The Difference between Strategic and Operational Management and the Role of Corporate Strategy - Coursework Example

a) Outline the difference between strategic and operational management giving examples of the sorts of issues that would be examined at each level (around 200 words) The main difference between strategic management and operational management as employed by Corus lies in the duration of the plans and the time frame that are considered in formulating these plans. strategic management issues The strategic management as employed by Corus looks at the long-term survival of the company in order to craft a certain strategy in response to the environmental factors. In a case study by Times 100 entitled “Competitive advantage through sustainable product development in construction”, Corus looks at the current environment, as well as its future environment, which according to it encompasses a forecast for the duration of twenty years as part of its strategic planning process. Among the strategic issues that the company faces is the issue of sustainability in terms of the resources in its environment. With the issue of sustainability due to the scant resources in its environment, Corus wants to be the pioneer in addressing this issue, thus making it an opportunity for the company to take the first mover advantage. Corus recognizes that as a major player in its industry, a major factor as indicated by its external environment analysis that will impact the company is the issue of sustainability. How the company will take advantage of this sustainability and turn to profitability includes identifying solutions and adding value to issues that Corus’s clients face, which as mentioned in the case: “extending the life of the building so they can earn revenue from it longer--the average life of a commercial property is currently only 20 years; reducing the costs incurred over the life of the building especially energy costs; earning more revenue from a workforce which is more content because of a better working environment.” operational management issues Given that the strategic management of Corus determines the issue of sustainability, in order to carry it on the operational level, the company translates the issue into more specific needs for the client. As stated in the case entitled “Competitive advantage through sustainable product development in construction” by the Times 100, “Corus is aiming to develop solutions that, as well as being resource efficient, have a flexible and adaptable design. This means that the usage of a building can be adapted internally without altering the structure or exterior of the building (re-use). It is not possible to do this with a building whose internal walls support/act as the structure and support the floors. It is much more difficult to achieve this without major modifications.” b) Outline the strategic planning process used by this company and briefly discuss this in relation to theoretical processes (around 800 words). 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. Corus starts its strategic planning process by conducting an environmental scanning or an external environment analysis. By using the PESTLE, short for Political, Economic, Social, Technological, Legal, and Environmental framework, the company is able to determine the current situation within its environment that can impact directly its operations. The case study by the Times 100 has indicated major issues included in PESTLE analysis. As for the issues concerning political factors, “UK Government policy and EU directives, for example, planning and environmental issues including sustainability affect the construction industry.” The economic issues that face Corus include, as indicated in the case: “the health of the economy and interest rates affect demand for commercial and residential property; the UK government is using taxation as a means to encourage improving environmental performance e.g. The Climate Change Levy, Aggregates and Landfill taxes; and, the construction industry is increasingly interested in whole life costs of the building, which includes initial capital costs, operating and maintenance costs - understanding how better design can improve all these costs.” Issues that concern the social factor of the environment are identified in the case as, “Changes in the birth/divorce rates and the average number of people living in a household affect the demand for housing; increasing crime, ageing population, and people’s well-being are part of the social dimension – research shows that the highest number of disagreements amongst neighbours is due to car parking.” As for technological issues, “new construction technologies affect working practices in the building industry, constructing more component systems in factories rather than on the building site.” In addition to the typical PEST analysis, legal and environmental factors are included by the company as they greatly impact the construction industry. As for the legal issues: “the UK and European governments believe the construction industry is highly fragmented and the only way to improve the performance of the industry in terms of safety and environmental performance is to increase legislation.” The environmental issues to be addressed include “Two of the main issues here are meeting the Kyoto Agreement in production of Carbon Dioxide from the burning of fossil fuels and waste going to land fill.” While the company has identified its current situation through the PESTLE analysis, it has to broaden its view and identify the elements in its environment for a twenty-year period to take charge of the first-mover advantage. This part of the strategic planning process ensures the long-term survival of the company within its environment in order to foresee trends, and be able to adapt and prepare for them. After the company has scanned its environment, the company spots opportunities that it can leverage and threats that it can address. This is to make the market forces more favorable, and to its advantage as these issues cannot be influenced by the company. The PESTLE leads to the concept of sustainability, in relation to the relative scarcity in the environment of Corus, which is an opportunity for the company to address and gain the first-mover advantage. The company then determines its aims and objectives in order to take advantage of this opportunity. In order to coordinate and communicate these aims to the whole organization, Corus’s vision statement is formulated as follows: “Corus aims to create valued added products and services to promote steel intensive commercially viable buildings. Through advanced design and technology we will improve the quality of life in society whilst enhancing the life-cycle credentials of the built environment.” Corus knows that in order for its aims and objectives to materialize, it has to create certain strategies that will lead to their accomplishment. Its strategy, therefore is to identify solutions and adding value to issues that its clients face, which, as mentioned in the case include: “extending the life of the building so they can earn revenue from it longer--the average life of a commercial property is currently only 20 years; reducing the costs incurred over the life of the building especially energy costs; earning more revenue from a workforce which is more content because of a better working environment.” c) Using at least two techniques analyse the environment of the organisation (around 400 words). Environmental model 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. 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 Corus, the resources that are mainly used in its operations include natural resources that are not replaceable such as coal, gas and oil. The company recognizes that this relative scarcity has a large impact not only in its operations, but in the industry as a whole. It has a stake at the depletion of those natural resources as it is a major player in the industry. Stability and dynamism is what the volatility dimension is about—the degree of instability in the environment of the company. In the case of Corus, it operates in a relatively dynamic environment: the products are industrial durables that are subject to the dynamism of technology as part of the construction process. The third dimension is determined by relative homogeneity and dispersion of elements which make an environment either simple or complex. Corus operates in a relative homogeneous environment with dispersed elements, given that its construction operations is basically the same as the other constructions company; dispersed in a way that various aspects of the construction process varies depending on the needs of the clients. When it incorporates information technology in its offering, the company becomes subject to changes in technology in the market place. The industry where it operates in is very competitive, and all these comprise the complexity in VSM’s environment. PESTLE The case study by the Times 100 has indicated major issues included in PESTLE analysis. As for the issues concerning political factors, “UK Government policy and EU directives, for example, planning and environmental issues including sustainability affect the construction industry.” The economic issues that face Corus include, as indicated in the case: “the health of the economy and interest rates affect demand for commercial and residential property; the UK government is using taxation as a means to encourage improving environmental performance e.g. The Climate Change Levy, Aggregates and Landfill taxes; and, the construction industry is increasingly interested in whole life costs of the building, which includes initial capital costs, operating and maintenance costs - understanding how better design can improve all these costs.” Issues that concern the social factor of the environment are identified in the case as, “Changes in the birth/divorce rates and the average number of people living in a household affect the demand for housing; increasing crime, ageing population, and people’s well-being are part of the social dimension – research shows that the highest number of disagreements amongst neighbours is due to car parking.” As for technological issues, “new construction technologies affect working practices in the building industry, constructing more component systems in factories rather than on the building site.” In addition to the typical PEST analysis, legal and environmental factors are included by the company as they greatly impact the construction industry. As for the legal issues: “the UK and European governments believe the construction industry is highly fragmented and the only way to improve the performance of the industry in terms of safety and environmental performance is to increase legislation.” The environmental issues to be addressed include “Two of the main issues here are meeting the Kyoto Agreement in production of Carbon Dioxide from the burning of fossil fuels and waste going to land fill.” d) Using at least two techniques analyse the internal resources and capabilities of the company (400 words) efficiency through quality management According to Philip B. Crosby, “the purpose of quality management is to set up a system and a management discipline that prevents defects from happening in the company’s performance cycle. To accomplish this you have to act now on situations which may cause problems some time from now. Act now for reward later.” One of the capabilities of Corus is its continuous desire to improve quality. In a case study by Times 100 entitled “Sustainable business at Corus”, allocation of resources to support its strategy for sustainability is practiced efficiently within the organization. In 2004, Corus launched a programme called ‘Restoring Success’, which aims to give the company a lead over rivals in efficient production. This programme focuses on eliminating wasteful activities and ensuring efficient production. A key part of this is an emphasis on recycling steel. Through its strong recycling credentials, Corus stands out from its rivals as a responsible business that is committed to sustainable development.” Corus knows that not only by recycling will it be able to maintain efficiency in its operations, it will also be able to support its strategy to take advantage of the sustainability issue in its environment. culture Bartol coins culture in her book Management: A Pacific rim focus, as “a system of shared values, assumptions, beliefs, and norms that unite the members of an organization. Culture reflects common views about ‘the way things are done around here.’ Organizational culture is sometimes referred to as corporate culture because the concept is frequently used to describe the internal environment of major corporations.” (2001, p. 91). The company is a global company that emphasizes quality and efficiency in its operations. Because the company aims to be a learning organization, it focuses on the idea of continuous improvement which is related to lean manufacturing. As a learning organization, it emphasizes working smart and not working hard, as well as benefiting from the wisdom that it has accumulated throughout its stay in business. This culture supports the strategy of a company of maintaining sustainability in resources by being efficient with its operations. By being a learning organization, it accomplishes two things: efficiency in its operations as lean manufacturing or working smart, as well as not committing the same mistakes in its operations; and, knowing that its people are also scarce, it aims to maintain its people by ensuring excellent human resource policies, as well as a good working environment and satisfaction through empowerment. In order to support this, the company having global operations, maintains and ensures proper communication within. This is to pass on a shared knowledge among employees, which will empower them to solve certain problems and issues they face in their operations. The consistency in the knowledge employees acquire is important aspect of its operations. e) Identify how the internal resources and capabilities could be used to create a competitive advantage (400 words) CORUS academy (CI) Corus is an organization that values learning. Given its strategy of adding value to the solutions that it offer its customers, the company is aware that it will not be able to implement such strategy without using its internal resources to create competitive advantage. Learning at Corus and CI includes four aspects: shared best practices, common language (describing things in the same way), common tools (using the best tools to aid improvement), and shared standard approaches. These four aspects are vital to the creation of a culture that serves as a competitive advantage for Corus, to operate in a global manner at the same time maintaining close focus to its strategy. The Corus Academy, which aims to implement the strategy in a consistent manner, is split into five areas: the standards, the tools and techniques, networking, communication and training. Because Corus is a learning organization, the next steps to improvement lie in the shared knowledge that it accumulates in its operations. Thus, good communication within the company is crucial, to apply the best practices to same problems that the company encounters and not to commit the same mistakes that it has made before. The company encourages “continuous improvement or CI” in its operations by investing in training its employees. CI ensures that each Corus employee is equipped with the knowledge it needs in order to create changes and help in solving issues and problems within the company. This CI gives way to the forming a Corus academy, as stated in the Times 100 case entitled “continuous improvement—the Corus way”, where a full course is aimed to develop a CI coach, which pass on the knowledge to other Corus employees. This empowerment of employees not only ensures workforce productivity, but is aimed to develop internal communication well as it is a global company Knowing that its people will determine the success of its strategy, the Corus way emphasizes the importance the company gives to its people. One, it does know that empowering people will not only lead to increase in job satisfaction as they are able to accomplish more, but it will give them a sense of involvement as for the whole organization. The company-related cases that encourage employees to give their recommendations to the issues and problems related to the company gives them a sense of being “part of the whole team”, and enables the employees to increase productivity by effecting change on their own. Lastly, in order to facilitate good working environment, the company emphasizes learning and shared knowledge vital in order to ensure communication within the company, which in turn leads to success. f) Identify how choices between different options would be evaluated from an marketing, operational, and financial perspective.(400 words) A contracting company like Corus faces a different approach to determining strategic options than a company say in a fast-moving consumer goods industry. For a contracting company, the efficiency of its operations is gained through a number of clients that it services; the more clients it provide a certain solution the more it can take advantage of lowering its costs. On the other hand, an outside-in or market-oriented approach requires a company to focus only on some of its profitable companies, provide the total solutions they need in order to maintain long-term relationships and ensure satisfaction. This in turn, requires a company like Corus to offer more in terms of its product ranges in order to provide total solution. This is an issue, because at a certain point it affects the operating efficiency to the extent that it may need to outsource in order to maintain efficiency. From a marketing perspective, the approach to gaining competitive advantage is through an outside-in approach. By identifying its target customers, and designing solutions in order to satisfy their needs, the company will have to go to some extent to enriching the product range that it can offer. The marketing process, while utilizing an outside-in approach focuses on the relative positioning of the Corus brand in relation to its competitors. By doing this, and by fulfilling certain promises that accompany the benefits the brand offers through its product ranges, the company can ensure long-term relationships with its customers. This long-term relationship with its profitable customers will give the company profitability and better sustainability in terms of the profit for the long run. Customer satisfaction may entail certain costs to the extent of the business, shifting focus within its operational capabilities. This outside-in approach to some extent, can affect the inside-out approach to dealing with the environment and crafting strategy of management through the operations perspective. While the operating efficiency of Corus is one of its competitive advantages, by expanding and broadening the range of the products it can offer its target customers will require giving up certain parts of efficiency. It may even require it to resort into outsourcing, if a total solutions-approach to satisfy its customers is to be adopted. Certain customers, the less profitable will be trimmed down as focus on the identified target customers will be focused on. Thus, the issue of these contracting companies lies on the balance of the outside-in or inside-out approach of management as regards the strategic decision and gaining competitive advantages. These issues lead to financial considerations of the company as regards the strategic options: which competitive advantages should be used to be more profitable in the long-run? Outside-in, or inside-out? Operating efficiency, or long-term customer satisfaction through enlargement of the product range? These are indeed the issues from a financial perspective of a contracting company like Corus. While the long-term profitability in terms of the select customers is an issue, an operating counterpart of making the solutions available to most customers in the market in order to ensure efficiency will impact the financial standing of the company. Bibliography Bartol, K., Martin, D., Tein, M., & Matthews, G. 2001. Management: A Pacific Rim Focus. McGraw Hill Company, Australia. Crosby, P. “Crosby: ‘Zero defects’ and ‘right first time’”. Management for the rest of us. Available from World Wide Web: Times 100. “Competitive advantage through sustainable product development in construction.” Edition 9 Study. Available from World Wide Web: Times 100. “Bringing an innovative product to market: Assure®.” Edition 10 Study. Available from World Wide Web: Times 100. “Continuous Improvement - The Corus Way.” Edition 11 Study. Available from World Wide Web: Times 100. “Sustainable business at Corus.” Edition 12 Study. Available from World Wide Web: < http://www.thetimes100.co.uk/case-study--sustainable-business-at-corus--56-245-1.php> Robbins, S. 2005. Organizational Behavior. Philippines: McGraw-Hill Read More