Strategic Management Practice
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Table of Contents
What are the strategic issues facing the organization? .4
What goals should the organization be setting . .8
What actions would you recommend the organization to take? .12
What would be the key elements of a performance management system to develop the strategy? ..16
Conclusion . .20
This report seeks to analyze the strategic management practices at the Co-operative group .The report contains an assessment of the different strategic issues facing the company and it organizational goals .The report describes alternative strategies that could be adopted by the group and the impacts of such strategies .Elements of a performance management system are also aIDressed and their influence on the company .A conclusion is then included detailing the findings made in evaluation of Co-operative group strategic practices.
The Co-operative group is a mutual business company based in the UK which is owned by consumers .The group has clearly set out operational objectives and financial goals aimed at driving its success. Its operations comprises of 4,800 retail outlets and staff numbering to more than 106,000 and has reported annual turnover of over £13 billion. The company was established in 1863 and was formerly known as co-operative wholesale society the group has been rapidly expanding over the ears with a clear distinction between the product and services that it produces .the products produced by the group are; beds motors, electrical products, medicines, food and clothes. The services include; funeral homes and other related services, internet banking, insurance, legal services, property management and investment, financial services, banking, farming and travel packages.
The group has various subsidiaries in various industries .The Company has also undertaken some mergers in order to ensure that it is able to achieve its goals in the long term. The Company has aims that will make them a commercial business that meets customer demands while at the same time taking care of its employees and being a leader in ethical actions and decisions. Its core value and principles that underpin its operations are; self help solidarity, equity, democracy, equality and self responsibility.
What are the strategic issues facing the organization?
Strategy refers to the scope and direction taken by an organization over the long term in order to for it to capitalize the resources available in the market environment while also fulfilling its key stakeholder requirements. Strategic issues will refer to the various factors that can influence the organizational goals of Co-operative group. The strategic issues are referred as such due to their effect on the strategy of an organization (Grant, 2003).
Co-operative group strategy will be considered in three categories; corporate, business unit and operational. The following deliverables will therefore be used in analyzing the strategy of co-operative group; competitive advantage, environment, stakeholders, resources, market and the direction. The corporate strategy represents the purpose of the group and the scope of its operations aimed at fulfilling its shareholders expectations .According to its annual reports its corporate strategy is to build a better society through excellence both in profitability nature and other key goals(Hambrick and Fredrickson, 2001).
The business unit will describe the strategies that Co-operative group puts in place to ensure it is able to successfully compete in its various markets .The decisions includes the way it develops its products will reacting to the market pressure. Development of this strategy will help Co-operative group in exploiting the available opportunities in the market or creating new ones .This strategy helps the group in relating with its consumers by understanding their needs and providing them with goods that meet these needs . The operational strategy entails the way cooperative group implements its corporate and business unit strategy .It helps the organization in maintenance of a balance between these strategies to ensure efficiency .The strategy puts a key focus on the organizations normal operations like daily processes and use of resources and the management of it personnel .
In evaluation of the strategic issues of Co-operative group Dutton and Duncan (1987) four stages strategic issue diagnostic can be used .The stages involve are anticipation, awareness, interpretation and assessment .Anticipation refers to strategies that Co-operative group has put in place to ensure its is able to detect any arising issues in the organization .This has been enhanced by having a board comprising both the executive and non executive members who have the mandate of ensuring the organizations activities are running smoothly .These boards have developed committee responsible will evaluation of company risks and also evaluation of any opportunities available for the company too exploit .
Awareness refers the process put in place by the company to acknowledge the availability of issues in its strategies .Due to the group being geographically dispersed it is exposed to external factors that may affect its business operations. Interpretation refers to situations where dominant forces unite to support each other .This can be expressed by efforts by its Group Chief Executive visiting China and establishing a joint venture with local companies to ensure the company is able to exploit the available opportunities. Assessment involves the organization conducting feasibility analysis on strategic issues facing it (Hambrick and Fredrickson, 2001).
The strategic issues that affect Co-operative group can be categorized by analyzing internal and external circumstances affecting the organization. This will entail the evaluation of organization resources of the organization .These resources are; its intangible resources, intellectual resources, organizational culture, human capital and physical infrastructure. A systematic approach can be used to identify strategic issues in Co-operative group. The PESTEL model is ideal in this evaluation.
Political factors refers to those factors that will affect the strategy of the organization due political decisions made in different companies .In UK the government has recommended for an increase in the VAT by 20% .The decision will affect Co-operative group as its sales will decrease due to their consumers having less disposable income .The organization will the n be forced to develop new strategies to help them cope with this new move.
Economic factors refer to changes in inflation rates and interest rates besides other economic related policies .These changes may have an effect on the corporate business strategy of Co-operative group .Due to economic global crisis experienced the organization has been adversely affected as it has incurred losses resulted by high inflation figures. New strategies have then been developed to help the organization in surviving the harsh economic times (Grant, 2003).
Social factors refer to factors that affect the demographic in a particular are .This will involve Co-operative group developing a strategy that will mix all demographic variables to ensure they dont conflict. Consideration of social factors is important as the company depend on human capital for the implementation of its overall goals.
Technological factors represent the advancements made in the use of information technology .Co-operative group has incorporated information technology in its strategy as it helps the company achieving competitive advantage attributed to innovation of new products and services .
Environmental factors represents the strategies that co-operative group has put in place to ensure it conserves the environment. The company is a leading organization in tackling climatic change by ensuring its operations do not pollute the environment. The company has initiatives with local communities aimed at contributing a positive impact to the environment.
Legal factors refers to the factors that the organization ill face legal issues due to any of its strategies .In order to ensure that this does not happen the organization has a compliance department that ensures it complies to any laws and regulation in different market environments.
Organizational activities can also be used to express the strategic issues in a n organization .The use of the value chain developed by Porter (1985) could help in identifying strategic issues facing co-operative group. The structure is divided into supporting and primary activity .Primary activities are; inbound logistics, operations, outbound logistics, marketing and after sale service. Support services are firm infrastructure, human resource management, technology development and procurement.
The primary activities relate to conversion of raw materials to finished goods from which the organization sells to its consumers .Due to the various industries that the Co-operative group is involved in it has to incorporate various strategies of production to ensure quality goods are produced. Interaction of support activities is important for the organization to achieve its objectives .This is achieved by having policies that ensure effective harmony of the various support activities.
What goals should the organization be setting
Strategic goals express the achievements that an organization aims at making in the future. Organizations express their strategic goals through the following ways; mission, aims and objectives and their vision. Co-operative group should set up goals that will drive it to achieve success and growth during the future.
It should set goals that will be in alignment with its vision of building a better society through excellence .These goals will stress on the importance of Co-operative group making a profit as well as focusing on other important aspects of a successful organization .The goals must state the ways in which the organization will build a better society .
The organization should set organization goals that take into accounts its key fundamental cooperative values and principles .This will help the organization achieve business focus by having laid out values .Self-help goals describes the organizations commitment to members of the public by empowering them to help themselves .The organization has a goal of remaining democratic by giving its members a say in the running of the organization. The organization has an equality goal whereby its seeks to ensure all its members have one vote without taking into account their investment in the company (Hambrick and Fredrickson, 2001).
The organization pursues an equity goal that ensures it carries its business transactions in an unbiased and fair manner. This is represented by its business dealings and other professional contracts. The organization also ensures solidarity in goals through working with others in order to achieve valuable objectives. This can explained by the company entering into joint ventures with other companies to ensure it is able to provide products to its clients across various markets.
Co-operative group should form goals that align to its mission .This will help them set a clear path for the achievement of the mission statement in the future.
Co-operative group should set up goals with strategic intent. Through this the organization will be able develop a clear path for future success (Prahalad, 1989).The goals chosen by the organization should be suitable, acceptable by all stakeholders and feasible. The goals stated should help the group respond to changes in the market as well as stretching its available capabilities. A goal set wit strategic intent ensures that the organization incorporates commitment and effort to its staff (Grant, 2003).
Co-operative goal should develop a hierarchy of goals to ensure both the short term and long term obligations are met effectively. The goal hierarchy help the organization in fulfilling of it immediate plans as they stipulate the daily goals that the organization is expected to achieve thereby setting standards for efficient business operations. The company should set up a strategy where it has lower level goals which will then help in developing major goals to ensure a smooth transition in these goals.
In developing effecting goals fore Co-operative group, the following elements should be included in order for the organization to develop goals that are clear; purpose, strategy, behavior standards and values. The purpose describes the reasons behind forming the company while strategy describes its intended achievements. The behavior patterns describe the policies and the value chain of the organization. The values describe the beliefs of the organization. The goals should help the organization achieve beneficial attributes to its key stakeholders.
In the setting of goals the co-operative group should ensure the goals are aligned to the missions, visions and strategic intent of the organization .This will help in ensuring that the goals are achievable and realistic thereby giving the organization an idea of where it should be in the future. The organization can also pursue multiple goals whereby it has different stakeholders each with high power in the organization .This will be aimed at keeping the key stakeholders of the company happy and ensure they dont interrupt the normal business operations (Hambrick and Fredrickson, 2001).
Due to the fact that co-operative group has interests in different industries it can have different goals to cater for the different groups and interests .This will enable it to continually grow and expand across the globe .Each geographical market requires a different strategy in order for success to be achieved hence it is important for organization to tailor its goals to reflect its different unique needs (Grant, 2003).
The changing demands and competition in the market can control the goals of the organization. The group will be forced to develop goals that are able to reflect these changes and help in growing of the organization .Political and economic factors may also necessitate the company in developing goals able to reply to these changes .These goals will run concurrent with other organizational goals that are aimed at ensuring effectiveness and efficiency of its operations are achieved. Having multiple goals arises from both internal and external pressures (Jarzabkowski and Fenton, 2006).Co-operative group is faced by challenges of maximizing its profits against its goals to provide for the society. The internal pressures arise from stakeholders within the organization like key employees who have sufficient power while external pressure comes from governments in regions where the company operates and environmental lobbyists.
In considering whether the organization will consider different goals, different perspectives must be considered to ensure the organization makes the best decision in following different goals. Broad and narrow perspectives can be considered in making strategic goals. The broad perspective indicates inclusion of all stakeholders irrespective of their power and influence in the organization. This strategy seeks to consider their views and opinions informing of goals for the organizations .The narrow perspective considers only the key stakeholders of the organization and seeks to forms goals that meet their needs.
In making goals Co-operative groups must first identify its stakeholders. Mitchell (1997) states that the best way of identifying stakeholders is by assessing them with regards to the following three elements; power, urgency and legitimacy. Power refers to the influence help by a particular stakeholder and its impact to the operations of the organization. Those stakeholders who yield a lot of power should have their opinions considered in the development of organizational goals legitimacy is dependant on the social accepted standards. An organization has norms that enable it to associate itself with a particular behavior and culture and any goal set should conform to these norms. Legitimate goals should be readily accepted socials and should be proper in relation to the people who reside in areas where the organization has its business operations.
Stakeholder mapping is important in determining the level of interest and power possessed by the different stakeholders of the company. Through this mapping an organization is able to determine whose opinions to follow to ensure it continues to have their support in the normal business operations. Some stakeholders have great influence but do not have the power to alter Co-operative groups operations hence their involvement in developing strategic goals should be kept at a minimal level (OBrien and Dyson, 2007).
What actions would you recommend the organization to take?
Strategic actions refer to the decisions made by managers of organizations and the driving factors for making these decisions. Determinist and voluntarism theories help in explaining decisions made by managers. Voluntarism theory claims that managers make decisions based on their own free will .Determinism theory is based on the notion that before a manger makes a decision various factors have to be considered.
Strategic actions are based on the contextual factors of Co-operative group. This represents factors like is size, technology being used and the owners of the organization. Before managers make any decisions these factors have to be considered. The actions made by the organization must be aligned to the external prevailing conditions and its internal capabilities (Hambrick and Fredrickson, 2001).Managers of the group must actions that are considered to be related to a balance between these elements. Actions can be based on population ecology whereby the managers of Co-operative group will make decisions based on environmental processes that have been initiated in different localities of the organizations operations. Norms of the organization can determine the actions it makes.
Co-operative group should consider having a high level of determinism in the actions and have a low influence of voluntarism .This will ensure that the managers are able to make actions that are beneficial to the organization and do not compromise on values and objectives of the organization .It is therefore important to considerer strategic choice, environmental factors, and power setting up actions for the organization.
Actions should be made to reflect the deliberate processes of the organization .These processes refer actions that are taken by management after evaluation of its daily processes. The organization should take actions based results obtained from defining its strategic objectives .In defining its goals and objectives Co-operative group will then be able to take actions that assist in achievement of these goals . Strategic analysis should be undertaken by the organization to determine factors that are likely to influence strategies adopted by the organization. Undertaking the analysis help the organization in planning the actions it will take on it various issues (Grant, 2003).
Strategic choices will determine the actions implemented by an organization .This refer to the choices that will be available for the managers of the Co-operative group to make depending on alternatives available from a strategic analysis exercise. These alternatives will help in forming an opinion on the best action to be taken. The group should therefore undertake a strategic planning to ensure that it captures all factors involved in decision making. In carrying out this strategic planning Co-operative group will be able to make concrete decision as the data acquired with provide the proof needed. The organization can also exploit opportunities and investment strategies exposed during the analysis. The whole process helps the organization I improving its relations with various stakeholders as a strategic planning analysis undertakes information from all these groups (Hambrick and Fredrickson, 2001).
The strategic planning option will help the organization in communicate its intended strategies to the concerned individuals .The actions will help in the implementation and control of various organizational strategies ensuring that it is able to achieve its goals. This recommendation should help in control of the organizational operations. The strategic planning model has the following activities ; planning guidelines ,drafting of business plans ,discussion with corporate, revising business plans ,drawing up of operational budgets, developing a corporate plan, approval by the board of the organization, setting up of performance target and performance appraisal.
In carrying out a strategic planning Co-operative group will be able achieve some key roles in its growth. Langley (1988) describes the roles expected to be achieved from strategic planning as following; information role, control, public relation and group therapy. Information role helps in the collection, analyses and dissemination of information across the organization. This facilitates effective communication enabling Co-operative group achieve its goals. Control role helps the organization in ensuring that its intended strategies do not deviate from the laid out path .This is achieved through established control measures that seek to correct any deviation noted.
Strategic planning can also serve to help the organization to influence various stakeholders due to the corporate culture adopted. In conducting a strategic planning Co-operative group can be seen to be professional as the process will be interpreted by stakeholders as assign of it commitment to openness. Group therapy roles suggest the effect strategic planning process has on the senior team of the organization .This model can help senor employees of the Co-operative group to share their views and concerns about the organization. These concerns will then be aligned with the strategic goals of the organization. (Grant, 2003). Through this process multiple roles are then implemented helped in ensuring activities of the organization are effective and efficient. Undertaking strategic planning may be complex for the organization but the benefits achieved from the process will have a huge impact in its growth and success.
Strategic actions can also arise from emergent processes .In an organization some of the processes that are involved in development of its strategies are known as deliberate processes. Emergent processes comprise the other type of process involved in strategy development .These process referred to as emergent dont have the control of the managers of the organization. They are usually resulted by both internal and external forces .The level of uncertainty in the market brings about the emergent processes.
Social economic factors contribute to the formulation of strategies for organization .It is therefore important to evaluate the effects of both social and economic factors before developing a strategy Ansoff (1968) describe this external processes as institutional processes. A combination of these factors will be instrumental in evaluating the appropriate strategic action to be implemented by the organization. Value and norms attributed to a certain society in which Co-operative group operates in might influence its activities hence it is important to consider these elements and ensure the organization maintains its operations at desired levels which will not result into conflict with these societies.
Employees of companies are expected to portray legitimate behavior .This should be expressed in the strategies implemented by the organization .This are attached to the norms and code of ethics embeIDed in the different strategies. Employee freedom and autonomy influence decision making thereby impaction on the strategic actions developed by the management. The labor market in a country determines the success of an organization. The size the current educations levels determines the nature of employees will have as it might be forced to spend extra resources to re train its staff so that they are able to perform to the expected levels (Grant, 2003).
What would be a strategy statement that summarized those actions?
The Co-operative group develops actions that are consistent with the results of its strategic planning initiatives.
What would be the key elements of a performance management system to develop the strategy?
Performance management system refers to the use of system of measures that have been developed in performance measurement .These measures are then used in organizational strategies to develop the organization. Performance management systems are linked to financial elements (Neely, 2000).They provides the following benefits to organizations ;help in formulating, implementing and reviewing it strategy, ensure effective communication within the organization and serve a motivating role to employees.
In developing a successful performance measurement system the organization must ensure it captures all elements as the process may be time consuming and costly thus affecting normal operations of the organizations. The system should have three levels the individual, measurement and the fit level. These levels are further sub divided into different variable to ensure the system captures all relevant information. Individual level contains the following; the different performance measures, uses, costs involved and the benefits of the performance system. The measurement level contains the following; appropriate elements, measures to be taken, long and short term objectives, integration of elements and measures put in place to ensure elements do not conflict. This system is then developed and reviewed to ensure it is appropriate for the organization (Pun and White, 2005).
In developing an ideal strategy it should incorporate various performance management elements .Fitzgerald model can be used to determine the ideal elements that should be included in the performance management system. The elements to be included in the system are quality, flexibility, resource utilization and innovation. This elements will be evaluated by the financial performance and competitiveness resulted by the adoption of the strategies.
Strategies should incorporate various elements to ensure it fully benefits the organization. A balanced score card can be used to capture the elements necessary in a performance management system (Kaplan and Norton,1992) .The model revolves around four perspectives which would make the strategy effective .This perspectives are; customer ,internal, innovation and learning and financial perspective. The customer perspective is evaluated by an organization considering the views of its customers. Internal perspective determines the processes which the organization must excel in to achieve their goals .Innovation and learning perspectives seeks to determine the ways in which the organization can improve its processes in order to create value .The financial perspective determines how the results of the organization are viewed by the shareholders who are the primary stakeholders of the organization.
The financial perspective is characterized by the following measures; cash flow, market share and growth in sales .The customer perspectives are characterized by new products, customer responses and customer partnerships. Internal perspectives are characterized by technology capability, manufacturing excellence, introduction of new products and product design. Innovation and learning perspective is characterized by; time taken to market, product focus, and learning process in manufacturing and technology leadership.
Strategic initiative must be put in place to ensure the performance management system does not fail. The system developed helps in management of organizations activities. A lack of proper implementation of a strategy may affect the overall performance of the organization .performance management forms the basis for development of strategic initiatives and each initiative must be aimed ay aIDressing a particular perspective (Goold, and Campbell, 2002).
A good strategy must have goals that the organization aims to accomplish. These goals will drive the organizational operations .The strategy must be based on four key aspects; impact, pursuits, reflections and responses .These aspects will help harmonize the development of the strategy by ensuring that the performance management system is well balanced .In determining strategic issues the organizational environment both internally and externally must be evaluated .This evaluation helps in development of a clear understanding of what the organization aims at achieving thus helping in development of a strategy that caters for the organizational goals and objectives .
The organization should establish a goal system whereby it categories its different goals to ensure sufficient priority is given to the achievement of these goals. Strategic goals will therefore drive the organization towards achieving long-term success. Hierarchy of goals development helps the organization in determining which goals to stress on and the present goals which must be achieved to ensure the organization will be able to continue with its operations (Cummings and Doh, 2000).
When considering the strategy of an organization various features must be analyzed to ensure it is effective. These feature are; the complexity of performance management in respect to the goals and actions of the organization. This will include the organization considering the different issues that affect development of strategies and goals .Having a wider goal system helps the organization in distinguishing the various goals and their implications on the activities or the organization. Strategic action of the organization will be presented to form a larger part of the complete organizational strategic action plan. The relationship between the different elements results into the complexity of the development of strategic goals (Chia and Holt, 2006).
The people dimension is another key feature in the development of strategic goals (Whittington, 2003) powerful stakeholders in an organization has huge interests in the strategic goals developed .Organizational goals will therefore be a reflective of stakeholder opinions. For a strategy to be approved it must be accepted by relevant stakeholders as it will achieve their expected obligations. All stakeholders of the organization cannot have their nee