Corporate strategy is one of the critical drives in evaluating how an organisation can draw success!

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What is Corporate Strategy?

Corporate strategy is one of the critical drives in evaluating how an organisation can draw success. This comes with the fact that the development of modern-day business organisations under a diverse range of environments with more robust competition and continuous changes in the market has made it almost mandatory that unless the proper strategy is carried out, there is no option to sustain in the market. In this analysis, a comprehensive understanding of strategy-making will be developed based on other literature and models to study the change in nature of strategies corresponding to the business environment. To find a real and practical observation and discuss the theories of strategy making, the sole research will be based on the case study of company, a globally recognised organisation. The focus of the study will be based on the different models and the application of those to the natural environment of company to evaluate the newer path of making strategies.

Strategy & Models of Strategy-Making

'Strategy' has been one of the most popular terms in the domain of business organisations. Over the last three decades, strategy has become a fundamental operator for the organisations amidst global competition, international business expansion and the shift of consumer demand from 'necessity' to the 'necessity of luxury' (Demilet al., 2015). Businesses, nowadays, are running more behind the strategy-making than any other planning. As a result, strategies are no more mere sharp plans; instead, the strategy is now an advanced topic of studying social engineering, encompassing every sphere of social and behavioural sciences, from economics to sociology and history to psychology (Roetzel, 2019).

In the management literature, strategies are no more for mere planning; instead, these have become much about putting creativity and innovations. According to Darbi and Knott (2016),Strategising means developing a comprehensive analysis of the organisation's current situation. The action plans are developed upon and consider the required business objectives to be pursued. 

Thus, while theorising and strategising for business growth models and corresponding action planning, it should be taken as example how its good for understanding how complex strategies can be implemented in the business context.

This paper will critically examine and analyse different models of strategy making and diligently apply them in the context of the business environment of a company. The target is not only about understanding several strategy-making models and theories but also adopting the methodologies of implementing them in a real business scenario. The fundamental of all these models thus would be implemented on company's current conditions, and correspondingly suitable recommendations would come out.

Along with several well-known models of strategy-making, a mathematical model based on some elementary level mathematical formulation would also be given for further research. However, this model would also try to find out the fundamental techniques of strategising, and therefore, suggestions will be made on company's business context focussing on this model.  

 Three-Dimensional Strategic Analysis

The three-dimensional strategic analysis is one of the most advanced strategy development and action planning tools. It is based on a complete objective methodology and mathematical modelling. To make a strategic analysis of the organisational functioning of company and find out some effective action planning, the three-dimensional strategic analysis might be the best tool. This modelling is based on an analytical and comprehensive study on several researches made by GUSEVA, UNGUREANU, and KUZMIN (2017); Trad (2020); Loginovskiy, Dranko, and Hollay(2018); Kokodey, Gnezdova, and Lomachenko (2018); and Mins (1994).

However, the fundamental conception has been adopted from the work developed by Kokodey (2013).

Theory Concepts

Before entering the accurate case analysis of company, a fundamental understanding and conceptualisation of the three-dimensional action planning are required.

To begin with, it is essential to understand the three dimensions for making the optimal strategy. Using the McKinsey matrix (Shenet al., 2015), the three dimensions must be:

(1) Level of the competitive advantage of the organisation (a market-specific parameter) (x)

(2)  Favourability of the environment (both external and internal) (y)

(3) Time (t)

Now, these three dimensions are taken along the X, Y and the Z axes, respectively, intersecting at the origin O. Before drawing the mathematical formulations, it is essential to put some fundamental assumptions.

The plane XOY and all the planes parallel to it, which correspond to a particular value of t, denote the competition planes at different periods.Any point on a competition plane, say A≡ (x, y, t), represents the organisation's strategic position corresponding to the competitive advantage x and the environment favourability y at the time t.

  • Relative market share
  • Relative market strength
  • Organisation's market share compared to the competitors
  • The consistency in financial growth compared to the competitors (might be taken as the gross revenue)
  • Expansion and effectiveness of the supply chain
  • Key commodity's competitiveness
  • Customer strength and customer loyalty
  • Innovation's power compared to the competitors
  • The capacity of production compared to the competitors
  • Product diversification strength compared to the competitors
  • Change resilience strength compared to the competitors

Amongst these, the relative market share and the relative market strength play as the most important factors along the X-axis in theory and in the real strategy-making for the business organisation in practice.

On the other hand, the variable y, plotted along the axis Y, denotes the favourability of the organisation's environment. Based on the work developed by Abba,Yahaya,and Suleiman (2018), thefactors that determine this variable that is represented as λican be listed as follows:

  • Dynamicity in the demand structure
  • Rate of growth in the market and its actual size
  • Change in customer's pattern (in economic or social terms)
  • Power of competitors and their quantity
  • Raw materials cost and availability
  • Employee's effectiveness
  • Work culture in the organisation
  • Possibilities of global financial crises
  • Environmental issues
  • Technological advances and trends

A Further Note of the Model

This model can be developed further using relevant literature based on polycyclic theories and the methods of hodographs. However, the model here is limited to a fundamental understanding only.

Implementing the Model on  Business Operation

It is now required to develop a comprehensive understanding of how the model proposed and developed above can be implemented in the context of company. Firstly, implementing this would require identifying the factors related to the competitive advantage of the organisation and the favourability of its business environment. Secondly, the values and the weights of the elements must be determined. To work it out in reality, company needs to carry out the following tasks:

  1. Evaluation of the level of competitiveness by identifying the factors associated with it.
  2. Proper quantification of these factors by assigning the correct values (fi). This should be done in a region-specific manner. The detailed reports of the competitors must be present with reasonable accuracy to evaluate the exact ratios.
  3. The most critical task is to give weights to these parameters, which are different for different market scenarios, and if not carried out properly, the entire projections of multi-components strategies would come incorrect, leading to a debacle.
  4. The quantification of the environmental favourability is a much more crucial part as it is primarily qualitative data and cannot be quantised unless true innovation is adopted. Furthermore, setting the weights for these factors requires a comprehensive and in-depth analysis with reviewing proper literature on the organisation's external and internal markets.
  5. The most non-trivial work is to understand again.

Porter’s Five Forces: Industry Analysis Model

Theoretical Approach to the model

Porter's five forces is a well-known and quite old theory in strategising and decision-making disciplines. According to Zhaoet al. (2016), however fundamental and straightforward enough and gives a superficial view of market analyses, it has an in-depth effect on evaluating ready-to-be-implemented and clear strategies. According to Karagiannopoulos, Georgopoulosand Nikolopoulos (2005), the theory states that there are five factors corresponding to the market that a company must deal with and that are the deciders of whether an organisation would flourish in the market. Here the organisational development or flourish depicts solely the financial growth (mainly the gross revenue). According to Porter (1996) and Porter and Locations (2000), these five forces are the suppliers' bargaining power, the customers' bargaining power, threats of new entrants, threats of substitute products, and competitive rivalry within an industry. The model suggests that a credible strategy would be developed based on the weights assigned to these parameters. Thus, it is essential to have a comprehensive analysis of the numbers and the power of these forces.

Gross Profit Increasing Strategy

The Main Concept

Gross profit refers to an organisation's profit by deducting all the costs for producing and selling all of its commodities. Thus, it denotes the net price for its services (Nariswari and Nugraha,2020). Indeed, increasing the gross profit is a crucial objective for financial growth that every organisation aims to earn. However, the increase in gross profit is brutal to make possible in reality because of a dynamic organisational environment, both externally and internally (Crane, 2017). Therefore, the modern strategies for gross profit increase have to be carried out by considering all the relevant market issues and organisational functioning and activities (von Mutius and Huchzermeier, 2021). According to Poonawalaand Nagar (2019), the following singular strategies might be taken for Gross profit increase, such as:

  • Reducing operating expenses
  • Raising prices
  • Increasing brand identity and the reputation of the organisation
  • Increasing customer loyalty
  • Bringing innovation in operation
  • Developing automation drive in operation to increase productivity etc.

All these strategies are singular, and one is related to another in an antagonistic or non-antagonistic manner. To deal with a real solution to increasing the gross profit, a scientific model is thus required. In this regard, a comprehensive, as well as a coherent model, is needed on which the strategy would be based. Which of these factors and to what intensity would be implemented- is the question of the process making in reality. Thus, those simple 'strategies' are not strategies in practice; instead, these are the mere factors manipulating which a strategic solution might be found.

To mitigate this challenge, the strategy-making team of the organisation must go for analysis with the following steps:

  1. Evaluating the key factors that can enhance the gross profit.
  2. The correlation between these factors should be considered then.
  3. Identification of the critical challenges for implementing each of these factors
  4. Based on this, identify the probabilities assigned to these at the current situation.
  5. Finding out the weightage of each of these factors
  6. Evaluating the intensity of the complex strategy based on the equation given above.
  7. Implementing the strategy based on the correlation of the factors by manipulating them to the greatest extent is possible through internal environmental changes.

The 7S Model or the McKinsey Model

The Main Theory

According to the McKinsey Model, the organisational strategy making is a function of 7S, viz. structure, strategy, staff, shared value, skills, system, and styles. This theory advocates for a holistic model to monitor and analyse organisational functioning (Nejad, Behbodiand Ravanfar,2015).

While strategy, structure and system are taken as the hard S, the remaining four are considered the soft S.The organisation develops its future strategies based on these (the process as the complex S parameter accounts for the current plan of action) parameters (Channon and Caldart, 2015). When the system must be remade, the organisation leads to an evaluation process on these factors. The idea is to have a comprehensive report on all of these factors at a regular time interval.  

Contingent Action Planning

The contingent action planning is carried out above, using different strategy making models. Based on these models, the required action plan might be stated as below: 

  • Based on the three-dimensional matrix model of strategy making, the organisation needs to develop a strong team for the R&D segment to critically analyse the factors corresponding to its level of competitivity and the environmental favourability. The team must use proper statistical research to develop a quantification model for these parameters and formulate an effective strategy. Furthermore, since the accessories market is highly dynamic, the designs are preferred to be developed for short time intervals during the initial stages. After the algorithms work properly, the strategies can be made long-term.
  • Using Porter's Five Force model, company should focus on how its organisation in Columbia may experience unprecedented and untouchable growth. Although it is already a leader in the market, the five-force model should be continuously used to stay alert for any disruption in the call made by any rival organisation or a new entrant. The organisation should focus on its branding and developing advanced and innovative brand strategies.
  • The 7S model of strategy making should be used in the US market to experience a serious and growing drive. Although there is a high chance of being challenged by the market leaders in the US, who are the giants indeed, the organisation should focus on the three soft 'S'of McKinsey's 7S to stay competitive by continuously evolving its strategies.

How Corporate Strategy Works?

The analysis above is deciphering a qualitative study of how effective strategy-making can be carried out for the accessories producing organisation. The paper has depicted some fundamental methods of making strategies and decisions based on a contingent environment. It has been sighted that it is impossible to develop a hardcore or specific model of strategy-making; instead, the only possible thing is to understand the parameters properly for a successful drive. In a contingent medium of operation, as the parameters of the environment vary with time, the strategies are always time-bound and dynamic. The paper shows that modern strategy-developing and decision-making processes are solely random. The only task an organisation needs to perform is to properly understand the contingency variables and their changes from a qualitative and quantitative perspective.

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