Strategic Analysis Paper 1. Strategic Analysis Paper. Josh Murphy. MGMT585 Strategic Management. April 28, Dr.

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1 Strategic Analysis Paper 1 Strategic Analysis Paper Josh Murphy MGMT585 Strategic Management April 28, 2013 Dr. Michael Corriere Southwestern College Professional Studies

2 Strategic Analysis Paper 2 Strategic Analysis Paper There are many factors that make a company successful including understanding what motivates employees. Often times, people ask, how do I motivate my employees? A successful company also has a great leader. But how does one become a great leader? Both of these questions have been asked by countless individuals in an attempt to better educate themselves on the skills or training required to become a high-quality leader in a leader- follower relationship. Throughout time, people have looked to leaders for guidance and direction. As far back as time is recorded, stories have been told of leaders and how they influenced their people. From Rustam, a great hero and leader from Persian mythology to Gilgamesh, the great Sumerian savior of his people to the Biblical character Moses who saved the Children of Israel from the Egyptians, leaders are a vital part of the history of mankind. Over the course of time, man s understanding of leadership has evolved just as people continue to evolve. Of course, motivated employees and great leadership alone do not build a company. A successful company is comprised of many things including competitive advantage and corporate social responsibility. A company with a competitive advantage in the marketplace that knows how to utilize that advantage to the fullest potential will be more successful than a company that does not have anything competitive to offer or a company that cannot draw consumers to their products. Additionally, today s society is becoming more focused on corporate social responsibility, including going green and giving back to the environment, and believes that organizations need to do what they can to give back to society and show that they have people s best interests in mind.

3 Strategic Analysis Paper 3 Company C s Competitive Strategy Profits that more than cover the cost of capital are known as economic rents; economic rents are earned when an industry has not settled down to have equilibrium or when your firm has something valuable that your competitors don t have (Brealey, Meyers, & Allen, 2011, p. 273). Some competitive advantages are long lived such as patents, proprietary technology, reputation (i.e., respected brand names), economies of scale that customers cannot match, protected markets that competitors cannot enter (i.e., most cities only have one electric company provider), strategic assets that competitors cannot duplicate. The generic competitive strategy from Thompson, Peteraf, Gamble and Strickland s (2012) text that best suits the decisions Company C has been making up to this point in the business strategy simulation is the best-cost strategy. A best-cost strategy gives customers more value for the money by offering upscale product attributes at a lower cost than rivals (Thompson, Peteraf, Gamble & Strickland III, 2012). So far in the simulation, Company C s focus has been on providing the best cost in the industry while still trying to maintain good credit rating, image rating, and investor expectations. Additionally, Company C is focused on dominating markets with their quality products. Based on the amount of time (or lack of time) between decision round entries, it would be difficult to implement an entirely new strategy at this point in the simulation and still expect to have the results that have been seen in past decision rounds. As of year 14 in the business strategy game simulation, Company C had the best average S/Q Rating between the Internet segment and the wholesale segment in all regions ("Business strategy game," 2013). The International Footwear Federation, a well respected consumer

4 Strategic Analysis Paper 4 group, rates the styling and quality of the footwear of all competitors and assigns a stylingquality or S/Q rating of 0 to 10 stars to each company s branded footwear offerings (Business strategy game, 2013). Having a high S/Q rating is a good thing for Company C because it means that Company C is on track to be the leader in quality. Company C s Diversification Jick and Peiperl (2011) suggest that organizations often change in response to a problem, even if the problem is not life threatening. Being able to adapt is very important in today s constantly evolving world. According to Hersey, Blanchard, & Johnson (2008), situational leadership states that there is no one best way to influence people. The leadership style that should be used depends on the performance readiness level of the individual or group being influenced as effective leaders adapt their leader behavior to meet the needs of their followers. It is essential for leaders to determine the appropriate style of leadership necessary by determining if task or relationship is necessary. Company C is willing to make changes as often as possible in order to stay competitive. Between year 14 and year 15 of the simulation, Company C noticed that there was capacity available for purchase in Europe-Africa. Because Company C did not already have a plant in this region, it was determined that the purchase of capacity and subsequently a new plant in Europe-Africa, while initially expensive, would save the company money in the long term because of the savings in tariffs and exchange rates. Company C s Competitive Strategy Improvement Plan Company C is focused on improving itself in the future. Thus far, from years 10 thru 14, Company C has managed to maintain a relatively high rating between all four companies

5 Strategic Analysis Paper 5 competing the business strategy game simulation. Company C would like to strive to become the top ranked company competing in the industry. This is obviously not something that will happen by simply changing one aspect; Company C is going to have to make a few strategic moves in order to become the top ranked company in the industry. Jick and Peiperl (2011) suggest that having honest communication can be a vital tool for overcoming the challenge of change and allowing the internal organization to be more personally invested. Communication also allows members of the organization to feel at ease with change. The members of Company C are planning to communicate more frequently in order to ensure that everyone understands what is happening and to ensure that everyone is in agreement about decisions. One area to be improved that will address the issue of investor expectations for Company C is to insure that company shareholders are happy. Issuing securities or stock is a common way that corporations can use to finance new projects, acquisitions, equipment, etc. Many new companies use an IPO (initial public offering) to draw in stockholders to help finance their operations. Because the company does not typically retain any of it s own stock during the IPO, many investors are interested in IPOs, as they want to ensure they are involved in what could become the next trend. Of course, later offerings may not be greeted with the same enthusiasm as IPOs, as stockholders may be concerned that a company is experiencing financial difficulties and the need to raise funds is a sign of trouble to come. There are several steps a company must follow in order to have an IPO. The first step is to file a Form S-1 with the U.S. Securities and Exchange Commission (SEC) that includes basic business and financial records. A group of investment bankers are then chosen to act as

6 Strategic Analysis Paper 6 underwriters, who help in raising capital from investors (Bergmann). The company must then choose a public stock exchange (such as the NASDAQ or NYSE) in which to list it s stock for sale. The company must then begin making presentations (with their underwriters) to investors in major cities, seeking large buyers for large amounts of shares. Assuming the SEC approves the filing, the company and its underwriters must set the opening price and number of shares that will be sold. When the company goes public, the investment capital is transferred to the company and investors get their shares; the next day, they begin selling those shares on the public market (Bergmann). Many investment bankers argue that underpricing stock for an IPO is in the best interest of the issuing firm. They say that a low offering price on an IPO raises the price when it is subsequently traded in the market and enhances the firm s ability to raise further capital (Brealey, Meyers, & Allen, 2011, p. 373). The Gold Star Award is something that Company C would like to work towards achieving. While it may not be possible at this point in the simulation to win this award from the company that currently holds it, Company C does realize that corporate social responsibility is an important part of running a successful company. Corporate social responsibility does not have a one-size-fits-all definition, which may be advantageous to global corporations in that they are able to tailor their CSR plans to particular societies, cultures, and regional needs. Lindgreen, Swaen, and Johnston (2008) see it as absolutely necessary that organizations define their roles in society and apply social, ethical, legal, and responsible standards to their business (p. 303) which captures the essence of CSR. It is more than applying standards, however, because of the deleterious nature of interactions between large corporations and people in a given society.

7 Strategic Analysis Paper 7 Conclusion Organizations often spend large amounts of money on advertising and marketing themselves so that they can attract people to their organization and promote their image. Company C is going to continue to do these things to help their image. Additionally, having a strong strategic plan on how to improve on competitive advantages will allow Company C to not only maintain their current ratings, but to increase their ratings and hopefully become the top ranked team in the industry. Change happens every day and being able to react in a positive way and with great communication will often prevent discomfort typically associated with change.

8 Strategic Analysis Paper 8 References Bergmann, A. (n.d.). How does an ipo work?. Retrieved from Brealey, R. A., Myers, S. C., & Allen, F. (2011). Principles of corporate finance. (10th ed.). New York, NY: McGraw-Hill/Irwin. Business strategy game simulation. (2013). Retrieved from Hersey, P., Blanchard, K., & Johnson, D. (2008). Management of organizational behavior leading human resources. (9 ed., pp ). Upper Saddle River: Pearson Prentice Hall. Jick, T. D., & Peiperl, M. A., (2011). Managing Change: Cases and Concepts (3rd ed.). Columbus, OH: McGraw Hill. Lindgreen, A., Swaen, V., & Wesley, J. J. (2009). Corporate social responsibility: An empirical investigation of U.S. organizations. Journal of Business Ethics, 85, Thompson, A. A., Peteraf, M. A., Gamble, J. E., & Strickland, A. J. (2012). Crafting and executing strategy: Concepts and readings (18th ed.). New York, NY: McGraw- Hill/Irwin.