FORMULATING STRATEGY OF IRAN POST COMPANY USING STRATEGIC MANAGEMENT MATRIX AND SWOT ANALYSIS

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1 Sci.Int(Lahore),25(3), ,2013 ISSN ; CODEN: SINTE FORMULATING STRATEGY OF IRAN POST COMPANY USING STRATEGIC MANAGEMENT MATRIX AND SWOT ANALYSIS Hasan Givarian 1, Ali Samani 2*, Roghieh Ghorbani 3, Rokhsareh samani 4 1 Faculty member, Islamic Azad University, Central Tehran Branch 2&3 Islamic Azad University, Central Tehran Branch 4 Islamic Azad University, Science and Research Branch, Tehran ABSTRACT: In today's organizational world, looking at an organization's status from a strategic point of view is one of the necessary requirements for remaining in close competitive and business field. Undoubtedly, Post Company as one of the largest service organizations within the country is not an exception. According to this attitude that a company's strategic planning represents its development trend and orientation, this paper intended to use innovative strategic planning instruments to investigate status of the company in its industry and provide a spectrum of possible optimal strategies for managers of this organization. To accomplish such an important issue, first, Delphi technique and interview were used to identify external opportunities and threats (EFE) and internal strengths and weaknesses (IFE) and then draw matrix of strengths, weaknesses, opportunities and threats (SWOT). Afterward, Strategic Position and Action Evaluation (SPACE) matrix and Quantitative Strategic Planning Matrix (QSPM) are placed on the agenda. Finally, strategies in proportion to the company status were presented. The obtained results indicated that implementing competitive strategies seems to be the best possible choice for Post Company. Key Words: QSPM SWOT SPACE EFE IE IFE INTRODUCTION Today, strategic planning is one of the key and important management instruments, which helps organizations in better performance of affairs, centralizing resources and energy, ensuring the coordination of members' and staff's efforts, assessing position and properly adapting the changing environment [1]. Strategic planning provides a clear orientation and framework for organizational management and also prospect of shared goals for all members of the organization in order to generate and strengthen the ability of identifying priorities in allocating resources and positions and subsequently facilitate management in crisis conditions. Strategy is defined as "determining fundamental and long-term causes and goals of a company and adopting a set of evaluations and allocation of resources required for achieving those goals and causes". Strategic planning of a company can be defined as "development trend of orientation and movement line". The process of strategic management as a continuous process includes the following sequence of actions: strategic plan, strategic planning, strategic implementation, evaluation and updating. Strategic planning has a dynamic process. By concentrating on the current positions and realities, this type of planning attempts to achieve the facing future. Strategic planning is not a linear process and is not implemented step by step in an inflexible framework; however, participation of all administrators in defining objectives, missions, relieving 1 and formulating action patterns for achieving the goal is a principle [7].One of the biggest issues that has attracted managers' minds in today's modern organizations is severe competitive space and dynamic environment in the current organizational society [8]. In this era, Post Company is faced with issues such as technology explosion, drastic environmental changes and growing competition. To remain in such a competitive space, the necessity of intelligence and doubled efforts is critical. Undoubtedly, it is impossible to achieve developmental goals without effective, accurate and dynamic planning. So, by relying on capable human capital and available widespread facilities and using an optimal strategic planning as an instrument for dealing with upcoming challenges, Post Company can overcome difficulties and lead its destiny as a successful, dynamic and learning organization. To this end, this study sought to answer the following essential question: What strategies should Post Company use to realize its goal, optimally perform its mission and achieve its desirable vision? The main objective of this study was formulating a proper strategy for developing Post Company; but, the following secondary objectives were also considered: Evaluating current status of Post Company in market

2 664 Evaluating strengths and weaknesses of Post Company Evaluating its facing threats and opportunities Determining the optimal strategy for success of Post Company This scientific research was of descriptive type because it contained a set of methods with the aim of describing the considered conditions and phenomena. Also, this study was a case study since researchers selected a special case and examined it from different dimensions. In fact, the overall goal of every case study is detailed observation of "studied" dimensions and interpretation of these observations from a holistic perspective [6]. In this research, library and field techniques were used for data collection. In library technique, investigating documents, evidence and statistics and, in field technique, questionnaire, interview and survey of experts were used. Delphi technique and experts' opinions were also used while preparing the questionnaire. In this study, symbolic or formal validity was used to determine validity of the data collection tool. Cronbach's Alpha was applied to test reliability of the questionnaire. Accordingly, the questionnaire was distributed among 30 individuals. Then, the collected data were tested and their reliability was confirmed using Cronbach's Alpha. Cronbach's Alpha of the questionnaires was reported as in determining internal ranking and in determining external ranking. Therefore, the resulted Alpha indicated that firstly the questions were in high correlation with each other and secondly the research questionnaire enjoyed high reliability. Statistical sample of the research is a part of large population that is determined by determining the sample size [4]. In this research, attempts were made to extract the necessary information from managers, specialists, assistants and experts in terms of the mentioned topics. Thus, opinion of 17 Iranian experts in post was used in this research. Literature Review In this study, attempts were made to formulate optimal strategies for Post Company using novel and scientific practices in the world. So, first, a brief definition of main elements of strategic management and their organizational examples in Post Company are presented. In the second section, the tools used in the study are introduced. A-Strategic elements Strategy: Strategy is assumed as different paths for achieving organizational goals and objectives [2]. Strategy indicates ways of achieving organizational goals and shows how to achieve the desired conditions. Strategy is in fact planning for optimal use of organizational facilities that includes diagnosis and organization of organizational abilities ISSN ; CODEN: SINTE 8 Sci.Int(Lahore),25(3), ,2013 for survival and adaptation with environmental conditions [5]. Strategic Management It refers to art and science of formulating, implementing and evaluating multiple functional decisions which enable the organization to achieve its long-term goals [3] Strategic Planning It determines organization's objective and coordinates all the organizational activities along with these objectives [9]. Vision Vision refers to explicit expression of the destiny, toward which the organization should move [10].According to Iran's Strategic Document, at the end of the Fifth Development Plan, Post is a dynamic, leading and efficient company that fulfills stakeholders' satisfaction and establishes an effective interaction in the relationships. Policy It is a means, by which the company achieves its goals [3]. Mission Statement It is a document that separates an organization from others. An organization's mission indicates a range of activities in terms of product and market [3]. According to Islamic Republic of Iran's Strategic Document, mission of Post Company includes providing (physical, electronic and financial) services using the most extensive communicational network of the country while relying on capable human capital and new technologies in order to meet external and internal stakeholders' satisfaction. B-Instruments of Strategy Formulation Internal Factors Evaluation (IFE) Matrix: It is a matrix in which internal and controllable activities are considered by the organization; however, these activities may be done in a very excellent or poor manner. They are in fields of management, marketing, accounting and finance, manufacturing, research and development and computer information systems. External Factors Evaluation (EFE) matrix: This matrix includes economic, social, cultural, ecological, environmental, political, legal, governmental, technological and competitive trends and events that could impose significant loss or profit on the organization in future. These factors are usually beyond the control of organizations. Revolution in computer, biotechnology, population displacement, changes in values and attitudes, space discovery and increased competition are all examples of external factors. Strengths, Weaknesses, Opportunities and Threats Matrix

3 Sci.Int(Lahore),25(3), ,2013 ISSN ; CODEN: SINTE This matrix is one of the important instruments by which managers can compare information and design different strategies in different situations. Strategic Position and Action Evaluation (SPACE) matrix This four-cell matrix categorizes macro strategies to four classes of invasive or prospective, defensive or protective, analytical or analyzer and passive or reactive. In invasive or prospective strategies, organizations are innovative in producing goods or providing services along with market development. The organizations using these strategies have high official, structural and technological flexibility in responding to the intensely changing (dynamic) environment. In defensive or protective strategies, organizations seek to establish a stable environment and atmosphere. Strategic actions of organizations are in line with maintaining market share or decreasing effect of competitors' aggressive movements. In analytical or analyzer strategies, organizations act in a changing environment and always wait for results of introducing new goods or services to new markets. These organizations seek to minimize risk and maximize profit opportunities. In passive or reactive strategies, organizations have no clear strategic focus. These organizations slowly react to environmental changes and do not make major modifications until being under the pressure of environmental forces. Internal and External (IE) Matrix This matrix uses available data in SPACE and EFE matrices and suggests one of invasive or prospective, defensive or protective, analytical or analyzer and passive or reactive strategies in a fourcell scheme. Quantitative Strategic Planning Matrix (QSPM) Relative attractions of strategies are expressed in this matrix. Using this method, various strategies could be objectively investigated, the best ones could be characterized and executive strategies are prioritized. Simultaneous investigation a set of strategies and integrative placing of all internal and external factors can be stated as the strengths of this matrix. Executive Model of the research In this research, attempts were made to employ the best possible tools and methods in order to reach the formulation stage step by step. These stages were done in the following steps: 1- Studying and investigating previous internal and external organizational experiences which are related to the topic 2- Arranging interviews with managers and experts of Post field in Iran in order to understand current situation in Post Company 3- Designing and formulating research questionnaires based on scientific principles and local experiences and information of the organization 4- Distributing and collecting questionnaires related to different matrices using Delphi technique, extracting information and classifying them 5- Decision making on optimal strategies by scientific techniques and presenting practical strategies to achieve a successful and dynamic organization IFE matrix Starting executive operations IE matrix SWOT matrix SPACEmatrix QSMPmatrix EFE matrix Data Analysis Descriptive and inferential statistical methods by Excel and SPSS 11 software were used to analyze the data obtained from the collected questionnaires. Preparing Internal Factors (IFE) Matrix In this regard, coefficient indicates relative importance of a factor in terms of organizational success in the relevant industry. These coefficients range from zero (unimportant) to one (very important) and sum of these coefficients must be equal to 1. In this table, ranking reflects effectiveness of the company's current strategy and the manner of the organization's reaction to factors. Ranking is a number between 1 and 4, in which 1 indicates company's weak reaction, 2 moderate reaction, 3 better than moderate reaction and 4 excellent reaction. In addition, score is obtained by multiplying ranking by coefficient (Table 1).

4 666 ISSN ; CODEN: SINTE 8 Sci.Int(Lahore),25(3), ,2013 Table 1: Internal factors (IFE) matrix Strengths Coefficient Ranking Score A- Public relations: optimal outsourcing (agencies, post offices ) B- Financial status: income from novel services like e-commerce, COD, logistics A- Technological status: Accelerating movement of company toward IT B- Management processes: developing systemic and strategic approach in processes E- Human force: moving to develop dynamic, competent, educated and skilled human capital F- Structure and organization: availability of extensive postal network across the country G- Strong information support: Having 10-digit zip code databases and databases for places H- Superior characteristic: exclusiveness as the largest provider of postal services in Iran I- Focus on survival: Enough support of internal managers from development and innovation J- Customer perceptions: Long-term history of Post as symbol of integrity Weaknesses Coefficient Ranking Score A- Financial status: low share of GDP B- Human force: lack of appropriate systems for attracting and maintaining staff C- Structure: imbalances and asymmetry of company's law with international standards C- Marketing: weakness in understanding the market and lack of integrated strategies D- Management processes: weak participative management and teamwork E- Research and development: lack of independent and active research and development unit F- Focus on survival: insufficient variety of postal activities in line with the needs G- Resistance to change: weak organizational culture in terms of implementing new techniques H- Pricing: by the government (low and non-competitive tariffs) I- Bureaucracy: a barrier for staff creativity and organizational learning Sum of strengths and weaknesses Preparing External Factors (EFE) Matrix Table 2: External factors (EFE) matrix Opportunities Coefficient Ranking Score A- Technologic environment: hardware and software facilities and infrastructure needed for developing the country's post B- International environment: continuous activity in international post area and cooperation with such international organizations as World Customs Organization C- Economic environment: increased trade owing to membership in coalitions D- Cultural environment: presence of university graduates in the country E- Geographical environment: access to several routes for roads, rail and air transport F- Legal environment: restructuring post sector and generating an independent regulatory body G- Social environment: presence of many companies and organizations willing to contract in order to provide services and transport goods H- IT and communication environment: accelerating movement of society towards information technology as a potential for providing new services I- Political-governmental environment: attention and support of policy makers as Electronic Government Counters and Rural Offices J- Neighboring organizations: cooperation of relevant organizations in development of business processes such as Customs, Information Technology and Post Bank Threats Coefficient Ranking Score A- Technologic environment: cyber threats and weaknesses in infrastructure of data transmission B- International environment: preventing advanced devices and new knowledge from entering due to sanctions C- Economic environment: currency fluctuations and governmental budget deficits in recent years D- Political and governmental environment: critical situation in the Middle East E- Legal environment: uncertainty about some inter-organizational rules and regulations F- Neighborhood environment: lack of coordination and cooperation among neighboring organizations in providing related services G- Cultural environment: lack of adequate knowledge of employees and customers about the existing laws H- Social environment: rapid changes in population, increasing urbanization and economic decline of rural units I- Competitive environment: growing activity of new competitors and self-posing J- Geographical environment: geographical width and diversity of country to provide services even to the farthest places Sum of opportunities and threats Analyzing IFE and EFE Matrices

5 Sci.Int(Lahore),25(3), ,2013 ISSN ; CODEN: SINTE Regardless of the number of factors included in IFE or EFE matrices, sum of final scores was between 1 and 4 and its average was Higher than average score meant strength and lower than average score signaled weakness of the factors. In EFE of Post Company, score (higher than average) proved relatively proper performance of the company in facing external factors. But, in IFE, score of (lower than average) showed the necessity of more focus on the company's internal factors, overcoming weaknesses and exploiting strengths. In this regard, some notes will be made in the suggestion section. Formulating Internal and External (IE) Matrices Four-cell IE Matrix This matrix consists of four cells and is drawn using quantified information of internal and external matrices. Results of the matrix showed that, as Post Company was located in competitive area, this company should maintain its market share using competitive advantages and strengths and show better performance against its competitors (Diagram 1). Nine-cell IE Matrix This matrix is similar to the four-cell matrix and enjoys the same matrix's information with the only difference that, in this matrix, area of strategic choice obtained based on the calculation of standard deviation of the responses is drawn using four points around a strategic response. As observed in the figure, this area is also in area No.5. It should be Formulating SWOT Matrix noted that strategy of area No. 5 known as "status quo" strategy includes market influence and product development strategies, which will be reviewed in conclusion section (Diagram 2). Diagram 1: Four-cell IE matrix Low score of internal factors high Conservative Defensive Offensive (2.625, 2.025) Competitive Diagram 2: Nine-cell IE Matrix low score of external factors Table 3: Strength, weakness, opportunities and threats SWOT Opportunities Strengths A-Public relations: optimal outsourcing B-Financial: income from new services C-Technological development D-Management processes: development of systemic and strategic approach E-Human force: moving toward development of human capital F-Structure and organization: extensive postal network G-Strong information background: availability of databases H-Superior characteristic: being exclusive F-Focus on survival: governmental support I-Customers' perceptions: Long-term history of the company as the symbol of integrity, services and people's trust SO weaknesses A-Financial status: low share in GDP B-Human force: lack of appropriate systems for attracting and maintaining staff C-Structure and organization: imbalances and asymmetry of laws D-Marketing: weakness in understanding market s lack of integrated marketing strategies E-Management processes: less participative management and teamwork F-Research and development: lack of an independent and active research and development unit G-Focus on survival: insufficient variety of postal activities in line with the needs H-Resistance to change: weakness in implementing new techniques and technologies I-Pricing: by the government (low and noncompetitive tariffs) J- Bureaucracy: barrier to employees' creativity and organizational learning WO

6 668 ISSN ; CODEN: SINTE 8 Sci.Int(Lahore),25(3), ,2013 A- Technologic environment: required hardware and A. Concluding contracts with all existing A. Integrating with existing parallel software facilities and infrastructure to develop the organizations to displace shipments and packets companies in the industry country's post B. Employing the best and most proficient B. Diversifying in customer services B- International environment: continuous activity in technicians offering adequate rights and salaries C. Trying to interact more with parallel international post area C. Purchasing and using new science, high standards companies C- Economic environment: increased trade owing to and modern and updated practices and D. Trying new contracts membership in coalitions technologies D- Cultural environment: presence of university graduates D. Developing databases by the best and most and technical specialists in the country E- Geographical environment: access to several routes for advanced technology and software and hardware equipment transportation E. Purchasing or contracting with many service F- Legal environment: restructuring in Post sector and companies in the industry creation of an independent regulatory body G- Social environment: presence of many companies and organizations willing to contract H- IT and communication environment: accelerating movement of society towards technology I- Political-governmental environment: care and support of policy makers J- Neighboring organizations: cooperation of relevant organizations in development of business processes Threats ST WT A- Technologic environment: cyber threats and 1. Developing partnership with competitors or making 1. Sharp and maximized reduction in overhead weaknesses in infrastructure of data transmission profitable cooperation costs such as new projects B- International environment: preventing advanced 2. Influencing the market by offering innovative, high 2. Limiting the company's activities to the most devices and new knowledge from entering due to speed and high quality services profitable ones sanctions 3. Developing products by taking advantage of 3. Closing remote and low-yielding postal units C- Economic environment: currency fluctuations and undetected strengths and new upcoming opportunities 4. Selling or transferring some parts of governmental budget deficits in recent years 4. Widening scope of services and activities based on equipment and services D- Political governmental environment: critical situation electronic services while satisfying customers 5. Reducing personnel costs through dismissal, in the Middle East 5. Trying to get ownership of parallel companies layoff and overtime decraese E- Legal environment: uncertainty about some inter-6organizational Trying to control activities of competitors rules and regulations 7. Diversifying services for customers F- Neighborhood environment: lack of coordination and 8. Attracting potential customers and trying to satisfy the cooperation among some of the neighboring existing ones organizations 9. Shifting from old strategies and techniques G- Cultural environment: lack of adequate knowledge of 10. Making income and discovering new and updated ways employees and customers about the existing laws of income generation H- Social environment: rapid changes in population, increasing urbanization and economy decline I- Competitive environment: growing activity of new competitors and self-posting J- Geographical environment: Geographical width and diversity of country to provide services Table 4: Strategic Position and Action Evaluation matrix Financial power score Income from new services 3 Pricing and tariffs determining by government 4 Average 7/2 = 3.5 Competitive advantage Loyalty and trust of clients owing to long-term history as a symbol of fidelity -4 Necessary technical knowledge relying on educated and professional staffin the field -3 Average -7/2 = -3.5 Environmental stability -2 Competitive pressure from competitors -3 Average -5/2 = -2.5 Industrial capability Hardware and software facilities and infrastructure needed to develop the country's post 2 Rapid movement of society towards information and communication technology to provide new services 2 Average 4.2=2 Point on the horizontal axis = competitive advantage + industrial capability = 1 Point on the vertical axis = environmental stability + financial power=-1.5

7 Sci.Int(Lahore),25(3), ,2013 ISSN ; CODEN: SINTE In this matrix, possible strategies were extracted in different situations of strengths, weaknesses, opportunities and threats (Table 3). It should be also noted that attraction score of each strategy is a number between 1 and 4, in which 1 means lack of attraction, 2 relative attraction, 3 Formulating Strategic Position and Action Evaluation normal attraction and 4 high attraction. (SPACE) matrix Prioritizing strategies in quantitative strategic Financial power, industrial capability, environmental stability planning matrix of Post Company and competitive advantage should be separately investigated and In this stage, importance coefficient of each factor is quantified for drawing this matrix. It should be noted that, since multiplied by attraction of strategies and final score competitive advantage and environmental stability are in of the each strategy is obtained. Then, strategies with coordinate's negative zone, minus sign should be added to their higher scores have higher priority (Table 7). quantitative value which is between 1 and 4 (Table 4). The results indicated that Post Company was in the competitive zone and possessed many competitive advantages in a rapidly growing industry; thereby, it can succeed (Diagram 3). Formulating QSPM Matrix According to the results from Strategic Position and Action Evaluation and Internal and External matrices, Post Company is on the competitive zone and ST zone's strategies are the best possible choices for this company. So, in order to prioritize possible strategies and determine the best strategies for the company, attractions of each strategy are estimated. First, strategies are numbered (Table 5). Diagram 3: Strategic Position and Action Evaluation Table 5: Competitive strategies CONCLUSION The results obtained from the applied matrices were convergent and all of them suggested that Post Company was working in the competitive zone. In other words, this company needs to take advantage of its strengths in order to avoid the upcoming threats and be able maintain its own market share in a competitive environment. The results of prioritizing strategies also showed the shift from old making profit methods to the new ones. Undoubtedly, nowadays, with development of virtual networks, communication between individuals and organizations has moved toward the virtual space, which has growingly decreased physical communication. Although this method can lead to profit reduction of post company, by implementing the orientation shift in a dynamic and timely movement and using initiative, vigilance and opportunism, other high profit methods can be discovered in this growing industry. For example, by moving toward service providing based on electronic commerce in cyberspace and turning to enabling heavy equipment and logistics sector, good revenue can be obtained in the untapped market. On the other hand, despite the increased efforts of competitors in gaining a greater share of the market, other competitors can be overtaken by increasing speed, variety and quality of service providing and relying on capable facilities and forces of the post network. In the next stage, attractions of each strategy are estimated in the form of questionnaire and average results are added to the table (Table 6). No Strategies 1 Making partnership with competitors or establishing profitable cooperation 2 Influencing the market through providing new, fast and high-quality services 3 Developing goods and services through benefiting from undetected strengths and new opportunities 4 Widening scope of services and activities based on electronic services while satisfying customers 5 Trying to get ownership of parallel companies 6 Trying to control activities of competitors 7 Diversifying services for customers 8 Attracting potential customers and trying to satisfy the existing ones 9 Shifting from old strategies and techniques Table 6: Average attractions of each strategy

8 670 ISSN ; CODEN: SINTE 8 Sci.Int(Lahore),25(3), ,2013 Main factors WIC Average attractions of each strategy Internal factors Technologic environment International environment Economic environment Cultural environment Geographical environment Legal environment Social environment IT environment Political environment Neighboring environment External factors Technologic environment International environment Economic environment Political environment Legal environment Neighboring environment Cultural environment Social environment Geographical environment Table 7: Prioritizing strategies in quantitative strategic planning matrix of Post Company Strategies Final Priority score Making partnership with competitors or establishing profitable cooperation Influencing the market through providing new, fast and high-quality services Developing goods and services through benefiting from undetected strengths and opportunities Widening scope of services and activities based on electronic services while satisfying customers Trying to get ownership of parallel companies Trying to control activities of competitors Diversifying services for customers Attracting potential customers and trying to satisfy the existing ones Shifting from old strategies and techniques REFERENCES 1. Arabi, Mohamad,, Strategic management in human resourcing. Publication of Cultural Researches Office, Alfred D. Chandler, Jr., Strategy and structure: Chapters in the History of Industrial Enterprise (Cambridge, Mass: MIT press, 1962) p David, Fardar Strategic management, Translated by Ali Parsaeian and Seyed Mohamad Arabi, Tehran, Center of Cultural Research Delavar, Ali,, Statistics and research method in humanities, Tehran, Saneii publication, Minztzberg, Henry "Research in Strategy-making, "Proceedings of the academy of Management, 32 nd meeting, pp , Khaki Gholamreza,, Research method in humanities, Tehran, Fara Publication, Noori, Jafar,, "Bioenvironmental assessment of strategic policies of Iran's industrial development using strategic factors analysis approach", Science and Research Journal of environmental technology and sciences, 8 th period, No. 2, pp , Robins, Stiffen P. Organization theory (tructure, design and application), Translated by Mehdi Alvani and Hassan Danaii Fard, Tehran, Safar Eshraqi Publication, 4 th ed Pears. Fred and Daniel. Robinson, "New techniques for strategic planning", Translated by Ahmad Mohammadi, PostBank Journal, 2008, No. 29, pp Safarzadeh, Hossein, Managing human resources and organizational behavior, Tehran, Pooran Pajouhesh Publication, 2 nd vol., 2 nd ed., 2010.