Strategic Management of Business Operations

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Table of Contents

Introduction
Strategic management
Strategy making
Situation and competitive analysis
Organization’s challenges in the global market
Conclusion
References

Introduction

There has been stiff competition in the execution of business activities with each company implementing different and creative strategies to win over the market. The continuous advancement in technology has brought forth various new ways of handling various activities and issues in all field of business operations.

Technology has improved communication and transport which are among the many aspects having close relations to business growth and expansion. Easy transport and communication has enhanced by technology has made more and more transactions to be undertaken.

To ensure that the business survives the dynamic market forces in rendering its services to the customers and win more customers, there is need for proper strategic measures to be formulated and implemented. This essay seeks to analyze strategic management as implemented in the management of business operations so as to maintain good business performance and development despite the changes in market forces that may occur.

A specific example of Bay hotels will be used to make the discussion real in pinpointing out areas where attention will be required as the hotels tries to make their presence felt in the around the national and around the world.

Strategic management

The history of an organization is usually important in checking the progress over the years. This usually helps in one being able to know the challenges a company has undergone and the way the challenges were handled then. The past challenges and successes usually form a platform for formulating new strategies depending on the future prospects.

It also helps a company management to avoid repeating mistakes which committed in the past. For the case of Bay hotels, the past has witnessed an excellence performance. Bay hotels are located in Britain. There are eleven regions where Bay hotels are in England, three in Scotland and one in Wales. Some of the regions have up to four hotels making the total number of Bay hotels in Britain to be around 32.

The Bay hotels are located in some of the best resort regions in the UK making them have a unique attraction to visitors. According to the company website, “Every Bay hotel has its own unique character and because we were the first to offer accommodation in many areas, you can expect out hotels to enjoy prime locations with some of the best views around” (Bay, 2009, p. 1).

There are various strategy paradoxes that have different ways of approaching and solving problems. There are two main approaches to learning of strategies proposed by Abraham Maslow which are problem-driven and tool-driven (Meyer & Wit, 2005. p. 4).

In problem driven strategy, one usually takes an in-depth analysis of the problem after which he checks for the right way of going about it while in tool-driven strategy; one usually internalizes theories before checking on the problem.

In running of a business, the top management team is usually responsible for formulating and implementing new strategies to maintain continuous business growth. To do so, they have to take good analysis of the market forces so as to make sound decisions.

This involves developing strategic vision and mission statements, setting objectives, formulating strategies, implementing the strategies and then checking the performance of a company. The objectives set should be challenging but achievable to ensure good progress of a company.

The integration of all these activities usually yields good results. In the hotel industry it is usually very significant for the management to ensure that the company remains relevant in the eyes of the customers and potential customers.

The service industry is very competitive and it is therefore significant that strategic management at Bay hotels be a continuous process which is not undertaken to completion but rather improved perpetually.

In case the strategies are to be modified during the implementation, and then the management team should be dynamic to accommodate the changes. This management entails competitive moves that yield good returns and continuous development.

The management should run the business, improve sales and satisfy customers as well as strive to meet the set targets (Olsen, 2006, p. 239). Bay hotels management ought to be dynamic enough to accommodate emerging trends in the hotels and avoid risking lagging behind. This is especially significant if the hotels are to venture into the international markets where competition for international customers is even stiffer.

In putting the strategies to work, there are various questions that the management usually figures out. It should consider the current situation and of the company, where the company wants to be in future and the means they are to use to move it there (Cumming & Greiner, 2009, p. 167).

The implementation of strategies is not usually a smooth process. It may be affected by factors from within the company or others that are from outside. Some of these challenges posed can be sorted by the management while others need partnership with people outside the management.

If all the parties involved in the running of a business such as the employees are in line with the long term projections and are totally dedicated in their duties, then most of the internal challenges would be overcome with much ease.

In formulating a strategy, one usually considers new opportunities, geographic coverage, integration required, diversification and the management of the key functions. This process usually involves taking of risks, creativity and spotting of opportunities that are rewarding to the company in the long run (John & Ulwick, 2009, p. 119). The strategy should be maintained to completion according to the time frame stipulated.

The organization capability is usually fundamental in the implementation of the strategies. If the resources are available and there are no major distractions, then the strategies’ implementation can be achieved in the time span provided. The performance of the strategies should be evaluated so that any modification necessary is to be undertaken in time.

Strategy making

The strategy making starts from developing the vision and mission statements. It usually entails getting a clear understanding of the firm future prospects and communicating to others in an understandable and inspiring way. This usually attracts investors and other parties who play some important roles such as raising funds for the company for it to undertake.

All the stakeholders of the company should be taken into consideration as they play important roles in management and running of the company. Some of the stakeholders include customers, stockholders, creditors, debtors and employees (Gibbert, 2010, p. 1).

In making the strategy, the company management stipulates what the company wants to achieve in future and lays down the short-term and long-term investment plans. In making the plan, other competitors in the field are considered.

The strategies to be formulated and implemented are to improve the customers’ confidence in the company and the company’s reputation as well as put the company in a better place at the market so as to be able to withstand the dynamic market forces and thus have a better hand in selling (Wintzer, 2007, p. 4)

The strategies should also indicate what activities the company should not undertake. Such activities are mostly a hindrance to the growth and development of a company. The most appropriate technology should be used. These technologies usually reduce the overall cost in strategy making and also increases efficiency as time is well managed.

The customer is one of the most influential stakeholders in the company thus the varying customer needs should be evaluated in order to come up with a better way of handling and providing services so that all the customer groups are satisfied. This is because the company’s operations are either customer-driven or market driven.

The technology used usually brings specialization in which a person performs in a field in which he is more conversant with. This usually makes everyone involved to be well integrated in the strategy making and implementation process.

To ensure that the strategy formulated fits well in the business, the strategy should narrow down specifically to what the company intends to do. This usually minimizes confusion and ensures good coordination. To the contrary if business activities are diversified, then a broader perspective is usually good so as to accommodate all the fields.

There are various departments in a company. These departments should have strategies in line with others to avoid some departments lagging behind. The department’s contribution, role and direction which are necessary to the overall success are usually considered. Good communication improves coordination and sometimes may challenge or motivate one in his undertakings.

Since the market is influenced by external forces, international trade conditions should be considered and the signs of improving or declining market opportunities realized. The vision, mission and objectives usually give guidance in proper decision making.

Proper referencing platform for the performance are usually necessary. For example, if a company doesn’t have a specific future objective but is totally dedicated to carrying out its duties, then it usually does not achieve the best results as its resources could have yielded.

The short term strategic measures are very important as they act as a measure of the overall progress of the long term measures. This means that the two should be formulated in line with each other. They usually stipulate the time frame for the achievement of every objective. Thus, the stipulation of the time frame for the achievement of every objective should be provided.

The long- term measures usually consider the effects on the arguments passed in the running of the business in its future performance. This thus brings the necessity to critically analyze each strategy to be made on the company because a mistake could result to major consequences in the business operations.

The strategies usually take into account organization-wide objectives, product objectives, department objectives and individual objectives in the order given above. This shows that the formulation insists that all parties must be involved although at different levels.

The strategies do not only take into account what the business intends to do but also the current steps undertaken. The strategy making entails formulating means of reaching performance targets, outcompeting rivals, achieving competitive advantage, withstanding market forces, capturing emerging market opportunities and bringing the company vision to become a reality.

Thus, it is based on what actions the management is to undertake for good formulation. Because of continuous change in competition, customer needs and expectations, production costs, regulations, opportunities and threats, then the strategies should be dynamic to be able to handle these challenges.

The formulation of good strategies usually makes it possible to achieve the intended achievements as well as attain others which were not foreseen. This is the case for either a diversified firm or a single line company.

The formulation of the strategies is well done by well qualified personnel in the specified fields. The specialists usually avoid unnecessary errors that may arise and provide thorough investigations of the strategies to the best of the knowledge available (Grant, 2005, p. 29). In the case of a diversified firm, the strategy making process takes into consideration all the industries or business groups giving different approaches to each.

It should consider the diversification and look into ways in which the performance can be boosted and the investment projects that should be undertaken prior to others. The various strategies formulated are functional and operational. The functional strategies usually oversee the performance of the key activities and provide support in the business operations.

The operating strategies are useful in analyzing the performance of various operating levels. The strategic plan requires unification of the various strategies involved. The good thing, about it, is that these strategies usually reinforce each other to bring forth good results.

The choice of a specific strategy is affected by internal and external factors. The external factors includes society, politics, laws, industry attractiveness, opportunities and threats while internal factors include internal strengths and weaknesses, key executives influence, shares values and culture. These factors usually shape the strategy to be implemented.

Some laws and cultures may act as hindrance to the formulation of certain strategies. The responsibility the company has to the society due to the activities it undertakes has great influence in the company strategy making.

The company should have a good image and reputation in the eyes of the general public with the strategy being related to the competitive conditions. Good techniques should be used to handle the various risks and threats that may arise (Mathieson & Scinasi, 2000, p. 41). This ensures stability of the business incase challenges arise.

The making of the strategy should consider the firm’s strength, weaknesses and competitive capability. The company’s main competencies are usually important because they give the company an upper hand in taking the opportunities that arise (Drejer, 2002, p. 33). The strategies should assist the company in utilizing its strengths and taking corrective measures on its weaknesses.

Key executive business philosophies and approaches towards the weaknesses are crucial in success of a company. The strategies formulated should not conflict with the culture of the business. This helps in avoiding unnecessary collision of contradicting ideas which would affect the formulation and implementation of the strategies.

The strategy should be in line with the expectations of the stakeholders such as shareholder, employees, customers, suppliers and the community. The formulated strategy is efficient and good for the achievement of the company’s objectives if it is inline with the firm’s situation, provides the company with sustainable competitive advantage and boosts the overall company’s performance.

Situation and competitive analysis

There are various approaches to achieving better results in the market. The organization could use competitive approach to identify the competitive scope and functional strategies taking into account the success brought about by the current strategies. This usually helps to know whether to improve on the current strategies or choose a new strategy.

The well performing strategies are found to make a good use of the organization’s expertise, strengths, core competencies and the strong competitive capabilities available. This usually makes a company better placed to undertake its investment plans such as expansion of the enterprise and be able to cope with the fluctuation of market forces.

The situation analysis is very importance in analyzing the condition of a company, its rivals and the environment so as to know the best approach for the implementation of the strategies to win the market favor. The environment usually makes it possible for the company to identify the strategic options and opportunities available in the market.

The environment usually consists of the external factors considered in situation analysis while the company’s competitive position usually forms part of the internal factors. Strategic thinking and analysis are useful in situation analysis (Karami, 2007, p. 83). They usually help in realizing the strategic options available to the company and making an excellent choice of the one that fits the business well.

In analyzing the external environment, one usually tries to pinpoint the major economic traits such as: market size, entry barriers, technological advancement, customer characteristics, industry profitability and the capital requirement, drivers of changes, strong competitive positions, and rivals strategic moves among others in order to get the full information.

After getting analysis of these factors, then the company management is in a position to make the right choice of the strategies to be implemented.

Organization’s challenges in the global market

There are forces that are evident in a situation analysis. These forces include the availability of substitutes, buyers’ and suppliers’ bargaining power and the presence of potential new entrants. In the analysis of these forces, the management should find out the sources of these forces and their strengths.

Rivalry among companies is one of the most used and effective force which uses price, quality, customer service, product innovation, advertisement and dealer network as some of its weapons at the market. Rivalry usually arises in an industry when product demand is low and there are many firms in the industry who find it rather expensive to move to other fields of business (McDaniel et al., 2008, P. 38).

The presence of new entrants into which the management needs to venture usually increases the competition. They usually increases the production in the industry and thus to maintain the business in good performance, the management has to critically analyze the situation (Clarke, 2005, p. 175).

The barriers present in the entry of a new firm and the reactions from the firms already in operation usually determine how easy the new firm is able to venture into the market. The most common barriers to entry include economies of scale, insufficient technology, brand preferences, capital requirements, regulatory policies and international trade regulations.

In production of goods, the development of a company usually relies on the returns available. The production of small quantity of goods usually results in higher cost of production per unit (Pandey, 2002, p. 214). This usually requires a company to sell its products at a higher price so as to cover its costs and make some profit.

For the well established and big companies, since the production is high, the cost of production is usually shared and is generally low. This places them in a better place at the market to make large margins of profits.

Hence, if an organization wants to venture into the global market, then there should be a critical analysis of how the cost of production per unit item is to be kept as low as possible for it to be in an opposition to sustain the market pressures.

There are certain ventures at the global market that require specialized technology. Although there has been continuous advancement in the technology in all fields, the technology available to different parties is not the same. This may be due to some hindrances preventing full access to advanced technology. Geographic locations and the research undertaken usually leave some places and people lagging back in terms of technology.

In the venture of the operations of an organization in the global market, an organization should consider the technology required in operations and compare them to its current technology capacity. If the organization is in a capacity to get the specialized technology, then it is in a position to go ahead and undertake its operations in the global market.

On the other hand if the organization finds challenges in getting the specialized technology required, then the venture into global market may pose a challenge in its development because it will be likely to underperform as per the global standards.

Due to improved knowledge in the production process, the cumulative production of a product may result in decline in the production cost of a unit. This is usually as a result of familiarization to what is expected of a company. This is usually referred to as experience curve.

The experience curve, empirically verified in hundreds of studies, suggests that, as a firm accumulates experience in building a product, its cost in real dollars will decline at a predictable rate. When the experience curve applies, the first market entry attaining a large share will have a continuing cost advantage. (Aaker & McLoughlin 2010, p. 171)

The requirements for achievement of the experience curve are continuous improvement in management and equipments used in the execution of the operations. Thus, before an organization expands its business to the global market, the experience curve may be a hindrance or a way through for its success. Thus good analysis of the curve could help the organization in making the right choice of strategic management to be undertaken.

There are organizations that have been in the market for long period of time. The services and goods an organization has been offering have been well adopted by the customers (Teal & Reichheld, 2001, p. 3). For new organizations that want to venture into the same industry, they usually find it very difficult to win the market favor (Sengupta, 2005, p. 131).

A good example is the Coca-Cola Company which has been in the market for long supplying its customers with its soft beverages. The penetration of another beverage company into the same market is not an easy task as there are customers who are loyal and would not agree to shift to other products. There are other customers who are attached to specific brand.

The provision of a different brand usually fairs poorly in the market due to rejection. Thus before an organization ventures into operation in the global market, it should consider the extent to which the customers are loyal to the already existing organization taking into account the various brand preferences.

If the conditions are favorable, then the organization can venture but if the conditions are not good, then venturing into the global market is not a worthy investment.

The establishment of an organization so that it can serve a larger population usually requires a lot. More capital is required to undertake the project. The capital is used in establishing the new operational branches of the mother organization. There are many types of capital available to the organizations and they include equity capital, debt capital and specialty capital (Salai-i-Martin & Barro, 2004, p. 82).

Equity capital is the difference between assets and liabilities of a company. This form of capital is used to finance the operations and expansion of an organization for example Microsoft. Some organizations have debt capital which is mostly obtained by lending money especially to financial institutions such as banks.

These institutions usually invest the money and give it back to the lenders with some of the interest it has earned. Also the organization can borrow the money. Depending on the type of capital available to the organization, the expansion of the company to operate globally faces a challenge in raising the large amount of capital required. Thus the availability of capital is a major barrier to expansion

Every state has regulations that govern the operation of businesses. These regulations are usually meant to maintain sanity and order in various industries and they vary from one state to another. In order to carry out business internationally, there are regulations that promote business among various states.

The government of a give state could also regulate the number of businesses operating in a given field based on some reasons which may not be released to the public. Due to these factors, a company expanding its business to other locations may not be allowed to operate according to such regulations (Pakroo & Packroo, 2008, p. 111).

There are various types of regulations such as; market failures, social subordination, collective desires, irreversibility, interest group transfer and professional regulation.

Due to the changing of the environment and other factors affecting business operations, then the regulation have to be constantly changing according to the situations. Failure to adhere to the regulations set usually leads to legal actions such imprisonment and huge fines on the part of the offenders. Thus a business expansion to a given field may be hindered by the regulations set.

At the international scene, there are restrictions set to regulate the flow of goods to a given country (Bishop, 2009, p. 13). This usually gives access of the distribution channels to some limited number of organizations. These organizations usually enjoy large sales returns due to reduced competition. The restriction may be placed to ensure only goods that attain a given quality are allowed to be accessed by the public.

Such restrictions are meant to ensure that there is sanity and uniformity at the international market (Smelser & Swedberg, 2005, p. 173). Some the factors that affect business transacting across various states include the infrastructure established and the politics. Some organizations are found to win favour due to the political status of a region. In the case of political instability, the international trade is usually greatly affected.

For example, the political instability of Libya has its effect felt by every one across the globe by the rise in fuel costs and thus the involved companies have been affected. This clearly indicates that the international restrictions regulate international business which is also affected by other factors.

Despite all the challenges encountered, an organization should be able to identify the most rewarding factors. These factors are usually responsible for prediction of the profits or loss margins a company may encounter and to what extent the company will be successful at the market.

The most rewarding challenges usually include skills and competitive capability endowed to an organization. In identifying these factors, an organization should maximize on them so that it can be better placed at the market.

Conclusion

There are various paradoxes which vary in the approach given to a problem. The main aim of a business is to gain more returns so that it can be able to maintain its operations as well as expand. To achieve these objectives, the organization must undertake good formulation and implementation of strategies.

The implementation of the strategies is usually not a smooth process as there are many hindrances which are encountered. Business organizations should make wise considerations before venturing into new markets to avoid losses and failures.

References

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