The Strategic Direction of an Organization - Assignment Example

? Themes and concerns to support Strategic Direction Introduction Strategic direction is the any given of action whose outcome is to contribute to the goal-achievement of a given organization. However, the goals to be achieved are not generalized since they are limited to long term goals hence the name strategic. From the lectures, I found out that any given organization that has the objectives making profits, that is, generating more revenue than the costs that it spends on, should consider its labour use, material employed and the time taken for production. On the long term basis, the organization should employ good relationships with the suppliers in pursuit of good supply chain management. Since the organization’s main determinant of the strategic direction is the customers it serves and the prospective customers, the customer needs have to be incorporated into the strategic direction. Customers are sensitive to quality, pricing, after sale services, environmental consideration of the company and the risk encountered when dealing with a given organization, that is, the scope of the organization’s operations. As such, the strategic direction of an organization is supported by the following themes and concerns as per the study lecturers. 1) Keeping up with technological advances Technology refers to the use of machines and tools so a s to execute tasks in a more advanced manner. Technology is presented as a volatile factor as opposed to a static one. It keeps on changing and advancing in that, every single advancement brings with it benefits concerned with lower costs, faster execution of tasks and even easier task performance. The use of Japanese techniques of production by the organization has been advocated by the lecture since they are deemed to be more technological as compared to those being used currently by the organization. Customers are the key factor and reason for the existence of the organization and hence an error free product makes the customer more satisfied than a product that is prone to errors. As such, the uses of technologically advanced methods like Poka Yoke is feasible to error proof the products of an organization. Technology is not a single scope feature but it spread over a large number of areas in the organization. These areas range from production to advertising of the final product of the organization. a. Technology in production An advance in technology means an increase in the number of units produced and a reduction in the total cost of producing such units. As such, the fixed costs of a company get spread over a larger range of units. On the other hand, the varying cost associated with the produced quantity, the average variable cost, decreases. Advancement of technology over a long period of time, the long term, means that the manual tasks performed by the workers will be performed by machines instead. For our context of learning, we use the case study of an automotive industry. Two decades ago, the production of auto motives used to take to be done by workers and it used to take a lot of time with workers being overworked so as to meet the organization’s objectives. The workers were largely involved in accidents from the heavy metals that are used in the construction of automobiles. However, with the advancement of technology, organizations like Toyota are using robots, which are innovated machines, to construct the auto motives. Through this employment of new technology, costs of hiring extra workers for extra units’ production are eliminated and instead robots do the work given that they are machines and they do not tire. As such, the Board of Directors should pay much emphasis to the technological changes that are unforeseen regarding production so as to maximize the profits of the organization in the long run (The Impact of Technology on Production and Short-Run Curves, 2005). b. Technology in advertising Technology advancements in the advertising scope include the internet and other new forums of advertisement like radio and televisions. With such ever-changing technological advancements, it is imperative for the management to consider the technological volatility regarding advertisement in the strategic scope. To optimize the results of the advertisements that the organization undertakes, the right social media should be used for the advert given that technology advances have made the consumers to have an unprecedented control level over the brands to choose from. Search engine optimization (SEO) helps the organization to make available, the product’s information, to the customers more easily by summarizing it in the first page of the website since the customers searching for the information don’t usually go beyond the first page of the website. Use of online videos on sites like YouTube has had a significant industrial change. People, in general, have begun to look for entertainment in the web and an organization, in its pursuit of advertisement excellence, should produce viral videos since they are known to transit ordinary people into brand loyal people. Further, the reduced cost of distributing internet videos, it is feasible to reach more prospective customers on the web. In line with the marketing objectives, the Board of Directors should consider the effect of technological advancements regarding advertisements (Liodice, 2010). 2) Product quality control Product quality is not limited to the lack of defects but the overall reliability and durability of the product are considered. Quality of the product supports the operational excellence strategic direction. With changing times, customers have become more aware and sensitive to product quality and base their present and repeat purchase on the quality of the product. Despite how low an organization can charge for a product, customer loyalty emanates from the satisfaction the customer got from the product which was as a result of quality. For a motor vehicle industry, for, instance, an organization participating in such a industry must produce a product of a high quality in order to survive the competition in the market. For instance, a Toyota Corolla is a high quality vehicle however, if compared with a Lexus vehicle, the additional features and status inherent in the latter outshines the quality of the former. However, quality does not guarantee absolute product liking. It all depends on the target customers. For example, Mac Donald Fast Food Company has franchised branches all over the globe with an identical burger quality produced in any of its branches, be it London, New York or South Africa. Unless the customers being targeted are interested in the quality of the product, the quality of the burger is of less significance (Marcus, 2010). Quality earns an organization competitive advantage over other ‘s in the industry by bringing with it customer loyalty, retailers’ demand for the product increases, a higher price can be comfortable charged, minimal replacement costs, quality staff is retained and attracted and a general strong reputation of the brand for quality is achieved. The Board of Directors should consider the quality control of the product so that it does not fall the standards that the customers can tolerate regardless of the cost incurred. In the long run, product quality will sustain the survival of the organization and stimulate super profits to the organization (Marcus, 2010). 3) Effective supply chain management flexibility The supply of the product serves as an extended operation of the production department. The maintenance of a good and close relationship between the two departments is of much importance for the success of the organization. An incentive to the supply chain management personnel supports the employee engagement strategic direction. The management should treat the aforementioned personnel with respect and not in a ruthless manner. Once the relationship proves to be of no profit to the organization, the organization should be free to depart. Through this free entry and exit mechanism, the supply chain operates in the most efficient manner. For instance, when the organization runs short of a particular raw material, a supplier is ready to offer the scarce product and if this relationship continues, a long term supply relationship is build. The most important factor that affects the operation of the supply chain is the culture of the organization. Traditional cultures of the organization involve company-based performance that is aimed at benefiting the company alone. On the contrary, the objective of supply management is to benefit all its participants. An effective organizational culture should include honesty, cooperation, trust, accurate communication and collaboration. Managers in the purchasing, logistics, operations and transportation should be equipped with the requisite expertise in their areas of participation in the supply chain and should also understand and appreciate how these functions affect and interact in the supply chain. According to the president of Fulcrum Consulting works, Ohio, Rebecca Morgan, initially, many automotive organizations entered into agreements which seemed like partnership, that is, they agreed to do business with each other on some prescribed conditions. As a result, there was poor performance, distrust and loss of absolute supplier and customers. For effective relationships to exist in the supply chain, the organization needs to distinguish the various supply chain boundaries. This is meant to make each and every unit in the supply chain to be evaluated differently in terms of performing the required tasks. As such, the Board of Directors needs to restructure the current culture of the organization in such a way that it accommodates the needs of all the participants of the supply chain starting from the purchasing manager up to the transportation manager. The involvement of such organizational managers in the strategic direction formulation lead to a motivate staff and effective performance of the tasks (Wisner, Tan and Leong 2009). 4) Standardization of the product for globalization purposes The scope of operation of an organization needs to be made as large as possible so as to attract the profits from every part of the areas covered. Standardization of the product will support the global presence strategic direction by identifying the customer needs that are common all over the globe and producing products massively so as to earn economies of scale. With the introduction of product standardization to the organization, it stands to gain a lot of benefits. Firstly, variety production is reduced and the company focuses on its area of specialization using the expertise of the available personnel. This results in an accurately produced standard product. A variety production means acquiring different raw materials for a different product. The products therein are expected to be of different features and purposes. This takes a lot of time and cost to differentiate the product. It also takes a lot of different skills of the organization’s labour so as to achieve the objectives of the firms. To avoid all this additional costs, the organization takes up standardization of the product so as to avoid errors encountered in the production of products that are as a result of learning new method of producing differentiated products in the industry. Effort duplication in designing different products is eliminated by standardization (Boundless). Secondly, interchangeability is enabled since a standardized product like an automotive can be repaired, installed, erected or maintained with much ease given the presence of standardized spare parts all over the globe. Customers will more often opt for products that can be repaired easily in case it occurs. For instance, in the automotive industry, a customer will buy automobile based on the presence of the spare parts of the vehicle in his or her region. For the Toyota Company to attract more customers given that they are oriented on the availability of spare parts, standardizing the vehicle production and hence the standardization of the spare parts will be the most feasible thing to do. The Board of Directors, while formulating the strategic plan of the organization should bear in mind that the product in question is set to sell in the global market where consumers have different tastes and preferences. To get a large target market, standardization will solve the problem of incompatible spare parts in pursuit of maintenance and repair, something that is inevitable in the life of any given product (Boundless). Lastly, easy availability of products means that there will be enormous profits from the sale of the easily available products. Accompanying standardization of products is the mass production of such products. When producing products in a massive manner, the fixed costs are being spread over a large range of units and there is availability of quantity discounts from the suppliers of raw materials. Economies of scale connote the reduced cost associated with producing mass products. In the standardization of products, the customers are able to access the product easily and at a reduced price. This serves as a competitive advantage to the company in the long term. The Board of Directors should foresee the benefits of standardizing a product in line with this argument (Boundless). Conclusion The strategic direction of an organization determines how the company will operate now and in the future. The benefits that are derived from such a decision are earned in the long term and usually, they are compromised in the pursuit of quick short term benefits. The Board of Directors, in interest of the shareholders of the organization should evaluate the benefits of each and every decision that they make so as to reflect the long term survival of the organization. Bibliography Marcus, B., 2010. Helium. [online]. Available at: . [Accessed on May 8th, 2013]. Liodice, B., 2010. 10 Technological Advances Marketers Can't Live Without. [online] Available at: . [Accessed on May 8th, 2013]. Boundless. [online] Available at: [Accessed on May 8th, 2013]. The Impact of Technology on Production and Short-Run Curves, 2005. [online] Available at: < http://www.studymode.com/essays/Impact-Technology-Production-Short-Run-Curves-65569.html > [Accessed on May 8th, 2013]. Wisner, G. D., Tan, K. C., and Leong, G. K., 2009. Principles of supply chain management: a balanced approach. Mason, OH, South-Western Cengage Learning. Read More