The Most Important Factor for the Successful Implementation of Strategic Change - Essay Example

SТRАТЕGIС BUSINЕSS АNАLYSIS Student’s Name: Course Code: Tutor’s Name: Date of Submission Essay 1: How can Porter’s Value Chain model help explain the source(s) of IKEA’s competitive advantage. Introduction Porter’s value chain model is a set of activities performed by a specific firm in a certain industry for it to deliver valuable services or products for the market it serve (Competitive Advantages and Entrepreneurial Opportunities., n.d). It is a framework that is used as a tool for analysis of a firm’s strategic planning for ensuring an effective leadership model. The framework was first explained by Michael Porter in his book competitive advantage: creating and sustaining superior performance in 1985 (Getty 2014). The model is used by business organizations to increase their competitive advantage as seen in IKEA. IKEA is a business organization that sells and design kitchen appliances, furniture as well as home accessories (Benshun 2003). Its competitive advantage has increased considerably since 2008 with the incorporation of porter’s value chain model (Benshun 2003). This essay will analyze the value chain with reference to IKEA’s competitive advantage. Porter divided this value chain into two. These are the primary and secondary activities. Market related and product activities were classified and primary while support activities were put in the secondary class (Walliman 2005). According to Porter, primary activities include inbound logistics, services, outbound logistics, operations as well as sales and marketing. Secondary activities are infrastructure related such as human resource management, technical development as well as procurement and infrastructure. IKEA has been more advantaged than other firms in the furniture industry all over the world due to key and competitive advantages. According to Xiaofei (2005) these advantages are usually utilized by IKEA for their market expansion as well as market development. These advantages are the same way outlined in the porter’s value chain model (Walliman 2005). Through secondary or support services as well as primary class, IKEA has a strong and established brand image. The organization is known for its low cost products which are stylish and of good quality (Xiaofei 2005). Joris & Brand (2002) says that this has been made possible by the knowledge owned by the organization regarding market related activities in the porter value chain model. In their product related activities, the organization still enjoy some advantages. Inbound logistics are well endowed in IKEA. For the continued development and production activities, the organization has well established and strong network regarding their suppliers all over the world. This means that they receive their supplies in time and as required and this increases the organization’s competitive advantage (Competitive Advantages and Entrepreneurial Opportunities., n.d). IKEA usually receive their supplies in time, they store them well and they make their inputs ready to make their furniture. Porter’s value chain model also incorporates operations (Xiaofei 2005). Operations include the production process together with activities relating to development, maintenance as well as packaging and testing. These activities have been well organized in IKEA and this makes it better than their competitors in the same industry. According to porter, an organization must offer good services after selling their products or services. These services are aimed at enhancing the value of the product. They take many forms such as repair services, after sale services as well as training and updating of the consumers. These services are evident in IKEA (Xiaofei 2005). They even offer children gaming facilities and good cafes as their customers shop. This means that children may be in a supervised area as their parents shop in IKEA and this will attract more shoppers with their children. Marketing and sales activities are also very important in the value chain. These include advertising and product promotion. Channel selection together with the actual selling is also very important to the target consumers (Getty 2014). This is clearly evident in IKEA as due to their stores design where customers can view, compare and choose their products with minimum assistance (Xiaofei 2005). Their strong and healthy relationship with their furniture makers and suppliers as well as restricting them from selling to their competitors give the organization a better environment to compete with other firms in the industry. Support activities or secondary activities are also equally important in making organizations competitive. These include procurement or the purchasing activities of a firm. The firm has to buy their inputs and make or transform them to finished products (Getty 2014). This activity is meant to add value through acquiring the best inputs at the best price accompanied by the required quantity as well as quality. According to Xiaofei (2005) IKEA has suppliers in all over the world where they sell their products. This makes them produce good and affordable furniture to all their customers in countries where they do business. Technology management is another activity according to porter (Getty 2014). It is very important in today’s business environment so as to reduce the production cost as well as developing new and affordable products (Competitive Advantages and Entrepreneurial Opportunities., n.d). It acts as a support tool for research in the market, process automation as well as development. IKEA has been developing its use in technology for it to beat its competitors in the market. The overall strategic plan as well as business objectives will be achieved with good human resource management (Getty 2014). This will include recruiting, appraising, planning as well as developing workers to execute the strategic plan of an organization. IKEA has done this through employing young, talented and able workforce which executes the strategic management. Infrastructure or plan management including financial and general management is also important in the chain according to porter (Getty 2014). IKEA has successfully been able to achieve this and this makes the business meet their objectives as well as strategic plan. IKEA has been using cost leadership strategy to increase its competitive advantage. This has been possible through pricing accompanied by controlling cost and efficient production. Their suppliers are usually from nations which are low cost. They are usually close to their raw materials as well as their distribution channels to reduce the costs they incur. Due to this strategy their final products are usually low priced and affordable to most middle class families. This plays a major role in increasing the organization’s profitability more than their competitors (Joris & Brand 2002). Most of their businesses are located outside cities where the cost of premises and land in cheaper with the aim of reducing the costs they incur. The customers usually select IKEA products by themselves, they transport them and assemble by themselves therefore making the firm reduce the transport costs and hence more profitability. They also use differentiation strategy to gain differentiation advantage (Benshun 2003). This is realized through making their products unique and different from other suppliers of the same products. The following activities are usually meant to make IKEA’s products distinguished. The business usually incorporates their consumers in their business (Benshun 2003). It is one of the few firms in this industry that allow customers to select what they want to assemble for themselves. This feature makes the organization unique from other competitors. They also have restaurants in their shops as well as offering child care services to the shoppers who have children something that is not common to other competitors (Benshun 2003). Conclusion In conclusion, there are two main activities which IKEA as adopted from porter’s value chain model to increase its competitive advantage. These are the primary activities such as product related activities and market related activities. The business also adopts secondary activities or the support activities. These include procurement, technology management, infrastructure as well as human resource management. This has made the organization more profitable than their competitors in the same industry. The business has also taken cost leadership strategy which has made it enjoy cost advantage. This has been done by reducing their production cost considerably. Differentiation strategy has also helped the firm to enjoy differentiation advantage by making their products unique and different from others. References Benshun C., 2003, Analysis IKEA China attack strategy, Modern Business Trade Industry, Vol.15, No.7, p.28-30 Competitive Advantages and Entrepreneurial Opportunities. ,n.d., Effectuation. doi:10.4337/9781848440197.00020 Getty, P. M., 2014, Slide 6: Unique Competitive Advantages. The 12 Magic Slides, p. 133-142. doi:10.1007/978-1-4302-6485-9_13 Joris, M. & Brand, M. J., 2002 June, “Organizational Structure and Performance”, SCALES- paper N200214. Walliman, N., 2005, Your Research Project, 2nd edition, SAGE Publications Ltd, London. Xiaofei Z., 2005, The dilemma of foreign furniture company in China, New Economy Weekly, Vol.16, p.84-85. Essay 2: Discuss the view that leadership is the most important factor for the successful implementation of strategic change. Introduction Strategic change is the restructuring of a marketing plan or a business basically done for the achievement of the business objectives (Ajmal, Farooq, Sajid and Awan 2013). It may include changes in the business mission, market or even the organizational culture. Leadership is the process of leading a group of people or an organization. In strategic change management, leadership provides the direction or the management of a business organization to achieve predetermined goals of the organization. According to Armstrong (2003) Leaders have significant roles to play as agents of change in every business organization. This essay will analyze leadership as a factor that is very vital for implementation of strategic change. It will look at the role of leaders in successful implementation of strategic change. Leadership plays the role of providing a strategic vision. Leadership usually produces changes when it comes to strategic nature. Leaders have to come up with an image of the desired business situation (Korbi 2015). This image forms the basis of the vision which will be transformed to a credible as well as realistic view of the business’s future. It gives the direction to be followed by other stakeholders of the organization ranging from senior to junior employees. The vision will originate from the leadership of the business and later form a framework within which the goals as well as the mission of the organization will originate from (Darling & Heller 2009). The vision will also be used to form targets within the organization making communication better among the employees of the organization. Korbi (2015) argues that the vision enhances more on the workers commitment and participation meaning leadership will play the vital role of coming up with a good vision to bring strategic change in any business organization. Leadership has the sole role of identifying the needs for strategic changes as well as seeking a new strategic response. The changing business environments in today’s world are very crucial for the survival as well as existence of a business enterprise (Higgs & Rowland 2005). The prevailing internal and external business environment will make the leadership of a business organization determine and predict the influence of change in the organization. The inevitable changes in the environment will attract the leadership intervention for more creativity and innovation (Armstrong 2003). It’s the responsibility of leadership of a business enterprise to assess and act as agents of change. The leaders are supposed to be more innovative and creative regarding the required changes in the business. The leadership should analyze the strengths and weaknesses of the traditional strategies so as to come up with the required strategies and therefore enhance change. Leaders have to use their skills in strategic leadership to differentiate between mediocrity and success that is sustainable to the business (Darling & Heller 2009). According to Ajmal, Farooq, Sajid and Awan (2013) it’s the responsibility of leaders to pass information regarding the old strategy and the benefits of the new one they are incorporating in the enterprise. All the stakeholders including employees need to develop the new strategy according to the vision and mission of the business. Leaders here have to make sure that they communicate well and do away with all communication drawbacks. The leadership decides the needs of the business to be served in developing the new strategy. To achieve this managers have to explain the business’s vision and mission as well as the activities to go along with them. All the workers have to know the importance of the change scenario and this will be facilitated by the managers or the leaders (Korbi 2015). The managers will also stimulate enthusiasm for the desired change by effective communication. It’s therefore clear that managers are not supposed to be limited to any form of communication for them to draw attention of their junior staff. Leaders have also the responsibility of dealing with and overcoming resistance to any change. This is a very crucial step in the management of strategic change and it must be facilitated by managers or leaders in a business enterprise (Denning 2008). Any change is usually accompanied by resistance from individuals as well as stakeholders in the company. It is usually because of the stakeholders’ lack of the necessary self-esteem to face the change. It’s the work of managers to identify resistance from employees together with the reasons for the resistance for them to be able to cope with it. Leaders are supposed specific management practices to overcome the change (Korbi 2015). These may include proper communication and information on the causes of resistance. They also need to be committed and participate in the day to day operations of the business for them to detect and be able to deal with the resistance. Managers should be real agents of change in facilitating agreements as well negotiations where necessary. Additionally they are supposed to manipulate if the available tactics seem to be ineffective (Darling & Heller 2009). Leaders are also supposed to make use of their power as well as develop a political support for the business. New strategies always require power so as to influence others and their behavior. Leaders will have to make good use of their position so as to make their subordinates follow (Denning 2008). This will include rewards to those who do well as well as reprimands to the wrongdoers. They also have a responsibility to motivate their employees so as to encourage them in taking the deserved change to a higher level. Political environment on the other hand is equally vital in making the change realized (Darling & Heller 2009). Leaders here need to comply with the political environment for better realization of their goals and objectives. Conclusion In conclusion, leadership is the most important factor for the successful implementation of strategic change. It’s the sole responsibility of leadership to provide strategic vision which will guide the entire stakeholders in a business enterprise. They also identify the needs for strategic changes and seeking strategic response. Communication is also equally important I change implementation and it is usually facilitated by the managers or the leadership in general. Additionally leaders usually identify as well as overcome change resistances together with making good use of their power to motivate as well as reprimand their employees. Managers also need to understand the different business environment for successful change implementation. References Ajmal, S., Farooq, Z., Sajid, N. and Awan S., 2013, Role of Leadership in Change Management Process, Abasyn Journal of Social Sciences, Vol. 5, No. 2, pp. 111- 124. Armstrong, M., 2003, A handbook of human resource management practice, London: Kogan Page. Darling, J, R & Heller, V, L. 2009, Organization Development in an Era of Socioeconomic Change: A Focus on the Key to Successful Management Leadership, Organization Development Journal, Vol. 27, No.2, P. 9 - 26. Denning, S., 2008, How leaders can use powerful narratives as change catalysts, Strategy and leadership, Chicago, Vol36, No.2, p. 11 Higgs, M & Rowland, D., 2005, All changes Great and small: Exploring Approaches to change and its Leadership, Journal of Change Management, Vol. 5 No.2, P. 121 – 151. Korbi, K., 2015, Leadership and Strategic Change ", The Journal of Organizational Management Studies, P. 1- 31, DOI: 10.5171/2015.638847. Read More