strategic management assignment leeds beckett university

7/25/2019 Strategic Management Assignment Leeds Beckett University

1/8

Section: 1

1.0 Introduction

Strategy is the opportunity and the direction of any rm for an extended

time period. It benets the rm when there are changes in the

environment as it organizes the competencies and resources of the rm

by fullling the expectations of the staeholders !"ohnson# et al.# $00%&.

'he strategic decisions are mainly about the following points:

(ong term direction of an organization and hence can be complex in

nature.

Scope of an organization activities therefore can be made in

situations which are uncertain.

'hey may help to gain advantage over competitors but can most

liely a)ect operational decisions.

'hey can address changes in the business environment but they

re*uire an integrated approach.

+alues of staeholders and can involve some changes. !"ohnson# et

al.# $00%&

(evels of Strategy:

Strategy can be divided into three di)erent levels. 'he ,orporate (evel#

-usiness (evel and perational Strategies.

1. Corporate-level strategy: this level deals with the purpose and

scope of an organization and how value can be added to the

di)erent parts of an organization. 'his includes issues such as

geographical coverage# range of products of the business and

resource allocation between the di)erent parts of an organization. It

is also related to expectations of the owners/ the shareholders and

the stoc maret !"ohnson# et al.# $00%&.$. Business-level strategy: this level deals with the di)erent

businesses that are included in the corporate strategy should be

able to compete in their particular marets. It is sometimes also


2/8

nows as competitive strategy. It relates to particular strategic

business unit within the overall organization !"ohnson# et al.# $00%&.. Operational Strategies: this is the third level of strategies which

are concerned with how the component parts of an organization are

able to deliver the corporate and business level strategies related to

resources# processes and people !"ohnson# et al.# $00%&.

1.1 Importance of Strategy for the managers

ccording to !2app 3 -irger# $004& strategic planning helps the manager

to improve the performance of an organization. 5hen the managers follow

their strategy# they are able to increase their prots# sale and net return

on assets and this has been measured as well. 6anagers adopting

strategic process expect that it will lead the rm to much better nancial

performance.

'here are many non/nancial benets for the rm which has adopted a

strategic process. ccording to !7arayanan 3 7anda# $008& the main non/

nancial advantages of strategy is that it helps the manager to now and

plan about the future problems as well as en9oy the future opportunities. It

also helps them to mae better and *uic decisions which results in cost

saving.

'here are di)erent views of each author that why strategy might help the

managers to understand their rm and its environment in a better way.

'he di)erent models are 6intzberg 4s# ,lassical pproach# 'he 2esource

-ased view !2-+& and "arzabowsis ps but I have used 6intzberg;s 4ps

and 'he resource based view as these two models are widely acceptedand are easy for the managers to adopt and understand that why strategy

is important for them and their rm.

1.$ 6intzberg;s 4s

ccording to 6intzberg# it is very di


3/8


4/8

If the manager follow strategy as pattern# they can eep on using it

till the time it is successful and gives them competitive advantage.

Strategy as Position: It can be dened as measuring the rm;s

performance in respect to its competitors. It basically considers the

external environment in which the rm is operating !6intzberg#

$000&. (ie the manager of >?, should consider >?, and he should

also loo at his competitors lie 6c@onalds# -urger >ing etc.

Strategy as Perspective: It can be dened as strategy that might

be aggressive for one manager whereas the other manager see it as

protective. It depends upon the way the managers loo to the

surrounding world !6intzberg# $000&. (ie one manager at -ritish

irways can tae (ufthansa as their biggest threat whereas the

other manager might tae it as their opportunity to exploit the

resources of (ufthansa and the third one can get into alliance with

them so it depends upon the thining of the di)erent managers.

1. 2esource -ased +iew !2-+&

'his view focuses on the strengths and weaness of the rm and wors on

a hypothesis that an organization can mae above average prots and

en9oy competitive advantage if it possesses uni*ue and specic potentials

either in the form of core competencies or in the form of resource

!Salonen# $010&. It is based on two assumptions which are that an

organization in an industry may be heterogeneous in reference to the

strategic relevant resources controlled by them and the second

assumption is that the factor marets are imperfect !-arney 3 5right#

$001&.

'he main motive of this view is to inspect about the source of the

sustained competitive advantage of the rm and what are the conditions

based on the two assumptions of this view !-arney 3 5right# $001&.


5/8

'he resource based view uses the +2I7 !+aluable# 2are# Inimitable# 7on/

Substitutable& model to explain whether a resource is strategically

relevant which is discussed beneath:

Valuable: resource is regarded as valuable if it exploits opportunity and

neutralizes the threats present in the external environment of the rm

!Salonen# $010&. (ie 'esco extra which is 'esco;s biggest store selling all

the products at one place !-ernard# $014& is a valuable resource for them

as they are neutralizing their threats and this store attracts more

customers in comparison to their competitors 6orrisons# Sainsbury etc.

Rare: resource is regarded as rare if it is uncommon among the current

and potential competition of the rm !Salonen# $010&. (ie 'esco extra is a

rear resource for 'esco because none of their current or potential

customers have all under one roof store and it creates sustained

advantage for them.

Inimitable: resource is said to be inimitable if it is hard to copy or the

competitors are unable to perfectly duplicate it !Salonen# $010&. 'esco

extra is hard to duplicate as a large place is re*uired to operate such storewith many employees and huge capital investment so it is inimitable.

Non-Substitutable: resource is said to be non/substitutable when it

cannot be easily replaced with products or resource of its ind !Salonen#

$010&. (ie 'esco extra;s substitute is not easily available because of large

capital re*uirements.

1.8 @rawbacs of 2-+

'he main criticism for 2-+ is that it does not explain the fact that how a

resource can develop and change itself with time !Aenry# $00B&. lso the

role played by people in the rm is supposed to be self/evident hence it is

addressed rarely and it also lacs details and it is very hard for the rms

to implement it !Aenry# $00B&.


6/8

,onclusion

?rom the above discussion# we can say that both 2-+ and 6intzberg 4s

alone on their self can help the executives to develop and implement

strategy for the survival and growth of their rm;s because of theirdrawbacs.

6intzberg;s 4ps are discussed in brief by 6intzberg which maes it very

tough to understand and implement and understand the extent of the

mareting environment. nd on the other hand 2-+ is accepted only by

few people and it is very di


7/8

'heories also explain individual that what they should do rst# what they

should be looing for and what their expectations should be from their

course of action. Dach approach is discussed below:

$.$ 'he ,lassical pproach

5hen the rm opts for classical approach# it aims at prot maximization

and in order to achieve it# the rm does rational planning !5hittington#

$000&. lfred ,handler# Igor nso) and lfred Sloan established the main

features of this approach which are the attachment to rational analysis#

separation of execution from conception and prot maximization

commitment !,handler# $00&.

?rom the article# the example of Eeneral 6otor# it can be noted that the

basic strategic problem is to position the rm in those marets in which

there is a probability of maximum prot. ccording to lfred Sloan# a

business adopting classic approach aims to earn return on capital and if

the return# in the long run# is not up to the mar# the reason behind it

should be corrected or the activity should be stopped.

'he main drawbac of this approach is that uncertain activities occurringin the external environment leads to the failure of this approach

!5hittington# $000&.

'he classical approach mainly in=uences economist and the militarists.

$. 'he Dvolutionary pproach


8/8

strategic management assignment leeds beckett university

Documents