The Behavior of a Business and Management Strategy - Essay Example

Question If you a. had to invest over 5 years your own money in one of the companies you have covered, b. could work for one of the companies …..which one would you chose and what is your thinking behind such a choice? Would your answer be different for part a) compared to part b) and why? In order to answer these questions, there has to be certain criteria to be determined where the decision would be based upon. In this case, very vital among the concerns of most of the stakeholders—in this case the shareholders and the employees—are relative growth and sustainability of a company in order to arrive at a decision. Although the two variables—growth and sustainability in business are both important to these two sets of shareholders, the relative emphasis differs. Let us assess both companies first according to the two variables. In terms of growth, Topshop rates better; it has very well defined plans for expansion. It has pursued the corporate-level strategy growth, in its operations as apparent in its dealings with foreign entities in line with its expansion. On the other hand, Ted Baker adopts the corporate-level strategy stability in order to focus on its current target market and satisfy them the best. Here, we can see that in terms of growth as assessed by using Ansoff matrix, Topshop is very aggressive in its plans and offers a promise of fast growth by market development. On the other hand, Ted Baker approaches growth on a slower pace, as it offers more product development to its current market. Sustainability is a company’s ability to sustain a level of sales and the state of its operations in a more or less steady level as it approaches the future. In terms of sustainability, as we assess the companies according to their marketing strategy, Topshop seems to be pretty sustainable but not as sustainable as Ted Baker. With Topshop adopting a mass marketing strategy, it focuses on sales-driven transactions. It goes to new markets to offer its product in a more or less like shotgun approach. With the complexity of the apparel industry and fickleness of consumer behavior, this shotgun approach to marketing, and catering to as many people is criticized constantly with regard to sustainability—it has not defined well who it is really selling to and whom its promotional efforts are directed to. On the other hand, Ted Baker’s strategy is to adopt target marketing and focus on a profitable segment. By consistently knowing what they need, they are able to satisfy their target market well. With a solid customer base, Ted Baker can offer products less expensively to its loyal target market. This consistency in its marketing strategy provides better sustainability on the part of Ted Baker’s operations, provided that it nurtures its customer base and keep track with the changes in their preferences over their lifetime. The emphasis on relative growth and sustainability differs according to the perspective of different stakeholders, although all stakeholders demand that there should be growth and sustainability in the operations of the businesses they are part of. From an investor’s point of view, security in the return of his/her capital is the primary concern, so sustainability is given more emphasis, although growth is still required. From the perspective of an employee, career objectives seem to be the primary individual concern, so growth within the company, through the expansion of its operations, give growth much more emphasis. Given those arguments, as an investor Ted Baker is a better investment. The security of the investment as offered by its sustainability in its current market and the relative manageable uncertainty, because it knows its target market well makes it a more suitable choice. Ted Baker pursues a more sustainable strategy, in the sense that by establishing relationships with its most profitable customers, not only is it cheaper and easier for it to offer new products to its current customers, but its sales are more predictable as function of their loyalty. By creating a strong brand, Ted Baker not only knows that it is more expensive to always look for new customers, so to build relationship with its current ones will provide it with success even though it is a small player, niche player, in the market. It continues to prove to be more profitable, as long as it keeps with its customers’ preferences over their lifetime. Although for the current, the strategy seems to be working for Ted Baker, however, it will be less wise for the company to be passing on the opportunities to accelerate its growth a bit. With the steady customer base, it definitely knows the profile of its target market. And to look for prospective customers based on the profiles of its target market, will prove to be beneficial. Here, it can add more to its customer base, although little by little but continues to keep them loyal, and a steady stream of profit is also foreseeable in its future; thus makes it more able to adapt to the fickle apparel industry with rapidly changing customer preferences. On the other hand, Topshop is pursuing a lot of growth outside the country. With this, there are more positions to be filled in within the company, which can provide a broader career opportunity for an employee. Also, Topshop’s international operations will provide diversity in terms of experience for its employees. In this case, for an employee who looks for the long-term objective in his/her career and a company where to carry it on. The fickleness of the apparel industry, will in the long-run push Topshop to move from a sales-driven operations into a relationship-driven operations in order to thrive in the market place. The best companies in the world know that they cannot satisfy everyone; therefore mass marketing will reach its ability to sustain operations. In order for it to be more profitable in the long-run, it has to be more focused, know its customers first, deliver everything to satisfy them and grow through expansion, as it delivers the same promise to new customers with the same profile to its old profitable ones. Only by creating a relationship with them will it become more sustainable and surviving despite the rapidly-changing customer preferences in the apparel industry. The answer is different for the two questions as the two questions require different perspectives to answer them appropriately, and those two perspectives give relatively different emphasis according to variables such as growth and sustainability in a company’s operations. Question 2 If you were a new CEO appointed to run your selected company in 2a, what detailed strategy would you want implemented to feel confident your chosen business would remain competitive over the long term. What forms/tools or strategising have you used to arrive at this strategy and why do you feel they are best suited for use in this business situation? What would your proposed plan be for how this strategy should be implemented internally and how you would get the buy-in with each of the major stakeholders in the business? Wise companies start with environmental scanning first, and implementing strategic planning especially in the case of industries that are proven to be fickle with rapidly-changing customer preferences. As Topshop is chosen as the more suitable employer to work for on the basis of career growth and opportunities, as CEO, environmental scanning should be put first in order to have a firm ground on where the strategy will be based upon. 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. Topshop should go back and determine to the its most profitable customers as its main target market, whom it should choose to build a long-term relationship with. The first thing that it should do is to re-evaluate the company’s current mission, set a long-term vision and set strategic goals. Only when the goals are already set will the company be able to craft clear and strong strategies. However, a consumer-centric philosophy in doing business should be adopted by the company—which focuses on consumers very closely to determine their needs, anticipate their wants in relation to the fashion trends and appeal to their very psyches. Strategic marketing should be employed in the overall strategic process, where focus on the consumers is vital. Marketing research is vital only to determine current perceptions about the company, and to plan strategies on how to reverse it. On the corporate-level, Topshop could continue pursuing a growth strategy through foreign expansion. However, by knowing its target market well in its home country will it be able to determine similar profiles of this market abroad. By defining a similar market, its marketing efforts could reach economies of scale as it caters to the same set of profitable customers, only in a different location. Although, this foreign expansion would entail other issues such as standardization to reach economies of scale, and localize in order to get to know deeper its customers in foreign markets. In the long-term, if the focus of Topshop is to maintain sustainability and achieve higher sales targets, it should strengthen the company image through branding and create equity. Topshop as a brand should re-establish its positioning which it finds as more sustainable in the long-run, and exists in the minds of the consumers. In this level, instead of utilizing rigid marketing research, Topshop can use motivational research which deals with in-depth study of its consumers which could help unleash the hidden desires of consumers that can lead to their preference in line with the fashion trends. A major recommendation is to pursue brand management on the corporate-level; as well as major integration among all the functions related to it. This calls for strategic human resources management in order to determine the structure for it. In line with its strategy of growth and adopting a strategic approach to human resources, it should think about its employees’ typical career path for growth and opportunities within the company as it anticipated new positions to be filled in within the structure. At the same time, strategic distribution should be kept in mind, seeing if the places where the brands are sold and distributed. The tactical plans, mainly the four p’s of the brand—product, price, place and promotions should be consistent with the target market. Its promotions should focus on creating marketing communications messages that are aimed to build lasting relationships with its target market. However good a strategy is, there are still issues an organization will face in terms of executing it. This recommended strategy, as it requires a change in structure to follow it and meet the objectives from which it is designed to achieve will face human resource issues, thus needs to also be addressed. This includes structural change, to prevent and address potential conflicts to arise in relation to execution, as well as current dissatisfaction in the work environment as mentioned in the research; and change management within the organization. The structure, in which such company conflicts are prevalent, is usually a mechanistic one. A mechanistic structure, as illustrated by Robbins in his book Organizational Behavior, is “comprised of high specialization, rigid departmentalization, clear chain of command, centralization and high formalization.” The behavioral issues that are usual outcomes of this structure springs from the fragmented and narrow view of the organization, as the research on Topshop warrants it, which does not focus on a whole but only let employees focus on their jobs as separate parts. The major key to address this issue is to provide all the employees a holistic view of the organization, which they are all part of and they are working for. Involvement and extensive communication is a crucial factor to providing a holistic view of the organization. The major structural issue to identify is on how to minimize these conflicts resulting from massive compartmentalization of jobs, while maintaining operating efficiency and productivity of employees by still utilizing specialization in some areas. This will also address the need to carry on integration in Topshop’s branding efforts. In many years, successful consumer-centric corporations have used the concept of cross-functional work teams in order to build their corporate brand and address the issue, as they serve all its customers from all the parts of the organization. A cross-functional work team is a team organized to perform a task, usually to work on a certain project within the organization. It is cross-functional because the members of the teams come from different specialized functions of the organization—research and development, marketing, finance, human resources, operations, etc. While the team focuses on things ranging from solving a certain problem in the company, to working on a new product a company decides to launch, specialization is used according to the demands of the project. The diverse set of individuals from different specialized jobs, working together also provides a multitude of insights for brainstorming. Because cross-functional teams work on a certain project, it is wise to empower these people, and give them a certain authority on deciding as to the maters concerning the project. This entails job enlargement and enrichment, where these individuals are given broader responsibilities, but still within the scope of their jobs. These individuals thus require training and developmental programs to ensure that they are capable of performing the new, broader responsibilities. Cross-functional teams also need flexible coordination with their immediate superiors or subordinates in order to do well on a certain project. This entails flattening of the organizational structure, and cutting down formalized processes that could cause bottlenecks to the performance of the teams. The use of cross-functional teams, even in the upper-level management promotes cooperation, and interaction among various departments in order for one to know what is going on with the other departments. As the lines of communication become open to more people, what really happens to the organization as a whole is determined. This, in turn, provides a more holistic view to employees. Cross-functional coordination would also give way to a new budgeting system, which rather than being given to certain departments, would be given to certain teams that handle the project. While the issue of competition is still apparent, a certain level of competition is necessary to promote excellence within the company. In this case, instead of making competition among departments, which is detrimental and counterproductive because they should be coordinating instead of competing, competition is utilized in a more productive manner. In order to effect this reorganization within the company, change management should be utilized in order to shift the status quo to a desired state in the future. Bartol, in her book Management: A pacific rim focus, illustrates a process of change management in eight steps. Bartol’s Eight-Step change model 1. gain recognition of the problem or opportunity The opportunity of integrating the operations and branding efforts of the organization in order to provide sustainability in Topshop’s long-run business health is to be recognized in order to start the change management. In this case, Topshop’s new strategy will drive the change in the organizational structure. 2. line up powerful sponsors In order to backup the planned change, the most powerful sponsors, usually the key people within Topshop, who are the executives, are to be informed about the planned change, and to gather their support in order for the change to be communicated to the rest of the company. 3. develop and communicate a vision In this part, the vision of changing the organizational structure has to be developed and communicated, first to those people who can pass around the information. In developing a new vision, it could be helpful to involve the rest of Topshop in order for them not to feel like the vision is a top-down command. It is to enable them to know the situation of the company and to feel like being more involved to what is happening, which makes them more receptive to the changes that will be enforced in line with the vision. This will address the concern in Topshop’s work environment where employees may perceive the vision as a top-down command, which can result in narrow view of the organization and less contribution in terms of overall productivity. 4. empower others to act out the vision By giving the proper authority to people who are capable of communicating the desired vision about the change in organizational structure, these people will have better chance to act out the vision. This may entail choosing the right people to conduct seminars and trainings to inform the other employees about the changes, and form a certain system to create these changes. Employees should be encouraged to act out the vision and adhere to the changes that are taking place within the company. In this case, promoting cross-functional teams would entail cutting down processes that are potential barriers. 5. prepare to overcome resistance Because this major structural change would require flattening the organization, as various processes would be cut down, a lot of positions come with them. This would make resistance more intense because personal interests are at stake, also because of the perceived uncertainty of the future work status quo. Thus, resistance should be overcome by coming up with rewards system, as discussed in the next step. 6. plan for and reward visible progress In operant behaviorism, the desired behavior is reinforced in order to encourage repetition, and undesired behavior is punished in order to discourage repetition. But a more humane, in line with motivation, way is to do the former which is to reward visible progress as planned change is carried on. This would mean that the desired behavior is appreciated by management, thus should be maintained. 7. consolidate improvements and facilitate further change By telling the employees about the improvements and where the division has gone as regards its restructuring and the benefits that are effected by this change, employees will see it as a good and necessary process that lead them for the better. By encouraging change in other areas of improvements, and soliciting ideas from employees in order to improve operations apart from the change in structure, better workplace environment will be fostered. 8. monitor and institutionalize changes When the change is not reinforced for the long time as such that it becomes part of the corporate culture, there is a huge tendency for the employees to go back to previous practices which could make things a lot worse than before. By continually reinforcing the changes until the time it becomes part of the new status quo, it is wise to always remind the employees of the benefits of the new structure, as well as the good things that cross-functional work teams, in our case have contributed to the operations of the company. The employees have to see the result to, as well as the improvements that the change will do for the company in the long-term. With all these addressed, the given strategy for Topshop in order to improve its operations and maintain its sustainability will be better executed, that will warrant the success of Topshop in the long-term by adopting a consumer-centric philosophy of doing business. 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. ROBBINS, S. 2005. Organizational Behavior. Philippines: McGraw-Hill Read More