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| Strategic
Management
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Basically, the recent decision of Mark and Spencer to introduce
a new range of fair-trade ethically sourced clothing products
made from organic cotton may be motivated by different reasons.
At the same time, it is obvious that, to a significant extent,
this decision is the result of the recent changes in the market
and customers’ preferences. To put it more precisely,
the decision to switch to focus the production on the organic
material is the result of the growing negative attitude of
the customers to the artificial materials. In fact, from the
point of view of the Contingency theory, this decision may
be explained by an attempt of the company to adapt to the
current situation and recent trends since, using organic cotton
would make its products more attractive to customers. Obviously,
as the products are made of organic cotton, customers will
be totally convinced in its safety while artificial material
that could be used instead of organic cotton could evoke certain
fears and apprehension from the part of customers.
Furthermore, the development of a new range will inevitably
attract customers to the new products since nowadays, the
market is changing rapidly. Consequently, companies have to
constantly renew the products they offer to customers in order
to keep their interest and remain among the leaders of the
industry. In such a way, it is possible to view the recent
decision of Mark and Spencer as an attempt to carefully analyze
the situation and benefit from it that basically matches the
Contingency theory.
2.
Speaking about Porter’s generic strategies and Faulkner
and Bauman strategy clock, it should be pointed out that,
in actuality, both positions are based on the idea of the
analysis of the company position and perspectives from the
point of view of gaining competitive advantages. However,
it is necessary to underline that Michael Porter has developed
three types of generic strategies: segmentation strategy,
differentiation strategy, and cost leadership strategy. He
views these strategies in two dimensions. On the one hand,
there is a strategic scope, which is a demand-side dimension
and looks at the size and composition of the market a company
intends to target. On the other hand, there is strategic strength
that may be identified with two competencies such as product
differentiation and product force. Practically, his theories
imply that the analysis of a company should be based on the
analysis of five major forces, including supplier power, barriers
to entry, threat of substitutes, buyer power, and degree of
rivalry.
As for Faulkner and Bauman strategy clock, it should be said
that another way to analyze a company’s competitive
power but, unlike Porter’s generic strategies, in comparison
to the offerings of competitors. Basically, Faulkner and Bauman
analyze competitive advantage in relation to cost advantage
or differentiation advantage. Practically, it means that there
may be several options. For instance, there may be low price/low
value that is typical for segment specific, or another option
is hybrid with low cost based and reinvestment in low price
and differentiation.
3.
The problem of Ford is actually not new and it is possible
to observe similar in many other companies, including the
leading ones. Obviously, the company lacks the experience
of the successful and repetitive implementation of their once
developed and perfectly working schemes. In actuality, this
problem is quite serious since the company cannot function
normally and its further development and progress is under
a question. At the same time, the essence of the problem,
in all probability, may be found in the interrelationships
between the units within the company. In fact, it seems as
if the company succeeded occasionally but it is possible to
presuppose that such a success is predetermined by the success
of a certain unit of Ford that contributed to the general
success of the company at large. Naturally, as the company
failed to progress further, it should be said that this managerial
experience, being developed by a particular unit, was not
shared with other unit and not implemented within the company
at larger scale. Instead, as the unit realizes its potential
and slows down its competitiveness under the influence of
different factors, such as the implementation of innovative
schemes or technologies by competitors, and gradually, its
success becomes a history, while other units remain ignorant
of the causes of such a success. This is why it is possible
to say that, according to the Systems theory the company simply
fails to develop effective relationship within its structure
and, as the system grew more and more complicated, the gaps
grow wider and successes of certain units remain unused by
other units and the company at large
4.
In actuality, alliances seem to be quite an effective tool
to overcome a company’s weakness. At the same time,
it is hardly possible to estimate that this is the most or
the only effective tool to overcome the weakness of a company.
On the other hand, it is also necessary to remember that,
potentially, alliances may cause serious problems or, at least,
may have substantial drawbacks. In this respect, it should
be said that often alliances imply the integration of two
or more companies into a single body that is supposed to work
more effectively than each company taken separately. However,
it is obvious that, in the result of such unification, each
member of the alliance should give something in to its partners.
For instance, it is not a secret that often the formation
of alliances lead to the redundancy but it is quite probable
that in the result of such redundancy potentially perspective
or gifted employees will be lost for the new company. Furthermore,
the creation of an alliance implies the reorganization that,
as a rule, weaken the position of a company in the market,
while time may be crucial for the company success, especially
if this company operates in the sphere of innovative technologies.
This is why, regardless nominal enforcement of a company in
the result of an alliance, the latter has potential threats
that can weaken the company even more.
5.
On analyzing the statement “successful business strategy
is a mixture of luck and judgment, opportunism and design”,
it is possible to think about the Chaos theory which actually
implies that there are no universal, permanent, and unchangeable
rules and it is practically impossible to fully predict the
functioning of a system or organization. This is why it should
be said that the Chaos theory admits the opportunity to the
intrusion of some unpredictable factors that cannot be forecasted
beforehand. Consequently, the supporters of this theory stand
on the ground that the successful management should based
not only on a pure logic and rational analysis of the possible
development of events or progress of an organization but it
is also necessary to take into consideration the role of luck,
a chance, or event that can change the situation dramatically
and which could not be predicted. At the same time, it does
not necessarily mean that it is necessary totally rely on
a piece of luck. In actuality, I strongly believe that the
careful planning and analysis of the development of a company,
the creation of the strategic plan of its development are
essential. Moreover, I would not make luck and opportunism,
on the one hand, and judgment, the ability to analyze, and
thoroughly planned design, on the other hand, equal notions.
In my opinion, the share of luck in the general success of
a business strategy is not the most significant, though I
admit that sometimes its role may be defining. Nevertheless,
I am convinced that without a properly developed strategic
plan, ability to make logic and reasonable judgment and develop
effective design are crucial and basic for the eventual success
of a company and its management.
6.
The disaster in South Eastern Asia resulted from the Asian
Tsunami was really terrible and it is true that many states,
companies and ordinary citizens attempted to help those in
need who had suffered from this natural catastrophe. At the
same time, the arguments concerning the financial aid to the
states and people who was struck by the natural disaster should
be viewed in two dimensions: ethical and purely commercial
or economical. However, it is still possible to play different
approaches to this problem that are typical for management.
In this respect, it should be said that, according to the
Contingency theory, the actions of the companies that spend
money, even if this is the money of shareholders, on the aid
to Asian countries may be justified because these companies
and their administrations acted in accordance to the situation.
In other words, as the Contingency theory admits, the companies
could and should help to Asian states since the situation
needs it and, consequently, the companies could act depending
on a situation. Similarly, according to the Chaos theory,
it is possible to support the financial aid to Asian states
because the natural disaster is an excellent, if this word
can be applied here, example of the unexpected intrusion of
factors that do not directly depend on the strategy or work
of companies or states. However, form the utilitarian point
of view, for instance, the claim to stop the financial aid
may seem to be quite persuasive and justified.
7.
In fact, the modern world is characterized by rapid changes
and there is no wonder that certain industries are susceptible
to very fast changes that affect the functioning of companies
dramatically. This is particularly true for the high street
retailer industry. This is why it is obvious that the changes
are essential if a company has been demonstrating a steady
trend to the decline within the last five years. At the same
time, it is important to realize that some radical changes
cannot be implemented within a very short period of time since
it could effect negatively the performance of the company.
In actuality, the rapid implementation of structural and strategic
changes could even deteriorate the position of a company compared
to its performance before the changes. Consequently, it is
possible to recommend primarily thoroughly analyze the situation
and find out the basic causes of the decline of the company’s
performance. After that it is necessary to focus on the elimination
of these causes. However, as the market is constantly changing,
it is quite natural that the company could hardly catch up
the changes within the market or industry only correcting
its past mistakes. Instead, it is also necessary to clearly
identify the recent trends and the advantages of major competitors
and possibly implement the essential changes in order to change
the strategy of the functioning of a company. In such a way,
it is possible to speak about two stages of changes: firstly,
it is necessary to solve currently existing problems; and,
secondly, it is necessary to implement innovations in accordance
with recent trends in the industry and adapt the experience
of competitors.
8.
Obviously, nowadays, such notions as architecture, reputation,
and innovation are of a paramount importance and can be not
only a source of competitive advantage but increase the market
value of a company. In fact ‘architecture’ implies
the structure of a company, its network, and interrelationships
between the units of the company as well as between all people
working at this company. In this respect, it is possible to
draw an example of McDonald’s, the company that has
the worldwide network and is recognized and popular practically
in all countries of the world where it operates. At the same
time, the ‘architecture’ of the company is quite
clear and, what is more, each unit of the company in different
parts of the world has the same structure. As for reputation,
it is also important and implies the popularity and loyalty
of customers to certain brand. For instance, GM, being in
quite a poor position, its products are still popular in the
US basically not due to their better quality or more attractive
prices compared to major competitors, but basically due to
its reputation, recognition, and popularity in the US. Finally,
‘innovation’ is also extremely important because
the implementation of new technologies as well as new methods
of management may be crucial in the modern world. For instance,
Microsoft, due to the successful implementation of new technologies,
has become the leader, if not to say monopolist, of its industry
and its segment of the market.
9.
Speaking about the value chain, it should be said that it
basically characterizes value adding activities within an
organization. Among the examples of such activities may be
named inbound logistics, operations, operations, production,
marketing and sales. In general the value chain is quite important
since it can provide a company with competitive advantages.
In this respect it should be said that a company with a well-developed
chain value can function more effectively since there exists
an effective system of interaction between its units and it
actually binds the entire functioning of a company into a
solid mechanism. As for the value system, it should be said
that it is equally important, though unlike chain value it
rather refers to the ethical sphere but not to business directly.
However, the value system inevitably effects the functioning
of a company and its financial results because it implies
the effective implementation of certain ethic and moral principles
that increase the effectiveness and performance of a company
due to the creation of positive organizational culture and
atmosphere. It should be said that the value system may be
coded and exist in the form of an ethical code that can define
the basic norms of behavior and principles of work of a company.
10.
Nowadays, knowledge are extremely important to the effective
functioning of a company. There are types of knowledge. Among
them it is possible to single out the empirical knowledge
acquired through practical experience of people in the result
of their work and cooperation and, as a rule, it is perceived
through senses. Also there is logical knowledge that is the
result of understanding of relationship of ideas to one another
and which is subordinated to the rules and norms of logic.
Finally, it is possible to name semantic knowledge which is
the result of learning and understanding the meaning of words.
Obviously, each of this type of knowledge could be acquired
effectively in different ways. In this respect, it should
be said that the empirical knowledge, for instance, may be
effectively perceived and shared by means of face to face
or video conferences. In such a situation, people sharing
the empirical knowledge can perceive the information with
the use of different senses, notably, their visual and hearing
abilities are involved, while the personal contact, either
direct, or by means of video conferencing, contribute to better
understanding of the knowledge shared by the receivers, while
sender can realize the effectiveness of his work in sharing
the knowledge with other members of an organization. In such
a way, through interaction and communication people acquire
empirical knowledge.
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