Strategic Leadership in a Changing World - Essay Example

Strategic position analysis Introduction Strategic position analysis is important to an organization in examining and determining the strength, weakness, opportunity and threats facing the organization or business at the present time with close proximity to the future (Johnson et al 2014, p.65). It entails the study of external and internal factors affecting the operation and profitability of an organization. Strategic position analysis is therefore a crucial tool that equips the management with necessary information to sustain the business competitiveness in its operating environment or industry. External factors refer to the external business environment factors affecting the business like competition, industry trends and technology as external market forces. Internal factors refer to the internally based resources the organization own for instance assets, skilled labor personnel and financial outlay that give it the organization efficiency in operation. Strategic position enables the management to implement appropriate strategy that guides the credibility of decisions made to steer the company or organization maximum business output. In essence, strategic position analysis should be the relationship between three crucial factors that the management considers in making strategic decisions for an organization. These are the external environment, resource base and competences and stakeholders influence and ethical and cultural values of the organization, however arguments have been put forward to link effective strategic position analysis to incline more to external environment factors more than the organization’s internal resources (Thompson & Martin 2005, p.132). External environment has been emphasized because it evaluates macro market influence and micro market influence; macro market influence factors are such as technological factors, economic, political and social factors and micro market influences are industry related factors for instance customers satisfaction, suppliers, barriers to entry and competition. Hence covering a wider aspect of assessing organizations growth factor than making decision based on the internally based resources. To best analyze this, it is imperative to compare the external market environment versus resources. Several arguments have however stated that a good strategic position analysis should find a mutual balance between the environmental factors, organizational competences, resources and stakeholders influence. Strategic position analysis To understand the importance of strategic positioning analysis to an organization, the several three key factors are important; external environment, internally based resources and competencies and stakeholders influence and ethical cultural values of the organization. External environment External environment is an important aspect to consider in implementing a strategic position analysis by a business or an organization (Keller, Aperia & Johnson 2013, p.65). External environment or business environment can be categorized into two; Marco-external influences and micro-external influence. Macro external influences include economic, social, technological and political factors that are likely to affect the operations of any business. Micro external factors include aspects pertaining to the industry the business is operating in factoring competition, suppliers, barrier to entry and customers’ needs (Johnson et al 2014, p.165). External environment is crucial in critically making strategic decisions in an organization by putting together these factors tat aide scenario planning, competitor analysis and strategic capability assessment. External environment poses the future uncertainty factor from the interpretation of these aspects such as the political scope that is highly unpredictable or economic, social and technology that are subject to change with change in time. However the main consideration in strategic positioning argues the fact that external environment factors should not be a future prediction determinant but rather provide a debating platform to enable the decisions makers make strategic decisions (Helms & Nixon 2010, p.227). This is termed as scenario planning. Scenario planning is a strategic tool that decision makers of an organization base their critical and evaluative arguments on by examining at the external factors that are likely to affect the operation of the business eventually interfering with the revenue capacity or sales. Competitor analysis is very crucial in organizations based in the same industry because of the nature competitiveness that determines the going concern for the respective business that manages to stay that the top. Businesses like banks need to strategically analyze their competitors at an industry level to acquire strategic positioning (Johnson et al 2014, p.144). It is key to analyze the economic segments associated the industry to better shape products and services to acquire an upper hand from competitors. Effectiveness of competitor analysis is based on a special research commissioned by the respective organization to understand the particular markets. External environment study and market research therefore helps the management or the decision makers to better analyze the position of the organization in the industry it is operating in to effect strategy that makes it unique from the competitors. External environment factor is important in determining strategic capability of an organization. This is understood as valuations standards by the customers in regards to the company’s products and services (Mintzberg & Lampel 1999, n.p). It is imperative to for any organization to study the basic minimal needs of a customer, factoring in their views so as to be able to map their product and service specifications to outperform the competitors in operating in the same industry level. Such a strategic position analysis can enable the organization or company to have a competitive advantage over its close competitors. Strategic capability assessment is crucial to the decision makers or management in determining the direction to take a s company to maintain its customer base and increase the probability of acquiring more to be strategically placed as product and service delivery leaders. Internal resources and competences Organization can achieve a proper strategic positioning initiative by strategic managing its internal resources and competences. Organizations should set a unique minimum standard for allocating resources for optimum productivity to reach the required strategic competitive standards as industry leaders (Crook et al 2011, p.443). Company’s resources include human resources, financial resources, physical resources and intangible resources; Physical resources refers to machinery and buildings and intangible resources refers to intellectual input, brand reputation and knowledge base. Strategic positioning advocates for organization investing in its resource base and competences to create a source for competitive advantage. Resources utilization by an organization is key to generate competencies that earn the company a competitive advantage. Competences is attributed to the fact that customer can be able to associate with certain features on a product or service. Companies that have invested in internal resources to achieve high value competences have strategically acquired competitive advantage over competitors. Talented workforce is one organizational resource under human resources that generate unique competences. Companies can however loose this comparative advantage through poaching by competitors. Strategic position comes in when addressing the fact that customer preference s and consumer choices change over time hence the need to be constantly directing resources to the most important aspect that changes the products and service to the customers’ specification (Banker et al 2011, p.492). Core competences are however difficult to measure by the decision makers even though various suggestions like benchmarking and value chain analysis. A company can allocate its resource to facilitate benchmarking process in examining good and poor performance by the company in relation similar industry players. Value chain analysis on the other hand is helps the organization or company to determine where value is generated and lost through its product and service delivery mechanisms. Stakeholders influence and ethical cultural values of the organization A general overview of the conditions and ‘ambience’ the company or organizations operates in is a paramount determinant of strategy. Strategic positioning under this context will entail considering business ethics, cultural framework, stakeholders framework and corporate governance analysis to determine the possibility of adopting new strategies or re-implementing the existing ones (Johnson et al 2014, p.176). Ethical and cultural values of an organization are the most crucial factor when making strategic decisions and their implementations. Corporate governance for instance determines a company’s regulatory framework by highlighting the major company’s direction and mission. Strategy implementation is likely to incline more to the company’s mission and vision as opposed to new set of ideology that is slightly different the mission and vision statement (Wilson & Giligan 2012, p.145). Stakeholders affect the implementation of a strategy based on the fact that stakeholders exact a certain amount of power to the management of the organization, for instance the government sets a certain guiding and regulatory framework to limit the decisions making of a company to protect the customers’ needs.an organization is thereby able to make a strategy decision in the confines of the industry law provision to achieve a maximum effect on the organization’s productivity and efficiency. Customers are likely to associate more with organization that subscribes to transparent ethical guidelines that protects their interests. Strategic positioning ensures that comparative advantage to companies adopting this strategy initiative. External market environment versus internal resources and competences External market environment is an essential factor in strategic positioning consideration by decision makers of an organization. The essence of strategic positioning is to give a company a comparative advantage platform over similar industry players hence information to effect this strategy is with the market trends, competitor analysis, customer consumption behavior and technology progress by mentioning a few (Nahmias & Olsen 2015, p.122)s. A company is likely to make a long term strategic plan by basing its decisions based on the industry trends and associated marketing forces or economic structure. Research carried about the organization relationship with the external market forces will give the organization an upper hand in setting the direction to acquire a unique platform against the competitors. Internal resource and competences on the hand is equally vital to reinforce external market factors because of their speculative nature. Decision makers in an organization use external market information to as a supporting measure to better utilizing its internal resource base and competence (Wheelen & Hunger 2011, p.132). For instance after analysis of the competitor information of similar industry player an organization can add more value to its products and services by using technologically advanced methods of production that reduce cost while enhancing quality. Human resources like talented individuals are able to enable a company or organization to be strategically positioned by offering unique human labor input making a company more productive and unique in its products and service delivery. Conclusion Strategic position analysis is essential for strategic short term or long term planning of an organization because it involves the mutual consideration of external market factors, internal resources and competences and finally Stakeholders influence and ethical cultural values of the organization. It is wrong to assume to assume that the organization’s decision makers should incline their strategy to considering external market factors more than the internal based resources or ethical considerations. They all rely on each other as crucial facts to be considered when making strategic decision by making the organization more unique to the customers’ eyes. Strategic positioning is however more effective if it safeguards customers’ interests, stakeholders’ interest, gives the organization a competitive advantage at industry level and considers the ethical and cultural guidelines of the organization. Strategic position analysis is an insurance policy to an organization’s future continuity. References Crook, T. R., Combs, J. G., Todd, S. Y., Woehr, D. J., & Ketchen Jr., D. J., 2011. Does Human Capital Matter? A Meta-Analysis of the Relationship Between Human Capital and Firm Performance. Journal of Applied Psychology, 443. Gerry Johnson, Richard. W., 2014. 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