How Competitive Forces Shape Strategy

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Introduction

The approaches to the development and execution of strategic plans are closely examined by many business administrators and scholars. This paper is aimed at discussing the issues that should be considered by a person when implementing a strategy. In this context, this notion can be described as the identification of long-term objectives as well as actions that are necessary for achieving these objectives (Chandler 1962, p. 13). In particular, it is necessary to identify those internal and external factors that can affect the way in which a strategy is implemented. Moreover, one should demonstrate how these factors should be evaluated. This topic is important because the sustainability of organizations and their competitiveness depend on the ability of business administrators to understand different elements strategy implementation. Therefore, business administrators should have a clear idea of how various internal and external forces can influence their plans. Moreover, they need to know how to avoid various pitfalls that can produce disastrous effects on a company. This essay will consist of several sections. First of all, it is important to examine various internal characteristics are important for the implementation of strategy. Secondly, one should overview the forces related to the external environment that can have significant implication for long-term policies of an organization. Overall, one can argue that a strategist should first consider the operational efficiency of a company because it determines the ability of a company to respond to the changes in external environment and overcome possible challenges. This is the main thesis that should be elaborated.

The importance of internal efficiency

There are different approaches to the development and implementation of a strategy. One of the frameworks is based on the premise that a business should be able to withstand the impact of various risks that cannot always be eliminated or avoided. An organization should be resilient to various threats that prevent it from achieving its strategic objectives. This model implies that a strategist should on those variables that can be controlled by the management. For instance, it is possible to focus on the resources that are available to a business (Wernerfelf 1984). In this case, the word resources can be viewed as tangible or intangible assets that the organization possesses (Wernerfelf 1984, p. 172). Moreover, this term is closely related to the organizational strengths as well as weaknesses (Wernerfelf 1984, p. 172). Therefore, a strategist should pay attention to such issues as technological edge of the company, its brands, the competence of employees, or even the way in which workplace procedures are organized (Wernerfelf 1984, p. 172). There are other researchers who focus on the internal characteristics of an organization. For example, Oliver Williamson (1991) pays close attention the organizational efficiency since it enables a business to adapt to change. In particular, it is necessary to consider such details as the elimination of bureaucratic barriers, ability to enforce property rights, or HR policies (Williamson 1991). Apart from that, strategist should consider such aspects as the reputation of a business, or its production capacity. This argument can be illustrated with the help of several empirical examples. In particular, one can speak about the rise of the Japanese corporation, Aoki, which has been able to grow due to its effective talent management, integration of suppliers, and ability to reduce costs (Williamson 1991). Overall, one can say that Japanese firms exemplify the importance of operational efficiency for the companys ability to implement or modify their strategies. This capability can be viewed as the cornerstone of their success and sustainability. This is one of the points that can be made.

Admittedly, this case written by Oliver Williamson (1991) study cannot be regarded as conclusive evidence because it throws light on the experiences of only one organization. Moreover, this study was completed more than two decades ago, and since that time, the practices of businesses could have changed dramatically. Nevertheless, this argument can also be relevant to other companies. For instance, researchers point out that while developing their strategies, leading American companies pay close attention to the internal characteristics of the firm, for instance, its knowledge management, HR policies, cost-efficiency, and technological expertise (Mathis & Jackson 2010, p. 32). For example, one can mention such organizations as Hewlett-Packard, Apple, or General Electric (Mathis & Jackson 2010). Therefore, one can argue that the efficiency of a company is the main issue that a strategist should consider. It enables a business to adapt its strategies to the changes in external environment (Mathis & Jackson 2010). Moreover, this element is essential for minimizing the impact of various risks. These are the main details that should be considered by people who shape the policies of various organizations.

Overall, this approach to strategy implementation is primarily aimed at decreasing the vulnerabilities of a business. It is closely related such a concept as resilience or the capacity of a company to adjust to change. If a strategist focuses on these aspects, he/she may not necessary reduce the probability of various risks (Chandler 1962). Yet, this professional can eventually make a business less susceptible to these threats that cannot always be foreseen. This is one of the main issues that can be distinguished.

External environment

Admittedly, one cannot disregard the influence of external environment because it can have profound implications for the performance of any business. This approach is advocated by Michael Porter who believes that positioning can be viewed as the heart of strategy (Porter 1996, p. 61). His argument implies that a company should be able to identify a market niche that it can fill. This argument implies that a business should closely examine customers needs or the competitive strategies adopted by their main rivals. In other words, the managers should understand how the products or services of a business can fit the market. In turn, the answer to this question should lay the basis for the development and implementation of strategies (Porter 1996). Moreover, it can shape practically every policy that the management will carry out in the future. Furthermore, the management should take into account that the strategies of other businesses can evolve with time passing. More importantly, the needs and lifestyles of clients can also change. These issues are important for the implementation of strategies that cannot be viewed as something static. Provided that these issues are overlooked, the competitive strengths of a company can be undermined. Therefore, managers should have a clear idea of how external risks can impact an organization. This is one of the points that can be made.

In turn, strategist should adopt various tools that can help him/her analyze different external forces. These professionals should understand what trends can have significant implications for the execution of long-term plans. In particular, it is necessary to focus on such aspects as the bargaining power of clients and suppliers, the openness of the market to new entrants, the intensity of rivalry within a particular industry, or availability of substitute products (Porter 1979). These aspects can be viewed as the most important characteristics of an industry (Porter 1979). Moreover, one should not forget about such details as the bargaining power of clients, legal environment within a country, the impact of technologies and many other factors that can shape the implementation of a strategy. Hence, a strategist should be skilled in the use of various analytical tools that can identify possible opportunities or risks. These examples indicate that understanding of external environment should not be disregarded by a business strategist. This person should not assume that social, economic, or cultural trends cannot affect the performance of a company. Such an assumption will eventually result in the stagnation of this business. So, this is the main pitfall that should be avoided by a strategist while implementing any plan.

Discussion

To a great extent, the arguments expressed in the previous section contradict the main thesis advanced in this paper. This viewpoint should be evaluated more closely since in this way, one can better understand the nature of strategy development and implementation. Admittedly, business administrators should have an in-depth understanding of various external factors in order to identify strategic goals. If they lack this knowledge, their efforts can be misguided. Under such circumstance, even the most efficient companies can fail to achieve their objectives. Nevertheless, it is critical to remember that operational efficiency is critical for the execution of any long-term policy worked out by the management. The implementation of any strategy is more likely to be successful if a company has such attributes as well-developed HR policies, technological efficiency, excellent customer service, cost-effectiveness, and proper time management. Each of these characteristics is an element of internal efficiency. Provided that they are absent, strategic plans can easily be misinterpreted or misunderstood. As it has been said before, these qualities help a business respond to possible challenges as quickly as possible. These challenges can emerge, even if managers have thoroughly examined the competitive environment of the business. This is one of the points that can be made.

Conclusion

Overall, this discussion suggests that while implementing a strategy, one should first focus on the tools or resources that enable a business to attain its long-term objectives. They are primarily related to the internal characteristics of a business. By focusing on this aspect, a strategist can make sure that a company can implement its strategic plans despite the adverse effects that can be produced by external factors. This is why this issue should be the main concern of business administrators. However, one should not disregard the need to be aware of the trends in external environment. This knowledge is important for ensuring that a company is ready for possible challenges. Without this knowledge, one cannot implement or modify its strategies. Still, a strategist should attach importance to those capabilities that enable a business to face challenges and overcome them. These are the main aspects that should be singled out.

References

Chandler, A 1962, Strategy and Structure: Chapters in the History of the American Industrial Enterprise, MIT Press, Boston.

Mathis, R & Jackson, J 2010, Human Resource Management,Cengage, Learning, New York.

Porter, M 1979, How competitive forces shape strategy, Harvard Business Review, vol. 57, no. 2, pp. 137-145.

Porter, M 1996, What is Strategy, Harvard Business Review, vol. 74, no. 6, pp. 61-78.

Wernerfelf, B 1984, A Resource-based View of the Firm, Strategic.Management Journal, vol. 5, no. 20, pp. 171-180.

Williamson, O 1991, Strategizing, Economizing, and Economic Organization, Strategic Management Journal, vol. 12, no. 7, pp. 75-94.

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