NGO Strategy - Case Study Example

Supervisor Task Select an organization (company or NGO) and explain its strategy towards the public sector. State the characteristics of the strategy, its processes, and the different kinds of relations developed (interacting with government as a regulator; as a supplier of services; as a partner; as a costumer; by delivering services; by influencing and taking part in public policy making) Task 2 Which are the weak points of this strategy and how do you propose to improve them November, 2008 Table of Contents 1.0 Introduction 1.1 Overview of the Company 1.2 Company Strategy to the Public Sector 1.3 Characteristics of the Company Strategies and relation with Stakeholders 1.4 Weak Point of these Strategies 2.0 Conclusion 1.0 Introduction Andrews (1997: p. 52) defines corporate strategy as "the pattern of decisions in a company that determines and reveals its objectives, purposes, or goals, produces the principal policies and plans for achieving those goals, and defines the range of business the company is to pursue, the kind of economic and human organisation it is or intends to be and the nature of the economic and non-economic contribution it intends to make to its shareholders, employees, customers, and communities". Corporate strategy in effect maps out the businesses in which an organisation intends to compete in a way that focuses resources to convert distinctive capabilities into competitive advantage. (Andrews, 1997). The definition of corporate strategies emphasises the need for the organisation to satisfy the needs of all the stakeholders if the organisation is to achieve its overall objective of maximising shareholder value. Stakeholders include employees, customers and the communities in which the organisation operates. Employees, customers and communities therefore have a significant impact on the success of the organisation and thus on the corporate strategy of the organisation. In formulating corporate strategy, organisations need to identify and priorities strategic issues, which involves scanning, selecting, interpreting and validating information. (Schneider, 1989). The aim of this paper is to explain the strategy of an organisation towards the public sector. The paper also looks into the characteristics of the organisation strategies with respect to the different stakeholders including the public sector. Finally, the paper discusses the weaknesses of the strategy. 1.1 Overview of Company in Question -Dell Computers At the dawn of the 21st century CSR began to gain world wide rapid importance and Dell Computers was amongst the first companies to add CSR into its business philosophy. Dell company was the second largest PC company in 2007 (Dell Company Review 2007). This was thanks to its inbuilt advantage of lower cost and highly efficient supply chain management technology (Dell Company Review 2007). Dell Company is the premier computer system provider worldwide with it highly customized products. However, today competitors are emulating Dell strategy through mass production and just in time production methods. According to the company 2007 annual report, the company currently employs more than 88000 people worldwide. As a multinational technological company, it activities are diverse. It currently sells personal computers, computers related products, servers. Data storage devices, network switches, soft wares and computers (Dell 2007 Company Review). No wonder, the Fortune 500 magazine ranked Dell Computers Corporation 8th on its annual list of most admired companies in the United States. The table below extracted from the company webpage provides a brief summary of its market structure. Items Value in Billion of $ Market Capitalisation 45.09 Revenue 61.133 Total Assets 27.561 Total equity 3735 Employees 82700 The next section discusses Dell strategy with respect to the public sector. 1.2 Company Strategy to the Public Sector Porter (1980) contends that, a company can get a competitive advantage by undergoing key internal activities and modification in its value chain through its network of suppliers and partners. By emphasizing lower costs lower time in its value creation where customers and suppliers are integrated in the entire process, Dell, Computers employ a differentiation strategy to the public sector and cost leadership strategies to the customers. To the public sector, Dell pays all its taxes, operates within industry and environmental standards and above all adheres to laws regulating wages, hours and working conditions. The company systematically carries environmental audit programs to create awareness, sensitivity and openness. According to the company's website, "Dell complies with all the environmental laws and regulations, including ISO 14001 and OHSAS 18001, and manages its facilities with the environment in mind. Dell designs products with up-to-date recyclable materials, using the Reduce, Reuse, and Recycle initiative at its manufacturing site. It commits to taking back old computer parts for recycling". No wonder in 2004, Dell began the "Design for environment program". The product concept and design revolve around Safe operations Extending product life Reducing energy consumption Avoiding environmental sensitive materials Using parts that can be recycled Dell is a model in the CSR doctrine. No wonder, Dell's vision is to create a company culture where environmental excellence is second nature. The company's strategy thus is inline with governmental and public sector regulations and requirements. 1.3 Characteristics of the Company Strategies and relation with Stakeholders Dell Computers business strategy and philosophy is characterized with the Corporate Social Responsibility philosophy (CSR). In recent years, CSR has been subjected to much debate and criticism. Proponents of CSR argue that there is a strong business case for CSR, "in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits". (Sacconi, 2004) "Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; still others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations". (Bulkeley, 2001; Sacconi, 2004).Today more and more companies are engaging in corporate social responsibility reporting, which helps major stakeholders to better understand how the company interacts with its society. (Sacconi, 2004) Many organisations in many countries have begun voluntary disclosure of the social environmental impacts of their activities in their annual reports. (Deecan and Unerman, 2006) These practices which have now become widespread began in many countries in the early 1990s, following considerable advances by a number of large companies to report environmental aspects of their business activities. The disclosures have often been made in the annual reports which include the financial statements comprising the balance sheet, profit and loss account and cash flow statement as well as a statement of shareholders' equity. (Deecan and Unerman, 2006) The content of the social and environmental impact usually comprise of policies, practices and or impact of the reporting organisation on its environment. (Deecan and Unerman, 2006). Dell Computers Corporation is one of the very first companies in the 21st century to make it activities socially responsible. According to the company website and 2007 annual review, businesses have responsibilities to stakeholders to make sure their actions do not cause harm. To the employees, Dell Strategy is to offer an ideal work environment in all the countries and communities where Dell is operating. The company has globally put in place effective staff training and retention programs, Dell also employs people with disabilities and its diversity programs ensure barrier free work place. To customers, Dell offers them a higher value for any product purchase through its competitive pricing and affordable technology. To the investors, Dell ensures that the company is managed with the highest standards to ethics, responsibilities in the best interest of shareholders. The board adheres to corporate governance policies and practices. To its supplier's stakeholders, Dell Computer Corporation promote ethical and socially responsible behaviors by promoting sustainable environmental practices, fundamental human rights, dignity and health with safety. From the 2007 corporate annual report, Dell is a corporate citizen and work closely with local communities in all the locations it operates. The company has a technology given programs for education and community groups, employees are made to donate time and money to worthy courses. Dell also sponsor its direct given programs to communities and groups (Corporate Annual Report 2007). Dell Computers corporate strategy is characterized with CSR requirements, an organisation must assess its organisational strengths and weaknesses, as well as its environmental threats and opportunities, which will enable it choose among alternative courses of action. (Hofer and Schendel, 1984) cited in Schneider, (1998). This indicates that an organisation must perform a SWOT (strengths, weaknesses, opportunities and threats) analysis prior to formulating corporate strategy. A number of factors have been identified as major characteristics of corporate strategy formulation: for example, Kets de Vries and Miller (1984) suggest that managerial personality and experience is an important determinant of the strategy formulation process; Janis (1972) considers group dynamics as an important characteristics affecting the formulation of corporate strategy while Frederickson (1984); Lyles and Mitroff (1985) suggest that organisational structure is also an important characteristics. 1.4 Strength and Weaknesses of these Strategies By relying on the CSR doctrine, Dell Computers can use corporate social responsibility to improve on their performance. Customers have become more concern about CSR and as such tend to promote the products of companies that have improved CSR structures. Employees too would love to work in a company with well-developed corporate social responsibility structures. A study by Bansal and Roth (2000) analysing 53 firms in the United Kingdom and Japan reveal that there are three motives for engaging in CSR: competitiveness, legitimation, and ecological responsibility. Therefore a company that has a good CSR policy is likely to be more competitive than one that has a poor CSR policy. In addition, such a company will quickly gain legitimation which will go a long way to increase acceptance of its products by the community and thus increase its sales performance as well as overall profitability. Proponents of CSR argue that there is a strong business case for CSR, "in that corporations benefit in multiple ways by operating with a perspective broader and longer than their own immediate, short-term profits". (Sacconi, 2004) "Critics argue that CSR distracts from the fundamental economic role of businesses; others argue that it is nothing more than superficial window-dressing; still others argue that it is an attempt to pre-empt the role of governments as a watchdog over powerful multinational corporations". (Bulkeley, 2001; Sacconi, 2004).Today more and more companies are engaging in corporate social responsibility reporting, which helps major stakeholders to better understand how the company interacts with its society. (Sacconi, 2004) Forman & Componova (2004) argued that poor strategies are result from mission and vision statement. The researchers argue that, misuse of this statement is so common and over time hard work is necessary for revival. They caution that, "Unless mission and vision reflect the core values, capabilities, and goals of individual organisations, they cannot shape current and future operations and therefore soon become clichs" (Forman & Componova 2004:7). Thus, through the CSR philosophy this is corrected. 2.0 Conclusion From the foregoing discussion, one can conclude that major stakeholders of an organisation have increased their concern on how the activities of the organisation affect the social and environmental setting in which they operate. Organizational strategies in order to be successful must be coined and defined within the expectations of different stakeholders. As a result there has been an increase in the requirements from companies. These issues pose significant challenges for companies as far as their competitive position and long-term performance is concerned. Consequently, it is necessary for companies to design CSR policies that would enable customers and other major stakeholders to perceive them as genuine companies. Such an approach will go a long way to improve the competitive position and long-term performance of the company. No wonder, companies like Dell has incorporated this in their mission and vision statements. References Andrews K. (1997). Resources and Strategy: A Reader, edited by Nicolai J. Foss. Oxford University Press, ISBN 0198781792, 9780198781790 Bansal P., Roth K. (2000). Why Companies Go Green: A Model of Ecological Responsiveness The Academy of Management Journal, Vol. 43, No. 4 pages. 717-736 Brignall S., Ballantine J. (1994). Performance Measurement in Service Business. International Journals of Service Industry Management. Vol. 7(1), pp 6-31. MCB University Press 0956-4233 Bulkeley, H. (2001). Governing Climate Change: The Politics and Risks Society. Transactions of the Institute of British Geographers, New Series, vol. 26, No. 4, pages 430-447 Deecan C., Unerman J. (2006). Financial Accounting Theory. European Edition McGraw-Hill Feldman, M. S., and J. G. March (1981) "Information in organizations as signal and bol", Administrative Science Quarterly, vol. 26, pp. 171-186. 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