Strategic Management and Business Policy - toward Global Sustainability - Assignment Example

Strategic Management On the Basics- a) We have said that strategic management is an evolution and a destination. What does this mean? Discuss in detail. Strategic management can be considered a destination because it is elements of the pursuit of the best possible plans that constitute strategic management. Strategic management pertains to the external analysis and control with regards to an organization and effective decision making is linked to the realization of strategic management. Strategic management can be regarded as an evolutionary process because all firms go through the different phases of strategic management as the managers brainstorm ideas to improve the functional indicators of performance of the firms (Wheelen, Thomas and Hunger, 5). In this regard, small and young firms support a primitive system of managerial responsibilities where managerial planning consists only of the financial matters, and periodic budget planning at the departmental level is the standard operating procedure of strategic administration. As the administration realizes that effective plans and projects cannot be strictly timed-bound or resource-bound, the administration looks to allow managers to provide greater input to the shareholders and have a higher say in the overall orientation of the firm. Hence, departmental managers and project directors formulate larger and longer plans and budgets are correspondingly designed to allow for these plans. As the operational nature of financial management appears to be falling behind the expectations of the shareholders or the higher management, the top management becomes active and likes to assume greater control of the strategic positioning and planning of the organization. Planning is recognized as a key administrative process and therefore committees are formed whose specialist task is to analyze the external positioning of the firm using factors such as market trends and brand identity and inform, assist and instruct the top management in their decision-making. As the separation of the operational management and staff of strategic decision-making proves to be counterproductive, the top management realizes the importance of and tries to implement a system of integrated planning and decision-making. Various groups based on strategic objectives are formed, information-sharing is increased and planning, budgeting and initiation of different projects proceed with an asymmetric system. b) Provide three examples of how your team company is or is not a ‘strategic management’ firm. Best Buy is very much a strategically managed organization. The fact that the company started off as a single music store in 1966 and is now a multinational retail chain of over 2000 stores readily indicates that the firm must have utilized a lot of aspects of strategic management. A major manifestation of strategic management of Best Buy is realized from the fact that the company has adopted an organizational system which is very flexible in order to allow for the continuous restructuring that happens in the organization as per the decisions of the highest administration. An example of the type of comprehensive overhauling best buy is open to, is the administrative changes of 2009, when Best Buy reduced the number of product-wise departments at every store from eight to three. Another way in which Best Buy adheres to the basic principles of strategic management is the allowance of open communication between the employees of the organization, regardless of the designations, and the provision of access to important information for planning purposes to all of the managerial staff and team leaders. To this end, Best Buy has adopted a method of communication from the top level management to the bottom level workers, which bars only sensitive information from transmission from the highest level employees to the base level ones. The Employee News Feed enlightens the store workers of Best Buy, upon the wishes of the corporate managers and shareholders, on the developments taking place possibly in countries foreign to the workers. Similarly the Best Buy Employee Toolkit is a software bundle which is constantly updated to incorporate the latest innovative ideas of the Best Buy management and in addition to assisting the store employees in their specialized work, provide them the tools to analyze operational conditions, and record the status of various types of performance parameters for their own and the top administration’s assistance. And a third way in which Best Buy fits into a generic strategic management model is the way the company ensures participation of all the managerial staff in providing different levels of input for the running of the organization. The company does this by encouraging its staff to pursue their plans for the better running of the organization at whatever level a staff member has control over. A promotional tactic the company now employs all over its operating regions came from a store manager, who tried out, on behalf of the company, but as his own idea, offering discounts to those pupils of a nearby school who scored an A in any subject in a recent examination. c) Lastly, clearly and succinctly describe your team company’s mission statement as well as the 2014 goals and objectives of the firm. While the company has never issued an official mission statement, it has always carried the following message for investors and customers: “"Our formula is simple: we’re a growth company focused on better, solving the unmet needs of our customers—and we rely on our employees to solve those puzzles. Thanks for stopping." Therefore, the two key terms discernable from this statement that allude to the presumable mission of the corporation are ‘unmet needs’ and ‘employees’. Another statement by Best Buy, oft-quoted as the vision statement of the company claims that Best Buy’s aim is to “make life fun and easy for consumers”. For 2014, the company is looking towards personalization as the next major business step for attracting customers and building loyalty of the section of society that prefers Best Buy amongst the major retail stores. The plan is to offer customized merchandise to the consumers for a start and gradually move up to the point in the future where the company is able to offer end-to-end solutions to customers. 2) On Corporate Governance- a) Discuss three traditional roles of the board of directors. Also, identify and discuss the most urgent governance issue impacting your team company’s board – what are they doing to manage this important issue? All the three primary responsibilities of the board of directors realize the collective power of the directors and would be ineffective if framed in an individualized manner. The vital function that the board of directors performs is the formulation of policies of an organization and the determination and refinement of its objectives. This function can be said to give the organization the life it leads. Hence, in the absence or critical neglect of this function, the organization dies. A second function of the board of directors, comprising both internal and external directors, according to the style of the organization, is appointing, evaluating and guiding the key personnel in the administration of the organization, especially the chief executive. The board of directors acts as a regulatory body, keeping the performance of the executives in check, limiting the power of executives, etc. The third task performed by a board of directors pertains to the financial oversight of the organization. The board aims to ensure adequate financial resources to the top management of the organization and approves the budget requests of the executives. The budget allocation is normally left to the administration executives who decide upon it in consultation with the various departmental managers. b) Lastly, identify and evaluate a major philanthropic initiative/program to which your team company contributes or leads that aims to do good while also helping the firm do well. Best Buy has been one of the loudest corporate voices in support of recycling of used goods for the safety of humans and their environment. Best Buy accepts any electronics item of trivial resale value for recycling as long as the utility of the item is not totally lost. Visitors can trade-in their used electronic appliances as long as the appliances carry any resale value, and if they do not, Best Buy collects the appliances for recycling purposes. So far, the company has recycled more than 800 million pounds’ weight of used electronics and its goal is to reach the figure of one billion pounds. In October 2013, the company won the inaugural cycling Leadership Award of the Consumer Electronics Association. 3) On Competition & Porter’s Five Forces a) We have said that competition forces society be better by providing superior value. Identify and discuss your team company’s competitive advantage and core competency – in essence, the magic sauce that makes the company stay in the game. Best Buy has a two-pronged strategy for beating competition from the other, larger, retail chains like Target and Amazon.com. The company cannot hope to match the variety of Wal-Mart and Target or the customizability and convenience of Amazon.com and eBay respectively, and therefore, there is little logic in targeting the specialties of these retail corporations. Hence the company has been focusing on pricing overall and on employee productivity in its land-based retail business. The company even has a policy of giving away an item at the lowest price offered for the item by any recognizable retail company - if the hopeful buyer produces acceptable proof of the low pricing. At the heart of Best Buy’s retail store survival technique is commitment to customer service. The company relies on well-trained, knowledgeable and helpful staff to keep customers coming into its retail stores. Best Buy popularly employs Geek Squads to assist customers in finding what they’re looking for as well as additional information related to the objects of their interest. The four self-devised principles Best Buy aims to adhere to are: 1. Enjoying offering the best service 2. Gaining from adversity and change 3. Staying respectful, humble and gentle 4. Utilizing the power of people b) Lastly, provide a descriptive discussion of the Five Forces Model of your team’s company and include what Wheelen and Hunger call the sixth force in your analysis. Regarding the degree of rivalry, Best Buy remains challenged by other retail businesses that sell electronics products, like Amazon.com. However, it is quite clear that because of the customizability offered by the online retailers like Amazon.com, Best Buy does not stand a chance of breaking into the monopoly of Amazon.com, eBay and Alibaba. On the other hand, Best Buy has virtually no competition in the shape of a land-based electronics retailer and decline of its own customer service can be its only enemy. This means that there is the threat of a new entrant in the consumer electronics retail market. Best Buy puts great emphasis on staying on top of the advancement of technology as the pricing and utility of electronic appliances changes rapidly and incessantly. With all the patenting wars in the software and hardware gadgets arenas in the recent past, it seems that electronic producers are moving towards self-marketing. And that signals a very real threat of substitution of the retail small electronics market. Supplier power has been the key to Best Buy’s becoming and remaining a multinational electronics retailer. With regard to the sixth force, the only worry for Best Buy is the role of its complements which seems to be evolving away from the fortunes of Best Buy. 4) On the Value Chain- a) Identify and discuss the business model that best describes your team company. Best Buy’s business possesses the characteristics of the switchboard business model. The company produces no product, provides a variety of choices to a customer and offers a range of product types for different types of customers. In addition, it provides the possibility of shopping for many types of products of a single manufacturer to brand-conscious customers. b) Lastly, provide a descriptive overview of the various components of the Porter’s value chain model as they apply to your CEO company. Identify the areas within the value chain needing to be strengthened. Ultimately, what is the profit/margin goal of your firm? The first component of Porter’s value chain is inbound logistics. Best Buy has a policy of bearing some cost of the supply if a manufacturer is unwilling to provide its distribution services because of long distance between the distributor and the Best Buy store. At almost every Best Buy store, the company bears a loss of some or the other products, because unlike commodity retail, electronics supplies are not ubiquitous; however Best Buy persists to provide the product to the customer in order to keep its customer base intact. The operations element can be considered the stocking, inventory keeping and MRP functions of the Best Buy retail stores. For the outbound logistics, Best Buy is gradually adopting a system of zero-footprint retailing which is used in online retailing. Online retailers command a network of distributors who keep inventories at their own expense and are also responsible for ensuring timely deliveries to the customers. Because of these qualities the distributors are able to cater to a number of retail companies. 5) On General Strategy - a) Define and discuss the current business and corporate strategies of your team company using the language from our readings. Best Buy uses principles of both cost leadership and segmentation to further its business. As stated earlier, it strives to offer competitive pricing as it is not a producer and hence product quality is irrelevant: which also allows it to employ a cooperative business strategy by teaming up with the electronics companies. On the other hand it combines the pricing focus with a focus on a particular kind of customer: one who is unsure about the exact electronic product he would like to buy and therefore looks for options and enlightenment on the products. Best Buy’s executive management is at a crossroads with regards to its corporate strategy. The company has already tried to make an entry into e-commerce, but failed because of the lack of required functionality. However, the electronics manufacturers are expanding their in-house marketing operations and the room for retail electronics marketplaces is also evaporating. b) What are the strengths and weaknesses of the current strategies? The company has too much reliance on segmentation where it relies on its ability to offer variety. Public knowledge of the popular electronic items is increasing as are the resources and ease of acquiring this knowledge. In terms of corporate affairs, the company has an excellent supply chain and contracting mechanisms which allow it to maintain a strong connection between supply and demand. Also the Geek Squad service of Best Buy is unique and probably accounts for a fair proportion of the customers the company gets. c) Lastly, identify the most urgent decision needing to be made to ensure the competitive sustainability of the company or to move toward a sustainable competitive advantage. Best Buy has very little chance of breaking into the online landscape with its current corporate portfolio. The only method of making an impression on the online buyer is offering standout area coverage. Best Buy could also delve into the services sector utilizing its Geek Squad service and the popularity of the service to start a consultation service arm. The truth is that the electronics retail industry is past maturity and Best Buy, being the only major electronics retailer now, must change its corporate direction towards distribution or customer service, or both, as these are the two sectors for which it has useful resources. Works Cited Wheelen, Thomas L, and J D. Hunger. Strategic Management and Business Policy: Toward Global Sustainability. Upper Saddle River, N.J: Pearson Prentice Hall, 2012. Print. Read More