Increasing Complexity Of Conducting Business Commerce Essay

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Strategic planning is becoming increasingly important due to the increasing complexity of conducting business. Strategic planning is long term planning which has enduring effects on the performance of an organization and cannot be easily reversed. This is increasingly important due to the complex nature of global business environment. The presence of strategic planning in the management of an organization ensures that the organsaition compare and contrast the different opportunities and choices available to it making sure that the best alternative or choice is selected which leads to the achievement of overall strategic and business objectives of an organization. Of all strategic planning measures an organsaition adopts, corporate level strategic planning can be considered as the most important and as such corporate strategic planning should be undertaken with due diligence and circumspection than any strategic planning below the corporate strategic planning. Strategic planning ensures that an organsaition is able to cope with the increasingly rapid changes taking place in the business environment. It helps an organsaition to identify the opportunities and threats in the micro as well as macro environment so that actions can be taken to either nullify the negative effects or to tap the opportunities that come up as part of change. Strategic planning enable an organsaition to be flexible and responsive in its approach to the changes happening in the business environment. As mentioned earlier as the changes in the business environment becomes more and more rapid and complex, an organization's ability to respond to it effectively is really important for its survival and growth. The advantage of having strategic planning in place is that it helps an organsaition to control and align the outcome of an action or actions taken by an organsaition in order to nullify negative effects or to tap the opportunities to the strategic objectives of an organsaition. Another important advantage of having strategic planning in place is the proper utilization of resources and efforts expended. Strategic planning ensures that resources are utilized in the optimal manner and efforts and expended with care and consideration ensuring it leads to the achievement of strategic objectives of an organsaition (Harrison, 1995).

Task 1

Construct a Management Strategy

Task 1 a "Identify an organization of your choice which you will discuss as an example in this assignment and give your reason for this organization"

The organization I have selected for this study is Sainsburys supermarket. This is due the established and strategic presence of the organsaition in the UK super market industry. Sainsbury's can be considered as the oldest super market in UK (established in 1869) (http://www2.sainsburys.co.uk/aboutus/our_140th/through_the_years/the_beginning.htm). The company was holding the number one position till the mid 1990s'. This can happen to any established company or brand due to the reason that once they get established or become the market leader, they tend to become complacent about their market position and ignore changes happening in the business environment. As the story of many great organizations and brands tell, it is at their own peril that organizations tend to ignore changes and stop thinking and planning strategically. Sainsbury's complacency as a market leader for a long time (for about a century) made it quite inflexible in its approach to plan strategically and take actions to tackle the moves of competitors. As a result of that it lost its numero uno position. Why I selected Sainsbury for this study is that, Sainsburys started performing well after 2004. Its approach to tackling competition and ensuring growth has changed significantly in a way that it can be considered as one of the best managed companies in UK. It has some of the best management practices with regard to strategic planning and implementation. As mentioned earlier in the introductory paragraph, managing change, effective utilization of resources and effective tackling of changes in the business environment to achieve the strategic objectives of an organization can be considered as some of the main objectives of strategic planning and this can be seen in Sainsburys renewed performance after 2004. Another reason of selecting Sainsburys is that an organsaition cannot change its culture and the way it approaches to change over time. This is particularly true in the case of an established organsaition which is more than hundred years old. But Sainsburys has been successful in getting rid of many of its difficulties with regard to being an established player and started performing as if it is like any other organization of the day realizing the importance of strategic planning in the long term sustenance and growth of any organization.

Task 1 b. "Who are the major stakeholders of your organization and what considerations should be made to ensure their (stakeholders) participation in developing management strategy?"

According to Johnson et al (2006) "stakeholders are those individuals or groups who depend on the organization to fulfill their own goals and whom, in turn, the organization depends".

Sainsburys main stakeholders are its shareholders, customers, employees, suppliers, financial institutions, competitors, regulators, policy makers etc.

While analyzing the different stakeholders of an organization, it is really important to identify which area of the business a particular stakeholder belongs and what kind of influence that particular stakeholder has on the management decision making of a company. This is important due to the fact that depending upon the nature of the business an organization, there may be many different stakeholders with differential influence on the decision making and strategy development of an organization.

Johnson et al (2006) divides stakeholders of an organization in to three kinds based on the environment which they belong to. They are the following:

The different stakeholders from Market Environment of an organization include shareholders, suppliers, competitors, etc. They have economic relationship with an organization (Johnson et al, 2006).

The different stakeholders from Socio/Political environment include government agencies, regulators, policy makers etc (Johnson et al, 2006).

The different stake holders from Technological environment include developers and owners of competitive technologies, standard agencies, key adopters etc (Johnson et al, 2006).

It is really important for the management of an organsaition to have a clear understanding of the importance the different stakeholders command in business decision making regarding different issues and development as the different stakeholders exert differential power in different situations or scenarios. In order to do identify the expectations and power of stakeholders Johnson et al (2006) suggests an organization to undertake stake holder mapping. According to them "stakeholder mapping helps an organization to identify stakeholder expectations and power and also helps in identifying their political priorities".

Another way of identifying the power and potential influence the different stakeholders exercise on a management decision is power/interest matrix. With the help of stake holders analysis and power /interest matrix an organization will be able to understand the priorities the different stakeholders will have on a management decision and the management will be able to take action accordingly in order ensure the participation of the different stakeholders in the development of a particular management strategy.

The power/interest enables an organsaition to identify the type of relationship an organization might need to establish with its different stakeholders. The strategy the management going to implement or would like to get implement should be acceptable to the key players. The management should be able to satisfy the institutional share holders in order to ensure success of the implementation of any strategy. This may often depend on the satisfaction of the shareholders with the success of the previous strategies devised and implemented by the management of an organization. Management or managers when pursuing a strategy should be able to evoke the interest and support of the different stakeholders involved. This will enable them to avoid the situation where in all the stakeholders involved become key players and oppose a management strategy development (Johnson et al, 2006).

(Source: Johnson et al, 2006)

(Image Source: http://knol.google.com/k/-/-/3ib8exvrc87n4/iffjx7/athens3.png)

Another important point to note is that stakeholders should be properly informed of the different aspects of the strategy management is going to get implemented. In order to do this an organsaition may have to influence the most powerful stakeholders through community, lobbying etc. (Johnson et al, 2006).

In order to ensure stake holder involvement and participation in strategy development, the management of an organsaition should do the following:

Identification of the key blockers and facilitators of a strategy and how the blockers support can be obtained

Repositioning of certain stakeholders in order to ensure more support for the strategy under consideration

Ensuring that the power of interest of the major stakeholders is maintained

An understanding of the following facts would help to understand the nature of stakeholders:

Stakeholders of an organization cannot be homogeneous even though the sub groups may exhibit somewhat different expectations and power.

Most of the stakeholder groups contain large number of members and as such can be considered as largely independently of the expectations of individuals with in the group.

Task 1 c. "What are the key criteria that should be considered when reviewing management strategy options?"

In order to review management strategy options, the most important factors to be considered are the mission, vision and value statements of an organsaition. This will help the strategy development team to properly understand the purpose of an organization and the role the concerned strategic option could play in helping the organization in the achievement of that purpose. The different strategic options should be compared and contrasted to understand its strategic implications when the overall objectives of an organization are concerned. The goals of an organization may change due to the changes in the business environment and the possible readjustments it has to make in order to properly respond to the changes. This may mean a change in the strategic direction. But as mentioned in the introduction, the success of strategic planning depends heavily on its durability. As such an organization should be able to review the different strategic options on the light of the possible changes in the business environment and the flexibility of the different strategic options under consideration to respond to it in an effective manner. Then the management should be able to identify the strategies that best align to the mission, vision, values and overall strategic objectives of an organsaition for a given time. The time is important here as no strategy or strategic decisions can be effective forever and as changes become rapid, the life time of a strategic plan diminishes. Considering all these factors are really important in the decision making and in the process of reviewing the desirability of the strategic options with regard to an organization.

Task 1 d. "Describe a situation with your chosen organization where a potential strategy might be developed to resolve an issue. Produce an appropriate strategy and indicate its resource requirements."

The retail super market industry in UK can be considered as highly competitive and complex. Changes happen at blistering pace at both micro and macro environments and as such an organization should be ever ready to embrace change and tap the benefits associated with it before the competition. Sainsburys should be able to identify the changes in the business environment before the competition and should also have strategies in place that helps Sainsbury to come up with innovative ideas and methods of attracting customers. But the other major players in the market are Tesco, Asda, Waitrose, Somerfield, Morrisons etc. who have really good management teams.

The most important resource which can help an organsaition to effectively face competition is the humans of that organsaition. The different kinds of people Sainsburys employs at different levels of management can play a crucial role in ensuring in the coming years to grab the number one position that it lost years before to Tesco. The company in my opinion should have change management practices in place to make the employees more responsive to changes happening in the business environment. As the ability to respond to change is somewhat embedded in the culture of an organsaition the ways by which culture can be created or modified for this purpose should be identified. As Schein (1992) states, there are three majors ways by which the culture of an organization is formed and developed. The first and main one being the values and philosophies of the founder owner. Wal-Mart is a classical example. The second way is through the recruitment and selection of new people to an organization. This, if undertaken with the specific requirements with regard to culture in mind with relation to culture will ensure that it facilitates the creation of desired culture in the future. The third is through the policies and values followed by the top management.

As I have mentioned earlier, Sainsburys started performing well after 2004. This change in the way of performance of Sainsburys can be attributed to the appointment of Justin King as the CEO in 2004. King has been successful in making many changes, but company will be able to perform better if change management initiatives are in place. This requires the organsaition to identify what are the factors that impede the growth the organization as far as employee performance is concerned. Force field analysis could be undertaken for this. After that three step model can be applied in order to bring in the desired changes. But this is easily said than done as there are many processes that an organization should undertake in order to achieve the desired objectives. The main resource requirements should be with regard to employee training and development, employee communication, reassignment of tasks, formation and development of teams, top management support and commitment etc.

Undertaking change management programs will ensure that Sainsbury's employees are more responsive to the changes in the business environment. This will enable top management to take quicker actions in order to tackle the strategies of the competition. Developing a culture that believes in taking up the competition and maintaining the top position in the market ensures that the organsaition develops sustainable competitive advantage over time which cannot be easily imitated. This is due to the reason that culture cannot be easily imitated due to the inherent complexity associated with it.

Task 2

Develop vision, mission, objectives and measures

Task 2 a "For you chosen organization, list down its ethical, cultural, environmental, social and business objectives. How are these influenced by the current business and economic climate?"

Sainsbury's mission is to be the consumer's first choice for food, delivering products of outstanding quality and great service at a competitive cost through working faster, simpler and together" (http://www.jsainsbury.co.uk/index.asp?pageid=14).

Sainsburys vision is to become the number one player in the UK supermarket industry (http://www.jsainsbury.co.uk/index.asp?pageid=14). Five principles form the basis of conducting business in Sainsburys. They are the following (http://www.jsainsbury.co.uk/index.asp?pageid=14):

The company serves best food which is good for health

The company sources with integrity

The company belies in respecting and using it in a sustainable manner

The company believes in making positive impact to the community in which it operates

The company believes in treating its employees with respect and dignity

In order to have a clear understanding of the way Sainsbury conducts its business, it is important to look in detail the five principles or values listed above. The following is an explanation of the principles:

The company believes in serving or offering best for food and health

The company believes in offering great quality foods at affordable prices and as part of this principle the company takes active steps in promoting healthy eating and active life style. As part of this the company provides clear information regarding the contents of the materials used in all own products of the company (http://www.jsainsbury.co.uk/cr/index.asp?pageid=4HYPERLINK "http://www.jsainsbury.co.uk/cr/index.asp?pageid=4&from=flash"&HYPERLINK "http://www.jsainsbury.co.uk/cr/index.asp?pageid=4&from=flash"from=flash).

The company believes in sourcing its products with integrity

The company sources its products with integrity in order to make sure that great products are offered at affordable prices. The company works with its suppliers in order to make sure the sustainability of the products with special consideration to economic, environmental and social impacts of sourcing. The ethical and environmental stance of the organization is made explicit here. The company in its five main values list sourcing with integrity and states that the company is committed to offering products and or service that are good to both customers and the environment. This means every body involved for example animals, farmers and producers benefited by dealing with the company. The company offers British foods and has been shortlisted as RSPCA People Choice's Supermarket Award fro promoting animal welfare (http://www.jsainsbury.co.uk/cr/index.asp?pageid=5). The company is the largest retailer of fair trade in the country. Sourcing through fair trade can be considered as one of the ethical ways of conducting business (http://www.jsainsbury.co.uk/cr/index.asp?pageid=36)

Respecting the environment

The company is committed to conduct business in an environmentally responsible manner and takes efforts to make it easy for the customers to act in an environmentally responsible manner. The company's commitment to run the business in an environmentally responsible manner can be seen in the policies and practices that the company has with regard to carbon emissions of its network, reducing the amount of package, reduction in food wastage and reducing other wastes (http://www.jsainsbury.co.uk/cr/index.asp?pageid=6). The company has targets with regard all the above mentioned factors that pollute the environment and is published in the website in show its commitment and can be seen in the activities undertaken by the company (http://www.jsainsbury.co.uk/cr/index.asp?pageid=53).

Committed to making positive difference to the community in which it operates

The company is committed not just providing jobs to people in the community in which it operates. Sainsbury goes beyond that by engaging the local community in its development plans and souring products from the local suppliers. Sainsburys has created sports centre, youth centre and improved language college and other amenities as part of their commitment to local community development (http://www.jsainsbury.co.uk/cr/index.asp?pageid=48). This can be considered as a socially responsible and committed way of managing business.

Committed to offer a great place to work

The company employs more than 1, 50000 people and is committed to providing a work place which is great to work. The company has clearly defined diversity policies in place and has taken actions for employee equality not just to comply with legal requirements but also to ensure that the company is socially responsible and is committed to reflect the local community in which it works. The company values everybody's contribution irrespective of their caste, religion, gender, ethnicity, nationality, origin etc. The company is committed to provide career advancement to its employees and flexible working hours to all its employees.

Analyzing the core values and principles discussed above reveals one major fact. Sainsburys actions in the direction of becoming an environmentally, ethically and socially responsible way of conducting business have been highly influenced by the current business and economic climate. For example, taking the case of sustainable development has become part of most of the organizations in UK and the different actions organizations take in that direction can be seen in their corporate social responsibility report (CSR). Sainsbury's case is not different. Most of the efforts taken by a company in the direction of corporate social responsibility can be seen as a requirement to conduct business in a successful manner and it has the additional benefit of improving corporate image which leads to improved customer confidence and loyalty.

Task 2 b. "Describe the roles of vision and mission statement of your chosen organization."

Sainsbury's mission is to be the consumer's first choice for food, delivering products of outstanding quality and great service at a competitive cost through working faster, simpler and together" (http://www.jsainsbury.co.uk/index.asp?pageid=14).

Sainsburys vision is to become the number one player in the UK supermarket industry (http://www.jsainsbury.co.uk/index.asp?pageid=14).

The mission statement of an organsaition has special significance to the way it functions. Taking the case of Sainsbury, the company wants to become customers' first choice for food and to consistently deliver high quality service at a cost which is competitive in a way which is faster but simpler by engaging the different stake holders involved. The five core values or principles that were discussed above are derived from this mission statement. The mission statement provides specific direction to the way in which the business should be conducted.

As far as vision is concerned, Sainsbury wants to become the market leader. It lost its number one position to Tesco in 1995 and Asda in 2003. The company's vision will enable it to function harder and better so that it will be able to reach its customers better than the competition. The vision requires the management to constantly monitor the moves made by the competitors and taking both proactive and reactive actions to make sure that the company is improving its market share and inching towards the achievement of the vision.

Task 2 c "Indicate how it is possible for an organization to evaluate the achievement of its objectives."

In order to evaluate the achievement of its objectives, the objectives should be quantifiable. Strategic planning ensures that the targets or objectives are set in a realistic manner and the performance are measures at predetermined regular intervals in order to make sure that the efforts are expended in the right direction to achieve the objectives. If not, actions should be taken to make sure that the short term targets are reset. Reasons behind non performance, if happened, should be undertaken so that short term target is achieved in time which leads to the achievement of long terms goals and strategic objectives of the organization.

Task 3

Plan for implementation of the strategy.

Task 3 a "Discuss how a timetable for strategy implementation can be determined. Include a sample timetable, to include key milestones and their timings."

According to Johnson et al (2006) "strategy refers to the long term direction and scope of an organization where in the organization achieves advantage by utilizing its resources and competencies in the most effective manner in a changing business environment so that stake holder expectations can be fulfilled".

The time table for strategy implementation depends on the strategy under consideration. Strategy should be planned fast and implemented immediately in order to make sure that it will be durable. Other wise, as mentioned earlier, a company will have redesign or re devise its strategies in order to be effective in a rapidly changing business environment. But the success of strategy depends on its durability and irreversibility. So depending upon the nature of strategy for example whether it is corporate or internal strategy, the time table varies widely.

The following is a sample time table, showing key mile stones and timings:

Actions

Jan

Feb

Mar

Apr

May

Jun

Juy

Aug

Sep

Oct

Nov

Dec

Strategic Decision to Initiate change in the organization

 

 

 

 

 

 

 

 

 

 

 

 

Mode of change management determined

 

 

 

 

 

 

 

 

 

 

 

 

Stakeholder identification, approval and identification of change agents

 

 

 

 

 

 

 

 

 

 

 

 

Force Field Analysis, Three Step Model

 

 

 

 

 

 

 

 

 

 

 

 

Investors in People Implementation

 

 

 

 

 

 

 

 

 

 

 

 

Monitoring the changes and making the required adjustments to ensure the strategic objectives is achieved in time 

 

 

 

 

 

 

 

 

 

 

 

 

 

Achievement of the desired change state

 

 

 

 

 

 

 

 

 

 

 

 

Task 3 b How might the dissemination process be used to help an organization gain commitment to its strategy and the implementation of this?

Communication plays a crucial role in obtaining the commitment of the people involved in the strategy development. In order to obtain commitment from the different stake holders, management should show commitment and take deliberate actions in order to convey what they aim by the implementation of a strategy. For example, in order to obtain commitment of the different stake holders involved in the change management programs of an organsaition, the management should be able to convince the different stake holders involved. It is highly important that the management is able to convince the powerful and influential in order to make sure that strategy is implemented for the achievement of organizational objectives. The other stakeholders should also be communicated of the importance of implementing a strategy in time and clear their doubts and fears to obtain sincere commitment.

Task 3 c. Describe the importance of monitoring and evaluation of a new strategy. Outline how this might be achieved.

Organizations have changed drastically over the years in the way they are managed. Earlier, it was direct controlling which was believed to be effective. Due to the development of human rights and laws, direct control can be counter productive for an organsaition of this era. As Johnson et al (2006) puts it indirect controls can be more effective than direct controls.

One of the best ways of applying indirect control is the use of reward. This is one of the reasons why reward is mentioned as a management lever. Reward system should be designed with care to ensure that employee productivity remains high with out direct supervision. The success of many modern day companies can be attributed to employee empowerment. This is one of the ways of making sure that employees are given responsibility in a phased manner so that they act in a responsible manner with out any direct supervision so that they remain committed and motivated resulting in higher productivity and performance.

As far as a new strategy is concerned, it is very important to set short term targets so that they are monitored effectively in regular intervals, resulting in the achievement of strategic objectives with out any delay. As mentioned earlier, stakeholder commitment especially employees, is really important in order to achieve planned strategic objectives.

Conclusion

Strategic planning is indispensable for the success of today's organizations. There are a number of reasons why it is important, but the most important reason is existence of increasingly unpredictable market conditions. Strategic planning undertaken ensures sustainable growth and the development of unique resources and core competencies overtime.

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