Strategy

INTRODUCTION

Johnson, Scholes and Whittington (2005, p. 9) define strategy as the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations. Strategy is therefore the long term direction of an organisation. Strategic Management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organisation to achieve its objectives (David 1999, p. ). Strategic management therefore focuses on the activities of the organisation that contribute to the achievement of organisational success. These activities include management, marketing, financial management, operations management, research and development, and information systems. The strategic position of the VSM will be analysed by applying the analytical models of strategic management to the current situation in the company.

The following models will be used to analyse both the internal and external environment of the company, namely, PESTEL, Five Forces Model, and the SWOT analysis The examination of the strategic position of VSM will involve analysing the strategy of the company with emphasis on the environment it operates in, its strategic capabilities, and how expectations affect organisational purposes and strategies. The analysis will conclude with a clear statement of the Key Issues and Critical Success factors. The strategic position of VSM will then be used as a base to develop an appropriate competitive strategy for the company.

The development of the strategy will also take into account the organisational cultural issues prevailing in the company.

COMPANY OVERVIEW

The VSM (Viking Sewing Machines) Group AB engages in the development, production, marketing, and sale of household sewing machines and related accessories, and software. The VSM Group currently has two brands, namely, Husqvarna Viking and Pfaff. The company produces several lines of sewing machines, the top being the Designer series and the lowest being the mechanical (non-computerised) Huskystars.

The company has manufacturing facilities in Sweden and the Czech Republic and produces top-of-the-line household sewing machines with related accessories and software. Each brand has its own unique and separate product line. According to BusinessWeek (VSM Group AB: Private Company Information, [internet]) the company was founded in 1689 and is headquartered in Huskvarna, Sweden. It has offices in many countries including Austria, Australia, Belgium, Canada, Denmark, France, Finland, Germany, Great Britain, Italy, Japan, Norway, Russia, Switzerland, the Czech Republic, Holland, and the United States of America.

As of February 2006 the company was acquired by Singer Sewing Company (BusinessWeek, 2008. VSM Group AB: Private Company Information, [internet]).

STRATEGIC POSITION OF THE VSM GROUP

The strategic position is concerned with the impact on strategy of the external environment, an organisation’s strategic capability (resources and competences) and the expectations and influence of stakeholders (Johnson et al 2005, p. 17).

The strategic position of VSM Group will be examined by utilising the following factors, namely, the influence/impact of macro-environmental issues to the strategy, understanding the company’s strategic capability and how this strengthens the company’s competitive advantage, and thirdly how expectations shape organisational purposes and strategies. The impact of the macro-environment will be analysed using the PESTEL framework, Porter’s Five Forces Model, SWOT analysis and the competitive nature of VSM Group’s home base of Sweden.

PESTEL identifies six main types of environmental influences, namely, political, economic, social, technological, environmental and legal. Each influence will be discussed hereunder.

PESTEL

Political variables

• Political stability in Sweden and the United States.
• The prevalence of foreign trade regulations in the USA.

Economic variables

• Decline in demand for sewing machines in past two decades.
• Decline in industry profitability.
• Low sales in respect of Pfaff within three years of acquisition.
• High production costs in the German Pfaff plant.
• Investment by Juki and other industry players into the US market.

Socio-cultural factors

• Not using a consultant for the strategic planning weekend meeting made the strategy process unstructured and was a shift from the company’s way of doing things.
• Encouraging participation in the strategy process by middle management through a series of seminars.
• The adoption of the strategy document changed workers’ attitudes. The strategy document served as a guide on operational matters. The mission statement was frequently promoted in the company’s public relations.
• Focus shift from technical features to customer satisfaction.

Technological variables

• Extended support for business development to encourage retailers to carry the Husqvarna Viking product line exclusively.
• Cooperation with Jo-Ann Fabrics & Crafts, a large retailer of fabrics with over a thousand stores throughout the USA, setting up small sewing machine outlets inside their fabric stores. This lead to the introduction of ‘after-market’ services such as training in sewing techniques, software for embroidery construction and ready-made embroidery patterns, spare parts and auxiliary sewing equipment. These after-market services are run by retailers.
• Customers were willing to pay as much as five to six thousand dollars on a three day course with a sewing expert.
• A new accounting system was installed in May 1999.
• The marketing and the technical development department also moved into the same office building in January 2000. This ensures that the two departments operate in sync from conception of product ideas to production and ultimately, the marketing of the product.
• Introduction of the Designer I model of sewing machine in 1999. The model made use of software to control the machine and contained no less than eight motors to cater for all functions.
• Customers could download upgrades from the internet site, save it onto the floppy disk that comes with the Designer I package and slide it into the built-in disk drive. This method of upgrading performance was new for sewing machines.
• The acquisition of Embroidery Networks Ltd (Emnet) in March 1999. Emnet produced software for PC-controlled professional sewing. With the advent of the internet people could exchange embroidery patterns through the internet or download them at the VSM website. VSM also expanded the number of software engineers from 3 to 17.

Environmental variables

• Manufacture of environmentally friendly sewing machines.
• Manufacture of machines which do not consume much electricity.

Legal variables

• Quality machines which are safe to use.
• Flexible labour legislation in Sweden and the USA.
• The mission statement pronouncement on the provision of growth opportunities for employees.

Five Forces Model

Porter identifies five basic forces that can act on the organisation, namely,

1. the bargaining power of suppliers,
2. the bargaining power of buyers,
3. the threat of potential new entrants,
4. the threat of substitutes
5. the extent of competitive rivalry.

The objective of the analysis is to investigate how VSM Group needs to form its strategy in order to develop opportunities in its environment and protect itself against competition and other threats. The bargaining power of suppliers The VSM Group restructured its operations when Pfaff in Germany and the Zetina plant in Czech Republic were taken over. Parts were now obtained from local suppliers and those from the Far East. This resulted in the reduction of costs by 50 per cent on key machine components concurrent with large improvements in quality and rejection rates. In this respect the suppliers’ bargaining power can be said to low.

The bargaining power of buyers Buyers of VSM Group sewing machines have low bargaining power because the buyers are not concentrated in one geographical area. VSM is an international company and has a wide customer base. The products from VSM are greatly differentiated and therefore cannot be regarded as the same as those from other industry players. The threat of VSM Group buyers switching to other manufacturers is low. The threat of potential new entrants The ease with which new companies can enter the sewing and embroidery industries will increase the intensity of competitiveness among industry companies.

High unit costs of production may present barriers to entry because they mean that any new entrant has to come in on a large scale in order to achieve the low cost levels of those already present in the industry. The current high technological advancements and innovation levels in VSM Group, strong customer loyalty to VSM Group, strong brand name, large initial capital requirements, government regulatory frameworks in Sweden and the USA, and superior products create barriers to entry for potential new entrants. The threat of substitutes

The threat posed by substitute products by other manufacturers can be countered by continuous investment in technology and ‘after-market’ services by the VSM Group. The extent of competitive rivalry The sewing machine and embroidery industries are more competitive than other industries. The intensity of rivalry in the industry has increased with the coming into the industry of major manufacturing companies from the Far East. The decline in the demand for sewing machines and price cutting by VSM Group also increased rivalry among industry players. The differences in company strategies, origins (Europe and Far East) and culture (European and

Japanese) increases rivalry as well. As rivalry among competing firms intensifies, industry profits decline, in some cases to the point where an industry becomes inherently unattractive (David 1999, p. 128). This statement manifests itself in the number of major manufacturers (Singer and Pfaff) who are going bankrupt.

The following four decisive elements are identified:

• Availability of strengths in certain fields especially the automation and technological fields. The technological advancements made by the VSM Group in its Swedish operation since the beginning of the millennium gives it a competitive advantage over its rivals and enable it to compete internationally.
• High demand in the Sweden for VSM Group sewing machines provides the basis upon which the characteristics of the advantage of the company are shaped and leads to global dominance of the industry by VSM.
• Related and supporting industries in the Swedish economy, the presence of Bernina Fritz Gegauf AG means that the two companies benefit from each other. Bernina enjoyed a solid reputation and their product range resembled that of VSM with their top model accepting embroidery files developed for other brands including VSM. All these factors made Bernina an important quality benchmark for VSM.
• Domestic rivalry with Bernina and the need by both companies to search for competitive advantage helped to provide the two companies with bases for achieving such advantage on a global scale.

Foundations of strategic capability

According to Johnson et al (2005, p. 17) strategic capability can be defined as the adequacy and suitability of the resources and competences of an organisation for it to survive and prosper. The strategic capability of a company refers to the resources that the organisation has and the way in which these resources are used. Resources and competences VSM’s resources can be considered under the following four broad categories:

• Physical resources – manufacturing plants in Sweden, USA and the Czech Republic.
• Financial resources – operating cash, budgets.
• Human resources – average number of employees (1,689).
• The intangible resources will refer to the skills and knowledge that the employees possess.
• Intellectual capital – the brand name VSM Group AB, business systems and customer databases.

Threshold capabilities Threshold capabilities are those essential for the organisation to be able to compete in a given market (Johnson et al 2005). VSM’s threshold resources refer to: internet based developments, the acquired software company Emnet, increased number of engineers, and Pfaff. Unique resources and core competences The design of the VSM sewing machines make them unique resources in hat they give the company competitive advantage and other manufacturers find it difficult to imitate or copy the designs. VSM’s core competences refer to: the ‘Dealer-Partners’ programme, the cooperation with Jo-Ann Fabrics & Crafts, and the accompanying introduction of the ‘after-market’ services. All these strategies give VSM a competitive advantage. 3. 6. Organisational culture analysis Johnson et al (2005, p. 47) define culture as the basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously and define in a basic taken-for-granted fashion an organisation’s view of itself and its environment.

Every organisation has a culture and it includes values, beliefs, rites, language, metaphors, symbols and rituals. Culture derives from VSM’s past, present, current people, technology and physical resources, aims, objectives and values of those who work in the organisation. These cultural products can be used by strategists at VSM to influence and direct strategy formulation, implementation, and evaluation activities. The following cultural factors specific to VSM have been identified:

• The strategy process was changed to include, for the first time, both top and middle management. The involvement of middle managers had a positive effect on operations in that the strategy document was referred to as a guide on operational matters and the mission statement was frequently promoted in VSM’s public relations exercises. The strategy document was also regarded as an ongoing process which could be changed in response to changing situations in the company.
• Retailers were transformed into ‘Dealer-Partners’ which included extended business support to retailers to encourage them to deal only with the Husqvarna Viking product line. In the USA, VSM entered into a cooperation agreement with Jo-Ann Fabrics & Crafts to set up small sewing machine outlets inside their fabric stores. This lead to the introduction of ‘after-market’ services such as training in sewing techniques, software for embroidery construction and ready-made embroidery patterns, spare parts and auxiliary sewing equipment. These after-market services are run by retailers. Customers were willing to pay as much as five to six thousand dollars on a three day course with a sewing expert. In support of the company’s strategy the top management of the company was changed to accommodate the managers of the national sales companies as well as the marketing vice president.
• The operating systems also underwent major changes. A new accounting system was installed in May 1999 to assess accounting information in new ways to keep track of the various activities in the value chain.
• The acquisition of Pfaff upset some employees and pleased others. The company now had two brands which were competing for the same market.

Former competitors were now brought to the same stable and the company faced a challenge of how to keep them apart on other dimensions than price and quality. • The relocation of the German Karlsruhe operation to the Swedish Huskvarna plant resulted in only a handful of research and development engineers staying on. The company had to re-orientate the German engineers into the Swedish way of doing things since the engineering principles of the two countries were fundamentally different.

FORMULATION OF COMPETITIVE STRATEGY

Long-term objectives represent the results expected from pursuing certain strategies (David 1999, p. 76). Strategies represent the actions to be taken to accomplish long-term objectives (David 1999, p. 176). Objectives take the generalities of the mission statement and turn them into more specific commitments: usually this will cover what is to be done and when the objective is to be completed (Lynch 2003, p. 440). Objectives will therefore possess the following characteristics, namely, they should be measurable, realistic, understandable to all, hierarchical, achievable, and should contain time frames. Clearly communicated objectives, according to David (1999, p. 77), are vital to the success of the company as they provide a basis for consistent decision making by company managers and help stakeholders understand their role in the company. Formulating the competitive strategy for the VSM Group will consist of aligning the internal resources and skills and the external opportunities and risks.

Consolidation

Consolidation is where organisations protect and strengthen their position in their current markets with current products (Johnson et al 2005, p. 342). The sewing market situation is forever changing and requires industry players to continuously innovate to improve the value of the products. The threat of new competitors or new entrants into the sewing that VSM has to pay particular attention to how the company’s resources and skills should be adapted and developed to maintain its competitive advantage.

Withdrawal by VSM from the German market should be regarded as consolidation. Market penetration A market penetration strategy seeks to increase market share for present products or services in present markets through greater marketing efforts (David 1999, p. 50). VSM should therefore strive to penetrate the high-end embroidery market further by utilising aggressive marketing efforts. These efforts should be focused on existing markets in the countries mentioned in the company overview.

Product development

Product development refers to significant new product developments and not minor variations on an existing product. According to David (1999, p. 51) product development is a strategy that seeks to increase sales by improving or modifying present products or services. Continued development and innovation on the Designer series will counter new entrants into the market, will maintain the company’s reputation as an innovator, and will protect the company’s overall market share.

Market development

Market development is where existing products are offered in new markets (Johnson et al 2005, p. 46). This may involve seeking new market segments, new geographical areas, or new uses for its products that will bring in new customers. Expansion to bring in new customers to the company for its existing company could involve some slight repackaging and then promotion to a new market segment. It will often involve selling the same product in new international markets, especially in China and Asia.

Diversification: related markets

Diversification is defined as a strategy that takes an organisation away from both its current markets and products (Johnson et al 2005, p. 46). When an organisation diversifies, it moves out of its current markets and products into new areas. Diversification carries with it an element of risk as it involves a step into the unknown. Moving into related markets however minimises the risk. VSM can diversify into related markets by becoming involved in the activities of its outputs such as distribution, transport, and logistics. that competed for the same market space. Acquisitions of manufacturing companies in the Far East would also assist VSM to break into new markets (market development), new technologies, and low cost raw materials.

CONCLUSION

Strategy was defined as the direction and scope of an organisation over the long term, which achieves advantage in a changing environment through its configuration of resources and competencies with the aim of fulfilling stakeholder expectations.

Strategic Management was also defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organisation to achieve its objectives. The strategic position of the VSM Group AB was analysed by applying the analytical models of strategic management to the current situation in the company. The following models were utilised to analyse both the internal and external environment of the company, namely, PESTEL, Five Forces Model, and the SWOT analysis.

The examination of the strategic position of VSM Group involved analysing the strategy of the company with emphasis on the environment it operates in, its strategic capabilities, and how expectations affect organisational purposes and strategies. The analysis of the environment concluded with a clear statement of the Key Issues (SWOT Analysis) and Critical Success factors (TOWS Matrix). The strategic position of VSM Group was used as a base in the development of an appropriate competitive strategy for the company.

The development of the strategy took into account the organisational cultural issues prevailing in the company.

REFERENCES

• David, F. R. , 1999. Strategic Management. 7th ed. New Jersey: Prentice Hall.
• http://investing. businessweek. com [accessed 08 May 2008]
• http://en. wikipedia. org/wiki/VSM_Group_AB [accessed 08 May 2008]
• Johnson, G. Scholes, K. & Whittington, R. , 2005. Exploring Corporate Strategy. 7th ed. Financial Times Prentice Hall.
• Lynch, R. , 2003. Corporate Strategy. 3rd ed. Financial Times Prentice Hall.

Strategies

An organization needs to have a clear plan or strategy in order to prepare itself to resolve any impending concerns in its operations. In such aspect, today’s group of organizations is implementing two basic types of strategies-the functional and operational types of approach.

A functional strategy is a core tactic which only involves short or medium term planning. These strategies are limited only to the departments of the organizations where the initiatives to undertake a procedure is limited. Each of the departments is required to do its functions or jobs in contributing to the total goal of the organization. Some of the examples of functional strategic planning involve marketing, product launching, accounting and financing, researching and legal strategies (Kulzick 1).

On the other hand, an operating strategy intends to close the planning space between the proposed business strategy and the actual implementation. It converts the strategic missions into defined procedure targets. In a shorter and general definition, operating strategies concern in narrower perspectives to manage the important operating units of the organization. Some of the examples of this approach are the program to boost laborers’ productivity, improving the delivery of goods and services or providing greater after sales support to the clients.

It is always an important mater for a certain business organization to have varying strategies for its operations. These tactics may help the entity to take care of the possible operation dilemmas and improve its business activities.

Works Cited

Kulzick, Raymond. “Functional Strategies.” kulzick.com. 2000. 2 Apr 2008 <http://www.kulzick.com/funcstrat.htm>.

With the current hard economic times as a result of the current global economic recession, it is the dream of every organization to review its business strategies and therefore figure out how it will realize its set goals and objectives. This is also the case that happens here with Netcare and it can be termed as the main reason why it decided to have an acquisition of operation in the United Kingdom or rather to expand internationally.

There are a lot of benefits that an acquisition is known to bring and they are known to affect the operations of the new organization in different ways. In this case, there are some ways that this acquisition has affected the strategic capabilities of the new organizations. This acquisition can be said to help Netcare to achieve its objective of providing quality and innovative health care services in every continent of the world and to as many people as possible. (apax. com, 2006)

With the Netcare was able to apply its six themes which it believed would be very helpful in the future of the company. With the entry in to the United Kingdom market, the company was able to move all the experience and expertise of its senior team to the two countries. This is something that was not possible in South Africa due to the political interference and the type health care system. This merger helped the company to provide high-quality services at low prices and this was not affordable in the tradition method that had previously been very expensive.

The merger also helped the company to adopt new technology which assisted in operational excellence. The merge is also known to improve on Netcare’s passionate people theme, best and safest patient care, and finally in transforming Netcare from a country based health care organization to an internationally recognized health care organization. (Porter, 2000) South African had very strict competition rules and tough regulations. This meant that for an organization to fully succeed, it had to face a lot of the obstacles that were set by the government there.

In addition, there was a lot of political pressure in South Africa and this made it almost impossible for any organization to even think of expanding. With the new acquisition in the United Kingdom, Netcare was able to get out of the political bondage. This meant that with the new United Kingdom hospitals acquired, Netcare would be able to conduct uninterrupted decisions on the growth strategies to apply. The healthcare system in the United Kingdom was different from that in the South Africa and this allowed room for fair and healthy competition. (Statistics South Africa, 2005)

In addition, South African can be termed as a country that is living like to two countries. On one side, it is a developed nation living like the other developed nations of the west while on the other side is a developing nation living like most of the African states all the other third world countries. This made the country’s healthcare system to adopt a doctor-centered approach. This meant that instead of hiring one permanent doctor, the hospitals were competing for the best doctors who would provide services on contract basis.

This would mean that the hospitals did not have any specific doctor who would carry out the daily activities or rather the most important activities of the hospital. This derailed any strategic planning that the hospital may have as they are not aware of the availability of the doctors. With the merger, Netcare found out that the approach in United Kingdom is different and there is a very healthy competition, it was therefore able to plan adequately for the future. (GIBS, 2007) In conclusion, the health care system in the United Kingdom was completely different from that in South Africa.

Netcare saw a lot of potential in the United Kingdom due to its healthcare system which had an expanding waiting list especially of the elderly. In addition, it had the hope of using its six strategies to realize its objective of making health care services available to as many people as they could in the world. They succeeded in entering this market and this changed or rather influenced the company’s strategic capabilities due to different health care systems in the two countries and different government and health care regulation policies.

References

apax. com. (2006, April 25).

Network Health Care Holding Acquisition. Retrieved July 10, 2010, from www. apax. com/en/news/story-general-healthcare-group-limited. html. GIBS. (2007).

Friedland Presentation to Students of MBA . London: GIBS. Porter, M. (2000). Economic Development Quarterly. Location, Competion, and Economic Development. Retrieved July 8, 2010, from http://edq. sagepub. com. ezproxy. liberty. edu:2048/content/14/1/15. full. pdf+html Satterlee, B. (2009).

Cross Border Commerce. Roanoke, VA: Synergistics, Inc. Statistics South Africa. (2005). General Household Survey.

Pinewood Tractors’s pursuing a multidomestic strategy orient themselves toward achieving maximum local responsiveness. As with companies pursuing an international strategy, they tend to transfer skills and products developed at home to foreign markets. However, unlike international companies, multidomestic companies like Pinewood Tractors s extensively customize both their product offering and their marketing strategy to different national environments. As a result, Pinewood Tractors generally does not realize value from experience-curve effects and location advantages and, therefore, often have a high cost structure.

(Likert, R. 1991. New Patterns of Management) A multidomestic strategy makes most sense when there are high pressures for local responsiveness and low pressures for cost reductions. The high cost structure associated with the replication of production facilities makes this strategy inappropriate in industries in which cost pressures are intense.

Global Strategy Pinewood Tractors s followed a global strategy, focused on increasing profitability by reaping the benefits of cost reductions that come from experience-curve effects and location economies.

Global companies do not tend to customize their product offering and marketing strategy to local conditions. This is because customization raises costs as it involves shorter production runs and the duplication of functions. (Hamel,G. (1999). Strategic Planning: Formulation Of Corporate Strategy)

Transnational Strategy Pinewood Tractors s whose operations are spread across several locations worldwide and are not confined to any country or a region and since pursue low cost and product differentiation at the same time are referred to as transnational companies.

In essence, transnational companies operate on a global level while maintaining a high level of local responsiveness. A transnational strategy makes sense when a company faces high pressures for cost reductions and high pressures for local responsiveness. Pinewood Tractors which pursues a transnational strategy, basically tries to achieve low-cost and differentiation advantages simultaneously. Although a transnational strategy apparently offers the most advantages, it should be remembered that implementing it raises difficult organizational issues.

The appropriateness of each strategy depends on the relative strength of pressures for cost reductions and for local responsiveness.

Products and Services Offered: The most important part of the plan is to tell the customer the details of the products being handled and the services offered. At times it may not be possible to give a description of each and every product but the list of sections and the items that particular section will handle will serve the purpose. Similarly for services a description is required such as the services offered are completely different from others.

Market Examination: An international business can’t flourish unless the market is thoroughly analysed, the type of customers, the possibility of growth and the target market. The needs and services of the customers are to be fulfilled to capture the market. The product price has to be competitive, on the basis of demand and cost unit pricing and working on market fluctuations. The promotional channels to be tapped, like advertising, on-line demonstration, tracking suitable customers and convincing them to purchase the product.

The scheme of free delivery at the destination and also free replacement if found non- working within a certain period. Market environment will change frequently and the company has to change strategy often depending upon the demand analysis. (Hamblin, A. C, Evaluation and Control of Training)

Target Markets in international-business: Consumer behavior such as shopping frequency and willing to do purchases from internet. Also depends on the desire and needs, lifestyle, age, education, occupation and income. Depending upon the market analysis the desired market has to be focused.

If the sale is to be made on web only then anybody having a credit card and access to internet can do purchases. Some customers have taken a decision to opt for a particular brand, in that situation the plan may be to keep some particular brands. Some groups of persons who are categorized in the primary market are considered as premium customers and their needs to be explored. Another group who may come in the secondary group are those who do shopping for somebody else may be they want to gift to any of their friends. This category has different needs than primary market customers.

In 1993, AY-Khans Sports was formed with a single store In Holiday Plaza, Juror Barr. Initially, the business started off as a general sportswear outlet. As the business grew, En Ail found that there was a demand for specialty shops, dealing in soccer, basketball and other sports. As a result, he began to set up stores catering to these niche markets. It has since grown to 61 stores In every country within Peninsular Malaysia. The main activities of AY-Khans are stores or retail activities.

First it increase the ROI by identifying non-moving stock across the chain, transfer them to where they are selling and/or return them. Also, Identify and return non-moving stock at purchase value to avoid any loss on non-moving stock return. Such effective stock transfers peopled with purchase returns increase the ROI. Next, it lower the inventory Investment by the consolidated view of Inventory including the need at each point of sale facilitates optimum Inventory at each point of sale. Also ensures that stock can be transferred to the point of sale at short notice.

They also lower pilferage by continuous stock audit based on BBC classification of Items Instead of periodic full stock verification helps to Identify mismatch between physical stock & system stock early. Such continuous stock audit helps lower pilferage. It also made a best purchase as the store pool its requirements; the volume of arches goes up. This allows store better-negotiating leverage. Combining this with the analysis of their sales, purchase and Inventory data, allows store keeper source products from the cheapest and best.

Then they lower the operating cost by optimal utilization of man power, optimal utilization of store space, effective inventory management and leads to lower operating costs. AY – Khans also centralized the financial control as store’s business moves to a model of depositing the entire receipts/collectors with the WHQL and all payments are made from WHQL, store get better financial control over its business. The fraud prevention by Real-time / Periodic upload of point of sale data to the WHQL prevents any tampering with data at the point of sale.

This builds better awareness among point of sale staff and prevents fraud. Subsequently, prevent poor practices from becoming bad habits by audit trail to help WHQL know the activities done at the point of sale and identify the poor practices such as stock updating, temporary stock addition etc. Corrective action for such poor ‘OFF The other activities for AY Khans are they provide discount to customer by making a big sale or promotion in press. They offer a reasonable and appropriate price for all our products that will benefit to all kind of level customers with a better purchasing environment.

AY -Khans trained their staff well in their product and technology as well to give a very good service to help customer. Their staff also must have a good knowledge about the product and to assist customer by giving the information about the product. Their concept as customer always right and provide value added service like assistance in purchasing. AL- Khans products are quality and up to date product. They also launch new schemes time to time like customer cards, free items on purchasing. For their valued customer, they provide voucher services worth ARMS.

This voucher enable customer to purchase their product at all AY-Khan’s outlet and it also can be a present. Other than that, they provide information about new products to customers by emails, telephone calls, messages etc. This will help customer to update every single latest product that arrived at AY-Khans. Others service that they provided for their customer is in choosing appropriate product. AY-Khans often involve in other activities like sponsorship of any mega vent. They also choose appropriate distribution channel. They followed the business ethics in terms of customer services.

They had directed and supervised employees engaged in sales, inventory-taking, reconciling cash receipts, or in performing services for customers. AY – Khans also monitor sales activities to ensure that customers receive satisfactory service and quality goods. They have their own brand authorized dealer such as Nikkei, Aids Lotto as their supplier. They always ensure their staffs are caliber in customer services by instruct staff on how to handle difficult and complicated sales. The company hire, train, and evaluate personnel in sales or marketing establishments, promoting or firing workers when appropriate.

This is to make sure all staff must have good Job behavior and very disciplined. Lastly, their account department have to plan budgets and authorize payments and merchandise returns to make sure company gain profit and to ensure company’s running business very well. As a result, AY-Khans today has expanded aggressively towards the goal to be the biggest sports chain-retailer nationwide. From a single outlet, AY-Khans has learnt to main competitive in difficult market conditions, while growing pace by pace.

It is a major concern for the Government that Bumpier retailers are a minority in almost all Shopping Malls and well-developed areas as is evident from the fact that Al- Khans has been chosen to be a Nominated Franchiser by the Government, AY-Khans meets all the criteria for a highly successful Bumpier retailer. Truth is, not many make it, as Bumpier retailers are perceived to be lacking in retailing skills. Al- Khans is one of the rare breed that should be accorded the highest marks in your f 10 respondents in the soccer industry recognizing the name AY-Khans.

EJB sports Pal EJB Sports pal is one of the Auk’s leading e-business sports retailers. JIB was originally formed in 1971 to acquire the business of a single sports store in Wigwag. The original store was established by J Brought in the early asses and was then bought by J. Bradford and then J. Bradbury. When David Whelan bought the store from John Bradbury he maintained the JIB name. Trading from four stores in 1976, the store portfolio grew to 120 stores in 1994, at which point the Company was floated on the London Stock Exchange. In 1998 EJB Sports acquired the business of Sports Division.

The acquisition then made EJB the largest sports retailer in the I-J. Since 1998, the Sports Division business has been fully integrated within the EJB group. EJB now operates in most major towns and cities of the I-J as well as on the internet and other channels. The product ranges include sports textiles, footwear, replica shirts, equipment, accessories, cycles and golfing products. The interesting thing about JIB is about their employment which is freely chosen, there is no forced, bonded or involuntary prison labor. Their employees have the right to collective bargaining.

They also have a working condition with safe and hygienic. Other than that their living wages are paid, working hours are not excessive, no discrimination is practiced and regular employment is provided. In this E-business, they provided disabled persons should enjoy equal opportunities within the workplace. EJB take the training and deployment of all colleagues within all the stores in I-J and Eire and its Retail Support Centre in Wigwag very seriously. The trainers within the group have responsibility for the induction of store personnel in ewe procedures, and new techniques and processes.

Training methods vary from daily Job training to weekly training sessions, video training, team briefings; supplier led training and residential training courses. Shopping online is the most simple, quick and fun way to buy the latest sports products at JIB sport. Whether customer using a PC, laptop, smart phone or the latest touch screen gadget customer can now shop with them in the comfort of customer own home and when customer on the move. Here at EJB Sports, customer will find the latest clothing, footwear, equipment and accessories for sports fans.

With their suggested range of products online and exclusive products Just for their website, they will soon find out why they are so serious about sport. When customers are on their homepage customer can browse their products by selecting a category from their drop-down menus. They could view the latest footwear, clothing, equipment, shop by sport or by brand otherwise click on any banner or image to take to direct to some of their best product ranges. Customers can also shop at www. Supports. Com anytime, anywhere and any day and with the best house with delivery charges.

All online orders will delivered by Home Delivery Network (HEAD). First customer online order must go to the address of the registered cardholder. They also provided online and JIB Sports store for free returns. Other services provided for nearest store by using Store Finder. Lastly, EJB Sports also provide affiliate programs to any customer who wants to Join and be an affiliate for the company for making money. They can be part of EJB Sport team in order to market or advertise the JIB Sport product via online or in any website and blob.

For the reward, they will get some commission by doing the affiliate program which their payment will transfer directly into their banks account. The commission are base on their performance in online marketing or E-Business. They also involve in social media networks such as backbone, Twitter and Youth to promote their company. Accordingly, E-business is one of the famous online businesses nowadays. Even it still a new thing and new comers in this industry, but because of there are so many benefits and advantage rather than the store retails, and it becomes the pioneer in the new technology of this decade.

The traditional business (brick and mortar) must look forward to enter into this online business because besides they can promote heir product; they also can close with customers and can buy the customer right. This will help company increase their services as long as the quality of the sales of their products. Why AY-Khans Sports Sad Bad vs. JIB Sports Pal? As we can see AY-Khans is only brick and mortar company but they have develop become an brick and clicks company; however they still young in this technology rather than JIB Sports that in early 1994 already have 120 stores while AY-Khans have setup 1 store only in 1993.

It is quite hard nowadays to get totally Brick and Mortar Company. Modern lifestyle with advanced technology, AY-Khans pursuit of assures to be consistent with other well established Sports Company as EJB sports Business Strategy Johnson and Schools define strategy as follows: “Strategy is the direction and scope of an organization over the long-term: which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”.

Strategy at Different Levels of a Business

Any of organizations have their on level strategy for ranging the overall business (or group of businesses) through to individuals working in it. There are divided in 3 categories: Three main components in systematic strategic management process shown in the figure below: Strategic Analysis. To analyses the strength of business position and considerate the crucial of external factors that may influence the position of the business.

There are a number of tools of analysis could process the strategic analysis, such as:

1. Strategic Choice. This process is to choose the correct and suitable choice by Understanding the nature of stakeholder expectations (the “ground rules”)
2. Identifying strategic options. Evaluating and selecting strategic options.
3. Strategy Implementation. The tough part for the business strategy is implementation. After all strategy has been analyses and selected, the critical task is then to interpret it into organizational action.

SOOT Analysts

In SOOT Analysis it’s an extremely useful tool for understanding and decision-making for all sorts of situations in business and organizations. SOOT is an acronym for Strengths, Weaknesses, Opportunities, and Threats. The SOOT analysis headings provide a good framework for reviewing strategy, position and direction of a company r business proposition, or any other idea. SOOT analysis use for business planning, strategic planning, competitor evaluation, marketing, business and product development and research reports.

Strengths and Weaknesses are ‘mapped’ or ‘graphed’ against Opportunities and Threats. Strengths and Weaknesses are regarded distinctly as internal factors – the situation inside the company or organization that tend to be in the present, whereas Opportunities and Threats are regarded distinctly as the external environment – the situation outside the company or organization when factors tend to be in the future. AY – Khans SOOT Analysis EJB sports SOOT Analysts Porter’s Five Forces The second strategy is Porter’s Five Forces of Competitive Position model.

It provides a simple perspective for assessing and analyzing the competitive strength and position of a corporation or business organization. The porter’s five forces are:- 1. Threat of new market entrants which is entry ease or barriers, to enter match with the marketplace and routes to the market. 3. Substitute which is alternative price and quality of the product attract more customer and buyers. 4. Buyer power is customer not a consumer. Which is company needs to look at buyer choice needs such as product, services, demands, cost, frequency, SIT schedule 5.

Competitive rivalry. This is the strong factor because company have to compete with other companies which is they need to take seriously. PEST Analysts The third strategy should be considered is PEST Analysis Template. It is very important that an organization considers its environment before beginning the marketing process. In fact, environmental analysis should be continuous and feed all aspects of planning this strategy is very useful for brick and mortar and E-business Company.

Introduction

Benchmarking can be viewed as the process of evaluating the quality of one organization against the performance of another organization (Ray, 2008). According to Rumelt and Schendel (2004), it is the process used in strategic management where by an organization is able to evaluate various aspects in relation to that of a superior company. Benchmarking is part of competitive intelligence carried out in firms to identify opportunities and risks in their markets as well as pressure testing a companies plan against market response.

Competitive intelligence is the real action of gathering and analyzing information on products customers and competitors for both short and long term needs of an organization. In this case I am going to benchmark my firm which is company H  against both  Nike Inc. and the leading company B. The two companies belong to the footwear industries. I identify my problem areas as financial analysis, market research, advertising, distribution and quality analysis. I will also utilize survey from competitive intelligence sources as well as industry reports to understanding how these companies do their businesses. SWOT analysis will also be used to create sources of competitive intelligence and Come out with proper information for my firm.

Company H Corporate Profile

Being one of the BSGs companies, company H manufactures and sells shoes, textiles and appliances for sports and other related products. We believe that we offer not only quality but also variety to our diverse customers. Company H is ten years old in the industry and is looking forward to being one of the leading firm in America by the year 2030.so far the company has more than 12 sub branches in three states with its headquarter in Denver Colorado. The companies’ greatest challenge is to survive in such a competitive industry.

We have identified our major competitors to include Reeboks, Fila, puma and leanings. others include Nike inc and the leading company B. in order to understand the threats posed by our competitors and their strategy we need to look at the strengths and weakness of the leading company B and also have an in-depth understanding of Nike inc. by having an in-depth corporate profile and the also the business process used by our competitors like inc, we will have a better ground to understand how our competitors are likely to respond to our strategy.

Nike Corporate Profile

Nike Inc came to existence in 1972 from what initially was known as blue ribbon sports. They founder included Bill Bowerman and Phil Knight and they named the organization after the Greek wing goddess of victory. Today it is recognized as global leader in the sporting goods industry. It was known to be the world leading marketers, designer and distributors of athletic footwear accessories and apparel (Kevina, 2007).

Nike currently takes in more than 20,000 employees with total sales of $9.5 billion. There is no doubt that over the years, Nike has evolved greatly as an athletic shoe industry creating the most competitive market in the recent years (Koranteng, 2004). It currently holds total revenues of $19,404,100 and a market capitalization of $20,751,324 with a $41.93 per share (Bunney, 2007). The amount for standing operations stands out at $1,824,200 with free cash flow $1,510,300. However, analysts are predicting slowing down of Nike in the next few years.

The present long term debt stands at $ 407,300 although the company still enjoys a stable profitability and efficiency (Foster, 2001). This slow down according to Barney (2000), Will be as result of change in consumer trends and competitive markets offered by other BSG s companies. For example, younger markets are starting to purchase shoes that are more casual including work boots. It is still not easy to establish the   overall sales and profits for Nike Inc but according to analyst, this statistics are likely show a downward trend in the future. According to Barney (2000) cites the high like hood of people switching to more medium priced products from the expensive brand name products.

Comparing stock and financial statistics for 2008, the company operating margin stand at zero with gross margin of 47.40% increase. Return on common equity 23.53% higher than last year with almost the percentage increase in return on invested capital (Smartmoney, 2008). The stock performance in the last three years is reflected by the share price of 22.16% with a high of $22.30 and low of $12.90. In the last five years the dividend grew by $23.48 and dividend payout of $0.24 (Bunney, 2007).

Looking at the market share of Nike Inc., The company accounts for 2% of the world $800 billion footwear and apparel sports equipment (PR Newswire, May 23, 2000). Nike which is considered by its customers as the world largest athletic shoe maker owns retail store in more than 160 countries in the world. The company manufactures its products at 830 factories distributed world wide (Foster, 2001).

The Nike marketing and advertising strategy is very vital for the company’s success. It is well positioned as a premium brand selling unique designed but expensive product. Nike attracts their company with marketing strategy which revolve around their brand image accompanied by distinctive logo and advertising slogan. Their marketing mix has many elements apart from promotion. Their advertising strategy utilizes national television and the media at large. In 1982, Nike launched its first ads during the New York marathon. This marked the beginning of their powerful advertising which saw them being awarded several awards of he advertisement of the year.

Due to this, Nike will face stiff competition from other established companies like our company H. In order for Nike to keep standing in the industry, it will need an exceptional global strategy. If Nike does not penetrate the global market successively it is likely to give other companies including the leading company B a competitive advantage.

Strengths

Comparing our own company H, with Nike inc and the leading company B, it is clear that the two company are far ahead but not far from reach. The strength for Nike and the leading company B is the tough management team and the good corporate strategy abroad. Our company H is still not through in recruitment hence a weak management team and a good corporate strategy. Our current employee’s intake per year stands at 500with a total sale of $100 million per year. The two companies have strong financial base. Company H current market capitalization is $1,065,132 and total revenues of $1,456,310. Nike has brand recognition; a reputation and a powerful trademark “just do it that has attracted a strong customer base.

Weaknesses

Looking at the weaknesses of competitive strategy employed by both Nike and the leading company B, our company can be able to come out with its own strategy to compete well. Company B relied on the strategy differentiation instead of cost strategy which involves identifying criteria used by clients and positioning the company uniquely to meet the criteria. This strategy is however responsible for high product prices beyond what customers can afford.

Threats

The major threats for Nike is Bad image because of sweatshops, increase in cost of providing solutions of technology, economic threats in North America and Asians countries. For both Nike and the leading company B, there is increasing competition coming from the major challengers in various branches of business, emerging competitors, free trade and the foreign currency fluctuation is under threat. Also, Nike is losing strong ground in soccer where others competitors companies have highest stake .The leading company B is being faced by Chances of distress due to growing beyond capabilities. Sometimes also, the Company’s reputation in footwear and apparel industry is a threat its own business.

Opportunities

In my analysis, I identify the weaknesses for Nike Inc and the leading company B as our opportunity to penetrate the stiff competition. The two companies are slow in absorbing new technology such as developing system for ecommerce. Moreover, Selling directly to consumer is bringing conflicts with its own reseller and therefore eCommerce will soon turn to be the best option for making good sales.

One of Company H opportunity is the increasing online customers and also the rising demand in the industry for online products, new technology and innovation. We have opportunity in that there is expanding e-commerce to the rest of the world hence high chances of outsourcing in the web. While Nike and company B is focusing in rising interest the basketball sports, company H will take advantage to expand ecommerce to the global market. Also read Axiata strategic management

Strategic plan begins with a mission statement that is clearly defined. The mission describes the basic functions of the organization in the society in regards to the products and services offered. The leading company B mission statement is to be the global leader in the footwear industry with sports brands built with elegance and passion for sporting lifestyle. Our mission statement for company H is to continuously improve the look, feel, image and the overall quality for our products to match and exceed the expectations of our customers.

We are consumer focused and that means we will continue to improve the quality, look, feel and image of our products and our organizational structures to match and exceed consumer expectations and to provide them with the highest value. We are committed to continue strengthening our products and brand to remain competitive and also improve our financial base

Part B

In the wake of twenty first century and the reality of globalization, changes in technology coupled with increasing competition have brought with it complexity in modern management (Rumelt & Schendel, 2004). The term strategy is used to refer to the overall managing of the organization with specific reference to an organization arrangement (Hofer & Schendel, 1978).

While competitive strategies provided a competitive advantage to the leading organization B last decade, the same strategies can be used by my company H and the last company G in order to survive in this century. Organizations that work with many branches require a clear distinction between the strategies at the corporate level (Hofer & Schendel, 1978). According to Porter (1980), planning strategically has become a key to success in almost all if not all organizations.

The competitive strategy used by the leading company B has greatly enabled the company to have a competitive advantage over the rest including the last company G. A competitive advantage can be defined as an added advantage which a company may have over the competitors in terms of offering greater value or benefits to the customers. The leading company B uses the   four strategies in the Michael porter model. In his work Porter (1980) suggested that four strategies could be used in order to acquire a competitive advantage.

The four strategies depend with several factors including the scope of the business and the extent to which the business could wish to differentiate its product. Porter (1980) came out with a model for categorizing these strategies and in the model he distinguished the differentiation strategy for broad business from cost leadership for narrow scope of business activity.

The leading company B utilized the differentiation strategy which involves identifying several criteria which are used by customers in a market and then focusing on positioning the business towards meeting these criteria. This strategy is associated with raising the premium charge for the product which is intended to reflect the high production cost and more value for the customer. It also involves giving customers elaborate reasons why to prefer one product over the other.

The quality of advertising and marketing is crucial in determining the competition strength of accompany. In his model, Porter (1980) emphasized that there exists five models which determine the industry attractiveness and profitability in the long run. Company B has tried to internalize the threat of new competitors in the industry earlier than company G and have come out with measure to increase product substitute’s availability. In addition, advertisement quality gives the leading company an edge over the last company G. The bargaining power of buyers and that of the suppliers and also the degree of conflict or rivalry between the available competitors is analyzed in the porter’s model.

According to Porter (1980), the threat of new competitors can easily increase the level of competition and there reduce profitability and attractiveness. The threat greatly depends with the barrier to enter the industry which in turn is dependent on factors such as capital requirement, economies of scale e.t.c. the threat of substitute is can as well reduce profitability of accompany. Buyer’s willingness to substitute and the price and performance of substitute are among the factors determining the threat of a substitute.

For my team to beat the leading company B it need to internalize the essential growth strategies. Looking at the Mckinsey model, Mckinsey (1992) elaborates that the business should base their growth strategies on four things: operational skills, privileged assets, growth skills, and special relationships. According to him operational skills are the major competencies that a business can have and it is the foundation for growth strategy. With the understanding of the Mckinsey principles, my team will therefore have strong competencies in the distribution, technology or the better customer service. Moreover, my team intends to utilize the privileged assets to penetrate the market.

The privileged assets are the very assets which are held by the business which are hard to copy by the competitors (Mckinsey, 1992). This include in our company, the direct marketing based businesses and well established brand. A business also needs the growth skills to be able to successively manage the growth strategy. Special relationship was the last key requirement in the Mckinsey model. These are kind of unique relationship threat a business may have with the trade bodies that can allow penetration to the competition easier. The model proposed seven ways of achieving growth which were distributed between existing product

Strategic Action for my team

In my business simulation game I analyzed strategies for improving supply for the company. Supply chain management is a function which is critical to any business success which is responsible for bringing high quality, fast delivery, efficient cost and continuous innovation in any businesses (Belch & Belch, 2001). It is one of the competitive strategies that our teams will employ in order to achieve our objectives. Both leading company B and Nike Inc are part of global companies that try to improve their competitive advantage by strategically managing and using their competitive advantage.

The marketing strategies increase the company fortunes especially when the market is so competitive like it is today. Marketing plays a vital role in decision making, targeting, pricing, market segmentation and positioning (Tucker, 2004). In the past, the leading company utilized major events to pursue their marketing strategy. My team will utilize sports activity like the Olympics where many people attend the activity in order to keep healthy and have fun. In the past the leading company B has always managed to capture the attention of their customers by sponsoring such events.

However, my teams in will do more in order to ensure that we beat the leading company B and survive in the industry. It is also important to bear in mind the rising competition from the last company G. Tucker (2008) attributes this to increasing popularity of alternative footwear, resulting in more constraints than ever before to achieve high profit through effective global sourcing practices.

Positioning strategy is another crucial part of gaining competitive advantage in the 21^st century .The strategy can be used as a retrospective measure against our competitors. The goal of any company is to create value of the consumer through development of company resources and capabilities. In the modern economy, intellectual capabilities and capital have become a point of focus (Belch & Belch, 2001).

My team will utilize the Positioning strategy to inform the customer what the company is doing better than its competitor. In my analysis I found out that company B positioning need to be somehow fluid and factors such as evolving pressure to perform must be in hand with constant maintenance of its product and services.

My team must choose which industry to participate in as a key factor in marketing strategy. It will go for an industry that will allow its products and services to preserve difference between its competitors for considerable period of time. To create a competitive advantage dictates that experienced staff of any organization be more innovative in creating a product or service than the rival in the industry (Belch & Belch, 2001).

Endorsement of Tiger Woods, for example, was one of the successes of Nike golf which was an innovative inc. Nike managed to create a competitive advantage since the most visible athlete in the world was the spokesman of their product. When formulating a marketing strategy for my comapany, my team will bear in mind that allocating corporate resources is an important decision. Making decision on who acquires what is a balancing strategy. More money is however needed to allocate to research and development which will eventually result in better products.

Looking at how company B and company G could have improved their operation, I will start by discussing the marketing methods and market mix.  For the purpose of determining proper marketing method for product delivery, it is very essential to keep analyzing certain factors which in this case company B and G ignored in the past. These factors are product, place price and promotion and product. They are referred to as marketing mix (Tucker, 2004).

It is very essential to have a product which in turn should be marked successively to the final person who is the customer. The product must be in such away that it gives the company a competitive edge. It involves asking such question as, what distinguish the goods from others which are already there. Is there a warranty that can convince the client to buy e.t.c? Once this questions are answered and the product is established then one can move to the other part of the marketing mix. Other factors needed to be considered included the distribution cost and the distribution systems in general. Consumer profile and attitudes, customer retention levels, sales and profits by product and the overall cost structure (Tucker, 2004).

Both company B and G needed rot review their prices for the products. As we have mentioned above the type of good that is being marketed affect the price. Price affects the customer perception of a good or service. Although sometimes high price is used to stress that the product is of high quality that is not always the case especially for inferior products. Improving the price and quality is competitive strategy that could have been employed by company B and G to have an edge over their competitors whose products is much more expensive (Tucker, 2004).

References

Barney, J. (2000). Companies resources and continued competitive advantage. Journal of

Management, 17(1): 99-120.

Belch & Belch, (2001). Advertising and Promotion. New York: McGraw-Hill Irwin press

Bunney, J. (2007). Journal Inc for Nike. Retrieved on December, 7 2008 from

http://journal-inc.com/ab/?p=115

Foster, A. (2001). Nike plan keeps it protected from downturn. Portland Business Journal.

            Retrieved on December, 7 2008 from http://www.bizjournals.com/portland/stories

Hofer, C. W., & Schendel, D. (1978). Strategy Formulation: Analytical Concepts. St.

Paul, MN: West Publishing Co.

Porter, M. 1980. Competitive Strategy. New York: Free Press.

PR Newswire (May 23, 2000). Nike stock market picks to the next level of

            Online personalization. Retrieved on December, 7 2008 from www.prnewswire.com.

Ray, J.F. (2008). How to Utilize Benchmarking In Business. Retrieved on December 5, 2008

            From http://management.about.com/cs/benchmarking/a/Benchmarking.htm

Rumelt, R., Schendel, D., (2004). Fundamental issues in Strategy: A research agenda. Boston:

 Harvard Business School Press.

Smartmoney, (2008).Nike Inc. statistics. Retrieved on December,7 2008 from

http://www.smartmoney.com/stock-quote/?story=keyStatistics&symbol=NKE

Kevina, L. (2007). Nike versus Adidas in the Footwear Industry. Retrieved on December 5, 2008

            From www.lotsofessays.com/viewpaper

Koranteng, J. (2004).Nike drags in e-commerce competition.  Advertising Age International

 journal, 31: 24-37

Tucker, R. B. (2004). Driving development through Innovation. London: Prentice Hall

Cisco systems develops a collaborative approch to organizing Cisco Systems, famous for developing the routers and switches in which the Internet is built, is faced with reexamining its organizing approach in order to improve how its teams and divisions work together. Despite still making billions in revenues, John Chambers, CEO, recognized that his mechanistic approach would not be enough to overcome Cisco’s shrinking market value. Thus, implementing a “collaborative approach,” and organic culture that would allow everyone to be involved in decision making was thought to be the answer. Chambers created cross-functional teams, identified measurable goals both short and long term, and emphasized speedy product development. Cisco and Chambers are confident that the organizational approach will make them a global leader in both communications technology and Internet-linked IT hardware and help them bring innovation to the market more quickly than the competition.

This case illustrates the need for more organic organizational structures to improve performance. Going from mechanistic and hierarchical to collaborative and organic has improved relationships and decision making at Cisco. You may want to ask students how Cisco should use its IT to improve a shrinking market demand for its products. Will this organic approach be enough to sustain and keep Cisco competitive?

How has Cisco changed its structure and control systems? Cisco moved from a mechanistic control to and organic structure which allowed for more collaboration and involvement in decision making. Essentially, controls were more loose with teams and divisions, both, planning long-term strategies, developing new products, and sharing technology. Instead of a select group of managers controls the direction of the organization, now, they were all accountable for the goals they established and met.

Relate Cisco’s changes to its control and evaluation systems to the stages of growth in Greiner’s model. According to the case information, Cisco skipped through stages 1-4 of Greiner’s model to stage 5 collaboration. The case only indicates that command and control was used and doesn’t imply that there was room for creativity, direction, delegation, or coordination/monitoring. Stage 6 is yet to be determined. 3. Use the Internet to investigate how Cisco’s new approach has worked. How is the company continuing to change its structure and control systems to solve its ongoing problems?

While student answers will vary, Cisco does not appear to have reached out to very many new innovations but rather extending product development from their routers. However, a good part of their revenue comes from collaboration. It appears that Cisco continues with its collaborative approach.