Corporate Strategy (MGMT6010)R

Java Python Corporate Strategy (MGMT6010)

1.0       TOPIC ONE: MANAGING STRATEGIC CONTRADICTIONS

The strategic contradiction of commitment and uncertainty presents significant

challenges for decision-makers when planning long-term organisational strategy (Raynor 2007). Committing to a strategy presents risks; over the past thirty years, there has been considerable disruption to previously stable industries due to rapid innovation and the introduction of technology like AI (De Wit 2020). Companies like Apple, Google and Amazon have changed the global business landscape and how business is conducted (De Wit 2020).

Uncertainty is unavoidable even when adopting a strategy proven previously effective, customer needs and values evolve rapidly; Raynor (2007) highlights the case of Sony’s Betamax VCR tapes, retrospectively considered to be a failure of strategic decision making. Raynor (2007) emphasises that the strategic decision made by Sony to continue with a business strategy of quality differentiation was reasonable and aligned with their understanding of customer preferences and market demands. The Apple iPod, a product that, like Betamax, when launched, was critiqued for being prohibitively expensive, was able to maintain the market share despite competition from cheaper products produced by Microsoft  and Dell (Raynor 2007). At the time of the iPod’s launch, Apple’s strategy was questioned as they disregarded the precedent of Betamax that indicated a consumer preference for low-cost products (Raynor 2007).

The presentation raised the notion of the organisational response to uncertainty caused by the pandemic; I reflected on the extent to which risk tolerance and strategic mindset can be cultivated through training and practice. Perhaps the Covid pandemic will equip managers with experience of operating in an atmosphere of uncertainty, meaning that managers will be better able to tolerate uncertainty in the future. The benefits to an organisation of a strategy that can pivot or adapt quickly to harness the potential of new and evolving technology are significant. Cryptocurrencies like Bitcoin are an example of a source of disruption to traditional investing and are increasingly being used as an alternative to cash; organisations are presented with the opportunity to invest in volatile digital economies providing high returns (Deloitte 2021). However, organisations and decision-makers must have a high  tolerance for risk and have mechanisms to mitigate the potential impact on the business (Deloitte 2021).

1.1       References

De Wit, Bob. 2020. Strategy: An International Perspective. 7th ed. Hampshire, United Kingdom: Cengage Learning.

Deloitte. 2021. “Corporates Investing in Crypto: Considerations Regarding Allocations to Digital Assets.” Deloitte.https://www2.deloitte.com/content/dam/Deloitte/us/

Documents/audit/corporates-investing-in-crypto-microstrategy.pdf

Raynor, Michael E. (2007), "Solving the Strategy Paradox: How to Reach for the Fruit Without Going out on a Limb." Strategy & Leadership 35 (4): 4

10.https://doi.org/10.1108/10878570710761327

Tricker, Bob. 2019. Corporate Governance Principles, Policies, and Practices. 4th ed. Oxford, United Kingdom: Oxford University Press.

2.0       TOPIC TWO: BUSINESS-LEVEL STRATRGY

It is essential for businesses to be adaptable to changes in their internal and the

external environment; decision-makers much decide whether their organisation should “adapt itself to its environment or should it attempt to adapt the environment to itself?” De Wit (2020, p.200). Day and Moorman (2010) put forward the notion of the inside-out or outside-in approach to strategy. An inside-out strategy has an inward orientation, strategy is based upon   using existing competencies and resources to create value (Tarkoff 2010). In comparison, with an outside-in approach, strategy begins with the market and Corporate Strategy (MGMT6010)R has its foundations in deep market insights (De Wit 2020, Tarkoff 2010). These approaches made me think of a restaurant I worked at in London; the menu was ‘modern antipodean fusion’, with very unusual and challenging ingredients. The owner wanted us to expose customers to new concepts, textures and flavour profiles even if customers were skeptical. This inside-out approach produced an exceptional product but required a lot of additional resources, particularly to train employees so they were able to educate customers and explain the owners’ vision. Each method has advantages depending on factors such as industry and business size; Day and Moorman (2010) identify Ikea as an organisation whose business strategy engages both approaches to establish competitive advantage and create sustainable long-term performance in diverse global markets.

While much of Ikea’s operational procedures, concept and organisational values are

consistent across markets, creating a replicable business model, recognisable brand identity and style, Ikea has successfully adapted its offering to create superior customer value in the long term (Jonsson and Foss 2011). Burt et al. (2021) put forward that Ikea’s market orientation exists on a continuum of behaviours; their long-term competitive advantage has its foundation in a mix of market-driving and market-driven approaches to business operations and strategy. Jonsson and Foss (2011) describe Ikea’s international expansion strategy as flexible replication; after some initial failures entering the US, Chinese and Japanese markets, a more flexible approach to operations has resulted in solid international performance. The flexibility manifested in changes to the geographical location of stores, products available for purchase and the customer segment targeted, as Ikea was less able to be competitive on pricing in markets with low-cost furnishings readily available (Burt et al. 2021).

Ikea has many points of interest, such as the limited vertical integration in their supply chain and their reliance on strong strategic partnerships with suppliers. As a human resource student, however, I am interested in how large companies use strategically human resource strategy to support their business-level strategy. The knowledge and expertise of employees must be maintained and managed like any other resource; knowledge-based businesses like Tesla invest heavily in human resources to ensure they can keep pace with rapid technological advancement, with their employees being a source of competitive advantage (De Wit 2020).

As we witnessed in our simulation activity, reducing operational costs by decreasing training  and labour spending is attractive and effective in the short-term. Investing in human resources can lead to an engaged, stable and committed workforce which is valuable as a source of advantage even for organisations with a cost reduction business strategy (De Wit 2020).

2.1       References

Burt, Steve, John Dawson, Ulf Johansson, and Jens Hultman. 2021. "The Changing

Marketing Orientation within the Business Model of an International Retailer: Ikea in  China over 10 Years." The International Review of Retail, Distribution and Consumer Research 31 (2): 229-255.https://doi.org/10.1080/09593969.2020.1857294.

Day, George S., and Christine Moorman. 2010. Strategy from the Outside in: Profiting from Customer Value. 2nd ed. New Jersey, USA: McGraw Hill

De Wit, Bob. 2020. Strategy: An International Perspective. 7th ed. Hampshire, United Kingdom: Cengage Learning.

Jonsson, Anna, and Nicolai J. Foss. 2011. “International Expansion through Flexible

Replication: Learning from the Internationalization Experience of Ikea.” Journal of

International Business Studies 42 (9): 1079-

1102.https://doi.org/10.1057/jibs. 2011.32.

Tarkoff, Rob. 2010. “The Value of an 'Outside-In' Strategy.”

Forbes.https://www.forbes