Strategic management principles and organizational applications

Strategic Management

It is very important that the factor of 'change' figures within an organization prominently. Different people utilize different approaches to implement these changes, and most often, it is that particular method that suits the organization the best that is used. Among some of the tried and tested methods of implementing change within an organization is the 'Delta Technique', which is one of the more popular and extremely successful methods used by the management. 'Delta' in fact means 'a small change' in Greek, and this is in essence what it represents. This technique has its base on the theory of Lewin, 1952, and it revolves around the three stages of change, like for example, when a piece of ice changes its shape, and it goes through unfreezing, changing, and refreezing. (Strategies for implementing change: an experiential approach)

Lewin has stated that it is very important to devote both time and energy to help a client to unfreeze, and even though it is a crucial stage when attempting to implement change, it is often ignored. Unfreezing therefore has to start with the individual acknowledging the fact that his methods may not be the best; after which he must prepare himself to face negative criticism. The next step would be to suggest alternatives to the existing process, and then state what information he would need to start to implement change. This approach would be relatively 'low-risk', and the change agent must be able to provide the client with the necessary control over the change. When change has been implemented in this manner, regular feedbacks as to the progress after the change has been made are necessary, and the organization would profit with the method. (Strategies for implementing change: an experiential approach)

Another approach to implementing change within an organization is that of laying primary focus on the fundamentals so that a stronger foundation may be built. The Three methods of such change are the 'top-down' method, the 'transformational leadership' model, and the different strategic approaches. While the first model lays emphasis on leadership, and depends on the method of rapid change described by the CEO of the company, the second method is about creating an environment where the people involved would be able to think for themselves and make their own plans and initiatives so that change may grow from the grass roots level, where all the employees can think and make wise decisions. Professor John Kotler underlines the eight-step approach to strategic change, and this is the initial establishment of a keen sense of urgency, after which the vision for the change may be developed. The next step would be to communicate the vision and incite the employees into taking action, after which short-term wins could be achieved. This change can subsequently be anchored in the vision of the organization. (Changing management culture: Models and Strategies to make it happen)

Question-2

All organizations that are in the business for the purpose of earning a profit may do one of three things: they can pay the profit that they have gained out to shareholders, or, they can reinvest that profit into the business for the purpose of expansion, or, they may want to manage share repurchases, or in debt reduction activities. Whatever the company may decide to do, what is important is that when a portion of the profit that has been made by the company is paid out to a shareholder. Then that payment is known as a 'dividend'. Why is the payment of dividends important, even if the company has to seek outside resources for the purpose of paying dividends, and even if profit may be reinvested in the company? (All about Dividends)

It is important to remember that during the first half of the twentieth century, the main reason that shareholders purchased stocks of a particular company was because of the dividends that it was paying, and even today, there are many shareholders who expect the company to provide them with a profit because of the fact that they have invested their funds in the organization. Therefore, it is seen that one of the main reasons why a company pays dividends is when it has become unable to reinvest its funds at a higher rate than that of the shareholders would have done if the funds has been in their own hands. In a similar manner, an investor may require ready cash for his own daily needs, and if he were to be made to wait for the company to enjoy long-term appreciation of the money, then he would be completely dissatisfied. (All about Dividends)

Another reason why companies pay dividends is that the more the company pays as dividends to its stockholders, the less the chances are of the executives attempting to dump their stock in large numbers. This may be applicable more to the corporate executives of the company than the common shareholders, but the fact is that dumping can be effectively prevented, and this in turn helps the company in the running of its business. Dividends can, therefore, turn executives into long-term stock holders, and this mean that these people would also not resort to short-term accounting tricks in order to move the stock prices, a normal phenomenon among organizations. Dividend selling, therefore, is seen as having an impact insider selling, whether the company is large or small, new or old. (Krantz, 2003)

Question-3

What exactly is 'Forward Integration'? It is a business strategy that is based on a vertical plan whereby all the various activities that take place within the organization are ruled by the control of the direct distribution of the products of the company. (Forward Integration) This type of plan is extremely useful and good to use within an organization, and the reasons for this are manifold. Today, more and more manufacturers are on the look out for newer ways in which they can control how consumers would be able to experience the brand being sold, and this has led to an increasing number of manufacturers selling their products not only through several company owned stores but also through retail outlets, and it is through careful evaluation and consideration on the part of the manufacturer about the conditions under which such a strategy becomes viable, and the manner in which forward integration would deliver a better resale price maintenance to the manufacturer, that this strategy can be adapted. (Bell; Wang; Padmanabhan, 2002)

This is especially true when the prices that are charged by the independent retailer are in competition with another integrated retailer, and these prices are at a higher level than those prices that are charged when independent retailers deal with each other. Therefore, today, the manufacturer has become a virtual marketer to end consumers, and this in turn means that forward integration is now possible as a viable channel strategy, wherein 'dual distribution' becomes possible. Now, the benchmarking of the performance of independent retailers is possible, and the manufacturer is also given the permission to serve a different segment. (Bell; Wang; Padmanabhan, 2002)

The advantages of forward integration strategy are manifold. The first one is that it is of innate benefit for the organization if it were able to set up its own wholesale and retail distribution network, if the company was subjected to undependable distribution channels wherein the steady progress of its various operations were to be interrupted frequently, or if when it discovered that the integration into distribution and retailing would be definitely better and more efficient for the company rather than approaching independent distributors. In addition, a greater sense of product differentiation would be achieved, as well as a good escape form price oriented competition. If the dealings were with a manufacturer, then they would enjoy infinitely better access to the final consumer of the product. (Appeal of Forward Integration)

Question-4

The evaluation of the various strategies that are used within an organization for different purposes is a very important aspect of marketing, and the success of the plans depends on the assessment and evaluation of the strategies that are being used. It must be remembered that the basic strategic planning within an organization are generally in the form of a five point plan, whereby the first step is to specify the objectives of the company, the next is to evaluate the plans and strategies, then to evaluate and monitor the results, after which commitment can be sought. It is only when each of the steps is implemented in an organized manner that the company would be able to function at its optimum best. (Evidence of the value of strategic planning in Marketing)

Furthermore, it must be remembered that whether the evaluation is being done by a group or by an online survey, or by any other method, all the different marker research surveys can either be quantitative or qualitative. When it is a question of quantitative analysis, the attempt made is to gauge and judge the quantity, and in general the researcher uses a variety of sampling strategies or any other quantitative market research methods in order to avail of pertinent information about the marketplace and the functioning of the organization within specified guidelines. The most often used criterion of quantitative market research to evaluate strategies is online surveys, individual quantitative interviews, mail, as well as telephonic surveys. Sometimes, one or more of these methods can be combined, and when this happens, it is known as a 'hybrid'. (Type 1: Qualitative market research)

An example of an online survey is that which was used by the 'Power Decisions Group' for a non-profit organization. The company being in a hurry to get results quickly, the survey was attempted online, and the Power Decisions Group reports that the online survey was able to get more than hundreds of valid responses to their questions, and achieved a more than 50% response to their survey. However, an online survey is not without a few innate disadvantages, and one is that it is virtually impossible to reach only the target audience with the survey; in fact, there will be more unwanted responses than genuine ones. (When can online Surveys be used?)

Since it is becoming more and more difficult today to both acquire as well as to retain customers, it has become imperative that quantitative marketing ideas and solutions are used so that the behavior of consumers may be better understood. The framework on which this is based consists of five steps, which are: strategy, the management processes of strategy and content and data. The next step is the linkage of all the different quantitative activities to a profit driver, which may be the audience or the channel or the contact. The very organization must be changed to adhere to quantitative marketing strategies, and finally, it is imperative that all marketing organizations have the proper infrastructure needed to implement quantitative evaluation programs. (Williams, 2005)

Question-5

The accurate and effective positioning of a product is extremely important, and if this is not done well, then the product, however good it may be, may end up in failure. Some companies give across the message that the product is for everyone; however, it will never be clear to the intended audience who the product is actually meant for, and when there is a doubt of this kind in the consumer's mind, then he will also feel that his problem would not be solved with the help of this particular product, and as a result, he will not buy it. Therefore, the product has to be accurately positioned, and the message made clear as to whom it is meant for. If the company is not able to communicate the exact value of the product to its potential customers, then neither can the customer find the product, nor can he realize the actual value of the product in terms of usefulness and problem solving. (Position your technology product with these five steps)

In addition, the media, and the various others who are involved in talking about the product, will state whatever they feel is its advantage or disadvantage, and this gives an unclear picture and as a result, there will be a lot of confusion. This happens because of the fact that although the company invests huge amounts of funds in developing the product, and then stating what it dose, rather than concentrating on how exactly a potential customer's problem would be solved by using that particular product, and this results in the customer's disinterest, because he is more interested in what the product will do for him, rather than what the product does. Product positioning is generally broken down into five simple steps, which are as follows: an analysis of the target market, after which it is an analysis of the customer's problem, then it is the solution offered by the company through its product, after which it is the benefits and the results that the use of the product would provide, and finally, the competitive advantage that this product enjoys over others. (Position your technology product with these five steps)

One example of a product-positioning matrix is that offered by a broadband company that wished to sell its high-speed Internet connections to potential customers, and wanted to position it effectively. It was discovered that in general, the customer had certain perceptions about the speed of the service, and it was decided that the positioning must offer this speed against the willingness to pay for higher speeds. This was the product positioning matrix that was developed by the company: 1= Slow, 2= Inexpensive, 3= Expensive, 4= Quick. Herein, the matrix summarizes the preconceived notions of the customer about the speed of the service being offered, as against the keen willingness to pay for higher and better speeds. The fourth quadrant shows the 'best deal' that the company is offering in terms of more value for less money. (Competitive analysis overview)

Question-6

The four points of Rumelt's strategy evaluation are as follows: consistency, consonance, feasibility, and advantage. According to these principles, consistency refers to the important question of whether or not the several different goals and strategies of various strategies compatible and consistent with each other, and consonance refers to whether or not the different set of trends that mark a particular strategy have been put together in a mutually compatible and satisfactory manner, and whether the interaction of the several different trends with each other been considered or not. 'Feasibility' on the other hand refers to the fact whether the strategy can or cannot be tried out within the physical and the human and the financial resources of the entire organization, and 'advantage' refers to the innate advantage, if any, the organization is able to offer as regards resources, skills or anything else that is relevant within the working of the organization. (Rumelt's Criteria for evaluating strategies)

Is the organization capable of offering competitive superiority or not? If it were required to review all the various underlying bases of the strategic plan, then, according to Rumelt's analysis, one would have to make ready a new and revised Internal Factor Evaluation Plan, by which the revised vs. The external strategies may be compared and contrasted, the result of which would show that there is no difference between the two. The second evaluation plan is to take an accurate measure of the performance of the organization, and for this, one would have to compare and contrast the planned progress vs. The actual progress that goes towards meeting the objectives as stated by the company. In this as well, it would be noticed that no significant differences would be evident. (Rumelt's Criteria for evaluating strategies)

Question-7

A 'Grand Strategy Matrix' is meant for those organizations that generally function within slow growth industrial environments, and is in a position of weak competitiveness. Such organizations would need to meet drastic change quickly, by which cots as well as asset reduction would inevitably take place. (Chapter 6, Strategy analysis and choice) However, the entire plan of strategic choice and analysis would involve, at the outset, the establishment of long-term objectives, then the generation of alternative strategies and plans, then the selection of the strategy that is best suited to the purpose, and then finally, the actual determination of the best alternative strategy that is well and fully consistent with the mission of the organization, and which would help the company achieve its goals. (Strategy analysis and choice: Chapter 6 Review)

Therefore, it can be stated that all alternative strategies in fact derive from a combination of the vision, the mission, the objectives, the aims, and the internal as well as the external audit of the organization, and it is at the input stage, or the Stage 1, that the issues of 'internal factor', and 'external factor' evaluations become very important, and these are also known as the IFE Matrix and the EFE Matrix. The CPM or the Competitive Profile Matrix is also combined with these two others, and in total, they make up the initial evaluation plan. The next stage is referred to as the 'matching stage', and it involves all the activities listed as follows: the SWOT Matrix, the Space Matrix, the BCG Matrix, the IE Matrix, and the Grand Strategy Matrix. This Matrix is in fact based on two diverse dimensions, and these are the Internal, or in other words, the Competitive Position of the company, and the External, or the Market Growth being demonstrated by the organization. (Strategy analysis and choice: Chapter 6 Review)

MetaSolv, an organization that wanted to increase customer value of the company, decided to use the Grand Matrix strategy to re-evaluate its existing strategies and embark on a new plan. Initially, the company recognized the fact that the customers of the firm are, in essence, the basis of the firm foundation of an inherently successful business marketing strategy. Therefore, the customers were examined and analyzed using the three important questions of 'who, what, and how'. In examining the question 'who', MetaSolv, which has two diverse groups of customers, evaluated both the groups, and for the 'what', the answer was that of a software solution to automate the entire business processes of the company. 'How' enabled the company to manage all the resources in such a manner that when cost was reduced, the efficiency of the service being provided would not decrease, and this meant that superior service would be provided by the company to its customers. This type of expansion has led the firm into diversity and growth, and, both locally and globally, and when the focus was on one core product, it was evident that there was no scope for further growth, and this in turn resulted in a solution that would offer added value, and this led to the utilization of the Grand Strategy Matrix. (MetaSolv's Choice of Strategies)

Question-8

While strategy formulation deals with the issue of conducting a system analysis, both internal as well as external, which in other words can be termed as micro-environmental and macro-environmental, strategy implementation deals with the proper and efficient allocation of the various resources that are needed by the organization, like for example, financial, time, personnel, and the support of an effective computer system. Strategy formulation involves the setting up of various objectives for the management and the employees of the organization, while strategic implementation deals with the veritable establishment of a proper chain of command, wherein it would be clear as to who is in charge, or even setting up of an alternative structure for command, like for example, a cross functional team of people. (Strategic management: Wikipedia, the free encyclopedia)

Strategic formulation involves the creation of long-term vision statements, and short-term mission statements, and also of all the overall objectives of the firm, while strategic implementation involves the assignment of a particular set of responsibilities to a specific individual or to a group of people or a team. While the objectives, both short- and long-term, would lead to the formation of a strategic plan for the organization, the implementation of a strategy would mean that the entire process would have to be efficiently managed, like for example, the processes of monitoring results, evaluation of the efficiency of the process, and the making of several adjustments and modifications to the strategy as and when necessary. (Strategic management: Wikipedia, the free encyclopedia)

Therefore, it can be stated that business strategy formulation is indeed a vast field, and it can be used to improve organizational performance, especially in today's world of constantly and continually changing business environments. Since all organizations must adapt to these changes very quickly, the strategic direction must run in the same direction as the response of the firm to the changes, and this in fact how an organization would grow and evolve over a period of time, instead of simply stagnating with outdated business processes. When Fortune Magazine conducted a survey, it was discovered that less than a 10% of all strategies that have been formulated effectively would have been effectively implemented, and although formulation is extremely important, it never does guarantee success and good results. Therefore, if the strategies of the organization were to be kept in mind and this were to be used to define an organization's destination, then the plan would be much better implemented, and the company would see more success. (Strategy Implementation)

Question-9

Among all the different variables that have an impact on the strategic implementation of a marketing plan, there are a few that are more important than the others, and it is these variables that are generally used for the purpose of market segmentation. Some variables are known as 'geographic', while some are known as 'demographic', while some others are known as 'psychographic'. While geographic variables encompass statistics related to the country of operation, demographics afford a profile of the targeted consumer, like his age and sex and income and so on. The psychographic segmentation offers an insight into the mental makeup of the intended consumer, like for example, his lifestyle, his attitudes, his thinking, and so on. The behavioral segment of a consumer also gives an insight into his attitudes, like for example, his 'brand loyalty', and his 'readiness-to-buy' stage. When all these variables are combined together, then the marketer would have a clear picture of the type of consumer or buyer that he wants the product to be targeted at. (Market Segment)

However, in general, most marketers believe in either the 4 P's, or the 4C's, although the most important are that of market segmentation and product positioning. The first of the 4 P's refers to the actual product that is being offered by the organization, the second is the price of the product, which can either mean the gross price, or the net price, or the reservation price, and whether or not it is suitable to the target audience. The third P. is the pricing strategy option that refers to the several different pricing options that are available, and how the price of the product can be based on that of the competitor, or on any other factor. The place where the product is intended to be sold is also very important, and the more convenient it is for the target customer, the better it will be for the sale of the product. The fourth P. refers to the Promotion that the management will be using to promote the product. The four C's refer to customer, cost, convenience and communication, and all four are equally important for the marketer in his strategy implementation efforts, and they can all make an impact n the success or the failure of the plan. (Strategy Publishing: Linking Strategy to Action)