Strategic Management Principles for Shefaa Company - Case Study Example

Strategic Management Principles Name Institutional Affiliation Strategic Management Principles Introduction Globalization and economic changes today has escalated the challenges in the business environment. In particular, Teece (2010) explain that these developments require the enterprise to re-evaluate their means to create value along meeting the consumer needs. Here, the ability of the enterprise to achieve these successes requires the availability of well-developed business model (Teece, 2010). The model employs an efficient strategy in capturing and delivering value. Moreover, it outlines the resources and capabilities of a firm that generate value to the target markets (Teece, 2010). At this point, it is important to consider the term strategy whereby Cui, Meyer and Hu (2014) define it as a plan outlining the activities to perform. The plan focuses on achieving long-term objectives and tapping future opportunities that provide a firm with competitive advantage along maintaining financial success. This report considers the case study of Shefa’a discussing the appropriate strategy to employ. It includes the advantage and disadvantages of the strategy projected through an argument of its suitability to the different shareholders of the company. Strategy for Shefa’a The case study identifies the underlying situation in the business where there are both the financial and non-financial concerns about the future of the business. As such, Shefa’a cannot apply a strategy that only addresses one segment of their existing challenges. Therefore, it is only a combination of strategies that will see the successful mitigation of the situation at Shefa’a. Here, the equity investment and begin human testing strategies strike as suitable solutions, especially since they account for both the economic and social concerns of the future operation at the company. Working with the American hospital to commence human trials is a strategic step in the fulfillment of the philanthropic pledge. Here, contracting the hospital to continue the human trials ensures that the company becomes elevated from inquiring further financial burden in financing the research. Furthermore, the collaboration with a philanthropic organization such as the hospital will ensure that the population benefits from the success of this medical trial. This mechanism agrees with a functional level of strategy where there is the making of tactical decisions that center on collaborative efforts (Grinblatt & Titman, 2016).  Grinblatt and Titman (2016) explain that corporate level strategies address the firms’ ability to produce positive net present value. Imperative in generating the net present value is its dependency on the factors of investment and financial choices. Barton and Wiseman (2014) includes that with the current financial crisis affecting the profitability of business, it is important to shared value and sustainable capitalism solutions. These solutions describe the mechanism employed in equity investment whereby the firms manage to secure long-term investment and value (Barton & Wiseman 2014). Furthermore, the strategy provides a return on investments along economic growth which at the moment are central challenges in Shefa’a. In reference to Grinblatt and Titman (2016), equity investment is a significant source of external capital. More important are its different types which all together interpret to enhanced financial performance. Advantages of the Combined Strategy The situation at Shefa’a calls for a broad strategy that effectively eradicates their financial and social burden. As such, the proposal to engage a combined strategy seems beneficial for some reasons. First, the collaboration with the American hospital to perform human trials provides the advantage of generating open innovation. Saebi and Foss (2015) explain that an open innovation technique controls external knowledge to enhance internal innovative changes for an expansion in markets. Furthermore, it generates a restructuring of the organization through changes in the business model realizing more flexible management process. Here, the working together with the American hospital acts as a driver to positive changes through developing open innovations channels. Examining the situation at the company, there is a gap in available capital for the continued operations of Shefa’a. Here, the combined strategy provides both human and financial resources, with the equity investment mechanism contributing to the financial strengths of the business (Grinblatt & Titman, 2016). Grinblatt and Titman (2016), equity investments come in different types which each carrying different advantages. As such, Shefa’a is able to choose from a wide variety of external capital sources that improve its financial position in the market. Furthermore, entering into an equity market avails the opportunity to diversify its operations (Grinblatt & Titman, 2016). Consequently, this interprets to focusing capital for a long-term rather than in achieving short-term results (Barton & Wiseman 2014).  With the combined strategy, Shefa’a will manage to effect positive entrepreneurial orientation for improved performance. Lechner and Gudmundsson (2014) define the concept as an integration of activities that result in gaining advantageous opportunities. Important in establishing a positive entrepreneurial orientation is the inclusion of its components to the existing business model in the company. These components include pro-activeness, innovation, autonomy, risk-taking and competitive aggressiveness (Lechner & Gudmundsson 2014). Furthermore, the combine technique enhances creativity in the firm which contributes to active decision-making and innovation practices. Disadvantages of the Combined Strategy Saebi and Foss (2015) explains that open innovation introduces the challenge of product complexity. In Shefa’a the combined strategy can introduce these complexities, especially through its strategy of introducing different partners in the product development and financial sectors (Saebi & Foss, 2015). Moreover, the plan posses the potential risk of inefficient organization governance with the diversion of its operations. Saebi and Foss (2015) includes the need to restructure the existing business model for the effective implementation of the new strategy. As such this restructuring exercise to enhance flexibility may expose the business to potential threats of failure such as decline in quality of products and inability to meet consumer satisfaction. The reliance on external capital for growth is a possible source for potential failure. Grinblatt and Titman (2016), mentions of different types of equity investment whereby there is a change in ownership of the firms resources. With this change in ownership, the internal business assets may fail to compare to the external capabilities introducing a shift in the corporate management. Moreover, the shareholders may become pressurized by the external force controlling the functions of the business resulting in low job satisfaction and employee motivation. In a similar view, Barton and Wiseman (2014) highlight the culture in enterprise to produce short-term results in respect to the expectations of the board. Here, the new strategy directs more focus to the long-term objectives in achieving sustainable capital. As a result, there is the generation of conflict of interest regarding performance expectation and availability of results. Lechner and Gudmundsson (2014) discusses that the effects realized through entrepreneurial orientation are short-lived providing a temporary solution towards performance improvement. Furthermore, since its mechanism involves a sequential process, it requires a consistent commitment of resources in its implementation. Here, Shafa’a financial position and capabilities does not favor the introduction of such a costly mechanism. Furthermore, its particular components such as autonomy and risk-taking may fail to agree with the preference of the employees, especially during a time of poor financial performance. Argument in Support of the Strategy At present, the main objective at Shefa’a is to continue its operation and eradicate the financial challenges. Furthermore, there is a need to fulfill the business social concern identified through the philanthropic pledge. Examining the relevance of the strategy to these objectives, it is evident that it provides both human and financial capital. Here, the availability of capital enhances the strengths of the business and its capabilities to tackle its present and future challenges. In the discussion by Klettner, Clarke and Boersma (2014) advancing corporate sustainability is currently at the mainstream of enterprise activities. This involves the restructuring of the business model, business process and strategic direction to include a social sustainability concept. Therefore, the association with a hospital ensures that the company remains loyal to its social agenda. As such, it influences the firms’ ability to exercise corporate social responsibility and sustainability while still observing its economic success. The strategy significantly promotes the creativity and innovativeness of Shefa’a. Consequently, there is improvement in performance including the ability to diversify its operation through the acquired partnerships. At this point, it is imperative to consider the expansion of the business as an opportunity to tap other viable markets and introduce expertise in advancing its research. This is a positive advantage to the entire organization shareholders with the board gaining economic progress while the employees managing to expand their skill in different fields. Moreover, the new strategy agrees with the objective of the existing differential focus in the firm. As a result, the organization will only execute minimum restructuring of its business model to accommodate the feature of the combined model. Conclusion In summary, the current situation at Shefa’a calls for an improvement in its strategic management. Important in this improvement is the ability to continue exercising an economic and social concern while gaining competitive advantage. Here, the combination of the equity investment plan along beginning human testing strategy provides the needed advantage for the company. Examination about the particulars of the combined strategy reveals that it accounts for the needs of the board and employees which is vital for its continued success, especially in generating sustainable competitive advantage. References Barton, D., & Wiseman, M. (2014). Focusing capital on the long term. Harvard Business Review, 92(1/2), 44-51. Cui, L., Meyer, K. E., & Hu, H. W. (2014). What drives firms’ intent to seek strategic assets by foreign direct investment? A study of emerging economy firms. Journal of World Business, 49(4), 488-501. Grinblatt, M., & Titman, S. (2016). Financial markets & corporate strategy. Klettner, A., Clarke, T., & Boersma, M. (2014). The governance of corporate sustainability: Empirical insights into the development, leadership and implementation of responsible business strategy. Journal of Business Ethics, 122(1), 145-165. Lechner, C., & Gudmundsson, S. V. (2014). Entrepreneurial orientation, firm strategy and small firm performance. International Small Business Journal, 32(1), 36-60. Saebi, T., & Foss, N. J. (2015). Business models for open innovation: Matching heterogeneous open innovation strategies with business model dimensions. European Management Journal, 33(3), 201-213. Teece, D. J. (2010). Business models, business strategy and innovation. Long range planning, 43(2), 173-194. Read More