Strategy processes - Essay Example

Tension between strategy processes that are rational and deliberate and those which are creative emergent 0 Introduction The success of any business relates to the way strategies are formulated and executed. Strategies can be rational and deliberate, or can be those that are creative and emergent. Many companies stay with the first option, as they are time-tested and least risky. However with the changing global business scenario, this may not be very effective in distinguishing between the successful and the also ran. Globalization has made an impact in the way conglomerates attend to their business globally. Competition has never been so intense and consumers that much more demanding. This leads one to question the ideal strategy process to overcome this problem. Many companies are spending huge sum of money in their R&D and deriving benefits from it. Innovation is the name of the game. It's true that not all innovations work well with the masses, but then again, one need to identify the root problem and then make adjustments to see that their targeted audience is covered through any creative or emergent technology. Telecommunication, transportation, banking, construction, and the list goes on and on have made tremendous progress over the last decade, and continues to do so. One gets to see new video game consoles launched by Sony Corporation, Microsoft, Mattel and Nintendo frequently. Boeing and Airbus industries compete for the sky with phenomenal flying machines and mobile phones keep changing shape and size just like a person changing his/her dress. Continuity can be boring and static, changes bring appeal and excitement. Despite these, one must take into consideration whether changes address the following: Culture influences Economical background Social Status Political influences This paper strives to elucidate the friction that one (Company) takes into deciding whether their strategy should follow one of rational and deliberate, or creative and emergent. As Pettigrew (1992) pointed out, Hofer and Schendel's pioneering definition of strategic management is processual in character emphasizing the development and utilisation of strategy (Szulanski et.al, 2006). In order to do this, this paper looks at two different industries that have become successful in different ways. 2.0 Globalisation In the context of this discussion, globalization plays an important role in the way a company strategise its policies to sustain their business presence. Globalisation has opened up numerous possible avenues for large and mid-sized companies to promote their products and services abroad. This directly enhances their market value and contributes to their economic might. In such cases, the time-tested strategy of rational and deliberate policies remains, and their products receive further boost through unknown territorial clientele. The governments of the once reclusive economies of Asia; China and India opened their skies to transfer of technology and co-production. Many of the heavy-machinery manufacturers and automotive industries were able to benefit immensely through co-productions and tie-ups. Government subsidies, cheap labour, qualified personnel and abundant raw material supplies generated huge volumes of profits and that too by retaining their strategy of being rational and deliberate. However, with time comes monotony and weariness. The strategy process has to be reassessed and changes brought about. Changes are perennial and so too are strategic processes. 3.0 Strategy Processes The strategy process is quite intriguing, yet exhilarating. Every company has its share of researchers who respond to the strategy process challenge by identifying certain traits that can either bring moments of exhilaration or disillusion. Disillusion comes from the often grotesque outcome of their effort leading to an outcome that is far from impressive. A lot of empirical research goes into the strategy process; large, often heroic and distinctive, collection of data is required to explore the possibility of linking strategy process and decision-makings, and finally to performance. The potentially revealing and insightful information comes at a cost, a cost that can nip the career perspective of the researcher, if it crashes. However, the outcome, though comprehensive, can be complex, messy, and notoriously fragile. Nonetheless, a significant part of the research is characterised by controversial normative orientation; strategic change or protecting and extending existing strategies, as Chakravarthy (2003) said. Such outcomes remain highly influential (if successful) until they are outdated, out fashioned, or shown to be hazardous. In short, a prescription that would guarantee supra-normal profits consistently would de-facto become the strategic management field's own version of the proverbial money machine (Szulanski et.al, 2006). Strategy process can be defined as the identification or uncovering of connections between the social, cognitive and political processes by which strategies can be formulated to make firms perform (Szulanski et.al, 2006). 3.0 Literature Review Product development involves a lot of planning. There is no point in developing a product that may be highly technical, if there are no market for them or if the present market standing and reputation becomes obsolete in the near future. If true customer satisfaction is the company prerogative, hen there must be a serious debate on whether the company can and will invest in technological product development In order to do so, the first and foremost objective would be to analyse the organisational capability and resource availability to match customer demands. The strategy process group addresses the following issues before making their recommendations: 1. Understand the perceived strengths and weaknesses of the product in question 2. Weigh the customer's options on why they will buy, or won't buy 3. Assess the ability to produce and develop these products over a long period of time, keeping in mind the customer's needs and demands 4. Factors that can hamper future sales, including political An organization must place its customers before self. It is therefore desirable to view the product in the context of what customers value rather than the organisation. A reason why many reputed organisations fall by the wayside is due to their ineptness by ignoring customer needs, and engage in image changes to glamorise themselves and their products (Pettinger, 2004, p.215-217). Though there are many players in the mobile telecommunication industry worldwide, the major names that one comes across in daily life are quite a handful. This is so, because of the strong marketing and services offered by these companies. Companies such as Alcatel, Ericsson, Fujitsu Microelectronics, Intel Corporation, Nokia, LG, Sony Ericsson, Motorola, Siemens, Samsung, Sun Microsystems, Panasonic, Mitsubishi Electric, Sprint, Nextel, AT & T Wireless, and Vodafone are well known and accepted brands. They have done extremely well all around the world with their branded mobile phones. However, there is no doubt, that without proper strategy process, most of these companies would find themselves in the same boat. There are no fixed love for a particular brand of handsets anywhere in the world, and definitely not so much in Europe, where mobile phone brands varies tremendously. The same is the case with the people of one continent with another. In general, Nokia is much better known and respected in Europe. Motorola dominates the handset numbers in the US. There is of course the interests of national players in mind, the likes of champions like Siemens, which is heavily respected in Germany. Samsung's brand awareness has been steadily rising in both the US and Europe, and LG is trying to make an impression on similar lines. Nokia rules the roost. There is no denying that Nokia is well respected the world over, with the exception of the U.S. Throughout Europe, and most of the world, Nokia is one of the top elite brands, like Nike in sports or Microsoft in computers. It produces an immediate aura of respectability. In the US, Nokia is lost in the crowd of semi-anonymous Euro-brands like Saab or Peugeot (Mace, 2005). So how do these companies sustain their market share By being creative and emergent, of course! The mobile phone industry is perhaps the most vibrant industry around today. The number of mobile phones is skyrocketing by the day, and newer models make their appearance almost every other month. Strategy process teams of each manufacturer have his/her hands full, as they compete against each other for dominance. Their tasks are even more challenging as they have to compete in alien conditions all the time. Accumulating data to formulate strategic thinking becomes cumbersome for many. However, companies like Nokia, Samsung (recently), LG, Panasonic, Motorola and Sony Ericcson, to name a few have made the top with dedication and hard work. For them success could not have been more exhilarating. However, creativity and emergence is their forte, as they work continuously to beat competition. The following few paragraphs elucidates the work of the strategy process. Faced with diminishing growth prospects, the mobile phone industry in the U.S is chasing one of the few demographics still walking the streets largely handset-free; the teens of 12 and under. The number of American betweens armed with cell phones is expected to grow 60 percent by 2010 to 10.5 million, according to the Boston research firm Yankee Group. This could be translated to say that by 2010, half the teen population of this country will be walking around with some handset en masse to racking up lucrative fees from text messaging, gaming, and watching videos. This will give an impetus to the rather docile market trend of the present (Ram, 2007). Apple Inc.'s iPhone is leading a new revolution in mobile screen technology. It plans to introduce gadgets using touch-sensitive screens that react to taps, swishes or flicks of a finger. The improvements promise to be slicker and more intuitive than the present rough stomp operation of finger presses and stylus-pointing required by many of today's devices. Apple has been showing off its new find; the finger ballet in video advertisements to lure more consumers ahead of the smart phones hotly anticipated launch in June. Competition is getting hotter, and so too will production. Introduction of new technology opens the doors for new avenues of growth and sustainability. With Apple's marketing machinery, iPhone is poised to become the poster child for the new breed of touch-screen technology. However, they will not be alone, for they will have their share of rivals. Shipments of this advanced strain of touch screens are projected to jump from fewer than 200,000 units in 2006 to more than 21 million units by 2012, with the bulk of the components going to mobile phones, according to a forecast by iSuppli Corp. Said Francis Lee, chief executive of Synaptics Inc., "This user interface will hit the market like the tsunami, hitting an entire spectrum of devices." Synaptics Inc., are maker of touch sensors, and its latest technology is in a growing number of cell phones, including LG Electronics' LG Prada touch-screen phone that was launched this year in Europe and South Korea and handles gesture-recognition similarly to the iPhone (Wong, 2007). As wireless technology continues to grow at the phenomenal rate that it has over the years, it will also continue to encourage the development of software to cause chaos and security concerns. At the moment the figures are difficult to quantify due to their nature. However, it is unlikely that they will counteract the supra-normal impact, wireless has offered to the worldwide economy. With technological advancement came the retail fixed-line VoIP services. This technology is already being adopted by both business and consumers and represent a major long-term threat to incumbent fixed telephony revenues. There is now growing interest in delivering VoIP services over a range of wireless technologies (including 3G, WLAN and WiMAX). Wireless VoIP services could bring significant opportunities and at the same time limited risks for network operators, service providers and equipment vendors. However, there is still substantial uncertainty over the extent to which wireless VoIP can be adopted for civilian operations and the impact it will have on the usage and revenue of voice services. Currently, wireless VoIP is being driven predominantly by cellular and BWA equipment vendors, keen to sell new VoIP-enabled capabilities. However, widespread deployment of wireless VoIP services will demand that mobile operators in particular see a convincing case for wireless VoIP services (Heath and Brydon, 2006). With competition getting hotter with the advancement of technology, many companies have now started recognizing the importance of patent analysis. Patent analysis is the best way to safeguard companies in maintaining an innovative edge and protecting future revenues. Patent is the primary way an innovative company can protect its future revenues. Patents are internationally defendable and help ensure that a company with a strong bias towards innovation will maintain a strong market presence and a good return for its investors. Patent data safeguards a company's long-term goals through protection of its R&D undertaken through years of experimentation and financial obligations. It is these qualities of a company that drives shareholder value and at the same time protect innovation against technology theft, besides showing the consumer the strength of its innovativeness in building on other ideas as well. The mobile phone we know today is an amalgam of a series of evolutionary innovations in the area of antennas, keyboards, operating systems, screen technology and battery technology. One of the most telling illustrations of the financial and strategic returns possible from patenting is that of Qualcomm. In 1990 Qualcomm, a then little known company, filed a patent in the area of mobile network technology which spawned an entire mobile industry and made this US company a global phenomenon (Brocklehurst, 2005). 4.0 Conclusion The failure to make appropriate changes at the right time can harm a company no ends. A company needs to innovate and investigate for survival, otherwise it can become competitively obsolete in its products, services, and value to customers. Change requires the ability to anticipate or forecast external dynamics of the environments in which the company operates, such as its markets, competition, innovation, government regulation, economic conditions, globalisation, and so on. Such a change also requires the ability to change the company's directions like its products, production process, marketing strategies, organizational skills, personnel, businesses and so on. Lowell Steele summarised the emphasis of change as the focus of strategic thinking: Strategy is concerned overwhelmingly with questions of change. How much must the enterprise change in order to survive and to continue to prosper How much change can it finance and manage How fast can it change These are profoundly difficult questions. -Steele, (1989, p. 178)1 Change is imperative for growth, and this comes about with quality strategy process. Unless strategy process is successful, companies will end up on the wrong side. It takes a lot of planning, plodding, probing, and execution before a strategy can become successful. The trend to be rational and deliberate is successful in many areas, however, it's the creative and emergent mode that is paving the way for many companies to compete and sustain their market presence today. References Brocklehurst M, Companies investing for the future in mobile telecommunications, 2005, http://scientific.thomson.com/media/newsletterpdfs/2005-10/unlocking-patent-value.pdf Dr. Heath M and Dr. Brydon A, Forecasting the Commercial Impact of Wireless VoIP in Western Europe and the USA, http://research.analysys.com/pdfs/report_brochures/rr230.pdf Mace M, European vs. American mobile phone use, 2005, http://mobileopportunity.blogspot.com/2006/09/european-vs-american-mobile-phone-use.html Pettinger R, 2004, Contemporary Strategic Management, Palgrave Macmillan, ISN 1-4039-1327-7, China Ram M.L, Selling cells to 8 year-olds: Wireless companies have set their hungry sights on tweens. From finicky youngsters to wary parents, it's not been an easy market to crack, Business 2.0 Magazine writer-reporter, April 19 2007, http://money.cnn.com/2007/04/18/magazines/business2/kids_phones.biz2/index.htm Szulanski G, Porac J, and Doz Y, Strategy Process: Introduction to the Volume, The Challenge of Strategy Process Research, 2006, http://www.rotman.utoronto.ca/baum/v22_intro.pdf Wong M, The Seattle Times, Business and Technology, Apple iPhone expected to drive mobile phone industry toward fancier touch screens, 2007, http://seattletimes.nwsource.com/html/businesstechnology/2003757368_webiphone21.html Read More