Strategic Management and Governance - Coursework Example

Strategic Management and Governance Strategic Management and Governance Introduction Sustainability refers to the elements where various components and systems are able to exist in harmony and in a productive way in nature. It can be achieved to aid in the permission and fulfillment of social, economic structures of any organization. There has been a great shift from the aspect of globalization within the economics of globalization to attain competitive advantage in the company. The shift has resulted from a number of factors that include governmental policies that are conducted along the societal preferences and the concerns for the creation of sustainable imperatives. According to research, the inclusion of sustainable considerations in the process of formulation usually forms the basis of sustainable competitive advantage for most of the firms. In this relation, it is apparent that it is essential to have a sustainability focus during the formulation of strategy. Subsequently, it is important to critically analyze how this process has helped firms to achieve complete sustainable competitive advantage. Besides, this paper will also evaluate the relevance of the sustainable considerations during the formulation of strategy when an economic recession period is being experienced. Sustainable considerations In strategy formulation, sustainable consideration refers to environmental, social and economic considerations use din strategy formulation. Therefore, there is a great importance that lies in the ability to consolidate various factors that play a certain role in the organization of effective processes and activities within any organization or firm. In the current environment, there are various environmental, social and economic terms that have been developed to refer to the concept of sustainable development. This is in relation to the organization. The most common ones are corporate social responsibility, sustainability and corporate citizenry. The Importance of sustainability-focus in strategy formulation The aspect of sustainability is based on one of the simplest principles. It entails the need to put everything that is required for survival and wellbeing independent on the natural environment in either a direct or indirect way. In this sense, with sustainability, human beings and nature are able to create and sustain an environment that produces product harmony. In turn, this environment can permit the fulfillment of the economic and social requirements among other needs of the present and future generations. Sustainability is a crucial element in the process of corporate management where environmental, financial and social performance in the effort to achieve competitive advantage. The main reason is that it ensures that there is abundance and it will continue to be experienced in the future. It mainly relates to the resources that are needed to protect the vital conditions of human beings as well as the environment. Morrish et. Al. (2010, p. 163), outlines that there is a major connection between sustainability imperatives, the formulation of strategies as well as the role of corporate entrepreneurship. In essence, from a business point of view, the aspect of sustainability can be expressed through the basic means of four dimensions. They include the market, social, financial and environment components. These important elements are supposed to be complimentarily and actively applied in a sustainable corporate strategy. Therefore, the sustainability of a company depends on these factors since it acts as a strategic vision that leads to the long term sustainability of the company. This can be achieved through several strategies. For instance, with the market dimension of corporate performance, the company can maintain and further develop successful and strategic positioning of the market whereas it can use the financial dimension to secure and increase corporate value. In addition, it can apply the social dimension in balancing its important relations with the other stakeholders and use the environmental dimension to protect its resources as much as possible. The focus in sustainability in the formulation of strategies is supposed to be done in a systematic manner. It is with this kind of consideration that most of the firms are able to make considerations on all the sustainable within the process of formulating strategy allows it to realize some additional benefits. They include the reduction of risks, increased efficiency, improvement on the image, coming up with an innovation differentiation strategy as well as the ability to be innovative in many other different ways (Kogut & Zander 2005, p. 1480). The strategies can be used during the performance of the SWOT analysis. This deals with the Strengths, Weaknesses, Opportunities and threats faced by the company. They take place at the initial stage of the formulation process of strategy. It is also a process that takes place during the development and assessment of the various strategic options. With this, the traditional perspective of the element is supplemented through the different sustainability dimensions. It is during the process of development and implementation of strategies that it makes certain that the activities are followed by the actions. They start from the strategic starting point that is followed by the development of strategic options. In turn, it is followed by the strategic development or formulation and finally the strategy implementation and monitoring. The broader views include the environmental and social aspects that frequently enable the firms to gain surprising insights and thus help these firms to achieve new strategic positions that are also interesting. These sustainable aspects are later cascaded down within the management system. For instance, in the central environment and or the social elements which are embedded within it. Usually, it happens next to the market and financial aspects. They achieve the intended function by acting within the set objectives and incentives. Furthermore, the monitoring of strategic elements for example with the use of a sustainability balanced score card plays a vital role in the support of sustainable targets (Mahooney 2001, p. 658). The other common strategy to be applied in relation to sustainability in the development and formulation is the element of sustainability reporting, which refers to the publication of information that is related to varied social, governance and environmental aspects. This is done in a comprehensive and strategic manner through which it reflects the activities and outcomes that are found across the three dimensions of performance within an organization. Analysis of Sustainability focus in Achieving Sustainable Competitive Advantage Over the years, sustainability-focus in strategy formulation has helped firms to achieve sustainable competitive advantage. As indicated by the concept of competitive advantage, the superior performance of any business is correlated with the resources found within the firm. With this, it is evident that the causal ambiguity present between firms is related to its resources and aims at generating a competitive advantage at a level that is highly sustainable. There is also an explanation that is offered to obtain an in depth understanding of the competitors. This understanding is based on the fact that the resources underlie the aspect of performance. This will determine the sustainability strength that is associated with the aspect of competitive advantage. In the event that a firm is not able to overcome the inter-firm causal ambiguity, it does not necessarily result in the imitation of the resources. Johnson (2006, p. 2) indicates that even after the valuable resources possessed by the competitors have been realized, a firm may not be in a good position to imitate as a result of the social context of the resources. It is also related to the based on the availability of the more pursuing alternatives. In particular, there are some resources that include the reputation of the company, which depend on various paths and are accumulated with time. In this regard, a competitor may not be in a position to imitate such resources (Kim & Park 2006, p. 46). The key aspect of the formulation and development of strategy is the ability to establish an advantage over the other competitors (Flint & Golisic 2009, 245). This step makes it difficult for the competitors to copy the advantages that are brought about by the competencies of the firm. The main reason is that they become rare, imperfectly imitable and highly valuable. For this reason, they have very few substitutes that make other factors that are not equivalent to them. The principle competitive challenge is to outperform the competitors in terms of the external and internal constraints. The main aim of this is to satisfy the demands of the consumers since they are undergoing constant change (Barney 2001, p. 81). Most of the companies are constantly under a struggle to obtain a competitive advantage through the use of their resources. These will reveal a competitive advantage and enable the acquisition of a unique position within the marketplace. Ultimately, it helps in the attainment of a superior financial position as is revealed by Flint and Golicic (2009, p. 290).Thus, the ultimate goal of this step is to develop a sustained competitive advantage that means that the implementation by any of the current or potential competitors and when the firms are not able to copy any benefit from the strategies. A sustainable competitive advantage is attained when a firm is able to sustain competitiveness in enterpreneurial landscapes. The influences the way that a company uses its resources and develops them depending on their different capabilities and activities. With this, it focuses on the fostering on the persistence of the competitive advantage that is based on knowledge and innovation. Therefore, the element in any firm can be obtained in the strategy that is employed currently is essential in the creation of value and is not at present being implemented by the present competitors or those that are likely to emerge in the future. Despite the fact that a competitive advantage can be easily sustained, it is not always the case in most of the firms. A firm that is involved in great competition can enter a market while making use of a resource that is capable of invalidating the competitive advantage of the prior firm. As a consequence, it leads to the reduced amount of rents. The sustainability that is found in relation to sustainable competitive advantage is considered to be independent in the sense that it depends and is based on a particular time frame. According to Spangenberg (2004, 79) when sustainability is considered in the context of a competitive form that is sustainable, then competitive advantage is independent with regard to the time frame. However, a competitive advantage becomes more sustainable when the competitors make an effort to make the competitive advantage redundant lesser than it was in the past. For that reason, when the imitative actions have stopped and do not disrupt the competitive advantage in a firm, the strategy of the firm can be said to be sustainable. These views highly contrast those of other people who include Porter who stated that a competitive advantage can only be sustained when it provides long term results that are above average (Santala and Parvinen 2007, p. 162). Many companies obtain the success of competitive advantage by making use of a sustainability focused strategy. A perfect example is eBay Eco-Initiatives that make maximum use of environmental sustainability in its business plan. The online retail firm has an open auction program that enables people from all walks of life to advertise, buy and sell brand new or second hand goods. In this case, the firm specializing in extending the life span of products instead of disposing them off to the pits. The online firm has also a Classifieds part where entrepreneurs buy and sell products within their home locality and reducing the expenditures related to exporting goods to other countries. Given that environmental factors arise when there are exports of goods to other countries, the company has adopted green supply chain management program through partnership with the United States Postal Service. Thus, observes priorities that are friendly to the environment when packaging their products (University of Fransisco, 2014). Also, Google’s environmental Innovations through business innovator has created a greener future that upholds environmental sustainability. This is evident through initiatives like Environmental corporate cultures that bring together goats to trim the grass. Such steps have enabled Google to stand out as an environmental considerate company (University of Fransisco, 2014). . In general, the steps taken by the firms ensure that that they place the core element that is linked to the possession of value chains through the alterations and allowance of activations that serve as the additional potential of the business. With this, it becomes evident that sustainability contributes to the economic viability of a firm since it serves as the main priority and strongly influences the sustainability efforts (Schmid-Schönbein 2004, 19). Relevance of sustainable considerations in strategy formulation during the times of economic recession Sustainable considerations can be applied in a wide range of areas in the society. One of these is the aspect of its usefulness in the formulation of strategies during the times of economic recession. In the contemporary business world, most businesses recognize the relevance of sustainable consideration in strategy formulation during the time of economic recession. This helps such organizations to put in place a vigorous business strategy that plays important roles in the business, especially, during periods of economic recession. In this section, the writer explores the relevance of sustainable consideration in strategy formulation during economic recession. It is important to note that sustainable consideration in strategy formulation during an economic recession is very paramount because in broader terms since any business strategy should endeavor to clearly state the external environmental factors that can negatively impact on the ability of the business to gain a competitive advantage. Sustainability come into play because it reminds the business management to consider long-term external factors that might affect the business. Besides, sustainable consideration in strategy formulation during the period of economic recession is vital in that it helps the business define the position that it is attempting to get into; in the long-term. Additionally, sustainable consideration is imperative in defining the resources that are required in order to be able to gain a competitive advantage. It also helps the business to have long-term strategies that may be viable during economic recession. Generally, there are three broader ways that business can possibly adapt during economic hard times that is during economic recession. These include retrenchment, investments and ambidextrous strategies. In formulating the above strategies that can be useful during economic recession, it is always important to note that in the process of formulating business strategies as part of strategic management process, which includes three major phases. These phases include strategy formulation, strategy implementation and strategy diagnosis. In this regard, a good strategic plan needs to be effective in solving the problems that may be encountered during economic recession, practical, as well as possible to implement not only during those periods of economic hard times but also when there is no economic recession (Barney 2001, p. 100). Additionally, sustainable consideration implies that strategies formulated should be feasible within a reasonable time frame. They should also not be overly disruptive, but they should rather be cost-effective, and generally acceptable to all the stakeholders in the organization. Moreover, it is important also to consider the fact that strategies formulated can be sustained by the available economic resources, as well as the available competencies together with opportunities and risks. Furthermore, sustainable consideration implies that the process of strategic formulation needs to put into consideration the major business objectives and the general strategies of the organizations, which usually would have been recognized as part of the challenges that the company might face in the process of implementing the strategic plan. The plan needs to reelect an appropriate exercise that is expected to culminate in the production of a strategic plan that feasible, acceptable during periods of economic recession. Besides, sustainable consideration also ensures that the implementation of a strategic plan is successful. Besides, it also guarantees that the planning process focuses on change management since the economic depression may trigger a high degree of organizational change. Additionally, sustainable consideration also helps the management to focus on the business process evaluation, which evaluates how the business process has succeeded or failed in the promoting the business achievements (Morrish et. Al., 2010, p. 174). Sustainable consideration also help the management to focus and engage in an in-depth discussion and analysis in regard to how the current business strategies can changes, and how to put in place the possible strategies so as to make it possible to mitigate any possibilities in regard to the business inability to realize its key objectives. Such efforts can be made by putting more emphasis on focus, emphasis and proper timing. Finally, sustainable consideration ensures that the organization puts in place a very robust business strategic plan that is capable of guiding the organization through a recessionary period. Whatever strategy should be well informed with the contemporary best business practices in strategy formulation in response to economic hardship. Conclusion The aspect of sustainability in the areas of strategy formulation and development has come up as a parallel to the globalization of economic markets. It is partly driven by factors such as the increased scarcity of resources, the destruction of the eco systems that results to the growth of consumer pressure. These lead to such topics as social equality, standards within the environment and fair trade. Overall, the aspect of competitive advantage within the business is brought out. It is for this reason that although the issue of sustainability was in the past considered to be a low priority in the corporate field in relation to profitability, it has become a major strategic and competitive issue. Bibliography Barney, J.B., 2001. Firm Resources and Sustained Competitive Advantage. Journal of Management; Vol. 17, (1), pp.99–120. 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(2004) “Reconciling sustainability and growth: Criteria, indicators, policies”, Sustainable Development, 12:74-86 Schmid-Schönbein, Rufer, 2004. Braunschweig: Sustainability: Living off Interest, not Capital, iO new management no. 5 pp. 16 - 23. University of Fransisco, 2014. Three Companies With Best Practices in Environmental Sustainability. Retrieved on 16th December 2014 from http://www.usanfranonline.com/resources/supply-chain-management/three-companies-with-best-practices-in-environmental-sustainability/#.VJBsndKUe9c Read More