Contemporary strategy analysis Essay

2001-2011 was filled with many black swan events (i. e. events that ar extremely rargon, have a study impact and are unpredicted even if they are rationalised retrospectively) e. g. Sep 11 attack, Lehman Br separate collapse, Greece/Iceland bailouts, Arab Spring revolutions, major earthquakes and tsunamis) Rise of BRIC countries creating a multipolar world 2. Sluggish Economic Growth + deepen magnitude Competition Economic growth in advanced economies sluggish passim the medium term governments and ho ingestionhold sectors are over-leveragedinsufficient productive investment funds from companies sitting on cash excess capacity in some sectors - resulting in square price ambition Internationalisation of companies from emerging-market countries e. g. contract manufacturers (OEM) in China and India competing with their customers in final markets. 3. Technology Disruption Digital engine room disrupting incumbents (e. g. Netflix replacing Blockbuster) and redrawing constancy ba rriers (e. g. Apple, Nokia, Nintendo, Blackberry now competing in same energetic device market) 4. Social Pressure and Crisis of CapitalismLoss of social genuineness of companies as a result of a fall-out from the 2008/9 financial crisis refuse for companies (hypocrisy + greed of bankers, traders, etc) and their leaders (e. g. Occupy Wall Street locomotement) Rise of election forms of line of credit enterprise as better, much nutrify competent models over especial(a) liability companies e. g. state-owned fasts (China, Brazil) and cooperatives (i. e. businesses mutually owned by consumers or employees). Challenge go about by companies of whether to unilaterally create/stick to its own values (which may become out of step) or reflect the current values and attitudes of night club it operates in spite of appearance.Item 2 New Directions in Strategic Thinking 1. Re-orientate collective Objectives of Companies Reconcile the need for profit maximisation with a broader soc ietal bureau (i. e. companies having greater social and surroundingsal responsibilities) Move away from centering on stock market valuation alone Management should non focus on profits but what strategic factors that drive profits or create value e. g. customer satisfaction, variety Best antidote to merged empire building and CEO hubris is a stronger emphasis on grassroots principles of strategy analysis. 2. Seeking More Complex Sources of combative AdvantageCompetitive advantages in directlys dynamic world is difficult to sustain due to high rate of technology diffusion + increased competition from emerging market companies who are more cost-effective Developing septuple layers of competitive advantage is now hired (e. g. as shown from companies that maintained favorableness and market share for years (e. g. Toyota, Wal-Mart), combined with the ability to combine multiple capabilities. 3. Managing Options The portfolio of options of a company e. g. growth options, aban donment options, and flexibleness options are more and more important as sources of value.Therefore option thinking should be adopted into a firms strategy e. g. industry attractiveness should not depend on profit potential, but option potential (e. g. an industry that produces a no of different products, comprises multiple segments, has many strategic groups, utilises a wide variety of alternative technologies) e. g. a resource is attractive if it fuck be deployed in different businesses and support alternative strategies (e. g. nanotechnology). Dynamic capabilities are important because they generate new options. 4. Understanding Strategic Fit brilliance of fitting the strategy of the firm with the firms business environment and its resources and capabilities. 2 major concepts regarding linkages within companies complementarity and complexity Complementarity the importance of linkages among a firms focal point practices and finding the optimal configuration (e. g. a six-sigma prime(a) program needs to be accompanied by changes in incentives, recruitment policies, product strategy, etc) Complexity the idea that companies are complex systems whose behaviour results from interaction of a large number of independent agents.This results in unpredictability, self- institution by a company and a company positioning between inertia, chaos, and evolutionary adaptation Common to both concepts is the contextuality of linkages Do the benefits from any particular exertion depend on which other activities take place? 2 dimensions of this contextuality contextuality of activities (are management activities and their benefits dependent or independent of each other? ) contextuality of interactions (do activities interact in similar ways across firms) Item 3 Redesigning organisationsThe challenge of todays business environment is reconciling multiple dilemmas (e. g. product at low cost, but also innovate), requiring multi-dexterity. Companies are now multi-dimensional structures with organisational capabilities for each business area e. g. quality management processes, social and environmental responsibility, association management, innovation and exploration, etc. 1. Solution to Complexity Making cheeks Informal, Self-Organising and Permeable Informal Organisation Rely upon informal or else than formal structures and systems e.g. team-based structures which rely on coordination rather than control. Companies are moving towards project based organisations temporary cross-functional teams charged with illume objectives (as opposed to permanent functions and continuous operations). Such teams are more able to achieve innovation, adaptability and rapid learning than more traditional structures and avoids issues of over-concentration of power and rigid, refractory structures (e. g. W. L. Gore, supplier of Gore-Tex boots).This is an example of a consensus-based hierarchy, which emphasises horizontal communication, over an authority-based hiera rchy, which emphasises vertical communication. self-organization Humans (and thitherfore, companies) have a capacity for self-organisation. Three factors are semiconducting for self-organisation identity, information and relationships. Identity is a shared cognition of what the organisation is (what is core, distinctive, and enduring about the character of the company) and an emotional attachment towards what it represents.A strong consensus of identity provides a powerful basis for coordinated action that permits flexibility and responsibility to be reconciled with continuity and stability. Information and communication networks within companies support spontaneous patterns of complex coordination with little or no ranked direction Relationships, or informal social networks, allow information to be created and transformed and allows the organisations identity to expand and include more stakeholders. The more access people have to one another, the more possibilities there are. 2. Breaking Down Corporate BoundariesThere are limits to the range of capabilities that companies kindle develop internally. Therefore, companies must collaborate in order to access the capabilities of other companies e. g. strategic alliances. Todays web-based technologies permit much wider networks of collaboration (e. g. use of ICT technologies by P&G and IBM to draw upon ideas and expertise across the earthly concern or the rise of open-source communities that build highly complex products such(prenominal) as Linux). Item 4 Changing Role of Managers The changing conditions and types of organisations require new approaches to management and leadership.Previous era of restructuring and shareholder focus associated with change masters (highly visible, individualistic and often hard-driving management styles e. g. Michael Eisner of Disney, Rupert Murdoch) Buck-stop here peak decision-making utilization of CEOs may no longer be feasible or wanted for the current era. Instead, it is the role of guiding organisational evolution that is more important now (being a social architect by creating an environment where every employee has the mishap to collaborate, innovate and excel).CEOs should be less pertain about decision-making and more concerned about cultivating identity and purpose. Senior managers also require different knowledge and skills nowadays e. g. self-awareness, self -management, social awareness (empathy) and social skills i. e. emotional intelligence. They should move away from being administrators and controllers and become entrepreneurs, coaches and team leaders instead. In particular, rapid evolution requires a combination of both incremental improvement and elating radical change (e.g. Sam Palmisano at IBM) Establishing simple rules the idea that companies toilette be managed by a few simple rules (boundary rules and how-to rules) with limited managerial direction otherwise (e. g. Cisco) Managing adaptive tension Create a train of tensi on that optimises the pace of organisational change and innovation. This is done through imposing demanding achievement targets, but ensuring targets are appropriate and achievable.