Corporate Strategic and Functional Management Policies - Example

Heading: Global economy Your name: Course name: Professors’ name: Date Introduction Strategic management is an indispensable in the modern business world; in fact businesses cannot survive without proper strategic management in place. More so, companies looking to be competitive in their business niche need to ensure that effective and proper strategic management policies are put in place. The primary role of strategic management is to align the company’s resources with the best and appropriate approaches and goals in the future. This will ensure that companies respond in time to the challenges and set achievable goals through the creation of a framework that works towards the corporate goals and strategies. There are a number of factors that affect corporate goals and strategies, these issues need to be addressed appropriately in order to ensure sustainability and achievement of strategic goals. This report seeks to cover issues affecting businesses with specific reference to the oil industry and specifically Crown Oil which carries its operations in the UK. Crown Oil UK was established 6 decades ago and it deals mainly with supplying of diesel fuel, heating oil’s, greases and lubricants throughout the United Kingdom (Crown Oil UK 2013). The company has been particularly successful because of its strategies of fast oil deliver all over the United Kingdom. The company however faces competition from other established companies such as the British Petroleum (BP) among others. This report seeks to analyze critical issues facing the company such as compatibility between corporate strategies and management functionality, internal and external influences which directly impact on corporate objectives and strategies and the need for flexibility in strategic management and practical limits of quantifying strategy. Critical analysis Need for compatibility between corporate strategic and functional management policies With increasing effects of globalization, companies now find it necessary to align its strategic goals with its functional management policies. In essence, aligning both internal and external influencing factors play an important role in ensuring the survival of the company through the upheavals of the business environment. Globalization increases opportunities and threats at the same time. Given the vital role the oil and gas industry plays, ensuring its sustainability is essential for both the company and the country as a whole (Teece 2010). There is a close relationship between the corporate strategies and functional management policies. Essentially corporate strategies is the main initiative taken by the top management of a company on behalf of the key stakeholders, this mainly involves management of the resources as well as assessment of internal and external environments that influences the company. It also entails company’s vision, mission and objectives coupled with the development of plans and policies (Amit,& Zott 2001, 493). With this consideration, functional management policies are developed in order to ensure that the mission, visions as well as the objectives of the company are achieved. In this sense, it is recommended for Crown Oil UK to ensure that its management functionalities and policies are well aligned with the corporate goals in order to improve performance of the company and achieve both the short term and long term objectives. Crown Oil UK faces a number of challenges in the oil and gas industry, these challenges vary and are dynamic hence the need for strong management which is best suited to manage both local and global challenges facing the oil industry. The main challenge facing the oil sector and specifically Crown Oil UK is increasing competition from both the local companies as well as foreign companies (Witcher & Chau 2010). The other main challenge facing oil companies is the need for green source of energy given the current outcry on the effects of global warming. In order to effectively manage competition, Crown Oil UK should ensure that the management policies are aligned towards ensuring quality customer services as well as improved value added services. This can only be achieved by first streamlining the internal management policies and the human resource of the company. The human resource is the most vital resource a company has, in this sense, Crown Oil UK needs to ensure that all factors which contribute to effective workforce are improved. Firstly, motivation is important, the management needs to ensure that the employees are motivated and clearly understand the company’s Internal and external influences on corporate objectives and strategy There are a number of internal and external influences that directly impact on the corporate objectives and strategy of Crown Oil UK. Internal influences are primarily the internal issues that the company faces in its daily operations, external influences are outside issues that the business faces as it deals in its market niche. Firstly, the internal issues that the company faces includes both human resource issues such as compensation, rewards, motivation and training while other factors includes the working environment, poorly aligned corporate objectives and poor management, all these issues are evident in Crown Oil UK and hence the need to provide recommendation on how best they can be addressed. In order to address these internal issues, the management of Crown Oil UK must improve its employee working efficiency by first revising the rewards schemes, ensuring appropriate compensation and remuneration in order to improve the morale of its employees. The other important consideration is improvement of the employee’s skills through constant training on better ways of working in their specific fields in order to improve the achievement of corporate goals and strategies. In essence, constant training is necessary in improving the skills of the employees, considering that technology changes with time, it is necessary to continuously improve the skills of the employees. Another essential factor is enhancing the work environment; this is basically improving the management-employee relationship and employee to employee relationship. According to Bonaccorsi, A & Giannangeli (2006, p.1085) a sound work environment improves the performance of the employees. This is particularly recommended for Crown Oil UK. More so, training employees on soft skills also enhances their learning and the need to ensure that the working environment is enhanced; this will help Crown Oil UK to avoid the negatives of the effects of ineffective team. The company needs to ensure that the corporate goals and objectives are practical and achievable, this is important because unrealistic goals and objectives kills the morale of the employees, with this consideration it is essential to ensure that the goals set by the company are achievable. More so, each and every employee needs to fully comprehend their role in the process, this is important in managing their expectation as well as what is expected from them as the company employees. Concerning the poor management, a thorough analysis of the current management is needed. This will particularly focus on the current management performance and generally how they handle critical issues that matter to the company. A complete restructure of the management as well as thorough training is needed. This is because poor management affects the performance of employees and hence the entire company considering that the oil industry is very competitive (Chesbrough & Rosenbloom 2002, p.521). External issues also affect Crown Oil UK, some of the notable external issues include competition from other companies within and outside the UK, and global economy such as recession or financial crisis like the recent global recession and European financial crisis, other external issues also includes the changing market conditions and the need for cleaner energy sources. In order for Crown Oil UK to deal with these external issues, there are a number of strategies that can be adapted in order to deal with the situation as it is (Johnson & Christensen 2008, p.51). Firstly competition from other companies, this is a major external issue that may impact on the objectives and strategies of the company. Competition can only be dealt with by being conversant with the market demands and being in a position to anticipate market changes and competitors strategies (Chesbrough 2010, p.384). Crown Oil UK needs to be aware of the strategies used by competitors ranging from their pricing, market niche and promotional strategies among others. By being fully aware of competitors, the company can be in a better position to deal with the situations that may arise (Murphy 2005). In summary, constant competitor analysis is necessary. On the other hand, dealing with global crisis such as financial crisis is also important, Crown Oil UK can ensure that this is well anticipated and dealt with by employing strategic professionals capable of providing useful information regarding eminent financial crisis. By doing this, the company can be in a position to properly respond by limiting supplies or by altering market strategies in order to arrest the situation without greatly impacting on the company’s strategies (LaClair & Rao 2002). The need for cleaner energy is now a necessity; Crown Oil UK has already taken measure to ensure that it promotes green energy by contributing to the environmental conservation initiatives and other measures of protecting the environmental heritage (Christensen 2006, p.39). This is however not enough for a company selling the same products responsible for the increased carbon-dioxide compounds in the air. Crown Oil UK needs to pioneer the formation of alternative sources of energy besides oil, this is a difficult challenge but will be necessary in the long run as governmental resources will concentrate on cleaner sources of energies as carbon footprint increases in the environment (Jorgensen, Owen & Neus, 2008). Flexibility in strategic management and practical limits of quantifying corporate strategy There is a need to ensure that flexible strategic management as well as practical limits of measuring corporate strategies. It is a necessity to ensure flexibility in strategic management because of a number of reasons; first, the uncertainty of the future is a key factor. Market is by default dynamic and hence making it almost impossible to accurately predict what is to happen in the market. The more rigid a company is, the more chances that its survival will be limited as the market change require quick response (Lovallo & Mendonca 2007). As an example, in the past few decades, what was considered a competitive advantage soon became a business necessity and hence an expense. In the banking system for instance, the Automated Teller Machine (ATM) was considered a competitive advantage back in the 80s but it is currently considered a business necessity and an expense. This also applies not only to the oil and petroleum industry but all sectors of economy. In summary what is a competitive advantage today may not be tomorrow ( Farey, B 2007). Technology is dynamic in nature; companies which take advantage of technology survive the ups and downs of market more successfully as compared to companies which do not readily integrate technology into its core business function. Notably, adapting technology is not necessarily a solution to the evident business problem but rather adapting the right technology can be an indispensable asset and a competitive advantage (Ezzamel & Willmot 2004, p.43). The idea of flexibility in strategic management is greatly depicted by adaptation of technology simply because technology is subject to change and hence calling for swift changes in order to accommodate change. Flexibility in strategic management is also necessitated by the need to foster realizable goals, realizable goals need constant change. Crown Oil in this case requires constant adjustment with respect to the prevailing market conditions. Market conditions call for changes that may have not been anticipated. This clearly means that the more rigid a company is, the more likely it is to fail in achieving key corporate objectives. More so, flexibility also helps in ensuring constant monitoring and management of the organizational goals, this ensures that the overall organizational goals are achieved in the long run. Constant revision and adjustment of corporate objectives is a necessity for the survival of the organization (Ezzamel & Willmot 2004, p.43). Quantifying corporate strategy is also necessary; this is because the strategy needs to be accounted for and actually realizable. Some companies make a mistake of setting corporate strategies that are not easily realizable; this makes it extremely difficult for the company to achieve its goals as the employees are not motivated. In order for a company to achieve its core objectives, it is necessary to set goals that are realizable and also understood by the entire workforce. It should essentially not look as if the key objectives are being forced to the workforce but rather look like they are realizable and achievable at the same time. On the other hand, the corporate strategies also need to be measurable with time, this is specifically important in determining the achievement of milestones in the progress, it should be clearly outline and every milestone marked in order to ensure full employees participation(Lovallo & Mendonca 2007,). Conclusion As discussed in this report Crown oil needs to adjust its core areas of operation in order to survive harsh economical times as well as achieve its corporate goals. Companies can only achieve corporate goals and objectives if they are well managed and the goals set within realizable limits. The management functionality should also be in line with corporate strategies, this is important because the internal functionality of an organization determines its external achievements. If the internal functionalities are limited, then the external achievements are also restricted. It is therefore imperative for companies to align their internal workings with the core objectives and strategies of the company. As also evident there are internal and external factors that influence corporate objectives and strategies. Internal factors includes workforce, the management performance as well as the general working environment of an organization, external factors includes recession, financial crisis, competition and dynamic market changes, these are factors necessary for consideration in setting corporate objectives and strategies. Notably as identified, it is necessary to have proper strategic management which is flexible, this is important because of the dynamic nature of the market. The market demands readiness for change and hence only favoring companies which readily accept change as a major and necessary variable. On the other hand it is also recommended to have quantifiable corporate objective that can be measured over time and every company’s milestone measured against the set targets. This can only be achieved through a complete analysis of the goals and how to determine if they have been achieved or not. References Amit, R & Zott, C 2001, Value creation in e-business. Strategic Management Journal vol. 22, 493-520. Bonaccorsi, A & Giannangeli, S 2006, Entry strategies under competing standards: Hybrid business models in the open source software industry, Management Science vol. 52, no. 7, pp.1085-1098. Chesbrough, H & Rosenbloom, RS 2002, 'The role of the business model in capturingvalue from innovation: evidence from Xerox Corporation's technology spin‐off companies.' Industrial and Corporate Change, vol. 11, no.3,pp. 529-55. Chesbrough, H 2010, ‘Business Model Innovation: Opportunities and Barriers.' Long Range Planning, vol. 43, no.3,pp. 354-63. 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