[College]
3) Mission, Vision, Statement of Values and Objectives: Suggestions to Improve. 9
Mission: Focus on R&D, Invest & Grow. 9
Strategic Mission, Strategic Posture and Spark NZ Performance 10
Strategic Mission, Organization Structure and Firm Performance of Spark NZ 10
Strategic Mission, Competitive Marketing Tactics, and Firm Performance 10
Vision 11
Hard Skills 11
Soft Skills 11
Statement of Values: Focus on Integrity, Community Citizenship, and Customer Service. 12
Objectives: Focus on Development of 4G, Telecommunication, Cloud Computing, IPTV Protocol and Acquisitions. 12
4) External Environmental Analysis and Internal Capability Evaluation. 14
Strategic Position. 14
a) PESTEL Analysis: Threat-Cost of Mistake; Weakness-Reliance on Technology. 14
b) Five Forces: Differentiation through Acquisition of New Entrants Development and Acquisition of the New Solutions. 15
Rivalry among competing sellers 15
The threat of potential new entrants 15
The threat of substitute products 15
Supplier bargaining power 15
Buyer/customer bargaining power 15
c) Strategic Diamond: 15
d) 6M: The Decentralized Structure. 15
Money 15
Machinery 15
Manpower 16
Markets 16
Materials 16
Make-up 16
Generic Strategies: 16
Ansoff's Matrix: Four Different Strategies for the Different Segments. 16
Strategic Choice 16
Market penetration 16
Figure 1: Strategic Diamond 17
Market development 18
Product development 18
Diversification 18
Figure 3: Ansoff's Matrix 18
Vertical / Horizontal Integration/ Conglomerate 18
Horizontal integration 18
Vertical Integration 19
Conglomerate 19
5) Strategic Evaluation and Selection 19
Sustainability 19
The New Mission of the Company 19
The New Vision 19
Feasibility 20
Acceptability 20
Stakeholder Matrix 20
Figure 3: Mendelow's Power-Interest Grid 20
20
References 21
Strategic Planning: Spark NZ.
1) Spark NZ - Former Telecom: Organization’s Description.
The history of Spark New Zealand is the history of fast change, strategic decisions, and acquisition. Established in 1987 by the New Zealand Government as Telecom Corporation of New Zealand Limited (Telecom or "the company") in August 2013 company rebranded into Spark New Zealand Limited (Spark NZ or "the company"). Presently the company provides digital services to consumers and businesses inside and outside of New Zealand. An international geographic market accounted for 5.5% of the total revenues in FY2014. The company's principal market is New Zealand accounting for 94.5% of the total revenues in FY2014 (Spark New Zealand 2015).
The company revenues by key market displayed rise with and exception of the Voice only market (Strategy Update & Three-Year Aspiration 2015):
Spark NZ website focused on two groups of the stakeholders: (a) the individual consumers, small and medium-sized business, and corporate segments of customers (b) investors. The product mix includes fixed line services, mobile services, Internet services, data services, voice services, information and communication technology (ICT) services, cloud solutions, collaboration services, managed services, mobility services, security solutions, digital solutions.
The website [http://investors.sparknz.co.nz] present Spark NZ to the investor according to the following business segments:
- Spark Home, Mobile & Business (formerly Telecom Retail) - the provider of mobility, data and cloud solutions to consumers and small business customers. The range of service includes content, data and voice services using fiber and wire broadband of third and fourth generation 3G/4G and Wi-Fi enabled wireless fidelity zones. (Spark Home [] 2015).
- Spark Ventures - creator of connected digital experience that deliver consumer engagement and revenue growth from different capabilities and platforms (Spark Home [] 2015).
- Spark Digital (formerly Gen-i) - is having activities in providing information and communication technology solutions: integrated solution of IT and telecommunication services NZ businesses, enterprises and government (Spark Digital [] 2015).
- Spark Connect (formerly Telecom Connect) - provider of core connectivity and cloud solutions to NZ businesses and government through a delivery of ICT Platform Services to transform relationships with the customers (Spark Digital [] 2015).
The detailed description of each segment has importance because they have their team, board of directors, CEOs and follow separate strategic goals different for each segment. Each segment holds no shares of the other.
2) Spark NZ: Mission, Vision, Statement of Values and Objectives.
- Mission
The Telecom's mission 2012 is "to become number one in broadband, mobile and ICT in New Zealand" (Telecom Annual Report 2012, p.24). As each business segment is the separate business with independent management, it has its individual strategic updates. Only Spark Digital has its mission: "Create Brilliant Customer Connections. Unleash Business Productivity" (Spark Digital [] 2015).
- Vision
In 2012 Telecom’s vision was “to achieve this [to become number one] by putting customers at the heart of its business and, in doing so, become New Zealand’s most preferred company" (Telecom Annual Report 2012, p.24).
In 2013, the company updated its Vision 2013 Strategy as Vision 2013 Initiatives: (a) Improve customer satisfaction, (b) #1 in mobile, broadband and ICT, (c) Cost reduction and simplification, and (d) Innovation in fiber and mobile. The company has marked the implementation of the 3 of 4 previous vision strategies (Telecom New Zealand 2013, p.4).
The Vision2013 strategy focused on four key themes:
"Enablers: Delivering changes to Telecom's operating model and structural design to better enable the transition to the post-Demerger environment.
Market Strategy: Exiting non-core markets and focusing investment in new or existing markets with higher returns and growth opportunities.
Operational Excellence: Reducing failure rates and simplifying the business to deliver improved customer experience sustainably lower operating costs and increased returns from capital investment.
Commercial Excellence: Driving a focus on customer satisfaction, customer retention and margin improvement from the delivery of new fiber, mobile and ICT customer offerings" (Annual Report 2012, p.25)
- Statement of Values
The company expressed its values in the 2015 Annual Report as follows:
"We listen.
We're straight up.
We get stuck in.
We win together.
Our values are what define us – they are simple, they are clear, and they lay the foundation for positive culture. A culture where our focus is on the customer and we can challenge each other to work better, every day.
Alongside our code of behaviors, which sets out the way we behave – to each other, to our customers and the community – our values is the glue that brings us together" (Spark New Zealand Annual Report 2015, p.39).
- Objectives
Company has the following objectives:
-“ The Group’s primary objective in managing foreign currency risk is to protect against the risk that the eventual New Zealand dollar net cash flows will be adversely affected by changes in foreign currency exchange rates” (Spark New Zealand Annual Report 2015, pp. 71).
3) Mission, Vision, Statement of Values and Objectives: Suggestions to Improve.
Mission: Focus on R&D, Invest & Grow.
According to Covin, the strategic mission is a part of the strategy; at the same time, it is a tactical moderation tool with a focus between the managerial choices and the firm performance (Covin 1994, p.485).
The Company's strategic mission has the anticipated moderating effect "on the posture-performance, structure-performance and tactics-performance relationships" (Covin 1994, p.486).
Strategic Mission, Strategic Posture and Spark NZ Performance: In the company’s mission, the Spark NZ was not clear about a nature of its activities: whether it was a risk taking and venturesome innovative business investing in R&D, which is appropriate to 'Invest/grow' situations or a moderately conservative. The last is appropriate for "earn/protect" situations. According to the company's latest announcement Spark NZ makes the stem decision in an acquisition of CCL, so it can present itself as energized company with the innovative managerial style.
As the company announced a divesting strategy of non-core assets from overseas markets or from business not aligned with the company's strategy it may mention in the mission about the efficiency-seeking efforts. In this case, the company takes the non-core "'harvest/divest' strategy" - the style is consistent with the risk avoiders and efficiency seeking (Covin 1994, p.486). The Company has announced the buyback of shares and may moderate the mission with the prototypical line "we do not see any better investment than in ourselves" (Investopedia 2015).
Strategic Mission, Organization Structure and Firm Performance of Spark NZ: The mission to be number one and unleash business productivity is on the harvest end of the mission spectrum of the company does not reflect the company’s 'Invest/grow' nature. At the same time, positioning as the organic organizational structure would bring the understanding of the inimitable and unique structure more positively related to the performance (Covin 1994, p.487).
Strategic Mission, Competitive Marketing Tactics, and Firm Performance:
As Spark NZ is still on the build end of the strategic mission:
Mentioning information about low-priced products will have a positive effect on the clients. Advertisement outlays and efforts will have a positive effect on the company performance. The large team of the sales force has a positive relation to performance. The extension of the customer credit will have a positive relation to the firm performance. Emphasis on the R&D activity will have a positive effect on the firm performance. Improvement of the new products rather than introduction has the better effect on firm performance. A broad product line has the real effect on market share (Covin 1994).
According to Fransisco, “The mission statement is an instrument for strategic planning and evaluating outcomes, and over the course of time may need some tweaking as factors change” (2008). As Spark NZ is the dynamic and risk-taking company, the mission statement should be a subject of frequent revision with a strong link with the tactics.
Vision: Focus on Talent Pool.
The 2012 Telecom’s vision does not express the company’s aspirations and the long-term sense of direction. Sooner, ‘to be preferred’ and ‘to be number one’ by ‘giving priority to the customers’ by ‘putting them at the heart’ reflects the company’s beliefs, traits and behavioral norms that could better serve as the core values.
Hard Skills: The most valuable asset of Spark NZ are its people because they are authoring all the innovations and company completely depends on their hard and soft skills in the short and the long-term perspective. The well-known example of the visionary is Edison, a person who has invented the electric bulb and made more than 1000 inventions.
Soft Skills: Although Edison had no formal education, he had a vision, and he nurtured a team. The Vision Statement with a focus on talent will help internally in "talent management" policies; will inform the external stakeholders about the long-term direction that the future of the company entirely depends on the team and vision of the inspired professionals and the cohesive team. Internally such direction can help in selecting the talent not only through the grades principle but also by the extracurricular activities.
Spark NS’s vision incurred several changed during the short term. Instead, a vision statement should look into the future, at least, five years to set a lofty future state.
Statement of Values: Focus on Integrity, Community Citizenship, and Customer Service.
The existing company's statement of values can successfully guide in the pursuit of the ideas expressed in mission and vision. The statement of values clearly presents the expectations how the company operations will go in line with the company's mission and the strategic vision.
Objectives: Focus on Development of 4G, Telecommunication, Cloud Computing, IPTV Protocol and Acquisitions.
According to Wright (2001) formulation of objectives is a process that “should include an analysis of the current business situation” in particular “objectives rely even more particularly on the SWOT” analysis (Wright 2001, p.815).
Spark NZ described its objectives as ‘risks related to the currency’ it comes clear from the SWOT analysis that the company has more objectives than it realized.
4) External Environmental Analysis and Internal Capability Evaluation.
According to Johnson & Scholes (1987), the environment changes and companies should modify their strategies to survive. Johnson and Scholes's framework suggests performing the external environmental analysis and internal capability evaluation to determine their strategic position. In particular, the acceptability, sustainability and feasibility criteria can provide the information necessary to take the strategic choice (Johnson G, & Scholes 1987).
Strategic Position.
A) PESTEL Analysis: Threat-Cost of Mistake; Weakness-Reliance on Technology.
Political: Political stability.
Economic: Cost of mistake can be very high. The knowledge of the economy has a positive correlation to the corporate economy.
Social: Development of the social network, e-learning, social media has a positive correlation with the growth of revenues.
Technological: The new knowledge or innovation of the competitors can quickly erode the existing leadership.
Legal: Ethical communication with the customers and partners is a must.
Environmental: Video and audio conferencing is in demand and can reduce energy consumption and carbon emission.
B) Five Forces: Differentiation through Acquisition of New Entrants Development and Acquisition of the New Solutions.
There are five competitive forces by M. Porter; the company should direct its activities towards the weakest point of competition:
Rivalry among competing sellers: High and increasing.
The threat of potential new entrants: the Moderate threat of the forward integration.
The threat of substitute products: Moderate until the company is the leader.
Supplier bargaining power: High for the innovative products.
Buyer/customer bargaining power: High because, required top quality of the goods and services.
C) Strategic Diamond: Economies of Scope, Proprietary Product Features - TV, Premium Prices due to New Solutions.
The strategic diamond (Figure 1) can communicate the following economic logic:
Lowest costs through economies of scope and scaling advantages.
Premium prices due to proprietary product feature: TV
Premium prices due to innovative solutions: 4G, cloud, etc. (Hambrick 2001, pp.51-62).
D) 6M: The Most Capable is the Decentralized Structure.
Money: Revenues of $3,018.8 million during the FY2014 - a decrease of 2.6% compared to the previous year.
Machinery: High competition requires the most up-to-date technologies and solutions.
Manpower: Importance of the hard and soft skills. Extracurricular activity can indicate motivation and vision. Feasible solution - is an acquisition of businesses with the new ideas.
Markets: Customers have the subscription plans. Still, the loyalty of the customers is paramount. Feasible is the acquisition of the new unfocused and energized businesses with the new approaches to connect to the markets.
Materials: Threat of forward integration by the providers of software solutions. Possible is the acquisition of the emerging forward integrating competitors.
Make-up: Company has the decentralized structure consistent with the strategic choice.
Generic Strategies:
According to the M. Porter, there are focused or market niche generic strategies (low-cost and differentiation). The company operates the large customer base and the new niche customer segments through the focused differentiation strategy.
Ansoff's Matrix: Four Different Strategies for the Different Segments.
The Ansoff Growth matrix can help the company to determine its product and market growth strategy. The market growth strategy depends on markets new or existing products in new or existing markets. The company has four different business segments with different activities for different strategies.
Strategic Choice
Market penetration: Spark Home – existing products 3G/4g, Wi-Fi in existing NZ markets.
Market development: Spark Digital – new information and communication technology solutions in existing markets of NZ business
Figure 1: Strategic Diamond
Product development: Spark Connect – new markets in NZ for core connectivity for existing products cloud solutions, ICT Platform.
Diversification: Spark Ventures – new market for different capabilities and platforms with new products creator of connected digital experience.
Vertical / Horizontal Integration/ Conglomerate
Horizontal integration solution is a part of diversification strategy for the company's existing markets possible for Spark Home for the products such as 3G/4g, Wi-Fi.
Vertical Integration is an expansion to find the different levels of supply for information and communication technology solutions within the existing market possible for Spark Digital. Backward vertical integration can be possible with the emerging companies offering the innovative IT solutions. Such companies can threat to integrate forward vertically (Diversification or conglomerate integration 2006).
Conglomerate: Spark NZ diversified conglomerate is divesting from the non-core activities to focus on the niche within their field of competence. The company is taking the first step of conversion to the global specialist in the niche markets. The speed of this process develops on the elimination of the company's competitors through occupying the niche market and through the investments into the R&D and the talent pool (Meyer 2006).
5) Strategic Evaluation and Selection
Sustainability:
The New Mission of the Company:
Spark NZ is the organic organizational structure with the efforts in R&D to improve the existing IT products. Our large team is focused on the core directions to continue receiving the customer credit and deliver the highest quality of the solutions and services. We don't see any better investment than in ourselves - our existing and new solutions.
The New Vision:
Our primary focus is on the talent pool. We have the large team of the motivated people with a vision to deliver the perfect core solutions in the NZ market to successfully compete and expand globally.
This mission and vision directed to eliminate the primary threat, cost of mistake and the main weakness – the rigid reliance on technology.
Feasibility:
According to the 6M model, the company has resources and capabilities to invest in the decentralized structure.
Acceptability:
Stakeholder Matrix
The changes must take into account different stakeholders their interest and power. Mendelow's Power-Interest Grid can provide this insight. According to the power grid, the key stakeholders are the talent pool, executive managers, and early adopters, R&D/HR departments and a coach (the leader). The strategy of diversification, differentiation, investment in R/D and talent pool is in line with the expectations of the key stakeholders.
Figure 3: Mendelow's Power-Interest Grid
References
Covin, J, Slevin, D, & Schultz, R 1994, 'IMPLEMENTING STRATEGIC MISSIONS: EFFECTIVE STRATEGIC, STRUCTURAL AND TACTICAL CHOICES', Journal Of Management Studies, 31, 4, pp. 481-505, Business Source Complete, EBSCOhost, viewed 6 January 2016.
Diversification or conglomerate integration (2006). [Online]. In C Pass (ed.). Collins Dictionary of business. London, United Kingdom: Collins. Available from: https://search.credoreference.com/content/entry/collinsbus/diversification_or_conglomerate_integration/0 [Accessed 8 January 2016].
FRANSISCO, L., 2008, Nov 08. A good mission statement can lead a business. McClatchy - Tribune Business News.
Hambrick DC & Fredrickson JW 2001, ‘Are you sure you have a strategy?’ Academy of Management Executive, 19(4), 51–62.
Investopedia 2015, Stock Buybacks: Breakdown. Available from: <http://www.investopedia.com/articles/02/041702.asp>. [06 January 2016].
Johnson G, & Scholes 1987, Exploring Corporate Strategy, Prentice Hall Heme Hempstead.
Meyer, KE 2006, 'Global focusing: From Domestic Conglomerates to Global Specialists', Journal Of Management Studies, 43, 5, pp. 1109-1144, Business Source Complete, EBSCOhost, viewed 8 January 2016.
Spark New Zealand 2015, Investors. [Online]. Available from: <http://investors.sparknz.co.nz/Investor-Centre/?page=Latest-Results>. [06 January 2016].
Spark Digital & Spark Connect 2015, Spark Digital. Spark Connect. [Online]. Available from: <http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/gXbeer80tkeL4nEaF-kwFA/doc/Spark-Digital_Connect.pdf>. [06 January 2016].
Spark Home, Mobile & Business, Spark Ventures, Digital First & Concluding comments 2015, Spark Home, Mobile & Business, Spark Ventures, Digital First & Concluding comments. [Online]. Available from: <http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/gXbeer80tkeL4nEaF-kwFA/doc/Spark-Home-Mobile-Business_Spark-Ventures_Digital-First_Concluding_comments.pdf>. [06 January 2016].
Spark New Zealand Annual Report 2015, Living a digital future today. Available from: <http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/gXbeer80tkeL4nEaF-kwFA/doc/FY15_H2/2015_Annual_Report.pdf>. [06 January 2016].
Strategy Update & Three-Year Aspiration 2015, Strategy Update. [Online]. Available from: <http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/gXbeer80tkeL4nEaF-kwFA/doc/Strategy-Update_Three-Year-Aspiration.pdf>. [06 January 2016].
Telecom Annual Report 2012, Embracing the Future. Available from: <2012http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/XZdfKzNUJ02K93habZUuMw/reports/annual/Telecom-AR-2012.pdf>. [06 January 2016].
Telecom New Zealand 2013, H2 FY12 Result Briefing. Vision 2013 strategy update. [Online]. Available from: <http://investors.sparknz.co.nz/FormBuilder/_Resource/_module/XZdfKzNUJ02K93habZUuMw/file/presentations/2012/H2-FY12_Presentation-FINAL.pdf>. [06 January 2016].
WRIGHT NS 2001, ‘Strategic Management’. In B. S. Kaliski (Ed.), Encyclopedia of Business and Finance, Vol. 2, pp. 815-818, New York: Macmillan Reference USA. Viewed 6 January 2016.
