Strategic management depends on the road plan developed for the future initiatives for a business organisation and its execution process. The two major steps of strategic management are “strategy formulation” and “strategy implementation”.
Issues of strategy formulation with the application of Principle of Enactment Theory
Strategy formulation is the initial step to developing strategies for management of an organisation. Principle of Enactment Theory has helped to identify the key issues that may arise while developing strategies for business organisations that can contribute to the growth of the organisation. As stated by Mount et al. (2018), assuming the potential budget for the strategy development process can be inaccurate and may create issues for the overall project. In order to execute the task of strategy formulation through research on the objective of the project, the organisation has to be executed with the help of online resources, market research, market analysis and various case studies. Market analysis that doesn't include environmental and competitive analysis can be considered as an issue in the process of strategy development.
Issues of strategy formulation with the application of Implementation Theory
In order to implement the strategies that have been developed for the organisational purposes several challenges can deteriorate the effectiveness of the strategy. The implementation theory helps to identify the issues in the implementation process. Such as,
Lack of resources can be identified as one of the major issues that can prevent the implementation process and impact the effectiveness of the strategy adversely. On the other hand, lack of communication among the organisational structure and the employees can create issues in the implementation process and increase the time consumption of the strategy implementation (Hitt et al. 2017). Employees may resist the strategy implementation as it may contribute several changes within the organisation.
Impact of the issues on strategic management practices of a global financial or banking organisation
The issues that have been identified regarding “strategy formulation” and “strategy implementation” have an increased amount of negative impact on the strategic management practices as compared to its advantages on global financial or banking organisations. Banking organisations usually develop strategies to cope up with the changing market condition or exchange rates that may impact their business. In case the strategy formulation process faces issues then the whole strategy becomes incorrect or inappropriate for the organisation and faults to provide any positive impacts (Mitsakis, 2017). The inaccurate environmental analysis can impact the business and delay the strategy development as well as implementation. Lack of resources can deteriorate the strategy implementation process. It can impact negatively on the economic stability of the finance company. On the positive impact of the identified issues are that it helps the company to improve their strategy management techniques and attain positive outcomes. The arising issues even help to analyse the market condition and efficiency of the strategy for the market as well.
Decision making plays a major role in the operational management of a business organisation. The decisions related to the product design of an organisation based on the decisions taken by the management team regarding the product. After analysing the market condition and current trends product design is developed by the designing department. Research and development unit executes organisational work on the product design as per the provided criteria of the management team.
The Issues that may arise regarding the decision making of the product design is the raw materials that will be used for manufacturing the product. The potential supplier who can supply raw materials according to the requirements of the product development and contribute to issues regarding the decision making as there are numerous suppliers available in the market (Alexander, Kumar & Walker, 2018). The combination of digital and physical ensign and its accuracy may create problems to make decisions about where to start the production or to make further adjustments. .
Decisions regarding the quality of the product developed in a business organisation can create several issues within the organisational structure. The quality department has to determine a benchmark which can help the production department to measure the quality of the products that will be manufactured. Decisions regarding the benchmark of the product quality may contribute to interpersonal conflicts within the organisational structure (Hassan & Zaazou, 2019). Increased pressure from the management team can negatively impact the quality of the produced items which can be considered as a major issue in quality management.
Impact of the issues on the strategic management practices of a global automotive organisation
Elements of operational management practices including product design and quality management impacts the development of strategies. Strategy management practices help global automotive companies to attain growth with clear business objectives and road plans. However, issues regarding the decision making of the product design can impact the strategy management. Highly competitive automotive industries have the demand of developing innovative product designs. In the views of Amineh & Kosach (2016), it can be stated that the decision making of determining any particular design faces several issues which impacts the business directly. The quality management issues faced by the automotive company impacts its business negatives and created requirements for through strategic management practices within the organisation. However, these issues help the company to identify the factors it has been lacking and helps to develop strategies, objectives and other business aspects.
Making changes in the organisational structure was inadequate for attaining any sort of improvement in the organisational performance as one of the major organisational problems at Ford was its values and norms that have contributed to “secrecy” and “ambiguity” among the managerial employees (The New Heat On Ford, 2018). Superiors in the organisational hierarchy have kept their information as a secret so that they will not have not to admit their own fault. Promoting teamwork through changing organisational structure was not enough as the managers tried hard to maintain their information to sustain their jobs.
After realising that Ford’s culture is the main reason behind its deteriorating performance Mulally opted for changing the organisational culture. At first he arranged meetings for identifying organisational issues once in a week and instructed divisional presidents or managers to bring different subordinates every week (The New Heat On Ford, 2018). Eliminating the conventional values of Ford, Mulally effectively established a fresh organisational culture which inspired employees to admit their own mistakes and work on it for attaining improvement. Sharing information with each other resulted in reduced cost and improved product design and quality because of the new culture within the company which improved the operational performance of Ford.
Generally the business strategy that lulu lemon follows is fulfilling customer requirements with accurate products. The athletic clothes developed for yoga and exercise by “Lululemon” were of superior design and high quality. According to Mattioli (2018) the company sells seasonal clothes with limited production and time period at the stores to tempt the consumers to purchase fast which will help the cash flow of the company running. The policy of limited product keeping at the outlets is the main pillar of the strategy which allows the company to sell all their products without any discounts throughout the year. In Spite of offering products at reduced costs the competitors struggle to cope up with the “scarcity policy” of “Lululemon”.
Lululemon needs to hire market experts and analysts who can analyse the market condition and current trends of the market. This will help the company to determine the potential new products and designs which will help to overcome the past controversies. Besides this, the company can provide training to the sales employees who work in the various outlets of Lululemon. Providing training can help the employees to understand superior ways of treating customers. Supervisors can be employed in the stores for analysing the employees and customer interaction and mitigating issues and conflicts. Lululemon have not undertaken thesis initiatives and can do so to improve their business condition.
Analysing and identifying five competitive forces can help to analyse the amount of competition in the current market. The influence powers of various aspects such as new market entrant, substitutes, bargaining power of the suppliers and the buyers and the existing rival companies can be identified with the application of “Professor Michael Porter’s Competitive Five Forces model” (Bonsu, 2019). Establishing organisational objectives according to the market condition and the impact of five forces can help to develop accurate strategies for business organisations. This can help in efficient strategic management. Implementation process of the strategies can be developed according to the competitive analysis report for maximizing the outcomes of the organisation.
New market entrant
The industry in which Nike executed its business has been encountering several new market entrants. However, the force of new market entrants is very low as Nike has an established business and brand equity that cannot be easily deteriorated by any new company.
Risk of substitute
Nike has been working on developing substitute and environment friendly items itself which reduces the risk factor of any substitute items low. However, companies that effectively offer footwear and apparel in reduced price may impact the business of Nike Inc. adversely.
Bargaining power of suppliers
Easy availability of suppliers in the market has decreased the bargaining power of the suppliers. This has provided an advantage for Nike.
Bargaining power of buyers
Rival companies offering the same products have reduced the switching cost for the consumers. Low switching costs have heightened the bargaining power of the customer base.
Adidas, Reebok, Puma are the major rivals of Nike Inc. who are executing their business in the same industry and offers similar items to the consumers that have increased their competitive force (Nike 2017 10-K Report, 2018).
The five competitive forces have impacted the business of Nike. The organisational authority has established business objectives, strategies and strategy implementation processes according to the competitive forces as it impacts the business majorly. This shapes the “contemporary operational environment” of the organisation as well.
“Professor Michael Porter’s Value Chain model” includes five activities “inbound logistics”, “operations”, “outbound logistics”,“ marketing and sales”, and “service” (Thomas-Francois, von Massow & Joppe, 2017). This model helps in increasing the value of these activities which can contribute in the overall profit generation of the company. These activities help business organisations to prioritize the consumers rather than departmental tasks or organisational budget. The internal and external factors of the business can be analysed with this model which can help in strategic management. Developing objectives that can help the company to attain growth and strategizing the growth plan can be effectively done with the help of “Professor Michael Porter’s Value Chain model”.
? Primary activities
Inbound Logistics includes purchasing green coffee beans from Latin America Africa and Asia and then roasting it in Starbucks roasting plants and then distributing to the outlets (S1.q4cdn.com, 2017). Operations of Starbucks are executed through tiow types of outlet stores including “company owned stores” and “licensed stores”. Outbound Logistics includes the overall sales of Starbucks items. Starbucks does not indicate in aggressive marketing. Superior customer services have helped the company to succeed.
? Secondary Activities
Secondary activities of Starbucks include all the departmental activities such as HR, IT, finance and the organisational infrastructure. The primary and secondary activities can help the company in their strategic management purposes as it is the main foundation of the organisation.
? Strategic outlook of developing own supply chain
? Presence in the global dairy market
? Experience in manufacturing and supplying process
? Producer driven company
? Less focus on the demands of the consumers
? Desire to expand in spite of low capital investments
? Fonterra can attract increased number of investors to stabilize their business
? Online presence of the company will help to attracting increased number of consumers
? Developing new services and products according to consumer feedback.
? Successful rivals including Nestle, Danone, Kraft outs increased competition on Fonterra
? Weak governance of the company can cause shutdown of the company and its business.
? Insufficient capital investment
Internal and external environment of the dairy business in New Zealand have contributed to the streets of the company Fonterra. However, the strengths have not helped the business to succeed. Increased numbers of weaknesses have been impacting the operations of the company. The company fails to focus on the demand of the consumers and developed products and services according to the producers (Nzherald.co.nz, 2018). The company have alshaya sources of generating pro\hits from the business execution rather than filling customer requirements and developing effective brand equity. Existing trials in the dairy industry have contributed to the failure of the company. However, the company has several opportunities that can help the company to revive its proposition in the dairy market. Threat mitigation strategies have to be developed for effective operational tasks within the organisation in the volatile business environment. Establishing effective business plans and strategies while ensuring strategic management can help Fonterra to overcome the threats and generate effective profit outcomes.
Threats and weaknesses
Increased competition from existing rivals, weak governance of Fonterra and insufficient capital investments for the business can be considered as the major threats for the companies that can deteriorate the business of Fonterra. The company is producer driven and does not prioritizes the customers and their requirements while developing business strategies (Nzherald.co.nz, 2018). This is one of the major weaknesses of the company. The company has undertaken aggressive expansion in the global market whereas the company lacks investment for executing the expansion work. This has also contributed to the weakness of the company.
Five strategies that helps the company to utilize its opportunities and develop new strengths for Fonterra
1. Strengthening the governance of the company by employing innovative fresh minds within the organisational structure can help the company to overcome its threats contributed by the weak governance.
2. Developing an effective business strategy for the company Fonterra can help the company to develop future road plans that can help to generate effective profits from the business.
3. The company is suggested to attract an increased number of investors that can help the business by contributing capital investment.
4. The company is recommended to focus on the consumer demands and develop their products accordingly to attain success in the business.
5. Instead of expanding on the global market the company should focus on expanding the business in the local market.
Alexander, A., Kumar, M., & Walker, H. (2018). A decision theory perspective on complexity in performance measurement and management. International Journal of Operations & Production Management. Retrieved on 4 May 2020, from: https://www.emerald.com/insight/content/doi/10.1108/IJOPM-10-2016-0632/full/html
Amineh, H., & Kosach, N. (2016). Assessment of Consumers' Satisfaction with the Automotive Product Quality. International Journal of Environmental and Science Education, 11(16), 8726-8739. Retrieved on 6 May 2020, from: https://files.eric.ed.gov/fulltext/EJ1118745.pdf
Bonsu, S. (2019). Integrating Community Involvement Programs into the Strategic Management Process. Journal of Economic Development, Management, IT, Finance & Marketing, 11(1). Retrieved on 10 May 2020, from: https://gsmi-ijgb.com/wp-content/uploads/JEDMITFM-V11-N1-P02-Samuel-Bonsu-Strategic-Management.pdf
Hassan, E. E. D. H., & Zaazou, Z. A. (2019). Quantitative Decision Making; Mathematical and Managerial Perspectives Comparative Case Study (MSA Versus Cairo University). International Journal of Service Science, Management and Engineering, 5(4), 163. Retrieved on 5 May 2020, from: https://www.researchgate.net/profile/Emad_El_Din_Hassan/publication/330546385_Quantitative_Decision_Making_Mathematical_and_Managerial_Perspectives_Comparative_Case_Study_MSA_Versus_Cairo_University/links/5c47a8aaa6fdccd6b5c18272/Quantitative-Decision-Making-Mathematical-and-Managerial-Perspectives-Comparative-Case-Study-MSA-Versus-Cairo-University.pdf
Hitt, M. A., Jackson, S. E., Carmona, S., Bierman, L., Shalley, C. E., & Wright, M. (2017). The imperative for strategy implementation. The Oxford Handbook of Strategy Implementation, 1-20. Retrieved on 2 May 2020, from: https://pdfs.semanticscholar.org/abbf/f6096fcf93ae85e0fd9e91f6484ff042bd66.pdf
Lululemon CEO: How to build trust inside your company. (2018). Fortune. Retrieved on 9 May 2020, from: www.fortune.com/2012/03/16/lululemon-ceo-how-to-build-trust-inside-your-company/
Mattioli, D. (2018). Lululemon's Secret Sauce. WSJ. Retrieved on 8 May 2020, from:
Mitsakis, F. V. (2017). Employees’ perspectives on strategic human resource development before and after the global financial crisis: evidence from the Greek banking sector. International Journal of Training and Development, 21(4), 285-303. Retrieved on 3 May 2020, from: http://irep.ntu.ac.uk/id/eprint/31898/7/9388_575a_583a_Mitsakis.pdf
Mount, M., Pandza, K., Majchrzak, A., & Pitsis, T. S. (2018). Low-power, high-influence: a case of IT-enabled open strategy formulation. Academy of Management. Retrieved on 1 May 2020, from: http://dro.dur.ac.uk/26300/1/26300.pdf
Nike 2017 10-K Report. (2018). S1.q4cdn.com. Retrieved on 11 May 2020, from: https://s1.q4cdn.com/806093406/files/doc_financials/2017/ar/docs/nike-2017-form-10K.pdf
Nzherald.co.nz (2018) Big Read: Why hasn't Fonterra worked? Retrieved on 14 May 2020, from: http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11503190
Retrieved on 15 May 2020, from:
S1.q4cdn.com (2017) Starbucks Corporation 2016 10-K Report Retrieved on 13 May 2020, from: https://s22.q4cdn.com/869488222/files/doc_financials/annual/2016/FY16-Annual-Report-on-Form-10- K.pdf
The New Heat On Ford. (2018). Bloomberg.com. Retrieved on 7 May 2020, from:
Thomas-Francois, K., von Massow, M., & Joppe, M. (2017). Service-oriented, sustainable, local food value chain–A case study. Annals of Tourism Research, 65, 83-96. Retrieved on 12 May 2020, from: http://www.academia.edu/download/53367000/ATR_-Service-Oriented__Sustainable__Local_Food_Value_Chain_-_A_Case_Study.pdf