Reflections

Simulations Reflection Introduction Strategic management first is a challenge for any company regardless of the situation and second is different for every company due to the change in the nature of any given marketplace. Strategic management plans must remain forward looking at all times in conjunction with the company mission and end-state. To successfully adapt, a manager must be flexible to an ever changing environment by staying focused on the company’s mission from a holistic approach. This flexibility increases the firm’s success and can be accomplished by considering and implementing a solid strategic management plan. Pearce and Robinson, 2005 presented 9 critical tasks from within the strategic management model that should be included in achieving any company’s strategic game plan and end-state objectives. They are matched to the strategic management model as follows: 1. Company mission (social responsibility, purpose, philosophy and goals) 2. Internal analysis (conditions and capabilities) 3. External analysis of the environment (competitive and general) 4. Strategic analysis (options matched to resources) 5. Long-term objectives (grand strategy to achieve optimal choices and options) 6. Generic and grand strategies (must support company and mission) 7. Action plans and short-term objectives (must support long-term objectives) 8. Policies that empower action (must support all objectives and grand strategy) 9. Restructuring, refocusing, reengineering the organization (supports grand strategy) 10. Control and continuous improvement to evaluate the success of the strategic process. (Pearce, Robinson, 2005) After completing the three simulations some of the lessons learned were the importance of internal and external analysis, establishing and setting long-term objectives, grand strategies, and developing action plans. The importance of Strengths, Weaknesses, Opportunities, and Threats (SWOT) analysis, was a factor that was associated with all simulations. Another factor that appeared to be a constant between each of the 3 simulations was the idea that each of the companies as well as the staff must be flexible and prepared to adjust their concepts of approach at any given point. The following paragraphs touch upon the learning points encountered from the simulations: Thinking Strategically, Developing Grand Strategies, and Creating a Strategic Roadmap. The factors that will be discussed will be the ones that appear to be most relevant to the construction of the Foundry Networks, Inc strategic plan. Thinking Strategically The first simulation, based on a bike manufacturing company, BJ’s ProSports (BJ’s). BJ’s is in the process of determining long-term objectives that support an overall strategy. The recommendation chosen was to balance the Chairman’s goal of securing the number one market position in term’s of revenue with the CEO’s goal of improving profitability. The first task was determining the research that the BJ’s team needed to focus on. During this process the National Specialty Bike Industry report and the United States Specialty Bicycle Consumer Survey were chosen to provide an overview of the market and to gain insight into consumer preferences. Determining the primary long-term objective followed. Based on the goals of the firm, the options given and the market environment, BJ’s was in a position to make optimum use of its internal strengths to become the leader in overall revenues. The next phase was identifying BJ’s SWOT, listed below: Strengths: status within existing retail network, cash position and Antigravity brand. Weaknesses: Male oriented image, excess inventory, and low recall statistics in the 12-24 year old demographic group. Opportunities: Create a women’s market, enter into the juvenile bike segment, and utilizing lower-cost offshore manufacturing opportunities. Threats: Other retailers focusing on the fitness trends, maturing of the mountain bike segment and a trend of retailers entering into the low-end market segment to boost sales and increase revenues. Based on the previously identified simulation SWOT and using matched-pair analysis, the best strategies chosen were the ones that addressed multiple SWOT points covered by single actions. For example, by creating a range of bikes that focused more on women, BJ’s existing retail store network strength was used to take advantage of the opportunity to enter further into the women’s market and allowed entry into the juvenile bike segment. This option balanced the weakness of the brand perception that BJ’s is solely a male-oriented brand. By focusing on the women’s segment BJ’s is able to mitigate the effects of the threat that the mountain bike segment is maturing, and focuses on a market that the low-end market segment was not targeting directly. Lessons Learned/Effectiveness of Environmental Scanning Environmental scanning and development of both realistic and attainable objectives that support the holistic strategy of a company were the most important lessons learned from this simulation that can be applied to Foundry. Environmental scanning allows decision makers to gather and present realistic, current and relevant information about events and relationships in the organization's environment. From the knowledge gained, management has the tools to plan for future adjustments that may need to be made in the existing strategies (Pearce, J., Robinson, R., 2005). Companies that operate without focused external assessments are not be able to identify potential SWOT, thus will not be stragetically sound to compete within their market industry. Without the combined knowledge mentioned, the end-state strategies have little or no chance of being successful. Had these scans not been completed for BJ’s many factors, only exampled by the situation regarding the women’s demographics and potentially the juvenile bike segment would have been missed or overlooked. BJ’s would have missed one or more opportunities that would have been seized by the competition. Concepts/Tools Applicable to Strategic Plan Two concepts from the simulation that apply to the strategic plan for Foundry include market research (focused on SWOT) and aligning objectives with conditions through matched-pair analysis. A summary of Foundry’s SWOT is: The SWOT identifies and prioritizes many external factors that impact Foundry. Understanding these factors is a first step in allowing Foundry to be proactive and create productive change rather than being forced to accept the results as they happen. The next step, matched-pair analysis, enables Foundry to determine strategic objectives that address multiple influences on their business. For instance, the objective of partnering with local firms in China and India in the small-office/home-office (SO/HO) networking market leverage’s Foundry’s strategic alliances and partnerships, this exploits the opportunity in the growth of the SO/HO market in the US and Europe, and partially neutralizes the threat of Asian vendors. By combining elements of the SWOT and aligning them with the strategic model and the 9 critial tasks for strategic management, Foundry can simplify its strategic plan to increase the likelihood of success in a way not possible if management were to decide to address each SWOT point as separate objectives. Challenges Facing Strategic Planners The most challenging issues facing strategic planners are collecting useful information and the reality of dynamic markets. Both issues were in the forefront of the first simulation. As was exampled within the BJ’s simulation collecting relevant data is complicated and can be expensive and worthless if not properly chosen. This simulation only presented four choices of sources for market research; reality can be much different with many more options available. A simple Google internet search provides many more options that could have been used. For a company like Foundry that operates in many different markets and offers thousands of products, the challenge is much greater plus they rely on package solutions from many vendors. This adds a greater challenge and is more significant than what could be presented in a couple thirty minute simulations. Compiling relevant data for decision-making is difficult enough, since it is impossible to predict precise future results based on historical information, for a single product in one market. For a global mega-corporation like Foundry, the complexity increases dramatically. This ties market research to the other challenge, dynamic markets. Even if data is accurate and relevant, the market is changing daily in the telecommunications industry. In the 70’s BJ’s was a small firm going into an upward growth pattern. Today their focus and strategy has changed because they have matured into an industry leader, thus changing the way strategy has to be planed and handled. As mentioned in previous reports, Foundry’s historical environment is much different now than it was 10 years ago or even 5 years ago, with competitors like Cisco, Juniper and Nortel still capturing major portions of the IT market share. If both Foundry and BJ’s do not realign their strategies with the current environments the potential is probable that both will lose their current leader status’s. Developing Grand Strategies The second simulation, Developing Grand Strategies, focused on the toy manufacturing firm, Oz!. This simulation demonstrates the required flexibility that is required to be maintained through changing external conditions characterized by market growth and competitive position. The rate of market growth and relative position to its competitors called for a different set of strategies to be determined and worked with during the simulation the choices chosen were based on the strategy theory (Pearce, J., Robinson, R., 2005). The environment as was classified within the simulation has been inserted into the Grand Strategy Clusters table (Pearce, J., Robinson, R., 2005) as follows: [pic] After assessing the existing market and competitive positions presented in the simulation, the recommended approach to meet the grand strategy available to Oz! coincided with a generic grand strategy from the table. For example, when Oz! operated in the first quadrant (top left), the choice was proposed that Oz! vertically integrate by buying the plastic’s company. Using this strategy, Oz! would be able to increase profitability by capturing profits of the supplier and potentially lowering an internal production cost. Lessons Learned/Relevance of Strategy Formulation and Choice Aligning available strategies with generic strategies is the most valuable lesson taken from this simulation. An OZ! or even a Foundry strategist will can mitigate risk by utilizing similar strategies learned from this simulation and have already been proven successful. Trends occur often and appear to happen in cycles, thus information can be extracted from these experiences whether they are from within the same industry or not. Lifecycles of certain trends especially within the IT environment can be used as an indicator as to where the company should be going. Unless a company or firm has an advantage of some nature that outweighs the effects of market conditions, the tested methodologies should be applied. Based on both the simulation and information gained from the Pearce & Robinson text a company should focus on identifying and predicting the market conditions to formulate a strategy that will enhance their competitive position as well as create opportunity by expanding market growth, based on the overall industry environment (Pearce, J., Robinson, R., 2005). Concepts/Tools Applicable to Strategic Plan The concept of understanding market conditions and applying the generic grand strategies will be useful in building a strong strategic plan for Foundry. Because, Foundry operates in different markets with varied conditions and industry maturity. It is important that Foundry apply different and applicable strategies for each of its global sites. For example to use the India and China expansion opportunities mentioned in an article specifically related to competitor company Cisco (Burrows, P & Kripalani, M., 2005). China has been experiencing a rapid growth period as well as an increased competition period in the networking equipment market. India on the other hand, is seeing a strong growth period but notably lower levels of competition. Therefore, while it would be wise for Foundry to purchase companies down the supply chain in India, Foundry would be served better by focusing on the horizontal integration and concentrated growth in China. Challenge Facing Strategic Planners The challenge facing strategic planners lies in predicting changes in the market conditions before they occur. If a company does not recognize increasing competition early, it must react to the competition vying for its customers. If this has not been identified and projected into the plan early, developing a mitigation strategy after the fact will leave the company at the mercy of the competitors. Again, flexibility and forward thinking is a key to survival and effective SWOT actions must be calculated into the strategy from the start. To mitigate external threats and maintain or the market position companies like OZ! & Foundry must constantly reevaluate the environment and reassess their strategies whether domestic or globally. Creating a Strategic Road Map The final simulation, Creating a Strategic Roadmap, adapts a strategic action plan that construction firm Constructwell should use to overtake the global market leader Aufbau in terms of revenue. In order to achieve Constructwell’s end-state goal following recommendations were selected: diversify operations into related businesses, forge partnerships to expand Constructwell operations, and reinforce product offerings. These choices were selected based on the recommendations determined from the SWOT analysis of both the internal and external operating environment. The SWOT was then aligned with the long-term goals of Constructwell. To further develop a recommended approach for Constructwell the following recommended the following actions: • To support diversification: Establish joint ventures and form alliances • To support expanding operations: Differentiate procurement process and form alliances • To support reinforced product offerings: Offer turn-key solutions and partially shift focus to wards renovation services Finally, with the rapid expansion of Constructwell I proposed that the firm adopt a matrix oriented organizational structure in order to center operations around critical processes and allow flexibility within varied geographic markets, resulting in an increase in customer value. Lessons Learned/Relevance of Formulation of Action Plans/Goals In order to formulate an effective action plan that will increase the likelihood a firm will reach its goals the first two considerations are identifying short-term objectives and initiating functional tactics (Pearce, Robinson, 2005). By linking the somewhat broad strategies to short-term goals a firm can change its techniques so that progress can be tracked and identifiable tasks can be assigned to business units or individuals. In this manner a firm can break down its strategies into specific actions with the list and priority being called the action plan. Within the simulation, I refined the product differentiation strategy into more specific objectives of offering turn-key solutions and renovation services. This provided the senior management with clear guidance as to how the strategy could be accomplished. It was then up to those managers to seek out and develop their own plans to support the overarching action plan. Important to note, this action plan capitalized on changing consumer preferences while mitigating threats of take-over bids and rising domestic labor costs at the same time allowing Constructwell to enhance information technology processes. The second key lesson I learned is that the structure of an organization can be either a tool or a hindrance to implementing action plans. For Constructwell, a matrix structure was optimum because it allowed planning, construction, and maintenance processes to interoperate cohesively, minimize redundant functions, while allowing flexibility needed in different market regions. Both the strategic business unit and geographic result in administrative functions being repeated, thus raising prices and decreasing customer value. The geographic structure, though not optimum, would however allow for specialization and understanding of local markets. Concepts/Tools Applicable to Strategic Plan For the strategic plan I am developing for Foundry I will incorporate the concept of breaking down strategies to objectives and specific action plans. For the Chinese market, one objective is to regain lost market share captured by local firms. With key Foundry strengths being large cash reserves and experience with joint ventures, the action plan will be to purchase existing networking firms and develop a joint venture relationship with China’s leading local firm, Huwai Technologies. Furthermore, I will evaluate Foundry’s organizational structure in China to determine if it is flexible and efficient enough or, conversely, if it needs to be modified to help Foundry recapture market share. Challenge Facing Strategic Planners As exemplified in the Creating Strategic Roadmap simulation, one challenge facing strategic planners is the volatility of strategic partnerships. Due to issues within two firms Constructwell was partnered with, both firms attempted to back out of agreements with Constructwell. This is not surprising considering that individual firms have different priorities and objectives. To reduce the likelihood of this occurring, I would impress upon strategic planners the importance of choosing the right partners. By right partners I mean those that have similar goals and complimentary, if not the same, values and culture. Conclusion In the discussion above the basic overviews of the Thinking Strategically, Developing Grand Strategies, and Creating a Strategic Roadmap simulations have been presented. The most significant learning experience came from the discussion of matched-pair analysis, which enhanced and clarified the understanding of the strategic use of SWOT. From the second simulation, the most significant factor retained was the characterization of market conditions and linkage to historically effective generic strategies. Additionally, the example of how to break-down strategies and long-term objectives into action plans will prove very useful in building the strategic plan for Foundry. In general, the simulations emphasized the point that strategic managers should carefully assess their market, consider their company’s internal conditions as well as the external conditions and then develop a specific plan, implement, measure, and reevaluate many times over. References Auster, E., Choo, C. (May 1993). Environmental Scanning by CEOs in Two Canadian Industries. Journal of the American Society for Information Science, 44(4), 194-203. Burrows, P., Kripalani, M., Einhorn, B. (November 28, 2005). Cisco: Sold on India. Business Week, 3961, 50. Retrieved from ProQuest database February 13, 2007. Country Watch (2006). Country Watch Database Macroeconomic Conditions. Retrieved from http://www.countrywatch.com.ezproxy.apollolibrary.com/default.aspx on February 13, 2007. Datamonitor (2007). Foundry Corporate Profile. Retrieved from http://dbic.datamonitor.com.ezproxy.apollolibrary.com/companies/company/ on February 12, 2007. Pearce, J., Robinson, R. (2005). Strategic Management (9th ed.). Boston: McGraw-Hill. ----------------------- [pic]