Strategic Management: The Importance Nowadays

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Table of Contents

Introduction
Preparing for an Economic Crisis
Conclusion
References

Introduction

The world is becoming smaller and smaller everyday, or so the song goes. But in the words of Cray & Mallory (1998), we are in a “larger and smaller world”.

Technology and the internet, computer link-ups, transportation faster than the speed of sound – all these make our world smaller. Global village and digital age are metaphorically interchanged to mean our activities are being done by the push of a button through digital technology. We communicate and conduct business with the rest of the world as if the world is just a small room or a building.

But our world has expanded because of the many challenges that await us in the changing world of business. Cray and Mallory (1998) state:

New developments and organizations have produced the integration of the European Union (EU), the North American Free Trade Agreement (NAFTA), the conclusion of the Uruguay round of the General Agreement on Tariffs and Trade (GATT) and the subsequent establishment of the World Trade Organization (WTO), and the entry into the world economic marketplace of the former Soviet Union and its client states have provided emerging opportunities for the expansion of international operations.

Every now and then, we hear of merging and acquisitions, or big organizations still wanting to become bigger and bigger, as if the word big has no limit.

However, this does not answer our quest of becoming competitive. In order for our company to be competitive, we have to inject in our business the effective rules of management and study and follow role models or success stories in business. Businesses and organizations still depend on strategies and tools for success.

Templar (2005) says, “The good manager is managing change, the process, strategy, progress and balance.”

Role Models in Management

Employees have to be encouraged and given resources to do their job and manage themselves. We should let them oversee their processes and set their strategy. But the Templar says, “We should not manage them.”

It means we must allow them to be free, because in letting them free, they think and become creative. If we dictate what they have to do, chances are, they become like robots, and they don’t care if our business is successful or not. We have to let our employees be responsible for their actions, or allow them to be managers themselves.

Let’s take the case of Southwest Airlines. Southwest Airlines is a genuine American success story. Like Southwest Airlines, we have “to motivate our people crazy about the company they work for, make them extremely enthusiastic about what they do, being intensely involved, even obsessed about providing legendary customer service, making them fanatically committed to a cause.” (Freiberg & Freiberg 1998, p. 3)

At Southwest Airlines, the employees are well motivated into making their own decisions and doing things which are not the ordinary. They hug, kiss, cry, or do comical things, which make customers laugh and enjoy while they are flying.

Kevin and Jackie Freiberg (1998) say of Southwest Airlines: “The company has been praised for its leadership and customer service in over a dozen business bestsellers. Management gurus like Tom Peters bring their clients to observe Southwest because they are intrigued with this wacky airline’s way of doing business.” (p. 4).

From 1990 to 1994, the airline industry was losing but Southwest was profitable each during the period, and was the only airline to earn a profit every year since 1973. The airline also maintains a considerable amount of debt and uses internally generated funds, making it not to worry too much about outside debts.

Motivating employees

Managing a business or organization must be motivated in high spirits. As the French philosopher Denis Diderot said, “Only passions, great passions, can elevate the soul to great things.” This is true with managing and leading people. Motivating people and making them in high spirits can be done at the same time.

By following examples of some great managers and leaders, we can have more creative and innovative employees: for example Daryl R. Conner, who is cited in Firth (2002). Conner is the “undisputed guru of the change management movement”, consultant of such giants as Mobil Oil, JC Penney, Pepsi-Cola, and Levi-Strauss, to name a few. Conner’s stance is that what sets winners apart from others is “human resilience” and that the basic characteristics of resilient people are that they:

“Display a sense of security and self-assurance that is based on their view of life as complex but filled with opportunity (positive).
Have a clear vision of what they want to achieve (focused).
Demonstrate a special pliability when responding to uncertainty (flexible).
Develop structured approaches to managing ambiguity (organized).
Engage change rather than defend against it (proactive).” (Firth 2002, p. 74)

We can make our organization more competitive by avoiding trendy management programs, like what Southwest is doing. They also avoid formal documented strategic planning. This means by just letting the managers and employees be creative in the process of delivering services to the customers, our business can become competitive and “attractive” to the public.

“If you treat employees as if they make a difference to the company, they will make a difference to the company… At the heart of this unique business model is a simple idea: satisfied employees create satisfied customers.” (www.sas.com, quoted in Firth 2002, p. 63)

Other businesses like Ernst & Young value their employees so much they forget their customers, because the philosophy is that by valuing your employees, you value the customers. Other companies also follow this principle: value your employees more than your customers. To put it in another way: put more importance more to the needs of your employees.

“The reality is that, in our business, hours are sometimes late and workweeks are at times long, putting pressure on personal and family lives … Our challenge is to keep solid contributors on board, provide the career platform they want, and foster the life they and their families need.” (Ernst & Young website, quoted in Firth 2002, p. 66)

By giving importance to our employees, we can produce a creative and competent force.

Let’s take the case of another successful company, the Toyota Motors Corporation. Toyota, in its early beginning in Japan, was a small automaker competing with giants businesses. Its success as a small business venture can be attributed to innovative measures introduced by its early founders and managers. It introduced the “Toyota Production System” which was a means of achieving mass production efficiencies with small production volumes. This was a method of applying continual improvement in their production. (Lynch (2008, p. 772)

We can also immolate this kind of management strategy – continuous improvement in the workplace so that our products will be competitive and attractive to customers. Employee resistance will not be a problem for as long as we value our employees. Another strategy of Toyota management is the way they value their employees. Toyota is not fond of firing employees even in times of crisis. Employees also rise from the ranks; supervisors are sourced from the low-rank employees, but they act as mentors and not as bosses.

Ten ways to create a revolution in our company

We should know what we want out of life.
We should know what matters to us.
We should wear what suits us, and not wear masks.
Talk to people.
Give up something you must need at work.
Trust everyone you meet.
Undergo a group experience.
Rewrite your business plan to align all of the above with your customers.
Draw a line on the office floor and invite everyone to a brave new world.
Share everything you do with everyone that crosses that line. (Firth, 2002, p. 94)

Preparing for an Economic Crisis

Maintain close coordination and tie-ups with allied business or organizations: In case of an economic downturn when we have to lower down cost of production, we have to maintain continuous tie-up with our allied companies or businesses who have been giving us support. We should maintain computer links or communication through the internet with our suppliers. Our product quality depends on the reliability of our suppliers.
Maintain a strong and dedicated workforce: If we have to downsize, as much as possible maintain a strong and dedicated workforce. We should not leave our employees behind or fire them because of the economic crisis. By having a good preparation for an economic downturn, we can maintain this workforce, and in turn, they become loyal to us.
Maintain a considerable amount of debt and we have to use internally generated funds, so we won’t worry too much of paying debts, especially in times of crisis.

Conclusion

We are living in a global village becoming smaller because of digital technology, but which is, to the managers and organizations, expanding dramatically because of integrations. This is a big challenge to our organization. We are already linked up to the world and our suppliers and allied businesses and organizations. But we have to be prepared for any eventuality.

In particular, we have to institute measures with the onset of the global economic crisis. The three scenarios above are our strongest measures and recommendations to make our company survive, and our people more resilient in these troubled times.

Moreover, our workforce should remain resilient, motivated, and all ready for any crisis that should come along the way.

References

Cray, D. & Mallory, G. (1998). Making Sense of Managing Culture. London: International Thomson Business Press.

Firth, D. (2002). Life and Work Express. United Kingdom: Capstone Publishing.

Freiberg, K. & Freiberg, J. (1998). Nuts! Southwest Airlines’ Crazy Recipe for Business and Personal Success. New York: Broadway Books.

Lynch, R., 2008. Global Automotive Vehicle – Strategy in a Mature Market and Toyota: What is its Strategy for World Leadership. In Strategic Management, 5th edition (Financial Times/ Prentice Hall), pp. 767-775.

Templar, R. (2005). The Rules of Management. Great Britain: Pearson Educated Limited.

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