Strategy Management and Innovation - Assignment Example

Strategy Management By: + Question Organizations all over the world come up with strategic plans in order to achieve their goals. Through these strategic plans, they wisely create a vision of their future as well as the strategies they need in order to reach their set goals. Despite these plans, most organizations still do not realize their vision and therefore they fail to produce the strategic results as expected. Since most of the executive teams are not able to understand the reason for their failure, they go ahead, repeat the same strategic planning cycle hoping it will be productive, and yield better results. Unfortunately, it does not work and therefore the dilemma continues. Managers should therefore consider some factors to ensure they achieve their strategic plans if they are successfully implemented. For a company to remain competitive in todays business environment, it requires to go through changes almost constantly. Market globalization and fast evolving technology are some of the factors that lead to survival of some businesses. Such organizational changes are relatively minor in some cases or sometimes major in other cases. For example, it can be a major when trying to refocus an overall marketing strategy and it can be a minor when trying to install a new software program. When an environment changes it affects the organization which as well has to undergo the changes. According to Lin (2007) culture is a major factor that affects managers when selecting an approach to strategic change. For any change to become effective, an organization is required to change its culture often. The type of change planned influences the extent of the change that is required. Culture refers to the set of values and guiding beliefs as well as understandings and ways of thinking which are shared by the members of an organization and is taught to new members as correct. Culture therefore leads to resistance to change. There are some reasons that make many people to resist change. Some include inertia, timing, surprise, or even peer pressure. Some people even resist because they fear losing their jobs if the changes occur. Managers should therefore take some steps to ensure they overcome resistance to change. Through education and communication, members of the organization will get to understand the change of the change. Managers should also involve employees in the design and implementation of the changes. They should also support their employees, listen to their problems, and support them through negotiations and rewards. Leadership is considered as the one of the key determinants that determine how managers approach strategic changes due to the bundled skills that come with leadership qualities. A company is able to achieve its strategic goals easily when the manager takes up a leadership approach in its management since employees will easily and effectively follow orders and request hence the quick and efficient delivery of services. Leadership and management skills according to Lin (2007) are the perfect combination for the development of an effective strategic plan development. Innovation is another key factor that affects how manager ought to approach the management of strategic change, innovation according to Bryson and Bromiley (1993), is important in an organization for it to acquire true change in its strategy. This is true based on the development of strategic plans whereby the strategies to develop a new service or products in conducted in the same way in every organization where a group of individuals are put together to work on major initiative that are proposed by the top level management hence it lack innovation. For innovation to be effected in a strategic plan the top-level management should only offer little suggestion in relation to the development of a new product or service and encourage the team collected to handle the project be creative and innovative in the development of the new project. Examples of companies that include innovation in their strategy development include Apple Inc., BMW, Google and Zodiac. These companies believe that innovation is the key to success, as evident in their success. They promote innovation from the early ages by searching for talented individuals to work for them and by promoting innovation in their employee by having a strategy for innovation. The best example can be derived by comparing the different strategies that Google and Microsoft, since they fall under the same industry, use and comparing the achievements that each company has met in a certain duration of time. Google Inc. is known for its strong belief in innovation and hiring of persons based on their achievement and their potential while Microsoft hires based on the achievements that an individual has achieved in his life. Comparing the two techniques in terms of management of the companies strategic planning, Google is more profitable and much successful as its managers effectively use some key factors which Microsoft overlooks hence it can be concluded that certain factors affect how managers approach the management of strategic change. In conclusion, managers should diagnose the current state of the organization. In doing this, they are able to identify the problems that the company is facing. They should also have a clear picture how the company will look after the change and be able to manage the change effectively. Question 2 Business ethics refers to a system of moral principles, which are applied in the commercial world. It combines law theory, historical and philosophical documents as well as politics thus it becomes a whole new scientific. Business ethics offer guidelines for behavior that is acceptable by organizations in both their day-to-day activities as well as in their strategy formulation. An ethical approach is becoming necessary for both corporate success and a positive corporate image. In today’s world, business ethics are less paid attention to since a lot of people in business are more interested in earning a lot of money for their own benefit and not considering the ethical costs or even the harm they would lead other people be it employees or the public. Based on this, each business in today’s world should incorporate business ethics in their strategies since it offers them an added advantage in that environmentalists and other people who consider morals and ethics in business will ultimately prefer doing business with them. Based on this, an ethical dimension in strategy management is therefore required in every business in order to promote their business and promote employees motivation to be more productive. This is true based on studies carried out by Bossaert and Demmke (2005) where the research results indicated that the incorporation of ethical considerations and morals in an organization saw the motivation and dedication of employees rise resulting to an increase in customer appreciation and hence sales (cited in Huberts et al., 2008) According to Kotsiris (2003), business ethics can affect an organization in ten fields in an organization hence the need to incorporate them in strategic management. Kotsiris (2003) states that business ethics in an organization can be grouped in to ten fields as follows: general business ethics, ethics of finance, ethics of human resource management, ethics of sales and marketing, ethics of production, ethics of intellectual property, knowledge and skills, ethics of technology, international business ethics, ethics of economic systems and law of business ethics. (Cited in Dudley, Braman and Vincenti, 2012) In general, business ethics, the ethics overlap with the company’s philosophy with the aim of determining the fundamental purposes of the company. Therefore, the company’s main purpose should dictate the ethical considerations of the company to be implemented. For example, a company that focuses on maximizing shareholder’s return is considered unethical when it focuses on the interest and rights of other people. Ethics of finance, sales and marketing should be considered in strategic management based on the importance of the field, generally having sales and marketing ethics will increase the sales of the company to people who value moral standards as the consumers easily identify with the company and can easily assess the value and behavior of the company. In human resource management, ethics should be incorporated in the strategic management process to assure the employees of the companies stand in certain issues such as religion, race, gender and age to avoid discrimination and hence promote unity and motivation between the employees. This will increase the employer – employee relationship in terms of the rights and duties each party is supposed to partake in and to limit the unethical conduct of the management such as employment of minors or excessive work stress among the employees. The other ethical consideration in the other fields entail the protection of consumer and employee privacy such that the company should incorporate measures to ensure that the rights, privacy and freedom of both the employees and the consumers are maintained and their data secured to reduce cases of data mining or identify theft either online or offline. Although business ethics are essential in maintain the companies role and standards in the industry, they are however limiting since they ensure that a company cannot participate in some activates as it is considered unethical hence loosing up on the opportunity. For example, if a company only employs a particular race, it loses up on the opportunity of new ideas that could be brought in by people from different races and also loose on making sales to other races as the company is considered racial. A good example of a company that has experienced losses and bankruptcy due to ethical considerations is Enron, a natural gas pipeline company, which declared bankruptcy in 2001 after its charismatic leaders who sought the success of the company at the cost of the community and its employees. Compared to a company such as Shell, a natural gas company, that ensures maximum environmental conservation and active participation in the development of the community, ethical consideration is hence vital in the success of a business hence should be incorporated in the development of a companies strategic plan. In conclusion, business ethics should be incorporated in strategic management since it provides clear distinction on what a company believes in. Although they are beneficial, they should be carefully considered before being implemented as they might reduce the company’s marketability if the majority of its consumers regards them as unethical or immoral. Question 3 The notion of corporate culture can be defined by combining some of the facets that make up corporate culture. These facets include a company’s history, founder of the company, and the beliefs of the company, the company’s principles, the values and the norms that the company upholds. Generally, the corporate culture of a company refers to the personality a company portrays to the public. According to Tharp (2009), a company’s corporate culture is the way a company has grown to be known and its values and norms as known and accepted by the public and the company’s competition. Having a strong culture according to Moran, Palmer and Borstroff (2007) has revealed to increase productivity, increase in loyalty, innovation and an increase in employee retention rate of an organization considerably. This is attributed to the name the brand offer and the obligation of both the employees and consumers appear to derive and identify with in relation to the organization hence they work towards maintaining the organizations st4rong reputation and culture. A strong culture is also known to attract the top values and hence the best individual in a certain field apply for position in the company so that they are also identified by the organization and also get an opportunity to identify with it. Hence having a strong culture increases the organizations competitive advantage in its field, as the best individuals are willing to work for the company thus the company can increase its innovation and sales with ease. Having a strong culture increases the internal motivation of employees hence they strive to achieve the company’s goals and objectives hence they utilize their best possible talents and devote their time to ensuring that the company increases its productivity. A strong culture also promotes high self-esteem in the organizational members hence they are not afraid to take risks hence they are more likely to venture into profitable areas. They are able to quickly adapt to change and have rapid learning and problem solving members to assist them in the ventures. On other hand, having strong cultures although increases the internal motivation of employees hence they strive to achieve the company’s goals and objectives. It also impacts the lives of the employees negatively in that they are too busy with their work in the organization they neglect their family resulting to break up of families, depression and ultimately the lack of productivity in the workplace as the employees affected will have built up excessive stress. For example, Steve Jobs the founder of Apple Inc. was once sucked from his own company after he became unstable due to excessive obsession with his work and losing his family. According to Perkins (2005), having a strong culture affects the organization negatively since the manager and employees become arrogant and excessively competitive. This in turn causes the organization to venture into risky areas without much consideration in regard to the risks involved and might ultimately cause the organization to face massive loses and bankruptcy which might lead to liquidation of the company. Dunnes (1992) argue that when an organization has a strong culture the directors and employees become obsessed and indulged in what they believe in and what they are doing so much that they do not think through their decision and ultimately the end come to justify the means. It also increases privacy and doubt in the capabilities of their competitors such that the organization’s employees only communicate internally or talk to themselves leaving the organization isolated from the other companies in the same industry, which can be a threat as the competition can easily manipulate them and increase its competitive advantage over them. Companies such as Apple In and Google are easily identifiable by their logo and from basically their name since they invested in building a strong positive culture hence most of the consumers identify with the brand thus health competition exists between the two as their products are differentiated. A company such as Nokia collapsed due to is strong culture, before Google made it big. Nokia was the mobile giant and had established a strong culture among its consumers by developing high quality mobile devices but its overconfidence resulted to its collapse since they were too encapsulated by their current position thus did not completely analyze the potential held by other companies. In conclusion, having a strong culture in this fast changing economically uncertain, competitive environment, advances in technology and high rate of globalization, is the best means for an organization to be distinguished from its competitors. It would hence increase its brand loyalty massively. Although a strong culture takes time to develop, a company should include promoting and developing a strong culture from and early stage to significantly increase the development rate and hence distinguish itself from the competition. However, a strong culture should be developed and maintained with regard to its negative effects to the employees and hence the organization thus it should be fair and ethical. Question 4 Power refers to the capacity of someone to impose his will on others by relying on effective affirmations in case the people are not willing to comply while politics refers to the activities that are not part of the formal roles assigned to an individual in the company. A psychological relationship between power and politics, which affects those with political power and those under the political power. The use of politics in an organization referred to as organizational politics. It is a means by which an organization utilize informal means to achieve its objectives or influence the achievement of goals. The implementation of power and politics can have both advantageous and disadvantageous outcomes depending on their implementation. In the development of an organization’s strategy, the influence of power and politics may result in a decrease in overall production of the strategy development team. Most of their decision will be largely influenced by the person who has most power over the others thus majority of the decisions made will be biased to please the person in charge in terms of power not authority. Hence it can be noted that politics and power in an organization lower the output if the employees and the development of the strategic plan hence affecting the productivity of the organization negatively. Individuals who pay more attention to organizational politics, according to Hutson (2013), end up paying less attention to their roles in the organization hence negligence in the development of an effective strategic plan. Involvement of politics and power in an organization will result to the decline of workers’ productivity since majority of the time they will be distracted and hence not concentrate of the development of a working an effective strategy. It also causes a negative environment in the organization as the person exercising power is bound to be disliked by all the individuals thus spoiling the relationship between the lower management and higher management thus the production of the employees is lowered. The involvement of politics in an organization results to lack of interest in the work thus employees tend to attend work just for the sake of it. This ultimately changes the effectiveness of strategy development as workers are relaxed and hence do not pay attention to the most effective ways available. Stress levels in an organization have been known to rise rapidly due to involvement of politics in the organization. According to Merkel (2014), the development of a negative environment in the organization results to negative attitude among co-workers hence they do not occasionally speak among themselves, this affects their performance as they build up stress from not engaging socially with other people and hence reducing their efficiency to develop an effective strategic plan for the organization. The increase of stress levels also causes some of the most productive workers in an organization to quit and hence the organization is left without expert advice in strategy development. For example, information from the company directors can be manipulated by a manager indulging in politics causing the change of the company’s goals hence a different strategy is developed. The indulgence of the individual with power in politics results to the deviation of the company’s goals to pursue other personal goals because of wrong information being transmitted down the power pyramid. This is because employees who indulge in politics are likely to manipulate information given to them thus changing the objective of the information leading to the development of a strategic plan that is different from the intended. Politics and power may also influence the development of the strategic plan positively if the person exercising the power focuses on the best way to develop the organization other than manipulating information to his beliefs. Thus, the strategy development process focuses on what is best for the organization increasing its efficiency and effectiveness. The indulgence in internal politics has led to the fall of startup companies such as Apple Inc. In its early years, Apple Inc. founded by Steve Jobs had experienced an internal political and power struggle. John Sculley, who had been a former Pepsi employee led to the collapse of Apple in terms of sales as Steve Jobs, was too engulfed by power that he did not consider other people’s ideas and opinions consequently leading to his eviction from the company. Based on this event power and politics in an organization mostly result in losses as the development of strategies is hindered by internal struggles. On the other hand, companies such as Samsung Electronics and HTC corporations have over the years increased their revenue and sales. This is due to politics in the organization whereby information is released regarding a device is released sooner than expected due to power and politics in the sales team causing the public to grow in anticipation and hence increased pre-orders for the device. In conclusion, the involvement of power and politics in an organization is beneficial only if the holder of the power focuses on the wellbeing of the organization and promotes effectiveness and efficiency of the organizations strategy development. They are likely to rebel against the individual exercising power or work to please him other that working for the good of the organization. Question 5 Porter’s five forces analysis as defined by Michael Porter (1980) is a framework that is useful in the analysis of a company’s competitiveness within a given industry. The five forces include potential entrants (threat of mobility), buyers (buyer power), suppliers (supplier power), Substitutes (threat of substitutes) and Industry rivalry. The forces are derived from the microenvironment that drives competition among rival companies and the threats that the company faces reducing its capability to make profit. Through the porter’s five forces, analysis a company can increase its competitive advantage over its competitors by using analyzing their effects and by determining where the company’s power lies in certain situations by utilizing the outside-in perspective (Johnson, Scholes and Whittington, 2008). The idea behind porter’s five forces analysis is based on the attractiveness of the market and its profitability (Slater and Olson, 2002). As the market structure is influenced, it in turn influences the company’s strategic behavior and hence the company’s success indirectly depends on the market structure. Porter (1980), states that the awareness of these five forces aids a company stake out a strategic position in its industry that is less susceptible to attacks and threats (Porter, 1980) Based on Porter’s five forces a company can increase its competitive advantage by analyzing the new entrants joining the industry to determine their threat level in terms of the competition developed when the business picks up, hence plan, and develop a strategic plan to counter the entry of new companies in the industry. The company should develop a strategic plan that reduces the threats of new entrants by increasing the minimum efficient scales of operation, protecting intellectual property through patents and copyrighting their marketing brand names and products. A company can also create alliances with suppliers and distributors to ensure a steady flow of goods and services to their markets. A company can also form retaliation tactics to ensure that the new entrants have little impacts to the company’s market share. By utilizing Porter’s five forces analysis a company can increase its competitive advantage by reducing the bargaining power of suppliers in order to ensure that they receive the best rates for resources and keep the suppliers in check so that they do not bleach their contracts of side with their competition. This can be done through partnering with the supply chain management, taking over suppliers, ensure that they are involved in supply chain training and hence overly increase dependency between the company and the suppliers. Competitive advantage can also be increased by reducing the competitive rivalry between the existing the companies in the industry according to Porter (1980). This can be done by avoiding price competition between the existing companies in the industry since most of the time this results in huge losses as companies strive to reduce the commodity price at the cost of quality. According to Slater and Olson (2002) the best way to increase competitive advantage without affecting the quality of the products it by differentiating the products, focusing on different segments, buying out the competition to reduce industry over-capacity and communicating with the your major competitors to regulate price and encourage fair competition. By doing so the industry rivalry between the companies will have reduced to a manageable scale thus the company can focus on improving its competitive advantage over other companies in the industry. The customers bargaining power also poses as a threat according to Porter (1980), thus reducing it will give a company an added advantage over its competitors. Proposals from Johnson, Scholes and Whittington (2008) include collaborating with supply chain management to regulate the prices of their commodities hence providing affordable products to the consumers without inflicting additional costs in production. They further suggests that increasing customer loyalty to the brand by investing in promotions and marketing strategies, increasing incentives and value addition and cutting out intermediaries thus delivering the products directly to the consumers. Porters last force involve the reduction of substitutes threat, this can be done by accentuating differences, entering the substitute market and increasing the influence to your products from within, taking legal actions against the substitutes, or by alliancing with the substitutes eventually buying them out. Samsung, a high-end mobile device manufacturing company, applied the porter’s five forces analysis in the development of their strategies as Rajasekar and Al Raee (2013) explain. The company constantly analyses the potential companies that can interfere with their competiveness if the mobile industry and buys them off before they are identified by other companies while still ensuring that they analyze the threat imposed by the existing competition specifically Apple Inc. By considering the threat imposed by the suppliers, consumers, existing completion, new entrants and substitutes, the company has an increased competitive advantage as it stay ahead of the competition at all time. Companies that fail in implementing Porter’s five forces analysis most often fail as observed by the fall of Nokia between 2006 and 2013 where they failed to consider threats imposed by new entrants in the market i.e. Google and Apple and where hence less advantaged since their technology was lagging behind. Hence the failure to monitor the threats imposed by existing competitors and the follow up on development and new technologies in the industry. 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