The Use Of Strategic Management Methods Business Essay

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This report is about identifying a particular problem or issue of the organisation discussed about in the environmental audit. There are two parts to this report the first is the strategic choices available to the organisation about the future and the way it needs to respond to pressures and influences found in the environment.

The second part of this report is putting the proposed strategy into action from the choices made earlier in order to achieve competitive advantage and sustain it. Competitive advantage is a measure of the superiority of a few companies over others proposes Angwin, Cummings and Smith (2006).

The problem that has arisen in the environmental audit with this organisation is high competitive rivalry from neighbouring gyms and swimming pools through Porter's Five Forces, which makes the lever for change environmental bases. The problem is that the swimming pool complex was built as part Olympics in London 2012, so it covers all the bases of fitness and exercise, which has bought it into direct competition with other gyms and swimming pools.

The type of strategy this is a complete customers solution strategy which is concerned with the relationship it has with its customers. Kaplan and Norton (2004) state with this value customers feel that the organisation understands their issues and they trust the organisation and the organisation's most valued asset is the relationship it has with its customers. As Kotler et al (2008) suggests that the cost of attracting new customers is much higher than the expenditure that is necessary to prevent existing customers defecting.

1.1 Levers for change

Levers for change are employed to manage strategic change states Johnson and Scholes (2002). With this facility being part of the Olympics there is great pressure to keep this facilities being used by communities after the games, but with high competition it will prove difficult. So a strategic direction needs to be put in place to sustain competitive advantage. This lever for change originates from expectations from the environment because with the development of this new facility, which means competitors are thinking of new ways to maintain customer loyalty states Douglas, Morecroft and Sterman (2000). With a variety of services Li (2007) suggests that organisations are constantly searching for differentiation in the new economy.

2. Method

The direction proposed is through Bowman's Strategic Clock and aiming for the Hybird strategy of the clock. Johnson, Scholes and Whittington (2008) states that the strategic clock shows the different positions in the market where the customers have various needs in terms of value for money. Brown (2002) suggests that this model analyses the organisations competitive position in comparison to the offerings and its competitors by considering competitive advantage.

Brown (2002) states that most organisations will aim for either the Hybrid segment or the differentiation segment. The Hybrid strategy is focused on providing low cost base and any resulting profits will be used to offer lower prices and to invest in differentiation according to Thompson and Baden-Fuller (2010). They are able to maintain this position through there the reputation it holds in its short life, as well as the facility itself as Birchall and Tovstiga (2005) state that core capabilities provide the firm with sustainable advantage, as they are built up over time and are difficult to transfer.

Sustaining competitive advantage will be through differentiation as Hooley et al (2008) suggest that differentiation should be pursued on multiple fronts for it enhancement. Sustaining advantage through differentiation includes intangible assets in imperfect mobility. Johnson, Scholes and Whittingham (2008) state that intangible assets such as image and reputation are rooted to the organisation and competitors will find it difficult to imitate or obtain. Corby has image through being a training venue for the 2012 Olympics and is striving for reputation.

Through Ansoff's matrix this strategy will fall into product development, as Corby know their customers and this product development can help supply more to their wants and needs (Campbell and Craig, 2005). Bowie and Buttle (2004) states that the launch of new products aimed at existing customers might also attract new customer groups. This is very relevant as this facility is government owned its aim is to get as many people physically active.

Joint developments and strategic alliance have been chosen to be the best way to achieve and sustain competitive advantage. Johnson and Scholes (2002) states that alliances are set up to either exploit current resources and competences or to explore new possibilities. There are many different motives for forming an alliance, but there tends to be three main categories, with the first being critical mass, which can lead to cost reduction. The second being co-specialisation that looks at letting each partner concentrate on the activities that best matches their resources and competences. The last one relates to my proposal that learning from partners and developing competences that may be more widely exploited.

Johnson and Scholes (2002)

The proposed method for solving this problem is through a strategic alliance with Bannatyne's Health Clubs. Cartwright, Cartwright and Cooper (1996) suggest that strategic alliances are the most convenient way to of eliminating competitors and controlling markets. Relating to this point Bannatynes are trying to control the market nationally whereas Corby's complex is trying to control the East Midlands area. This alliance help both the swimming pool complex and Bannatyne's health club, as the complex will benefit through vast amounts of knowledge from Bannatyne's personal. Cummings and Worley (2008) propose that strategic alliances help organisations to gain knowledge about their environment and develop values and norms. This is what the proposition is hoping to gain by enabling staff of Corby complex to provide quality information. Bannatyne's will benefit as there profile will be boosted through helping a community building. A strategic alliance with Bannatyne's will help share the costs training and developing the knowledge at the complex, as public spending has been substantially cut by £1.165 billion to councils nationally ( Corby council will find funds a stumbling block.

There are number of ways in which a joint development or alliance is set up the chosen method is through networks as the two organisations work in collaboration without formal relationships, but through mutual advantage and trust. Kogut (2000) cited in Child, Faulkner and Tallman (2005) stated that networks can benefit a firms performance in proportion to the range and quality of information it provides.

2.1 Suitability

According to Johnson and Scholes (2002) suitability is concerned with whether a strategy addresses the circumstances in which an organisation is operating. The strategy proposed is suitable as it brings knowledge from a national company to help achieve competitive advantage and to reduce the competitive rivalry discussed in the environmental audit. Evans, Campbell and Stonehouse (2003) suggest that the strategy must be suitable to meet stakeholder expectations, capitalising on strengths and addressing weaknesses. This strategy is designed to do this by meeting the expectations of stakeholders as from the environmental audit the stakeholder mapping showed that this complex is not only for the local community, but wants work with the national community. The complex has a target discussed in the environmental audit that it must have a lasting legacy and not forgotten after the 2012 games for grassroots participation according to Sport England (2010).

2.2 Acceptability

Acceptability can be defined by Johnson and Scholes (2002) as they state it is concerned with the expected performance outcomes of the strategy. There are three types that make up acceptability: return, risk and stakeholders reactions.

2.2.1 Returns

With this strategy the aim is get more participation, so therefore increasing turnover, this is the same for Bannatyne's through this alliance as there profile will increase and more people will join their health clubs. Jeffs (2008) suggests that if the strategy is unlikely to provide financial returns relative to the effort or investment that is made, then it will not be accepted by the stakeholders.

2.2.2 Risks

Due to high competitive rivalry from neighbouring gyms the organisation must take a risk in order to gain advantage as Finlay (2000) shows that risks must be taken and if it doesn't it could lead to no profits for its activities. With this facility being in the public sector it is not associated with high profits, but participation, so high end risks are out of the question.

2.2.3 Stakeholder expectations

The last part of acceptability is the stakeholder's expectations; this is an important factor that needs to be considered (Davies and Ellison, 1999). There are number of questions that needs to be considered firstly will this direction gain support or will it move in a way that cause friction between these groups? With reference from the environmental audit the stakeholder mapping tool concluded that the community and supporting the elite were key target groups, this proposed strategy will only contribute to their targets.

2.3 Feasibility

Jeffs (2008) states that feasibility is linked to whether you have the resources and competences for the duration of the strategy. From the resources and competences shown in the environmental audit it shows that Corby complex is in an ideal position as no money will be needed to develop the complex. The only resource and skills that needs to be developed is the knowledge of the industry to which this strategy is based around. Davies and Ellison (1999) suggest that a competitive reaction from other organisations is a very significant factor.

3. Strategy in Action

3.1 Managing change

3.1.1 Type of change

The type of change that will occur at Corby's complex are adaptation as McCabe (2010) suggests that it is concerned with realignment and incremental, which is usually based on predictable assumptions. Johnson, Scholes and Whittingham (2008) state that change needs to be incremental as it can build on skills, routines and beliefs, so change is more likely to be understood. Corby's complex are having the same staff, but using outside knowledge to make them more knowledgeable about the industry and the environment, so skills are going to be enhanced and routines change positively.

3.1.2 Communication during change

Different interpretations of communication can be combated through communication during change and Balogan, Hailey and Johnson (2008) state that a way of overcoming the different interpretations is to provide message repetition. Singhal and Rogers (1999) also agree as the effects of one shot exposure to a communication message are typically minimal. So leaflets to businesses and schools around the area could be handed out every other month as Henning (2008) states leaflets can be printed on any desktop computer and copied cheaply.

3.1.3 Leadership Style

According to Johnson and Scholes (2002) a leader is not necessarily someone who is top of an organisation, but someone who is in a position to have influence. They are often categorised in two ways. Instrumental leadership includes activities associated with building teams, clarifying required behaviours and instituting appropriate measures, rewards to support the desired the new behaviours (Avery, Bell and Hilb, 2004).

3.2 Resources

Swayne, Duncan and Ginter (2006) state that having adequate resources allows for strategic alternatives, whereas having few resources can inhibit the implementation of a strategy. The four key resources include: people, finance, information and technology.

3.2.1 People

The knowledge and experience of people can be the key factors for enabling the success of a strategy according Johnson and Scholes (2002). The managing of people will be through the soft resource approach as this is concerned with people's behaviours, both individually and collectively. It is about the commitment to meet the needs of individuals as Johnson and Scholes (2002) suggest that the need for the organisation to share and create knowledge is crucial to success.

Through alliance with Bannatyne's Johnson and Scholes (2002) have noted how the knowledge can be spread in the organisation. The process of spreading knowledge can have its drawbacks as competitors can be educated through employees moving organisations, so there needs to be innovative and creative ways of continuously nurturing the organisation (Johnson and Scholes, 2002).

Corby complex is publically owned, and is not run by one owner as established in the environmental audit, but by a hierarchal team. Line managers are the people who will carry out the day to day running of the facility and can put this strategy into practice. Johnson, Scholes and Whittingham (2008) state that lines managers are involved in managing people issues which put more emphasis on ownership and better blending of people related issues in business strategies. HR cannot leave all aspects to line managers as they will become overstrained, so they need to act as a service provider, regulator and an advisor suggests Anon (2009).

3.2.2 Finance

Anon (2009) notes that the success of an organisation depends upon its finance and the way it is managed. So emphasis on managing finance is essential to create value. Whereas private sector organisation sees value as making profit, the public sector equivalent is the need to deliver best value within financial limits Johnson and Scholes (2002). There are three broad types that organisations face:

Firstly is managing value, which is measured by the way stakeholders receiving value states Anon (2009). According Johnson and Scholes (2002) the problem with public sector managers is the financial responsibilities which are usually confined to managing their budget. This type of strategy is a mix of cost and value, which needs to support a competitive service states Johnson, Scholes and Whittingham (2008).

Secondly is funding strategy development as the main issue is that funding needs to coincide with the organisations core aims and objectives according to Anon (2009). This funding strategy development could help other units within the Corby Borough Council.

Lastly is the financial expectations of the stakeholders and Wickham (2006) suggests that the success of the venture depends on how its performance helps stakeholders to achieve their individual goals. This strategy relates to how council money has been spent well, in order to achieve its aims and objectives to supply best value as well as increase physical activity of the community.

3.2.3 Information

Competitive advantage is more likely to be achieved through service performance (Johnson and Scholes, 2002). The firm's ability to acquire, create and use information resources is an important source of heterogeneity that can lead to competitive advantage suggests Mahmood and Szewczak (1999). This shows that if the knowledge is passed on from Bannatyne's health individuals will be difficult for other to follow this method. This knowledge will be used by Corby complex to achieve its targets and sustain competitive advantage.

3.2.4 Technology

Johnson and Scholes (2002) state that acquisition of technology by competitors is not necessarily a source of advantage; it is how the organisation exploit the technology is where advantage is created. The technology in the gyms are state of the art a way this equipment can be used is if they offer one month's membership free to understand the quality the complex holds with additional knowledge being proposed the technology exploited. An example of how technology hasn't achieved success is when General Motors invested $40 billion to modernise their facilities through automation by substituting fixed cost for variable costs (Pfeffer, 1996). GM didn't get much for their investment.

4. Conclusion

To conclude this report it is clear to see that from internal development the proposed strategy will have huge benefit to the organisation through achieving competitive advantage and sustaining it. Through examining the chosen method it is obvious that Corby complex has the entire infrastructure in place to carry out this proposed strategy and subtle changes to the daily routines enable staff to have vast knowledge of the environment. Many authors in this report have expressed the importance of having knowledge of the business in the environment. With this facility being built as part of the regeneration of the town and being used as a training venue for the Olympic Games there is growing concern for this facility to have constant use whether it by the local community or national athletes. This strategy will enable staff to learn from a national leading company on how to sustain advantage in a rapid moving environment.

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