Strategic Thinking Essay Examples
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How aspects of macro environment influence competitive structures of existing markets
The macro environment consists of main external factors that influence the decision-making processes of a business. Examples of macro environment aspects that affect the operation of the organization are demographics; economic factors; changes in technology; social, political, and legal forces; and natural forces. The macro environment has significant effects on the competitive structures of existing markets in different ways. Firstly, changes in technology have great influence on the competitive structure of existing markets because new technologies introduce advanced marketing strategies that lack in the already existing markets. For example, existing market structures take long to adapt to internet marketing strategies allowing new entrants into the market better chances of shining in the global market.
Secondly, social, political, and legal aspects have potential influence on a competitive structure of existing markets. The political regime, the political party system, and the type of government affect the competitive nature of the existing markets. New governments introduce new policies that affect existing market structures. According to Scott new political regimes heading current governments present broad policies influence the macroeconomic environment (2006). For example, the government may introduce policies changing monopolistic market structures into perfect competition leading to significant changes in the competitiveness of the existing organizations. Additionally, states have the capacity of introducing regulatory regimes that influence market structures, labor relations, and capital; hence affecting the competitive structure of existing markets.
Finally, changes in demographics have significant influence on competitive structures of existing markets. Demographic factors such as levels of income of consumers affect the competition of a market structure. The average income received by marginalized communities determines the types of goods and services that an organization could offer to the market. A shift in the geographical living of consumers creates a lot of impact on marketing. Movement of people from rural to urban centers leads to changes in people’s lifestyles and demands. A change in consumer demand and lifestyle leads to a significant shift in the competitive structure of the existing markets (Khan 2010).
ii) Identification of dominant management issues of strategic development in existing business
Existing business must use unique strategies in order to compete with the emerging businesses. Dominant management issues affect operations of existing businesses leading to a fall in competitive advantage and making emerging businesses opportunities to shine in the market environment. One of the major management issues of strategic development in existing business is adapting to changes. Existing businesses have problems adapting to changes and using innovations to increase their chances of winning the competitive advantage. The main factor delaying change adoption is the presence of old generations holding management positions. Former managers have problems using current and advance business strategies to compete in the market environment. Existing businesses ends up using old-fashioned strategies that have no place in the modern technologically advanced business world. Poor market adoption strategies affect the strategic development in existing organizations. Quick adoption of market changes increases the range of innovation diffusion, promotes technology adoption, and increases business returns (Sammut-Bonnici and Paroutis 2013).
The second dominant issue of strategic development in existing businesses is incorporation of effective business ethics. The major management issues in business ethics include conflicts of interests, honesty and the fairness, organization relationship and communication (Smit, & Morgan 1996). Top managements in existing businesses have a tendency of advancing personal interests instead of organizational interests. Additionally, lack of honesty and fairness in conducting business operations affects the overall outcome of the existing business. On the other hand, communication is a major management issue affecting both existing and emerging businesses. Poor communication strategies contribute to poor productivity and a reduction in the competitive advantage of existing businesses. Existing businesses lack modern communication models that help reach more customers and quickly like using social media in marketing.
Internal and external analysis
The SWOT, analysis model
Internal and external analysis of an organization helps in establishing the position of an organization in terms of competitors. The internal situational analysis focuses on major strengths and weaknesses of an organization. Establishing the organization’s strengths and weaknesses helps in accomplishing internal goals and provides an avenue for achieving external goals. On the other hand, external situational analysis focuses on opportunities and threats (Ingram 2015). The internal and external analysis of 759 Stores helps in identifying the current market situation of the organization and establishes the effect of internal competences on corporate logic. 759 Store is located in Hong Kong and majors in sale of snacks and groceries. The company adopts differentiation and low-cost strategy at ones in order to attract and retain customers.
Using the SWOT analysis model shown in figure 1, the current position of 759 Stores is not very appealing. The management should use strategies that would reduce weaknesses and threats. Analyzing the SWOT model, the company enjoys the benefits of having approximately 759 stores located in strategic places that include busy streets, major towns, and cities. The stores also import goods directly from Hong Kong eliminating middlemen and other suppliers capable of affecting the quality of products. On the other hand, the company has better chances of expanding into new markets globally by starting coffee shops or combining sale of products in a single unit. 759 Stores could improve its competitive advantage by operating 24 hours a day, importing goods from other countries to promote diversification, and taking advantage of currency. According to Hill & Jones (2013), fundamental ideas in internal and external analysis involve analyzing the organization’s environment, the country, and the competitive position. SWOT analysis is the most effective business model that helps in evaluation of internal and external factors in the organization.
The influence of choices of corporate logic internal competencies
Internal competencies form the basis of the firm’s competitive advantage. Proper use of internal resources and capabilities makes the company more competitive. Internal competencies have some effects and influence on corporate logic of the organization. 759 Stores has many resources that if utilized in a unique and strategic manner would help the company overcome major weaknesses and threats. The theory of competitive advantage identifies human resources, finance, marketing and technology as the main organization internal resources. Even if internal competencies increase the strength of firm’s competitiveness in the market, they are significantly affected and influenced by corporate logic. Corporate logic is custom rules used to exchange information between user interface and database in a firm. Every organization has business rules and policies governing different aspects of the business.
759 Stores has more than 500000 employees, which makes management more challenging. Communication logistics used in the company affect the overall delivery of information leading to misleading messages that affect the delivery of services by employees. Additionally, corporate logic issues such as poor database management influence communication within the organization. On the other hand, poor employee selection strategies affect the overall productivity of the organization. The organization needs to employ employees with technical skills and experience in the sale of snacks and groceries. Poor corporate logics like lack of a strong management team with strong leadership skills affects the overall management of the organization. An effective management team should understand organizational resources and internal competencies and how each contributes to the development of organizational strengths that promotes the competitive advantage (Duncan, Ginter, & Swayne 1998).
iii) Organizational competencies, stakeholders’ expectations and evolution of strategic thinking logic
The main organization competencies for 759 Stores are performance, culture, skills, and information. Figure 1 shows a representation of these competencies. The company focuses on improving its performance in to win the competitive advantage. The major performance measures for 759 Stores are production, profit levels, sales, and employees’ output. Skills help in ensuring the company creates more innovations in the area of technology. The company aims at employing competent employees with necessary skills in to promote innovation. Achieving the right competence is a challenging process for organizations and often requires an interactive process. For example, 759 Stores is more competitive because of their ability to promote a culture of innovation by establishing the best online-based shop for their customers. Access to quality information about the present marketing strategies would make the company prepare for future competition. Information is acquired through research and market surveys from clients.
Figure 1: 759 Stores’ competencies
Stakeholders have specific expectations from their particular organization. The primary 759 Stores stakeholder’s expectations are achieving the organizational competencies shown in figure 1. Stakeholders expect the group to come together and work as one community in to come up with unique brands. Organizations utilize interactive processes that determine how each section of the organization contributes to each goal by analyzing how the main challenges faced by each competence (Cullencoates 2008).
Strategic thinking logic
The success of the business in the current business environment depends on the ability of the company to place the environment and people at the core of corporate strategies (Ceres n.d). Organization management develops decision-making strategies that are logic and aims at achieving organizational competencies and meeting stakeholders’ expectations. At 759 Stores, strategic thinking logic focuses on organization’s strategic goals. The company achieves its strategic objectives by having each department come up with operating strategies describing how they intend to meet business expectations. Figure 2 shows the strategic thinking model used by 759 Stores. Organizational units interact in the process of thinking the best strategies to highlight in their respective goals leading to a united company.
NB: Each department determines strategies and programs that support the company’s core business competencies.
Figure 1: 759 Stores’ Strategic Thinking Model
Effects on the consideration of strategic choice 759 Stores in year 2010
External and internal factors create a lot of impact in the process of implementing strategic choices planned by the organization. To achieve a competitive advantage from emerging markets, 759 Stores Company optimizes her internal resources at the same time capturing external opportunities and avoiding threats. Many factors limit total implementation of planned strategies causing delays and eventually making the company trade with losses. The Corporate Report drafted in 2009 provided a five-year financial summary that saw the company achieves profits worth $500 million in the year 2013. Finding solutions to some of the macro environmental factors that affected the company’s existing market structure led to an increase in revenues by 60 percent in 2011/2012 financial year. Organization’s strategic choice recognizes key ways that internal strengths and external opportunities will interact with internal weaknesses and external threats in order to understand the external competitive environment brought about by macro-environmental factors. Strategic choices at the firm’s level reflect ideas of the firm management (Tietz 2013).
The main factors affecting strategic choice 759 Store in year 2010 include the firm infrastructure, technology adoption, procurement, and management issues. The company had not established a robust infrastructure because of internal factors such as poor management. The organizational structure, company’s mission and vision statements did not represent the main agendas of the company. The company ended up reconsidering her strategic choice in 2010. 759 Store’s major considerations included launching of new shops, acquiring products from external suppliers, and differentiation. The company collaborated with other countries such as Japan to import products at favorable prices. Additionally, the company established supply from bigger distributors and manufacturers in order to establish a stable supply of products to consumers. According to Li & Lai (2014), 759 Stores is one of the fastest growing local supermarket chains. The company has grown from managing small stores selling pre-packed products to large-sized stores selling different categories of food items.
759 Store Annual Report 2011/2012 reflects the corporate decision to adopt new technologies that adhere with the prevailing marketing environment. In order to achieve her financial forecast of $500 million by the year 2013, 759 Store adopted a policy of high turnover and introduced efficient online shopping environment that serves the general public. Adopting new technologies was a move to compete with new entrants to the snack and grocery market because of changes in market structures. Additionally, the firm’s management has developed a corporate cash flow projection for the next one year by considering the impact of internal and external factors. The cash and cash equivalent and banks overdrafts for the year 2012 were $17,947,000. The corporate strategic choice aimed at doubling the above value at the beginning of year 2013. The company achieved a value of 56,592,000 in 2013.
Finally, macro environmental factors affect consideration of strategic choice 759 Store in year of 2010 by enabling the firm to expand its stores. In 2010, the firm started with few retail shops located at main towns in Hong Kong. The company management has considered her strategic choice by opening more stores that led to the increase in revenues between 2011/2012 financial years. Additionally, the firm has combined its operations into a single business unit selling both products in one store.
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