Development of Strategic Management - Assignment Example

STRATEGIC MANAGEMENT” Faculty SECTION A Q1) Evaluate Amstrad’s strategic development since the 1980’s using the suitability, feasibility and acceptability criteria. Q2) Recommend a set of objectives and a strategic development plan for Amstrad from 2005-2010 – justifying the recommendations made. SECTION B Q1) Discuss the importance of corporate culture when contemplating introducing a new strategy into an organisation. Draw on any relevant case studies (especially from Johnson and Scholes) to illustrate your answer Q2. The management of change is crucial to business success in the 21st Century. With reference to CSP and Marks and Spencer identify the factors driving change and the difficulties involved in managing the change process. SECTION A Q1) Evaluate Amstrad’s strategic development since the 1980’s using the suitability, feasibility and acceptability criteria. Amstrad is a UK based company in personal computers, electrical and electronic products. It has successfully completed nearly 37 years in the business. It has tasted all kind of market experiences from success to failure. It has been continuously involved in the product development and marketing strategies in the highly competitive and rapidly changing market. Key Strategic Moves: There have been various points where the company and its management had to take strategic decisions. It was strong leadership and clear objectives that company has been able to face the change in the market with proper strategic moves. Some of strategic decisions are summarised below: Product Development: Amstrad had been continuously involved in the product development process for the new products for the existing market. It has established itself as a low cost product provider. One of the key strategies it has followed was pricing strategy. Innovation of Double Decker Machines, Phone book data bank, e-m@iler and others are some of the examples. Market Development: Amstrad has been focusing on the pricing strategy and identifying the niche markets for its products and offerings. It has developed new markets for the Double Decker Machines. Diversification Strategies: As mentioned in the case study, various diversification strategies have been adopted by Amstrad time to time for the success and survival. There are various ways of diversification strategies. The first is to identify opportunities to achieve further growth within the company’s current business (intensive growth opportunity)1. (Kotler: 2000, Pg 73-74) Amstrad has done this by launching new laptop computers in 1991. Apart from these product development strategies and others has been part of this strategy The second is to identify opportunity to build or acquire business that is related to company’s current business (integrative growth opportunities).2 (Kotler: 2000, Pg 73-74) Amstrad had innovated new double Decker machines and Phone Book Data banks which is related to there existing electronics business and it had profitable market for that. The third is to identify opportunities to add attractive business that are unrelated to the companies’ current business (diversification growth opportunity.3 (Kotler: 2000, Pg 73-74) Amstrad has entered into telecommunication business. It is an example of the diversification growth opportunity. Telecom sector was growing sector and at the initial growth phase of its product cycle. There was lot of opportunity to establish and gain profits with the growing market. Updated Key Events Till Date: Amstrad has been adopting various marketing and product strategies from the day it has started its business operations. It has attracted major advertisers for its digital media platform that is e-m@iler watch launched in 2001. It was a virtual tool for neighbour watch. It also released next generation Digital Set Top Box in the same year. In 2002 it has launched next generation of e-m@iler which offered more services to the customers. These services were internet access and entertainment related. Fro 2003 to till today Amstrad has been focussing more on the technical and operational side of the business. The supply chain management being the main focus area it has emphasised more on the supplier side and reduction of overall cost of the product adding value to the customers profitably. In 2003 Amstrad mainly focused on the manufacturing and operational issues. It entered into agreements with two separate new manufacturers for setup boxes, combined key board and remote control units. Apart from these it has entered into Italian broadcaster Sky Italia for the supply of digital satellite set top boxes. SWOT Analysis: Strength Experience in the Industry Established name Focus on Product Mix Strategy Focused Approach Leadership Weakness Pricing being the market driving strategy Risk taking abilities Opportunity Growing demand of electronics sector. Growing telecom, outsourcing(Customer Relationship) and entertainment sector Demand of computer accessory products increasing. i.e. data storage devices, printers, speakers, headphones Opportunity existing in new markets and territories like Asian, Latin America Threat Number of competitors increasing. Disturbance of any factor of supply chain management is always a threat factor Technology changing very fast in the area of computers and electronics. Government policies and socio-political condition of business environment. Q2) Recommend a set of objectives and a strategic development plan for Amstrad from 2005-2010 – justifying the recommendations made. Objectives and strategies are devised on the basis of the opportunity existed in the market, environmental analysis, analysing the attractiveness of the market and internal analysis of the company. So far it can be inferred that stability of Amstrad in the industry is due to its appropriate strategies, leadership and right products for the right market strategy. Amstrad has been satisfying its stakeholders. Now the new strategies can be developed on the basis of opportunities existed in the market. As mentioned in the question 1, SWOT analysis opportunities for Amstrad are as follows: Opportunity Growing demand of electronics sector. Growing telecom, outsourcing(Customer Relationship) and entertainment sector Demand of computer accessory products increasing. i.e. data storage devices, printers, speakers, headphones Opportunity existing in new markets and territories like Asian, Latin America Leveraging on Growth of electronics sector: Electronics sector is a fast growing market. Amstrad has been operating in the same sector from the beginning of its business operations. At present it focuses on the education sector. Within the education sector itself various profitable niche markets exist with the educational self learning requirements. Amstrad has expertise of electronics, computers and serving education sector. It can modify its product with the specific need of the sector i.e. Data Storage Devices can be supplied to the educational institute and for the students of Graphic Designing and others. There are various unidentified segment in educational sector with latent demands. A proper research can reveal the exact requirements. Growing telecom, outsourcing (Customer Relationship) and entertainment sector These are the other profitable segments for Amstrad where it can adopt diversification strategies. Customer relationship management today is totally based on technology. Cost cutting has been main focus for all the businesses. Amstrad have always focussed on the pricing and low segment. This segment is profitable. Requirement of cost effective tools like IVR, CTI and others are always there. Telecom sector is booming especially in the Asian countries where the market is still growing with a fast growth rate. Entertainment is another segment where Amstrad can leverage on. Demand of all kind of entertainments from in door games to outdoors is increasing. Growing culture of multiplexes, super malls, hyper malls and emphasis is another area of opportunity. Computer accessory products: The number of computer users worldwide is increasing. With time the penetration of computers and internet is growing in multi-fold. It was 1980 when world wide in every thousand people computers available was 1.14 which is 160.9 today. In 25 years the growth is approximately 150 times.4 The demand of communication tools and accessory products are increasing with the increase in the number of PC users. The reach and accessibility of consumer to internet is increasing and at the same time consumer has become more savvy and informed about his needs and rights. Competition is increasing since it has become global village, at one place companies have cut down their cost by using faster and effective mode of communication & business, on the other hand loyalty which the companies used to enjoy in the past is diluting. Recommendations: 1. Amstrad should explore new markets like Asian, Latin America and other where the economy is still growing. 2. It can look at the computer accessory segment. 3. It can focus on the niche segments of education sector as well. 4. Entertainment industry will be profitable for Amstrad. 5. More focus on telecom sector. 6. Attention to overall value chain. SECTION B Q1) Discuss the importance of corporate culture when contemplating introducing a new strategy into an organisation. Draw on any relevant case studies (especially from Johnson and Scholes) to illustrate your answer. Culture: Corporate Culture can be inferred from what employees do or say within the corporate setting. This is influenced by various factors like values, beliefs, socio-cultural context in which the organisation operates or the employee belongs, knowledge, behaviour and other factors. Types of Culture within Corporate: There can be various types of culture in any organisation. It can be role culture, task culture, power culture or star/personality culture. Johnson and Scholes describe culture as a web of interlinking entities, all of which influence the overall culture of any corporate. The role culture is most common among all the various types of culture. It is around the role or job rather than any other factor. A person in a key role position will always have a feeling of achievement and will get the same kind of treatment with others. The task culture on the other hand is performance based. This culture motivates members to show continuous problem solving performance. Power culture organisations are usually small in sizes. These organisations can be understood by the structure of spider webs. In those structures if the centre is removed the whole structure will collapse. The same happens here. The decision making powers are restricted to the power centres. They respond to the any environmental change or organisational needs. The personality culture is prominent in academics, research areas where people come together with similar interests. The culture of any organisation changes with the strategies it adopts i.e. diversification, reengineering, entering to the new market and others. This is influenced by various factors like leadership, technology and engineering, management of changes etc. For instance we take example of IBM case. IBM is a multi product and international organisation. In IBM everyone is expected to follow three fundamental principles: Respect Individuals Strive for excellence Provide the best Service No discriminatory policies, treating everyone equal for hiring, training and opportunities, best customer services and excellent reward system has been few factors for attracting talents from the job market for IBM. As the organisation started growing the distance between workers and management started increasing. The structure started changing to a bureaucracy kind of organisation. Span of control and vertical growth of organisational structure increased. To deal with it IBM adopted strategy of Independent Business Units for its PC division. This unit proved to be successful. IBM followed the same strategy for robotics, electronics, software and other opportunities. 5 Q2. The management of change is crucial to business success in the 21st Century. With reference to CSP and Marks and Spencer identify the factors driving change and the difficulties involved in managing the change process. In 21st Century, this is a period of globalisation and internationalisation. The world has become a global village where people can share information on fraction of time, people can work anywhere from anywhere and companies can explore opportunities in various countries and market place. This on one hand given several benefits and opportunities on the other hand has resulted in various challenging situations. Every plan of expansion, diversification, entering to a new market or any decision results to some kind of change in the existing setup. The challenges corporate today have to manage these changes effectively and efficiently. Take example of Marks and Spencer as quoted: We have over 400 stores located throughout the UK; this includes our largest store at Marble Arch, London. In addition, the Company has 150 stores worldwide, including over 130 franchise businesses, operating in 30 countries.6 Worldwide operations of the company serving people with various needs and demands, employing people with different cultural setups are challenging job. The decision to make standard policies and location specific policies are big challenges. Identifying the aspects which can be standardised and which should be localised demands for in dept study of new market, location and organisations existing strategies. As mentioned in the figure the process of management of change starts with understanding the process of strategic change. Management need to understand and study the impact of change in various stakeholders and various components of it. For instance organisation like BBC which has covered almost all parts of world and on their website they have location specific information and news. BBC works on contractual basis for the programs to be telecasted on the various countries usually with the collaboration with the national media houses. Figure 1: Managing Strategic Change7 Any process of change can be successful with effective leadership and change agent. People can be involved in the change process; they can be educated about the change needs and change process. Their inputs and suggestions should be taken. There are various factors which influence the change process they are: Leadership Change Agent Identifying resistance factors like Fear of unknown, fear of losing power or job, fear of not being able to handle the new responsibilities and others Ethical and moral issues After change implementation, post implementation guidance to handle any kind of discomfort or issues. The difficulties which any organisation will face during implementation of change are resistance to change. This can be overcome by proper organisation development process. All the factors of change should be identified and employees and various related stakeholders should be communicated well about the benefits of the change. Any conflicts should be resolved the earliest. Change can be managed well with proper communication, management education, counselling, and training, changing structures, systems and technology, changing attitude, participation of employees and with the help of proper leadership. Reference Johnson and Scholes Exploring Corporate Strategy. Prentice-Hall 1993 p. 396- 412 Kotler, Philip: 2000 Marketing Management, New Jersey: Prentice-Hall Inc., 10th Edition Koontz and Weihrich: 2000 Essentials of Management: London: McGraw Hills, 5 e, Pg 210 Piercy, Nigel F, Market Led Strategic Change, Butterworth Heinemann, 3 e, Charted Institute of Marketing http://www.etforecasts.com/products/ES_pcww1203.htm#1.1 assessed on 29 Jan 2006 http://www2.marksandspencer.com/thecompany/whoweare/index.shtml assessed on 29 Jan 2006 http://www.helsdale.demon.co.uk/cult.htm assessed on 29 Jan 2006 Read More