Thinking and Acting Strategically - Assignment Example

Discuss the assertion that strategy is jn crisisflas Wilson and Jarzabkowski (2004, p.14) There is no crisis if the employees within the company arewilling to change to the new and better strategies implemented by management. There is crisis in strategy if the employees resist the change in strategies recommended by management to increase market share by implementing new processes and procedures to improve the quality of its product in lesser time and spending lesser cost. There are advantages and disadvantages for choosing between following the prevailing marketing strategies that have existed form many years and changing to the more dynamic and chaotic strategy of a fast paced business environment. The business environment consists of internal environment composed of employees and owners or investors and creditors and the external environment composed of the customers, suppliers, competitors, government, TESCO'S has garnered a big share of the retail industry market. But complaints have been lodged by competing stores for government to make an inquiry into its bully boy tactics. Tesco with over 180 stores in England is offering up to 40% discounts to its present and prospective customers. The stores affected are Asda and Yorkshire's chain Proudfoot. Tesco uses its vast Clubcard database to give it access to detailed information about shoppers that no other retailer can match. (Harrison & Enz,Hospitality Strategic Management,p145,USA,John Wiley & Sons,2005) It also owns a controlling stake in an information company, Dunnhumby, which sells data to third parties. Sales of Tesco has increased due to this strategy. "Calls for an end to Tesco's bully-boy tactics have grown too loud to ignore " this result to a call of full scale competition inquiry by govt. Elsewhere, Lee Scott, the president of Wal-Mart, which owns Asda, has called for government intervention to halt Tesco's rapid growth on the grounds that it is increasingly hard to compete. Sainsbury's chief executive, Justin King, has demanded changes to stop Tesco's market share "climbing to 40% in short order". Ref: Julia Finch Saturday November 12, 2005 The Guardian COMMENT: This is another way of Macro strategy where the competitors ask government to intervene since Tesco is playing fair as their market share has been decreased and many smaller stores have closed up. In business, only the losers complain. The customers go to Tesco because of its lower prices. SAINSBURY'S has made public its first loss after many years of being one of the leaders in the supermarket industry in England. Its current loss of 38m pounds is a big disparity between its last year's 323m pounds. Sainsbury's, which last month was at the centre of takeover speculation, is struggling to turn itself around. It has been the subject of takeover by its competitor Asda. The main cause is that they have not filled up their stores shelves in time because they had not estimated the sales output. This Micro strategy has been rectified by its chief executive ,Justin King. Its stock market shares increased due to the new moves of it chief executive. "Sainsbury's chief executive Justin King recently admitted the firm had been failing to properly stock its shelves after struggling with faulty distribution systems. A reorganization of the business under Mr. King has already cost it 400m. However, he said the company was now aware of where it had gone wrong in the past and was working hard to try to put things right." Now, the shop has been opened again to regain its original foothold as one of the leading markets in England. It has also added additional product lines. Sainsbury's chairman Philip Hampton said he believed the retailer had the building blocks in place to achieve a turnaround. SAINSBURY'S key strategy: increase product quality, lower prices, improve product availability . Once the UK's biggest supermarket chain, Sainsbury's has since been overtaken by both Tesco and Asda. REFERENCE: (http://news.bbc.co.uk/1/hi/business/4018407.stm)] General Electric's corporate finance "provides the business financing you need to keep your company moving forward. Asset based business loans are just one facet of commercial finance to meet your needs. GE Commercial Finance solutions include business loans to improve cash flow, restructure, debt consolidation and provide working capital. Commercial loans can also provide business financing for acquisition & buyout. GE Commercial Finance specializes in commercial loans starting at $10MM and above. Corporate Finance with a Difference" It can serve your finance needs and prefers to enter in a long term loan relationship. This is an example of rational strategy. They have been offering loans for many years now. It has the expertise which people need which new companies do not have. Changing strategies maybe not what some customers want. Customers want a established company bringing with it the many years experience in the SAME service activity. REFERENCE: (http://www.gecfo.com/WT.mc_id=GECFO%20Buscom%20GE%20Commercial%20Lending&WT.srch=1) REFERENCE: RMM (Adapted from Wilson and Jarzabkgwsfci, 2003, Thinking and acting strategically: New challenges for interrogating strategy). The article entitled Thinking and acting strategically: New challenges for interrogating strategy by David C Wilson;Paula Jarzabkowski from European Mangement Review, Vol 1, No. 1, pp 14-20(7) published by Palgrave Macmilan states " This paper takes a critical and evaluative stance toward micro-activity-based approaches to understanding strategy. It argues that such approaches bring with them important theoretical and empirical challenges. The paper argues against a tendency to reductionism without equal emphasis to the contextual influences that bound micro-strategising. Finally, the paper argues for a more international and comparative approach to micro-strategy studies than has currently been the case.European Management Review (2004) 1, 14-20, advance online publication, 5 March 2004 doi:10.1057/palgrave.emr.1500008" (file:///E:/www.ingentaconnect.com%20(%20Jarz%20Wil%20P14).htm#avail)Both authors emphasised that micro activity is very important strategy in the accomplishment of company objectives.When new business strategies are implemented that replace the prevailing rationalized strategies started during the early years, There is no crisis if all company employees submit freely to the system of strategies. The crisis erupts when the present employees from the different departments refuse to implement the new company strategies. They are resistant to change for they are used to performing the prevailing repetitive strategies which they have been accustomed to. Whittington 1996 states of the importance of varying strategy to suit each every business situation and financial analysis as part of business activity. According to him, differing strategies must be used to adjust to every changing business environment. For the manager, tools and techniques to help generate new strategies for each situation. He proposes use of industry analysis, as can be obtained from England's stock exchange for all its companies listed here. Praxis is the actual making of strategies by managers. General Motors' praxis at a certain time was when Alfred Sloan, its key officer proposed a controversial strategic move in a brainstorming meeting with its key officers, the people present were asked their opinions regarding Mr Sloan's move. They remained silent until the meeting was over. Either his executives did not know to point out the downside of his strategy or they were afraid to upset the boss. General Motors is one of America's big car manufacturers. Their market share has decreased due to the influx of smaller Japanese cars. The GM employees' attitude is well known during the prior years of management. (Hunger & Wheelen, pp212-213,Strategic Management,Donnelly & Sons,USA,1995) Whittington in 2002 states "In this paper Whittington extends the 1996 paper in relation to the practice perspective. The practice perspective is extended into three sub-perspectives i.e. Strategy practices: This relates to the actual planning tools used by strategic practitioners. Portfolio models and industry analysis tools are used extensively etc. Corporate culture is important here. Praxis. This relates to the actual work activities done in developing strategies by practitioners, Use of board meetings, away-days etc. The use of video and audio techniques is being used to throw extra light on the work involved m strategising work. (Wilson and Jarzabkowski have an input here)." REFERENCE: RMM (Adapted from Wilson and Jarzabkgwsfci, 2003, Thinking and acting strategically: New challenges for interrogating strategy by David C Wilson;Paula Jarzabkowski COMMENT: Stockholders and investors use industry analysis and portfolilo models that the STOCK EXCHANGE gives free of charge to its investors. These will be used to help the prospective investor to decided which company they will invest or divest their money. If you will visit England's stock exchange, you can also ask for financial statements and stock market analysis like the standard and poor ratio. Financial statement ratios are also used by the managers for decision making. G D Harrell and R O Kiefer, company concentrating on the use of international portfolio analysis, can be contacted for an expert portfolio analysis of venturing into the international market scene. Their portfolio analysis compares the effects of country attractiveness with its competitive strengths. (Hunger & Wheelen,Strategic Management,pp 317-318,Donnelley & Sons,USA,1991) Wilson and Jarzabkowski (2003) also state: "This paper attempts to develop a synthesis on the practice of developing strategies in firms from the perspective of individual strategists (practitioners), the tools they utilize (practices) and the way they interact with each other (praxis). It is similar in content to the Whittington articles although uses different words to describe the game practices. W&J use three dimensions to capture strategizing in firms. a) Iterative (repetitive): This is similar to the practice tools in Whittington's articles. General Motors, above is an example of this strategy. ( repetitive loan transactions) b) Protective: This dimension is similar to Mintzberg's strategic synthesis An example is Sainsbury's. It wants to get back and protect its market share. Another example is when an eatery in the eastbound side of the Connecticut Turnpike Interstate 95 in Darien was offering fast food and for years it was so filthy. But after a protective strategy, McDonalds, in order to protect its territory near this highway, bought the place. Three years later, it was the busiest eatery in town. (Harrrison & Enz, Hospitality Strategic Management, p75, John Wiley & Sons,USA, 2005) c) Practical Evaluation; This is a wisdom perspective and focuses on the ability to get things done. It is similar to Whittington's practice perspectives particularly with praxis and practitioners. This paper attempts to show a relational view between individuals practising strategic formulation (which they call the micro level) and the macro part of the external environment (macro environment). An example of a micro company is General Motors. The employees are fearful that their action will upset their chief executive so they implement, without reservation, their head's strategic plan. An example of a macro company is when the US district court judge ruled that Visa and Mastercard will no longer be able to prevent member banks from issuing card from its rivals. This decision favored their rivals, American Express and Discover. Another macro company situation is when the entry of mail order companies such as Dell and Gateway into a PC industry previously dominated by IBM, Apple and Compaq increased the level of competition resulting in the scenario that when one competitor decreases it price, the others will most likely follow suit so their market share will not be run over. The topic Taking Strategy Seriously in the article Responsibility and Reform for an Important Social Practice by Richard Whittington of University of Oxford and Paula Jarzabkowski of Aston University et al. states that " strategy is a pervasive and consequential practice in most Western societies. We respond to strategy's importance by drawing an initial map of strategy as an organizational field that embraces not just firms, but consultancies, business schools, the state and financial institutions. Using the example of Enron, we show how the strategy field is prone to manipulations in which other actors in the field can easily become entrapped, with grave consequences. Given these consequences, we argue that it is time to take strategy seriously in three senses: undertaking systematic research on the field itself; developing appropriate responses to recent failures in the field; and building more heedful interrelationships between actors within the field, particularly between business schools and practitioners." (http://jmi.sagepub.com/cgi/content/abstract/12/4/396) COMMENT: These three steps are what we have to do to accomplish the company goals of increasing the market share thru customer satisfaction by given excellent service and responding positively to customer complaints and innovating and renovating to the fast paced business environment. According to Strategy Safari: Mintzberg, Ahlstrand and Lampel, Prentice Hall, 1998 Some of the theories of the Strategic Decision Making are (1) It is based on rationality and it known as formalized planning. The General Electric Company discussed above is a good example here. It is now a very successful company using for having a splendid service record for many years. This record has made them one of the biggest financial services company around the world. The goal is the main attainment objective and the strategy during those days are proactive, meaning strategy to be implemented. The environment is assumed to be stable or peaceful. And the business and economic decisions are easily available. The decisions of management are generated to satisfy a situation at a particular point in time. (2) Emergent Approach - It thrives in a dynamic environment. The strategies change to improve the future time periods. An emergent strategy example according toDouglas Smith article entitled Better than Plan: Managing Beyond the Budget Leader to Leader, No. 15 Winter 2000 is when "Jennifer Dunlap, vice president of the American Red Cross, decided to enrich her budgeting process with an outcomes focus. As head of Corporate Services, responsible for human resources, marketing, communications, fundraising events, government relations, and international services, she asked her staff to prepare the usual budgets for the coming year -- but these budgets would simply provide a necessary appendix. She wanted the body of her plan to focus on the key performance challenges identified by leaders of Corporate Services as well as the outcome-based goals critical to succeeding at those challenges." It is mainly a reactive Strategy. Meaning, the strategy is made after a situation arises calling for immediate action. The decisions are based on short term results with not so precise objectives in the long run. (3) Incremental Approach - It is moderately dynamic. It thrives in an ever changing business environment. An example here is the SAINSBURY'S company stated above. It accepted that it had failed due its inaccurate monitoring of the input and output of it products. The chief executive then reacted to their predicament by making a quick decision and implementation of the strategy to fill up the and handled the crisis himself. (4) Adaptive approach - There is dynamic or chaotic environment due to the constant change in business cause by external factors like the rise and fall of stock market, the gross domestic products, inflation, supply and demand trends. According to Mintzberg, the four characteristics are a) Strategy is reactive, b) Decision-making is incremental. c) Strategy making reflects a division of Power amongst players. d) Little attention paid to problems of coordination. REFERENCE: Wilson, D, C. and P, Jarzabkowski (2004). "Thinking and Acting Strategically; New Challenges for Interrogating Strategy." European Management Review 1: 14-20. COMMENT: Example of Strategy is reactive company is Sainsbury. An example of decision making company is Sainsbury and General Electric. An example of Adaptive approach company is Sainsbury and General Electric. They both adapted to their customer's customers' wants and needs. The customers of General Electric wanted a company with the vast years of experience in servicing their financial loans. General Electric offers loans to a sector of the loans market belonging with the really big chunks of the market share in terms of USDollar or Eurodollar amounts. Sainsbury also reacted to the market just in time to avert a total collapse. Tesco has a big chunk of the sales market due to its bully tactical strategy as coined by its competitors with decreasing market shares. REFERENCE: Harrison & Enz,Hospitality Strategic Management,p145,USA,John Wiley & Sons,2005 Safari: Mintzberg, Ahlstrand and Lampel, Prentice Hall, 1998 Wilson and Jarzabkowski,2003, thinking and acting Strategically; New Challenges for Interrogating Strategy. Strategy under Uncertainty, Hugh Courtney, Jane Kirkland andPatrick Viguerie; Harvard Business Review, Nov/Dec 1997 Fascalc, R. Surfing the Edge of Chaos, Health Forum Journal, March/April 2002) Beinhocker E, Strategy at the edge of Chaos, The Mckinley Quarterly, 1997. . (Harrrison & Enz, Hospitality Strategic Management, p75, John Wiley & Sons,USA, 2005) Strategy at the Leading Edge New Research & Conference Reports. 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