Organizations Strategic Capability and Competitive Advantage - Report Example

Strategic Management Table of Contents I. Introduction 3 II. Content and Analysis 3 Critical Analysis of the Organization’s Actions 4 a. Theoriesof Strategic Management 4 b. Application of the Theory in Heathrow Airport 5 2. Critical Determination of Organization’s Strategic Capability and Competitive Advantage 6 a. Strategic Capability and Competitive Advantage 6 b. Application of the Theories in Terminal 5 of Heathrow Airport 8 3. Evaluation of the Performance of the Organization 8 a. Beneficial Theory of Benchmarking 8 b. Application of Benchmarking For Organizational Performance 9 III. Conclusion 10 References 11 Sekhar, G. V. S., 2009. Business Policy and Strategic Management. I. K. International Pvt Ltd. 12 I. Introduction In the present day business environment, proper management of resources is deemed to be one of the core objectives of the business unit irrespective of the sector it operates. Since the level of competitiveness is quite high in every sector, the margin of error for any business is quite marginal. In this regard, proper formulation of business strategies is quite vital within the business operations (Sekhar, 2009). This aspect means that each of the operations of the businesses must be in alignment with the formulated strategies, so that positive outcomes can be ensured every time. Contextually, the role of strategic management theories and concepts came into existence (Hill & Jones, 2012). This particular study will focus on solving the problems of Heathrow airport relating to the operations in terminal 5. The company that has been selected for this particular essay is Heathrow Airport in London. It is one of the biggest and the busiest airports of the world in the present day scenario. The airport has handled a number of passengers more than any other airports in the world. Carriers from various nations of the world make use of the airport for their operations throughout the year and accordingly, making it the third busiest airport in the world (LHR Airports Limited, n.d.). Contextually, this particular essay focuses on depicting the importance of strategic management theories and concepts in the present day business environment emphasizing Heathrow Airport, London. II. Content and Analysis Within the complex challenging present day environment, business units are required to perform efficiently in every section of a business in order to stay ahead in competition and gain a sustainable position in the marketplace within any particular industry. In this regard, the role of strategic management of business units is deemed to be quite vital to a considerable extent. Effective strategies can be regarded as the backbone of the operations of modern day business units. In this context, there are several theories of strategic management that can be taken into consideration, which can further relate to the operations and actions of Heathrow Airport. 1. Critical Analysis of the Organization’s Actions a. Theories of Strategic Management There are various strategic theories that can be implemented within the present day operations of the business units. Some of the theories of strategic management include profit-maximizing and competition-based theory, resource-based view, contingency theory, survival based theory, human resource based theory and agency theory among others. Profit-maximizing theory of strategic management refers to the approach of the companies to focus more on maximising the profit of the business and depicting it as the most important objective of a company. As per this particular theory, companies intends to develop themselves as a sustainable unit by maximising their business profit through operating in the most efficient manner in each of the domains of the firm’s operations. Similarly, a competitive theory of strategic management often reflects the approach of the companies to gain competitive advantage over the rivals by building noteworthy strategies and stay ahead in competition as when compared to the rivals operating within the industry. With this particular strategic management theory, companies often seek to enhance their market positioning, which assist in enhancing their competitive positioning in the marketplace. Contextually, the survival-based theory is a particular concept within the domain of strategic management that focuses on enhancing the positioning of companies on a continuous basis to survive for a longer duration within the marketplace. It is one of the most widely used theories of strategic management in the present day business context. The resource-based strategic management theory will also be an important determinant that needs to be discussed in a comprehensive manner owing to its wider applicability (Guerras-Martín & Navas-Lopez, 2014). It has been comprehended that a resource-based approach in the domain of strategic often intends to gain wider market share and better brand positioning within the marketplace with the help of optimum use of the resource available within a business. In this particular strategy, firm’s strategies are focused towards proper allocation of the resource within the operations with the intent to obtain maximum benefit from each of the available resources. It is also an important part of the modern day business operations, since it ensures optimising the use of business resources in the most efficient manner. Similarly, contingency theory is a particular principle that is used by the companies with the intention to manage business operations in an efficient manner. Since human resource is among the most important parts of the operations of a business, proper management of the same is highly prominent (Raduan & et. al., 2009). Hence, all the aforementioned strategic management theory is deemed to be quite crucial and widely prevalent within a business domain. b. Application of the Theory in Heathrow Airport It has been learnt that the aforementioned theories of strategic management can prove efficient in dealing with the prevailing problems faced by Heathrow airport, London. It has been identified that terminal 5 of the airport has been dealing with certain issues in the recent times owing to which the overall operations is impacted one way or the other. Notably, this part of the airport is made of glass, concrete along with steel, which further ensures both beauty and strength at the same time. However, despite of considerable investment, the opening day of the terminal witnessed issues of poor baggage handling, flight cancellations and delays among others. This was owing to the issue of malfunction in the IT system implemented in the place. In order to solve this particular issue, the resource based strategic management theory can be taken into consideration. Notably, in this particular theory, companies focuses upon ensuring optimum use of the available resources of a business towards gaining utmost satisfaction of the customers and their loyalty at large. In this context, it can be mentioned that Heathrow airport is one of the biggest airports of the world and it has reputation of its own that is being appreciated by the customers. However, lack of efficacy of terminal 5 in the initial days has proved to yield negative publicity for the company. However, it can be stated that terminal 5 of the airport is embedded with all the modern day amenities that can ensure the deliverance of noteworthy to the customers. Hence, a resource-based approach will be fruitful to be used in this context. With the application of this particular theory, the management of the company will be able to deliver services to the customers through optimum and effective use of the resource present in terminal 5 of Heathrow airport. 2. Critical Determination of Organization’s Strategic Capability and Competitive Advantage a. Strategic Capability and Competitive Advantage The concept of strategic capability refers to the business abilities of an organization in order to perform effectively based on competitive strategies and practices. In relation to an organizational perspective, strategic capabilities are developed to achieve the competitive business goals that are crucial for a firm to gain long-term sustainability within a particular business market and/or industry. An effective set of strategic capabilities involves different strategic measures and practices that are employed by an organisation. In relation to a conventional business environment, strategic capabilities centrally focus on the key assets along with its valuable resources, market position as well as future goals of the organisations (Birchall & Tovstiga, 2005). With due regards to the business environment in the present business environment, there is a large number of elements that can be identified to the strategic capabilities of the organisations. In terms of assets, business property, capital as well as intellectual property i.e. patent rights are few of the major elements in the strategic capabilities of the organisations. In addition, the strategic capabilities include other elements of an organisation such as organisational structure, human resource, skills and competencies of the employees and leadership mechanism or style that lead to the overall functioning of the organisations have also been witnessed as few of the major elements of firms’ strategic capabilities (Hill & Jones, 2008). The term competitive advantage is defined as a firm’s favourable position for achieving more profit and growth as compared to competitors within a particular business market segment or industry. Competitive advantages of the organisations involve offering a superior perceived value to a specific market or group of customers than the existing rivals within the similar industry or business domain. Competitive advantages of the organisations can be characterised into various types that include strategic measures of the organisations, products and/or services and working or business culture of the firms (Pearson, 2007). From a general business perspective, the notion of competitive advantage includes both costs and differentiation strategies regarding the scope of products and/or services offered by the organisations. In the context of cost, the strategy of cost leadership is one of major and widely accepted competitive advantages of the organisations that enable organisations to offer a similar type of product or service comparably at a lower price than existing competitors do. On the other hand, differentiation leadership is often referred as a competitive advantage that enables firms to target comparably larger markets across the whole business industry than other competitors (Pearson, 2007). b. Application of the Theories in Terminal 5 of Heathrow Airport It is quite apparent from the above analysis that the theories of strategic capability and competitive advantage are deemed to be quite effective in the present day business context towards ensuring a smooth and sustainable positioning within the marketplace. Companies that intend to gain success in the challenging and ever changing marketplace will need to make use of their strategic capabilities to gain competitive advantages. Contextually, Heathrow airport will also need to use its strategic capability of delivering quality services along with using its competitive positioning of being one of the biggest operators towards resolving the performance issues prevailing in terminal 5. The problems prevailing in terminal 5 were mainly in the form of inefficacy of the workers along with lack of optimum use of the prevailing resources. With the help of its strategic capability, the management of the organization can certainly ensure positive results in the operations of terminal 5 of the airport. 3. Evaluation of the Performance of the Organization a. Beneficial Theory of Benchmarking It has been learnt that benchmarking is a particular theory that is being used by the management of the companies in the modern day scenario with the intention of improving the performance of any business on a continuous basis. It is a particular theory that involves analysis of the processes and operational practices of a business on a periodic basis and likewise, changing strategies to deal with the challenging external business environment. It is often regarded as a tool for improving the domains of a business that are under certain specific issues of lack of performance (Urenio, n.d.). The theory of benchmarking directly relates to the concept of ensuring continuous positive changes within the operations of any particular business. It is also regarded as a particular theory that involves analysis of the approaches and methods use by the competitors and likewise, bring positive changes within the operations of a company by being influenced from the external business environment (Moriarty, 2011). This particular theory is deemed to be quite effecicient in the present day business environment owing to the aspect that it enables companies to enhance their business operations in a comprehensive manner and accordingly, gain a sustainable positioning within the marketplace (Raa, 2006). The theory has wider applicability within the present day challenging business environment. b. Application of Benchmarking For Organizational Performance As depicted, benchmarking is a particular concept that involves improving the performance of a business through learning from the past mistakes as well as efficacy of the competitors within similar industry. It can be mentioned that benchmarking can be effective in dealing with the operational performance within the workplace of Heathrow Airport. Since the organization is dealing with issues of baggage handling in the domain of terminal 5, the theory of benchmarking can be regarded as efficient in mitigating the problems. Many of the workers in this particular terminal of the airport have not been able to ensure fast delivery to the customers with regard to baggage handling. Many of the flight left empty, which certainly resulted in loss within the overall business revenue. In this regard, it has been noted that the management of the company is needed to bring positive changes within the operation in this particular terminal through implementing measures on a trial and error basis. This can be done through benchmarking theory, where the business is needed to learn effective approaches from other department and likewise, bring positive changes within the operations of this particular terminal. III. Conclusion From the overall analysis of the paper, several key facts compiled from numerous secondary sources relevant to strategic management can be summarised and presented. It has been learnt that companies often seek to have a sustainable and competitive positioning for them within the marketplace in order to survive for a longer duration within the challenging business environment in every sector. In this regard, proper use of strategic management theory and practices is deemed to be vital. Some of the common and widely used strategic management theories have been depicted in their particular study. Notably, a resource based strategic management approach has been recommended to Heathrow airport management for solving the current issues prevailing in terminal 5 of the airport. The paper has also made extensive discussion about the importance of strategic capability and competitive advantage in dealing with the problems of Heathrow airport in terminal 5 of the airport. Hence, it can be concluded that strategic management is indeed an important part of the present day business units for performing operations with better competitiveness and sustainability. References Birchall, D. & Tovstiga, G., 2005. Capabilities for Strategic Advantage: Leading Through Technological Innovation. Palgrave Macmillan. Guerras-Martin, L. A. & Navas-Lopez, J. E., 2014. Strategic Management. Theory and Applications. Home. [Online] Available at: http://www.guerrasynavas.com/the_book.html [Accessed December 23, 2014]. Hill, C. & Jones, G., 2008. Essentials of Strategic Management. Cengage Learning. Pearson, No Date. Strategic Capability. Home. [Online] Available at: http://catalogue.pearsoned.co.uk/assets/hip/images/catalog/uploads/ECS8_C03.pdf [Accessed December 23, 2014]. Raduan, C. R. & et. al., 2009. Management, Strategic Management Theories and the Linkage with Organizational Competitive Advantage from the Resource-Based View. European Journal of Social Sciences – Vol. 11, No. 3, pp. 402-417. Raa, T. T., 2006. The Theory of Benchmarking and the Measurement of Industrial Organization. Poster Paper Session. [Online] Available at: http://www.iariw.org/papers/2006/tenraa.pdf [Accessed December 23, 2014]. LHR Airports Limited, No Date. Facts and Figures. Home. [Online] Available at: http://www.heathrowairport.com/about-us/company-news-and-information/company-information/facts-and-figures [Accessed December 23, 2014]. Moriarty, J. P., 2011. Using Benchmarking to improve Tourism Businesses. Home. [Online] Available at: http://www.victoria.ac.nz/som/about/teachingandresearch/tourism/publications/tour-docs/Tourism_Benchmarking_Seminar_VUW_13_Sept_2011.pdf [Accessed December 23, 2014]. Sekhar, G. V. S., 2009. Business Policy and Strategic Management. I. K. International Pvt Ltd. Urenio, No Date. Benchmarking Theory and State-of-the-Art. Home. [Online] Available at: http://www.urenio.org/e-innovation/presentations/Stuttgart/kelessidis_folien.pdf [Accessed December 23, 2014]. Read More