The Challenges Faced By Strategic Management Commerce
In this assignment would try to focus on a company named Applied Research Technologies which was in to treatment of water management and preparation of water filtration equipment. With Mr.David Hall as its CEO and Mr. Peter Vyas as its manager of filtration Unit. Filtration unit was a part of business ART acquired from an oil and gas service company in 1996. Its core product line was in mobile water treatment that allowed oil and gas exploration companies to meet government water recycling requirements at well heads and drilling sites. ART was one of the technology world's emerging giants. In this essay we try to emphasis on and analysis on various industrial tools' like Porter's Five Force analysis, PESTEL analysis and also on strategic management tools of the organization.Vision Statement:
''We aim to change the world through innovation, and to grow our place in it through entrepreneurship''. Harvard Business School, (2010)Strategic Management:
In order to create and sustain in competitive market the organization undertakes decisions, actions and analysis the situation to gain competitive advantage in the industry. This definition captures two main elements that go to the heart of the field of strategic management.
First, the strategic management of an organization involves three on going processes which are as follows: analysis, decisions, and actions. That is, strategic management is concerned with the analysis of strategic goals like vision, mission and strategic objective of the company, which also includes the internal and external environment of the organization.
Second, the soul of strategic management is to study of how some firms outperform as compared to other firms. Thus, managers need to control how a firm is to compete, so that it can obtain advantages that are sustainable over a lengthy period of time.
Michael Porter says that sustainability cannot be achieved through operational effectiveness alone. Most of the popular management tools of the last two decades like total quality, just-in-time, benchmarking, business process re-engineering, outsourcing all are about operational success. Dess, Gregory G., G.T. Lumpkin and Marilyn L. Taylor. (2005.)Strategic Positioning:
The strategic positioning of an organization includes the developing of the desired future position of the organization on the basis of present and likely developments, and the making of plans to realize that positioning.
In the ART's company it was dedicated to supporting innovation not only with funding the companies R&D spending. Its main business strategy was to innovate and entrepreneurship of the company which drive the company's growth. Company moved quickly to launch the products in the market to position itself in the market. Sharing of knowledge and dissemination was another key factor which positioned the company into the market. The company's biggest strength was in its core product and technology which they used .The company had also introduced the 'Fast Track Pipeline'' program which focused on the highest priority projects by providing them with additional resources and management attention. The company's CEO started pushing the ART's presence globally. It had the objective of to attract the best and brightest wherever they live. Harvard Business School, (2010)Strategic Decisions:
As the organization operates the entire resources the strategic decisions are concerned with the whole of environment. Strategic decisions have major resource suggestions for an organization. Strategic decisions are difficult in nature and also deal with future which also involves a lot of risk. The decisions are the long-term decisions they are concerned with future planning. They also related to overall counter planning of all organization and also strive with growth. Management Study Guide (1998-2000)
In ART's the strategic decisions were the most important for organization. Vyas was responsible for the major decisions involved in the water filtration unit. Vyas took active interest in developing the unit. He had the major responsibility of approval of the projects. As he was appointed as the manager as for the filtration unit in 2001 his first decision was to rebuilt the team by carefully selecting entrepreneurial-minded individuals to fill the vacancies left by turnover in the unit. One of the major recruitment was Janice Wagner, whom he knew from her five year as a marketing manager in the HVAC division. As the manager he had the ability to convince his superiors on his major decisions made by regarding the growth of the filtration unit and well as his team recruitment..Strategic Implementation:
Organization successes at strategy operation effectively manage four key support factors:
Action planning: Organizations success at executing strategy developed detailed action plans and assigning duty to specific individual for accomplishing each of those action steps. Thus breaking down their broad strategy statement in to small assignment.
In this case study we can find that manager Vyas who headed the filtration unit had various detailed plans regarding the unit he assign various task to different department heads like recruiting Janice Wagner as marketing manager for developing the new business from scratch. He also tried to focus on various small aspects of the unit which he had already been segmented in to various small units like he had developed the technology department and assigned the work of to focus on developing commercial design for the oxidation technology and he understood the business opportunity and asked his team to prepare a brief overview of the market.Organizational Structure:
The organizational structure is depended on the current structure whether the proposed strategy fits in the current situation and whether the current trend is suitable for the business. ART's also focused on its business strategy as its current position and structure formation was depended on the management. The structure was such that the division's head of all the units were responsible for success of their units and had their own strategy of working towards their responsibility.The Annual Business:
To fund all the intended strategies organization are aware of their needs. They have to think about the necessary financial commitment in the planning process. The have their own budgeting time and strategic plans to their annual business.
ART's company did have their own budgeted plans for their particular units allocated to the manager's to carry out the day-to-day activities. The water filtration unit was waiting for the approval of $2 million to launch a mini water-oxidation product form the CEO. Despite two failures to bring this product to market over three years, the team had that confident of their product and they assumed that their product would be successful this time.Monitoring & Control:
Monitoring and Control is periodic look at the strategies which were implemented in the unit does work properly and if not work towards the betterment of unit to bring the strategy back on track if they are not implemented properly. This could be in the way of changing the action plans, using new strategy instead of old strategy and also changing the objectives or in the working style.
In this organization the manager Vyas who controlled all the activities in the unit, bringing change in the working style in the organization. Controlling and monitoring are the key aspects of any organization for the success of the business.Strategic Analysis of ART's:
Here we would try to analysis the various strategies which could help the industry to achieve their goals and could bring success to their planning of strategies. Here we would also be discussing the various tools which can be used to judge the company's performance.Porter's Five Forces:
Porters five forces model helps retrieving where the power lies in a business. Porter's model actually is a strategy tool that can help in analysing the pull in an industry structure.
Porters Model is considered an important part of forecasting tool set. By using a framework rather than a formal statistical model, Porter identified the related variables and the questions that the user must answer in order to develop assumptions personalized to particular industry and company.
Porter's model of competitive forces assumes that there are five competitive forces that identify the competitive power in a business situation.
(Source: http://notesdesk.com/notes/strategy/porters-five-forces-model-porters-model/ )
Threat to substitute: This means how certainly our customer can change to other competitors. There may be many substitutes available in the market and thus customer can certainly find the product or service that offer's that same service for lesser price. Substitutes are threat to the company as it creates competition in the market.
In ART's there were various other products which were available at cheaper price as compared to their products. As you can see in the case study you can understand that there many similar products which gave the same service as compared to ART's product and at much cheaper rate. This could be a threat for the company as it could hamper the company's profitability to with stand the market competition.
Threat of new entrance: The entrance in the market also declines the power of the organization. Threat of new entry depends upon on the entry and exit barriers. There may be many reasons for it like economies of scale are not high, customer switching to other products, thus it is always viable to keep the entry barriers high so that the market maintains its standard on the level of players in the market and so there could me more profit even when the market is not good.
Bargaining power of suppliers: Bargaining Power of suppliers means, how much control the suppliers have to drive down their products price. When suppliers have more control over supplies and its prices that segment is less attractive. This could also happen in any organization where suppliers have an upper hand.
Bargaining power of Buyers: Buyer's negotiating power may be lowered down by offering separated product. In the case of ART's the buyers were the ultimate end users of the product and they had the power to retain the product in the market or whether to reject the product. The customers where the ultimate decision maker of the product and they had the preference whether to select the product or to reject the product.
One of another tool which used by all the industry to start up a new business is the PESTEL analysis which also focuses on the industrial factors:PESTEL ANALYSIS:
Pestle analysis is strategic planning method that offers a valuable outline for analysing the environmental pressure on team or an group Rogers, J (1999), M & Edmonstone, J (1999)
The following are the factors in PESTEL analysis:P- Political
The current and potential impacts from political pressures. This could be due to political environment could not have been favourable for ART's company in the previous to failure as it could be the new regulation form the government or could be the taxation policy which could have the factor's for the organization. It was in 2006 where government restricted on use of residential water use and also on landscape irrigation because of drought kind of situation in U.S.E- Economic
The local, national and world economic influence. As you can see there was huge potential for the company to grow organically. In April 2006, according to palmer drought index 26% of united states was considered in moderate to extreme drought condition's' and there was a major scarcity situation. They had a huge market in the U.S for residential water purification.S- Sociological
The ways in which changes in the society affect the project. There are some sociological factors which also affect the organization like the demographical factor in countries like India or the income distribution of the country which could affect the penetration of the organization due high price or market condition.T- Technological
How new and developing technology affects the organization. Technology was the key factors of the ART's as an organization which drive the company. The company spend more on its' technological units due to its core focus of the product depended on the success of its technology. Like new discoveries' and development in the technology of the unit and the speed of the technology to develop a product also are the key drivers for the company's goals.L- Legal
How local issues like legalisation affects the national projects. This can be through the management law's towards its employee's and could be related towards the safety of the employee's and the product safety were the also the issue which company could have faced while developing the productE- Environment
This could be in form of global and national environmental issues. As the whole concept to develop the product was to provide a solution to provide a safer and clean drinking water to the society by providing a technology which could help the environment and provide more comprehensive household water. The environmental laws which are same across the industry which focuses on protection of the environment and also on the consumption of the energy for any organization.
Rapidbi, (2007) says that there are various factors that could affect the organization. In the case study of ART's there various environmental issues related to product as well as, some technological factors which drive the organisation and which could be one of the failure of the product twice in the previous attempt. One has to look beyond all the factors for a successful running of the organisation. Source: Renewal Associates (2003),Strategic Groups:
Strategic groups are the organization within an industry or sector with similar strategic features, similar strategies or competing on similar bases. It helps to know who the competitors of the given company are and also emphases on the basis of competitive rivalry within each strategic group is different from another group. Gerry Johnson, Kevan Scholes, Richard Whittington, (2008). It also relates to finding threats and opportunity to the organization. In the case study we have seen that the ART's as an organization have a competition on the basis of price from other organization as they sold similar product into the market a cheaper price which was a threat for the company as they had a new product to be launched into the market. The team identified the potential market and the competitor's in theKey Success factors:
They key success factors for ART's unit from my point of view was their management skills which their manager Peter Vyas exhibited on all the stages of the decision making. As, per the PESTLE analysis ART's had business had a very favourable environment which provided a huge potential market for the company. Analysing form POTER's Five Forces we can also see that ART's as an organization had a very promising future due to its external environment and its prospects for the growth which company aimed for.Key Driver's for the ART's as an industry:
As we have discussed the PESTEL analysis it is very important for any organization to recognize its key drivers which would force or expected to affect the organization structure of an industry. As it could not be the same factors which could impact the company's success, but there could be different factors like macro-environment factors or technological factors which could be the key drivers for the company. Gerry Johnson, Kevan Scholes, Richard Whittington (2008).
In the above organization the key drivers could be a). Technological factors, b). Environmental factors, c). Social factors, which are the factors for the ART's as an organization which could be driving the company towards its goals.Conclusion:
The importance of strategic planning in any organization used with in this assignment and various tools adopted by the organization for their growth. Opportunities are only possible by looking across strategic groups particularly in the macro-environment and the concepts and framework used in this company should help in understanding the factors in the macro industry and competitor or market environments of an organisation. However the implications drawn from this understanding in strategic decisions and strategic management are the key success drivers of any organizations. Identification of threat and opportunities can be extremely valuable when doing strategic analysis and thinking about the strategic choices in the future. The whole, idea behind this assignment is to understand the concept of the business strategy and also to get the basic overview of the entire industry and key success factors behind the strategic management of the organization. One of the things that company missed was on lack of confidence from the top management towards their employee's and also lack of decision making. The company had great managerial skills, but they lacked in power sharing. As the key drivers for the company was their technology and marketing skills, but they lacked in financial decision making. The team showed a great courage and skills towards their commitment but failed on certain parameters which need to address before launch of the productRecommendations:
For the ART's its always viable to look at the external factors around the industry and management needs to build a trust in their employee's. The organization needs to rethink on the part of its business strategies as well as financial strategies before launching their products. The company needs to identify their key drivers using these industrial tools to have a success of their launch, so that they do not fail again and maintain their key position in the market. The company can work on various other strategies like financial decisions on the part of their launch and also can implement various new strategies to get the product launched successfully. It has huge potential and could have a very big market to focus on and should work on each and every resource which is provided to them whatever the market environment existed
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