Human Resource and Reorganization, Essay Example

SWOT Analysis in Strategic Management

According to Jones (2000), strategic management as the process through which an organization formulates implements and evaluates decisions that will help the organization to achieve its long-term goals. The process involves tabling the organizations mission, vision and objectives after which policies and plans designed to achieve these objectives are developed and finally allocating resources to implement the policies and plans. Strategic management is a continuing process which evaluates and controls an organizations business, assesses its competitors and sets strategies to outcompete these competitors.

After setting these goals and strategies the strategic management groups then reassess each strategy to see  whether it was successfully implemented or whether it needs replacement to meet changes in technology ,a changed economic environment, new competitors, and changes in financial social and political environment (Miller and Dess 2004)

For the business to establish the progress its making in achieving its mission the have to do monitoring which involves evaluating the efficiency and efficacy of the process and making changes where necessary, monitoring the results and establishing control for variances (Franklin H, 1964). For successful implementation of its plans an organization should not leak the information to competitors and there must be consistency from every individual including the management.

Strategy Evaluation

SWOT analysis is tool for environmental monitoring that enables the business to evaluate both its internal abilities and capabilities as well as evaluate the external factors that might affect its performance. In conducting a SWOT analysis, one is able to figure the effectiveness of the strategy adopted. SWOT analysis, analyses the strengths, weaknesses opportunities and threats in the adopted model. This helps marketers to focus on key issues as well as assisting the strategic apex of the business to design the best responses to meet the market forces and ensure the business continuity is assured.

In SWOT analysis opportunities and threats represent external factors. Threats include things like price wars with competitors, an upcoming competitor in the same market and competitors with superior access to channels of distribution or even imposed taxation on your products. Opportunities could be mergers or strategic alliances, changing market segments to get more profit, a market vacated by incompetent competitor, an international market among others while strengths and weaknesses are internal factors; Strengths are aspects that add value to an organizations product or service .This could be quality processes, location of the business and specialist marketing expertise. A weakness on the other hand could be damaged reputation, lack of marketing expertise, and poor quality goods or services undifferentiated products in relation to competitors among others, (Saloner, G, Shepherd, A and  Podolny, J. 2001).

SWOT analysis generally involves analyzing both the external and the internal factors.

SWOT analysis

In doing a SWOT analysis the factors are grouped into internal and external factors, for the internal factors we look at the strengths and weaknesses while for the external factors we look at the opportunities and threats. The opportunities are mapped into our strengths to help us get the best attack strategies while the threats are addressed through ensuring that our weaknesses are managed to reduce our risk levels.

Example of SWOT analysis

Wal- Mart SWOT Analysis

Wal-Mart is the world’s largest grocery retailer and control of its empire .It has a reputation for value for money, wide range of products in one store hence its convenience however being the worlds largest grocery retail could be a weakness, due to the huge span of control.

Wal-Mart also faces competition threats both globally and locally. This is because of its superiority and hence it becomes the target of competition.

Wal-mart has opportunities because its capable of forming a merger with other global retailers and focusing on specific markets like greater China region and Europe.

How it helps understand strategic fit

Strategic fit being the adaptability of the corporate strategy to the macro- environment in which the company operates, is at the heart of setting up and manning profitable and successful operations by the companies. The success of the adopted strategy is evaluated by the performance of the company so in question. By analyzing effectively the forces existing in the market as outlined in the SWOT analysis.

In understanding the strengths of the corporation in as far as the market outlook is concerned the company can seek to further these strengths and ensure they have a stronghold of the market and can survive stiff competition. In understanding the weaknesses, the company is able to work at these weaknesses and strengthen their performance in the market. The opportunities are the market openings that the company seeks to identify and exploit to make profitable their operations. The threats are a major consideration for the company especially in the prevailing economic environment so worsened by the global economic crunch. The company therefore ought to put in place stringent risk management procedures to mitigate the effects of such threats. This helps the company ensure that its business can be sustained irrespective of the prevailing market forces. This model therefore gives the strategic plan being adopted by the company a multifaceted approach that helps it blend well with the market and is so doing achieve strategic fit.

The Ansoff model on the other hand seeks to provide an outline of the options available for a company to pursue. The models are generally shaped by the prevailing market conditions. A company whose products are completely new might seek to achieve market penetration while one that whose products are losing hold in the market might seek to use diversification to capture new markets and retain market relevance. A company seeking to attain diversification may do so by way of acquisitions, this includes acquiring new business interest as well as new products already developed by other companies. The strategy to be exploited by the company has to fit well with the companies standing in the market and the choice is informed by the existing market conditions and the effort to attain a strategic fit. For a company to fit into its market through development of proper strategy, then accurate forecasting of the market environment is necessary, (Eliot, Timmerman & Granger 2006).

Value chain analysis is the other model that is used in strategic management.  In the process of value chain analysis business activities are grouped into two groups namely

a) Primary activities that are closely concerned with the development and delivery of the products.

b) Support activities that are not involved with the product delivery but are involved in the ensuring efficiency and effectiveness of delivery of the target products.

Value chain analysis therefore involves determining what activities are best provided by the company itself and which ones are outsourced. The activities a company undertakes are aimed at increasing giving the company competitive advantage over the competitors in the market. In value chain analysis a three step approach is taken.

First the market or organization is broken down into key activities under each major heading of the mode. Secondly the potential for value addition through costs advantage or differentiation or activities of identity where they are seeking to gain competitive advantage. Indentify strategies that are built around sustaining competitive advantage. By sustaining the competitive advantage that an organization has, its able to ensure that it can sustain its business operations and in so doing ensure that its operations are profitable.

Through the analysis of the value chain the business is able to identify the advantages that can be gained through increasing the customer satisfaction and advantage that they gain from the company.

Culture and Change

The culture of a group is a pattern of shared basic assumptions that a group learns as it does work through internal integration as well as external adaptation. It stems from assumptions that have worked well and hence is considered valid and therefore ought to be taught to new members. (Schein 2004) The challenge that culture poses to strategic management is that aspects of change face stiff resistance from the deep rooted culture in the organization. The culture therefore becomes a hindrance to the strategic planning if it leads to resistance to change.

Normally organizational change is always resisted due to the culture formed and the fear of the unknown that comes with change in an organization.  As analysts argue that most efforts at change fail due to the poor reception that they receive from the target population. Lack of effective management poor leadership as well as lack of relevant training. Poor communication is a major impediment to proper and effective change management (Donkin  2004). The first step in appropriate strategic management is the setting up of appropriate plans to manage change in the process of carrying out the strategic plans. The effectiveness of these will also determine how well the strategic fit works in the organization.

 Conclusion.

Strategic management calls for a well structured approach that incorporates analysis, formulation and evaluation that keeps a good focus on the overall fit of the company to the eventual goal. The strategic fit in an organization is guided by the manner in which the organization plans its strategy. By putting in place good communication channels to establish rapport and create identity of to the strategy being adopted. This motivates the staff to support the change strategy that is being adopted by the company in an effort to support the strategy and growth of the organization.

Strategic fit is about employing the models and utilizing the opportunities they present carefully to derive all the possible advantages. The use of a properly structured plan for the effecting of change in such a strategic model is good in ensuring that any problems are anticipated and mitigating measures are taken to ease the impact of such problems.

Big multinationals have adopted risk management procedures to mange risk arising form there changes and the different corporate strategies that they adopt. An example is PricewaterhouseCoopers LLP which has a fully fledged risk management department that caters for any unforeseen occurrences in strategic management and specializes in handling any crisis that might occur in the process of implementing business strategies such as mergers, liquidation and other business recovery strategies.

References

Eliot, T, Granger, J & Timmerman, A 2006, Handbook of economic forecasting, Elsevier, Sydney.

CIPD- Change management, available  at http://www.cipd.co.uk/subjects/corpstrtgy/changemmt/chngmgmt.htm.

DONKIN, R 2004 Human resource and reorganization: Managing the change challenge. Change agenda, London, Chartered Institute of Personnel and Development, London:

Jones, R and Hill, C. Strategic management: An integrated approach, Houghton Mifflin Company, New York.

Miller, A and Dess, G 1996, Strategic management, Mcgraw Hill, London

Willey, B 2002, Companion to Economic forecasting, Oxford university press, Minnesota.

Kotter, J. P. & Schlesinger, L.A. (2008) Choosing strategies for change. Harvard Business Review. Vol 86, No.7/8. July/August. pp130,132-139.

Value chain analysis, available at. http://www.marketingteacher.com/Lessons/lesson_value_chain.htm

Saloner, G, Shepard, A and Podolny J 2001, Strategic management, John Willey, Washington.

Schein, E 2004, Organizational Culture and leadership, John Willey and sons, Washington.

Strategic management, available at http://www.quickmba.com/strategy/porter.shtml

Strategic Management: Ansoff Matrix. http://www.quickmba.com/strategy/matrix/ansoff/