Strategic Management: The VRIO Framework - Assignment Example

Strategic Management Table of Contents Table of Contents 2 Question 3 Question 2 4 Question 3 6 Question 4 8 References 12 Question The VRIO framework, which was previously known as VRIN framework, is an analytical tool used principally for analysing the internal environment of an organisation that includes both tangible and intangible resources in accordance with the organisational capabilities (Gallagher, 2004). This framework is based upon four questions, which included the “question of value, question of rarity, questions of imitability, question of organisation”. Correspondingly, it is considered that this framework is quite beneficial as it evaluates the organisational activities and capabilities and helps in establishing a competitive position for a company in the market (Pesic & et. al., 2012). It has also been revealed that there are there main benefits of VRIO framework to an organisation, which are as follows. The first benefit of VRIO framework is that it helps in categorising the critical capabilities of an organisation, considered as the driver for creating value within an organisation. The VRIO framework analyses the competitive advantages for an organisation that further helps in determining whether the organisation is capable enough to sustain in the market. It also helps in identifying certain business prospects that would provide a competitive advantage to an organisation (Lin & et. al., 2012). The second benefit of the framework is that it helps in evaluating the intangible resources of an organisation through questions of value, rarity and inimitability. It is subsequently considered that if the VRIO framework is integrated with the Resource Based View (RBV) approach, the intangible resources of an organisation can be effectively analysed, as it is quite difficult to measure the intangible resources of an organisation. Overall, this integrated VRIO-RBV framework would help in analysing the resources that are uncertain in nature (Lin & et. al., 2012). The third benefit of VRIO framework is that it analyses the strengths and weaknesses of an organisation, which in turn helps the managers to make quick decisions. It is considered that this framework covers the pitfalls of SWOT analysis as it provides a more perceptive and dependable insight to the strengths and weaknesses to an organisation (Lin & et. al., 2012). Question 2 It is conceived that technological enhancement has been the main driving force for the increased extent of globalisation. Contextually, technology is referred to as the socialised knowledge for manufacturing products and/or services. Arguably, there are five elements in technology those play a huge role in driving globalisation of numerous industries. According to the Faculty of Communication and Media Studies, these elements include “production, knowledge, instruments, possession and change” (Faculty of Communication and Media Studies, n.d.). Driven by these elements, changes in technology have increased the capacity of production, wherein, without the use of technology, it is quite difficult to manufacture products and/or services. Thus, it can be stated that technology has driven globalisation owing to the fact that it is particularly due to the changes in technology has played a key role in triggering productivity expansion and business transactions worldwide. Likewise, technology forms a major part of knowledge distribution cycle in the contemporary scenario, as it is derived from intellectual functions due to which companies use research and development while globalising at such an extensive magnitude. Correspondingly, technology involves a set of instruments that are either tangible or intangible in nature, due to which it is used by companies to globalise their business effectively (The Levin Institute, 2013). Possession is also an element of technology as the individuals who possess technology have the ability of controlling it and trigger globalisation. This controlling factor has a relationship with the economic and political aspects of globalisation for a company. It is thus considered that companies, which possess technology and have the capability of controlling it, can ensure an effective globalisation process. The final element of technology includes change as a driving force for innovation within companies. In most of the circumstances, it is viewed that companies, which are able to innovate in the current, frequently changing business environment, develops a capability of globalising their business effectively. Technological developments in navigation and conveyance have also contributed towards globalisation of several industries. It can thus be revealed that due to the improvement in transportation that was induced through technological change, export and import activities have been possible at a large scale, which hence resulted to globalisation (The Levin Institute, 2013). Moreover, there was huge improvement observed in the communication practices, due to the change in technology and this improvement highly contributed to the increased extent of globalisation among various businesses. Enhancement in digital technologies also acted as a driving factor of globalisation for several companies, as global network was established among companies due to which, smoother transfer of knowledge and information among various nations became possible, which further resulted to globalisation. Due to technological change, it was witnessed that e-commerce activities were introduced due to which techno-globalism was promoted further among companies, helping in their globalisation process (Faculty of Communication and Media Studies, n.d.). Thus, it can be asserted that enhancement in technology contributed towards globalisation among various industries. It would be worth mentioning in this context that globalisation of these industries would not have been possible if there were no technology changes. Furthermore, it is considered that if these developments had not occurred, businesses would not have been able to connect with each other and proceed towards international trade. Additionally, communication between companies from different nation would not have been possible if there were no technological changes. Overall, technological change or technological enhancement made the concept of globalisation come into existence. Question 3 It has often been argued that change is the only permanent aspect in everyday life and business environment in the contemporary era, due to which managing change has become the only key to success for both individuals and organisations. Change management is referred as a procedure of planning, systematising, synchronising and controlling various internal and external factors of the business environment to ensure that the change, which has been implemented, helps in achieving the desired objectives with a minimised scope of errors. Change management is primarily focused towards preventing any kind of disruptions within an organisation, so that the targeted goals are achieved without any problem. In the present day era, change management has gained increased emphasis, as it is quite important to resolve certain conflicts that arise within the employees. Change management also helps in preventing any kind of service interruptions that might occur within an organisation (Oseni, 2007). Cultural clashes can also be resolved effectively through change management, as it reduces the cultural differences within the employees or among the work force. Likewise, if any difficulty is found as linked with change in an organisation, it is considered that change management is the best approach to resolve these difficulties. It would be worth mentioning that change management contributes toward the strategic process of an organisation, as it helps in initiating change from the top-level management to the lower level management of an organisation. This in turn helps the management to develop a strategic plan based upon the changing circumstances in the business (Oseni, 2007). Moreover, change management benefits the company to provide a strategic vision that motivates the entire employee population to meet the strategic objectives. Change management is highly associated with the strategic process since it helps in providing a new organisational direction that initiates growth within the workforce and eventually the organisation as well (Ryerson University, 2011). Change management also results in alleviating the employee performance by transforming their skills that increases their capability to perform better (Wiley, n.d.). In general, change management falls within the strategic process of an organisation helping in meeting the organisational goals and objectives at a wider scale. There are various approaches of change management available to managers in an organisation when implementing planned changes effectively. These approaches include traditional approaches and emergent approaches. Illustration of a traditional change management approach can be found with reference to Kurt Lewin’s classical model that emphasises three phases of unfreezing, movement and refreezing through a change process can be implemented effectively. Unfreezing includes identifying the problems related to change, while movement involves forming new standards for change and refreezing includes change reinforcement to achieve the desired results within an organisation. Socio-technical approach is another traditional approach, which is based upon the assumption that the social and technical paradigms of work must be used to initiate change within an organisation. Planned approach can also be used by managers for change management, which is considered as the best traditional approach of change management for an organisation. However, in the contemporary business environment, emergent approaches to change management have been developed, which includes the integrated strategic approach in which employee involvement is stimulated for change management. Trans-organisational development is another emergent approach wherein the change is planned to ensure that the change management process is effectively implemented within an organisation (University of Pretoria, 2005). Question 4 Strategic planning is a systematic approach of preparation to suffice the organisational mission and objectives. It is considered that strategic planning can prove as an effective tool in developing suitable a framework for the management of an organisation to assist effective decision-making. These decisions are mainly focused towards allocation of resources within an organisation along with addressing the business challenges. Moreover, strategic planning also helps in creating opportunities that provides a competitive advantage to an organisation in the long run. It has further been viewed that strategic planning is concerned with creating certain directions for organisations, setting priorities and identifying the challenges in business that limits an organisation to achieve its objectives. It is accordingly conceived that strategic planning is an effective tool for stimulating energy and driving growth within an organisation (Southern University New Orleans, n.d.). An organisation, in order to develop a suitable strategic plan, must follow certain steps in a sequential manner. The first step of strategic planning includes preparation of plan, wherein a specific program is prepared as per the organisational requirement and determined goals. The next step involves defining the mission and vision of the organisation and accordingly, a systematic review of the defined mission and vision are undertaken. Environmental scanning forms the next step of strategic planning wherein the external factors of the organisation are comprehensively scanned along with the internal factors. Likewise, after the scanning process is complete, an organisation can recognise certain strategic issues pertaining to its operations. The next step in strategic planning involves framing strategic objectives as per the business requirement. After the strategic objectives have been framed, in the next step, creating plans for implementing the desired objectives is focused. It is considered that strategy implementation is a vital step in the strategic planning process that determines whether the plans formulated would be successful. The last step includes monitoring and assessing the implemented plans intended to obtain a degree of understanding regarding any adjustment required in the strategic plan developed (The Enterprise Foundation, Inc., 1999). Organisational sustainability has also gained increased popularity in the current business trends and its significance has been widely witnessed in various industries. It is believed in this regard that if an organisation develops sustainable approaches in its business functions, there is a huge possibility that the organisation would withstand in the competitive market for a longer term. Correspondingly, there are two factors identified to have a direct relationship with the organisational sustainability, i.e. the direct factors and the indirect factors (Tsai & et. al., 2013). Direct Factors: Notably, financial, environmental and societal aspects are the direct factors that enable sustainability within an organisation. It is believed that the financial aspects of an organisation have a direct implication on the functionality of a business and its sustainability. This is principally because a financially sound organisation can maintain adequate balance for its sustainability in the market. Similarly, social factors also determine organisational sustainability emphasising the notion that a socially integrated organisation can maintain its sustenance through equal cooperation with the government bodies and the community. In addition, environmental factors also play a huge role in organisational sustainability, as there is a direct relationship with the environmental practices and profitability of an organisation in its sustenance (Tsai & et. al., 2013). Indirect factors: Besides the above mentioned direct factors, indirect factors contributing to strategic planning include dynamic ability of an organisation, innovation skills, intellectual capability, human resources, products & services manufactured, corporate social responsibility, supply chain and information technology used by an organisation. It can thus be asserted that these factors contribute towards enabling an organisation to maintain its sustainability, as there is an indirect influence on the business of an organisation having strong linkage with its sustainability (Tsai & et. al., 2013). References Gallagher, S., 2004. Internal Analysis. Why Does Firm Performance Differ?, pp. 1-5. Faculty of Communication and Media Studies, No Date. Effects of Technological Developments on Globalization Process. Pages. [Online] Available at: http://mediaif.emu.edu.tr/pages/atabek/GCS7.html [Accessed 04 May, 2014]. Lin, C. & et. al., 2012. A Fuzzy Quantitative VRIO-Based Framework for Evaluating Organizational Activities. Management Decision, Vol. 50, No. 8, pp. 1396-1411. Oseni, E., 2007. Change Management in Process Change. Journal Online, Vol. 1, pp. 1-4. Pesic, M. A. & et. al., 2012. Application of VRIO Framework For Analysing Human Resources’ Role In Providing Competitive Advantage. Book of Proceedings – Tourism and Management Studies International Conference Algarve, Vol. 2, pp. 575-585. Ryerson University, 2011. Change Management Leadership Guide. Human Resources Department Organisational and Employee Effectiveness, pp. 4-20. Southern University New Orleans, No Date. Strategic Planning Process Background Information. Chancellor. [Online] Available at: http://www.suno.edu/Chancellor/docs/Section.I.Strategic.Planning.Process.and.Background.References.pdf [Accessed 04 May, 2014]. The Enterprise Foundation, Inc., 1999. Effective Strategic Planning. Getting Your Organization Focused and Directed, pp. 1-36. The Levin Institute, 2013. Information Technology. Globalization101. [Online] Available at: http://www.globalization101.org/information-technology/ [Accessed 04 May, 2014]. Tsai, M. & et. al.,2013. The Direct and Indirect Factors on Affecting Organizational Sustainability. Journal of Management and Sustainability, Vol. 3, No. 4, pp. 67-72. University of Pretoria, 2005. Approaches to Change Management. Available. [Online] Available at: http://upetd.up.ac.za/thesis/available/etd-05092005-123748/unrestricted/03chapter3.pdf [Accessed 04 May, 2014]. Wiley, No Date. Change Management and Organizational Development. Developments in Change Management, pp. 18-50. Bibliography Fairfield, K., 2011. Influences on the Organizational Implementation of Sustainability: An Integrative Model. Organization Management Journal, pp. 1-17. Johnson, G. & et. al., 2005. Exploring Corporate Strategy. Pearson Education Limited, pp. 1-591. Paton, R. A. & McCalman, J., 2008. Change Management: A Guide to Effective Implementation. Sage. Read More