Crafting and Executing Strategy
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The ABC Corporation is a hypothetical highly technological company specializing on computer hardware with focus on advanced specific characteristics for modern PC games and high skilled graphics experts. The firm provides a range of newly developed monitors with high response and fast refresh rates as well as corresponding video cards. It supplies its products to individual customers and IT corporations. The ABC Corporation conducts its operations within the boards of US market and plans to extend its sales internationally in future. Therefore, the company has to revise its long-term strategy with the consideration of its international expansion plans.
Strategic management is an extremely important issue for The ABC Corporation. At the moment, the company needs a very strong strategy in order to enter the international market. Strategic decisions arise as an outcome of an evaluation of the external and internal conditions. Although it does not provide a guarantee of success, strategic management leads organizations to making effective decisions in long-term perspective; it also helps to implement those decisions efficiently and to facilitate concrete actions which are significant to ensure success (Thompson and Strickland, 1999, p 2). Moreover, creation of an effective strategy is mostly an improvisation. Every company has to invent its own ways to succeed in the market. Deep understanding of the company’s strengths and its business environment provide the top management with a sound strategy only when it is combined with a high creativity and a talent.
For the ABC Corporation, the business setting is going to be changed considerably. That is why creating a strong strategy is of critical importance for the company. It needs to consider new competitors, review available and perspective resources, and evaluate its opportunities on future markets.
In order to have a sustained growth in the global environment, the ABC Corporation needs to develop three levels of strategy. The first strategic line comprises identification of the company’s “general long-range guidance” (Porter, 2009, p 11). It bases on the formulation of mission and vision statements as well as on the general outline of the long-term goals and priorities. The second level focuses on the company’s (or one of its unit’s) business strategy and defines its main products, services, and markets. And, finally, the third step leads to preparing the operational (or functional) strategy of an organization. Mainly, this level provides the practical basement to conduct the long-term plans and objectives connecting the top management strategic view to the functional departments. The ABC Corporation applies all three lines of strategic management as it aims to enter the international market and has to be prepared for stricter competition rules.
Going international allows the ABC Corporation to get access to wider geographical markets for its offered products, attract some specific resources (for example, high skilled specialists), extend its activities to a different range of products or services, and to obtain competitive advantages over its main challengers (Rowe, 2008, p 102). These opportunities define the company’s strategy for the nearest time and influence its global and functional goals.
A mission statement sets up “the values, beliefs and guidelines” for the company and its ways to conduct business. It determines an organization’s relationships with its employees, customers, shareholders, suppliers, government and the community (Ackoff, 1987, p 30). The mission of the ABC Corporation explains its main purpose and reason for existing. It is stated as follows: “The company plans to get its place on the international arena for computer hardware and obtain more opportunities for growth of its assets, human capital, and market position”.
The vision of the company concentrates on its future position. In an opinion of Ackoff, 1987, any company without “a shared vision of what it wants to be” can be compared to “a traveler without a destination” (p 30). The vision of the ABC Corporation is: “The ABC Corporation aims to become an internationally recognized provider of computer hardware for the society of modern gamers and high skilled graphical experts”.
The second level of the ABC Corporation’s strategy identifies its products and markets. The company intends to provide monitors and video cards in the domestic and international markets. The main feature of the firm’s production is the strong focus on developed graphics.
In accordance with its high level strategy, the ABC Corporation develops five functional goals to support its mission statement. They encompass operational, financial and human resource factors. Strategic objectives intend to make the company’s long-term strategy succeed. They identify more precisely what the firm needs to achieve in each of its main functional areas in order to reach its mission and vision statements.
The first objective is to explore the international market and identify products which are the most demanded by gamers and graphics experts in foreign countries. It is highly important to evaluate the needs of the perspective consumers properly. For example, there can be no or very little number of gamers preferring large-sized 3D monitors in some countries, while graphics experts may be looking for a 30 inch monitor for their working projects.
Further, the ABC Corporation’s production unit has to adjust the computer hardware in accordance with the international market’s standards and expectations of the foreign customers. Becoming an international supplier, the company has to consider widely accepted quality standards and apply them consequently to its operation processes and final output.
Third, the company aims to attract specialists on graphics from abroad which will enhance its human capital considerably. Computer industry is one of the economic sectors with frequent innovations of products and services and constant technological growth. Therefore, the firm has to “track overseas developments” and consider “breakthroughs by foreign competitors” (Shapiro, 2010, p 18).
The following objective addresses financial side of the international expansion. The ABC Corporation plans to obtain a loan from the domestic bank in order to have more working capital for increased level of production and necessary adjustments in the output characteristics. The loan is to be paid out after the company starts active sales in foreign markets. Thus, the ABC Corporation expects a considerable increase in its profits which will cover expenses of external financing and provide enough internal funds for further development.
The final goal of the company is to create a well-known brand name of a provider of developed hardware for graphics experts and gamers in the international computer society. The brand will bring stable consumer interest in the ABC Corporation’s products and will allow it to become more active in other product lines. Besides, creation of the brand name will support the company’s declared vision to become an internationally acknowledged hardware supplier.
The claimed objectives of the company’s business strongly support its strategy, mission and vision statements. They describe five main issues to achieve success in the international markets and comprise dealing with resource factors necessary for such an expansion.
Formulation of a strong strategy of a company proves to be very important in order for it to be successful in its business operations. This specifically applies when a domestic firm plans to expand internationally as broader markets inevitably mean more competitors, stricter quality rules and higher operational risks. Thus, top management of such an organization should develop all three levels of the strategy, starting with the mission and vision statements and supporting them with a corresponding business strategy and functional objectives.