Implications Of Business Strategies For Organizational Success And Failure

Advantages of Corporate Strategies

Describe about the Strategic management?

Businesses implement many exorbitant corporate strategies in their business front .But are they 100% cost effective? That is the big question in today’s world. Process researchers have found out through the help of much research that such strategy implementations are not producing the same results as expected. All executives in organizations know that strategy is important but they find it difficult to implement as they would be forced to encounter such a future that they have no clue about. One of the most important objectives of corporate strategy is to establish the organization’s position in the industry relative to competitors. Strategies can be of many types such as retrenchment strategy, diversification strategy, divestment strategy, pricing strategy etc. A small company can apply a number of business strategies. The strategies that they implement could be different from those of their competitors. Diversification strategy is very useful as it is designed to improve opportunities for profitability and growth. A successful strategy may help an organization increase its sales volumes and gain revenue or an unsuccessful strategy may be the reason for a company’s decline. Business strategies are unpredictable and unprecedented. In this essay I am going to discuss about different implications of business strategies and how it can create or destroy the future of an organization (Businessknowhow.com, 2015).
Advantages of corporate strategies:

Richard Lepsinger, President of On point Consulting once said that however good is a company’s strategy it is of no use if it can execute it I the proper manner. I think that he have said the right thing. As we get plenty of examples where business empires have fallen down because of wrong strategy implementation we see even small businesses thriving because of a successful corporate strategy plan (Charityvillage.com, 2015). Thousands of small companies start up every year and the good news is most of them have learned what to do in order to be successful in the first few years and that paved the way for them being successful enterprises in the future.

Some of the common factors that all these small companies share are:

1. Work/life balance
2. Company culture
3. Attitude
4. Business strategy
5. Financial roadmap
6. Discipline
7. Customer service
8. Risk
9. Business processes
10. Marketing
11. Information technology
12. Sales
13. Team of advisors and finally
14.  Training (David, 2005).

Academicians and managers have developed many frameworks and models to help in strategic decision making. Michael porter, Harvard professor states three principles of corporate strategy .These are creating fit by aligning activities of the company with one another to support the chosen strategy, making trade-offs by choosing what not to do and creating a valuable and unique position. Dr. Vladimir Kvint has defined strategy as a system of formulating, finding and developing a doctrine that if followed faithfully will result in long term success (Forbes, 2011).

A business strategy can be described as a long term business planning. It generally covers a period of 3- 5 years. Business strategies are concerned with what level of investment to be done in a particular product for example the launching of pooh roo juice by coca cola in America. Strategies are also concerned about the scope of a business activity i.e. where and what the company produce .For example, the scope of BIC is focused on main three product areas razors, lighters and pens (Foss, 2007).

There are mainly two main categories of strategies.

1. Competitive strategies
2. Generic strategies

Organizations follow some types of generic strategies

1. To purchase new assets, the expansion of the company is necessary, including development of new products and new businesses.

2. Companies like coca cola, Cadbury, Gillette, and Schweppes are major mncs with operations all over the world.

3. Retrenchment involves narrowing the scope of one or more business units for the overall betterment of the company. The Americans call this as “sticking to the knitting” or concentrating on what you do best.  Michael porter’s generic strategies describe how a company follows competitive advantage across its chosen market scope (Jeffs, 2008). Three generic strategies of porter are cost differentiation, focus and lower cost. Companies choose strategies like lower costs than their customers to attract customers or they differentiate themselves in some respects to command higher price over their competitors. They also concentrate on focus or selling their products in selected markets or segments or offering their products across many market segments (Managementstudyguide.com, 2015).

There are also other types of integration .they are vertical integration, forward integration and backward integration.

1. Vertical integration means the company uses more power over their suppliers and distributors in order to increase its revenue in the market place secure distribution channels or supplies and reduces transaction costs.

2. Forward integration is a strategy where company gains control over their previous customers such as retailers and distributors.

3. Backward integration is a strategy where a firm gains ownership over its previous suppliers (Opentuition.com, 2013).

Diversification strategies are that strategy where a company expands its business forum by adding more markets or product lines within its business opportunity. The purpose of diversification is for the company to enter operations which are different from current operations of the company. When the new venture is strategically linked to the existing line of business it is called concentric diversification and conglomerate diversification is tat where the new business is completely unrelated to the old business.

By the help of organizational strategies organizations fulfill their aims and aspirations. The company operates within four main elements of a successful strategy. The company’s strengths, their weaknesses, their opportunities in the competitive environment and threats in the outside world. this four elements, strength, weakness, opportunity and threat together constitute of the SWOT analysis strengths and weakness are internal factors of the organizations which are easier to control than the opportunities and threats which lies in the outside world and is more difficult to control  (Reliableplant.com, 2015).

Ken Andrews’s through his strategic model asked four basic questions about a company and its environment.1. What can the company do? 2. What does the company want to do? 3. What is that they have to do? And finally 4. What others expect the company to do?

Another very strong strategy of companies is through mergers and acquisitions activity. Like for example face book acquired instagram in 2012 with a price of $ 1 billion. Instagram allows facebook to compete in a market where despite having no strong presence it helps to retain young users. Moreover, by buying instagram facebook has given a competitive edge to companies such as Microsoft, Google and other competitors.

Being different from competitors is also an important aspect for business. Unless customers can differentiate your products from me- too competitors the company would have a hard time in sales. Business can do this by highlighting their product’s features, superior technology, heritage, styling, price or pedigree. The new apple I pad Air costs $274 which is more by $200 than competitors. Apple is being able to enjoy such high costs as it has been successful in differentiating its products from its competitors through display quality, lightness, engineering, software and finally ease of use.

Types of Business Strategies

One of the easiest ways for organizations to lose credibility is to admit that they don’t have a strategic plan. However, due to various obstacles like the recession many organizations cannot follow their strategic plan even if they do have one. So, it is very obvious that the plans that they are having have failed to predict the future of their organizations.

The plan often fails to produce new insights. Sometimes it is never used. In some organizations strategic planning is nothing but is seen as a tool to engage board members and staffs by exposing them to the mission of the organization (Small Business – Chron.com, 2015).

The uncertainty of strategic planning is not new. There is a famous saying that “man proposes and God disposes” (Yourarticlelibrary.com, 2015).

William starbuck, a scholar said about the downside of planning that at often times strategic planning is little more than superstitious babble. The idea that planning can predict the future is nothing but a myth; it can avert any kind of problems but can never eliminate them. Some exciting business examples to prove that strategic planning cannot predict the future are:

1. Coca cola began its career as a pharmaceutical product. It had launched products that are a cure for morphine, headaches, addiction, impotence and many other diseases.

2. Raytheon started out as a refrigerator making company and later on went to become the creator of the first missile guidance system.

3. Nokia began its career as a pulp mill that shipped to paper mills and later on became one of the greatest mobile phone makers.

4. DuPont started out as an explosive’s company and later on became the manufacturer of Teflon non sticking cooking pans.

5. Avon started as a door to door book selling company before starting as a cosmetics manufacturer.

6. Oneida Silversmith was a religious communal cult with an exceptional communal lifestyle.

7. General Nutrition Centers (GNC), started out as a yogurt company, selling sandwiches and yogurt before becoming one of the world’s leaders in sports nutrition, vitamin supplements and beauty products.

These drastic changes were not predicted by any strategic plans.

The myth about business strategy is that the more you plan the better will be your results. The reality is there is no relationship between the time spent in making business plans and the likelihood of success which will come after implementing it. Actually the reality is very different, the more the organizations plan, the worse is the result as they spend more time in the planning loop and unable to move to effective implementation

Another myth is that strategic planning is an arduous and painful process. It doesn’t need to be painful if the right planning group makes the right approach. There is no way that a perfect plan gets perfect results. The time spent in getting the right plan is hardly worth the effort. The strategic management process is time consuming, complex and difficult to implement (ŽakaitÄ—, ŽakaitÄ— & profile, 2013).

1. Time consuming: managers spend a lot of time researching, preparing and communicating the strategic plans which disrupt day to day operations and impact the business negatively. For example, managers might overlook daily requirements. When issues are not solved in a timely manner it can result into high turnover for the company. This can compel the company to put aside the strategic planning and concentrate more on day to day operations.

2. Complex process: Strategic management always needs to do a SWOT analysis, access long term and short term objectives, strategic control and organizational structure. These components are interrelated so change in one component will affect the other.

3. Difficult to implement: The implementation process requires a clear communicated plan. It should be implemented n a way that requires active participation, full attention and accountability of members all over the organization. Managers must always support and gain synergies from the employees to garner support for the company’s mission and objectives.

4. Skillful planning is required: An organization that needs to anticipate the future in order to plan head had to think of many risks and changes. The managers need to have the right skill sets, to avoid any pitfalls and mitigate risk factors (Worldanimal.net, 2015).

There are many reasons behind the failure of strategic planning. They are:

Lack of focus, lack of understanding, lack of energy, lack of accountability, lack of flexibility, lack of follow up, having the wrong people in leadership positions, writing the plan and shoving it on the shelf, partial commitment, inability or unwillingness to change, having a plan simply for plans sake.

Conclusion:

Businesses implement many exorbitant corporate strategies in their business front. . One of the most important objectives of corporate strategy is to establish the organization’s position in the industry relative to competitors. Business strategies are unpredictable and unprecedented. It is time consuming, difficult to implement, and very complicated in nature. Strategic planning cannot predict the future. The future is unpredictable. Strategic planning can only provide with a cautious strategy to avoid any pitfalls in the future or so that the company can apply turnaround strategy if it ever have to come across any problems in the future.

References:

Businessknowhow.com,. (2015). The Top Five Reasons Why Strategic Plans Fail. Retrieved 17 February 2015, from https://www.businessknowhow.com/manage/splanfail.htm

Charityvillage.com,. (2015). The Advantages and Disadvantages of Strategic Management. Retrieved 17 February 2015, from https://charityvillage.com/Content.aspx?topic=the_advantages_and_disadvantages_of_strategic_management#.VOLW8fmUeos

David, F. (2005). Strategic management. Upper Saddle River, N.J.: Pearson Prentice Hall.

Forbes,. (2011). 10 Reasons Why Strategic Plans Fail. Retrieved 17 February 2015, from https://www.forbes.com/sites/aileron/2011/11/30/10-reasons-why-strategic-plans-fail/

Foss, N. (2007). Strategic belief management. Strategic Organization, 5(3), 249-258. doi:10.1177/1476127007079977

Jeffs, C. (2008). Strategic management. Los Angeles: SAGE.

Managementstudyguide.com,. (2015). Disadvantages of Planning. Retrieved 17 February 2015, from https://www.managementstudyguide.com/planning_disadvantages.htm

Opentuition.com,. (2013). ACCA P3 Advantages and disadvantages of strategic planning. Retrieved 17 February 2015, from https://opentuition.com/acca/p3/acca-p3-advantages-and-disadvantages-of-strategic-planning/

Reliableplant.com,. (2015). Why strategic plans don’t work … and what to do about it. Retrieved 17 February 2015, from https://www.reliableplant.com/Read/15167/why-strategic-plans-don’t-work-what-to-do-about-it

Small Business – Chron.com,. (2015). What Are Some Disadvantages of Strategic Management?. Retrieved 17 February 2015, from https://smallbusiness.chron.com/disadvantages-strategic-management-80740.html

Worldanimal.net,. (2015). Advantages and Disadvantages of Working in Coalitions. Retrieved 17 February 2015, from https://worldanimal.net/our-programs/strategic-advocacy-course-new/module-4/networking-and-alliances/advantages-and-disadvantages-of-working-in-coalitions

Yourarticlelibrary.com,. (2015). What are the Advantages and Potential Disadvantages of Planning under Management?. Retrieved 17 February 2015, from https://www.yourarticlelibrary.com/management/what-are-the-advantages-and-potential-disadvantages-of-planning-under-management/3501/

Žakaitė, G., Žakaitė, G., & profile, V. (2013). Strategic Planning Insights: Advantages and Disadvantages of Strategic Planning. Strategicplanninginsights.blogspot.in. Retrieved 17 February 2015, from https://strategicplanninginsights.blogspot.in/2013/04/advantages-and-disadvantages-of.html