Business Strategy
The company is faced with a challenge relating to the size of its stores. It needs to use that space more efficiently. One option on the table is to renovate the stores in order to use the existing space more effectively, and the other option is to use that space by changing the company's positioning, broadening its product line by using the space for offices. The latter has a certain appeal in the sense that the space is optimized for revenue, but does not take into account whether this will be viewed as a positive shopping experience or a negative one by its target audience (it is not necessarily desirable to take on a Wal-Mart sort of approach to shopping when you cater to the top 25% of income earners).
The company therefore needs to visualize how these two strategies will play out before making a decision. Mankins and Steele (2005) note that there is a strategy-performance gap, and they identified several areas where this gap exists: communication, resource allocation, poorly-defined actions, organizational silos, inadequate performance monitoring and more.
Gadiesh and Gilbert (n.d.) point to communication as an essential component of turning strategy into action, because effective communication allows for buy-in to occur...
In this case, adding the ancillary services will require buy-in from management team members who see this as a distraction from the core business, and from customers as well. But with full buy-in from management, customers are more likely to buy in themselves, because communication of the initiative will be that much better.
Neilson, Martin and Powers (n.d.) distil the critical factor as being information flows. Communication, as a general concept, is clearly important, but they have drilled this down to the type of communication – who knows what and when. This is augmented by further paywalled research that seems to indicate that decision-making authority also matters.
Information flows allow decision-makers to make their decisions based on the best available information. In the XYZ scenario, senior management should gather some information before embarking on this strategy . The reason for this is that the strategy clearly solves one of its biggest problems (excess real estate) but it won't be an effective solution unless it actually solves the customers' problems. By solving customer problems, the company will actually benefit more. So that alone means that the right information on which to base the…
