Strategic Management at the Red Group - Case Study Example

Strategy analysis for the red group

Strategy is defined as the craft of rising to a particular challenge and accomplishing more through resolve, self-knowledge, creativity, foresight and genuine capability that are cultivated in the medium to long term (Pearce, Robinson & Subramanian, 2011). The article analyses the strategies applied by the red team for the last 4 rounds.

Diagnosis overview

Diagnosis is the identification of a business condition or problem by analyzing the history or background, examining the symptoms, research evaluation as well as investigation of the probable or assumed cause. It helps determine the difference in organization assets such as partner competencies, skills and processes with the aim of identifying challenges facing the firm and opportunities for growth. It is essential for an organization to have goals and plans in place in order to conduct a diagnosis. Diagnosis entails evaluation of the problems that are facing the organization as well as the resources put in place to deal with the challenge (Chapter 10, pg. 102). Effective diagnosis often entails utilization of models such as PESTLE and SWOT analysis.

A well conducted diagnosis is vital towards achievement of growth in a highly market. Simulation gaming is characterized by rapid changes and increased competition which present major problems to organizations and can only be identified and dealt with by conducting a business diagnosis. High competition and rapid changes are the challenges that are being faced by the red team and affect productivity and growth. Business diagnosis in the industry is initiated by all organization that takes part in production of simulation games as well as expertise and available resources (Chapter 8, pg. 83). PESTLE and SWOT analysis indicates shows high competition among other factors as the major problem that affects organization in the business world. Utilization of diagnostic principle in analyzing challenges that are faced by simulation industries such as the Red team is vital toward achieving competitive advantage and increases their share in the market through increased growth as well as overcoming completion and increased changes in the gaming market. Diagnostic concept may also reveal changes in preference, taste, technology and culture that often results to industries abandoning their strategies or utilize old ones. Use of diagnosis strategies in determining technological changes can indicate that such elements are often characterized by rapid changes which may risk organizations as a result of their products becoming outdated at a faster rate.

Strategic intent (overview)

Strategic intent is the mean by which a company can achieve its stated goal. Strategic intent is a long-term plan developed by an organization to help achieve the desired goal. It is the linkage to the transition rules and exploration rules that define its transition from its current design to a future ecosystem and business design. A strategic intent often has a purpose. The uniqueness, logic, and discovery that make a strategic plan come to life are vital for employees. Workers have to believe, understand and live according to it. Therefore, the creations of various strategies by a team helps share a common intention as well as extend survive through time and space. Strategic intent is never developed in a single session, but it is often considered a continuous process. A clear strategic plan creates a picture of the daily life of a customer and describes anticipated changes and discontinuation from the current world (Chapter 10, pg. 102).

Strategic intent entails active and deliberate management practice and process that refocuses the industry on the goal of winning. Strategic intent involves developing and communicating obsessive winning strategies at all departments since it entails the definition of goal specification, directing vision into a mission as well operationalizing strategic objectives. Strategic intent should be in line with the scope, time and assigned strategies of the firm as it involves long term market targets (Chapter 10, pg. 101). Top management should be committed towards deciding on an effective strategic intent as it develops a sense of urgency and improvement drive. The strategic intent for first simulation round focused towards achievement of market share within the next three years by integrating major firm’s capabilities such as competitive pricing, reduction of costs and superior ability in R&D.

The strategic intent of the fourth team remained the same up to the 4th year. The 3rd year strategic intent aimed at achieving more than twenty percent of the global market in the next three years. An effective strategic intent has to be feasible with opportunity, stated timeframe and underlined capability. The Red team has to expand their activities rapidly in order to be at par with the rapid changing and competitive market. The red team’s ability to carry out development and research, adopt competitive pricing, cost reduction will enable the team to achieve increased growth (Chapter 8, pg. 84). The three to six years time frame is significant for strategic intent as it allows the red team to make necessary changes and effective implementation of the strategies. Therefore, the red team’s strategic intent was appropriate for the last four rounds and was created according to the correct utilization of principles.

Strategic intent: Tactics

Business tactic is the technique or method utilized in choosing how to engage with a particular service or product. Such tactics include market development, where firms identify new customers for the existing services and product, product development where existing customers are presented with least modified or new products, market penetration where companies increase their market share through utilization of existing product. Product development, market penetration and development remain the major strategy for new organizations to help achieve increased growth in the market share as they cope up well with cost reduction and R&D (Chapter 9, pg. 97).

The red team employed different tactics in the four rounds. For instance, the team utilized product and market development tactic in the first three rounds and retrenchment and diversification tactic in the fourth round. Firms that deal with sale of simulation products often neglect management principle in their 1st round of operation in market penetration as a result of weak customer base as well as reduced funds to develop new products and services. Firms have to employ various strategies such as competitive price reduction, increased product promotion and online marketing so as to continue competing effectively in the market. The tactic will enable the red team to develop a customer base in the market. It is important to think about product development during the second and third round as a result of strong strategic linkages, market changes, rapid products, intense competition and enlarged customer base. Retrenchment tactic is an appropriate tactic in the fourth round as it helps eliminate less profitable market segment, gaining competitive advantages and maintaining growth. Diversification tactic is inappropriate in the earlier stages as per the principles (Chapter 8, pg. 85).

Strategic intent: Competitive stance

Porter refers to competitive stance as the basis for competition. Reduction of cost by the Red team will enable them win customers since the products will be available at a slightly lower price as compared to competitors due to higher efficiencies and lower operational costs. Differentiation strategy is associated with a wide range of services and goods. Premium strategy is a situation where organizations compete by offering heritage, luxury, rarity product, high performance and a combination of these characteristics (Chapter 9, pg. 98). In Blue Ocean strategy, demand is developed, and there is often growth that is rapid and profitable. Companies often compete by acquiring a greater share of the market. As the market becomes more crowded, organizational growth and profits declines. Blue ocean, premium and differentiation strategy are not effective at the earlier stage of organizational growth since they are expensive, too risky and more problematic when it comes to implementation by a firm that is new in the market. In order for an organization to succeed in a rapid and highly competitive industry, it needs to develop strategic decisions that consider cost reduction as a competitive strategy as it’s achievable, appropriate and most beneficial for industries growth.

Red team seeks to improve growth by offering its services and products at lower prices in order to increase profitability. It is important for organizations involved in selling simulation products to increase efficiency while at the same time lowering production cost in order to meet their goals. Adoption of cost reduction strategy will enable the firm such as the red team to offer product at a reduced price and consolidate their resources in order to attract customers and increase their competitive advantage. In addition, the firm should consider differentiation at year two onwards in order to deal with stiff competition from other individuals (Chapter 10, pg. 106). Blue ocean strategy can be employed at year four since it is more risky and problematic for new industries.

Strategic intent: Porter's five forces

Porters five forces includes; the level of competition, threats of new entrants to the market, the bargaining power of the suppliers, threats of consumers opting for other products and bargaining power of buyers. The forces are used to analyze the external environment of the firm. To the red team, which is a simulation game industry, the analysis of porter’s five forces is as follows; the threat of new entrant relates to the number and size of the firms that are joining a given segment of the market. New entrants may erode the market share of the industries as a result of new predation strategies that may be implemented by newcomers. Rivalry is associated with the amount of competition in the industry. Existing firms such as green, blue and gray focus on gaining more shares in the market and without restraining option, organizations my lose their customers to other firms (Chapter 10, pg. 108). The threat of substitute targets products and services that serve the same role as those produced by the firm. An increased threat of substitute exists in the simulation market since buyers possess low recognition of simulation industry as well as inadequate protection rights towards products. The strength of the buyer is where more firms produce products and services that target a single buyer. There are many simulation buyers around the world resulting to a reduced bargaining power. Supplier power is where the industry has many buyers and only a single supplier. There are many suppliers in the gaming industries and therefore low power making it difficult to control their input.

Evaluation of strategies

Strategic evaluation comes last in strategic management and relies in the coordination of the activities performed by top managers. All strategies employed by the firms may be subjected to future adjustments due to internal and external factors which keep on changing. Evaluation strategies may include reviewing external and internal environmental factors (Chapter 10, pg. 107). In addition, the strategy is then determined whether it’s appropriate towards achieving its goals as well as being sustainable and long-term.

The evaluation strategy for the new product produced is based on the sales as well as market research done before the product is developed. Evaluation informed plans and strategies. It can also be done through market research, assessing the sales and the product development plan (Chapter 9, pg. 98). Evaluation of strategies was an important issue as it will throw light on effectiveness and efficiency of the comprehensive plan in the achievement of desired results. The red team will be able to assess the strategies applied with political, socio-economic and technological innovations. The team will evaluate the strategies through measurement of performance, fixing benchmarks and analysis of variance.

Diagnosis

The main challenge that is facing the company is failure to achieve a particular growth in a market that has rapid changes and high competition. The team therefore formulated various strategies that could help improve growth of the company in the market. Some of the strategies entailed reduction of cost of the products as well as competitive pricing. Competitive pricing entails pricing of product with a focus on the competitor’s prices.

Intent

The intention of formulating various strategies aimed at achievement of twenty percent of the global market share. With civil at some of the world, the company applied blue ocean strategy by opening new businesses elsewhere.

Timeframe

The time frame ranged from three to six years

Capability

The superior ability of the team was to ensure competitive pricing and cost reduction is implemented

Opportunity

The team made use of the available opportunity was increased demand in the market for a certain product.

Aim

Growth

Tactic

Product development

Method

Organic development

Stance

Cost of products

Strategic group

Within the current strategic group

Offering

More technology and features

Audience

USA and China

Reference

Chapter 8, 9 & 10 of the book provided, 82-157