Matching External Relationships and Internal Capabilities - Essay Example

Critically Evaluate the View That the Strategy adopted by an Organization Is a Consequence of the Match between the Organization’s External Relationships and its Internal Capabilities Introduction The rationale as to why some organizations achieve inspiring success over others in the same industries has drawn significant interest and focus from practitioners and researchers. Most researchers have affirmed that, the success of an organization solemnly depends on its ability to balance between its strategies with external and internal factors. The available literatures has also pointed out that, the success of an organization is to a great extent influenced by dependent interrelation between strategy and external environment (Andrews 79). Some experts have asserted that, organization’s strategists must consider the internal capability of an organization. A mismatch between internal capability of an organization and its strategies may to some extent contribute to less than optimal output and input ration in an organization. The accessible research findings have confirmed the existence of a very close relationship between an organization’s internal capabilities, the organization’s strategies, and the organization’s external relationships. This essay addresses the perception that, the strategies adapted by an organization is as a result of the organization’s internal capability and external relationship. Strategy and an Organization’s Internal Capabilities In most cases, organizations that have the ability to balance between their internal capabilities and their strategies have competitive advantages over institutions that formulate their policies without considering their internal strengths and weaknesses. As a result, the analysis of the company’s internal liabilities, resources, weaknesses, and strengths is essential in the strategy formulation process. Sufficient examination of strengths, weaknesses, opportunities and threats facing the business is as exceptionally decisive in devising the organization’s strategy. The objective of a strategy should be based on the company’s weaknesses and strengths (Deal 423). In planning for the organization strategy, the strategists should also consider the institution’s entrepreneurial problems and administrative problems. In most cases, strategies and organization’s internal capabilities reinforce each other in the success of an organization. A successful organization selects management systems that are in line with its strategies. Moreover, entities with several adjustment levels employ different strategies to match with their internal capabilities. As a result, business entities that have high-level of adjustments reveal organic structures and prospectors plan while business entities with low-level of adjustment use mechanistic structures and defender strategies. In most cases, organizations strategists identify a unique approach to its market place before structuring an organization strategy that fits the identified market approach. To come up with a supportive strategy, company strategists uses the existing information on the company’s management styles, costs, profitability, sales, and organization’s structure to get an in depth understanding of the business internal capability. Policy makers focus on a firm’s resources and marketing competence to be aware of the deficit and needs of the company. To understand the company’s competition advantages, the policy makers also analyze the value chain of the organization. On the other hand, to recognize the financial status of the company, policy makers should as well conducts an intensive value analyses to the company’s shareholders. Profitability analysis will be useful in ascertaining customers’ perceptions on the organization’s services and products (Rumelt 23). To come up with a successful strategy, the organization’s management attempts to understand the most helpful ways of creating a responsive operational environment as well as an effective means of choosing the company’s strategic opportunity windows. A SWOT analysis is essential in identifying the organization’s ability to successfully implement its strategies and long term plans. The success of an organization is based on the nature of its services and products. To generate a constructive marketing strategy, a company’s strategists should analyze and understand the company’s product life cycle and its product demands. The analysis of the products life cycle facilitates the understanding of company’s products earning pattern (Thompson 43). Strategy and External Relationship The main characteristic of a strategy paradigm is the linkage between the organizations’ strategy profile and external relationship. The linkage between the organization’s external factors and strategies has a vital role to the organization’s performance. The organization’s reputation is determined by the existing fitness between the strategic orientation and external factors. The core aim of formulating strategy in an organization is to harmonize internal and external aspects that affect the market of the company’s products. To achieve a competitive edge in a highly competitive market, an organization must align its strategies with the environmental resources (Avilla 31). External factors represent the environmental aspects in which the organizational strategies are blended. For an organization to remain feasible and relevant in a competitive market, it must effectively adapt to its surrounding environment. When formulating their strategies, the organization specialists define their environment and identify the dimension and components of their external environment. In the organization decision making process, policy makers evaluates and considers the external social and physical factors that may bear on the implementation of the set policy. In this regard, policy makers analyze the social, cultural, and behavioral background of the targeted beneficiaries of the plan. Other factors such as landscape, population structures, general environment, and infrastructure are considered in policy making process. Decision makers differentiate between the environmental factors that may either directly or indirectly impact the business’s daily operations and profit making objective (Zott 23). In formulating competitive strategies, a good number of strategists carry out a consistent and exhaustive market analysis on the company’s products. Market analyses helps in understanding the existing market dynamics as well as probable market challenges. Successful marketing analysis also helps in the identification of the market’s successful elements, threats, opportunities, and trends. Moreover, the insight on the marketing trend is also relevant in strategy planning as it helps in predicting the future development of the market (Venkatraman 23). Competition analysis is an exceptionally essential in drafting a rational and a successful business strategy. Competition analysis helps in the recognition of the factors that influence the market competition as well as the nature and dynamic of the market (Ailawadi 279). Through competition analysis, strategists also realize the manner in which a company uses its products position to acquire the existing competitive advantages. Competition analyses also helps in the definition and in setting up of the marketing strategy goals and objectives. However, to get the actual facts on the weaknesses and strengths of an organization’s competitors, strategists ensure their competition information is from reliable sources. A successful competition strategy should not only appreciate the customers ‘s needs and demands but should also incorporate the most successful means of meeting the identified needs and wants in a better way than its competitors. Adequate knowledge on customers’ needs and wants is vital in strategy formulation. To understand the customers’ needs, wants and the forces that influence market competition, most strategists employ porter’s five forces model of completion analysis. The analysis of business environment is very fundamental in strategy formulation as it offers a guideline on the most effective way of adapting to the changing business conditions. The understanding of the factors and forces that leads to environmental changes is also crucial and significant in strategy formulation. Ideally, effective strategy should be in a position to adapt to the emerging changes. Successful strategy should predict probable environmental changes and set up plans to address emerging changes (Beardwell 67). Failure to have effective plan to counter emerging changes may jeopardize the organization long term and short term survival. A successful business strategy is based on an exhaustive analysis of the company’s existing and potential customers. Customer analysis plays an incredibly decisive role in understanding the customer’s behaviors and the most cost effective means of fulfilling customers’ specifications and demands. The analysis is essential in identifying the potential customers buying situations and their economic and social background. To prosper in a competitive market, a business strategy should incorporate customers’ behaviors as well as common factors that influence decision to make purchases. Marketing strategy should also identify information relevant in making marketing mix decisions (Venkatraman 513). Conclusion In light of the above analysis, it is clear that, business strategy is to a great extent influenced by a match between organizations internal relationship and the company’s internal capability. Being the steering wheel for a successful business, business strategy should incorporate the opinions, demands, and needs for all stakeholders. Exhaustive analyses on the company’s internal strengths and weakness is consequently exceedingly vital in necessitating a successful business strategy. The strategy should consider the company financial capability, the competence of the company workforce, the company’s short term and long term objectives, as well as the quality and nature of the company’s products and services. The analyses of the market competition, customers, and other environmental factors are as well especially essential for successful implementation of a business plan. Work cited Ailawadi, Dant. The difference between perceptual and objective performance measures: An empirical analysis. MA: Cambridge, Marketing Science Institute. 2004. Print Andrews, Boyne. “Strategy Content and Organizational Performance: An Empirical Analysis.” Public Administration Review, 66. 1 (2006), 52-63. Avilla, Bradley. What is Environmental Strategy? The McKinsey Quarterly, 4 (2007), 53-68. Beardwell, Claydon. Human resource management: a contemporary approach. 5th ed. Harlow: FT/Prentice Hall, 2007. Print. Deal, Kennedy. Corporate culture. Cambridge. MA: Persons. 2000. 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