Advanced Business Strategy - Assignment Example

A. Advanced Business Strategy Q1. What is it about an experience that makes it ‘strategic’? Use brief examples to support your answer (from cases used in class or from any other published source). An experience makes it ‘strategic’ when an organization is able to steer its direction from a negative situation to a successful one. It is strategic when resources of the organization are efficiently and effectively utilized and maximized towards the achievement of organizational goals. Several instances in the case studies have exemplified strategic moves made by decision makers which enabled specific companies to rise beyond barriers. In the case of S.A. Chupa Chups, various strategic experiences enabled its founder, Enrique Bernat Fontlladosa to steer it from financial difficulties, to wit: (1) the change in strategy of producing one product for different markets instead of producing hundreds of different sweets for one market (this move enabled the company to focus on a core product and specialize on it); (2) innovativeness in terms of originating the product as a sweet on a stick, developing a plastic stick instead of a stick made of wood; (3) product adaptation which enabled the product to cater to the specific tastes of defined markets (sugar free for Scandanavia, salted liquorice for Finland, green tea flavor for Japan and light colored for China); (4) process technology developed specific machines to cater to identified processes (machines to make spherical sweets, punch holes, paper wrap, among others); (5) develop their own distribution system and create appropriate advertising strategies (through radio, TV, and point of sale publicities); and (6) explore the global markets by not being afraid to take risks nor be deterred by failure. Saatchi and Saatchi’s strategy to acquire companies initially spelled tremendous success for the brothers. However, considerable losses prompted the need to evaluate and re assess this strategy and decide on focusing on its core business of communication services through internal growth. This move enabled the company to build up its capabilities for launching global advertising campaigns with caution. According to Louis Dreyfus, its Chief Executive, “Saatchi was right to expand into different markets to serve multinational clients, but added, "Creativity isnt the same everywhere. You cant apply the same principles in England, France and America." (Mintzberg, 2003, 315) By acknowledging that the concept of culture applies, keen knowledge and analytical thinking is being practiced to steer the organization out of its financial conundrum. The case of Moet Hennessey Louis Vitton (LVMH) exemplified strategic experience through its active external growth strategy oriented towards luxury product companies with high development potentials. The managerial and entrepreneurial skills of Bernard Arnault focused on an acquisition strategy in its field of expertise. Accordingly, the success of the organization is based on “having the people of the highest caliber.”(Mintzberg, 2003, 170) Leadership strategies enabled highly competent people to be creative in their own craft. They invested in training and development to maintain and motivate their personnel. Finally, the philosophy of the Unipart Group of Companies to take the long term view and to try to make the right investment decisions in the best long term interests of the company proffered the company’s vision for the future. The practice of shared destiny relationships enabled their personnel to actively participate in sharing of knowledge and information through continuous learning. Working in teams made innovation possible in the production process eliminating wastes and improving productivity through employee motivation. All of these examples proved that managerial and financial resources coupled with the ability to discern and make use of genuine opportunities in the environment assist in ensuring success in the accomplishment of organizational goals. For organizations which aspire not merely to survive but to lead and to generate productive performance in a climate that will encourage the development of competence and the satisfaction of individual needs, the strategy selected should be examined for its inherent attractiveness to the organization. The bolder the choice of goals and the wider range of human needs they reflect, the more successfully they will appeal to the capable membership of a healthy and energetic organization. References Christensen, C.R., Andrews, K.R., & Bower, J.L. (1978). Business Policy: Text and Cases. Richard D. Irwin, Inc. Homewood, Illinois. Johnson and Scholes. (1993). “Definition of Strategy.” Advanced Business Strategy. Business 3036: Session 1. Powerpoint Presentation. Mintzberg, H, (2003). Saatchi & Saatchi worldwide, The Strategy process. Pearson Education Ltd. -------------------. (2003). LVMH : Taking the western Art de Vivre to the world, The Strategy process. Pearson Education Ltd. Q2. Describe any three schools of strategy (i.e. Elaborate on their basic thesis and orientation, and use brief examples to discuss their manifestation (from cases done in class or from any other published source). Mintzberg, together with Ahlstrand and Lampel described Ten Schools of Strategy in their book entitled “Strategy  Safari: A Guided Tour Trough the Wilds of Strategic Management". (Kotelnikov, 2009) Three from the Ten Major Strategies are described and analyzed in terms of their applicability to the cases taken in class: The Entrepreneurial School is a strategy process centered on the visionary expertise of the chief executive officer. Some aver that the basis for this process is merely intuition; however, as chief executives, economic perspectives are sound theoretical backgrounds. It is categorized as a descriptive school of strategy but with a shortfall of relying on the leader’s intuition. It is my personal conviction that the Entrepreneurial School does not rely merely on the intuition of the leader. Actually, as chief executives, they have gained the status and level in their hierarchy of their organizational structure through educational expertise and professional experience. Entrepreneurs are a distinct breed of businessmen who thrive and excel in a highly competitive environment. In trying circumstances, entrepreneurs are faced with outlining alternatives which would entail strategic decisions with regard to the future. The prominent and distinguishing characteristics and traits which identify and set entrepreneurs apart are their vision, dedication and commitment, and their high drive to achieve. Innate in entrepreneurs’ traits is their willingness to take calculated risks and the desire for innovation and improvement. The cases on S.A. Chupa Chups (Bernat), Saatchi and Saatchi (Maurice and Charles, Louis-Dreyfus ), and LVMH (Bernard Arnault) all relied on the visionary outlook of the chief executive officer/s. These cases are examples of leaders utilizing the entrepreneurial school of strategy. All required the expertise and intuition of the leaders to steer the organization from financial difficulties to financial success. Bernat’s genuine belief in his innovation made him buy all the shares of the original company and became the sole shareholder of the firm. This enabled him to implement the strategies that made Chupa Chups a world renowned brand in lollipops until contemporary times. The entrepreneurial skills of Bernard Arnault made it possible for LVMH to become one of the leaders in the luxury products. The keen business acumen of Louis-Dreyfus enabled Saatchi to recover from consecutive years of financial losses. The Learning School is described as an emergent strategy formation process. According to Mitzberg the approach utilized in this school of thought is one where “management pays close attention over time to what does work and what doesn’t work. They incorporate these ‘lessons learned’ into their overall plan of action.” (Mitzberg, 1998) The basis is education and learning theory. I agree that the Learning School focuses on determining through actual experience what works in some organizations and to find out the applicability of the theories to one’s environment. Learning is actually a continuous process. It is not a one time experience. There must be a conscious determination to update one’s skills in terms of theories and practical applications to different facets of the organization’s operations. The appropriate case which applies the learning school strategy is the Unipart Group of Companies where there is a sharing of knowledge and information through a learning mission to Japan. According to case facts, the experience from Japan enabled them to realize that “the process of direct employee involvement made the production jobs more interesting, and the team oriented approach created a supportive and motivating atmosphere.” (Mintzberg, 2003, 373) Finally, the Configuration School of Strategy focuses on transformation. The contextual approach is the theoretical framework or basis for this school of thought. Personally, I believe that the configuration school of strategy entails a determination and assessment of the present status of the organization and the ability to discern the appropriate strategies to steer the organization to growth. This school of thought is manifested in the Saatchi & Saatchi case study where the organization experienced two distinct phases of different strategies applied. The first strategical move was applied by brothers Charles and Maurice when they acquired advertising companies and consulting businesses to emerge as a leader in their field of endeavour. However, consecutive losses necessitated Louis-Dreyfus to apply the strategy of focusing on its core business of communication services to transform the organization to financial success. References Kotelnikov, V. (2009). Features of the Ten Major Strategy Schools. Retrieved 08 Jan. 2010. Mitzberg, H., Ahlstrand, B. and Lampel, J. (1998). Strategy  Safari: A Guided Tour Trough the Wilds of Strategic Management. From 12 Manage. Retrieved 08 Jan. 2010. < http://www.12manage.com/methods_mintzberg_ten_schools_of_thought.html> Mintzberg, H. (2003). Unipart group of companies, The Strategy process.Pearson Education Ltd. B. Contemporary Issues In International Business Q3. What are its advantages and disadvantages from the perspective of different stakeholders in contemporary international business? The advantages of opting to conduct business in multiple countries are diverse and productive. First and foremost, an organization opting to indulge in international business would gain the ability to grow at a faster rate due to more opportunities offered by more markets. With the potentials to increase the organization’s revenues through the sale of products and services to markets beyond the local markets, the rate of growth is considerably greater. In addition, the organization would have access to cheaper raw materials needed in its production processes. Markets from other countries provide sources of raw materials and labor which are priced lower than in the host organization. Exposure to foreign markets encourages increased competition and likewise, increases the need to improve efficiency and product quality. There should be considerable research made to determine the profiles of competitors in other countries to develop appropriate strategies to excel. In doing so, an improvement in production processes, sourcing of raw materials, utilization of labor follows. Finally, opportunities from foreign markets reduce the risks in local environmental changes that have significant impact to the organization’s bottom line. A determination of the strengths, weaknesses, opportunities and threats of new markets enable the organization engaging in international business to capitalize on the strengths and opportunities and devise means to address weaknesses and threats. (Answers Corporation, 2009, 1). On the other hand, the disadvantages of international business from the perspectives of various stakeholders are also eminent. For one, doing business internationally is more costly in terms of establishing new facilities, hiring personnel, licensing requirements of different governments, technological set-ups, travel expenses, among others. In addition, the host organization must familiarize itself on foreign standards and regulations imposed by different governments in establishing a new business in their respective countries. This would entail the use of more resources to adapt and adjust to the regulatory requirements of other countries where the organization intends to do business with. Furthermore, currency adjustments cause delays in enforcing immediate operating procedures required on a day to day basis between the host organization and those organizations set up in diverse countries. Foreign exchange devaluations influence the liquidity of the organization and thus, any significant deviation could affect its financial performance. Finally, a restructure of the organizational structure to incorporate global markets must be updated regularly to incorporate changes necessitating frequent changes and reorientation of concerned personnel. An international department with the responsibility to monitoring changes and updates in foreign markets is a critical amendment to the structure. What does the term ‘globalisation’ mean in relation to different aspects of company activities? Globalization increases the available pool of data on various information which can be utilized by the organization in their day-to-day activities (manufacturing or production, information technology, human resources, among others). These data, however, should be analyzed and evaluated in terms of its adaptability to the host organization or to other organizations in different countries where they operate. Globalization requires the addition of an international department to monitor, coordinate, and assimilate activities of the local departments and that of the departments in foreign markets. Senior management in charge of disseminating policies and procedures must determine what kind of strategy to employ in foreign markets. The extent of applicability of policies and procedures of the host organization should be determined in terms of implementation to foreign markets. Would a centralized approach be implemented or a decentralized approach in decision making be more appropriate with globalization. A coherent and clearly defined framework of disseminating relevant information to foreign markets must be established. Globalization means being more vigilant of monitoring activities from the foreign markets and determining their impact to the host organization’s activities. It acknowledges a wider view in terms of looking at perspectives, opportunities and threats in foreign markets which influence the achievement of corporate goals. If a company globalises, how does this influence its shareholders/employees/suppliers/competitors/broader society/the government/the natural environment? If a company globalizes, it must prepare the organization and its stakeholders in terms of capabilities of its present resources, supply chains, leadership and management capabilities, awareness on corporate culture and the culture of the countries it plans to do business with. The shareholders must be oriented on the effects of globalization to the organization in terms of structure (organizational, international, and geographic) and its effect to the organization’s net income both in the short term and in the long run. The employees must likewise be oriented and informed on the influence, impact and effect of globalization to the nature of work and responsibilities of different departments of the organization. The organization’s suppliers must be informed that globalization could open new markets which are likely sources of alternative materials. In doing so, they can make the necessary adjustments in price and/or quantity to retain their business with the organization. The competitors would be influenced by globalization in terms of an increase or decrease in local market shares. By doing business in the foreign markets, the organization must be prepared to meet other competitors and apply the necessary strategies in this regard. Globalization increases the firm’s efficiency to ensure an improved share of its target markets. In terms of the broader society, globalization necessitates corporate cultural adjustments and delving into social responsibility. It is also through their concern for society that the natural environment is safeguarded and maintained. Finally, the government gains through globalization. By increasing its markets, more taxes would be paid through improved productivity, payment of licensing requirements and regulatory expenses. References Answers Corporation. (2009). What are the advantages and disadvantages of doing business internationally? Retrieved 08 Jan. 2010. Q4. What is the difference between the shareholder and stakeholder view of organisation? The difference between the shareholder and stakeholder view of organization lies initially in their primary objective and ultimate interest in the organization. Shareholders are interested in the organization’s net profit and returns on investment. To them, the organization must maximize the utilization of its resources and minimize its cost to achieve the greatest profits possible. Stakeholders, on the other hand, have diverse motives of interrelating with the organization. Employees view the organization as a source of employment and remuneration. Suppliers view it as a source of income or user/producer/manufacturer of their raw materials. Society, in general, is closely looking at the organization’s thrust to social responsibility – what benefits doe it give to the public and to the community. The government monitors an organization’s adherence and compliance to regulatory requirements and the impact of their activities to the natural environment. Thereby, the difference lies in the ultimate benefit that the organization gives to either the shareholder or stakeholder. Shareholders look at the bottom line as the reason for the organization’s continued existence while the stakeholders only consider the organization’s bottom line as a means to satisfy their other needs and goals. Which theories/concepts underpin these two views? The basic difference lies in the ultimate goal of these two groups of people in the interest of the organization. The theory of profit maximization underpins the shareholders’ ultimate goal or interest is the organization’s bottom line. On the other hand, stakeholders look into other theories such as the motivational theory for the employees (to motivate them to work and to increase their production); the theory of supply and demand for the supply (as the organization’s purchase order on a regular basis defines the supply and demand of goods that they produce); the theory of morality and ethics for society to conform to the organization benefitting the greatest number of people and to consider the impact of the business’ operations to the environment and to society, in general. When considered from the perspective of each of these two views, how are different types of organisational practices within contemporary international business assessed? Different types of organizational practices within contemporary international business are assessed according to its impact or effect on the ultimate goal of these two views. As consumers being stakeholders, for example, aside from being interested in how the organization makes profit, their end goal as users of the product is the organization’s ability to satisfy their needs by providing high quality products at affordable costs. The society as stakeholders are interested in corporate responsibility to the environment and to the local community. It evaluates how the firm is able to provide ample employment opportunities and ensure the safety and upkeep of the natural environment where it operates. From the point of view of shareholders, organizational practises within international business will be assessed in terms of its impact on financial condition and performance of the firm. In this regard, the extent of stakeholder and shareholder interests in the organization, their direct relevance to the organization’s core competence and their ultimate purpose for being involved in the organization determine how different types of organizational practices in international business are assessed. References Sliwa, M. (2009). Contemporary Issues in International Business: Lecture 1. Powerpoint Presentation. Read More