Strategic Management and Industrial Environment of the Company - Essay Example

?Magna International With the advent of the nineteenth century it has been d that the transportation systems all over the world have been designed in such a way that the individuals living in the society can travel with ease. One such mode of transport being developed largely in the world is of the automobiles. Magna International Inc is one such company which produces automobile parts. The company is of a Canadian origin formed by Frank Stronach. It is based in Aurora Ontario from where it deals with all its internal and external activities. Magna is known for its production of automobile parts which are supplied to the known automobile producers of the world. These automobile producers include Ford, Toyota, Volkswagen BMW and several others which rely on the quality products produced by Magna. With the help of its technologies Magna is able to develop a variety of products including exterior, interior, metal body, front models, rear models, lighting components and several others. Magna is also known for its assembling of these products together to produce an automobile which can meet the requirements of the modern day society. Although the company went through an era of considerable losses in 2008, it still was able to grasp a profit of nearly $51 million by the end of September 2008. This clearly shows that the company is growing more and more day by day generating more profits so as to fulfill its aim of achieving the right profitability rate. Unlike other companies, Magna International Inc. does not follow a mission statement with inflexible approaches. It, as a substitute, uses its ‘corporate constitution’ and its ‘Employees’ Charter’ as its responsibilities and line of action. The corporate constitution of Magna International included the rights and responsibilities of its workers, declaration of management’s involvement in profits and development of the business, and description of disciplines on management. Their culture and responsibility, hence, is to keep a balanced behavior with management, workers and investors. The operating philosophy and culture of Magna International is based on the fairness of treatment, equality of opportunities to all employees and a collaborative approach to work for the good of the organization. It gives ample space to the employees in order to increase its efficiency and provides a flexible approach to the wants of employees, shareholders and management. The aim of Magna is to become a leading supplier of automobile parts but keeping the integrity and fairness in the treatment of its organizational workers and other stakeholders. The company has expanded throughout these years and has now been able to develop 242 manufacturing operations all over the world. Magna International in order to achieve its aim has to operate in a proper international, regional and industrial environment. The industrial environment of the company includes the working level of the employees and the potential to which they can work at. The industrial environment of Magna International is modified in such a way so that their employees are able to work at their maximum potential. The industrial environment of Magna includes its fair working policies and other programs which tend to encourage employee participation. Moreover an Employee Charter which was introduced in 1988 helps them to achieve this target of fairness and balanced industrial environment. As the company has expanded all over the world it applies to all the principles and laws of different nations. To do so the company makes sure that it is competitive enough to launch its manufacturing plants in certain countries and that its routine activities in that particular area are successful enough. The company has developed such policies which help them to further expand in these countries and cope up on the level of international scenario. The company strictly follows the laws and economic policies of the country in which it develops its plants. Similarly it also adheres to the factor of language as per the country language. For example the sale centers of Magna in Germany have employees who speak German also. The regional environment in which Magna works is compatible to its standards. The workforce, financial and physical capitals are the main factors which allow Magna to grow excessively. The offices and plants of Magna are spread all over the world and before deploying these offices and plants all these factors are considered. The workforce of Ontario can be considered here because it is the main headquarter of Magna International. The capital and physical factors have been a main strength for the company and similarly the individuals in Ontario are capable enough of working to the levels that the company requires. Moreover as Ontario is a developed province that has all the necessary entities that the firm may require. This includes an organized transportation system, educational system, social cohesion and adequate supplies of natural resources. All these factors help the firm to operate in a suitable manner. Bibliography Magna International Magna earns US$51M in Q3, reversing year-earlier loss despite sales decline Magna International < http://www.google.com/finance?client=ob&q=NYSE:MGA> Mobility Barriers in Strategic Groups There are certain strategic groups within an industry which are more profitable than others due to their strategic competence. Such groups are highly rewarded due to their competitive efficiency which allows them to enjoy greater opportunities and face lesser risks. The management may consider switching between strategic groups if they believe that moving to another strategic group will bring benefits for the company or business. The changes in business models and strategies would be required in order to switch form one strategic group to the other. There are a number of Mobility barriers which must be considered before entering into the other strategic group. The mobility barriers that exist and interrupt when switching between strategic groups are crucial for the management to be identified, analyzed and evaluated for its success. Mobility barriers are the factors prevailing within the industry that the business is working in. These barriers include the barriers which act as a hurdle in the company’s way fo entering or leaving a particular strategic group. Companies following a particular structure and strategic model develop distinct qualities, working style, cost structures and expertise. Companies following a particular strategic option, hence, carry different pricing and profit levels. The options and opportunities available to each strategic group are also different. The level of competence of each group also varies. Hence, in order to switch from one strategic group to the other, the company must analyze the situations and circumstances that it would face after entering into the other strategic group. A company desiring to enter another strategic group must assess its competence level and ability to compete and outperform the competitors in the other group. If it does not have the efficiency to improve its performance or position in the strategic group or if it faces the risk of extreme competition that would be threatening to its position in the industry, the company should review its decisions of switching to another group. Companies have different structures and competitive advantage in different areas, hence, there is a need to analyze the cost effectiveness of moving from one strategic group to the other. If the entry to the other strategic group requires greater training and costs to integrate in that group, the organization should weigh between the opportunities that would be achieved and the costs related to the entry or exit from a particular strategic group. The final decision should be based on in depth analysis of the issues involved. Life Cycle analysis is another way of determining if the entry or exit from a strategic group is beneficial or not. Life Cycle defines five stages of industry’s life cycle including embryonic, Growth, Shakeout, Mature and Decline. These stages help in determining the competencies which a business must posses in order to enter or exit from a strategic group. If the industry is in its growth stage, there is a high risk of new entrants but since the demand of a particular product increases at this stage, the entry barriers are lower but competition is higher. In conclusion, we can say that mobility barriers play a vital role in decision making of strategic groups. The use of life cycle analysis helps in determining the possible outcomes of entry or exit from an industry. It divides the life of a business in to different stages and provides an expected situation of the industry at each stage to aid management’s decision making process. Bibliography: Hill, Charles W. L, and Gareth R. Jones. Essentials of Strategic Management. Boston: Houghton Mifflin Co, 2008. Print. Read More