The Development Of Strategies For Products Commerce Essay


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Traditionally, organizations developed around strategies based on product, processes, technologies, access to financial resources and economies of scale (Perez and Pablos, 2003, p.82) to sustain their core competencies. However, with the advancements in technology and changes in the global marketplace, firm's activities and their tangible resources have become relatively easy for competitors to duplicate. Thus, their core competency, their competitive advantage is lost, unless they have the capacity to learn more quickly than their rivals (Milmore, et al., 2007, p. 370).

Learning can be either:

According to Bratton and Gold (2007) Organizational Learning (OL) refers to attempts of using the ideas of learning collectively at organization level. Simply put, OL is the process of learning, in which focus is put on how individuals or workgroups collectively learn. Within this process may also include Learning Organization (LO) or simply put the process of learning to learn. LO refers to organizations with the vision of continually learning to learn how to expand their capacity to create results they want, and take appropriate actions toward responding proactively to changes in the environment (Milmore, et al., 2007, p. 370).

The creation of learning environments and structural designs that promote learning leads to new insights that improve performances and competitiveness (Noe et al.2000, p. 65). Thus, the premise of learning has led to developments within firms towards securing competitive advantages.

Knowledge Management

This pursuit of competitive advantage has led to greater focus on intangible assets than ever (Perez and Pablos, 2003, p. 82). The focus of organizations now shifted towards developing knowledge-based capital instead of tangible assets for sustainable advantage. George Walker, president of Delta Wire, exemplifies this sentiment, "Anyone can come in and buy machines like I have. The difference is the knowledge of your workers."

Mayo (as cited by Bratton and Gold, 2007, p. 346) defines Knowledge Management (KM) as:

The management of the information, knowledge and experience available to an organization - its creation, capture, storage, availability and utilization - in order that organization activities build on what is already known and extend it further.

Levi Strauss & Co. (Levi) producer of Levi's jeans and apparel has manufacturing and sales operations in many countries. Since 1853 their employees have played a vital role in Levi's establishment today as an industry leader with a powerful portfolio to its name (Harrington and Voehl, 2006).

One of their efforts toward learning is employing the right people. Creative, talented and committed individuals are employed so that Levi's core values of originality and integrity are easier to be sustained, as creative people can contribute more innovative ideas to the organization (Harrington and Voehl, 2006). Once the right people are hired, finding newer and more innovative ways to function will becomes an inherent part of everyday processes which leads to better productivity within Levi.

Another approach taken by the management is to open up its vast knowledge accumulated over the decades to their employees. They developed a Knowledge Management System (KMS) called OLIVER (On-Line Interactive Visual Employee Resource) to capture their portfolio, knowledge of brands, values and even financial performances (Harrington and Voehl, 2006). This database is shared within the employees so that they can acquire new knowledge about services, skills of other employees and suppliers. The KMS is interconnected from purchasing, personnel to logistics so that employees are able to use it whenever they need to so that it adds value to the strategies they formulate or even regular operational activities.

OLIVER can thus enable greater productivity and efficient functioning as employees in different countries are able to stay connected and in touch, which can lead to an advantage over their rivals. However, to maintain their competitive advantage Levi will have to ensure that employees are motivated and satisfied. This is to ensure that turnover will be minimum. This can be addressed by having a strong rewards or recognition program.

Arygyris and Schon's Single loop and double loop learning:

Organizations cannot benefit from organizational learning unless the learning is simple and routine (Bennet, 1996, p.114). In such cases organizations can revert to its old habits and thus lose the benefits of experience.

Single loop learning (SLL) is the learning necessary for an employee to be able to apply existing methods to the completion of a job. Double loop learning (DDL), in contrast, is learning that challenges and redefines the basic requirements of the job and how it should be undertaken.

Single loop

Double loop

Emphasizes identification of problems and then taking corrective action

Emphasizes understanding and changing the basics assumptions and core values that led to a particular problem

Source: Extracted from Werner and DeSimone, R, J (2006) p. 591

DLL can occur within organizations when they experience crises, fail to attain targets, and experience environmental change. Learning about mistakes in these situations however can be costly and inefficient due to the fact that decisions may be taken too late to be effective, and all the benefits of forward planning are lost.

An example of SLL and DLL can be explained with the help of the following diagram:

Exhibit: Single and Double Loop Learning

Source: Adapted from Haberberg and Rieple (2008) p. 411

McDonald's, like many organizations, uses SLL as a matter of routine if there is a problem or when need for improving something arises (Haberberg and Rieple, 2008, p. 411). For instance, when profits fall short of expectations they would reassess their pricing, advertising or look at new products that Pizza Hut or Burger King might have launched to look for a likely explanation or cause. They might then try to recover the profits by lowering the prices or introducing new products; if sales recovered, they would have learnt the means to fix the problem. If not, they would likely look at other means, for instance, if the quality ingredients or of its customer services had somehow deteriorated.

These actions are all based on McDonald's existing system of belief (Loop 1 in Exhibit), which if likely the result of the ingrained belief that if the burgers are good enough and served with a smile at a competitive price, then people will want them.

Assumptions like this are so embedded within organizations that they pose a challenge to change, as in the case of McDonald's, who likely required a lot of convincing that the customers no longer desire hamburgers. It wasn't until 1980s that they took the possibility seriously enough to introduce McDonald's pizza to counter threats from Pizza Hut, and more recently, experimenting with 'healthier' meals such as salads and fruits. This stage - someone in McDonald's being able to challenge and change their deeply held assumptions and theories are examples of DLL (Loop 2 in Exhibit). Because psychological factors involved, not all organizations are capable of DLL and fewer are able to take on the challenge when confronted by insoluble problems or crisis.

Such SLL learning is thus required in order to build core-competencies as routines are rarely perfect when they are initially put into practice. DLL learning is vital for organizations to adapt to major changed within its environment and thus leading McDonald's to gain a sustainable competitive advantage.

Formal Training

Training refers planned efforts by companies to facilitate employees' learning of job-related competencies (Tyson and York, 2000, p.162). Such competencies include knowledge, skills or behaviors that are critical for job performance which may include mastering knowledge, skill and behaviors related to their job. Applying these skills in their day-to-day activities will allow them to achieve performances greater than that of rivals, thereby measurable competitive advantage.

A company that has capitalized on creating value through training employees in order to sustain competitiveness is TJX Companies. This discount clothing and home fashion retailer hires their employees from unemployed or low-income communities and provides them with the skills required, firstly being English-language skills. With the initiation of The First Step program, 36,000 employees have benefited from formal training methods such as classroom training, case management, internships programs, and through formal instruction brochures distributed by the company (Noe. Et al, 2000, p.283). All these organizational learning efforts have lead to an employee retention rate that is 30 percent higher than average firms.

TJX believes that training was a critical factor behind the company's success (Noe. Et al, 2000, p.283). Formal training allowed them to retain a workforce who are qualified and skilled, which will likely result in better morale among workforce. Due to retention, it is also likely that their level of customer service and productivity will be increased, as the longer an employee works on a task, the more efficient he will be at performing it. The specific skills developed through formal learning can allow TJX to rotate employees through distribution centers and corporate offices as they have all been equipped with the essentials knowledge and skills required.

The degree of successful learning that takes place through formal learning depends on a number of conditions. There must be opportunities for the employees to practice the skills or new knowledge acquired. Unless they are able to commit the lessons to memory and demonstrate it through everyday actions, the learning has no particular value (Werner and DeSimone, 2006, p. 90). Furthermore, there must be opportunities for employees to interact and observe experiences of other employees so that new insights and perspectives are gained. When employees are able to utilize these skills, behavior or knowledge they have gained, this places the organization as a whole at a better position to respond to market conditions and thus gain a competitive advantage.

The 5 Disciplines of Learning

According to Senge (1990) there are 5 disciplines to learning: Systems thinking, Personal Mastery, Mental Model, Building Shared Vision and Team Learning, which he described as:

Systems Thinking: a discipline for seeing wholes. It is a conceptual framework for seeing interrelationships rather than things, for seeing patterns of change rather than static snapshots

Personal mastery: the discipline of continually clarifying and deepening our personal vision, of focusing our energies, or developing patience, and of seeing reality objectively.

Mental models:  These are deeply ingrained assumptions, generalizations, or even pictures and images that influence how we understand the world and how we take action

Building shared vision. Peter Senge starts from the position that if any one idea about leadership has inspired organizations for thousands of years, 'it's the capacity to hold a share picture of the future we seek to create'

Team learning: the process of aligning and developing the capacities of a team to create the results its members truly desire' (Senge, 1990).

These learning principles are a route to improving performance and productivity (Boyle, 2002). This could be seen in the company Royal Dutch Shell (RDS). De Geus (1988) claims that RDS's successes and their very survival were attributed to their institutional learning. They had been since the beginning been based their planning on forecasting which was their mental model at the time. They were unprepared for unforeseen variable that may arise. However, the management went on later to realize that their attitude had been that of developing the business in a predictable way without much change. By the late 1960s they had assembled a diverse team of experts to bring in varying knowledge (Boyle, 2002).

By doing so, new scenarios and strategies that expanded and developed conventional theories were formulated that questioned and expanded their existing scope of understanding. Also, through dialogue with experts in the team, greater understanding of internal and external factors that affected RDS was brought to light. Through these mental models and team learning, RDS was able to survive in the highly competitive oil industry.

However in the l990's, RDS was deemed a dysfunctional learning organization. Member commitment and community, or the vision that all the employees shared, was lost due to the management reached a point of complacence. Their inability to participate in a shared vision due to the fact that they had decided to pursue their own agenda rather than that the organization led to failure for the organization to think as a system. Decision making was slowed down, commitment of the employees was adversely affected, and the sense of community broke down. All of these factors escalated in the 1990s and their competitive position was ultimately affected.


In today's globalised world with breakthroughs in technology, it is possible to reasonably duplicate resources or methods with a matter of time. The focus on employees as an asset is so important for this reason. Although core competences such as methodologies can be benchmarked against, or copied, the knowledge of an organization's employees is difficult to replicate. An organization that wants to develop and maintain a strong foothold in the business environment will likely benefit from developing their business strategies to reflect ongoing changes in the market as well as investing in the employees or human capital.

Organizations practicing such methods of learning will likely have a better chance at surviving in a world where change is the constant. By continually adapting and being responsive to the changes, they can reinvent themselves so that they remain relevant. Gaining the commitment of employees at all levels and helping them continually expand their capacity to learn will enable the organization to willingly identify and challenge their existing methods to produce more and more value. Such opportunities to grow will allow them to be empowered to find better and more innovative ways to transform their day today activities thus leading to productivity.

As can be seen in RDS, competitive advantage can be lost when organizations fail to focus on their vision. The top management's commitment and passion towards learning plays an important role in organizational learning.



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