Strategic Management - Strategic Capabilities and Organizational Culture - Essay Example

Strategic Management Contents Contents 2 Strategic Capabilities 3 Organizational Culture 7 Global or Sustainable Operations 9 Strategic Options 10 Strategy in Action 11 Strategy Development 11 Strategic Change 12 Different Frameworks 16 References 21 Strategic Capabilities Vodafone is the largest telecommunication company in respect of its turnover and in relation to the client base the company is ranked as second largest. The company has its headquarters in UK in Newbury. The company has been estimated to have a market value of £75 billion. The company over the years has been able to sustain in some highly competitive market because of its good network availability and constantly upgrading its services so as to meet the consumer demand in different market segments. The company has currently its business operations spread over 25 countries and it has even entered into network partnerships in over 43 countries. The company because of its innovative services has been able to maximize its revenue growth over the years. The company has been able to secure goo profit margins amongst tough competition but in the recent years the net profit margin has shown a decline because of its acquisitions. There exist different forms of strategies that a company undertakes when the competition is fierce in the market place or when the company finds that there is greater scope in a completely different market segment that would be helpful for the company for long run. Strategic management is an important course of action for any organization in today’s dynamic and changing market conditions. Similarly maintaining market leadership is major concern area for Vodafone in the markets of UK. This has also resulted in provided digital convergence by delivering digital services and content through converged networks such as IP networks to devices such as laptops, PCs, smartphones, etc., with the help of various converged applications. These applications are mainly in the form of music streaming on a handheld device or on PC. Bundling services are the major demand in the market place as the number of players in the telecommunication sector is increasing it is giving more chance to the customers to switch over to any other telecom service provider. The strategic development towards change is majorly because of many new forms of technologies in the market. The communication market segment is very dynamic in nature and there is a constant invention of brand new forms of technologies and applications. There has also been a growth in consumer mobility which has given rise to many new form of application such as cloud systems. As the competition is very strong in the markets of UK it has resulted into great opportunity for those players who want to enter into the communications world. This has resulted into more number of new entrants in the market and even decrease in price levels for the services being offered by the service providers. Vodafone Company has the main goal to remain the leader in the communication world which can only be achieved by management of its business strategies and even formulation of new strategies so as to sustain in the highly competitive business environment. Strategic capabilities comprise of the resources and the core competencies that are possessed by any company. These core competencies form the basis on which a company can develop its competitive advantage for long run. The core competencies that forms the capability of an organization has two basic parts one is the resources that are possessed by an organization and the other is competencies that states that which job is executed the best by the company. As per the case of Vodafone Company the company has been able to maintain a good percentage of market shares and is also expanding its business operations through acquisitions and partnerships. The company has been able to remain as the market leader in the cellphone industry and has expanded its empire to over 26 countries. The major resources that the company possess is a good financial strength to further diversify or expand its operations to untapped market, the company even possess skilled workforce who works towards maintaining the market leader position of the company by offering the best of services to the customers. The other factor is competencies that are possessed by the company and it has two kinds of capabilities such as threshold capability and distinctive capability. The threshold capability is those capabilities that help a company to compete in the market place. The threshold capability that are possessed by Vodafone Company is the high quality superior service that the company offers to its customers and its high brand awareness in the different markets of its operations including UK that gives them a chance to acquire more of customer base. The distinctive capability is the factor possessed by a company that gives them a competitive advantage over the others. This kind of capability helps the company to acquire a competitive position in the industry. The distinctive capability that is possessed by Vodafone is its strong network infrastructure. The company has been able to build a brand image because of its good network connections. The other such capability that the company has is its diversified geographical portfolio that has given the company a strong base in the market place. It has able to sustain its operations over 26 countries and gains high profit margins. The other such capability is the use of one single brand Vodafone for integration of all its subsidiaries. Both the threshold and distinctive capability are the major factors that drive the growth of Vodafone in markets of UK. The resource based view is a model that identifies the resources possessed by a company as a key to the organizational performance. The concept of resource based view was invented in 1990s as a method to achieve competitive advantage in the market place. According to this model it is very much important for any company to look inside the system for identification of various sources that can provide the company with a competitive advantage rather than analyzing the outside competitive environment. The below given below illustrates the resources of a company and the key point of importance in relation to Vodafone Company – The tangible resources possessed by Vodafone are its infrastructure, financial arm and the skilled work force of the company. The intangible resources of the company comprise of skills, expertise, network infrastructure, diversified geographical area and its wide range of business operations. There are two assumptions of this model towards the resources possessed by a company one is heterogeneous resources and the other is immobile resources. The heterogeneous resources comprises of the skills of the workforce of Vodafone and its capabilities such as good network infrastructure and a strong financial strength that cannot be easily copied by any other players in the market place. This factor can also comprise of brand reputation that is developed by a company over many years. Similarly is the case of Vodafone whose quality services and brand image that it has build over the year’s forms its main competitive advantage and cannot be easily imitated by competitors. The other assumption of this model is that resources of a company are immobile and it cannot move from one company to the other. On basis of this assumption it is also stated that strategies that is formulated by one company cannot be duplicated by any other player. The VRIO framework of the model states that whether the resources possessed by the company is valuable, rare, costly, and organized enough so that they can achieve a competitive advantage in the market place. This is further illustrated in the diagram below- The resources that Vodafone Company possesses are valuable since it possesses the market leader position and it is rare as it requires more of market analysis and experience in the industry that can only be achieved by time. The resources are costly to imitate as if other players try to acquire other networks or form partnerships like that of Vodafone it would require more of investment. However the resources that are possessed by the company forms temporary competitive advantage as more players are emerging in the market which is given rise to more of innovative services and applications. Hence there is a need that Vodafone continuously develop new strategies so as to sustain in the market and make its resources a sustained competitive advantage. Organizational Culture Organizational culture can be defined as the behaviours and culture that has a unique contribution towards the psychological and social environment of a company. The cultural aspect of an organization includes visions, norms, and values, systems, working languages, beliefs, habits and symbols. It can also be considered as a collaborative form of behaviour and values that are taught to the new individuals. The organizational culture also has an impact on the groups and people and the way they interact with stakeholders and clients. Schultz and Ravasi (2006) had clearly described in their work that organizational culture is a collection of mental values that are shared so as to guide action and interpretation in organizations by setting some significant behaviours for any particular situation. Needle (2004) in his works stated that organizational culture represents more of collective beliefs, values and principles of the members of an organization and is even derived from factors such as market, technology, history, type of employees, product strategy, national cultures and management styles. On the contrary corporate culture reflects those sets of values and beliefs that have been created by management so as to reach the strategic goals. The organizational culture comprises mainly of four elements as stated in the diagram below- The major goal of the organizational culture at Vodafone is to expand the employee base both in terms of nationality as well as gender. The company tries to maintain high performance standards for its work and even aims at maintaining good relationships with their employees by providing them with all kinds of benefits and even engaging the employees to give strategic directions to the company. The organizational culture of Vodafone is stated as ‘The Vodafone Way’ through which the way of working in the system is consistent, while maintaining the level of trust and even having simplicity in business operations. The company focuses on developing ownership mentality amongst the employee base so that they perform well in the system and even the rewards are so designed that the employees are acknowledged on the basis of their ownership mentality. The company takes active measures towards leadership developing and even developing talents in the system so that the company can accomplish its goal of being the communication leader in the industry. Global or Sustainable Operations An organization needs to manage all its business operations very effectively because they it helps the company to achieve sustainability in the market place. As per the case Vodafone Company has its operations globally spread to across 26 countries where it has been able to maintain a market position over the years. The company operates in a highly competitive industry of telecommunication sector that enforces Vodafone to develop new strategies and come up with new innovative service line. The company even focuses on delivering quality service so that they are able to build a sustainable future. Their vision lies in operating in such a way so that they can benefit the economy, society and even its stakeholder base that is situated worldwide. They expand their business operations with the common objective to deliver the best of mobile services across the world and even maintaining a good relationship with all its partner networks. The company’s operations are surrounding the interests of people where they deliver safe telecom services to the customer base so that the information of the customers are kept secured and even it respects the privacy of its customers. The company not only expands its business operations and works in collaboration with all its partners so that the quality of its service is not compromised and even they take into account the needs and wants of its customers so as to sustain its existing customer base and then acquire new ones. Strategic Options Vodafone Company has been able to sustain in the telecom industry simple because of its constant evolution of innovative services and market expansion strategy that it adopts. This strategy has enabled the company to enter into new markets and sustain its operations in the market. The company over the years has applied globalization, innovation and diversification strategies. The company has adopted low diversification strategy in its operations of providing cell phone services. The Vodafone Group has been able to maintain is expanded market share simply because it transfers its core competencies to its partners across various networks and even shares its activities. The company has been able to market growth through partner network agreements and even various horizontal acquisitions. The company has the strategic option in terms of diversification as to expand its operations to new emerging economies and even enter into a new market such as France. The company can even strengthen its operations in the markets of US. The company can even strengthen its capital so as to do more of investments in the broadband and mobile sector. The company needs to strengthen its operations in emerging economies by providing more of value and reducing the cost associated with such service. The company can further diversify into fixed line services and enter into a completely new market through gradual acquisitions. Internationalization is the strategic option for Vodafone Company over the years and it has proved to be a favourable condition for the company as it has gained more market share and a large customer base. With the invention of new mobile devices and applications there has been great demand in the consumer market towards the telecom service providers. This in turn has given a lot of opportunity to such service providers to capture the demand and generate revenue ad has even given the opportunity to Vodafone Company to expand its operations across 26 countries. The company has further strategic options to enter into some of the untapped markets of various countries and even offer services to some of the remote locations in the world where other players could not enter simply because of a not so suitable network infrastructure that is needed to support business operations in such remote places. The other strategic option that is available to the company is in form of innovative services that it can aim at developing in its business operations. The telecom service providers cannot do much of differences in the services they offer but still innovation can be incorporated as per the hidden demand of the consumers. As per the consumer mobility the company can aim at providing services that supports cloud computing or even offer some form of service bundling so that the company can offer value addition to the services they offer to the customers. The company can even opt for upgrading mobile network connections. The company can even plan strategies so as to capture the fixed line market and even adopt the necessary technology in order to eliminate the entire speed gap with any fixed line networks. Strategy in Action Strategy Development The strategy development phase is the initial phase that is undertaken before making any strategy as a fixed change in the system. The strategy development comprises of various elements that needs to be thought about by the management before implementing such a change. The first element is that of external analysis or the recognition phase of the strategy. The second step is of the internal analysis and that is also regarded as the choice phase. The third is the endorsement phase where the commitments are set to make such a strategy incorporated into the system and the last is the alignment phase where the strategy is finally incorporated. These are the steps that need to be undertaken by Vodafone Company before adopting any measures for the global market or for the markets of UK. Strategic Change Strategic changes are mainly triggered by a number of factors and these factors were well formulated by Tichy. Tichy’s work on strategic changes clearly illustrates those there four main causes of change. The first cause for such change is the changing environment that relates to the economical changes that is taken place and even the increased competition in the business environment. The second cause for change is business relationships that denote new business lines and even new form of alliances. The third factor behind such strategic change is the technological development and the last factor as per the theory is people or the new entrants in the organization that fosters such a change. Vodafone as per the theory has encountered two main factors that has triggered for a strategic change that is of technological development and increased competition in the markets of UK. The big three model of change was formulated by Kanter, Jick and Stein in the year 1992 and it stated that three elements for a strategic change that is applicable for any company. They are movement, form and roles. The movement relates to change catalysts that states three kinds of movements for a change such as macro evolutionary change, micro evolutionary change, and revolutionary movement. All of the changes are in context of the amount of impact that a change can cause to the organization or the environment. The second factor of the theory is articulating change or form that states there are three changes such as identity, control and co-ordination changes. Finally there are three role specific roles of implementing changes such as change implementers who implements the change, change strategist who structure the plan for the change and change recipients those who faces such a change. The strategic changes can be further governed with the help of the theory as formulated by Kanter which is known as the three stage prescriptive approach. This theory states that there are three stages for organizational change – the identity of the organization that is changing or needs a change to be incorporated for further growth, the second factor is the issues related to transition and various coordination problems as the organization moves from one stage to another in the lifecycle, and the third factor is controlling the political conditions of the organization. The strategic changes that Vodafone is opting for in the markets of UK are based on the industry life cycle movements that are stated in the prescriptive approach. The company needs to develop a basic transition change as the services that company provides has reached its maturity phase which demands some more of innovative service lines so as to sustain in the competitive market place of UK. Kurt-Lewin has developed the three stage model for organizational change in the late 1950s and it still forms the cornerstone of the change management in an organization. The three step change model encompasses factors such as unfreeze, transition and freeze. These stages is very effective for Vodafone as its strategic change option to either enter into new emerging markets or develop new technology based services would require this model so that the change is effective. The first phase is of unfreeze that aims at reducing the forces that restrict the workforce to think differently and even make them realize the need that lies towards adopting such a change. The transition stage would require the management of Vodafone to take effective measures towards removing any confusion in the minds of employees in moving towards new ways from old ways. This phase even encompasses developing some new behaviours, values and attitudes and even doing some form of structural changes in the system. The last stage is of freezing that requires the company to take strong measures so that the change that is implemented forms part of its corporate culture. The Emergent Approach to Change encounters some of the emergent factors that were not so forecasted to take place in the change implementation phase. The emergent approach of change relates to the unpredictable and the developing nature of change. The emergent approach underlines that there are multiple variables that interplays within an organization for a change. The rational of this approach states that change cannot be solidified under any such circumstances. The change is rather seen as disruptions, unforeseen events, opportunities and breakdowns that rise within a given time period. The emergent approach also states that the change cannot be driven by any experts but it is an important role of the managers within the system. Thus it would be very essential for Vodafone Company to adopt certain measures before it incorporates any such change in its business operations in UK and even consider the outcomes that can result from implementing the change in the system. Peter Senge stated in his works of learning theory that a learning organization is one in which a group of individuals work together so as to create desirable outcomes for the organization. There are five disciplines in the learning theory that needs to be considered by Vodafone so that it is able to sustain global operations and develop more of innovative ideas. The first discipline is systems thinking that states organizations are basically a system of relationships and all the problems associated with such relationships needs to be effectively met so as to outperform in the industry. The second discipline is of personal mastery that states individual’s forms the major role in a learning organization. The next discipline is mental models that states mindsets and theories forms the basis of structuring the functions of the organization. The next discipline is of shared vision that states all of the employees working in an organization should have a common vision. The last discipline of the theory is team learning that states group discussion and effective team learning is very essential for the growth of an organization. The theory stated by Pettigrew and Whipp clearly outlines that there are five factors that governs strategic change. The first factor is environmental assessment that is carried out by a thorough analysis of the all the prevailing factors in the environment that would facilitate such a change and even adopt measures against those that would not support any such strategic change. The second element is of leading change through which the change was formed needs to incorporated across all the departments of the organization and this is a major responsibility of leader. The third factor is to link the operational change and strategic change in the system so that a common objective is accomplished. The fourth factor of concern is strategic management of human resources so that the change is carried on appropriately and so that they are able to accept such a change in the organization and perform as per the standards. The last factor in the five factor theory is that of coherence in the change management that mainly depicts the level of feasibility, consistency, and the competitive advantages possessed by the organization. The model of the theory is given below- The theory clearly states that if Vodafone needs to sustain its operations in the global market it needs to work in accordance with the strategic management of human resources in the system, to convey the need for bringing in such a change, proper analysis of the environment before adopting any such change and to link its operational areas with strategic change so that the change is incorporated throughout the system. Different Frameworks The VRIN model is a framework that is required by an organization to evaluate whether the resources that are available to the company are capable enough to form its competitive advantage or not. The model comprises of four important factors used to evaluate resources that are valuable, rare, in-imitable, and non substitutable. The resources of Vodafone Company are its financial arm, skilled human resource, strategic network partnerships, expertise, wide geographical portfolio, brand awareness and exceptional customer service. These resources as per the model create value for the company and even help to reduce its weaknesses so that it can outperform its competitors. The resources are rare and cannot be duplicated by any other players and even given strategic returns. These resources are controlled only by Vodafone and hence are in-imitable by nature. However the resources do not fit into the last factor of the model that is non-substitutable. These resources can be substituted by any other element by other players in the market. Benchmarking forms another strategic tool that is required by a company to plan its strategies and even measure its performance in relation to other players in the market. Benchmarking is an effective tool that helps the company to understand the current position of its competitors in comparison to of its own so that better strategies can be developed by the company to outperform the competition. The major players in the telecommunication industry of UK comprise of British telecommunication, Orange, Virgin Media, Cable & Wireless, and O2. Vodafone in midst of this tough competition can adopt the strategic framework by benchmarking its operations in relation to that of competitors in the areas such as level of customer satisfaction, net profit margins, market share and brand reputation so as to analyze its level of performance in the UK market. The value chain model of an organization is to determine the various operations in the system so as to deliver products or services to the end user. Vodafone Company has been known for its quality services and the model of its value chain is given below- The model clearly states that the main elements of the value chain of Vodafone Company is the equipment providers, implementers, application providers, content providers, network operators and service providers. These departments are managed by the company so as to deliver quality service to its customer base. SWOT analysis is a strategic framework that is used to determine the internal strengths and weakness of a company and even to identify the external opportunities and threats of a company that would be advantageous for the business operations of the company in long term. The major strengths of Vodafone Company is that diversification in its geographical portfolio, high brand awareness, good network infrastructure, integration of all the subsidiaries under the same brand name of Vodafone, and superior customer service. The weakness of the company is that the company has no presence in the markets of Africa, Latin America and any such markets. The company has weak presence in the markets of US. The company has most of its business generated in the markets of Europe. The opportunities for the company is that it can capture growing emerging markets, the company can learn more from China mobile market, and more of research and development of various new innovative mobile technologies such as 4G and 3G network coverage. The threat of the market is a highly competitive market place, it still lags behind many such telecom service providers in different markets and even in UK, and even there is high penetration strategies that are adopted by companies in the markets of UK. The generic strategy model outlines the most suitable option that is available to a company and it was designed by Michael Porter and is stated below- (Hill & Jones, 2012, p. 145) As per the model the best suitable strategy that can be adopted by Vodafone so as to sustain in the markets of UK is to adopt the overall cost leadership strategy. This strategy would help the company to occupy a broader competitive scope and generate more of profit margins by offering its services as the lowest cost possible. The cultural web comprises of certain factors that is used to measure the strengths and weakness of a company in respect of the company culture. The culture web comprises of four important factors such as power culture, task culture, role culture and personal culture. The power culture of Vodafone represents its hierarchical organizational structure that is required to control the overall business operations, the task culture represents its ethics of performing business operations, the role culture is the effective participation of the leaders that allocates and then directs the group towards a common goal as the company focuses on developing ownership quality in all individuals, and the personal culture is building strong relationship and harmony in the system. As per the stakeholder analysis Vodafone as the largest telecommunication service provider performs its operations in common interest of all the stakeholders may that be partners, shareholders, customers, or even employees. The major focus of the company to deliver the best of services meeting all the demands of different stakeholders and even taking strategic actions through a proper discussion with all the key stakeholders whose opinions would benefit the company to a great extent. References Hill, C. & Jones, G. R. 2012. Strategic Management Theory: An Integrated Approach. Hampshire: Cengage Learning. Read More