BUS 3002 Assignment 1 - Critically evaluate the importance of strategy process and strategy context in determining strategy content PDF

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3rd year BUS 3002 mandatory assignment...

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Ramin Tom Hoodeh 13433627

BUS 3002 – Debates in Strategic Management Assignment 1

Critically evaluate the importance of strategy process and strategy context in determining strategy content This essay will draw upon the results of the research process completed around the topic of developing and determining strategy content in the relevant context. Following Plato’s argument of imitation [ CITATION row15 \l 1033 ], it’s feasible to say it’s impossible to create a new idea out of scratch. Every new product idea is an amalgam of experiences which you reason to create something never seen before. The same can be the same with formulating a strategy. Business decision-makers tend to use strategies that worked for others, but cater it to fit their own content, based on their missions and objectives. There is plenty of theory to do with the process and context of strategy that helps quantify ways in which content is developed. A fundamental theory is a concept called Cognitive Maps; presented by psychologist Tolman [ CITATION Tol48 \l 1033 ] which has been adapted for use in the planning process of strategy. Cognitive Maps build on past data and is a medium in which managers can block out “noise” so that a decision about strategy can be made based on the most relevant information [ CITATION DeW101 \l 1033 ]. Cognitive Maps therefore act as a tool that can allow managers to problem solve and find rational conclusions on what tasks need doing. Refined skills in such a tool can help develop strategy content; a key example of how theory can help in determining strategy. However, it’s important to mention that the theory acts simply as a starting ground for determining content. It seems the most essential aspect of developing strategy is the intelligence of the manager to not only know which strategy/tool to use, but how to use them. Simply using a cognitive map doesn’t guarantee success. Using such tools correctly to build a viable strategy process, taking into account the business context would be a reasonable path to a successful content. Joint-ventures are another strategic medium that companies can use which heavily involve knowledge of the context and process of the potentially new environment. Toyota and GM’s venture in 1984 is an example of how two otherwise-competing companies can strategically work together [ CITATION Fen05 \l 1033 ] to further reach their long-term goals and objectives of satisfying shareholder interests. GM sought knowledge on how to build small-sized cars at mass scale more efficiently, and Toyota were testing the waters in manufacturing passenger cars in the U.S. The benefits for American GM are, since Toyota is an expert in its

Ramin Tom Hoodeh 13433627

BUS 3002 – Debates in Strategic Management Assignment 1

Japanese “lean” efficient manufacturing processes, gaining this (extremely valuable) expertise. Toyota would benefit in the exchange of GM introducing the Japanese company to American marketing strategies and provide the logistics needed for U.S. manufacturing. This example analogically helps bring to light the impact that process and context has on developing strategy content. The relevance of this venture lies in the fact that while Toyota was in a new context, the Western world, GM was under the company of Japanese employees, with their expert knowledge of new manufacturing processes that could revolutionise GM’s margins. Both companies have gone through various degrees of change since the venture and continue to do so after their contract expired. Change is a way of life in Japan [CITATION DeW101 \p 195 \l 1033 ], and change management is to do with dealing with the process of change and also how to maintain the company after the change, albeit in a new context or the same one. The process requires a strong leadership force behind it, to steer through demanding and possibly risky shifts in the business and organisational system [ CITATION DeW102 \l 1033 ]. A summary of some changes Toyota was put through were its organisational structure, Japanese employees were relocated into a new context and had to uphold morale whilst working with new GM employees [ CITATION Fen05 \l 1033 ]. GM’s employees were given the power to change the processes within Toyota in the U.S., and such cross-cultural operations require meticulous management. This is where managers have to be careful, and is an example of a strategy sounding good “on paper”, but where the real-life implementation carries some holistic implications. In such strategies that involve the movement of employees from one culture to another, managers have to consider the chance of members of the workforce experiencing “culture shock”, especially when dealing with contrasting contexts such as Japan and the U.S. Culture shock is defined as “A period of mourning for the home world, characterized by feelings of grief and separation anxiety” [CITATION Bro08 \p 34 \l 1033 ] and was found to be common especially in Japanese immigrants arriving in the U.S. [ CITATION Tog07 \l 1033 ] and is therefore an aspect to be considered by managers. Culture shock can lead to undesired results in employees such as cognitive exhaustion, interaction awkwardness and some psychosomatic problems [ CITATION Bro08 \l 1033 ]. Therefore, managers must evaluate and take into account their employee’s ability to carry out the strategic processes in the new context, when determining the strategy content. Although the joint-venture example was successful, it can be used to articulate the possible holistic side effects of some strategy processes, highlighting the importance of efficient change management abilities in carrying out a coherent, working strategy content. Tesco’s attempt to expand with healthy food stores in the U.S. failed due to the lack of knowledge of the context of U.S.’s food shoppers’ preferences and supplier capabilities [ CITATION Yod15 \l 1033 ]. Following the Pareto principle where 80% of a company’s business comes from 20% of its customers [ CITATION Gro07 \l 1033 ], Tesco’s example shows the

Ramin Tom Hoodeh 13433627

BUS 3002 – Debates in Strategic Management Assignment 1

importance for managers to know when to change/expand and when it’s more profitable to seek stability. Sometimes, it’s best for a company stick to what its good at and to let go of battling sources of rigidity to make way for change. However, like all strategies, whilst one fails for one company, this doesn’t necessary entail it will fail for all companies who try it. In a changing world, it is argued that managers must always be changing/improving their strategy in order for the business to survive [ CITATION Por08 \l 1033 ]. This is often referred to as the “Darwinian” approach to business strategy [CITATION Pir10 \p 553 \l 1033 ]. This argument would entail that since the business context is always changing, in a constantly changing world, then the strategic processes would have to constantly be changing. “Change” is a very broad term, this change could be the internal operations of the business, business growth, or responding to a macro-environmental change that presents an opportunity. Logic follows that it is up to the intelligence of the manager to reason the best strategy content for their own business, based on their resources for processes and present/future context. For multi-firm organisations, the portfolio organisational perspective acknowledges each business’s characteristics and demands, and enables increased responsiveness. This is where the corporate centre funds the other businesses as opposed to ruling them [ CITATION DeW10 \l 1033 ]. This means each business can express more potential competitive dynamics. Virgin adopts this practice, with over 200 companies under its brand name [CITATION DeW10 \p 319 \l 1033 ]. This portfolio approach to corporate strategy is an example of where context is paramount to strategy development, the strategy of diversification through acquisition is very applicable here, mirroring Virgin’s entrepreneurial ventures. The corporate centre can also take advantage of co-insurance, reducing the negative implications of a single strategy/business failing. However, it’s not about the strategic process and context that enables successful content, it’s about what works for what company. Smaller firms such as family businesses are more heavily affected by failure, they are also less likely to take risks even if it’s backed by heavy investment; the business’s success is the family’s(ies’) well being [ CITATION Nic08 \l 1033 ]. On the other hand, it’s important to acknowledge the distinction between risktaking and having a Darwinian approach to business. Research shows small firms’ rigidity can put the business and family at risk. Change can be incremental, small firms can still embrace change, if they’re flexible in allocation of roles and responsibilities, mindful of the heritable individual differences of family members [CITATION Nic08 \p 114 \l 1033 ]. Strategic renewal remains a viable alternative to the challenges most businesses face when determining strategy content. Their processes must constantly involve strategic change in order to be in harmony with external conditions. Almost 500 years ago, revolutionary Niccolo Machiavelli gave his take on strategy claiming “there is northing more difficult to take in hand, more perilous to conduct, more certain in its success than to take the lead, in the introduction of a new order of things”

Ramin Tom Hoodeh 13433627

BUS 3002 – Debates in Strategic Management Assignment 1

[ CITATION Dil09 \l 1033 ]. The fact that his quote remains relevant today helps dig deep into the true nature of strategy. Since managers operate within constantly changing contexts, there can be no recipe for success; no “one size fits all”. This is also because each business has its own unique micro context which needs to be accounted for in determining strategy content. Although the Darwinian approach can help a business survive change, responding to change can only ever take a company as far as a market follower. Managers must adopt the quality of consilience to be the leader in “the new order of things”, (whether it be through luck or not) to maximize strategic content success. Smaller companies therefore also have to embrace change and take risks. Initiative to know the right strategy that works for themselves, taking into account their micro and macro context is shown to be the difference between business success or failure. Referring to the introduction, a manager’s “light-bulb” idea may be a good starting point, but the translating and implementing into actual practice is what makes it count. For example, Ryan Air’s idea to strip the consumer aeroplane business to basics and not give every customer free food [ CITATION Tel09 \l 1033 ] was an idea based on assumption of what the current consumer context is. However, they still have to deliver the basic service of taking customers from A to B successfully. It was a clever idea for the Japanese and American automotive firms to team up, but it took good initiative and ability to work in new contexts for the process to develop successful content. Therefore, strategy hinges on managers’ foresight know which strategy will work for their context and how to implement them. The theory shows a textbook approach of how strategy works and what businesses should do. Although newer theory is less linear, an all-conclusive one-plan-fits all strategy can never be created. Word Count (without citations): 1675

References Brown, L. & Holloway, I., 2008. The initial stage of the international sojourn: excitement or culture shock?. British Journal of Guidance & Counselling, 36(1), pp. 33-49. De Wit, B. & Meyer, R., 2010. Chapter 2: Strategic Thinking . In: Strategy: Process, Content, Context : an International Perspective. 4th Revised Edition ed. Hampshire: CENGAGE Lrng Business Press, p. 58. De Wit, B. & Meyer, R., 2010. Chapter 6: Corporate Level Strategy. In: Strategy: Process, Content, Context : an International Perspective. 4th Revised Edition ed. Hampshire: CENGAGE Lrng Business Press, pp. 316-319. De Wit, B. & Meyer, R., 2010. Strategic Change. In: Strategy: Process, Content, Context : an International Perspective. 4th Revised Edition ed. Hampshire: CENGAGE Lrng Business Press, p. 215.

Ramin Tom Hoodeh 13433627

BUS 3002 – Debates in Strategic Management Assignment 1

Dillon, R., 2009. The Prince: Niccolò Machiavelli. s.l.:Createspace Independent Publishing Platform. Fenton, K. M., 2005. GM/Toyota: Twenty Years Later. Antitrust Law Journal, 72(3), pp. 10131027. Grosfeld-Nir, A., Ronen, B. & Kozlovsky, N., 2007. The Pareto managerial principle: when does it apply?. International Journal of Production Research, 45(10), pp. 2317-2325. Nicholson, N., 2008. Evolutionary Psychology and Family Business: A New Synthesis for Theory, Research, and Practice. FAMILY BUSINESS REVIEW, 21(1). Pirson, M. A. & Lawrence, P. R., 2010. Humanism in Business – Towards a Paradigm Shift?. Journal of Business Ethics, 93(4), pp. 553-565. Porter, M. E., 2008. The five competitive forces that shape strategy. Harvard Business Review, 86(1), pp. 78-97. rowan.edu, 2015. Aesthetics - Plato's Aesthetics. [Online] Available at: http://www.rowan.edu/open/philosop/clowney/Aesthetics/philos_artists_onart/plato.htm [Accessed 14 December 2015]. Telegraph, 2009. Ryanair has highest charges for in-flight food and drink - Telegraph. [Online] Available at: http://www.telegraph.co.uk/travel/travelnews/6204904/Ryanair-has-highestcharges-for-in-flight-food-and-drink.html [Accessed 17 December 2015]. Togashi, K., 2007. Psychic pain as a result of disrupted narcissistic fantasies among Japanese immigrants: A self-psychological study of the stress and trauma of immigrating. International Forum of Psychoanalysis, 16(3), pp. 177-188. Tolman, E. C., 1948. Cognitive Maps in Mice and Men. Psychological Review, 55(4), pp. 189208. Yoder, S., Visich, J. K. & Rustambekov, E., 2015. Lessons learned from international expansion failures and successes, Smithfield: Business Horizons....