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The key of an organizations in implementing a winning strategy among the grand strategies considered is the choices that the organization makes. Strategic choices are concerned in making the decision that involves the organization's future and the direction where it needs to react to variables such as the ever changing environment and to maintain sustainability. As strategy choices generally consists of integrated choices such as (1) the field in which the organization will compete in relation to competitors, (2) the choice of sources to its competitive advantage and (3) choices on how strategies are to be pursued, the considerations of choices made based on solid insights and evaluations rather than guesswork can sometimes be significant constraints. These key issues involving the strategic choices such as conflicts, controversies, competitors, dilemma, people and many other factors confront many organizations and it is unavoidable too, to Mitsubishi Motors (MMC) as well. Mitsubishi Motors (MMC) is one of the strategic business units (SBU) of Mitsubishi Groups of Companies that have expanded to many nations especially in Malaysia as Proton adapted their motoring technology.
The strategic alliance with the Malaysia's local car maker - Proton had started since year 1985, where Proton initially assemble their very first car using components and parts obtained by MMC. The strategic choice of having a licensing strategic alliance with Proton is beneficial to both parties where MMC are able to expand potential markets and gain competitive advantage through access to its partner's assets such as markets meanwhile Proton are able to adapt their motoring technology. However, there might be issues that confront MMC in the process of considering and evaluating the selection of this strategy such as the conflicts and controversial issues between the corporate and strategic business unit.
Internal issues: Conflicts and Controversial
Conflicts and controversial issues arise because the corporate level managers may have different opinions on these choices. The corporate managers have to make decisions based on difficult judgment, usually in the circumstance of considerable uncertainties. This is because uncertainties are derived from many reasonable forecast of the future because strategy are associated with the long run outlook where complete analysis and information are tough to take place in the first place and if it is possible, it will be too late. Therefore, such plausible forecast is a significant constraint for corporate manager to choose the right choice. Likewise, bureaucratic complexity often engulf in large MNC which lead to 'bureaucratic fog' due to steep management hierarchies that creates a layer of cloud that slow down the corporate managers' response to issues and the need to coordinate between the interest of their strategic business units. Although if there is enough information that applies to the strategy evaluation criteria such as suitability, acceptability and feasibility; conflicting conclusions can too arise where a proposed strategy might seem highly satisfactory but not be acceptable to major stakeholders as they have to depend on their own judgments on the best course of actions.
Apart of that, risk concerns such as whether contractual strategic alliance is fitting the strategy or would an acquisition will be better off, strained the corporate managers. Corporate managers are also afraid of adding management costs because they are typically the best paid in the whole group, therefore if their valued they create such as market development is lesser than their costs, it means that the corporate managers are net value destroying. Similarly, alliances expose MMC to its partner - Proton, the motoring technologies that is has revealed which could possibly in the future become a competitor in which it is factual that Proton has started to produce its own self- developed car at 2004. Not to mention, partner eventually could utilize the know-how and might perform better than the startup itself. Nevertheless, the strategic alliance somehow turned out to be successful as MMC are able to leverage the fees due to patented products with Proton having 44% of the Malaysia's market share in year 2004. MMC have officially end its strategic alliance with Proton in year 2005 and established in Malaysia since then.
Strategy are concerned with complex issues and often it is difficult to identify with the tradeoffs due to causal ambiguity where it is hard to relate the consequences and effects relationship that underlie strategic decision making. For example, when MMC started selling Mitsubishi cars in Malaysia in year 2005 with the effort to understand the factors that affect demand, it may be issues for the SBU to measure the relative importance of price and quality, not to mention how quality is defined to begin it. The appropriate pricing strategy to adopt is also an issue faced by MMC managers due to game theory. Because competitors in the automobile industry that have similar segments consist of interdependent relationship with each others such as Honda, Hyundai and Kia, it is said to be one competitor's move is likely to stimulate response from other competitors. In other words, the pricing strategy choices made by one competitor is reliant on the choices made by another. There are constraints and dilemma in choosing the appropriate strategies to protect itself at the expense of other competitors in reference to the strategy clock - too high of a price, you will lose your customers meanwhile too low of a price, and it might to lead to a price war.
Competitors are not the only issue that affects MMC's strategic choices; customers would also affect as well. This is because there is a positive association between customer perception and evaluation towards the product sold. In buying behavior, customer satisfaction and expectation must be met in order to fulfill customer needs and create customer retention. Taking the example of year 2008 where MMC has a strategic alliance again with Proton, where the new Proton Inspira will be based on the Mitsubishi Lancer platform. However, Proton Inspira's customers might have the misconception that the Proton Inspira is comparable with Mitsubishi and this would create a perception that Mitsubishi is at the same level as Proton. Nevertheless, Mitsubishi must uphold to its name as a Japanese car maker. In order to do that, Mitsubishi launched their own Lancer at a higher price to maintain their image of a Japanese auto car maker which causes MMC into jeopardy which is again into game theory's dilemma. The catchphrase of MMC strategy should be customer-oriented and listen to you customer which is not controversial. However, to what extent is the strategic choice should MMC listen to their customers? Questions such as, (1) how much money to spend on marketing research (2) How much of the corporate manager's time should be committed to customer contact, in which ultimately result in an offset that lesser time spent on management, employees, suppliers and others (Clayton, 1997)
In addition, the expectation of powerful stakeholders such as the corporate level managers can sometimes drive MMC into an improper strategy due to pressure to deliver revenue growth (Prahalad and Bettis, 1995). Similarly, there are some difficulties for MMC to align with its corporate because there is a need to be consistency between the different elements of strategy according to Robert & David (2001). Having said so, each and every elements of strategy such as the competitive strategy, direction and method must work consistently and as a whole. However it is not an easy task for corporate and business level managers as stated by Mintzberg (1994) due to lack of ownership which causes the business level strategy does not align to the intended corporate strategy. Otherwise, strategies that are not aligned will have different competences which are mismatched with the strengths of the business.
Conclusion and Recommendations
There are times that controversy and issues in strategic choices of large MNCs resides not in the general statement of the organization's direction, but rather the matter of degrees where it exists in its planned application. In other words, for managers in selecting between black and white is easy and not controversial, however selecting in the midst of the diverse shades of gray is, where often the strategy lies in choosing the right shade. In the perspective of much uncertainties, strategy development and implementation requires difficult choices and trade offs in which smart managers ought to have conflicting views given the nature of strategic choices.
This is therefore; managers are required to become skillful in managing conflict and to drawn in an effective strategic management processes. It is also required that strategic alternatives have to meet and aligned with the criteria of suitability, acceptability and feasibility. There is also need for managers to compare the strategic choices if there is more than one strategic alternative that meet the abovementioned criteria. As there is detachment from reality, it is important that who will be vital in executing the strategy where often line managers that are responsible to support the choice made. Line managers have day to day operations in their hand which they have to cede in order for supporting the choice made, hence it is better to empower ownership to other employees as well to work as a whole. It is not necessary to have the strategic plan revealed, however necessary to educate employees the objectives of the goals or strategy.
In this era of globalization, managers encountered intense competition from both their local and foreign competitors. This new competitive environment are no longer compatible to its own local market but dictated by other markets around the world and is blind to a particular country external environments and cultures. Organizations that are able to cultivate an atmosphere that managers are able to develop an appreciation for the power of conflict stand out among its competitors to accomplish a true competitive advantage.