Strategic Management Assignment
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1.There are a few key points to unfold when it comes to the definition of strategy. First and foremost, it’s an action plan. A simple idea or notion without an executable framework is not a strategy. For example, developing the human resource department of a company is an idea. Only with a concrete framework of how to do it, is a strategy. Strategy is also output based. Any plan of action with a few pre-determined and unambiguous objectives is not a strategy. Thirdly, it needs to be goal driven. Any output cannot be achieved without driving an organisation’s resources in an objective way, and that is the primary aspect of strategy. In case of an organisational strategy, there is also another very important facet. The plan, execution and its objectives must be accompanied with a vision. Any strategy without an idea of its long-term impact will not work as fruitfully as expected.
There are two parts, rather two processes involved in a strategy. The first one is strategic thinking. It is the process of ideation. After a vision and goals oriented with that vision for the company are well defined, the organisation brainstorms for ides to achieve that goal. This part of goal oriented critical thinking is called strategic thinking (Bolisani, et al., 2017). Next comes the work in action. Strategic planning is the second part where an actual concrete blueprint is developed by the organisation to guide the idea evolved through strategic thinking. Both parts culminate into one function – execution. Which is why strategic thinking always having to be adaptive so that it can mould itself into newer frames as the plan comes into action and new and unexpected problems start arising on the road to achieve the objectives of a company.
Corporate world and its development as a whole, is based on suitable strategy. A long term well thought of strategy can take a company far ahead of its competitors. On the other hand, if it fails, then there can be a financial disaster. In this context there are two main approaches to corporate strategy which needs to be discussed here – the prescriptive strategy and the emergent strategy.
Prescriptive strategy is pre-emptive and predictive. It is done with an approach to advance the company by determining or predicting the market forecast. It is a top-down method. It means that the heads of the company – the CEO and the management establish a vision for the company and develop a list of concrete adjectives that they want to achieve in the long term (Pisano, et al.,2017). In orientation with these goals, a detailed analysis is done of the market characteristics, the demands the economic growth and how they will change, or at least in what direction, over a distinct period of time. Based on the results of this analysis, the management decides upon strategies. These strategies are then micromanaged and directions are sent from the highest to lowest hierarchical level. The managers then direct their own respective departments, categorize the objectives and drive the employees to achieve them. Thus, prescriptive strategy is practically a top-down recommendation based on analysis that employees are supposed to follow. The company management identifies the growth opportunities and scopes for new ventures. An example would be Motorola’s growth strategies. They had a successful business in manufacturing and selling electronic dev ices but when the right opportunity presented itself, they successfully forecasted the market demands and moved on to producing products that aided telecommunication. However, there are quite a few cons that this method has to face. In a market that’s fast paced and constantly changing in terms of customer needs, it is almost impossible to make the exact predictions. Thus, when a strategy is already made and rolled out, it becomes difficult to adapt to the changes and hence only a fraction of the intended goals is ultimately achieved. Another issue is with the formulation of the strategy. Corporations are becoming increasingly democratic. Which means that employees at all levels who have a certain amount of accountability, also have the rights to participate in major policy formation. Thus, a rigid top-down approach keeps them out of the loop and hampers both the levels of employee engagement and employee motivation in the organisation.
A contrast to this process can be found in the emergent approach of corporate strategy. It is a more organic and growth-based process. The emergent approach, being true to its name, does not have strict identified objectives at one point in time. Rather, it believes in developing those objectives with a more fluid, absorptive ideology (Koppman, et al.,2017). A few broader ideas are set out as a company vision statement and the employees are made aware about it. After that, managers at different level, coordinate and collaborate with their respective employees in order to come up with detailed plans that will work for them, establish a set of goals and drive their teams towards achieving them. The employees are heavily involved in determining the objectives of the company and via a feedback system the management decides to adapt to the developments. Instead of a solid plan and micromanaging the departments, this type of strategy moves bottom up, growing and adapting to the changes both in the market and in the workforce as they go. Emergent strategy by its organic nature, can also occur as a chance phenomenon where a decision taken for one reason can completely diversify its results to develop into a long-term company strategy. One example would be Walmart. It developed rural stores due to geographical reasons at first, but it ended up reducing competitions for the company. However, unlike perspective strategy, it sometimes fails due to anonymity between various factions of the same company. In some other cases, opposing views are developed which results to a confusion and the strategy development remains unsuccessful. Also, due to lack of pre planning sometimes the emergent corporate strategy can lead the companies to move without any direction and hence they lose out on golden opportunities that might have helped in growth of the company by leaps and bounds.
3.According to (McDonalds, 2018) SWOT analysis is seen to be a blunt tool when it is applied in case of strategic management. To understand this, it is important understand what SWOT stands for and every aspect of this tool. The word SWOT stands for Strength, Weakness, Opportunity and Threat (GURL, E., 2017). Among these Weakness and Strength are considered as internal factors. The organization exerts certain level of control over these internal factors. On the hand Threat and Opportunity are considered as external factors. An organization essentially has no control over these factors. SWOT analysis is a well known tool for analysis and audit of the total strategic position of a particular business as well as its environment. The goal of this tool is to find strategies through which firm specific business model can be created. Simply stating, SWOT analysis acts as the foundation for evaluation of internal limitations and potentiall as well as identify probable threats and opportunities from the outside environment. The four factors in SWOT analysis have been discussed in the following.
Strength: The specific qualities of an organization that enables it to efficiently accomplish their goals can be regarded as the areas of strength of the organization. Identification of the areas of strength is vital as it allows the organization to achieve continued success and sustain theses successes.
Weakness: The areas of weakness of an organization are the specific qualities that act as a barrier or prevent it from achieving its goal or reaching its full potential (Vlados, 2019). These specific weaknesses deteriorate authority on the growth and success of the organization. In simple words, weakness refers to those aspects of the organization that fail to meet the expected standards.
Opportunity: This is an external factor and opportunities are often provided by the external environment within which the company is operating. Opportunities particularly arise when the organization can take benefit of certain conditions within the environment. During these conditions or situations, the organization can plan as well as execute a number of strategies to make them more profitable. Further the companies also obtain certain level of competitive advantage by properly using these opportunities.
Threats: Threats are particularly seen to rise when external environmental conditions jeopardize the profitability and reliability of the business of the organization. Further, a particular threat to an organization gets compounded when it is related to an organizational weakness. Threats are external factors and so cannot be controlled and can severely affect the survival and stability of the organization.
SWOT analysis, to some extent is instrumental in selection and formulation of strategy. There are some key ways through which SWOT analysis helps in strategic planning. It allows the building of strength within the organization. SWOT analysis can work as a source of information for planning of strategies (Elavarasan, et al., 2020). It can help in maximizing response towards opportunities and at the same time also helps in reversing its weakness. Further this tool helps in identifying the firm’s core competencies, set objectives as to how to plan strategically and overcome the threats to the organization. Lastly it also helps in analyzing future, present and past so that through assessment of current and past data, future plans can be formulated.
However, aside from these advantages, SWOT analysis has quite a few limitations that ultimately makes it a “blunt tool” when applied in case of strategic management. There are many aspects that cannot be properly controlled by an organization after performing a SWOT analysis. These factors involve inputs of raw material, price increase, economic environment and government legislations. Searching for a new market for a particular product that is not having sales in overseas market due to certain import restrictions also falls under the external limitations of SWOT analysis. In addition to this, there are some internal factors affecting the company which are not discussed within the SWOT analysis. These aspects include insufficient development and research facilities, poor industrial relations, Faulty product as a result of underdeveloped quality control, lack of efficient and skilled labor etc (Abdel-Basset, et al., 2018).
Overall it can be concluded that SWOT analysis allows organization to view certain complex circumstances as simple which may result in the organization overlooking some key strategic contact that may occur. In addition, categorizing factors only on the basis of weakness, strength, threats and opportunities may be highly subjective when in reality the market is highly uncertain making it a ‘blunt tool’ in strategic management.
5.Innovation strategy is a corporate strategy thinking and planning framework that any companies have gradually adapted into their vision. Innovation as a strategy means new, creative. It is used to direct the company in a new direction that will both add value and retain the existing customers prioritising the growth for business. The crucial part of innovation strategy is far more than just developing a new idea. It is about incorporating that into the company’s vision and directing the entire organisation to work towards it with all its resources. Innovation strategy is as dynamic, as it is critical. It is not just based on reacting to current trends in the market or forecasting a possible growth in an area, its about adopting a new, out of the box idea that will end up creating a market for itself and in doing so, will give the company a high advantage over its competitors.
The chief obstacle towards implementing the innovation strategy in any organisation is its existing work ethics and vision. All established companies have a vision statement that direct the long term and short-term goals of the organisation. However, innovation is creative thinking taken to an optimal level. Hence, even though there might be quite enough new ideas floated, not all, in fact not most will align with the existing views and consequently the existing managerial policies of the company. There is bound be some friction between the traditional perspective and the new ideas and not all resources will therefore be available to implement those new ideas.
There are a few different models under which innovation strategy might be implement ted:
- The regular/routine model of innovation is where company innovates based on its already existing strengths, thus not bringing any radical change in dynamics.
- Radical innovation on the other hand, simply builds within the line and legacy of the existing company while integrating new methods of functioning, like new technology to control the business.
- Disruptive innovation brings a completely new idea to the market either in terms of product, pricing or service. In this case, it disrupts the existing model of business in the market and forces its competitors to align with itself thus gaining a considerable head start when it comes to customer base and loyalty (Christensen, et al.,2018). This is how Amazon’s shipping policies pushed other companies to provide free shipping options to their customers
- Architectural innovation is a holistic change. When a brand wants to change their face value, their marketing strategies, all while integrating new methods of functioning, it is called architectural innovation, which, needless to say, is the most complicated of the lot.
Innovation strategy is not without its own advantages and disadvantages:
- Being the pioneer in any business opportunity provides a competitive advantage\
- The company establishes a new legacy for itself
- The flexibility of the company results in growing its customer base
- Employees are motivated at the prospect of making a larger impact
- The existing market value of the company might increase
- The stakes are very high, on failure the company loses its reputation
- There are huge number of resources including money, involved to bring about substantial innovation
- If the market risk is not calculated properly then a potential failure can put the company at a huge financial dilemma, coming out of which might be difficult
- In case of failure, future attempts of the company at innovation will always be viewed with a sceptical pair of lenses and the customer will think twice before actually putting their faith in the organisation for a second time.
A company that has taken innovation strategy to a completely new level in terms of their corporate policies, is Amazon. Amazon has used innovation to create such a broad spectrum of business ventures that limitations seem bleak. To do this, it mostly uses the disruptive innovation policy. It makes bold, drastic customer-oriented moves, which when accepted by the customer, forces the company’s competitors to comply with the new market standards. What’s more is that it keeps on innovating in all its business ventures, so that customers constantly get the chance of an updated wholesome experience. They have achieved this feat by employing and encouraging innovators within the company. Amazon follows the classic two pizza rule, when it comes to team formation, that is keeping the teams so small that only two pizzas are enough for them and this drives all the employees to participate and innovate with utmost dedication towards the company’s goals (Denning, 2018).