Strategies in Action
Category : General Motors Case Studies, PESTEL Examples, Strategy Development Process, Strategy implementation and the winning formula
Part 1: BUSINESS STRATEGIES
Strategies are central to the achievement of sustainable development. These are the driving force of practically every organisation that are motivated to grow fast ahead of the competitors, grow in line with the industry or to simply catch-up and defend an existing status. Whether domestically or internationally, the orientation of these organisations is to expand, to reach and to penetrate into new market segments despite of all the hindrances that the market environment imposes. Organisations are also initiated by efforts to maximise profit and minimise risks through strategizing. There are four corporate strategies companies could identify themselves with – international, multinational, global and transnational strategies.
International Strategy at Microsoft
International strategies can be viewed as outcome of the interrelationship between industry characteristics, strategic flexibility and organizational capability (1999). International strategies are defined as the strategies organisations use if they have domestic market operation as their primary market and converge into offshore markets as accessories, options and alternatives. The strengths companies can draw from international strategies include the independence of the country market while providing local needs and services offshore, maximise and centralised operational scale, the limitations of the direct presence in overseas markets with respect to sales and marketing and build and develop interdependent networks worldwide (). The weaknesses of international strategies is that it involves modern factors of production, different types of international trade; international polices, regulations and laws compliance; the role by the governments and the role of risk in international strategy.
An effort to participate in the international market is the main goal of Microsoft Company that is why they choose to implement international strategies. Basically, Microsoft is committed to mergers and acquisitions as a way to expand globally and to reach new markets. Other effort includes a massive advertising of Microsoft products. To drive the international strategies, Microsoft developed and established a new group – Media/Entertainment & Technology Convergence Group – to consolidate the strategies for different services and for complying with industry standards. The group is responsible for ensuring the effective business relationships, technologies and polices to meet the consumer demand as well ().
Multinational Strategy at General Motors
The growth of multinational companies conforms to the expansion of industry across national boundaries. Multinational strategy is defined as the recognition of the domestic company of the importance of international markets and puts greater commitment into it. Multinational strategy takes into account the characteristics of the domestic market. The purpose of multinational strategies is to seek opportunites in nations and regions new to the firm. Multinational companies are always triggered by the organizations’ viability, flexibility and feasibility to respond with geographic distance differences, national loyalties and barriers (1985). The strong points of multinational strategies agree with the width of supply and distribution networks and the alliances between the competitors. However the weak points include the volatility of the movement of goods (customs), people (immigration), money (currency exchange), capital (regulation and taxation) and ideas (censorship and firewalls). There are also natural barriers to such movements and transportation, travel and communication would be too costly (2007).
The competitive threat of Japanese automobile invasion over the United States forced the General Motors (GM) to expand their markets and employ a multinational strategy. To protect the home market, GM followed an expansion strategy in penetrating the rest of the American market while going after several market segments offshore. They are protecting their luxury market but also allowing expansions on low-cost markets. In fact, GM is concentrating on key markets like China and the Asia-Pacific region through consistent product innovations ( 2007).
Global Strategy at Intel
The integration of globalisation of basically every industry directly underpins the emergence of global strategies. In the concept of mass customization, comparative advantage became the most important element of global strategies to gain a competitive advantage. Global strategy is defined as the effort to give emphasis to production efficiency instead of responsiveness to local markets and the exploitation of the economies of scale. The strengths of global strategies reflect the efficiency, strategic, learning and reputation aspects of a firm. Efficiency is explained by the economies of scale achieved from access to customers and markets, exploitation of another country’s resources, extension of product life cycle and the operational flexibility. However, global strategies have diversity microeconomic and diversity operational risks. The diversity in macroeconomic depicts the business cycles that are not perfectly correlated among countries and the diversity in operations refer to labour problems, necessary compliances and natural phenomenon (Global Strategic Management).
In reality, Intel is already expanding innovations globally from the introduction of personal computer microprocessors chips to laptop and desktop computers chips and the implementation of global strategies are additional efforts for the company. Being the market leader in the chip industry, Intel’s global strategy was dubbed as “Intel Everywhere”. From what the tag suggests Intel aimed at putting Intel products in every home on earth. Their focus is on the supply chain strategy that could strengthen the production schedule. What came to be known as the microprocessor chip provider penetrated in the low-end servers market and merchandisers in effort to expand farther (2004).
Transnational Strategy at DuPont
Transnational strategies refer to the adaptation of environmental situations while achieving flexibility through capitalizing on knowledge and communication. As a management approach, the strengths of transnational strategy are manifested in the integration of overseas components into the overall corporate structure across several dimensions and the empowerment of each component as sources of specialized innovation. Other attributes of transnational strategies is the organizational integration of global business activities through close-collaboration and interdependence between its headquarters, operations and international subsidiaries and the use of suitable global information technologies (1998). Conversely, transnational strategies exhibit pressure on local responsiveness, inevitable conflicts on decision-making and value-added mechanisms due to differentiated contributions and divergence on standardized and knowledge generation and distribution.
DuPont is widely known for its transnational strategies. The company had continued their transnational expansions through strategic acquisitions of local companies and investing in warehousing and logistics center in addition to its seven domestic facilities ( 2001). The main goal of the company is transnational expansion through increasing the revenues from non-petroleum products. The company emphasises the role of cross-functional teams, engineering departments and the designs for manufacturing and the environment. DuPont is also engage in franchising and joint ventures and strategies on flexibility of competitive pricing as part of their transnational strategy ( 2007).
Part 2: STRATEGIC MANAGEMENT
The elements of strategic management in DuPont Company
The role of strategic management incorporates the corporal understanding of the application of strategic positioning, the power of strategic choices and putting such strategies into practice. Such strategies are inherent for the companies which are diverting their attention from a domestic marketplace into the international scene.
I. Strategic Position
Strategic positioning illustrates the implications of strategies on the external environment, the strategic capability of the organisations and the corporate expectations (2002). According to the Chemical Market Associates, Inc., DuPont is generally considered as one of the most diversified companies in chemical industry. The DuPont family holdings were more extensive and more valuable compared to its rivals. DuPont owned strategic positions in more than 70 countries worldwide. Their strategic positioning conforms to ‘going where the growth is’, ‘put Science to work’ and ‘capitalize on the power of one DuPont’.
The environmental factors are comprised of several differing influences and trends that are considered to be the layers around an organisation. The primary environment of any organisation is its macro-environment or where the organisation belongs in the industry. The PESTEL analysis is the most comprehensive method of assessing the environment of any organisation. PESTEL includes the political, economic, social, technological, environmental and legal influences and provides the organisation with a framework of variety of forces that could affect their operation. The results of this analysis could effectively lead to transforming such forces into strategies that are beneficial for the organisation. Another method to evaluate the environment of the organisation is through the five forces framework. This framework, which was developed by Michael Porter, put emphasis on sources of competition internal and external to the organisation by means of barriers to entry, suppliers’ and buyers’ power, threats of substitute and extent of competitive rivalry. The dynamicity of the two techniques of environment evaluation conforms to understanding the competitiveness of the organisation and the critical success factors that could be derived from these environment evaluations.
The sources of competitive advantage for DuPont refer to its internal work processes, the core technology, strategic alliances and corporate capability. Throughout history, the politics of DuPont reveals the hazardous effect of its chemical residue on the environment. Activists named DuPont as one of the worst polluters and one of the most monopolistic companies in the world and in America, respectively. The company’s economics deal is organized into five business platforms and the operational structure focuses on the board and the role of the workforce. The social performance dealt with working closely with stakeholders and recognizing their attributes. The collective reputation of the business is evidence by its ‘right to operate’ within society in general. A culture of innovation (technology) is always in existence within the company accompanied by efforts to maximize benefits and minimize risks. The commitment of the company directly points to safety, health and environmental (SHE) commitments through policy- and systems-compliance (legal) to manage the upstream and downstream performance.
2) Strategic capability
Strategic capability concerns the adequacy and suitability of resources and competences as the requirements of survival and growth. To wit, competitive advantage could be only achieved one the organisation learned to develop strategic capabilities that are appreciated by its customers in a manner that competitors are finding difficulties to imitate. The most basic process of acquiring knowledge on organisation’s strategic capabilities is through a comprehensive review of the strengths, weaknesses, opportunities and threats (SWOT).These are tangible and intangible elements inherent to the organisation that enables the continuous improvement or the ability to continually develop strategic capabilities. In fact, the analysis of value chain and value network could be a basis to understand the importance of creating and developing customer value. Value-adding activities may include activity mapping and benchmarking. Benchmarking is the process of listing down best practices regarding performance – physically and financially – and productivity.
DuPont Company envisions itself as the world’s most dynamic science company that creates sustainable solution that facilitates a healthier living. Science and innovation is the primary competitive advantage of the company in all its products, technologies and businesses. The company draws strengths from the dynamicity of science as it strengthens polymer, chemistry, physics and engineering. In addition, the company had recently converged in biotechnology research in agriculture, bio-based materials and nanoscale science and an ongoing research and development on pipelines as well. In terms of its operation, employees are expected to leverage market access, scientific capabilities, customer relationships and functional competencies. Geographic markets and product markets are of highest priority in DuPont. The company believed that collaboration, productivity and quality improvements are the by-products of the company’s capability in creating value-added opportunites.
3) Expectations and Purposes
The corporate expectation and motivation or what is commonly known as corporate governance attentively considers all the stakeholders of the company as they influence the expectations of the company itself. Corporate governance had become conflict-lade and problematic in the recent years due to two main reasons as control and ownership and accountability. Aside from influencing expectations and managing such, corporate strategic positioning also deals with corporate cultures and ethics as they can put pressure on which strategy the company will follow. Corporate culture refers to the general values, beliefs, behaviours and assumptions. The broad essence of corporate ethics deals with the process to overcome individual dilemmas and its relation to the immediate community where it operates. Put simply, corporate culture is the backbone of the organisation and corporate ethics is the conscience of the organisation. This element is applicable for both internal and external spheres of a company that could be illustrated by different value-creation activities either in low-cost positioning or product differentiation. Moreover, managing expectations involves the upward or downward movement of the company in the experience curve. Learning effects and economies of scale are examples of experience curve indicators ( 2002).
DuPont aimed at organizing people of all backgrounds that can contribute and achieve their full potential to facilitate organizational and individual excellence. The corporate governance ensures that the workforce is adequate to answer the needs of the employees. Practices in human resourcing, in particular, underpin a culture of non-discrimination and respect. DuPont’s philosophy is dedicated at improving the quality of life and enhancing the vitality of their internal and external communities. The body of corporate governance exercise power accordingly and is comprised on a multi-cultural group of global leaders. In fact, seventeen of the highest ranking officials 24% are women and of people of color. In this way, the diverse perspectives in global and local could create higher value solutions in more productive and less capital-intensive ways and experiences could lead to the transformation of the company as a whole.
II. Strategic Choices
Strategic choices provide an array wherein the companies could decide what approaches, directions, or methods use in achieving business-level and corporate-level objectives. Expansions purport a greater profit for the company through business and corporate-levels strategies towards cost leadership, differentiation and competitive advantage. DuPont is engage in strategic direction by means of the global business portfolio.
1) Business-level strategies
Business-level strategies hone an environment of better competition. The development of these strategies necessitates distinguishing different strategic business units. This can be carried-out through different strategies as ‘no frills’ differentiation, hybrid and focused differentiation. To sustain the basis of competitive advantage, it is essential for every organisation to safeguard their position in the market and emerge as the market leader. This is difficult to achieve specially in hypercompetitive conditions. The underpinning to succeed in hypercompetitive markets conforms to speed, flexibility, innovation and the willingness to accept and implement change from the business-level. Though strategies of collaboration may only distort the effective practices within the company, the strategic thinking must always focus on countering or pre-empting competitors.
DuPont recognizes that their employee workforce differs from region to region. However, the employee population is honed to meet the business needs of the company that reflects in the global customer base. DuPont, in exchange, build on creating, promoting and supporting an inclusive culture that attracts and retains both employees and customers. The business-level strategies manifest governance structure and management systems that put emphasis on its mission and core values. Their mission is to create shareholder value and societal value and their core values are the SHE commitment, highest ethical behaviour and respect for people. The governance has an active responsibility on corporate policies. Business-level strategies are as follows: internal recruitment of board members; linking executive compensation with organization’s financial and non-financial goals; policies on audit; an open bulletin for shareholders for suggestions and recommendations; management of direct impact of operations; and employee programs integration and work/life balance.
2) Corporate-level and international
To further enhance the company’s position in the international market, some companies are employing different strategies at corporate and international levels. These are the business units that could be the drivers of the decisions of the corporate parent. The basis for decision-making is the product itself and the international scope and the process on how the company attempts at improving or adding values that are created by the business units. In adding or creating value, parent companies can utilise the framework of portfolio manager, synergy manager or the parental developer. The connectedness of strategic capabilities from a corporate and an international perspective purports related and unrelated diversification. A reasonable assumption is that performance could be jeopardized if the organisation focuses too much on diversification.
DuPont businesses are strategically aligned by market growth platforms via increasing speed and effectiveness to meet the customer needs. Strategic alliances in different countries made available the products and services offer on electronic and communication technologies, performance materials, coating and color technologies, safety and protection and agriculture and nutrition. DuPont has joint ventures and acquisitions in Korea, China, United States, United Kingdom, Japan, California and Belgium. The wide array of products and services include clad laminates, circuit fabrication materials, ethylene copolymers manufacturing, nylon filaments, resin manufacturing, powder coatings, flouroadditives, crop protection and etc. DuPont also has 129 worldwide subsidiaries and affiliate companies.
3) Development direction and methods
The success or failure of different strategies must conform to the following criteria: suitability, acceptability and feasibility. Suitability is the rationale of the strategy, acceptability deals with expected return, risks and reactions of stakeholders and feasibility is the probability of delivering strategies. Such criteria manifests that competitive strategies ought to be compatible with methods and direction of development. Development direction is categorised into protect and build, product development, market development and diversification. In addition, there are three classifications for method development as internal development, mergers and acquisitions and strategic alliances.
Basic development processes in DuPont include new products in agriculture and nutrition, productivity improvements, growth in security applications, tapping market opportunities and penetrating the emerging and expanding markets. Evidently, the direction of DuPont moves from internal to external, from domestic to wide-reaching, offshore and from home country to host country. In meeting the growing global demand, DuPont employs specific methods such as increasing global farming productivity, strengthening polymers and packaging, shaping the fabric of security and driving new initiatives forward through introductions of latest safety innovations.
III. Strategy into Action
The companies’ effort to ensure that strategies are functioning is acknowledged as translating strategy into action.
Organising conforms to the configuration of the organisation. These are the structures, processes and relationships within. The success of the organising effort is measure in terms of effective ways to respond to key challenges. The structural type of organisation refers to functions, divisions and matrices. Processes refer to the input and output activities or the direct or indirect. Relationships are characterised by two main issues as centralisation as opposed to devolution and strategy style. The value of organisational configuration deals with reinforcing cycles and achieving cohesion in organisation configuration deals with commonalities.
The structure of the board is comprised of 11 subordinates from the chairman and 6 committees as strategic direction, environmental policy, audit, compensation, corporate governance and science and technology. They are guided by the business ethics policy and conduct guide. There are also senior leaders, business unit leaders, regional and country leaders and selected function vice presidents. The leadership’s role mainly focuses on driving growth and sustainability thus it requires a close contact with different committees and units.
Enabling sprung from the two-way relationship of resource management and strategic success. Resource management refers to formal and informal systems and procedures that enable transfer of knowledge and information. Moreover, finance or the budget is central for every transaction and activities within and outside the organisation. Base on this notion, it is important for every organisation to deliver financial value to shareholders and owners. Another factor for enabling is the development of technology. The idea is to use, abuse and exploit technologies at hand and extract limitations and then draw strengths from those limitations. In lieu with this, organisations shall be obliged to integrate resources and competences across resource areas.
Communication is the key for DuPont leaders and employees. Semiannual meetings are held during winter and summer. Such assemblies provide an opportunity to address issues and opportunites through development of closer relationships with peers, networks with external community and discussing topics of interest for the company and the teams. Regular interactions between assignment managers, program directors, unit managers and peer groups. The interfaces facilitate working in businesses that ensures quality assignments for subordinates, finding right rotations and scheduling and career assignments and informal coaching and mentoring.
3) Managing change
To manage changes, the scope and the nature of change must be clarified and understood by everybody in the organisation to facilitate the identification of necessary approach or action to be taken in managing such changes. Other considerations are the resources and skills or the evaluation of capacity, capability and readiness of the organisation to implement changes. Since the change process requires different, it is crucial that the organisation has the important key people as strategic leaders, middle managers and outsiders. Though the company may also employ turnaround strategies, management leveraging will be necessary. Leveraging efforts include surfacing and questioning, routines and symbols, political processes, communication and other tactics.
In becoming model for safety and operational excellence DuPont is always faced with transitioning efforts. Change management is a challenge since the structure involves many subordinates and stakeholders. When faced with changes, the company first introduces or reintroduces their philosophy in ways that it demonstrates value for people both in their daily lives and the organization as a whole. Changes are then carefully monitored through quarterly employee reviews to facilitate a continual and demonstrated reinforcement of such principles. All managers begin to use values as a guide in undertaking day-to-day activities.
IV. Strategy Development Processes
There are two strategic processes as the intended and emergent strategies. Intended strategies are the planned and deliberated strategies by managers and emergent strategies are the strategies that are developing in less deliberate ways. Intended strategy is the outcome of strategy workshops, project groups, strategy consultants and imposition of strategies by external stakeholders. On the other hand, emergent strategy stems from logical incrementalism, resource allocation, organisational culture and political activities. Basically, most of the process of strategy development passes through the planning system.
Strategy development involves the continuous reports on what must be developed, why and how. Annual monitoring and evaluation and reviews are proofs of these reports. Aside from financial findings, DuPont also includes information and reviews on governance and management, economic performance, environmental performance and social performance. Reports include description of major divisions, operating companies, subsidiaries and joint ventures; and significant changes in size and structure, significant changes in measurement methods and significant changes on internal policies.
Part 3: CONCLUSIONS AND RECOMMENDATIONS
The four strategies discussed herein are intertwining concepts of corporal strategies. What is common among the four strategies are: 1) to expand market reach; 2) to explore new market segments; 3) strategically position products and services towards establishment of brand and image; 4) innovations; 5) continuous support on interdependence; 6) providing quality needs, services and products; 7) adding value to the brand or image and 8) formation of worldwide networks. Likewise, the challenges faced by theses fours strategies are: 1) pressures on local responsiveness; 2) geographic and legal compliances; 3) entrants, trades and tariff barriers; 4) localization/customization and/or standardization of products and services and 5) considerations on decision-making and control structures.
The implications of strategic positioning emphasize the knowledge on the internal and external factors that influences strategic decisions. Capabilities and expectations of the organisation are thoroughly examined to facilitate strategic choices. Strategic choices empowers organisations en route for the attainment of sound strategies that are embedded on separate yet connected business-level and corporate-level strategies. Strategic choices take into account the direction that drives the company and the methods used by the company. Putting a strategic choice into practice ensures a proper structuring, enabling and managing of changes.
Prior to converging into the idea of penetrating the foreign markets, the organisations must first seek to psyche the capability and the availability of the facilities and resources. Growth and changes are costly, conflict-leaden and possess risks that may lead to either success or failure for the company. Corporate strategies start with internal evaluation followed by estimation. There are so many avenues to choose from; thus, companies must strategically plan ahead. Strategic planning is situational analysis of what the current performance of the organisation is and how the organisation could pursue a global strategy. Remember, pursuing a corporate strategy involves not only the top management but the whole organisational hierarchy.
Aside from strategic planning, DuPont could converge into a closed-loop decision-making that maximizes the employee involvement. This can be done through forming quality circles that will serve as watchdogs and facilitators of employee engagement from the lowest to highest level of hierarchy. A diverse culture also inhibits the communication and in effect sacrifices the personal interaction. This process could produce conflict and in addressing them the company could follow the contingency theory wherein practices could be reconsider and restructured and only appropriate processes and systems will be left.
The third option for DuPont is the evaluation of the internal environment through the MOST framework where M is the mission, O is the objective, S is the strategy and T is the tactic. Importantly, the international market environment is continuously changing and so the company must not settle in employing a single strategy or model. DuPont should also consistently assess the organisation’s fundamentals. Supposing that the company is faced on conflicts in the business and the international levels, the company cannot employ the same strategy in settling grievances. From this example, mission, objectives, strategies and tactics must be customised to the needs of every business unit.
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