Advanced Strategic Management - Essay Example

Answer Google has been a highly innovative firm that explores and exploits new opportunities that is focused on meeting and anticipating the changing preferences of its customers. Its major objective is to provide best user experience by managing information that is useful and universally accessible. Google’s numerous products and services vis-à-vis Google Chrome, Google App, AdWords, AdSense etc. demonstrate its unique foresight and technological advantage that provide users with highly satisfactory experience and opportunities to boost their business goals. Its strategic decisions in advancing its objectives are highlighted in its diverse business activities and business linkages that promote networking with other business entities. Thus, its decision to acquire Nest is integral part of its strategic initiative that is designed to give it an innovative edge in the market and generate strategic profit in the smart homes. Google works in an environment of intense competition where originality and differentiation are key issues to retain competitive leverage. Porter (1996) strongly asserts that firms can outdo others if they can establish a difference and exploit it for achieving their wider goals. Indeed, Google has been distinct in its customer centric policies, growth strategies and organizational culture that nurture creativity (Google Inc., 2013). Its state of the art research and development facility constantly strives to anticipate the changing preferences of its customers. They have made significant breakthrough in exploiting the vast potential of internet through their new products and services as well as diversifying business goals through business alliances and acquisitions. Acquisitions of Facebook, twitter, Motorola etc. have been important part of their strategic business decisions that have contributed to its leadership position in the market. The recent acquisition of Nest is seen as key part of its future planning and long term goals of penetrating new market of smart homes. Nest was founded in 2010 by two former employees of Apple, Tony Fadell and Matt Rogers with vision of smart homes within home automation industry. Its first product, sensor driven internet based thermostat was launched in 2011 which was an instant success (Curtis, 2014). The thermostat can be controlled remotely through smartphones that enabled people to change the temperature of any room or the whole house through a click of the smartphones. In October, 2013, it introduced smoke and carbon monoxide detector which is important safeguard device for homes that can also be monitored through smartphones. Both the devices produced by Nest give insight into huge potential of penetrating new market segment of home automation that can significantly add to the convenience of the people, especially working class. Johnson, Scholes and Whittington (2008) emphasize that corporate strategies have emerged as key facilitators of competitive advantage mainly because they are focused on analyzing and anticipating customers’ requirements and providing them with complete satisfaction (Barney & Hesterly, 2010). The advancing technology greatly contributes to the comfort of the people and empowers them with tools that can be exploited by them to improve and improvise their lifestyle. While internet provides them with vast database of information, the smartphones have become vital ingredients that collate and collaborate with network of linkages to optimize customers’ expectations and experience. Acquisition of Nest by Google is a smart move that has brought Google right into the homes of the people where it can learn and exploit new information and maintain its market leverage. Nest would considerably add value to Google’s effort to ease the problems that people face in their daily lives. Columbus (2005) contends that dynamic strategies facilitate Google to operate at lower cost and help retain its niche position by exploiting new options. In the highly competitive environment of rapid globalization and advancing technologies, Google’s strategies are developed to meet new challenges and explore and exploit the huge potential of technology and internet. Google’s major source of income is through its advertisements and by making Nest a part of its business venture, Google can now further explore the needs of the people and collate it with their lifestyle. Nest products are intelligent products that anticipate owner’s routine and adjusts the temperature accordingly. It would have access to the huge database of Nest’s customers and despite Nest’s privacy policies, Google could evolve creative formats that would not only exploit the competencies of Nest’s team of engineers but also help create devices that are useful to people thus gaining considerable advantage in the market. Larry Paige’s vision is to create things and devices that people would use in their daily life like mobile phones, cars, clean air, etc. (Google, 2013). Nest’s expertise could be exploited by Google to develop smart home devices which would help people to enhance the quality of their life. Thus, products that would remind people regarding pollution and ways to minimize it, people can better manage their lifestyle to minimize and promote energy efficient ways and preserve environment for posterity. Hendricks (2014) of Forbes says that Internet of Things or IOT has become the buzz word for cutting edge technologies that provide smart and intelligent solution to the problems of the people. Learning thermostat produced by Nest was an important breakthrough that learns the behavior of the people and performs as per their daily routine thus delineating the need for constant monitoring and worries about home temperature or dangers from smoke/ carbon monoxide emission from various home based electronic and electrical devices. Nest’s acquisition therefore would provide Google with vital add-on devices and knowledge based inventions that could be incorporated within the wide scope of its objectives and long term vision and mission. Nest is a team of highly vision oriented individuals who would significantly contribute to Google’s human capital. There is huge potential in the home automation segment that could be easily targeted through Nest database of customers which would provide Google with alternate avenues of profit and new opportunities for exploring fresh ideas in the area of sustainable development and sustainability of resources. (words: 980) Answer 2 Established firms tend to miss disruptive change mainly because they promote technologies that sustain business objectives (Christensen, 1997). He defines established firms as those which ‘had been established in the industry prior to the advent of the technology in question, practicing the prior technology’ (ibid, p24). Big or established firms thrive on niche market position and marketing paradigms and therefore innovate product and services for higher performance. The major perspective of the established firms revolves around the performance of the product and not on the paradoxical views that can give new perspectives to the old products. This is interesting insight into the ways established firms fail when new version of technology infiltrates market and diverts customers appeal for the established brand for the new one. The majors reasons for the failure of established firms is their focus on the sustained technology which makes them miss the opportunities which are caused by disruptive changes. The sustaining technology performs on expected trajectory as defined and sustains the industry growth through improvement in product performance. The big firms therefore become complacent in the ability to innovate for higher performance and miss disruptive changes brought about by products that thrive on their ability to disturb the market (Adner, 2006). The disruptive technologies are cheaper and are often introduced in emerging market for people who are less attractive to established firms. Consequently, disruptive technology redefine performance trajectory in terms of faster growth and innovation that ultimately lead to the failure of established firms. Christensen (1997) also gives example of disk drive industry that were led by established firms which met the changing needs of their established big customers by giving them more and something better thereby missing new opportunities of looking laterally at new innovation in the industry and maintaining their leverage. The small drives with lower storage did not satisfy the needs and requirements of the customers of the big firms and therefore were rejected by them. New entrants like IBM, Seagate etc. saw the potential of small drives and used them to forge new market which disturbed established firm and led to their failure. Christensen, Kaufman & Shih, (2010) assert that profit cannot be the sole criteria and investment in the technology must be tempered with the awareness of life cycle of the technology and firms’ ability to identify disruptive technologies for the new opportunities of growth. Indeed, the main reasons that big firms like Xerox and Sears which were industry leaders were reluctant to embrace new technology which ultimately led to their failure. Xerox catered to the demands of its customers who required large photocopying machines and therefore failed to see huge potential of desktop copiers and lost their position to Hewlett Packard. Sears had been market leaders in retail industry of mid-priced goods and services. Though acclaimed as one of the best managed companies, its reluctance to move with time and place customers’ needs first and offer them competitive pricing led to its ultimate demise Similarly Kodak lost its market to the digital camera and IBM’s large frame computers delayed its entry into personal computers which Apple Inc. was quick to exploit and become industry leaders as they exploited the disruptive change and forged into personal computers that became intrinsic part of the masses, bringing about tremendous change in the society. But Google leads in the examples of disruptive technologies and it has always provided the masses with new products which has not only stunned the market but also the consumers. It is open to new ideas and easily adapts to new situations and encourages sharing of knowledge. Its ability to anticipate customers’ requirements and its constant desire to innovate so as to provide them with tools to make their life easy is part of its important management strategy that is intended to safeguard it from any unexpected disruptive change. Google therefore follows distinct and differentiated strategy that promotes organic structure and relies on innovative ideas and lateral thinking. Strategic decisions and creative approach have emerged as vital tools for Google as it helps to identify new opportunities and challenges for growth (Spulber, 1999). In the highly competitive market, firms need to maintain their competitive advantage through innovative approach and cultivating wider perspective to new ideas. Advancing technology is one of the major drivers of change that must be aligned with the dynamic strategies of the firm to meet new challenges efficiently and successfully. The web of active inertia is vital factor that exposes firm’s inability to take appropriate action at the right time where active inertia refers to the firm’s tendency to follow established behaviour despite environmental shifts and compulsions (Sull, 2000). Consequently, the established firms often miss disruptive changes and fail to see the wider ramifications of disruptive technologies. (words: 790) Answer 3 Strategic decision-making process is critical aspect of managerial initiative that promotes sustainable performance in a competitive business environment. An integrated approach to the changing dynamics of contemporary business practices necessitates strategic decision-making process that addresses the uncertainties of external environment. It becomes especially pertinent for firms that are driven by creative ideas and need to allocate resources to innovation. As a result, managerial leadership’s initiatives imperatives have emerged as powerful tools for decision-making process as strategic choices are influenced by leadership’s decision style (Nutt, 1990). The design of effective decision-making process is also preceded by absolute commitment to shared vision of change by the employees as it to seeks and exploits wide scope of opportunities within the changing external environment (Schwenk, 1997). Thus, design of strategic decision-making process becomes vital ingredient of innovation. In the technology-driven firms, creative ideas and innovation is inherently linked to uncertainties because the investment into the research and development is based on little knowledge. The unsystematic trial and error becomes crucial mechanisms for testing working ideas to innovate. Thus, decisions to pursue ideas become key imperative for developing strategies for new product development that relies on individual skills for making good judgment. The various mechanism of developing effective designs for decision-making process for successful innovation becomes key ingredient of managerial leadership. The various phases of innovation involving decisions and evaluation give credence to the design and process of evolving strategies. Funnel decision-making design is one of the most effective and popular ways of allocating resources to innovation. Klingebiel and Rammer (2013) strongly affirm that developing alternatives and using flexibility as provided by funnel design is cost effective as management gradually increases resource allocation till more information is available. Funnels facilitate in reducing the risks at later stage because early informed resource allocation run higher risks of misidentifying successful projects which tend to be rejected for greater probabilities for others. One of the most important features of funnel decision-making process is that it helps to identify early the uncertainty factors so that successful ideas could be focused on for further research. Thus, it enhances the hit rates for successful new product development. This is important as the low-cost optionality provides the management with leverage to make higher resource allocation on successful projects. Innovation involves high uncertainty because the new ideas have yet to be tested for their efficacy and performance. Resource allocation to innovation therefore requires astute judgment and evaluation techniques that would reduce the financial risk as well as time wastage. Strategic decision are impacted by various issues like foresight and awareness of environment changes that reveal uncertainty in future events that may not necessarily follow the past and often encompass drastic transformation (Adner, 2007: Besanko, Dranove and Shanley, 2009). Thus identification of factors that create uncertainties is facilitated by strategic decisions that address the issues and promote paradoxical thinking to have wider perspectives on innovation and innovation process (Harris & Woolley 2009). The funnel design thrives on testing many ideas initially to gradually minimize options such that final allocation to individual ideas runs lesser risk of failure. Mintzberg (1990) stresses that informed choices need to be exploited by evaluating the changing trends and preferences of the people and studying market conditions. The strategic decision-making by exemplary leadership ensures that data, information and knowledge are effectively linked within innovation process to gain competitive advantage. At the same time, routine promotes predictability, standardization and complacency where people are caught in the web of active inertia (Sull, 2000). Consequently, they are not able to make appropriate judgment for successful innovation. Funnel design of decision-making suits the innovative firms as it involves risk taking and incorporating un-programmed or spontaneous tasks and autonomy to experiment with new ideas. Moreover, within the funnel design of strategic decision-making, environment factors are used to test the effectiveness of ideas to finally hit the successful idea. Funnel design of decision-making process therefore is highly successful way of innovation that significantly contributes to higher success in firms that are driven by innovation and creative ideas. It allows management and developers to minimize decision errors through delay in full commitment and learn from mistakes so that risk ultimately pays off (Field, 2008). Indeed, uncertainty is inherent in innovation process and lack of awareness of factors that contribute to it result in failed research and higher cost of investment. The design of strategic decision-making therefore, becomes key element of successful innovation that is cost effective and at the same time, significantly enhances the chances of development of innovative products that add value to the performance of the firm. (words: 762) Reference Adner, R. (2006) ‘Match your innovation strategy to your innovation ecosystem’, Harvard Business Review, vol.84, no. 4), pp. 98-107. Adner, R. (2007) ‘Real options and resource reallocation processes’, Advances in Strategic Management, vol. 24, no. 1, pp. 363-372. Barney, J.B. and Hesterley, W.S. (2010). Strategic Management and Competitive Advantage, 3rd edition, Boston: Prentice Hall. Besanko D, Dranove D and Shanley M (2009) Economics of Strategy, 5th edition, New York: John Wiley & Sons. Christensen, C, M. (1997) The Innovator’s Dilemma: When New Technologies Cause Great Firms to Fail, Boston: Harvard Business School Press. Christensen, C, M., Kaufman, S.p., & Shih, W.C. 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