Case Analysis
Format MLA Volume of 3000 – 3500 pages (12 pages) Description Managerial Concerns, Preferences, and Objectives for Positioning and Performance References
Assignment type : Case Study
Using Situational Strategic Management (SSMA) approach to analyze a case
Generic managerial aims can be expressed as:
• Effectiveness—doing the right things
• Efficiency—doing things right
• Flexibility
o Responsiveness to change
o Initiatives for competitiveness and innovation
The well-known standard list of questions for enquiry and for considering aims and objectives can be borne in mind as (in no particular order):
• who?
• what?
• why? (why not?)
• when?
• where?
• how? (how much? how well? how often?)
In the context of strategic management, effectiveness can be addressed through formulating the mission of the company, and usually this is accompanied by a vision statement, and a set of values. Aims and objectives for positioning and performance ideally will be in light of the mission and usually will take account of the vision.
It is as well, however, for the analyst to remain sceptical, i.e., take nothing at face value, and cynical, i.e., look for the individual self-interest, when investigating what powerful individuals in organizations, i.e., managers, say and do, both individually and as a group. Perhaps taking a cynical view, what managers say, or what the management says, can be for public or employee relations purposes and necessarily will be socially desirable and politically correct. In reality, however, there need be little or no relation between what powerful individuals, including managers, say publicly versus what they do. Always, actions and outcomes speak louder than words!
For example, managers from the top-down can communicate publicly and inside the organization “what the company is doing”, i.e., mission, vision, values, aims, objectives and strategy. In reality, however, these communications may be largely for public and employee relations purposes or as ceremonial conformity with societal expectations. These communications may bear little or no relation to the actual budget resource allocations, functional implementation priorities, employee work activities and the internal reward structure. What managers spend time, effort and money on is the indication of their real strategic priorities.
MISSION AND OTHER STATEMENTS
Mission Statement
This is usually the answer to the question, “What business are we in, and why and how?”
Component questions may be:
1. who is being satisfied? (customers and market segments)
2. what is being satisfied? (customer needs and wants)
3. how (and how well) are customers and their needs being satisfied? (Marketing mix and supporting company capabilities and competences)
Textbooks can have varying concepts of mission. One concept, according to Pearce & Robinson, (2013, p. 24) is that the mission statement should address the following questions:
• Why is the firm in business?
• What are our economic goals?
• What is our operating philosophy in terms of quality, company image, and self-concept?
• What are our core competences and competitive advantages?
• What customers can and do we serve?
• How do we view our responsibilities to stockholders, employees, communities, the natural environment, social issues and competitors?
This list is only these authors’ concept and in other textbooks some of these questions may be covered in concepts and statements of corporate vision and values.
Vision Statement
This is the strategic management group’s perspective of “What kind of company-in-business do we want to be or become?”
This statement may be addressed to employees and to external stakeholder constituencies.
Values Statement
This may be the expression, from strategic management’s perspective, of “What kind of company-of-people do we want to be or become?”
This statement may be addressed to employees and to external stakeholder constituencies. The values statement may be related to corporate culture, which may be conceived as expressed in the unwritten rules in the organization for “how things are done and how we do things, around here.”
Aims and Objectives
These are the environmental positioning and corporate performance ends that are established by strategic management. Ideally, they should be appropriately SMART:
• Specific
• Measurable
• Achievable
• Realistic, and
• Time-based.
The Strategic Gap is determined at the planning horizon as the gap between what is expected in the changing future (if the company continues doing what it is presently doing) and what is desired. Realistically, any strategic gap must be important, measureable and achievable.
Managerial concerns, preferences and objective are the basis for the remainder of the analysis and planning process. It is these concerns and preferences that strategic analysis and planning are aimed to achieve.
Drucker (1954) suggested eight major areas in which corporate business objectives are needed:
• Market standing
• Productivity
• Physical and financial resources
• Profitability
• Innovation
• Manager performance and development
• Employee performance and attitudes
• Public and social responsibility
More recently, the Balanced Scorecard (Kaplan & Norton, 1996) provided a framework for objectives, designed to translate strategy into operational terms. The strategy is translated using four questions:
• Customer: To achieve our vision, how should we appear to customers?
• Internal Business Processes: To satisfy our shareholders and customers, at which business processes must we excel?
• Financial: To succeed financially, how should be appear to our shareholders?
• Learning and Growth: To achieve our vision, how will we sustain our ability to change and improve?
Objectives, Measures and Targets and are specified in answer to each question. These are seen here as MCPOs. Initiatives are specified in light of these objectives, measures and targets, as strategies to achieve them or carry them out in the future.
TRADE-OFFS AND HUMAN FACTORS IN SETTING AND ACHIEVING OBJECTIVES
In practice, there always are trade-offs between objectives. These include:
• Short-term profits versus long-term sales and market share growth
• Profit margin versus competitive position
• Direct sales effort versus market or product development
• Penetration of existing markets versus development of new markets
• Related versus non-related opportunities for growth
• Profit versus non-profit objectives
• High-risk (and possible high-return) environment versus low-risk (and low return) environment
Also in practice, managers are human. Those in powerful positions in business corporations may choose to pursue their own self-interests, e.g., to maximise their profit—or returns—related management bonuses, at the expense of the company and its other stakeholders. This was illustrated by the 2008 “meltdown” in financial institutions in the United States and other countries.
POSSIBLE ACTIONS TO INCREASE PROFITS OR RETURNS—AND THEIR RISKS
1.
Decrease Working Capital Items
2.
Risks are:
3.
o Decreased cash
o Decreased credit worthiness
o Decreased debtors
o Loss of credit as a marketing tool
o Decreased inventory
o Production problems and increased delivery times
In a digital world, these risks may be minimised by using real-time information and control systems, e.g., sales-to-order and just-in-time inventory.)
4.
Decrease Investment in Fixed Assets
5.
Risks are outmoded equipment and inflexibility of operations, loss of quality, and perhaps higher labour costs. In today’s world digitization and information systems may permit lower-cost and more productive use of fixed assets.
6.
7.
Decrease Cost of Sales
8.
This may be through:
9.
o Generally working manufacturing and service employees as “fewer, cheaper, harder, faster and longer”. For example, individuals can be employed as, casual on-call, contractual or part-time (to avoid paying legislated benefits), and paid minimum wages. Risks may be loss of quality and developing a “nobody cares” culture but these may be mitigated by tighter supervisory control and machine pacing and monitoring of individuals’ work activities and tasks, and their work outputs.
o Subcontracting, outsourcing or off-shoring production to lower-cost suppliers and jurisdictions. Risks are loss of technology and control, and sub-contractor problems such as collapsing buildings and “sweat-shop” conditions can become public relations issues for the company.
10.
Increase Prices
11.
Risks are reduction in unit volume and loss of market share. If it is not existing products or services but new products or services with higher prices and higher margins, the risks are that, in the face of competition, they will not sell in the expected unit volumes or the higher prices and margins will not come to pass.
12.
13.
Increasing Sales Volume through Increasing Production and Productivity
14.
Risks are overloading plant and people, leading to stock-outs and loss of quality, and burnouts.
15.
16.
Increase Debt/Equity Ratio (to Obtain a Measurably Higher Return on Equity)
17.
Risks are inability to carry the debt load and make the interest payments.
18.
MANAGEMENT CONCERNS, PREFERENCES AND OBJECTIVES (MCPOS)
In order to provide criteria for strategic situation analysis and planning, a set of generic aims or indicators for strategy positioning and performance is suggested for strategic management. In any particular situation it can be presumed that there will be, or at least should be, these aims and objectives for strategic management.
A generic set of strategic aims or indicators is suggested below and these are generally to be maximized as more and better performance relative to:
• MCPO 1. Customer value (price/quality) opportunities
• MCPO 2. Industry key success factors (KSFs), competitive differentiators and advantage(s)
• MCPO 3. Financial performance indicators: including $ Sales, profits, profit margins, and returns. etc.
• MCPO 4. Customer and market performance indicators: including Unit and $ sales, margins and profits; market, segment and share growth
• MCPO 5. Customer segment and market exploitation and expansion
• MCPO 6. Assets, resources and people development, utilization and productivity
• MCPO 7. Stakeholder relationships, including corporate social responsibility (CSR), ethics and sustainability
Whether CSR, ethics and sustainability really are or can be “maximised” may be open to debate. The more fundamental question may be whether all of the other aims or indicators are considered in light of CSR, ethics and sustainability or whether these things are thought about only after maximising the other MCPOs.
Strategy and company analyses are in the light of these performance and positioning maximization items as analytical criteria.
Strategic situation analysis is facilitated by
• Identifying the actual past and present performance and positioning for each aim or indicator, e.g., What are the specific customer value opportunities that the company is pursuing? What are the specific sales revenues, profits, profit margins, returns, ratios, etc. for the company?
• Identifying what is happening in the environment and what the company is doing with its resources, and in its organization and operations, to deliver the performance and positioning that has been identified. (This is the basis for future analysis and planning where the questions will be “What can and should the company do more of and be better at?
• P. Drucker, “The Practice of Management”, 1954.
• R.S. Kaplan and D.P Norton, “Using the Balanced Scorecard as a Strategic Management System”, Harvard Business Review,(February, 1996).
• J.A. Pearce and R.B. Robinson, Strategic Management—Planning for Domestic and Global Competition, 13th Edition, New York NY: McGraw-Hill Irwin, 2013.
• Ohmae, K., The Mind of the Strategist—Business Planning for Competitive Advantage, McGraw-Hill Book Company, 1982; published Harmondsworth, England: Penguin Books Ltd., 1983.
• Porter, M.E., Competitive Strategy: Techniques for Analyzing Industries and Competitors, New York: The Free Press, 1980.
• Porter, M.E., Competitive Advantage: Creating and Sustaining Superior Performance, New York: The Free Press, 1985.
• Porter, M.E., “What is Strategy?” Harvard Business Review, (November-December 1996). Reprinted in H. Mintzberg, J. Lampel, J.B. Quinn and S. Ghoshal, The Strategy Process—Concepts, Contexts, Cases, Pearson Education, Inc., Upper Saddle River, NJ, 2003, pp. 16–22.
