Differences between Deliberate and Emergent Strategies - Assignment Example

Topic five: Describe the differences between deliberate and emergent strategies. When would an organization be likely to favour a more emergent approach to strategy formulation? (200 Words) A deliberate strategy is an organisation’s planned or intended strategy that has been put into action. For instance, a planned action can be used to realise the intentions of the senior managers of an organisation to launch a new product into the market. The launch of the new product in this case is the result of a planned action involving market research about the need for and likely success of the new product in the market. On the other hand, an emergent strategy means an unplanned action or an action that simply arises from decisions that have to be made without prior planning due to unforeseen circumstances. For instance, an action by a competitor to reduce the price of a substitute good may cause the management a company to review the price of the company’s product offering so as to remain competitive. An organization is likely to favour a more emergent approach to strategy formulation in cases where something that was not expected happens. For instance, an increase in terror threats may necessitate an airline to invest more in security measures in order to continue operating safely and stay competitive. Topic eight: Q2-. Identify each of the five ‘Generic Strategies’. What are the they key objectives associated with the pursuit of a ‘Best-Cost Provider’ Strategy ? (200 Words) Cost leadership strategy: This strategy focuses on competing on the basis of low per unit cost or offering the lowest possible cost for products/services. Broad differentiation strategy: This strategy involves competing by providing services or products that are generally distinct from those that are offered by competitors. Focused low-cost strategy: This involves focusing on a narrow, specific and recognisable segment of customers and offering the lowest price. Focused differentiation strategy: This involves developing services or goods that target a narrow group of customers or services/goods that are unique to a narrow group of consumers. Best-cost provider strategy: This is a strategy that focuses on achieving the benefits of differentiation and low-cost strategies. As it can be seen above, the best-cost provider strategy involves pursuing the benefits of both low-cost and differentiation strategies. The objective of adopting the best-cost provider strategy is to offer more value for money. This is achieved by combining many things into one: capabilities and resources to achieve high quality; special features to raise the perceived value or performance of a product; and good customer care service – all at a lower cost than the competition. Topic nine: Q1- When organisations choose to diversify their operations they can either do so through related or unrelated business. Explain the differences between related and unrelated diversification. What factors would make an organisation choose the unrelated option rather than the related option? Provide examples to support your reasoning. What are the advantages and disadvantages of related diversification? (350 Words) Related diversification is diversification that involves a company expanding by producing a variety of products or services within the same industry or by acquiring another enterprise that has products and customers that are related to the current business. For instance, a company may expand to provide a wide range of financial services that target different customers, but all these services being classified as financial services. On the other hand, unrelated diversification involves an organisation providing contrasting services and products in different industries and markets that have few or no similarities. For instance, Virgin offers financial services and airline services among other types of products and services. Factors that would make an organisation choose the unrelated option rather than the related option: 1. When an existing industry has reached a declining or maturity stage of the product life cycle. At this juncture, the firm needs to look for new growth opportunities. For example, with the decline in sales of film, Kodak tried to diversify into other industries such as pharmaceuticals through acquisitions. 2. When the firm has attained a lot of success in an industry and has significant resources. For example, Kenya’s leading bank, Equity Bank, diversified into the mobile telephony industry to more effectively tap into the communications and mobile money transfer market that was dominated by Safaricom. 3. The motivation by managers to diversify risk. For instance, Siemens formed various conglomerates in different industries (e.g. heavy industry, mobile phones) to spread risk. 4. To expand economic power. For instance, one of Samsung’s reasons for diversification into different industries has been the concentration of economic power. Advantages of related diversification Related diversification reduces an organisation’s dependence one any one of its business operations and therefore lowers economic risk. It provides an opportunity to gain a competitive advantage from cross-business strategic fits. It provides synergistic effects between different business activities. Disadvantages of related diversification In case of obsolescence in areas such as products or technology, the entire business may be adversely affected. It may become more complex and difficult to coordinate different but interconnected businesses. Q3- Using the value chain concept, explain the differences between related and unrelated diversification strategies. (150 Words) A company’s value chain refers to how the value proposition of the company is designed and implemented. It includes the full range of operations that are undertaken so as to bring a service or product from conception to the point of selling it to the final market. Related diversification is a strategy that involves operating a business in a new industry that is linked to a firm’s existing business unit or units through some form of connection between one or several components of the value chain of each business unit. Unrelated diversification means venturing into a new industry or business that does not have an obvious value chain linkage with any of the industries or businesses in which a firm is currently operating. Topic eight: Q1- Expanding internationally is a strategic option for many firms: (a) Identify the four reasons why an organisation might look to expand internationally. (200 Words) 1. Market factors: A firm will look to expand internationally if there are consumer needs that the firm can satisfy in the international market. This could be due to several factors including consumer needs being homogenous, customers having an international perspective and looking to buy on a coordinated basis, and there being the possibility to use global channels such as the Internet and brand names in advertising and marketing. 2. Cost drivers: An organisation will look at whether the economies of scale of operating internationally are important. For instance, if the international market offers significant savings in regard to operating costs, such as through low labour costs or low product development costs, then the concerned firm will want to operate in the markets that offer the favourable operating costs. 3. Government incentives: An organisation might look to expand internationally if the government in the foreign market is stable, has consistent policies, promotes the growth of open markets, discourages protectionism, supports common technical standards, and has favourable policies for the growth of business. 4. Competitive factors: A firm might look to expand internationally if its competitors are operating internationally, the local competition is high, the level of growth in the local industry is low, and there is interconnectivity between the firm’s domestic country and the targeted country of business. (b) Identify and describe five strategic options that an organisation might pursue in entering and competing in foreign markets and describe each in detail by using extensive of examples in putting together the answer? (200 Words) Export strategy: This option involves producing items in one country and sending them to other countries. In an export strategy, the need to coordinate activities between countries is low since a company simply produces goods and offers them for sale in another country. For instance, BHP Billiton, an Australian-based company, exports mining resources to China. Multi-domestic strategy: This option involves having full and autonomous operations in several countries to meet the demand in those countries. For example ANZ, and Australian-based bank, operates in Australia, New Zealand and in several other countries in Asia. In each market, the bank’s product offering and market position differs. Global strategy: Having a global strategy means producing a standard product and offering it for sale in all countries across the world. Companies that operate using a global strategy include Internet firms such as Facebook, Google, Yahoo and Twitter, computer manufacturers such as HP and Lenovo, and financial services providers such as PayPal, Payoneer and MasterCard. Transnational strategy: This strategy involves having different specialisation areas in different countries and interchange of services or goods between the areas of operation. For example, Coca-Cola’s core products such as Coca-Cola are the same, but the company also offers other products whose tastes vary depending on local market preferences. Regional strategy: This strategy entails having production bases in one or a handful of countries in a given geographical area so as to supply all countries in that region. For instance, Colgate Palmolive’s production facility in South Africa serves several countries in the southern Africa region. Topics Ten and Eleven: Q1- Implementation is often described as the most difficult aspect of the strategic management process. The implementation process involves a focus on eight key issues. Identify the eight components of the implementation process and through the use of examples detail the key issues associated with each. (200 Words) The successful implementation of a business strategy depends on eight key issues. These are the strategy itself, the capabilities that an organisation has, the organisation’s leadership and employees, the culture of the organisation, the structure of the organisation, the systems within the organisation to support strategy implementation, and the general environment within the organisation. An organisation needs an environment and capabilities that support the formulation and implementation of strategy. Such an environment is one that promotes aspects such as open communication and involvement of all players in decision-making. In such a situation, every employee will have the perception that their contributions towards strategy are valued. The implementation of strategy also depends on having a leadership and employees that are committed to achieving the objectives of the organisation. For this commitment to occur, there has to be a culture that supports the implementation of new ideas once they are conceived. For instance, a decision to export goods to an international market will have to be supported by a culture that is committed to ensuring that the organisation expands to new markets. There also have to be effective systems to support such decisions to ensure that the process of implementing the strategy is seamless. Q2- Identify the key features of organisational culture, what role does culture play in strategy development and implementation? (200 Words) Key features of organisational culture: Member identity: Members of organisations have attitudes and beliefs that define the uniqueness of the organisation and what the organisation values. Language and customs: Cultures of organisations are often defined by language and customs. Companies have expressions, sayings and acronyms that only their people understand. Symbols: Symbols portray a powerful statement that defines organisations’ cultures. Symbols speak about the culture of an organisation without necessarily having to use words. Habits and organisational climate: Habits define organisational culture. What people do and say on a daily basis defines the type of behaviours that an organisation adopts over time. Also, how people relate within the organisation define the kinds of relationships that become entrenched in the organisation. Culture affects strategy development and implementation in that the cultural features such as values, expressions, symbols and habits determine how a strategy is developed and implemented. For example, a culture that values innovation and expansion is more likely to support the development and implementation of new concepts or technologies in production so as to enhance the production capacity of an organisation. In contrast, an organisational culture that is risk-averse will not be open to trying new approaches in production. Q3- Identify the ten key tasks to be accomplished if a strategy is to be well executed. Choose five (5) of the ten (10) tasks and explain why they are important from a strategy implementation perspective 400. (400 Words) The ten key tasks to be accomplished if a strategy is to be well executed are as follows: Task 1: Clarifying the impact of the strategy on each part of the organisation and planning the change that is expected to occur Task 2: Communicating and getting people involved in the change vision Task 3: Selecting the appropriate metrics for the implementation process Task 4: Aligning reward systems with performance appraisal Task 5: Establishing coalitions to support the strategy Task 6: Defining the existing talent gap Task 7: Developing competencies for process design Task 8: Adjusting leadership behaviours to match with the strategy’s requirements Task 9: Developing a culture that supports the strategy Task 10: Monitoring the progress of implementing the strategy to check for areas that need intervention. Five of the tasks are important because of the reasons given below: Task 1: Clarifying the impact of the strategy on each part of the organisation and planning the change that is expected to occur. This task is important because it enables an organisation to determine what impact the strategy will have on each aspect or area of the organisation and also enables the organisation to plan for the expected change. This ensures that new strategy is well aligned with the objectives of the organisation and every employee in the organisation is well aware about the change that the strategy will bring to the organisation. Task 2: Communicating and getting people involved in the change vision Communicating and getting people involved in the implementation of a new strategy is important because it prepares everyone for the change process. This in turn helps reduce resistance to the change process, which is critical for ensuring that the change process and the new strategy are successful. Task 4: Aligning reward systems with performance appraisal There is need to determine the appropriate criteria that will be used to evaluate performance and reward different people for different tasks that are accomplished. This will ensure that the strategic goals of the strategy implementation are met and that people are compensated adequately. Task 5: Establishing coalitions to support the strategy In order for the strategy implementation to be successful, there is need to have a coalition of people throughout the organisation who can influence and manage the change process. Also, there must be shared commitment to the set goals. Thus, there is need to ensure that both managers and other employees are working in teams that will guarantee the success of the strategy that is being implemented. Task 8: Adjusting leadership behaviours to match with the strategy’s requirements Leadership behaviours must be aligned with the strategy that is being implemented. This is to ensure that the people involved are committed to delivering the objectives of the strategy in question. Q4- What are the difference(s) between capabilities, competencies, core competencies and distinctive competencies? How do these differences inform the crafting of strategy by management? (200 Words) Capabilities refer to a firm’s ability to perform a particular activity in a way that is reliable and satisfactory. Competencies are special attributes owned by an organisation that make the organisation endure the demands of the competition in the market. Core competencies refer to a situation in which an organisation develops its competencies over a period of time and makes use of them to its advantage in competing against its rivals. The ability of an organisation to develop competencies and use them so well against its competitors is referred to as a core competency. A distinctive competency is said to have been attained if an organisation possesses a specific ability exclusively or in a considerably large measure, such that it has a competitive edge over its rivals because of the possession of that ability. The differences between capabilities, competencies, core competencies and distinctive competencies help organisations in strategy formulation since organisations are able to know the level at which they are so that the strategy suits that level. For instance, organisations with mere capabilities will come up with strategies that enable them to compete and gain a share of the market. On the other hand, organisations with distinctive competencies will come up with strategies that enable them to continue their domination as market or industry leaders. Read More