Management Must Strive for Efficiency and Effectiveness throughout Organisation - Assignment Example

Strategic Management is the set of steps through which businesses define the objectives for all the departments and products and are aligned those objectives with the corporate aims and objectives of the long term ultimate goals. It is the process to define Organization mission, vision and objectives followed by the policies and planning step in order to carve a way to reach the designed ambitions by deploying optimal combination of “available” resources to the organization. As discussed in the lecture, the steps of strategic management implementation to the real world 1) Strategy Development Process 2) External Environment Linked to Building Strategic Capabilities 3) Building Strategic Capabilities 4) Building Strategic Capabilities: Managing the Marketing Mix 5) Financial Performance Strategy Development Process This process starts with the concept of “Strategic Thinking”. Strategy Development requires one to think in a different way so that to take calculated risk in order to reorganize the problem solving and thinking patterns to replace those that was followed in the business without question. But the focus of strategic thinking is not to favour creativity for sake of it but to help one know how to capture future or make a brand new with the given resources. Along with Strategic Thinking, another important critical point is getting the right people involved and at the right place. As discussed in “Who says Elephant can’t dance by Lou Gerstner”, he quoted a number of members from his top management and referred them as heroes of the story of revival of IBM where they were intentionally selected and get involved in their roles and renewed the blue for IBM. The development focuses on three main paradigms Intended Strategy Development: A strategy that an organization has on its paper or want to pursue arose from strategic planning, Workshops and consultancy. Emergent Strategy Development: By keeping eye on the realities of political, economic and social/cultural situations, the strategy emerges out that is carries more logical and rational approach in the process of implementation. Challenges and Implications The future is not as predictable as we thought it to be after our planning. Uncertainties and complex conditions are always there in the real world so as the strategy makers came up with the back plans as the precautionary measures. Also, the concept of learning organization has arrived in the buzz of business referring to those organizations that learn from the experiences, situations and uncertainties. External Environment SWOT and PESTEL are the renowned tools for the external environment analysis. In order to devise a strategy, Firms look at the strengths in the field they are operating or want to operate in future and figure out the weakness they have in order to pursue an opportunity or deal with an approaching threat. These angels give the strategy the sight of Firm’s own business and resources with respect to the industry. PESTEL is purely external environment focused tools that is used to analyze the political, economic, social, technological, environmental and legal situations of related to a firm or to a strategy that is in focus. Political Situation involved the condition of a countries government and its stability, the policies and practices of a government concerning with respective sector and the regulations and regulatory infrastructure about that industry. Economics factors are the conditions of the business cycles of a related product or in a given industry. GDP and GNP trends are of the importance to analyze a countries economy is a company is going to invest in a particular country and following the strategy of going global and internationalization. Socio- cultural analysis is of utmost importance in order to understand the potential set of customers and defining segments and implementing through targeting the market with an appropriate strategy. Socio cultural analysis involved the demographics, income, lifestyle and other objective things about the society. Technology on which the dynamics of many industries depends have its roles in order to become business, operations and products more valued for the customers and low cost for the producers and manufacturers. Environment protection laws and the customer’s awareness along with the importance given to the corporate social responsibility have its implication for the organization whether to pursue a project or not. For example, the old case of ozone layer depletion cause of CFC came with major implications for the business related to the industries involving CFCs. Laws and the enforcement of it also gives the strategies of organizations new directions. There are a number of cases when business shifted the operation from developed countries to under develop countries because of absence of a specific law or looseness in enforcement. Porters Five Forces model Porter gave his Five force model back in 1979 and is a tool to design a firms position with respect to its suppliers, buyers, competitors(existing and upcoming), and intensity of rivalry throughout the industry. This is the tool design to figure out the dependant and uncontrollable elements of a strategy that can make it tumble while implementation. These points then strategized to reduce dependence and look for alternative or act accordingly to the given available resources. Building Strategic Capabilities Market Segmentation and Target Market Under the light of above stated analyses, firms figure out the potential market in an industry with the help of strategy they have planed according to the scenario. Now comes the time, where firm segment down the potential customers in to groups because no one can be everything to any one especially when it comes to business. According to the segments and their match with the strategy, company goes for the final implementation that is to go to the customers with their offer. The selected and optimal segment for the business is the targeted segment or target market/ niche market for that firm. In order to cater the target market, Marketing mix tool kit is the framework to follow in order to make their offer to the customer and brand themselves in front of customers by creating difference from the competition. Marketing Mix Marketing Mix tool kit was initially came up with 4Ps, now days, some authors refer to this tool kit with 5 or 7Ps depending on the product or services. The Tool kit carries frameworks for 1. Product 2. Price 3. Promotion 4. Place 5. People 6. Process 7. Physical Evidence Companies design their products that are more efficient for them to produce with the resources and technology by keeping in mind the needs of targeted customer class. Then, Pricing is carried out with the costs plus the brand value and the bargaining powers of different forces. Promotion is primary tool to create awareness for the new products or to remind the customer about the existing one. Place, the point to make offer to the customer directly, has its own significance. In order to target the elite class, no one can open a restaurant with jammed roads, thin streets or low quality ambience. It surely differs how we build the hotels for different classes. People, process and physical evidence of the existence are of importance for the services industries like consultancy. Financial Performance: The end results of the strategies is showed in the financial performance where one can get to know the return of which tool get how much return and the overall return for the business and for the share holders. This is where the value of a firm and its fortune get decided when talking in monetary terms and in the share holder perspective. The very basic perimeter for this is PE ratio. There are many other complex models. Developing and implementing the strategy by having the perfect fit for it does not put this process to its end. As the customers are fickle and industries are dynamic along with the related micro and macro variables of economy and country, the strategies needs to be monitored and revised and redirected according to the new scenarios in order to create new futures for the business by venturing in to blue oceans along with competing effectively in red ones. References 1. Strategic Decision-Making Processes: The Role of Management and Context Vassilis M. Papadakis, Spyros Lioukas, David Chambers Strategic Management Journal, Vol. 19, No. 2 (Feb., 1998), pp. 115-147 2. Introduction: What Is Strategic Management? Dobson www.blackwellpublishing.com/.../Dobson_strategic%20management_sample%20chapter.pdf 3. Introduction to Strategic Management Susan Scribner new.paho.org/hss/documents/introductiontostrategicmanagement-EN.pdf 4. Strategic Management for Senior Leaders: A Handbook for Implementation Denise Lindsey Wells govinfo.library.unt.edu/npr/initiati/mfr/managebk.pdf 5. Who says Elephant can’t dance Louis V. Gerstner Read More