected to long queues and inept personnel, they may flee before reaching for their wallets.
Some of the important strategic management tools that can be utilised for mitigating the various internal and external challenges and optimising the overall efficacy of a company will be detailed below.
PESTLE analysis, which is also known as PEST analysis, is a marketing concept. Additionally, this idea is utilised by businesses to monitor the environment in which they operate or in which they intend to introduce a new product or service, etc. PESTLE is a mnemonic that stands for “Political, Economic, Social, Technological, Legal, and Environmental”. Song, Sun and Jin (2017) state that it provides a “bird’s eye view” of the entire world from a variety of various perspectives that one would wish to consider and keep track of while considering a particular idea/plan.
The BCG matrix is a tool created by Boston Consulting Group to analyse the strategic position and potential of a company brand portfolio. It categorises firms into four groups based on their industry’s attractiveness (growth rate) and competitive position (relative market share) (relative market share). These two elements suggest the possibility of a firm portfolio being successful in terms of cash necessary to support the unit and cash produced by it. The analysis’s ultimate aim is to aid the firm in selecting which brands to invest in and which to sell. The BCG matrix, or the “Boston Consulting Group” matrix, may be divided into four separate quadrants based on a study of relative market share and market growth, as per Madsen (2017). (2017). Each of these four quadrants has a unique symbol that represents a certain level of profitability. “Cash cows”, “stars”, “question marks”, and “dogs” are the four symbols. Through such categorizations, an executive may pick on which resources to focus, which capital to spend, and which areas to reduce expenses.
Porter’s 5 Market Forces Analysis
Porter’s Five Forces is a business analysis model that shows how various industries may achieve different levels of profitability. In his book “Competitive Strategy: Techniques for Analyzing Industries and Competitors,” Michael E. Porter proposed the concept in 1980. When evaluating a company’s industry structure and business strategy, the Five Forces model is commonly utilised. With some qualifiers, Porter listed five inescapable forces that influence every market and industry on the world. The five forces are widely used to evaluate the competitiveness, sustainability, and profitability of an industry or market. Porter’s five forces, as per Bruijl (2018) are:
Five Stage Design Thinking
Design thinking is a non-linear, iterative process that teams use to research people, challenge preconceptions, reframe problems, and develop and test innovative solutions. Its five phases—”Empathize, Define, Ideate, Prototype, and Test”—are especially useful for handling issues that are ill-defined or uncertain, as stated by Clark et al., (2018). As previously stated, one of the major benefits of the five-stage method is the ability for information gained in later stages to flow back to earlier stages. Information is constantly used to inform our knowledge of the problem and potential solutions, as well as to redefine the problem (s).
The mentioned tools, no matter how effective and helpful they might be, have theikr own share of disadvantages, which limit their practical utility in a big way. The major limitations of each of these tools of will discussed ahead.
A Limited Viewpoint
While the PESTLE research includes six major external elements that might have an influence on a firm, it leaves out numerous others, the most notable of which are internal factors and competition. If PESTLE is exclusively used for strategic planning, strategic managers may encounter many information gaps, forcing them to rely on guesswork, which is never a good thing. As a result, the PESTLE should be used in conjunction with other analyses, such as SWOT and competitive analyses, to ensure that a comprehensive picture is acquired before making any decisions, holds Aithal (2017).
It is possible that the analysis is outdated
When a PESTLE research is finished, the data may become out of date very immediately. Islam (2017) claims that this is due to the fact that political, economic, social, technological, legal, and environmental concerns can shift significantly in a matter of hours.
While this does not happen often, it is important to keep track of current developments to ensure that management is aware of whether the analysis is still valid. Before becoming reliant on the analysis, strategic managers must do a new PESTLE research if the data is out of date.
A huge investment
Much of the data needed for a PESTLE research is not easily accessible online, and what is found may be inaccurate due to the quantity of unverified material on the internet. This means that locating the relevant data might take an hour or more for a strategic manager, and he may still be unsuccessful, according to the remarks of Aithal (2017). Because each component must be extensively studied and evaluated, the manager will need to gather a substantial quantity of data, implying that even in an ideal scenario, he should expect a major time investment. He might have to pay to access databases or go to the library to get printed materials.
2. Limitations of BCG matrix
The BCG Matrix establishes a resource allocation framework across several business units and makes fast comparisons between various business units, Hossain and Kader say (2020). However, the BCG matrix has significant restrictions. For example, while the BCG Matrix classifies companies as low or high, companies may also be classed as medium. The true nature of business can therefore be hidden. As per Mohajan (2017), the following reasons make it problematic:
III. Limitations of Porter’s 5 Forces Analysis
The five forces of Porter have a number of faults. The first is inherent in its composition. It provides a historical picture of the larger industry as a static model. Bruijl (2018) suggest that this may be useful for directing a short-term plan, but the window for Porters knowledge for five factors is likewise restricted by changing external conditions rapidly. Globalization and rapid technological advances are examples of trends not so prominent when Porter established its framework.
For many industries, immediate domestic rivalry – with equal work challenges, varying regulatory frameworks, etc – is less serious than the global competitors who, as a consequence of technology and logistics advances, are able to provide goods and services internationally. Extending the input of the model to incorporate all competitive scenarios in the globe complicates return analysis, a snapshot for “short-term strategy”.
The third issue, according to Saltelli et al., (2020) is that many people utilise the five forces of Porter in ways that have never been intended. The most common mistake is to try to apply the five forces of Porter to one firm rather than to a whole industry. This model can provide insight into strategic dialogues, but they are not a tool to analyse specific firms. Business owners should perform a SWOT analysis specific to the industry and, if at all, use the five forces of Porter as input data. Investors can use Porter’s five forces to assess the desirability of a business, but they will still have to dive into corporate finances unless they use a vehicle, such as a specialised exchange-traded Fund.
Design Thinking demands a true user involvement throughout the project phase, similar to the Agile Scrum. It comprises first research, interviews, co-development of concepts and prototype testing along the process, point out Chou (2018).
Darbellay, Moody and Lubart (2017) believe that it’s a misconception that design thinking correlates with a one-day session. It is never a workshop, but a means to think and understand how users feel. Tomita and Maeno (2018) state that in order to incorporate Design Thinking in a project, managers need to study, interview, synthesise and test with actual users with a qualifying time.
The five-stage framework of design thinking is a creative approach for problem-solving and product development through primarily concentrating on the experience of the customer or user. As per Dam and Siang (2020), companies also use this technique to build unique and out-of-the-box solutions to fulfil the needs and demands of the customers. Following these five steps appropriately is not critical for every design process. The focal point is the balance of definitive and expansive thinking, which takes time for the exploration of the problem thoroughly before indicating a root cause. After that, it takes time to thoroughly exploring every potential solution beforethe selection of one or more solutions to be testified.
For example, if a customer of HCL desires to purchase a monitor, and the specific model is out-of-stock, chances are there for the person to contact customer service to know detail about the availability of the product. What HCL can usually do in this situation is providing an estimated date for shipping, but, based on the opinion of Azman (2014), to assist the consumer more, the customer service of the company can provide more information for helping the consumers once they understand the actual problem of the buyer. Such information might include where the customers are planning to use the monitor, and why they are interested in buying them now etc. They might need them during an event, in which case, according to what Wolniak (2017) had opined, shipping them out when they are back in stock would not help at all, and the company should instead suggest some similar products that can ship right away.
Losing customers has a great possibility if HCL addresses the problems at surface-level only, and this way the customers will assume that the company do not care about providing desired products to the customers at all. However, with the design thinking technique as explained by Clark, Stabryla and Gilbertson (2020), and Dam and Siang (2020), HCL can uncover the actual needs of the consumers and find a creative solution through:
In the way mentioned above, the interaction is turned from a transactional exchange through informing the data of the product being back in stock, which could have been printed on the product description itself, into a dynamic process of problem-solving, which is adding value to everyone engaged in the entire process (Wolniak, 2017). Although the payoff emerging from a single interaction can seem small, customer-company conversations like this can rapidly boost up to a huge effect on the business metrics such as overall sales and customer retention.
According to Porter and Strategy (1980), a competitive strategy process is the creation of wide formula of the way an organisation is about to participate in the market competition, their objectives in that process and the policies they need to achieve the goals. As HCL is facing the issue of drastic competition in the market, the company needs to analyse its situation as a strong contender in this competitive market of the global electronics goods industry (Sato, 2016).In this process, the analytical tool of Porter’s Five Forces, as described in the previous section, is suitable to understand the market situation and find out strategies to resolute the issue of strong competition in the market:
The threat of New Entry
There are several barriers to new entry into the marketplace of the electronics goods industry. Newcomers find it difficult to establish themselves and build trust among consumers in comparison with HCL. In this industry, once a customer is loyal to particular company products, they mostly do not consider buying such products from another company, even if given attractive offers. Brand name, which represents company reputation, is another factor that HCL can boast about from this aspect.
The threat of Substitute Product or Service
There is a strong presence of a personal computers in the households at global level, and HCL is one of the top companies to provide durable and quality PCs.
Bargaining Power of Suppliers
Suppliers can have power over the manufacturer if they influence the materials used to build the products and if the company is relied onby a specific section of the suppliers. HCL is a globally operating company that has a large base do trusted suppliers, though, for the best quality material, the company has to depend on certain suppliers in the market, giving them some power over the organisation.
Procurement professionals in HCL must collect knowledge of the market, the changes occurring in it and recent trends so that they can keep upgraded with the market to avoid suppliers having power over them.
Bargaining Power of Customers
In this technologically advanced era, the electronics market contains consumers who are price-sensitive and would not hesitate much to move on to an alternative provider if their regular company raises the price of the products. Thus, the bargaining power of customers is high for HCL in the global electronics sector.
HCL needs to work on becoming the dominant player in the market by bringing innovative solutions to the customer needs and thus increasing the profile of the company.
The global electronics industry is a sector that is consisted of several players, some of which are world-renowned names, bringing innovative revolutions to the market. In such a market, HCL faces high competition from companies like Lenovo, Dell, Acer, Sony, Compaq etc. with a high reputation and outstanding relation with consumers.
Efficiency, learning and flexibility are the three factors that HCL must follow in each of the objectives of their business strategies. The company must hire the best professionals in its employeebase to bring innovation in product features and creative solutions to consumer services.
(Source: Crainer, 2013; Sunanda, 2018; Porter and Strategy, 1980; Beleya, Bakar and Chelliah, 2017)
Observation and Arguments
Several authors have addressed the concept throughout the years. According to Fuerteset al (2020), strategies are the model of objectives, plans, goals, policies, purposes etc. in achieving them addressed in a manner that these strategies can define the business that the company must belongto. It has been observed in the review of literary articles that the competitive edges for a company refer to it being competent enough to outrun its competitors by superior value in its performance. Such value is created for the customers, and this can be a matter of argument for the marketers that competitive strategy is viewed with the foundation of the way a business can compete in the market it has selected to target for a specific product(s). Having a high threat of competition in the electronics goods industry, especially the PC sector, the strength of HCL will be boosted through its business-level strategies that mostly contain a focus on innovation and design for the creation of high-quality and different features in the products (Sunanda, 2018). Alongside, the company must concentrate on investing in research and development activities in customer service. HCL should not merely target what it has already gained from the previous operational strategies, but also concentrate on the constant development and improvement of the products and services for strengthening the competitive advantage in the operating markets.
Strategic management is founded on an organization’s unambiguous knowledge of its goal, its future vision, and the principles that will drive its activities. The process necessitates dedication to strategic thinking, a subset of corporate management concerned with an organization's capacity to establish both long and short objectives. Additionally, strategic planning includes the formulation of strategic decisions, actions, and resource allocation necessary to accomplish those objectives Strategic management creates a general vision by developing plans and procedures for achieving objectives and then allocating resources to accomplish them.
Strategic planning aids an organization and its leaders in contemplating and preparing for the future of the firm, which is a major role of the board of directors. Strategic planning establishes the organization's and workers' orientation. Unlike static strategic goals, excellent strategy formulation develops, analyses, and assesses an organisational strategy on a constant basis, leading to enhanced organisational performance, customer base, and revenue, In that case, the overall report has implied several effective theories that can forecast better future stability of the company. This particular report has based on the HCL Technology and its operational process. From the evaluation based on the company, there are severe faults have been found that are critical for the management to handle. Regarding this matter, this particular report has given some effective solutions that can help to mitigate the issues.
This particular report has described the theoretical concepts of Porter’s Five model. The five effective forces of Porter's five is helpful for any company to recreate the stages of the operational process. In the company context of HCL, this particular application would help to minimize the issues that have been found in the internal and external processes of the company.
On the other hand, this particular report has described the effectiveness of the five stages of design thinking theory and applied them in the identified issues of organizational context. The Design Thinking Design Theory program aims to foster critical dialogues that will assist designers and researchers in serving the business, economy and the public sector for the purpose of achieving beneficial social and economic results. This series delves into system planning as a means of generating value via new goods and services. Alongside, this report has given detailed information regarding strategic management theories from several literary sources. The overall process of this report has critically analysed the performance of HCL Company and provide effective solutions that can improvise the performance of the company.
From this particular report, there are severe aspects that are understood by me as per the conceptual notions of strategic management. The overall understanding of the report has been evaluated through the application of Gibbs's reflective cycle. Graham Gibbs created the Gibbs' Reflective Cycle in 1988 to provide the framework for learning from events.
Figure: Gibbs’ Reflective Cycle
Source: (Pitts, 2021)
Description: From the overall report it has been understanding by myself that strategic management is the essential key that is important for the HCS to progress its overall operational process. As a role of a business consultant, I experienced that the company itself has great progress that can forecast a better future of the company but there needs to be the application of theories on behalf of the solution of their identified issue.
Feelings: As per the evaluation of the report I have felt that the strategic management association of theories can evolve the implemented process of the company as well as be useful to resolve the issues and this overall process of understanding was going well.
Evaluation: From this experience of mine it has been evaluated that the theories are important and effective for the future progress of the company. The understanding process from this report has made me feels good and made me knowledgeable in such areas.
Analysis: This report has examined and evaluated the performance of the HCL Company. This evaluation process has found severe appropriate tools and theories which would be helpful for the company's operational process. From this analysis of the report, I have understood that the strategic approaches of the theories are convenient for business.
Conclusion: From the overall report I have finally understood that for enhancing the capabilities of the HCL Company and resolve the issues as per the evaluation of the company.
Action Plan: As per the future recommendations I have understood future I will use more strategic theories and aspects that would be more helpful.
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