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Business Strategy in a Global Environment

Paper Type: Free Essay Subject: Business Strategy
Wordcount: 4660 words Published: 1st Jan 2015

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Globalization is the eminent icon of the 1990s, and in the twenty first century. Globalization is absolutely soaring and gearing up dynamically competing life’s real scenes. Globalization refers to the growth and status of trade and investment, clustered by the growth in international business fields, and the integration of economies penetrating all corners of the world.

Strategy Paradoxes and Debates

The term strategy anchors its definition basically sprouting from military fields and origins and has been expanded into the business world and context where several authors and researchers have spread arguments and debates on strategy concerning both quantitative and qualitative manifestations and processes. Strategy in business is coined to survival; the battleground and arena during a match, or a game. Jarvis (2005) highlights the 5Ps concept of Mintzberg observing the term “strategy” which primarily means plan, ploy, pattern, position, and perspective. The Coca Cola Bottling Company has all these 5 Ps in particular and all companies in general.

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“Strategy” is a ploy which basically refers to any artifice, maneuver, trick, or game to outwit and defeat a competitor or rival raising an anticipation of what we are going to do to confuse, shake, deter, prompt or deceive competitor to perform a move or not to move at all. It articulates the necessary steps to be done like creating a pattern (as a post hoc application), reflecting on the done action with its pattern consistency whether or not it’s planned and intended. Seeing the pattern means it’s an intentional strategy showing the pattern stems from the plan. But there’s no managing and supervising intentionality. So there are two types of strategy distinguishing such intention; namely, deliberate strategy and emergent strategy.

“Strategy” as a position is pushed with the idea and analogy from the military view, “I’ll take care of the waves whilst, you take care of the ripples” referring on the emphasis of “tactics”. Position strategy simply stares its focus on where you are standing or sitting for you to view your horizon and whole landscape in the world of business relating to the context or internal and external situation. Such position projects the relation and status within the competitive arena and the existing co-operative interrelations matching one’s organization, team, or department against others and rivals and the lobbying environmental demands. Moreover, strategy-as-position situates different and several players not just one-to-one competition. A company that exposes itself to a market cubbyhole and tight competition is trying to position itself to secure, to brace sustainable competitive advantage.

“Strategy” as perspective refers to the group of “strategy creators or makers” with their whims, views, retrospection, predilections, and preferences affecting the organization. Thus, strategy is a body of ideas, insights, anticipations and imperatives spoken and aired by a group of people articulated in different types of conversations and of distinct degrees of importance wherein ideas and propositions are scattered for a collective forum which is either imposed or consensus.

Global Market Models and Concepts and Analysis

Managers must be conscious that markets, supplies, investors, locations, partners, and competitors can be anywhere in the world. Successful businesses will take advantage of opportunities wherever they are and will be prepared for downfalls. Evidently, successful managers, in this environment, need to understand the similarities and differences across national boundaries, in order to utilize the opportunities and deal with the potential downfalls. In developing appropriate global strategies, managers need to take the benefits and drawbacks of globalization into account. A global strategy must be in the context of events around the globe, as well as those at home. International strategy is the continuous and comprehensive management technique designed to help companies operate and compete effectively across national boundaries. While companies’ top managers typically develop global strategies, they rely on all levels of management in order to implement these strategies successfully. The methods companies use to accomplish the goals of these strategies take a host of forms. For example, some companies form partnerships with companies in other countries, others acquire companies in other countries, others still develop products, services, and marketing campaigns designed to appeal to customers in other countries. Some rudimentary aspects of international strategies mirror domestic strategies in that companies must determine what products or services to sell, where and how to sell them, where and how they will produce or provide them, and how they will compete with other companies in the industry in accordance with company goals. The development of international strategies entails attention to other details that seldom, if ever, come into play in the domestic market. These other areas of concern stem from cultural, geographic, and political differences. Consequently, while a company only has to develop a strategy taking into account known governmental regulations, one language (generally), and one currency in a domestic market, it must consider and plan for different levels and kinds of governmental regulation, multiple currencies, and several languages in the global market (Heil 2010).

Company Strategic Decisions for Sustainable Competitive Advantage

Arie de Geus (1997) spelled out that a company with needs has the key characteristics he called a living company because it is helping itself. He stressed four key traits: (1) sensitivity to the business environment which reflects the ability and capability to learn and adjust; (2) cohesion and identity or the ability to create a community with vision, personality, and purpose; (3) tolerance and decentralization or the ability to build relationships; and, (4) conservative financing.

Strategic Management is a constant object of curiosity among psychologists and thinkers. On several occasions, senior managers are asked how they come up with strategic decisions. They have one pattern of making these crucial and company-light decisions. One would suppose these to be mathematical, based on rigid rules of logic or statistical treatments. But here’s the catch: The managers’ decisions were product of informal data gathering, intuition, innovation, and oral exchanges in 2-way communications. These managers have the feel of the whole situation besetting their companies and their impulse always has an accompanying relevance. Their minds transcend logical rules that are immutable and mechanical and perhaps by age and experience, they acquired an almost instantaneous and discrimination of what is effective and practical. They give a whole new meaning to the words feeling, judgment, common sense, proportion, balance, and appropriateness. They use these terms to effect viable actions that would sustain their companies in the tests of domestic or external competition, recession, changing market attitudes, inflation, to mention only the majors. These street-smart guys are not much into science when they make a decision. Instead, they stay at the helm of art which is a combination of wisdom, experience, common sense, and a lot of prudence and daring.

Senior managers usually see problems of their companies as big opportunities in disguise. They remain flexible in finding ways but that does not mean foolish weighing the indefinite till the situation clears or worsens. They are flexible in making solutions to give provisions for modifications, adjustments, shifts, or even u-turn without compromising company principles. They are not namby-pambies who are easily swayed by fashion. They are as hard as nails on standards of excellence. Hence, they inspire, and prod those below them to follow suit and commit to live action. They are virtuosos in motivating people and so people tick to grow the limbs of their action plans and visions.

It was noted in many studies conducted in most industrialized countries that executives are investing much of their time developing a circle of relationships. Thence, they gain insights and details to be applied in forming concrete strategic decisions. They have the inclination to use mental simulations and they display some gift of “seeing with their minds.” Intuition is the guiding light of the day and even after office hours, they would re-run what else can be done if strategy A should need a remedy. So before any pitfall or backsliding, there reserved a fallback program to reinforce the existing. Funny as it sounds but executives can sense first what they are going to do before they can explain why. No calculations but deep in their brain cells and feeling, this is the way to salvation and promised land. The way might not be a bay of plenty but they are sure when the dusts subside the rays of their strategy would save the organization. Information may change overnight and strategic planning is complex but they know how to combat challenges with concrete interventions.

With the advent of technology, senior managers are more and more relieved of the so called strategic planning. Information Technology at last has created a great divide between senior managers and operational level managers. Through sophisticated programs on the computer, any manager can already function as an independent segment albeit following the general threads of the company culture. All that top brass management would do is to inspire, delegate, assess and appraise their subjects. They provide the vision, specify the substance, and direct the institutional goals. Their managers are expected to facilitate process, action plans, and fill out forms to make way for effective documentation, work accomplishment, accounting procedures, marketing, manpower accountability and networking.

Executive leaders have followers, while managers have subordinates, according to an analyst. Managers are oftentimes blamed for the bankruptcy of businesses in America in the 1970s and 80s. Leaders make decisions while managers usually execute them. Leaders are careful to choose their managers because lack of leadership down the line can antagonize the growth of the whole organization.

Normally, strategic decision-making takes place on two levels: aggregate and individual. Both of these are geared towards getting attention, storing information through encoding, retrieval thereof, strategic choosing, feedback and outcome. Aggregate and individual strategies are interdependent and they harmonize with each other in all stages of the organization. While it is true that aggregate is more supreme than the individual strategy, it is the individual that feeds to the strength of the aggregate. The aggregate can only sound strong on paper but without the individual strategy which is the action level that extends to clients, customers, consumers, financiers, lenders and debtors, it can just be a lameduck-a print of strong accent without teeth or bite because there is no execution by junior vice presidents, section managers, team leaders, and the rank and file.

. Johnson, Scholes and Whittington in corporate strategy present a model in which strategic alternatives and options are evaluated against three key success criteria: suitability, feasibility, and acceptability.

(1) Suitability. It gears to answer security questions such as “Would it work?”, “Does it make sense to economy?”, “Would the organization obtain economies of scale, economies of scope, or experience economy?” “Would it be suitable in terms of environment and capabilities?” Ranking strategic options and decision trees are the measuring tools to evaluate suitability.

(2) Feasibility. “Can it be made to work?”. It is concern whether the resources required to carry the strategy are available and can be obtained and developed. Its resources include funding, people, time, and information. Consequently, cash flow analysis and forecasting, break-even analysis, and resource deployment analysis are the scaling tools for it.

(3) Acceptability. Would this make sense among stakeholders? Would shareholders, company employees and customers respond with the targeted product or performance outcomes? What about returns? Will it yield the projected benefits by the stakeholders in terms of dollars or other essentials (financial and non-financial)? For instance, shareholders would anticipate the growth of their capital or wealth, employees would aim for the upliftment in their careers and customers would expect added value for money.

When strategy fails, the probability of risks arises–financial or otherwise. These risks could be shareholders going against the issuing of new shares or employees and unions picketing against outsourcing for fear of losing their jobs. Most likely too, customers would have paranoia over a merger as regards quality and support. What-if analyses are tools employed to evaluate acceptability.

Global Market Models and Concept Analysis

In the midst of global market tight business competition models and concepts’ analysis is crucial and vital. Thus, any business manager must discern and decide what’s the best move or course of action to be undertaken to outwit and win the market place and patrons. Several concept analysis are designed for managers to scrutinize business status to have an equilibrium and project sustainable competitive advantage among others in the field. One of these types is SWOT Analysis.

A good look at the internal and external environment is an indispensable part of strategic planning. Environmental attributes internal to the firm usually can be classified as strengths (S) or weaknesses (W),while those external to the firm can be classified as opportunities (O) or threats (T). This analysis is referred to as SWOT analysis.

This analysis provides insights that are keyl in matching the firm’s assets and capacities vis-à-vis the competitive environment in which it exists. Therefore, it is crucial in strategy formulation and selection. What are strengths? The firm’s or company’s strengths are its assets, resources and capabilities that can be utilized as the foundation for mapping out a competitive edge. Some of these are patents, reputed brand names, established repute among customers, cost advantages, exclusive access to precious natural resources and favorable access to marketing outlets. Weakness is of course the opposite of strengths like lack of patent protection, a so-so brand name, ill-repute among customers, high price structure, lack of access to the best raw materials or natural resources, and worst, lack of access to strong distribution channels.

Take the case in which a firm has a large amount of manufacturing capacity. While this ability may be considered as a strength that competitors do not share, it also may be a considered as a weakness if the large investment in manufacturing capacity hinderss the firm from reacting quickly to shifts or fluctuations in the marketplace.

Furthermore, opportunities may mean income and growth; like, a wanting in customer need, invention of new technologies, loosening of legal hindrances and lifting of international business hurdles.

Moreover, threats are the present and intervening factors in the external environment; like changes in consumer tastes deviating from the firm’s product lines, introduction of rival products, new legalities and regulations, and further increase in trade barriers.

Any company should not singly invest into very encouraging opportunities. Rather, it should have the caution and prescience to better understanding and analysis of a doable course of action to gain that competitive advantage– by determining a blend between the company’s strengths and upcoming opportunities. S-O strategies run after chances that are a good addition to the company’s strengths. W-O strategies fiscalize weaknesses to run after opportunities. S-T strategies map out ways that the firm can use its strengths to minimize its exposure to external threats. W-T strategies create a defensive plan to protect the firm’s weak spots from making it highly exposed to outside threats.

Another tool used to scan the environment in the business field is the PEST Analysis. This is a sophisticated external macro-environment probing that manifest how firm processing can be expressed in terms of the Political, Economic, Social, and Technological factors. Oftentimes, the acronym PEST (is made as “STEP”) is employed to describe a framework for the synthesis of macro-environmental factors. Political factors are government laws and legal issues and ascribe both formal and informal rules in which the firm must work–like tax policies, employment measures, environmental ordinances, trade barriers and taxes, and political instability. Economic factors include the purchasing power of prospective customers and the firm’s capital–like economic improvement, interest rates, exchange and inflation rates. Social factors involve the demographic and cultural facets of the outside macro-environment.

These factors have direct effect on customer needs and the size of potential market bases like health consciousness, growth of population, age brackets, career paths, and consciousness on safety. Finally, technological factors can lower if not eliminate barriers to entry, cut the minimum efficient production stages, and highly affect outsourcing decisions; like, R&D activity, automation schemes, technological incentives, and rate of technological change.

In order to appraise, analyze and assess finished activities which will eventually create a company’s competitive edge, a chain of value-creating activities must be in place. Michael Porter outlined a set of many generic activities common to a wide range of firms. Accordingly, the objective of such activities is to foster worth that exceeds the cost of providing the product or service. In consequence, this will generate profits as customers want worth congruent to costs. Everyone wants worth as tantamount to price so such value-creating activities is a very good psychology applied to business. If only all businesses employ this action plan, then what a better consumer base they create and a whole lot happier people they would account in their following.

Another concern tackles inbound logistics which embraces the receipt, warehousing, and inventory of company input and output materials; operations are the value-creating tasks that transform the inputs into the finished product or outcome; outbound logistics are responsible for the finished product to reach the customer, including but not limited to warehousing, delivery and the like. Marketing & sales are any efforts–tangible or not, direct or indirect, intentional or by chance-are those activities that have something to do with getting consumers to buy the product, channel selection, advertising, pricing, and much more. Service activities are those of maintenance and enhancing effect to the product value inclusive of customer support, repair services, etc.

All of these vital activities are effective in developing company’s competitive advantage. Logistics, as we all know, are crucial and vital for a contracting company to to distribute services, while service activities are the main focus for a company that offers on-site maintenance contracts for office supplies and machines.

In addition, there are also at least four generic areas of support activities ensuring firm sustainability in the business shark-infested waters–among others, procurement, technology development, human resource management, and firm. Procurement entails the role of buying the raw materials and other essentials in the value-creating undertakings. Technology development includes studies and development, process machination, and other technology gadgets used to enhance the value-chain activities.

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Human Resource Management, are the tasks that include recruitement, enrichment, and just compensation of workers. Firm infrastructures are those activities of the finance, legal, quality, and management departments. Support activities are termed as “overhead” but some firms have sparingly used them to maintain a competitive advantage. For example, a company can do outreach works, medical missions, gift-giving to indigents, of renovation of a neglected public hospital. This can also take the forms of donating to a charity, to a depressed area because of typhoons, floods, or quake-shaken areas. These activities require definition, linkages, and coordination between and among partner companies, with the consent and knowledge of the customer base. Sufficient and effective media publishing through print, broadcast or satellite means can be employed to maximize efforts to establish such elusive state of company’s competitive edge. It is a matter of concerted effort, a must-have if companies have to outlive and outdo competitors. A perfect grasp of interdependence and mutual benefit must be clear to make all strategies work for the betterment of the organization. If support is not totally ensured, then at least, majority of suppliers, advertisers, as well as the general public are involved. If response is not favorable, then executives have to do some side stepping, even taking back alleys so the company’s goals will be served. If executives back out, then, what a pity to the organization. A company needs a sure-fire executive in the face of uncertainties. Hence, executives must see a rundown of these activities before implementation.

That is why there is what we call value system. Great companies have very strong value systems that new hires would either subscribe to it or leave it. There is simply no half-way house in these great companies. In exchange, they offer palatable salaries, fringes, and other opportunities of growth-monetary, career or physical growth.

In closing, strategies are useless unless acted upon, applied, or animated to make the company prosper side by side with competitive edge. With the fangs of globalization threatening to devour the weak and unprepared, executives of the 21st Century has many assignments to do. These begin from mapping out a vision, a mission, then the strategies needed to make these dreams come into fruition. Gone were the days when companies would only wait for customers to take their products because of limited choice or monopoly. Today, more than any era of the past, business is very precarious and risky. Hard earned capitals are washed away overnight once investment is not done with caution, sustainability and competitive edge. Only those who have the edge would survive.

Application: The Coca Cola Bottling Company:

Coca Cola soft drink was nothing but a local concoction in America. It was concocted by Dr. John S. Pemberta in Atlanta, Georgia. Frank Robinson, bookkeeper, suggested the name and crafted it in free hand script which stood the odds of changes till this very day.

From a local drink, the founders of the company planned to market it on statewide scale. Their ploy is to give its package a handsome look so it would appeal to skeptical drinkers. The design of the brand name has been a consistent pattern to make sure the name will be associated with thirst quenching. Their marketers are very aggressive and effective that very soon after their debut in the drinking arena they salvaged the prime spot in the soft drink industry. They arrogate to themselves the saying, “Get Ready for Tomorrow Today,”-their corporate way of positioning. Their perspective to be global came into reality, riding in that slogan, “Open Happiness!” They convince people through ads that Coca Cola can refresh the world, can inspire to make people optimistic. In other words, they exist to make a difference.

And then their advertisements are apt for specific seasons. During winter time, they show Santa Claus merrily dash through the skies as he drinks coca cola in his chariot on reindeers. During summertime, the theme, “red hot summer” is bannered on company sponsored parties. Before the competition could catch up, Coca Cola also introduces hundreds of other delights in its product line. But a wit may ask, how do they capitalize on their strengths, and address their weaknesses, opportunities, and threats, including antagonisms from politics, economy, society, and technology?

They look ahead. They analyze trends that shape business in the future and adjust accordingly for what’s to take place. Coca Cola was abreast with the Y2K scare along with giants in the business world. Hence, they won together with their bottling partners and financing allies. Concerning the current global crisis, the company is not at all hampered by leaps and bounds because it is consumer-based.

The company applies core values on leadership (the resolve to create a better future), collaboration (collective ingenuity), integrity (being real), accountability (or responsibility), passion (heart-mind commitment), diversity (create more and more), and quality (doing well) as its anchor in its vision 2020.

In addition, even their managers get out into the market and listen. They observe and learn. Coca Cola people possess a world view and they are curious to sift what’s new. And lest we forget: They remain constructively discontent on their achievements, new markets and prospects. They are a cool bunch with a singular vision: To refresh the world.


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