Implementation, Control and Evaluation of Strategic Decisions - Term Paper Example

 «Implementation, control and evaluation of strategic decisions» Introduction Complicated, modern business environments require multinational company leadership to work consistently at creating strategic and competitive advantage for their firms. Since there are a wide variety of multinational companies competing in different foreign markets, oftentimes specialising in similar product variety, it becomes increasingly important to recognise issues of cost, marketing, and ensuring that the business fully understands the activities of competition. Being able to make the company stand out as a leader and as one with profit success requires a dynamic leader with the foresight to plan for the future, a process understood as strategic planning. Strategic planning involves understanding the market environment where specific products are being sold, such as the consumer’s behaviour patterns, to recognise areas where the business can improve. Is the product efficient for consumer needs or does it require adjustment in order to outperform competition? Does the foreign buyer have any preconceived notions of doing business with a representative from a Westernised country? These are only a few questions which executive managers and other high-profile business leaders must consider in order to make the multinational enterprise experience success. In addition, the strategic planning process should recognise opportunities for further growth, to cut costs whenever possible, and overall improve the competitive position of the firm. The overall point of strategic planning is to identify opportunities for better business outcomes, best defined as what brings value and benefit to both the short- and long-term profitability of the business. Value can be defined in terms of profit, growth or excellence in total company or competitive performance. This paper describes how strategic planning is utilised for multinational firms, evaluating various methods of execution, evaluation and control required for successful planning efforts. The planning process In the multinational business environment, maintaining an understanding of the business environment, competition and the buyer are key success factors. Utilising the PEST Analysis template, which describes the political, economic, social and technological environment, strategic planners can determine how best to position the business. For instance, in the foreign operating environment, issues such as tariff restrictions or import volume compliance will clearly impact both profitability and expansion expectations. Economic conditions can include the available financial resources for the indigenous buying population or even the health of the regional, foreign government. Social conditions can include whether violence is present in the buying community, whether consumer lifestyle preferences will impact product perceptions (Boone & Kurtz, 2007) or whether quality relationships exist between government and business or citizens. The technological environment consists of various software programmes which can enhance the business or even the level of technological capacity available in the foreign region. The PEST analysis is designed to allow the strategic planner to view the company as it currently exists and determine whether external factors are favourable for business improvement or development. When there are situations uncovered through research which identify potential problems toward meeting a strategic goal, it allows for rapid decision-making to combat the issue. In essence, a careful PEST Analysis creates awareness as a tool for better business and the provision of policies which will not become obsolete due to simple lack of external oversight. Porter’s Five Forces model, in addition, is a valuable strategic planning tool for the multinational enterprise. This model recognises the threat of new entrants, supplier power, competitive rivalry, buying power and the threat of substitute products (Strategic Advantage, 2005). A multinational enterprise, especially one operating in a highly-saturated market, will have a wide variety of competition. Porter’s model allows the strategic planner to consider whether the supplier maintains any level of control over the provision of product as well as whether the company’s product is sufficiently positioned (from a marketing perspective) to outperform competitive brands. Five Forces further assists in determining whether new companies will be entering the foreign operating environment with similar products and whether substitute products can erode total business profitability. If the business leader determined through a careful analysis of potential forces that the business was about to face increased competition from a new entrant, the strategist would want to look at how the company is actually entering. Are they utilising promotional material which is congruent to the needs of the buying community? Is their product actual superior to the firm’s? Has the business partnered with any other business to enhance the image of their product? Though not every multinational business maintains a specific sales product, it is important to fully understand what might drive risk to the business’ long-term competitive position and work to combat these problems with continuous planning and assessment. Whenever the analysis uncovers opportunities for improvement, and the executive leader is prepared to change processes or policies to achieve them, strategic planning has added value to the business. Though the PEST Analysis and Porter’s Five Forces models are not the only viable methods available for strategic planning, these models do tend to highlight the majority of situations which a multinational enterprise is likely to encounter in the process of doing business both domestically and in foreign environments. They provide the strategic planner with the opportunity to asses all aspects of business relationships from the supplier right to the seller in order to recognise where weaknesses exist in the entire value chain for the business. The implementation of strategy is largely determined by the culture which exists within the organisation and the specific goal which the company is trying to achieve. Malek and Narayanan (2008) offer that the structure of the business will dictate whether strategy can be implemented effectively. For instant, flat hierarchies without a great deal of middle management leadership are generally effective at motivating staff under perceptions of increased autonomy. When strategic decisions have been made and policies are expected to be complied with, the executive leader will require the assistance of junior-level managers to ensure that the multinational business needs are fulfilled. Thus, maintaining a minimal leadership hierarchy will boost internal incentive to conform to issues such as identifying areas of improvement, performing job role functions efficiently and ensuring a sense of loyalty for the senior manager. Malek and Narayanan again offer that at the organisation level, strategy implementation requires the collaborative efforts of multiple staff to get the job completed appropriately and to strategic guidelines. At the portfolio level of strategic implementation, issues of cost control and, when appropriate, marketing tactics should be considered. Is the product selling as expected or should further consumer research be conducted? Can the product be manufactured in a different business environment as a means to save costs for raw materials distribution? Asking questions such as these will create quality solutions which will drive further business success, with the strategic planner ensuring implementation by controlling the activities of staff. Delegating specific assignment tasks and maintaining a presence while these activities are being undertaken ensures both an authoritative role for the executive leader and ensuring the work is done to expectations. The business leader must also consider issues of implementation from an individual level, concerning the level to which the strategist can become actively involved in carrying out strategic goals. Does the change require specific expertise which the senior leader lacks, such as a specialised knowledge of marketing or sales functions? Perhaps the problem with the business is at the technological level, requiring an expert in software and data applications. There are likely times in which the strategic leader must remain a casual observer and reinforce the integrity of others’ contributions and expertise in order to build a winning team filled with motivated workers/subordinate managers who are willing to comply and conform. Business leaders who wish to command a better public image will also have to be concerned about implementation, especially if the marketing message is important enough. Smith (2005) argues that the most important element to sending an important marketing message is power, or having the ability to dominate over the receiving audience. In a hypothetical business situation where the strategic leader requires the business to position itself as an ethical business with the highest levels of moral business practices, the manager will require all marketing literature to reflect this. Combined with media messages and physical company representation, the manager ensures that the multinational business utilises power to capture the attention of either the foreign or domestic audience. This can be accomplished through any variety of creative marketing campaign, however it reinforces the necessity for power in the role of strategy implementation. Outside of implementation is control, which is closely tied to leadership behaviour. As previously identified, implementing strategy involves ensuring all target groups in the business are focused on individual tasks. Control is dictating specific times in which to report progress, eliciting information in the pursuit of organisational support, and maintaining a presence in the operating environment (amongst countless others). However, control is not only about maintaining an authoritarian attitude, but also takes the uncontrollable situation and makes it controllable through strategic planning. For instance, Slywotzsky and Hoban (2007) offer that many of today’s companies try to constantly outperform one another to the point where the firms have competed themselves to death. They suggest utilising various strategic partnerships to bring a wide variety of value to the business, such as by sharing back-office space in warehousing environments or launching dual media campaigns for sponsorship of a major community event. Such a partnership would take competitive activities, which are generally out of the business’ control, and make them more opportunistic for the business long-term. Clearly, maintaining an element of control during the implementation toward goal attainment involves staying constantly informed of what is going on in the external business environment and steering the company toward meeting these challenges or opportunities. If the multinational business is suddenly facing import volume restrictions in the foreign operating environment, the business must regain control of this situation in order to keep with profit expectations. Potential solutions to this problem could be to simply abandon import activities in this particular region and expand into a different market territory. Additionally, working with local government to have these restrictions removed are another option. The strategic leader maintains control of every situation by having contingency plans for each potential situation which the business might encounter. Evaluating results is largely completed by assessing current sales volumes or other appropriate data figures related to finance. For instance, if the strategic leader determined that the best value for the business was a long-term investment into a developing foreign economy, he or should would evaluate the progress of profit in this area. Viewing appropriate sales reports and comparing profit to existing pricing models would be one example of sustaining a quality portfolio and evaluating whether strategy is working appropriately. Such research might also uncover whether the multinational company had created a product which was rejected by the local buyer, allowing the strategic leader to develop a new product quickly by restructuring existing manufacturing capabilities. Evaluation can also take the form of consultation with various subordinate managers who would be instructed to report on business activities. If a specific strategic goal was efficient and workable, the strategic leader can easily evaluate whether sufficient progress has been made and identify any individual or situation which is causing the project goal to be sacrificed. This could, in some situations, require the manager to make sizeable staffing changes in the event of poor organisational performance. Evaluating whether a product is outperforming competitor products can also be a function of the strategic planning process. Faulconbridge, Taylor, Beaverstock and Nativel (2008) describe evaluation from an advertiser’s perspective, utilising a team of planners to identify specific target audience characteristics regarding product purchases. Advertising is linked to a form of marketing science, requiring strategic evaluation to determine whether the business truly understands its buyers. If a product was selling well but, as one example, changed its long-standing formula and suddenly experienced a measurable drop in sales volume, there is clearly an opportunity for change and improvement. In this scenario, basic evaluation at the strategic level involves assessing whether spikes or declines in sales are observable and then utilising further planning to uncover how best to position the company to combat these problems. Conclusion The strategic planning process adds considerable value to the long-term profit potential of a business, improves consumer and business relationships, and assesses any potential threats from the external business environment. Proper planning appears to be the primary success element for a multinational enterprise as it recognises strengths and weaknesses as well as various opportunities and threats to business stability. Implementing strategy involves structuring the business in a way that is congruent to long-term goals and to satisfy internal motivations to perform. Ensuring that the appropriate individuals or divisions are contributing to the strategic goal is the essence of implementation at the strategic level. Working within or redesigning culture is another apparent opportunity for implementation to ensure that at the organisational level the business is constantly focused on taking strategic directives. Controlling strategy implementation requires both authoritarian values and maintaining an active presence in the specific project goal. Coercing managers to report activities timely and report on their assessments/observations of business activities will serve to make the strategist keep the business on-task. Additionally, the strategic partnership with other competition will reduce over-competition and allow the business to benefit from mutually-rewarding partner scenarios. There are clearly a wide variety of steps necessary to achieve successful strategic management, however at the individual, organisational, and portfolio level, the strategic leader maintains a wide variety of options for improving the overall position of the business as a cost and competitive leader. The multinational enterprise must understand its buying community and establish products or services which are finely attuned to their individual lifestyle and cultural beliefs. Working with local governments, additionally, will improve both the public relations image of the firm and secure opportunities related to the social environment for long-term strategic planning. Knowing what drives profit and sales successes in the foreign market environment is key to maintaining a successful business which can sustain longevity in complicated, competitive environments. Clearly, proper strategy is much more than merely creating a policy and hoping it has relevance. It is gathering research, organisational unity, authoritarian posture at the senior level, and maintaining a constant awareness of the external business environment. Proper strategic planning speaks to the overall health of a firm which is why a multinational company requires competent top-level leadership with a flexible mindframe and a watchful eye. Bibliography Boone, L. and Kurtz, D. (2007). Contemporary Marketing, 12th ed. United Kingdom, Thomson South-Western. Faulconbridge, J., Taylor, P.J., Beaverstock, J.V. and Nativel, C. (2008). ‘The Globalization of the Advertising Industry. A Case Study of U.S. Knowledge Workers in Worldwide Economic Restructuring. Sloan Foundation Research Report. Accessed 30 Nov 2008 http://geography.lancs.ac.uk/Members/ jfaulconbridge/Dated%20and%20copyrighted%20The%20globalization%20of%20the%20Advertising%20Industry%20-%20Final%20Report.pdf Malek, W. and Narayanan, V. (2008). ‘Why smooth execution depends on clear outcomes”, Ivey Business Journal Online, 72(2): 1. Slywotzsky, A. and Hoban, C. (2007). ‘Stop competing yourself to death: Strategic Collaboration Among Rivals’, The Journal of Business Strategy, 28(3): 45. Smith, Ronald D. (2005). Strategic Planning for Public Relations. Mahwah, NJ Lawrence Erlbaum Associates. Strategic Advantage. (2005). “Michael Porter’s Five Forces Analysis”. Accessed29 Nov 2008 http://www.strategy4u.com/assessment_tools /info.php?s=2&OVRAW=Michel+Porter&OVKEY=michael+porter&OVMTC= Standard. Read More