How Firms Respond to the Challenges - Essay Example

Over the period of time, the focus of debate on the strategy and how firms respond to the challenges have been based extensively upon understanding and following the competition. The traditional models of strategy focus on developing the ability to effectively scan the external environment of the firm and adjust the strategies accordingly. (Saloner, Shepard, & Podolny, 2000). The author’s views can be largely understood from the perspective of the resource based view of the organization. As Michael Porter suggested that the organizations need to develop strategies which can help them to create high valued goods and services so that they can be sold at higher prices. (Porter, 2004). Author therefore seems to have taken a narrow view of how organizations can actually just rely on their own resources to gain competitive advantage and give less consideration to what competition is doing. Porter however, claims that operational efficiency is not the strategy though Porter believes that it is necessary but not the sufficient condition.(Porter, 1996). Author however, seem to have taken a view that operational effectiveness can actually materialize into successful strategy. Debating strategy from this perspective therefore can be considered as important because this is where strategy is actually directly linked with the maximization of the profits. (Davies, 2000). Author however, seem to differ by offering an indirect suggestion towards the use of differentiation as one of the (Porter, 1989) Such approach toward strategy therefore outlines that strategy is not just limited to understanding and exploring how to leverage the organizational resources in order to compete effectively. (Speed, 1989). Within this perspective the debate presented in this article points out that strategy should be of evolutionary nature where only such strategies will survive which can produce best results. The author has given different examples of financial institutions where the international firms continued to re-evaluate their strategies in order to fit them according to what is working best. (Elfring, and Volberda, 2011) The evolutionary approach towards the strategy outlines that firms cannot withstand the competition but rather focus on developing their competencies in order to successful evaluate and challenge the competition. This also outlines that the firms must continue to focus upon the use innovative tools and techniques to successfully challenge the competition. (Henderson, 2007). This approach also outlines that the author has taken a broader view of how the firms can actually use their core competencies in order to compete. This thought on strategy suggests that once the firms take care of developing their core competencies and resources, competition matters less to them. (Morden, 2007). These core competencies often translate into the competitive advantages for the firms and the firms resultantly develop into stronger and innovative organizations. It is also critical to understand that the firms pursuing such strategy must not be complacent and continue to evolve themselves according to the external situation. As such the link between the organizational strategies as well as the external environment is critical and the author has suggested the same. Overall, the author seems to have presented an evolutionary school of strategy for firms in this article. 2) One of the most important strengths of this article is based upon the fact that the author has produced a relatively different and fresh approach towards the strategy. By outlining different practical examples from financial services industry, author has critically offered a glimpse into how the managers think and evaluate their options before taking on any action. As such it is important for the managers to consider different aspects of the strategy making before it can actually be materialized. (Pretorius, & Maritz, 2011). What is unconvincing however is the fact that the author has just focused upon the financial services industry while providing practical examples. This may have narrowed down the choices as each industry faces different dynamics and therefore their response to the external events may be different. Author has therefore critically failed to present a diversified view which can cater to the needs of different players operating in the economy as a whole. Another important and probably the stronger point of this article are based upon the arguments that the organizational resources as well as competencies do not remain same. As discussed that once information technology and computers were considered as the source of competitive advantage however, most of the firms subsequently lost the same. Such type of behavior and actions therefore can force the firms to continue to look for more ways of doing the same thing. Indirectly, the author therefore has suggested that the firms must continue to innovate themselves in order to ensure that the competition remains within its acceptable boundaries. This aspect of the article therefore is one of the key and convincing arguments presented to outline as to how the firms should actually evolve themselves rather than relying upon their old ways of doing things. It is also important to consider that the author has attempted to give an impression in the article that competition may not matter as such because once the firms develop their skills and competencies, it may not entirely plausible to focus on the competition. (Parnell, 2011). This notion may not be entirely acceptable as the firms like IBM have continued to focus upon what they were best at however, subsequently IBM was successfully challenges by the likes of Dell and HP. (David, 2004). Author therefore may not seem to be a plausible argument. Firms if not focused upon what their competition is doing may soon find themselves in a position where they can no longer be able to compete. Author however, does suggest that such firms continue to focus upon market and their customers and must evolve according to the changing preferences of the customers.(Jensen, 2011) On the whole, this article is presented a one dimensional view of the different aspects of the strategy and failed to offer an insight into how the competition may force a change in the strategy. Author has produced somewhat monotonic arguments to present a case which requires further deliberation and academic depth to understand as to how the strategy is linked with the internal and external environment of the firm. References 1. David, F (2004). Strategic Management: Concepts and Cases. 10th. ed. New York: Prentice Hall. 2. Davies, W (2000). Understanding strategy. Strategy . 28 (5), pp.25-30. 3. Elfring, T and Volberda, H (Schools of Thought in Strategic Management: Fragmentation, Integration or Synthesis). SagePub [online]. [Accessed 1st November 2011]. Available from: . 4. Henderson, S (2007). Becoming misrepresentations in strategy and time. Management Decision. 45 (1), pp.131 - 146. 5. Jensen, P A, (2011). "Organisation of facilities management in relation to core business. Journal of Facilities Management, 9 (2), 78 - 95. 6. Morden, T (2007). Principles of strategic management. 3rd. ed. New York: Ashgate Publishing, Ltd. 7. Parnell, J . A. , (2011). Strategic capabilities, competitive strategy, and performance among retailers in Argentina, Peru and the United States. Management Decision,, 49 (1), 139 - 155. 8. Porter, M, (1996). What is Strategy. Harvard Business Review, 1(1), 62-78. 9. Porter, M,( 1998). Competitive advantage:creating and sustaining superior performance : with a new introduction. 1st ed. New York: Simon and Schuster, 10. Porter, M, (2004). Competitive Advantage. 1st ed. New York: Free Press 11. Pretorius, M & Maritz, R (2011). Strategy making: the approach matters. Journal of Business Strategy. 32 (4), pp.25-31 12. Saloner, G , Shepard, A & Podolny, J (2000). Strategic Management. 1st. ed. New York: Wiley. 13. Speed, R, (1989.) Oh Mr Porter! A Re-Appraisal of Competitive Strategy. Marketing Intelligence & Planning,, 7(5), 8-11. Read More