Strategy Assesments Essay
A company strategy is management`s action plan for running the business and conducting operations. (Thompson et al, 2007, p.3). Strategy is a plan-sort of consciously intended course of action, guidelines (or set of guidelines) to deal with the situation. Mintzberg, (1996). According Sanjiv and Stuart, strategy represents managerial commitment to pursue a particular set of actions in growing the business, attracting and pleasing customers, competing successfully, conducting operations and improving the company`s performance. The concept of strategy has been debating issue on our B301 TGF activity 1.2 to assess the strategic views of two leaders namely Sanjiv Ahuja and Stuart Grief. Both views involve the specification of long-term goals that add value to the organization and propel it to be able to cope with the changing environment. As a practice, it consists of adopting courses of action and allocating resources in ways necessary for carrying out the overall objectives. (Niekerk, C. 2014) post on TGF recommends that strategy is a common theme that runs through both (Stuart and Sanjiv) is that strategy is important for all employees to have a sense of purpose and direction, thereby buying into the company’s goals and contributing to the
overall success of the organization Sanjiv and Stuart both acknowledge this potent of strategy in the running of business. However they do differ on the implementation, competitive advantages, sustainability and gaining market position. Van Niekerk, C. (2014) posting touched on both views subscribing to some of Mintzeberg’s 5ps models of strategy. Their differences demonstrate the complexity of strategy, how managements intends to grow the business, how it will build a loyal clientele, outcompete rivals and putting together pieces of crossword puzzle of different business units. In agreement with Jordan, W and Uys, R touching on the strategy flexibility, Stuart and Sanjiv if were to change industries so is there strategy is prone to change to suit the new environment. On the same note Grieshaber, D. (2014) has noted similar argument made by O’Sullivan and Wright (2009) to describe strategy as complex and flexible with no one size fits all definition. Both Sanjiv and Stuart acknowledge that businesses or organizations are compelled to make dramatic changes and improvements not only to compete and prosper but also merely to survive. Thompson et al point out that ‘every company must be willing and ready to modify its strategy in response to changing market conditions, advancing technology, the fresh moves of competitors, shifting buyers needs and preferences and emerging market opportunities. Thus to say a company strategy is always a work in progress.
They both emphasize the importance of communication in the implementation of strategy. Sanjiv puts planning at the centre of strategic implementation. Sanjiv’s prescriptive approach regards strategy as a systematized and deterministic process where analysis of business performance leads to the formation of a strategic plan. He argues leaders should be in charge in refining the final objective and plan can be put into action through successive layers of the organization. Sanjiv claims that leaders should set the goals, set the strategy to be very simple and understandable to every member of the organization. In this context Sanjiv elevate leaders into supreme level in the formulation and execution of strategy .He presents strategy as a plan that guides organization. Sanjiv’s stand point on is communicating strategy clearly and succinctly – especially in large organization. Strategy must be brief and clearly stated and reduced on one
piece of paper. Sanjiv further illustrate that keeping the goals, the objectives in understanding the strategy has to be an inclusive role to play for everyone in an organization. Changing circumstances and ongoing management efforts to improve the strategy cause a company`s strategy to evolve over time, a condition that makes the task of crafting a strategy a work in progress and not onetime event. Stuart Grief also views strategy as an ongoing process to continuously strive to refine and adjustment on yearly basis in order to keep up with the changing dynamics. Stuart seems owes a lot to the concept of “Kaizen” principles that states, involves every employee – from upper management to the cleaning crew. Everyone is encouraged to come up with small improvement suggestions on a regular basis. Stuart elevates that strategy as dialogue, the open discussion and debates about specific topic makes more people buying into strategy. Strategy should inclusive of everyone in an organization so as to better understanding and execution. In a B301 course, (2014, p.22) states that a strategy must be stretched to include employees and organizational arrangements, becomes very virtually everything a company does or consist. Stuart describes strategy as something not durable, don’t last forever Stand must be flexible; strategy cannot be rigid and unchanging in their very nature. The process involves constant learning that leads to the development of another strategy. It goes without saying that practice makes perfect, therefore it applies to a continuous refinements of strategy over a period of time. Every leader has plans that allow for flexibility in formations to adapt to reality. And this sums up that it is not leader or strategists who cause changes in the planning and execution but a reality. Conclusion
Both Sanjiv Ahuja and Stuart Grief conception of strategy relates to Mintzberg five Ps plan of strategy. Mintzberg strategy views demonstrate that business or organizations are consciously planning course action and using guidelines to deal with present and future situation. PART TWO.
CRITICAL ASSESMENT OF 5P`S OF STRATEGIES OF MINTZBERG TO MAHINDRA & MAHINDRA CASE STUDY STRATEGIC PLAN
Strategy is a plan – sort of consciously intended course of action, a guidelines (or set of guidelines) to deal with a situation. (Mintzberg, H.
(1996). By this definition strategies have two essential characteristics: they are made in advance of the actions, to which they apply, and they are developed consciously and purposefully. Mahindra has been at the fore front looking into the future and therefore provides an opportunity to influence the future, or assume a proactive posture. Mahindra strategic plan was to acquire existing firms that have already existing infrastructure and technology in place but need only direction. For example, the purchasing of struggling and western firms allows Mahindra to gain competitive strategies and gaining market share in specific market segment. Western firm can provide better technology as in most cases they incorporate into research and developments departments. The R&D strategy would put Mahindra at the same level of technology advancement with western firms. Effective staffing and leadership provides sense of direction and business continuity and this is seen how Mahindra headhunted Pawan Goenka, veteran of Detroit. Detroit used to be the centre and manufacturing hub for automotives in American history before global financial meltdown. The plan is to plug in every expert, ideas and technology into the system and provides standards of accountability for people, programs, and allocated resources. Diversification is seen as better strategic planning for Mahindra as this help them to control profitable niche markets such logistics and moving away from mass market for conventional cars whereby global giant’s car-making ( Chinese Great wall) are posing threats. Porter, (1985, p.376) comments that diversification strategy can seek to extend any types of tangible interrelations offering the greatest impact on competitive advantage. Strategic planning is the key to helping organization collectively and cooperatively to gain control of the future and the destiny of the organization. Mahindra strategic plan for new pipeline designs for local market and rural distribution network that will deter rival as competitive advantage. Porter, (1985, p.3) depicts firm grows fundamentally out of value is able to create for its buyers that exceeds the firm`s cost of creating the plan. STRATEGIC PLOY
A specific “maneuver” intended to outwit an opponent or competitor. Here the strategy is the threat, not the expansion itself, and as such is a ply. In all finance-related activity, diversification means to become involved in a
range of different activities or assets, with the goal of reducing exposure to any one particular risk. It is summed up by the saying of not putting all your eggs into one basket. In investing, diversification means avoiding the risk that a particular investment going badly will have serious overall consequences. In business, it covers the risk of being too reliant on one particular element of the market. In this case Mahindra & Mahindra for example bought ‘Satyam’ an It-service firm that seemed to lower its market stake but in the end boosted the combined value. Sponsoring of American Bull-riding tournaments seems to be another ploy of eliminating potential rivals. On the one hand the sponsorship creates brand awareness, constantly reminding people to buy Mahindra Tractors. Of course, if they ceased sponsoring such activities people would not immediately bull-riding but their sales would decline with time. Humans’ attention needs to be reminded, in large part due to being constantly exposed to so much information, so if Mahindra stopped being so present, someone would take their place and with time customers would not think of buying Mahindra tractor. Again Mahindra bought Ssangyong, an ailing South Korean firm in order to boost its presence in pickups trucks but face formidable competitors. Buying out an existing company can be a path to independent wealth, create new growth opportunities for Mahindra that seem to constantly looking for margin expansion. But company buyouts are complex and require considerable investment and attention to detail every step of the way. So to sum up, huge global brands remain highly active in strategic ploy in order to maintain their position atop of the competition. Of course Mintzberg refers this, as strategy of conflict to outwit rivals in a competitive or bargaining situation. Suu Tzu, (2010, p. 10-11) narrates similar strategy by analogy of minuteman, when faced the redcoats on the open battlefield of concord in the traditional frontal confrontation of the time, the minuteman lost. Then, the minuteman made a fundamental shift in their battle tactics and fired on redcoats from behind stones fences as they returned to Boston. This shift in tactics initiated a strategic turn in combat, as the new strategy of skirmishing contributed to the success of the American Revolution. STRATEGIC PATTERN
But if strategies can be intended (whether as general plans or specific
ploys), surely they can also be realized. In other words, Mintzberg defining strategy as a plan is not sufficient; we also need a definition that encompasses the resulting behavior. Thus a third definition is proposed: strategy is a pattern—specifically, a pattern in a stream of actions. By this definition, strategy is consistency in behavior, whether or not intended. Strategies, in other words, form as well as are formulated and so even good ones need not necessarily be conscious and purposeful. For example Mahindra has demonstrated the consistency of avoiding the risk of graft and cronyism as the order of business in India. Some Luck and good judgments on profitable ventures has steered them away from making bad investment such as ‘Ford’ then opted to invest in its own SUV projects which became successful. Relationship between strategy and behavior is an intricate part of strategic pattern at Mahindra, the enthusiasm to be independent without depending on too much debt, the idea is to be creative in managing cost leadership and use of capital efficiently. Cost advantage gives Mahindra to conserve disposable return by consuming only about one-fifth of the group`s underlying cash-flow. This is evident on their high returns and little debt since most Indian conglomerates are often financial quagmires. STRATEGIC POSITION
Strategy is a position – specifically a means of locating an organization in an “environment”. By this definition strategy becomes the mediating force, or “match”, between organization and environment, that is, between the internal and the external context. But strategy as a position can extend beyond competition too, economic and otherwise. In this case study of Mahindra looks set to dominate India`s market for SUV market. Indian SUV market contributes 55% of operating profit and cash-flow. Indeed this is “niche” market that needs to avoid competition. Like in military and game theories of strategy or better known as head-on competition where position becomes the sight of the battle, it is a matter of sustainability and survival of the fittest and avoids competition at cost. Mahindra affirms its strategic position as the world largest tractor firm by volume (India and Abroad). Mahindra moved in with speed and accuracy at hand of they have managed to be the 5th biggest Indian family group by sales ($16 Billion) and 17th largest Indian firm by market capitalization ($15 Billion). Sun Tzu
point out that throughout history, winning generals in battlefield developed disciplines and systems for moving faster than their opponents to occupy the strategic positions. Napoleon`s is one of the famous warrior in this category.
Strategy is a perspective – its content consisting not just of a chosen position, but of an ingrained way of perceiving the world. Strategy in this respect is to the organization what personality is to the individual. What is of key importance is that strategy is a perspective shared by members of an organization, through their intentions and / or by their actions. In effect, strategy in this context, it is like entering the realm of the collective mind – individuals united by common thinking and / or behavior. Mahindra developed the engineering culture that’s suit the Indian market and it’s noted in the case study that rarely will you find Indian manufacturing success – and Mahindra created its home technology can be regarded as shared perspective.
CRITICAL ANALYSIS OF MINTZBERG`S FIVE Ps FOR STRATEGY
Mintzberg five 5Ps of strategy; plan, ploy, position and perspective are just representative of strategy and does not detail what process to follow. Strategy should consider tactics, and successful tactical implementation requires an appreciation of strategy. The word strategy is widely used in the world of business and uses different meanings for a different purpose. With reference to Mahindra & Mahindra case study it does not make sense to applies the theory on each 5P`s of Mintzberg strategy explicitly. It might be understood that all five P`s can make sense together with some underlying internal and external environmental factors that specifically applies the automotive industry. Mintzberg`s paper is data-free and therefore regarded as conceptual, and might not well been defined with supporting empirical base.
Mintzberg data follows the analogy of one size fits all and cannot be accepted in empirical study analysis. Strategy as plan needs a well-formulated objectives and purpose, referred to as strategic ambition of
the firm. Strategy as ploy needs means of outperforming competition. Strategy as pattern needs to identify what strategic actions have been successful in the past that can be useful and lead to succeed in the future. Strategy as position means to be aware of what the unique sale proposition is and how it compares to competitors in term of positioning and market share. Strategy as perspective needs the development of an organizational culture that can open opportunities to rethink their processes, strategies, and innovative management practices. For instance, Mahindra & Mahindra is not at sleep (Case study), is positioning the new SUV models in pipeline and rural distribution network as strategic ploy in its category within the automotive industry. Mahindra & Mahindra has used economies of scale, which has allowed them to reduce operating costs (1.9% of its market value) of research and development. CONCLUSION
This model has gained adepts including managers prefer Mintzberg’s model to a Porter’s framework for formulation of strategy for its holistic approach as Karl Moore states in his post about whose view of strategy is most relevant today, comparing Porter and Mintzberg. This strategy model allows manager to comprehend a strategy from a wide perspective that involves internal and external analysis and exploit organizations’ core and competencies with the dynamic business environment to achieve superior performance
B301 Module course, (2009) “Making Sense of Strategy: Reading 1 & 2”. Open University. O’ Sullivan, T and Wright, A. (2009) “B301 Module Course: Introducing Strategy”. Open University. Thompson Jr, A.A, Strickland, A.J and Gamble, J.E. (2007) “Crafting and Executing Strategy: The Quest for Competitive Advantage”. 15th Edn. USA. McGraw- Hill Irwin. Michaelson, G.A and Michaelson, S. (2010) “ Tsu Tzu: The Art of War for Managers”. (2nd Edn). Massachusetts. Adams Media. Porter, M. (1985) “Competitive Advantage: Creating and sustaining superior performance”. New York. Free Press.