Essay Writing - Report Writing >> Sample Work >> Organizational Behaviour, Basic Strategic Management Process

Explain how SWOT analysis reflects the basic strategic management process.

Strategic Management Process generally includes strategic planning that is being done by an organization so as to determine where the business is heading towards over the next few years and that which path they would choose to achieve their goals and on what parameters would they evaluate their achievements. Strategic Management Process would also include the decisions made by the company that were not part of the planning process but had to be taken in order to combat the challenges.

Now, when we go for a SWOT analysis of a company, we try to determine the company’s relative strategic position within the industry by analyzing the relative strengths and weakness and also other external market factors by observing the trends of opportunities and threat within the industry. (Roger Lever, Dec 2008, Use SWOT Analysis for Strategic Planning, Suite 101)

When we talk about strategic decisions, the company would require knowing its basic resources so as to take a well informed decision, as these decisions would be very important in shaping up the future of the organization. One of the most important parts of the Strategic Management process is to implement the strategies for which the company should know their key resources, so that it may optimize its utilization. Now when we run a SWOT analysis for a company, we try to find out the relative positioning of the company within the industry. By analyzing the key resources & processes we are able to determine the core competency of the company, if at all they have. We would be clear what the company’s strengths are and that they should be used smartly to outweigh the negative effects of the weakness they possess. Certainly, in a basic strategic management process, we would do an internal analysis, so as to determine the future path for the organization.

In Strategic Management Process we would always try to divest our weak links, so that we could optimize the profits within the organization. SWOT also enables us to find the weakness that exists within an organization.

In SWOT analysis, external analysis helps us to determine the Opportunities and threats present within the industry, which is taken into considerations while formulation of the strategic management process. These scenarios enable the company to take strategic decisions which may define the path ahead for the organization.

Hence SWOT analysis in most ways reflects the basic strategic management process for determining the company’s road ahead.

It is sometimes said that Value Chain Analysis disaggregates the business. To what does this refer?

Value Chain Analysis is another comprehensive approach that a company can use to determine its internal resources and strengths in a more systematic and quantifiable manner than the SWOT analysis. It describes different activities taking place within an organization and breaks them down into chain of activities that occur in a sequential manner.

In 1985 book Competitive Advantage, “Michael Porter introduced a generic value chain model that comprises a sequence of activities found to be common to a wide range of firms. Porter identified primary and support activities for the process”

The two groups are as under:- (Strategy - value chain analysis, Bournemouth University)

Primary Activity

These are activities that are directly correlated to creation and transporting of the product.

Inbound logistics

Activities related to receiving and storing externally source materials

Operations

Activities relating to the process of converting the resources into a final product .

Outbound logistics

Activities related to supplying products to the end user

Marketing and sales

Activities related to Marketing of the product, providing information to the consumer.

Service

Post Sales Service to keep monitoring the product performance

Support activities

Activities which are not directly involve in production but still hves a say on the overall efficiency of the organization.

Procurement

Activities related to purchase of resources for running its business.

Human Resource Management

Activities related to recruitment of the staff, training, development etc.

Technology Development

Activities concerned with managing information processing and the development and protection of "knowledge" in a business.

Infrastructure

Activities relating to the support systems and different functions like finance, planning, quality etc.

Hence, when we talk about Value Chain Analysis disaggregates the business, it refers to the chain model which enables it to analyze the company in a more comprehensive way, as discussed above.

What are three characteristics that make resources more, or less, valuable? Provide an example of each.

The three main characteristic that makes a resource more, or less, valuable are listed:

1. Valuable

“A resource must enable a firm to employ a value-creating strategy, by either outperforming its competitors or reduce its own weaknesses "(Barney, 1991, p99; Amit and Shoemaker, 1993, p36). It means that the cost involved in the resource should he lower than the cash flow expected from the vale creating strategy. Nano Launched by Tata Motors is one of its kinds as the cost of buying the car is as less as 1 Lac INR.

2. Rare

In order to be valuable, a resource should certainly be rare. “This would mean that in a perfectly competitive strategic factor market for a resource, the price of the resource will be a reflection of the expected discounted future above-average returns” (Barney, 1986a, p1232-1233; Dierickx and Cool, 1989, p1504 ;). Gold can be an example of a resource for the ornament industry.

3. In-imitable

“If a valuable resource is controlled by only one firm it could be a source of a competitive advantage” (Barney, 1991, p107) . “This advantage could be sustainable if competitors are not able to duplicate this strategic asset perfectly” (Peteraf, 1993, p183; Barney, 1986b, p658 ). Patents used in the Pharmaceutical Industry specially in specific drugs industry can be an example o f In-imitable.

APPLE'S BLUEPRINT FOR GENIUS

What are Apple's strength and weaknesses? Opportunities and threats?

Apple is one of the pioneers in its industry. The company has always come out with a product that has changed the dynamics of the world. Products like Screw free laptops, I- Pod have already created a lot of buzz. With the company on its roll, let us do a SWOT analyze of the company:

Strengths

1. Apple is the one of the most innovative companies both in the product category and in branding its image.

2. Unique & Strong Leader in the form of Steve Jobs

3. Diversified Product range including I-pods, Macs etc

4. The company also holds a huge cash surplus which can easily utilize to acquire a new firm, in case of diversification.

5. Trusted Brand enables it to sell its product at a premium

Weakness

1. Cost of Production would be high compare to what other companies have.

2. Stand alone design rather than following the trend would mean that the company can incur huge losses, if h design doesn’t work

3. Too much important key information is kept in the hands of the few.

4. No outsourcing Policy

Opportunities

1. Increasing the Global Reach

2. Expanding itself to the consumer electrics

3. Increase its market share in PC & Software space

Threats

1. Increased competition on mobile products

2. Microsoft more aggressive on Mac vs. PC commercials

3. Competitors focus on the most successful in the arena - which is Apple in the portable music industry.

4. High expectations lead to a higher impact when the company does not deliver exactly what the market expects.

What are Apple’s key resources and capabilities and which are most valuable?

Steve Job has been instrumental in shaping the way Apple is right now. Apple has been able to make a mark in the industry is just because of the kind of innovation products it bring to the market. Apple has been the only company that has crafted its own path. Every other company would follow the path of Apple and would make products similar to Apple’s Product so that they do no loose the profits made by the augment of the new product. Like in case of I Pod , as soon as the company found that Apple’s new ideas of selling music will be the next big thing; they hurriedly came out with their version in the market, so that they do not lose out on the volumes. Apple has been able to achieve such great heights only because of the kind of culture it promotes within the organization. Innovation is the need of the hour coupled with hardworking and intelligent people brings on the table the commitment to completely change the future of the industry by bringing out revolutionary products. Apple has always brought products that has lasted for a decade but has been the best invention or innovation of their times. This kind of consistent performance from Apple is expected as it invest huge chunk of its profit in R & D, so that the employees gets the best facilities to invent further. Moreover Apple does not believe in outsourcing and that keeping it within the organization enable it to keep the motivation of innovating further. With skilled employees, world class infrastructure, High Tech R&D coupled with an invaluable leadership and culture of innovation, shapes a very good future for Apple.

What is the most meaningful type of comparison you make use of in conducting each approach to internal analysis at Apple?

Generally, there are different ways of doing an internal analysis of a company, namely, SWOT analysis, Value Chain Models, Resource base view. As for SWOT, it’s all about finding the relative importance of the company in the industry with both internal and external factors, while for Value Chain; it would be determining the cost advantages associated with each activity in the production process. Resource based is totally based n the view that comparative advantage would exist because of the resources that company possess. Now, in order to make the most meaningful type of comparison, in conducting each approach to internal analysis at Apple is the Benchmarking – Comparisons with the competitors.

If we run SWOT for internal analysis, it would enable us to find the relative strengths and benefits within that industry while in value chain we would be able to find the cost associated with each process and that which process, if outsourced, would enable the company to achieve maximum profit, while the resource based view will determine whether the highly skilled employees or the world class infrastructure with High Tech R& D is really above the average standards of the industry.

Overall, comparisons with competitors would enable the company to analyze its current relative position, thereby asking the management of the company to make necessary changes.

Which approach to internal analysis works best in your internal analysis of the aspects about Apple covered in this case? Why?

Apple is a Process Based Company and hence in order to optimize the different processes it has we should follow the value chain model approach for internal analysis. Value chain model would enable the company to find the specific bottlenecks at each process, so that it may work on it and reduce it to an extent that it becomes a relative strength for the company in the industry and that the cost associated with that process would become the lowest in the industry.

Moreover, when we talk about Apple who has made it clear that they will not outsource, value chain become s an important part of their strategic decisions, as they would require finding the cost advantage associated with each level of activity, so that they could provide the products at much better rate compared to its competitors.

Value Chain analysis also propagates the concept of innovation and promotes it at each stage, thereby enabling to help Apple by spreading the culture of innovation and hard working. Innovation at each step of the value chain would lead to a reduction in the cost of each activities, while an increase in the number of products that can be offered to the market with increased profitability.

Hence, after reading the case, the value chain analysis is the best internal analysis tool for a company like Apple.

STRATEGIC MANAGEMENT PLAN

Download and complete the Company Strengths and Weaknesses analysis worksheet.

Mckinsey & Company is a Multinational consulting company having operations in more than 40 countries (Mckinsey Overview, Datamonitor report). It provides varied kind of services to its clients which include financial, managerial, technological etc. The clients of Mckinsey include both public and private firms, with foreign governments.

Following are the Strengths & Weakness of the Company

Strengths

1. Diversity of product portfolio

Mckinsey has a full range of consulting services, which it provides to different company in the private sector, government sector. This also enables the company to help the government in carrying out social projects, which enables them to build a brand name for them self in the society.

2. Trusted brand

Mckinsey has been able to grow year on year on the basis of its well established brand name, which has been developed over a period of 70 years (Mckinsey Overview, Data monitor). Not only it attracts big clients, but is also instrumental in recruiting the best minds of the world. It provides services to various prestigious companies across geography like being the designer of the initial organization of NASA or an advisor to Vatican Banking System, thereby charging premium prices for its works. The company can easily leverage its brand name to ear incremental profit.

3. Worldwide operations

The company has huge cliental base and the sole reason that can be attributed for this success is the global reach of the organization. This also maximizes the benefit a company can reap from high net worth clients. Moreover, the company enjoys the benefit of diversification of risks as its operation is not saturated to a particular market but is spread across boundaries.

Weakness

1. Weak technology consulting arm

Although, Mckinsey core competency is to provide high end consulting to its client, yet it has not been able to tap the market of the technology consulting arm. This sector is one of the fastest growing businesses within the consultancy industry for the last few years. Other IT companies have grown over the period largely due to the growth in this sector and hence the company should improve its resources to combat the challenge and come out of it successfully.

In your opinion, what functions and services in your selected company define your core competencies? Which could be outsourced leaving the organization room to be more focused on what it does best? What critical skills should your organization develop?

In my opinion, the diversity of the product portfolio positions Mckinsey as the leading company in its industry, thereby making it a core competency for the company. The company provides services to many high end clients that ranges from automotive industry to telecommunication industry. With the varied kind of products in its kitty, the company can benefit by providing these services to its clients.

As the company we have chosen is itself a consulting firm and generates revenues by outsourcing, so the company model does not permit it to outsource work. Even though the company can look for tie ups with companies that are highly skilled in the Technology Consulting but outsourcing the work is not a possibility. But the tie ups would enable the organization to focus more on the technology consulting and would enable the company to upgrade its skills, which when coupled with the brand name would generate huge surplus for the company.

Mckinsey should develop necessary skills to improve its performance in the Technology Consulting arm so that it would enable them to increase the diversity in their product portfolio, thereby generating positive returns for the organization.

company should also look brush up its skills of working in a very highly competitive environment so that the kind of threat that is being posed by increase in the competition in the near future can be tackled efficiently by the company.

The Company should also develop skill that enables it to foresee the future, so that if it finds that one industry is not serving their purpose, they can easily decide whether they want to switch or not.