Different Approach to Strategic Management - Case Study Example

Introduction What shapes the behavior of a business is the degree of uncertainty in its environment. In order to assess the degree of uncertainty, it is important for us to note the key dimensions that define an organization's environment. As Stephen Robbins (2005, pp.443-444) illustrated in his book Organizational Behavior, there are three dimensions to the environment of any business, namely capacity, volatility and complexity. Using this framework, we try to assess the environment in which the company currently operates in. The environment plays a huge impact in crafting strategy and strategic management decisions an organization makes. The strategy depends on the dimensions of the environment where it operates in, as mentioned earlier, which depends on the overall objectives of an organization. This strategy should be supported by a different structure that would carry on the fulfillment of various responsibilities and tasks to achieve the organization's objectives. However, in implementing a chosen strategy which requires restructuring within an organization, various strategic human resource management issues should be addressed. In the case of VSM, where the recommended strategies are to induce inorganic growth and to consolidate fragmented markets through acquisitions, potential barriers to the implementation of these strategies are discussed below. Environmental assessment: three-dimensional model of the environment VSM Capacity talks about the ability of the environment of an organization to promote growth, which is measured through relative abundance or scarcity in the market. In the case of VSM, researchers suggest in their recommendation acquisitions in the market in order for the company to strengthen its presence, due to scarcity of resources. There is little growth in some parts of the market that it needs to be consolidated for VSM to maintain profitability and acquire new resources for its expansion goals. Stability and dynamism is what the volatility dimension is about-the degree of instability in the environment of the company. In the case of VSM, it operates in a relatively stable environment: the products are industrial or consumer durables which make consumer preferences less volatile. Since not so many companies are in the industry where VSM in, there is less influences and changes in terms of trends which could make the environment volatile. The third dimension is determined by relative homogeneity and dispersion of elements which make an environment either simple or complex. VSM operates in a relative heterogeneous environment with dispersed elements, given that its sewing machine production is coupled with the changes in technology, which we all know is more rapidly-changing. When it incorporates information technology in its offering, the company becomes subject to changes in technology in the market place. Also, the company faces relative threat of new entrant as competitors that fight in terms of costs. All these comprise the complexity in VSM's environment. P&G P&G is in the business of fast-moving consumer goods-as it offers a diverse range of products that consumers use and consume in their daily lives. From abundant to scarce--the amount of resources that are available to the organization determines the degree of an organization to sustain growth; this is the capacity dimension of the organization, as Robbins has put it. The fast moving consumer goods is an abundant environment for P&G, as basically as the people in the world are consumers. The world market has a lot of opportunities in terms of untapped market where P&G can offer the vast range of its products. In terms of volatility, the second dimension in the environment which Robbins described as the degree of instability in the environment, P&G's surrounding environment is relatively dynamic. From stable to dynamic: the degree of high unpredictable change a company faces makes forecasting and testing various probabilities becomes imperative for managers when making decisions. The 'consumer' factor, or the rapid changes in terms of consumer preferences, has made P&G's environment very volatile. With the unpredictability of consumer behavior, the fast-moving consumer goods industry is characterized with dynamism in terms of its environment. We can say that P&G operates in an environment that is complex; that is, as described by Robbins, the environmental elements are heterogeneous and dispersed. The fast-moving consumer goods, in terms of global rivalries names a few of its giant players; but in terms of competition, almost in all countries and markets, smaller direct competitors can easily spring up to compete in more specialized consumer goods, not to mention the bigger number of indirect competitors for a certain product. The vast numbers of smaller and more specialized players that cater to almost all people, who are the consumers, represent the complexity of the environment of the fast-moving consumer goods industry. Strategy formulation VSM VSM operates in a relatively scarce, stable but complex environment. Given this, VSM is able to stay in business initially by maintaining an inside-out or production-related orientation. However, when VSM realizes that the outside-in approach will help it leverage more the opportunities in the market place, as well as deal more effectively with the complexities of its environment, it has adopted an outside-in or market orientation approach. Due to the relative stability in the environment, a creative or incrementalist approach to strategic management has made the company survive through the years of its operations. While the relative scarcity in its operations suffices, the company realizes the need to adopt a strategic planning approach to strategic management in order to use more of its resources to meet its business objectives. The changes in the environment, while it affects profitability demonstrate the relative scarcity. The company, in order to maintain profitable, should adopt a consolidation strategy and inorganic growth as stated in the case. In an environment where the resources are scarce, the best way to grow is to acquire the resources of other players to strengthen presence. This makes sense in the case of VSM, where it is the major player. In order to protect its shares in various markets, and promote market penetration in other markets, it has to grow and create stronger presence. But the best, or perhaps the only way to grow in a scare environment is to acquire other player's resources. P&G Business-level P&G adopts a growth strategy in its operations. Given the vast opportunities that are represented by the abundance of resources in its environment, because basically all people are consumers, P&G can use its capabilities to reach and serve more markets. Specifically stated in its annual report, P&G's clear strategies are: "continue to grow P&G's core businesses: leading brands, big growing markets, and winning retail customers, leveraging P&G's core strengths and core technologies; develop faster-growing, higher-margin, more structurally attractive businesses in which P&G has significant potential to achieve global leadership; grow disproportionately in developing markets to serve more low-income consumers" (2006, p. 6). These strategies clearly state P&G's plans to support its growth strategy. Issues on change management Strategic drift With the acquisitions, the company may lose strategic focus and strategic drift may happen when objectives become less clear and less relevant because of consolidation. Strategic drift happens when people perceive the strategy as weaker because of less clear objectives. In the case of VSM with the acquisitions, there is a tendency to insert additional objectives that are related to acquisitions which can make the strategy appear less relevant. This can happen more when incrementalism is in place, as the strategy is not derived from a set of streamlined objectives such as when done through strategic planning. Vision, drive, direction New vision should be communicated by management in the process of committing to acquisitions, for when the vision gets clouded, strategic drift may set in, which tends to decrease the drive to reach objectives because they become less clear and company loses direction. Formal processes With the entrance of acquisitions, the status quo in the company is shaken and formal processes need to be adjusted in order to streamline the formal processes in the other organizations acquired. Mental processes Due to the necessary disruption in status quo, the current way of thinking in the organization would have to change. In the presence of acquisitions, the mental processes of the other acquired organizations should be incorporated in the organization's line of thinking. Power and culture: organizational resistance This change in status quo will encounter resistance within the organization. Because there is change, uncertainty within the work environment will create chaos thus people in power will defend their vested interest in certain positions. Power struggles will be apparent, and as shuffle in the power structure within the organization is more threatening, efforts to carry on change will be hurdled. When two cultures come into fusion from acquisitions, the strength of the culture prevails. This is one of the issues that management should address for this could impact the implementation of strategy. Since VSM's culture should prevail, incorporating the other culture, formal processes and mental processes into VSM's culture is necessary. This may take some time; learning is gradual as the culture of another organization is fused with a dominant one. Differences may arise, but will have to be resolved as in the process of emergence. As a new status quo is in place when all the members of both organizations learn to adapt, a new culture is in place for the company which will determine whether it is beneficial or detrimental to achieving the strategy. Due to this, management should not leave the change in culture happen to chance; it should delve and intervene. If a certain culture is necessary in order to accomplish certain objectives and support the strategy, the shift in the status quo should be toward that desired culture state, which is VSM's culture. However, as previously discussed, it should give way to differences with the other culture and resolve those differences, then encourage new learning. Learning and emergence; incrementalism When a new status quo is in the process of formation, the formal processes and mental processes of the acquired organization should be consolidated to the culture of the organization. This is to leverage the strengths of the acquired organization. Similarly, differences within the cultures should be resolved. The new status quo in place requires learning and emergence on the part of the members of both organizations. The new culture comprised of new processes-formal and mental should prevail in support of the new structure and strategy of the organization. While learning should be gradual in order to reinforce status quo, this should be promoted by management and should not be left to chance to maintain desired state and ensure stability. Conclusion Different environments require different approach to strategic management. However, it is still advisable to utilize strategic planning in contrast to incrementalism when carrying on strategic management. In the case of VSM, planned change involving acquisitions poses a lot of issues in relation to strategic human resource management. When acquisitions are carried on to be part of the overall corporation, the organization should carry on strategic planning to revise its strategy. On a corporate-level, the acquisitions are strategically in line with the company's overall or corporate objective. However, in the case of VSM, where it plans to adopt a low-tier product line to pursue market penetration, it should revise its business-level strategies and incorporate its acquisitions as a separate strategic business unit. When this revision in strategy is carried on, it only makes sense that the structure should be revised too in order to support the chosen strategy. This restructuring of the organization calls for total shuffle among the resources and a shake to the status quo: old positions to be scraped off, replaced by new positions; span of control either broadened or lessened; re-allocation of budgets among departments, etc. When the organizational culture is strong, it can be a barrier to restructuring. Vested personal interests are at stake, as well as perceived uncertainty that accompanies the restructure can create confusion and chaos within the organization-thus the effort would encounter resistance and power struggles. In this case, effective change management should be carried on in order to address the possible hurdles to implementation of the strategy. Bibliography Bartol, K., Martin, D., Tein, M., & Matthews, G. 2001. Management: A Pacific Rim Focus. McGraw Hill Company, Australia. Dessler, Gary. 2003, Human Resource Management. 9th ed. New Jersey: Prentice Hall, Inc. Jamieson, David and Julie O'Mara. 1991. 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