Business Organization and the Myth of the Market Economy, Essay Example

Abstract

Regardless of the type and kind of business activity, organizations act in an environment, in which strategy, organizational structure, and appropriate planning form a cluster of critical success elements. Planning shapes the vision of the organization’s future. The concepts of supply and demand help organizations change their selling and purchasing approaches in short and long run. Marketing strategy and organizational structure can be used as the sources of sustained competitive advantage. All these elements are the essential and the integral components of sustainable and profitable business performance in organizations.

Introduction

Regardless of the type and kind of business activity, organizations act in an environment, in which strategy, organizational structure, and appropriate planning form a cluster of critical success elements. Planning shapes the vision of the organization’s future. The concepts of supply and demand help organizations change their selling and purchasing approaches in short and long run. Marketing strategy and organizational structure can be used as the sources of sustained competitive advantage. All these elements are the essential and the integral components of sustainable and profitable business performance in organizations.

The value of a business plan for an organization

Whenever an organization wants to expand the range of available resources or to attract additional investments, a well-developed business plan can readily become a reliable tool of business expansion. “A business plan can prepare you for the obstacles ahead and help ensure your success” (Mason & Stark, 2004). Certainly, this description of a business plan value is too general. To be more specific, the value of business plan is expressed through the business plan’s ability to prepare organizations to possible growth barriers and obstacles. A business plan also creates solutions and approaches, needed to overcome these barriers. A business plan is the key to successful and efficient allocation of limited organization’s resources; a well-developed business plan also shows that an organization can use and allocate these resources efficiently (Mason & Stark, 2004). In general terms, a business plan can turn out to be a matter of organizations’ competitive advantage, because efficient planning lays the foundation for the subsequent short- and more importantly, long-term organizational and business success.

The concepts of supply, demand, and organizational performance

The range of effective organizational tools is not limited to business plans. The quality of organizational performance is influenced by a variety of factors and concepts. Here, the economic concepts of supply and require special attention. These concepts can positively or negatively impact the quality of organizational performance. How effectively organizations manage to use these tools will also predetermine their organizational success in short- and long-term periods. From the viewpoint of demand, organizations have a chance to coordinate the price of their goods with the amount of the goods customers are ready to buy. The concept of demand is also linked to the concept of substitute goods. In other words, organizations, which can understand how prices of other goods influence demand, will be more likely to preserve their market position and to expand their market share in short, and later, in the long-run (Crum & Palmatier, 2003). In the same manner, the concept of demand is directly influenced by income; “if income increases, the demand for normal goods and services will also increase. Conversely, if income levels decrease, the demand for normal goods and services will decrease” (Crum & Palmatier, 2003). Organizations should be able to manage these income fluctuations in a way that benefits their sales and promotions. Finally, as customer tastes and expectations influence demand, organizations can use this information to improve the quality of their organizational performance. All these factors can change demand, and organizations must be able to predict and steer these changes toward better customer satisfaction and as a result, better organizational performance.

The concept of supply in organizations directly impacts the quality of supplies and resource allocation. The concept of supply works to help organizations define and use the most cost-effective resources. Effective organizations will always possess relevant information about the cost of resources, their availability, as well as the number of suppliers in the market (Crum & Palmatier, 2003). Organizations’ ability to determine an equilibrium price for their goods and services will also show their general effectiveness and competitiveness. The more flexible and knowledgeable organizations are in their supply and demand management, the more chances they have to stay afloat in the world of the growing business competition.

Marketing strategy and organizational structure: the sources of competitive advantage

The instruments organizations can use to improve the quality of their performance are different and many. Marketing strategy and organizational structure can be fairly regarded as the two sources of sustained competitive advantage in organizations. To begin with, “marketing strategy is the path through which marketing resources are matched suitably with the market opportunities and problems. It is the basic approach that the business unit will use to achieve its objectives, and it consists of broad decisions on target markets, target positioning, market mix, and marketing expenditure levels” (Urban & Star, 2001). Marketing strategy can provide organizations with sustained competitive advantage by helping them master the marketing environment. Marketing strategy is useful in a sense that it shapes organizations’ expectations about their competitors. This information and expectations are valuable competitive benefits. For example, an organization which has a well-developed marketing strategy is better equipped to evaluate possible entrance of substitute products – a competitive advantage, which other firms may not be able to match. However, using marketing strategy as the source of competitive advantage is impossible without adopting organizational structure to the strategic organization’s needs. It appears that organization’s capabilities are embedded into its structure (Lazonick, 1993). That means that marketing and other strategies in organizations are constrained by their structure. In many instances, it is organizational structure that determines the scope and effectiveness of a marketing strategy. Very often, organizational structure is defined as “principles that are believed to shorten the average search to solution of the problems of survival and profitability” (Lazonick, 1993). Thus, an effective, flexible, simple, and well-balanced organizational structure can become the source of sustained competitive advantage – something that will help organizations find the most appropriate and effective solution before their competitors do. An effective organizational structure should always be tied to organizational strategies. Only when strategic changes result in appropriate organizational changes will organizations remain competitive in short- and long-run.

Conclusion

Organizations operate in complex environments. They are influenced by a variety of factors and concepts. However, effective planning can help organizations overcome even the most complicated issues and obstacles. A well-developed business plan promotes efficient allocation of limited resources; supply and demand can improve organizational performance; organizational structure and marketing strategy can be the sources of competitive advantage. All these elements create a sense of organizational stability, flexibility, and effectiveness in short and long run.

References

Crum, C. & Palmatier, G.E. (2003). Supply and demand management: Process, principles, and collaboration. J Ross Publishing.

Lazonick, W. (1993). Business organization and the myth of the market economy. Cambridge University Press.

Mason, C. & Stark, M. (2004). What do investors look for in a business plan? International Small Business Journal, 22 (3): 227-248.

Urban, L. & Star, H.S. (2001). Advanced marketing strategy: Phenomena analysis and decisions. Prentice Hall.