Strategic Management Corporate Strategy - Essay Example

BMGT 495 - The questions below are designed to test how well you understand the philosophy of the strategic management system rather than the specifics of a given tool. You should be able to answer the questions based upon your experience doing your personal and group projects. Copying material from the textbook will not be a complete or sufficient response. Make sure that you answer EACH part of the question. The answers to questions can generally be covered in page or less. 1. (25 points) a. At the beginning of the course in the very first conference we discussed the nineteen steps in the strategic management process (SMP) - which can be found in Course Modules. If you were instructed by your boss to apply the SMP, but were limited to performing only 5 steps (5 of the individual analytical tools), which steps would you select b. State your reason(s) for selecting each step chosen. Strategic management process needs to go through the following five steps to ensure that the strategy is successful and is implemented in order. 1. Strategy Analysis: This comprises of identifying and aligning with the objectives of the company. This is an important step and has to be necessarily performed so that the corporate strategy could be fixed. 2. Strategy Choice: Based on the strategy worked out, we need to fix the choice of strategy that we finally identify. This becomes the company's strategy and has to be planned and chosen with utmost care. 3. Action Plans and Functional Tactics: In order line up the strategy and achieve what ever was set as the target for the company it is important that a series of action plans along with appropriate functional tactics are worked out. 4. Strategy Integration: The next step is to integrate these action plans and the strategies that we have planned into the corporate strategies. 5. Control and continuous improvement: Once the strategy is integrated, the implementation of the strategy needs to be continuously controlled and monitored. This is needed to ensure that the strategy adopted is implemented in its letter and spirit. To ensure that the strategy is successful it is essential that the process and the strategy gets improved over a period of time. Continuous improvement is an essential component. 2. (10 points) a. Do you think your final report based upon the 5 steps chosen in question 1 above would be a valid strategic management process b. What precautions might you want to attach for readers as they read and interpret the report Yes. The final report based on these five steps listed in the earlier question will make up a valid strategic management process. However there are certain points of caution, which the readers should have in their mind. They are: 1. The strategy works towards continuous improvement of the processes or actions to reach the targets set and not to change the target itself in the name of improvement. 2. The strategy choice is based on various factors that make up the corporate strategy. However, the reader should be cautious that the alignment of this strategy to the corporate objective is as per the visualizations done. There could be gaps in them and this needs to be straightened out. 3. The reader should also note that the action plans and functional tactics are based on the various parameters that are available and the experience of the person evaluating the scope of work. There are bound to be some errors and mistakes in this evaluation. 3.(25 points)a. Compare and contrast the nature of external factors with the nature of internal factors. Give three examples each of external and internal factors. b. Discuss an example where an organization might be able to increase its control/influence over an external factor. c. Since external factors can impact the profitability of an organization, why do we have financial performance as an internal factor d. How does misclassifying an internal factor as an external factor in the EFE impact the analysis External factors that considered during analysis are: Opportunities and threats. For example, customer preferences, Governmental policies, trading agreements between countries, currency rates, etc., Typical internal factors included are normally the strengths and weaknesses a company espouses. They are: skills of the employees, strong customer focus, ongoing employee development, store policies or internal corporate policies, clear mission statement and other such factors. One of the external factors that could affect the business is the ease of payment and option to buy from home or with least effort. This is preferred by most customers. This can be helped by using an online payment or credit card payment or a bank transfer online. In addition, the stores also resort to online shopping malls that result in ease of operation and satisfaction among most of the users. Financial performance is dependent on both internal and external factors. However since financial performance is not just one value but a performance over a period, it is usually the way the company performs and is able to acclimatize itself to the changing external scenario. This makes financial performance an internal factor. Misclassifying an internal factor as an external factor will be changing the rating of the organization. This would have an impact in planning and executing the strategy itself. Since the ratings in individual heads would help us in identifying multiple operating options, it would be trying to identify a solution where there is no problem. This would lead to unwanted waste of time and money. 4.(10 points) a. Discuss how the competitive profile matrix can provide insight into positioning your organization relative to the competition b. Is it more valuable to compare total scores for organizations included in the CPM or to analyze competitors across the most important success factors c. Explain your answer. Competitive profile matrix helps in charting out and rating competitors who are threats to the business of the company and their strengths, weaknesses with reference to the strengths and weaknesses of our company. Selected factors are used to evaluate and this would help in knowing what is our strength as against the competition's and where we should concentrate to promote our products and services. Total scores in the CPM would provide an overall figure to let us know whether we have an upper hand or not but the analysis will be more profound and useful only if it is done on the important success factors that are being considered. These will let us know the strengths that we have and the weaknesses of our competitors which we need to capitalize on. If for instance, by looking at a chart, comparing Wal-Mart with some of its competitors, we find that Wal-Mart is good in Pricing and financial positioning. They should try and capitalize on those strengths which will easily enable them to break the competition. 5a. (10 points) For the EFE, IFE and CPM it is important to limit the number of factors you included in the analysis. Why b. What happens to the analysis if you use more than 8-10 factors for the EFE and/or IFE, or 5-6 factors for the CPM. There is no hard and fast rule on the number of Critical Success factors that are evaluated for the purpose of EFE, IFE and for CPM. But it is the normal practice to keep it at around five or as fewer as possible. This is needed to ensure that the analysis is fair and we keep in mind the direction the company wants to take. In the beginning when candidate CSFs are listed out during the brainstorming sessions, there could be a number of factors which are distantly relevant and certain others which are very relevant. We need to cull only the relevant factors and position them in our analysis. When we use more factors for any of these analysis it would dilute the attention that you might give them. This would not result in a good rating chart that otherwise you might get when you have fewer number of factors to evaluate and relate to one another among the competition and the company. It is highly imperative that those factors that are really critical to the company's success are identified and then they are used to rate the performance of the company. The dilution of the factors will result in ratings that are not fully dependable. They would also provide results that could be confusing and might lose strategic direction in direct contrast to what is the objective of the analysis happens to be. 6a. (10 points) Which of the four quadrants (TOWS matrix) for strategy matching produces the best strategies for the organization, which you analyzed b. Justify and explain your choice. For Wal-Mart, the TOWS matrix shows a strong inclination towards the first quadrant; strength-opportunity quadrant much more than the other three. This is so because of the strong presence of the strengths that they have and it is also true that the company is sitting at the threshold of a strong opportunity. Both these factors influence the decision that the company should focus on its first quadrant rather than on the others. The second quadrant, while is to combat threats, it does not offer much scope for growth or support growth; while the third and fourth are more defensive and will have to be done to ensure that the company does not fall into bad times. All these reasons helped us in making this choice to go for the first quadrant; strengthen our strengths or capitalize on the strengths and make use of the opportunities that are provided at this point of time. 7a. (10 points) Discuss how to thoroughly analyze your proposed strategy selection. b. What understanding do you gain by performing this analysis The strategy selection of strengthening the strengths of the company and to capitalize on the same to cash in on the opportunities has been done after a detailed analysis of the existing scenario. We need to take a closer look at the Internal and external factors that affect the strategy. When this is analyzed, we find from the Internal Factors Evaluation table, that Wal-Mart is more customer oriented and has a large network of shops that would cater to the needs of their clients, at every corner. In addition to this, Wal-Mart also had strengths to support the opportunities that exists, typically, the growth of the internet based business and the ease of shopping that the customers need. On analysis we find that the IFE and the EFE is in line with our strategic management proposal based on the TOWS matrix analysis. We also find from the CPM, that these are the major strengths of Wal-Mart and a weakness for many of the competitors. Any right strategist would capitalize on these strengths and opportunities of the company and on the weaknesses of their competitors. Read More