Operations Management for Competitive Advantage - Essay Example

Strategic Management Introduction Strategic management has become exceedingly significant aspect of sustainable business operation. Business strategy, both at national and international levels have undergone tremendous changes since the recent global recession. Regardless of the nature of business, organizations today confront with highly complex issues in a competitive market. An array of factors including the changing trends in firm’s natural and technological environment, changing consumer behaviour, and growing corporate merger intensified business competition. In this context, strategic management has become the inevitable part of successful managerial operation in every industry. This paper tends to evaluate the nature and growth of current business practices; and the relationship of strategy and integration to the organization. What is strategy? Marketing objectives and strategies are the highly significant factors that influence the purchasing behaviour of consumers. Every company designs new promotional and managerial strategies to persuade their targeted consumers and to meet the expected goals of the organization. However, today consumers are more selective, alert, enlightened and powerful. Therefore, companies categorize consumers according to their response toward the products/services. As the market is highly competitive, customers are well informed about the numerous products and services. Hence, customer acquisition and retention has become the major concern of business strategy. Both Strategy formulation and strategy implementation are equally significant in today’s business field. Strategy formulation and implementation include a variety of organizational practices. It is often understood as the ‘decision related to the design of a process and the infrastructure needed to support the process’. (Chase, Jacobs & Aquilano, 2006 p.24). To illustrate, it is the process that defines the organizational goals and lays out plans in long term to achieve the intended goals. Strategy not only determines the organizational mission and objectives but also covers other areas such as marketing, finance, and human resource (HR) concerns. The following diagram shows the various aspects of organizational strategy. (Source; Shim J K. & Siegel J G., 1999, p.6). However, an outstanding strategy does not necessarily mean that the organization would achieve its goals. In addition to the well designed strategy, the method of implementation is significant factor that determines the organizational success. Therefore, successful managers would integrate the various strategic aspects with all important elements of the organization. As it is stated in Wiley & Sons (1971, p.5), in order to achieve goals, managers must ‘comprehend their potential combinations and coordinate and integrate business factors’. Design strategy & Emergent strategy Organizational Strategy became a subject for debate since 1987 when it was termed as design strategy and emergent strategy by Henry Mintzberg. He argued that strategy not only includes predetermined actions but also the gradual developments or immediate steps taken to deal with changing situations. Therefore, strategy is not simply a set of guidelines that the organization would strictly comply with. Although in general sense strategy indicates the preset programs, organizational decisions are always subjected to immediate deviation according to the changes in the firm’s environments. This happens due to the unexpected events like economic down fall, market variation, technological application, or as part of legal compliance, and many more. Such events can not be anticipated by the individuals who formulate long term strategy. The long term strategy that determines the multifaceted aspects of the system is often termed as design strategy. The new decision taken in response to the emerging situations is termed as emergent strategy. Design strategy has top down features because it is developed by the individuals or group responsible at the top level; and is subsequently implemented within the organization. As compared to emergent strategy, it is more reliable as it is the result of negotiation, bargaining and compromise between many individuals and groups within the organization. (Grant, 2005, p.24). Moreover, design strategy considers the overall betterment of the firm; whereas emergent strategy can only deal with certain evolving situations. Design strategy is often formulated after detailed research and negotiation and therefore less likely to fail in its application. As Grant (2005, p.24) states, emergent strategy is the decision taken by individual managers according to the changing environment. Every organization would confront with such unexpected complexities when emergent strategies become inevitable. According to Mercer (1996, p.527) when markets become more complex emergent strategies become common. Emergent strategy is developed as the manager tries to transform his organization according to his vision. It includes an array of actions that develops from bottom to top over a significant period. Since the effect of the decision is uncertain, emergent strategy possibly costs time and effort until it develops an appropriate policy. Strategic Management of HR Human Resource Management (HRM) is an important area where companies heed their strategic management concern. Team work is the essential element with HRM in every organization. Inappropriate strategy formulation and implementation will adversely affect the teamwork and the concept of leadership. If the strategic integration is not effective, it would affect the production, supply, customer satisfaction, and the relationship between the members of the organization. Group activities, structural changes, and healthy interactions will make communication effective among the employees. Inappropriate strategic management would lead to centralized HR management in profit-driven companies because they focus excessively on individuals and categorize them on their performance base. Organizations must develop scientific approach to employee retention and reward system according to the firm’s environmental changes. However, as suggested by Armstrong (2006, p.134), HR strategy should align with the business strategy (vertical integration) and must be apt to the organizational culture. If it is regarding international tourism management, ‘the tourism managers should think globally and train their staff according to the global standards’ (Moutinho, 2000, p.320-321). Organizations are highly benefited by the technological advancements in HR management. To be competitive, modern organizations need to have timely and accurate information about their human resource. Hence, today organizations rely on technology to have immediate access to HR information for employee recruit and retention. Technology has enabled companies to store every valuable data in their specially designed software. This Human Resource Information System (HRIS) is highly integrated with the enterprise planning (ERP) of a company. HRIS is widely accepted in modern organizational functions. However, careful analysis and strategic approach is essential to meet the objectives of HRIS implementation. HRIS would ease the complexity of data collection, reporting, and analysis. It not only helps the HR decision making process but also ensures the company’s legal compliance by maintaining and updating every piece of information. HRIS maintains information regarding employee performance, salary statement, personal file etc. The objective of ERP is the total integration of the business including the greater customer satisfaction, reduced operation cost, improved service etc. However, the method of implementation is the most important factor that determines the effect of the HRIS. It is the integral part of enterprise planning because the overall achievement of the firm is determined by the human resource performance and its efficacy. The greater HR alignment and management functions obviously lead to success. In order to identify the potentiality and weakness of the HR, management should have the instant access to the related information. Hence, without designing a proper HRIS, today a company can not complete its Enterprise Resource Plan. Prior to the design and development of an HRIS, a careful analysis is essential to identify the various HR requirements. This process is known as needs analysis. It is a comprehensive method that includes long term as well as short term plans. If the system makers fail to conduct a good analysis, the system will not meet the intended goal. Long term plan would help to anticipate the possible technological changes and subsequent troubles. Short term plan also is important to identify the areas where immediate solution is required. Needs analysis is not a process that ends with the initial stage of the project; instead, it lasts until the implementation of the program. Needs analysts would scrutinize the strength and weakness of current system to determine if any of the programs could be continued. Likewise, information technology (IT) has also become essential to the strategic management in every industry. For instance, international tourism is highly dependent on IT. Tourists have easy access to information regarding places of interest all over the world. Governments or tour operators also can use the technology to gather information while designing their strategy. As stated by Moutinho (2000), in order to craft an appropriate strategy, international tourism managers should be aware of international competitive benchmarks and global standards. Employ retention Many organizations find it difficult to align their workforce to gain their intended mission. The current economy reminds all organizations the significance of strategic management. The organizations which hold conventional strategies and structures always tend to confront with HRM failure. If employers are facing managerial problems, they need to reconsider the reward system and organizational structure because they are more influential than any other factors. First, the manager should identify the persons who are directly or indirectly involved in the issue. In other words- who must be affected or benefited by the particular problem. Secondly, he should study the issue from different perspectives to analyse how the individuals would judge the problem. Furthermore, he will examine whether the individuals involved are in the right role or the things are in the right place. Possibly one can find some misplaced elements or unsuitable individuals behind every problem. In that case, a mere rearrangement would solve the problem. “The only way for the organizations to change rapidly enough is to design them so that they can adjust their strategic intents, structures and human capital deployments as a matter of routine that means starting with a new set of core principles about what an organization should look like.” (Lawler & Worley 2009). Generally, employees are also reluctant to evaluate the various problems of their professional life. If it is done, they can identify the unfair factors which intrude in to their comfort or the irrelevant roles they are performing. One must have enough patience to examine every aspect of the particular issue in order to deal with those difficulties. Strong financial strategies, high professionalism and forecasting accuracy are other key factors in organizational strategy. Strategy designers should define the expected employee behaviour within the organization. The general concepts on expected behaviors can be summarized as follows; 1. People with high aptitude and serious concern about their careers 2. Individuals who comply with the code of conduct 3. Individuals who stick to their goals 4. Individuals who maintain the anticipated standards in their performance 5. Individuals who cooperate with collogues Marketing Strategies Marketing planning involves various types of marketing techniques, systematic preparations and exercises. Once the initial factors such as firm’s size, service/product, and market to be served are clearly identified, the entrepreneur must identify the possible impediments to the business growth. In order to develop appropriate marketing strategy, market research is essential. Marketing research is an area where organizations spend considerable portion of their budget. However, research objectives should be concise enough to achieve better result. According to Kerin (2003, p.167), if the objectives are too broad the problem may not be researchable; and if they are two narrow the value will be lessened. The research should aim at specific outcomes. Only then the research results can assist developing further strategies. Marketing, finance, and action program often undergo strategic changes while attempting to meet company’s objectives. For instance, tourism industry underwent tremendous strategic changes due to the recent global economic downturn. Iyengar (2008 p.59) notes that tour operators and hotel entrepreneurs were forced to reduce their service costs. Business operators are bound to ensure that the product or service attain a certain percentage of return of their spending on marketing. If it is not proportional, company needs to reset the price to ensure the sales revenue balance with the marketing cost (McDonald, 2007, p.280). In addition to the unexpected situations, there are numerous factors like the ‘history of organization’s previous accomplishments, failures, policies, mistakes, and mission that the managers would consider while designing new strategies’ (Peter, James H., Donnelly, p.7). Cognition & marketing All attempts to preserve market stability should also meet customer satisfaction and shareholders’ requirements. Timely dispatch, accessibility to products/services, and their incompatible quality are highly essential for customer retention. In order to fight unfair competition, company should launch new advertisements; and internal as well as external campaigns. It will be highly effective if company deploy celebrities from the targeted segments as its brand ambassadors. Advertisements and other cognition methods can easily convey specific message to customers. Certain difficult ideas can be conveyed to the ordinary consumers only through ads, demonstrations, and campaigns. Verbal Cognition There are situations when a company might deviate from its conventional marketing strategy. Insurance industry could be an example for this because people hardly approach company/agent for insurance policy. Insurance is often sold using verbal cognition because inter personal relationship between consumer and a company representative has its own significance. They can be motivated by advertisement or persuasions to a certain limit. Their buying behavior is strongly influenced by their requirements. Advertisements meant to aim this group must be more life related as well as something that would create a feeling of necessity. This category might be influenced by the interaction of an excellent agent or salesman. An agent’s product knowledge and salesmanship would promote customers; and if customers are better informed, that would enhance their buying behaviour. Accuracy, professionalism, genuine approach, and pleasing behavior are the essential qualities of a marketing professional. Visual Cognition Visualizing cognitive style also is a useful marketing technique used by organizations in order to persuade their customers. To illustrate, this method would be highly useful in tourism industry if tour operators make use the modern technological backup to visualize important tourist destinations. Most of the leading companies today maintain both cognition techniques simultaneously. Understanding the consumers according to their traits, approaching them through the proper channel, introducing appropriate cognition strategies and using the advanced technological possibilities are some of the unavoidable initiatives of successful companies and marketing agencies. Strategic management in Tourism Strategic investment in tourism industry should promote economic development, cultural relationship, education, and entertainment in a single policy. Effective tourism strategy would enhance environment, reduce international tension, preserve culture and tradition, and offer a number of opportunities to professionals. Eco-friendly tourism will also ensure the conservation of forests and other natural habitats of animals and birds and there by contribute to the overall development of the country. As mentioned earlier, organization would design promotional strategies according to their organizational culture and environment. For instance, as an emerging trend, medical tourism industry has become a fastest growing segment of tourism in Kerala the most beautiful state of South India. As the recent global financial crisis hit largely on European Countries, Asian countries have been highly benefited from medical tourism industry. This region has become an alternative cost-effective destination to the western people. Majority of the patients in this category come from the countries like the United States and UK. Kerala enjoys its own remarkable share in medical tourism by providing its ancient system of medicine Aurveda. This herbal medication and technique of body massage known as ‘Panchakarma’ gained international admiration especially during the last decade. Obviously it is the achievement of Kerala’s Tourism Department which has also initiated an array of innovative techniques to enhance the industry. ‘The department has recently launched an online training program for travel agents and tour operators in the UK in order to promote UK sales to Kerala’. (Business Standard.com). The department heeds its genuine concern to preserve the natural beauty of its attractions such as backwaters, beaches, wildlife sanctuaries, hill stations, water falls etc. In addition, it organizes seasonal fests and exhibitions which attract thousands of domestic and international tourists. Kerala Tourism Development Corporation (KTDC) ensures cheap and best food and accommodation for the visitors through out the major destinations. It also coordinates all hospitality arrangements and functions of tourism department. This could be the best example for the appropriate strategic management in international tourism industry. Environmental Strategy & Legal Compliance Infrastructural developments have caused environmental impact on the natural and cultivated vegetation all over the world. Deforestation has become the major threat to wildlife and many of them are at the verge of extinction. Therefore, governments today follow very strict conservation programs to ensure the protection of the remaining vegetation. Moreover, environmental pollution is another concern that has led to the legal restrictions on organizations. Many of the industrialized nations have passed strict regulations to control industrial emission of toxic gas/substances. Environmental concerns have been growing all over the world in response to global warming and climate change. Therefore, governments and various national and international organizations have initiated strong control over industrial operations. Business entrepreneurs have to comply with numerous regulations of pollution, waste disposal, and resource management. Today, environmental management is one of the inevitable functions of firms rather than mere procedure of legal compliance. “Many companies practice environmental auditing and reporting, have environmental departments, use environmental themes in advertising and public relations and even adopt green technologies and comprehensive environmental management systems.” (Hoffman & Ventresca, 2002 p.201). This is what meant by the proactive approach toward the natural management. Hence, environmental concerns have become an inevitable area of strategic management in every modern industry. Conclusion Strategic management is the inevitable element in national or international business functions. An effective strategy will define the mission, policy, goals, strengths, and weakness of the organization. It will also identify the threats and challenges and the essential elements to success. Subsequently it schedules actionable programs to meet the requirements. Organizational decisions must be flexible enough to redesign according to the situational changes. Proposed activities must be implemented in a well designed and unified way. Finally, along with the strategy implementation, feedback of the total program should be collected. Moreover, effectiveness of current practices has to be analyzed frequently. Strategy implementation includes all activities associated with production, distribution, and delivery of products/services. In addition, it also manages effective use of human resource, equipments, and other facilities. Scientific approach to strategic management and integration will enable organizations to satisfy their business needs. References Armstrong M, 2006, A Handbook of Human Resource Management Practice, edn.10, Kogan Page Publishers. Chase R B, Jacobs F R. & Aquilano N J., 2006, Operations Management for Competitive Advantage, 11th edn. Tata McGraw-Hill. Grant R M., 2005, Contemporary Strategy Analysis, 5th edn., Wiley-Blackwell. Hoffman A J., Ventresca M J., 2002, Organization, Policy and the Natural Environment: Industrial and Strategic Perspectives. Stanford University Press. Iyengar P., 15 Dec.2008, ‘In Reverse Gear: terror’s Talons have bloodied the Golden Gees of Indian Tourism’. Outlook, p.59. Kerin, Hartley, & Rudelius, 2003,Marketing: The Core. McGraw Hill Professional,. ‘Kerala Tourism Starts Online Training Course’. 13 Nov. 2009, Business Standard, retrieved 29 Dec. 2009 from http://www.business-standard.com/india/news/kerala-tourism-starts-online-training-course/12/02/376264/ Lawler &Worley,2009.The rebirth of change. People Management Magazine; 29 Jan 2009. McDonald, 2007, Marketing Plans: How to Prepare Them, How to Use Them. Illustrated 6th edn., Butterworth-Heinemann. Moutinho L., 2000, Strategic Management in Tourism, CABI. Mercer D., 1996, Marketing, 2nd edn, revised, Wiley-Blackwell. Peter, James H., & Donnelly, 2004, Marketing Management: Knowledge and Skills. Edn 7.McGraw-Hill Companies, Inc. Shim J K.& Siegel J G., 1999, Operations Management, Barrons Educational Series. Wiley & Sons, 1971, Marketing Management: A System Perspective. John Wiley & Sons. Read More