Strategics management - Essay Example

1. Identify which school(s) of strategic thought is/are the most likely candi s) to offer sufficient conceptual and theoretical matter suited to interpreting and resolving the scenario as presented. The ten schools of thought model from Mintzberg et. al. (1998) is a framework that can be used to categorize the field of Strategic Management. These schools are classified as: Design, Planning, Positioning, entrepreneurial, cognitive, learning, power, cultural, environmental and configuration. The Sony Scenario presents a management overhaul problem and re-structuring of the organization to meet the cultural environment needed for the future. For these the following schools of strategic thought will be directly related (Aguilar, 1967): The Design School: This school sees strategy formation as a process of conception. The approach used by this school is clear and unique, where strategies are formulated in a deliberate process. In this process, the internal situation of the organization is matched to the external situation of the environment. The Positioning School: This school sees strategy formation as an analytical process. The approach used by this strategic thought is that it places the business within the context its industry, and looks at how the organization can improve its strategic positioning within that industry. The Entrepreneurial School: This school sees strategy formation as a visionary process. The visionary process takes place within the mind of the charismatic founder or leader of an organization. The school stresses the most innate of mental states and processes- intuition, judgment, wisdom, experience, and insight. A sound vision and a visionary CEO can help organizations to sail cohesively through muddy waters- especially in early or very difficult years for the organization. The Power School: This school sees strategy formation as a process of negotiation. The strategy is developed as a process of negotiation between power holders within the company, and/or between the company and its external stakeholders. It can help to let the strongest people survive in the corporate jungle. This school of thought can also help to ensure that all sides of an issue are fully debated. It can help to break through obstacles to get to the necessary change. It can also help to decrease resistance after a decision is made and is particularly useful to understand Strategic Alliances, Joint-Ventures and Stakeholder Analysis (Brown. & Eisenhardt, 1998). The Configuration School: This school sees strategy formation as a process of transformation from one type of decision-making structure into another. Strategy and organizational shape (organizational development) are closely integrated and should be reconciled. An organization can be described in terms of some stable configuration of its characteristics, which it adopts for a period of time in a particular type of context. This causes it to behave in particular ways, that give rise to a particular set of strategies. The periods of stability are interrupted occasionally by some process of transformation. Key to strategic management is most of the time: to sustain stability, or at least adaptable strategic change. But periodically there is a need for transformation, and to be able to manage that disruptive process without destroying the organization (Aguilar, 1967). 2. What dilemma(s) does the scenario suggest with respect to facing change and dealing with competitive challenges? With Sir Howard as the new CEO of Sony, the organization is going to face a lot of new reforms and possible restructuring. The first challenge in the course of these changes is to have the foreign and Japanese stakeholders agree on the vision of keeping the company together on the basis of operations. The company’s different divisions need to be converged together to form a better revenue generating operations bank. Stringer, faces another block in evaluating the high price Japanese work force and laying off many of the human capital in the less cost effective Japan. The corporate culture for the Japanese division values relationships a lot and adheres to personal feelings of employees- giving them severance deals that involve paying employees in advance up to two years. In cutting down employee expenses in Japan this will lead to another hindrance in executing restructuring plans. Furthermore, a switch from a complete traditional Japanese culture to a mix of American corporate governance and environment will be hard to establish among the Japanese employees as confrontation is avoided and employers are generally indirect and polite in handling their employees. Along the way with restructuring the company’s human capital, Stringer will also have to change the way the company holds its concept of trying to control the market with proprietary technology. With the development of electronics market, it may be a sound decision to open cross compatibility of Sony products with other machines and develop new partnerships with other companies to promote positive and sustainable future growth in the business. Many of the products offered by Sony are actually profit eaters and affect adversely on the products that actually make money for the company. To retain growth the product lines have to be re-thought and improved based on performance as Sony has diversified into almost all electronics types for the consumer market. But along these changes in product line ups, major shuffling and decentralization of different divisions is also the need. Stringer has to overcome resistance from within the company and heads of different divisions to be answerable for any negative operational effects the company may suffer from individual divisions. Getting rid of a division of Sony Corporation may also exhale bad public relations as in the past Sony has suffered from such an example. These dilemmas that are presented to the new CEO of Sony Corporation have to be dealt immediately as the goals set for the new leadership are tougher than before. The company has already lost its once top standing in the consumer market and as the Chinese no-brand companies give a tougher competition in price. As recommended by Brown & Eisenhardt (1998), the remodeling of the company may be the only answer to gain the competitive advantage it once had. Sony’s battle for the consumer market along with its other divisions has to be based on internal reforms that are consistent and coherent across the entire corporation. 3. To what extent are the building blocks associated with strategy formulation and implementation useful in addressing the specifics facing the business in question. Strategic management not only creates plans attuned to assumptions about the future, but also focuses on using these plans as a blueprint for daily activities. The chief executive of a strategically managed organization must be able to imbue the organization with a strategic vision so that the organizations members are able to think big (institutionalized strategic thinking) and act big (institutionalized courage). The chief executive must be able to deal with the uncertainty of contemporary events and turn these events to the organizations advantage (Aguilar, 1967). Managers must be superb at continually adjusting competitive strategy, organizational structure, and modus operandi as the marketplace demands. In a strategically managed organization, top managers accept change as a permanent condition. The building blocks for a comprehensive strategic management model are: external analysis, internal assessment, strategic direction, strategic plans, implementation, and performance evaluation (Fahey & Narayanan, 1986). External Analysis There are two major reasons for beginning with an external analysis for the scenario. First, this analysis will have implications for organizational change and development. Second, by having leaders from all functional areas of the organization involved in the analysis, it should be easier to obtain their cooperation in making adjustments in response to the external analysis (Fahey & Narayanan, 1986). Internal Assessment Stringer has to know as to why the organization has succeeded in the past, what it will take to succeed in the future, and how it must change to acquire the necessary capabilities to succeed in the future. To remodel the organization and set roles for different divisions he must evaluate the organizations capacities--its management, program operations. Evaluation of the organizations resources- people, money, facilities, technology, and information is also necessary. To review the organizations current capacities and future needs and compile a list of the strengths and weaknesses that will have the greatest influence on the organizations ability to capitalize on opportunities (Fahey & Narayanan, 1986). Strategic Direction To use the information developed in the first two components, external analysis and internal assessment, to review the organizations mission, set goals, develop strategic vision, and determine the most critical issues the organization must address if it is going to achieve this vision. Mission review is the foundation and authority for taking specific actions. Goals are broad statements of what the senior leadership wants the organization to achieve. Strategic issues are the internal or external developments that could affect the organizations ability to achieve stated goals (Fahey & Narayanan, 1986). Strategic Plans Once the direction that the organization will take is agreed upon, he must derive strategies of how to get there. Developing strategies is the fourth step in the strategic planning process. Strategic plans are the documented, specific courses of action that define how to deal with critical issues. They result from the careful and unbiased development and evaluation of the alternatives which are available to the organization. If the critical strategic issues are truly important for any given company, and if the mission statement reflects the organizations fundamental priorities which drive the business then a well made strategic plan should last for three to five years depending on the environment (Fahey & Narayanan, 1986). Implementation Strategic management is more than just developing strategic plans. It involves managing the organization strategically to gain competitive advantages (Mintzberg et. al., 1998). From day to day, leaders must manage the organization so that its strategic plans are implemented. Implementing strategic plans calls for the development of the right organizational structure, systems, and culture, as well as the allocation of sufficient resources towards the right goals. Implementation--the execution of selected courses of action- is a crucial step in the strategic management process. It is essential to involve, from the very beginning of the process, individuals and groups who will help to carry out the strategic plan (Fahey & Narayanan, 1986). Performance Evaluation In this step, the organizational heads are supposed to establish a system to monitor how well the organization is using its resources, whether or not it is achieving desired results, and whether or not it is on schedule (Mintzberg et. al., 1998). The monitoring and reporting system is continuous, with periodic output reviewed by teams, while major evaluations are conducted on an annual basis. A dual benefit of performance evaluation is that it subjects the strategic plan to discussion and testing in the context of the real world (Fahey & Narayanan, 1986). Problem Resolution for Sony 1. What is the most challenging task facing Stringer? The case presents many problems facing out of Sony- all of which lead to a possible shift in the direction and operations of the company form where it stands today. According to Stringer, “the worst nightmare would be passive resistance.” He basis his statement on the Japanese culture that is prevalent in the head office in Tokyo. Another factor that leads him to say this is that a few key players in his teams have a strong attitude and have been pretty much left alone and getting them to work differently is going to be a major concern. To drive his creative team to think ahead and in a different prospect would be the basis for all the evaluations and reforms Stringer has to take. And to make them respond as humans and accept these changes that may be totally different than the prevalent culture of the organization is going to be imperative. This problem does not only reside with individual human capital but many different divisions have problems and issues in working coherently and together since conflicts within departments are as natural as conflicts between individuals (Mintzberg et. al., 1998). Stringer needs to formulate a common platform where all the heads of the divisions can come together and work towards a common goal. The resistance from these division heads and individual capital can break and divert all of the efforts made by Stringer to yield no results at all (Brown & Weiner, 1985). 2. Critically discuss the approach to this challenge Wayne Gretzky- one of American hockeys all-time greatest, once said that he would skate to the location where he believed the puck would come form another player. The external analysis component of strategic planning has the task of ascertaining where the puck will be. This component consists of scanning the environment to identify changing trends and potential developments, monitoring specific trends and patterns, and forecasting the future direction of these changes and potential developments (Brown & Weiner, 1985). Merged with an internal assessment of the organizations vision, mission, strengths, and weaknesses, external analysis assists decision makers in formulating strategic directions and strategic plans. Playstation inventor Ken Kutaragi should not lose his position in the company as many may find him inspiring and Sony may gain from his expertise and knowledge. It may be a bad strategic move that instead of pushing Kutaragi-san out of the company, Sony should leverage his expertise and design genius to apply some of the Playstation magic to the rest of the Sony product line (Brown & Weiner, 1985). Imagine a TV that enabled customers to dock their cameras or media players and view data on the big screen or stream data onto their small units. Imagine a Wi-Fi friendly family of electronics, wireless Playstations- and the possibilities are endless, but success will come from creative thinking, not pulling Kutaragi away from home electronics and giving him just the game division. Another example for restructuring is what IBM has figured out and is selling its PC division to a Chinese manufacturing corporation. The straw that broke the proverbial camels back at HP was former CEO Carly Fiorina saddling the successful printer division with its failing PC division after the terrible Compaq acquisition. Dell gets it with its focus on customization and cost-per-unit. Gateway doesnt get it and is dying. Sony doesnt seem to get it and their units are marginalized and very rarely spotted in technical circles. (Brown & Weiner, 1985) 3. Howard Stringer is quoted to have said: “I cannot allow the generosity of Sony’s [culture] to resist certain changes. Kindness, in the end, can kill a company.” Comment on what is implied in this statement. When a company gets to be the size of Sony and revenue growth slows, it makes it very hard for young, dynamic people to move up the corporate ladder. How you change that in a culture where everybody has known each other for most of their working lives is the task, especially at the senior level. The loyalty within Sony is quite extraordinary, and thats a remarkable thing. Some of that has to be sustained because its part of the Sony spirit (Brown & Weiner, 1985). There is a hunger to reward people more efficiently and to make people accountable more effectively and to bring the next generation into the mainline because theyll be the ones to design the cool products. The culture at the head office in Tokyo has been to tolerate inefficient workforce and even paying them advance salaries for up to two years. Practices like these promote corporate failure and is a hindrance in making changes. Eventually, these practices will result in the company being at a a stand still and not receptive to any changes for the growth (Brown & Weiner, 1985). 4. Discuss the leadership issues and what these mean for Sony’s corporate strategy. Stringer is going to be the first non-Japanese CEO for Sony Corporation. This alone is going yo be a major issue for the Stringer as well as Sony as many employees and stakeholders are used to the culture that has been rooted in the company and may find hard to adjust to the environmental changes that Stringer may bring about. From the orthodox Japanese way of corporate government to a shift in the dynamic and less loyal American corporate environment the change may come with a lot of resistance from the stakeholders as well as the employees (Aguilar, 1967). Moreover, many key human capital resources may be needed to shift in new roles or more proactive roles in company- making them work more towards their goals and assume and understand more responsibilities associated with their roles in the company. A decentralised environment may be of the key growth element in Sony but the development of such human resource may take time or even not compliment the standing of the creative team of designers, developers and engineers (Aguilar, 1967). For Stringer, the tools of environmental analysis- scanning, monitoring, forecasting, scenario planning used in the context of a model that uses these tools to expand vision, formulate strategic direction and strategic plans, implement these plans, and evaluate the implementation, enable us to shape the future of our organization and meet the challenges of global change (Aguilar, 1967). Works Cited Aguilar, F. 1967. Scanning the business environment. Macmillan. Brown, A., & Weiner, E. 1985. Supermanaging: How to harness change for personal and organizational success. Mentor. Brown, S. & Eisenhardt, K. 1998, Competing on the edge, Harvard Business School Press. Fahey, L., & Narayanan, V. K. 1986. Macroenvironmental analysis for strategic management. West Publishing Company. Mintzberg, H. et. al., 1998, Strategy safari: A guided tour through the wilds of strategic management, Free Press. Read More