Corporate strategy and its integrated nature. Volkswagen case - Essay Example

?Introduction Corporate strategy is an integrated process as it requires a collaborative effort at the organization wide level to ensure that the overall objectives of the organization are achieved. Integrated nature of the strategy outlines that the different organizational resources are combined together to execute the corporate level strategy and achieve the strategic objectives of the firm. It’s also because of this reason that strategy as a process is considered as an iterative process where the firms keep on adjusting and changing their strategies in order to successfully negotiate with their external environment. Strategy therefore outlines as to how the firm, by utilizing its internal strengths can take up the opportunities offered by the external environment while at the same time negotiating with the threats faced. There are four key dimensions of any business strategy involving the strategy formulation under which organizations actually formulate the strategy, the analysis dimension under which the firms perform the strategic analysis before any strategic option is chose, choosing the right strategy and finally implementing the same. These four key dimensions of a well developed business strategy therefore require a collaborative and integrated approach to make a business strategy successful. It is through all these key dimensions that a firm reaches at a point where it can achieve its organizational objectives. This report will discuss as to what is a successful business strategy by discussing the key dimensions of the business and discussing the same with respect to the Volkswagen group. Corporate Strategy and its integrated nature Johnson and Scholes define strategy in following manner: “Strategy is the direction and scope of an organisation over the long-term: which achieves advantage for the organisation through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfil stakeholder expectations".1 The above definition suggests that strategy is the name of setting an overall direction for the firm on long term basis. What is also important to note that it outlines the need for achieving a configuration with the organizational resources while working in an uncertain and challenging external environment to achieve the kind of advantage which can fulfill the expectations developed by the stakeholders? The above definition is quite comprehensive in the sense that it outlines as to how the integration of different elements together can provide the firm the kind of advantage to achieve its objectives. Without setting a direction and configuring it with the organizational resources, it may not be possible for a firm to achieve its organizational goals. Volkswagen Group has set up a strategy of achieving its growth through expansion in the emerging markets. It is also aiming to consolidate its position in the existing markets while at the same time achieving the set financial targets to be achieved in medium and short term. A closer analysis of this would suggest that the group is actually aiming to develop a two pronged strategy of consolidating in the existing markets while at the same time achieving the expansion in new markets.2 Evaluating the same in the light of above definition would suggest that the firm’s strategy is clearly focused upon meeting the expectations of its stakeholders by using its traditional advantage in its existing markets while at the same time configuring its resources to gain access to the emerging markets. It is also important to understand that an organization is a collection of different resources which are combined together to achieve the common objectives. For example, a firm’s excellent production system and high quality output may not sell itself unless it’s backed up by excellent marketing resources. Similarly, despite having the capability to produce high quality products, a firm may not be able to achieve the same if it does not have access to finances. As such strategy is therefore of integrated nature and may not provide the desired results if its executed on stand alone basis.3 Key dimensions of a successful business strategy In order to successfully develop a business strategy, it is important that it must have four key elements to make it successful. The first key element is the process of formulating the strategy itself however, before the same could be achieved, it is important to conduct an strategic analysis. Strategic analysis involves a careful evaluation of the internal and external environment of the firm and how both the environments can actually affect the firm and its strategy. While evaluating internal environment of the organization, many firms often adapt tools like SWOT analysis to identify their strengths, weaknesses, opportunities and threats. The idea is to actually how a firm can use its strengths to successful take advantage of the opportunities while at the same time negotiate with the threats.4 This analysis however, may not be sufficient if it’s not backed up by analysis of the firm’s external environment. Scanning of external environment of the firm is often performed with the help of tools like PESTLE analysis which can offer the firm a critical insight into its political, economic, social, technological, legal and environmental factors and how they can affect it. Once this is done, the next stage involves making a choice between different strategies identified after performing the internal and external analysis. The final dimension of a successful business strategy is its implementation based on the above process.5 Considering the above key dimensions, if we take the example of Volkswagen’s decision to enter into Indian market, we will come to know that the firm will have to actually perform the assessment of external environment of India with the help of PESTLE analysis and subsequently can decide as to whether the firm can enter into this market through a wholly owned subsidiary or by forming the strategic alliances with the local players in Indian market. Conclusion A successful business strategy requires an integrated approach where the firm must take into accounts its existing resources to take advantage of the opportunities offered by the external environment of the firm. What is also important to understand that a successful business strategy requires a step by step process of strategic analysis, strategic choice and strategy implementation to achieve the desired organizational objectives. References 1. Johnson, G, Scholes, K, Whittington, R Exploring Corporate Strategy, 8th Edition, FT Prentice Hall, Essex, 2008 2. Volkswagen Group firms up “Strategy 2018” Website. Available at http://www.volkswagenag.com/vwag/vwcorp/info_center/en/news/2010/02/Investor_Day.html Accessed March 18, 2011 3. Lamb, Robert, Boyden Competitive strategic management, Englewood Cliffs, NJ: Prentice-Hall, 1984 4. Hamel, G. & Prahalad, C.K. “The Core Competence of the Corporation”, Harvard Business Review, May–June 1990. 5. Barney, J. Firm Resources and Sustainable Competitive Advantage”, Journal of Management, 1991:17 Read More