Question

Strategic Management

1. Company’s current strategies: describe the strategies and use supporting materials to explain what the strategies are.

Based on the evidence of the last 3-5 years of operations, discuss to see if the strategies were a good or bad fit.

suggest improvements through enhancing the various strategies or introduce new changes of strategies to the company. each 20 marks

Answer 1

While strategy is a very wide term used as a buzzword by the management, we can discuss about the key strategy phases which drive a company's growth and long term vision. Strategy is usually preceded by planning and thinking of the product and the market in which the company needs to operate.

The four phases of strategy can be defined as follows:

Phase 1 - Basic Financial Planning

Phase 2 - Forecast based Planning

Phase 3 - Externally Oriented Planning

Phase 4 - Strategic Management

Let's delve into these phases in serial manner.

Phase 1 - Basic Financial Planning

This forms the basis of financial operations for any entity. Preparing projections of revenue, sales, costs and capital requirements on an annualized basis lays the foundation for commercial operations of any organization. Management at this stage is quite optimistic about the growth of it's business with ambitious targets, high sales and fast growth.

During forthcoming years, the financial forecast presented in this phase gets tested at all levels. The quality of it's planning defines it's accuracy.

Phase 2 - Forecast based Planning

While the previous phase was long-term, forecast based planning is usally for the immediate short term for which the organization has better insight. Depending on the type of organization, the preparation of this phase might be quite complex with multiple products, types and business models. The economic systems might be more complicated for the level of a management level planner with limited technical insights.Planners usually resort to advanced planning tools for estimation, including trend analysis and regression models, and eventually even computer simulation models. However, the actual business might still be quite volatile as compared to their predictions. Nevertheless, Phase 2 improves the consistency of planning and effectiveness of strategic decision making.

Phase 3 - Externally Oriented Planning

As the business achieves new success and growth, it also raises the scale and complexity at which it operates. This brings in the need for next level of planning which can connect the organization with external dynamic factors driving the market response. Since this phase is more dynamic, it involves planners looking for more new opportunities to "shift the dots" based on current customer demand by developing new business capabilities or by re-defining the market to better fit their company's strengths. The team members look at design improvements, lowering performance costs and try to compete on price. Each choice is differentially rewarded by a different risk/reward profile and gives priority to a different objective.

Phase 4 - Strategic Management

This matches the planning at top management level. Large multinationals with diversified product portfolios look for a complex strategic planning by management. It's a very effective method for fast growing organizations. It involves the mechanisms for:

• A planning framework that passes at all management levels,
• A planning process that resembles the thinking of the management, and
• A corporate value system that reinforces the commitment of the management to it's strategic planning.

If we've to revisit the strategies planned by the management and decide if they're a good fit or not, we can do the same by adopting following methods:

Stressing Competitiveness - This involves identifying key competitors, understand their strengths, relative strengths of our organization and it's competitive strategies to overcome competition. This could also lead to identifying our blue ocean strategy which can keep the competition at bay for a very long time.

Focusing on a Theme - Some organizations check the efficiency if their planning process by focusing it's parameters on a particular theme which can provide value to it's customers either in terms of easing the manufacturing process or adding value to customer service. This is a very efficient practice to test the outliers in our products.

Negotiating Objectives - This is more prevalent for a de-centralized organization with multiple business units and scattered operations. Different units try and negotiate on the business investment required for a return of certain profits on the operations. The management has to really weigh all options before allocating it's funds correctly for best utilization.

Demanding Strategic Insights - The management can demand key strategic insights from it's business units to understand if they've any key surprises that can be offered exclusively in their product offerings. If a business unit doesn't have anything specific to offer, it's quite likely that they won't be able to surprise the competition either.

To enhance the effectiveness of strategic planning, the management can embibe the corporate value system in it's organization to improve the following:

1. The value of teamwork which can keep the organization as one and help in coordinated effort.
2. Ownership drive to make them equally responsible and engaged with the organizational vision.
3. Open communication, rather than following closed doors policy.
4. Common belief system to succeed and grow together.