Strategic Management in Action - Literature review Example

Strategic management concepts Name Date Introduction Rothaermel (2014) defines strategic management concepts are approaches adopted by leaders in a company in order to define the organizations overall objectives, mission statement and vision. However the success of strategic management approaches in an organization should involve both employees and managers. These concepts should be well aligned with a company’s mission and vision. Strategic management concepts are effective tools in running a company as they are able to define and put more emphasize on the goals of an organization (Rothaermel, 2014). This report explores some the concepts which contemporary organizations are using in making their companies a success. The report will draw relevant examples from specific companies as presented in several case studies and analyze them. Corporate Social Responsibility According to Kotler & Lee (2004) corporate social responsibility refers to the sustainability of an organization, whereby business enterprises commit themselves to the laws and ethical codes of commerce. Therefore a company must ensure that it is adhering to these laws while at the same time it is adding value to the development of the economy of a country. Additionally, the company is also required to recognize the rights of its employees as it uplifts them, their families and the society. Some of the corporate responsibilities include; fair distribution of profits and resources with the stakeholders, conserving the environment by using renewable energy materials and engaging in proper disposal of waste products, educating the general public on the importance of the environment in addition to recognizing employees and consumer rights (Coutler, 2013). Qantas approach to social responsibility and stakeholder management in this case study is rather ineffective. This is because the employees at Qantas were not necessarily involved in the decision making process as a strategic approach to enable the company in countering the losses it was making. In addition to this it is also evident that the leadership at Qantas was autocratic which means that some of the rights of the workforce at Qantas were often overlooked. According to McGregor (2006) this type of leadership allows managers to make all the decisions affecting the company and do not involve workers but only supervise and control them. Moreover, the communication practices at Qantas also seem to be poor and the participative also contributed poor relations between employees and the managers. For Qantas this approach was ineffective especially when the company had to let go 1000 of its workers and this action by the head manager led to a stop of operations at Qantas. Management of Stakeholders Stakeholders are viewed as groups of people or an organization that a company or organization is committed to and is therefore required to meet their expectations (Howden, 2007). In the management of stakeholders, it is important that a company recognizes the importance of the role played by each stakeholder and engages them in the process of decision making that may affect them. This way the management of a company is able to maintain a positive relationship with the relevant stakeholders. Dubrin (2013) affirms that assessing the nature of stakeholders in addition to effective management of stakeholders, is very important for a company when it comes to resolving the challenges facing a company. According to Caroselli (2000) stakeholder management is an organizations capability to meet the expectations of people or organizations that are involved with the company. Qantas failed at this due to the continuous losses it made over the years, therefore putting the company in a position whereby it had to make increased profits in order to pay dividends to its stakeholders. In addition to this Qantas was also unable to take advantage of the influence its stakeholders have in the company which led to the operational and performance challenges that faced Qantas. According to Howden (2007) the aim of any stakeholder in an organization is to influence decision making for mutual benefits of each stakeholder. Therefore if stakeholders are not well managed, they may not be well motivated to cooperate and participate in the success of a company (Kleinaltenkamp & Ehret, 2006). In the case study “Not Just a Game” the manager of the football team is quite conversant with what he is doing and he is positively managing his stakeholders. This is because the manager is engaging all the relevant stakeholders, the football players, fans and the sponsors in the process of decision making by allowing them to directly support the team and contribute to its success as a business enterprise. The manager is well aware that the fans of the team want to see the team win while the team players and sponsors want to make profits from the team. Therefore the manager introduces innovative ways that will enable the team to prosper in making its profits and meet their expectations and that of sponsors while at the same time he ensures that team players are practicing enough to win games and satisfy the expectations of fans. According to Caroselli (2000) it is important to identify the nature of each stakeholder whether they are internal or external and understand the impact each of these stakeholders have on a company. This will enable a manager to effectively respond to the needs of an organization’s stakeholders as well as manage them efficiently. Strategic analysis In the strategic analysis of an organization three analysis methods are normally used. These include; PESTLE analysis, Strategic Grouping and Porter’s five forces. In this strategic analysis pestle analysis and porter’s five forces will be used. Pestle analysis of Michael Hill International Company Pestle analysis tool is used in evaluating the external environment factors affecting a company. It includes the analysis of political, economic, social, technological, and legal environments of an organization. Political Most of the raw materials used by Michael Hill International are imported from other countries. Therefore some of these materials needed for the jewellery company can be originating from countries that are experiencing political warfare. For instance, out of the top five diamonds producing nations Canada stands out as the only politically stable country, the rest Russia, Angola, Botswana and Congo experience political warfare from time to time. Therefore if a war or political wrangles broke out in any of the above countries the company’s jewellery production will be affected. Additional with the expansion of Michael Hill International Company into other countries, like the US and Canada the company is also faced with the need to adhere to the laws and regulations of each state. The company needs to tailor its business ethics and laws to be aligned with the nation or state it has occupied. Economic factors These refer to how the economy of a country contributes to the success of a business and vice versa. Some of the economic factors include; income, tax policy, government spending, interest rates and inflation. Michael Hill International has experienced major success in the economies of Australia and New Zealand and has been an important element in the economy of these two nations. For example, the company enjoys economic thrives with at least 22 stores in Australia, 30 in New Zealand and 7 in the US. However, Michael Hill International has faced a number of challenges due to the recession in the western economy since the company operates on a global scale and radical changes in interest rates tend to negatively interfere with the profit margins of the business. Social The company faces several risks as it conducts businesses and operates manufacturing outlets in the western markets. As a result the company needs to acquire enough knowledge on the current changes affecting the social settings of the markets in foreign countries. Therefore it is essential for the company to study the cultural desires of the people in relation to the jewellery industry. In the 21st century consumers want to have trendy and fashionable pieces that make a statement and therefore MIH should divert from making pieces that only appeal to the Australian or New Zealand taste. Technological Technological advances play a vital role in the jewellery industry. Therefore MIH should make sure that their equipments are advanced and produce high quality pieces that meet the needs of their clients. In order to compete in the current global markets, MIH should adopt the use of the latest technology pieces in the manufacturing and production. Legal Through its expansion over the years, MIH operates in a highly competitive industry with similar products by its competitors. Therefore it is important that with every innovative step taken to improve their brand, MIH should protect its right. This can be achieved by securing a patent, copyright, trademark or design so as to ensure that other competitors do not impersonate their pieces and label them as their own original brands. Environmental MIH has grown from a single business unit to a multinational company and therefore the company is expected to operate in a consumer friendly manner. The organization needs to uphold environmental and ethical manufacturing techniques that do not contribute to global warming. Therefore the company can conduct its manufacturing and production activities through the use of recyclable materials. Porters Five Forces: The Australian Supermarket Industry Threat of entry The threat of new entrant is quite low as emerging companies in the industry are likely to be faced with several barriers which might hold them back. Some of these barriers include local zoning laws, restrictive planning regimes in addition to limited vacant land available for development. With such challenges most foreign companies have been deterred from penetrating the Australian Supermarket Industry. In addition to this, potential new entrants in this industry will be forced to compete with already existing giants Coles and Woolworths which will place them at a disadvantaged position. Power of buyers The bargaining power of buyers is quite low but is predicted to rise in the near future. This is because the Federal Government and the ACCC might be compelled to lower the barriers deterring new entrants into the market and therefore will provide consumers with a variety of choices to pick from. As a result of an increase in consumer power, will enable consumers to compare prices with other stores and allow them to choose from the cheapest alternative. Consumers are likely to deviate from Woolworths or Coles and shop on online platforms that provide similar goods for cheaper prices. Power of Suppliers The suppliers’ power is rather low since Woolworths and Coles have the control of at least 75% of the market. This has placed the local producers in Australia at a disadvantage since they have very few intermediaries to choose from. As a result Woolworths and Coles continue to remain as the only lead buyers of producers’ production. Nonetheless this existing power is bound to change due to the recent initiative by the Federal Government and the Australian Competition and Consumer Commission’s to lower the competition barriers experienced in the industry. This will place the bargaining power of suppliers at a moderate position. Rivalry between existing competitors There is a high degree of rivalry experienced in the industry due to the limited number of players and the standardized nature of goods and services. Therefore the competitive nature in the industry currently relies on price, brand choice and supermarket location. Threat of Substitutes The threat of substitute is quite high since a supermarket such as Coles faces competition from indirect competitors such as grocery stores, convenience store or farmers markets. With such indirect competitors, the industry is likely to face various threats as they have the potential to expand into bigger grocery stores. In addition to this farmers’ markets are gaining a lot of popularity with consumers since they provide organic products that are appealing to consumers who feel the need to eat healthy food products. Value Chain Analysis The values and vision of Fortescue metal company clear specifies the company’s commitment to be “the safest, low cost, most profitable iron ore producer.” To achieve this, the company focuses on working with the local community and its markets so as to get the best products from and for the people and that the business environment upholds this culture (Fortsecue Metal Group, 2011). Inbound logistics Fortsecue Metal Company is essentially a manufacturing and Productions Company therefore the company produces what it sells. This places the company at a competitive advantage as the company has positioned itself as a low cost producer and has a direct link to distributors. The produces by Fortescue are manufactured by the company and they go directly from the company to a national or regional distribution centers. In addition to this the company promotes a well cultured environment for their worker which promotes team worker and their wellbeing and that of their stakeholders. Operations Operations ensure that the consumer convenience and value, quality assessment and inventory management are well documented and evaluated. The company ensures that from the time raw material to when they are manufactured into end products, the supervisors make constant checks to look put if the products are in good shape. For each of their manufactured units and products, there is a minimum presentation. This is achieved by the utilization of forecasting programs which also evaluate any future trends in the industry. Marketing and sales The two main factors involved in order to increase the value of sales and place the company at a better strategic competitive advantage include promotions and organizational dynamics. The company has made relevant investments in the local communities in order to boost the quality of their products by involving local communities. Additionally the company ensures that the wellbeing of their main market, China, is well catered for by transporting quality and affordable products. Through this the company promotes its products in this market as well as increases its sales. Business level strategies (The Australian Supermarket Industry) These refer to a set of integrated goals that a company is committed to in order for it to achieve its desired goal. The business strategies adopted by the main key players in this industry is made up of highly integrated competitive strategy. Both Coles and Woolworths, utilize the two mechanisms of cost leadership and differential elements for them to compete effectively. The existence of an efficient supply model in the industry minimizes the costs of supply incurred and most of the brands and products in these supermarkets are mainly differentiated by the quality. Nonetheless the industry has countered future threats by employing the strategic factors which include the minimization of future threats. For the survival of companies in this industry, Coles and Woolworths have implemented strategies that keep this companies flexible for any future changes that may take place within the company. Partnerships and Alliances& vision statement (Air Asia) Air Asia vision statement is “To bring full premier services to the customers yet offering the lowest flight costs” this vision statement by Air Asia, has made the company to focus on its clients by ensuring that everyone within the economic gap is able to use their service to fly. The company also aims at “having a productive and motivated workforce and build close relationships between employees and top management” this way the company creates a conducive work environment that allows the staff and the managers to interact freely. Lastly the vision statement embraces technology through “Updating and embracing the technology all the time to meet the goals of Air Asia that is reducing the operational costs” (AirAsia, 2011). According to Johnston & Clark (2012) partnerships and alliances offer a company many opportunities to expand to other regions and exploit the resources in other countries. Some of the advantages a company is likely to enjoy due to partnerships and alliances include: Entry into new markets, increased market power and economies of scale and scope and the acquisition and exchange of skills. Air Asia has used its various partnerships as a means to enable the company to achieve its vision statements. For instance in 2007 the company entered into an alliance with Virgin airlines. This alliance enabled the airline to penetrate several markets such Kuala Lumpur and London by acting as a cargo and passenger feeder. References AirAsia. (2011), Enriching Asean and beyond — Annual Report 2011, AirAsia, p. 10, [Online]. Available from: www.airasia.com. (Accessed on 12th May 2015) Caroselli, M. (2000). Leadership Skills for Managers. New York: McGraw-Hill. Coutler, M. (2013). Strategic Management in Action. New York: Prentice Hall DuBrin, A. J. (2013) Leadership; Research Findings, Practice Skills (7th Edition ed.). (S. Person, Ed.) Mason, Ohio: Cengage Learning. Fortescue Metals Group, (2011). 2011 Annual report. Howden P. F. (2007). A critical stakeholder analysis process, Practice Change, Bendigo, Australia: Department of Primary Industries. Johnston, R. & Clark., G. (2012). Service Operations Management: Improving Service. New York: Prentice Hall. Kleinaltenkamp, M., & Ehret, M. (2006). Relationship theory and business markets. Bradford, England: Emerald Group Publishing. Kotler, P. & Lee, N. (2004). Corporate Social Responsibility: Doing the Most Good for Your Company and Your Cause. New York: John Wiley McGregor, D. (2006). The Human Side of Enterprise, Annotated Edition. New York: McGraw-Hill. Rothaermel, F. (2014). Strategic Management: Concepts. New York: McGraw-Hill/Irwin Read More