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Analysis of Suitable Strategic Choices of an Organization

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Strategic Decision Making

1394 Downloads 14 Pages 3577 Words

Introduction to Strategic Decision Making

Strategic decision making is the process by which managers can decisions for the betterment of the organization. These decisions are concern with organizational activities and the overall organizational environment. Companies make strategics towards achieving their goals and objectives, and improves employees efficiency. It also helpful in compete with the external environment of the organization as well as internal also. Employees behavior and their activities are affected by internal or internal factors of the market (Nielsen and Nielsen, 2011). So as these factors also reduces the chances of gain competitive advantage of the company, and its market growth. Internal factors of the organization can be reduces with the help of SWOT analysis, it involves strength, weakness, opportunities and threats of the organization. SWOT analysis is helpful in evaluate the overall internal activities of the employees and suggest strategics to reduce them. Due to this, strategic decision making also develops a healthy an dwell being environment in the organization. There are so many external factors in the organization that affects on employees performance and their behavior. These factors are as – political, economical, social, technological and legal (PESTAL). They also impact on organization's image and its market share and increase the number of competitors.

Task 1

Analyse the external environment of the organization and justify the threats and opportunities

The external environment of an organization is combination of the all outsider influences and factors that affect the activities of the company. organization should have to act or react to manages its flow of operations. External environment involves entities, factors, events and conditions that are surrounding overall the organization. It not only affect organization's activities and operations but also determines its risk and opportunities. External environment also known as operational environment that is totally opposed form internal environment. Managers can analyze the external factors with the help of PESTAL analysis, it is helpful in order to reduces the external factors that impacts on employees performance and their productivity as well. The factors that are involve in PESTAL analysis are as follows...

Political factors

It includes political stability in the market, government of the organization, taxation policy, environmental law, labour law, trade restrictions and so on. Basically it consider the relationship of the company with its government. It plays an crucial role in the success of Imda Tech. It establishes balances between free markets and system of control. Along with this, the government of every nation's don't supports any illegal or immoral corporate activities.

Economical factors

Economic factors relates with the health and wealth of any business organization. In Imda tech, economic factors helps to analyse the economic conditions of business. It is assistive in finding these problems such as- unemployment, economic growth, international trade and current levels of inflation, so as managers can make a better strategic plan. There are some economic factors that impacts on company's performance, such as- credit accessibility, interest rates, inflation, unemployment rates, and disposal income of buyers.

Social factors

Social factors involves distribution of wealth, education level of employees, changes in lifestyle and trends, population demographics etc. These circumstances affect on the mentality of consumer's and individual's in a given market. Social factors are also known as demographical factors.

Technological factors

Technological factors impact on employees performance because there are so many working techniques are available in market, due to these tools and technologies employees can work easily but they cannot develop their skills and knowledge (Citroen, 2011). In Imda tech, there are some technological such as – rate of technological obsolescence, new discoveries and innovations or new technological platforms.

Legal factors

Legal factors involves profit margins, viability of certain markets and product transportation. It assess the legality of business towards products and services.

Porter's 5 model

Porter's 5 forces model is a framework for evaluating the level of competition between industry and organization strategy development. It design to determine the intensity of competition in industrial organization. It also develops the attractiveness of competitive advantage that refer for overall company's profitability. These are the 5 forces that are involve in porter's model, such as – power of supplier, power of customers, threats of substitutes products, competition in an organization, and potential of new entrants in the business (Dekkers, 2011). In imda tech, these factors are also impact on its productivity and efficiency , it also increases competition form new entrants and affect on the quality of product and services.

Strategic capability analysis

The analysis is helpful in order to evaluate the capabilities of the employees so as managers can easily improves it. Along with this, managers create polices and strategics towards implement them in the overall organization. It increases the financial liability of Imda Tech so that company can growing despite in the presence of competitors.

Limitation of porter's 5 Model it focus more on macro analyse less, so as it is not a proper tool for analyse the external or internal environment because it is not specific. But it is helpful in accomplish competitive advantage for business organization. Five forces of porter's are as follow: -

Threat of new entrants

There are so many competitors and new entrants are available in market, porter's framework helps to provide capability to compete with all those factors. It is very challenging to stand in marketplace for new organization, because customer's cannot easily trust upon them. This framework helps to reduces the all barriers for new companies and start-ups.

Supplier power

It also develops the supplying power of managers. It is very essential to manage and organise the prices of the product therefore customers can easily attract towards them. Supplier power involves- reason of low pricing, how to switch cost, the number of supplier in market and who is controlling prices (Gary, Wood and Pillinger, 2012).

Bargaining power of customers

Bargaining power of customers also determine the market outputs. Customers only prefer those products which rates are less than another. If buyer power is high means buyer has many alternatives and if buyer power is less so that it acts independently.

Industry rivalry

Industry rivalry involves competition form external market. The model helps to provide suggestion in order to compete with external market and it also increases the chances of sustainable competitive advantage with the help of innovations.

Threats of substitutes

There are various kinds of product are available in market, therefore it is very difficult to produce attractive and innovative products for customers. Along with this, price and quality of product is also attracts the customer's, so as the managers of Imda tech, have to produces that type of product which has the combination of prices, quality and attractiveness.

Performance and efficiency of employees in Imda tech can be summarized through SWOT analyse...

Strength

Internal capabilities that may help an organization reach its objectives.

Weakness

Internal limitations that may interference with a company's ability to achieves its goals.

Opportunities

External factors of the organization that may be able exploit is advantage.

Threats

Current and emerging external factors that may challenges the company's performance.

Task 2

Describe the strategic capability of an organization and also identifies the strength and weakness

To understand the strategic capabilities of an organization, firstly managers have to understand the strategic choices of the company. Strategic choice approach, relate with the decision making process of Imda tech, because if strategics are not develops properly so as leaders cannot take sustainable decisions. The main aim of strategic choices is to concentrate on developing polices and to make them in a specific planning situations, either their substance or timescale (Kandemir and Acur, 2012.).

Strategic capability analysis

The analyse is helpful to improves the performance of the organization and their employees so as they can produces good quality products and services. Strategic capability analysis is helpful in company's competitive position that is change by its capability to perform at a high level. In today's world, every organization should have to change their abilities in order to respond customers demands and needs. It is also helpful in competitive threats that are commonly faced by Imda tech, if company is not to compete with its external threats so as its market growth goes down rapidly. There are some positive benefits of strategic capability analyse, such as -

Bridging the gap

It bridges the gap between success and failure components. Strategic capabilities helps to achieve market growth and development for the organization. So as it provides that kind of policies by using them managers can easily improves their productivity and efficiency.

Understanding organizational capabilities

Strategic capability analysis helps to know the capabilities of the organization, so that managers can develop their strategic accordingly. Due to this, they can easily makes their goals and objectives. If goals are set on the basis of organizational capabilities so it is easier to achieve them for managers.

Strength and weakness of Imda tech in context with competitive advantage

Strength relates with power and quality of the organization, it shows its ability towards goal achieving. Every business organization has to develops its capabilities and sustainability so as it can easily stands in capital market. Strength of an organization helps to compete with competitive advantage of market. A strength is a positive aspect for every business organization, it adds offers and values in Imda Tech a competitive advantage. It involves all tangible assets such as available equipment, credit, loyal customers, existing channels of distribution information and processing systems, credit, capital, copyright materials and patents or various valuable resources (Schmoldt and et. al., 2013). It seeks with quality of the product, proper utilization of available resources, market growth and market shares, a wide range of customers and achieve competitive advantage for company. Along with this, managers of Imda tech, can easily judge their capabilities and performance and make strategics accordingly. Strengths helps to face challenges and threats that are concern with external environment and it also reduces the impact of outside factors on company's growth and success. There are so certain teams that are specialist in or they have a unique knowledge, credentials and reputations in order to provide a competitive advantage and adds values in goods and services.

There are so many characteristic that detrimental for growth and success of the organization. Weakness reduce from the value of the product and offers, it is beneficial for competitors of a business, an apparent weakness would be an irrelevant place for Imda tech. Fro example – if a company is situated in north side, but its customers are extend in south or east area so as company is not able to easily understand their choice and demands. As along it is very difficult for company to supplying products in north area because it increases it transportation cost (Wu and Pagell, 2011).

Components which are known as weakness can rarely be remedied with appropriate restructuring or investment. Weaknesses of an organization can be find out through these factors or questions – why they do badly, what they are avoiding, who are competitors, and how they can compete with external markets. Weaknesses also can be identify through SWOT analysis, by using it managers of Imda tech, can easily evaluate the internal factors of the organization that affect their performance and not gaining competitive advantage from external market. It is very hard to figure out weaknesses and reduces them as well.

Task 3

Develop suitable strategic choices

It is an essential requirement of every business organization is to develop their strategic choice. Strategic choices are concern with strategic planning of the organization, by which managers can easily develops their aims and goals. It is the process that is helpful in making long term decision of Imda tech. Strategics choices are develop in order to implementation of a healthy and wealthy business organization. There are some factors that are involve in the development of strategic choices, such are as follow: -

Choice of infrastructure type

The first factors that is involve in strategic choices is to choose the type of infrastructure. When managers are planning for their business so as they have to chose the type of their industry. Infrastructure involves technical levels network design and set up of organization. In Imda tech, team leader also identifies all those factors so that they can easily implement their strategy and make it more effective. There are various ways to built infrastructure of the company, such as meshed, ring, and tree (Nummela and et. al., 2014). They are suitable and appropriate for different regional needs and situations. Choice of infrastructure, helps in develop goals and objects of the company. If the overall structure of the is well being so as employees also fell comfortable in operating activities. Strategic choices also plays an important role in achievement of competitive advantage of company, so as by applying them managers can easily compete with external factors of market. It is the central activity in order to make strategic decision and decisions should be developed for a long period of time in order to accomplish growth and success.

Choice of financial tool

Appropriate financial tools are also very important in the success of every business organization. In Imda tech, managers have to regulate that kind of financial tools by which they can easily manages budgets and financial statements of overall business organization. It is impossible to manage bunch of all financial accounts and reports, because they are diversifying timely. So as managers have to implement financial tools and techniques by which sales revenue and other profits of Imda tech can be manage in well being manner. These financial tools and techniques also available for private and public investments in any project of the company (Abdulrahman and et. al., 2015). Revenue based capital for running projects, public funds, community financing and private capital and bank loans in order to identifies the financing mix for a successful task or project. Choice of financial model is concern with investment and capital model of strategic choices. In that public or private sectors can be invest through direct or indirect methods of investment. The main aim of any strategic choice in terms of financial tools is to increase public investment so as the overall capital of Imda tech, can also be increase. Along with this it also involves to regulate attractive techniques by which peoples can easily influence in projects.

Choice of business model

An accurate and effective business model an important role in the extension of business inn marketplace. Choice of appropriate business model reduce the chances of failures of any project. A good business model involves attractive techniques of marketing, innovate products and services, quality of products and a key group of customers. If all those factors are mix up with marketing strategy of an organization so that it is sure that it can be able to achieve competitive advantage. Business models describes the duties of employees in infrastructure projects or their operations (Parayitam and Dooley, 2011). Along with this, business model should be able to deal with external factors and new competitors, so as it can gives better productivity to the organization. It also refers that a product should be maintain its quality so that it can easily attracts the number of customer. In term of strategic choices, it provides effective ideas and thoughts to improves their strategy and policies, and accomplish the competitive advantage of the company.

Strategic choices helps to reduces the elements of failure and develops success factors. They are also able to compete with external market of the organization, so as managers can achieve their competitive advantage. It involves all the external and internal factors of business that affect on its performance and efficiency.

Task 4

Evaluate strategic choices for an organization

Evaluation of strategic choices and decisions helps to improves the decision-making in an business organization. Strategic choices are concern with business planning, by which companies can develop their growth and success. It determines course of action that incereases sales revenue and profits of Imda tech. On the other hand, it is path to success by which managers can achieves their growth and development. There are two important factors of strategic choices, such as – setting objectives and strategic planning. Setting objectives are the essential part of strategic choices, because if managers cannot set their goals and objectives so as they are not able to achieve target market (Eweje, Turner and Müller, 2012). In strategic choices, managers also have to develop their strategic decision making process so as effective and efficient strategics can be create (Smith, 2014). An appropriate strategy can changes the overall market image of the organization. There are three choices are involve in strategic choices such as – choice of business model, choice of financial tool and choice of infrastructure. All the above mention three strategics managers have to choose choices according to their business type. In Imda tech, manager has to prefer the choice of business model, because it also involves another both choices.

Choice of business model help to built an effective business model and it also able to measure future growth of the company. Along with this, an appropriate business model capable in identifies forthcoming risk and uncertainness so as managers can prepare their plan accordingly (Chai, Liu and Ngai, 2013). Due to risk and uncertainness, sometimes market share of business goes down and it can't achieves its competitive advantage.

As above mention strategic choices are helpful in define objectives. Goals and objects are forward looking policies that relates with what a owner wants to attain. It also improves the performance of employees in order tom providing them training and developing sessions, that improves their knowledge, skills and qualification towards a particular task. Strategic choices also improves leadership qualities among team members so as it develops their personal as well as career growth of employees (Kudyba, 2014). These are some factors that are involves in strategic choices...

Environmental factors

There are some natural factors such as weather or climate that affect on strategic choices and planning, because managers are not able to identifies the impact of these factors. Sometimes they are positively and sometime negatively.

Attitude or age

There are so many age groups and personalities work together in business organization. All of them have different thinking and mind set, it is not easier to influence all members of the organization (Lyhne, 2011).

Situational factor

Sometimes, situations affects the decision-making process of managers. And it is not possible to change all the situations at same time.

Conclusion

In the above mentioned report it has been concluded that strategic choices affect the overall goals and objectives of the organization, it also impact on decision-making process the company. Along with this, the internal and external environment of business also put effect on employees performance and their productivity. SWOT and PESTAL analysis is helpful in order to identifies the internal and external issues and challenges. PESTAL analysis involves – political, economical, social, technological and legal factors of external market. These factors impact on organization growth and success, ans so on decreases the number of customer. For that managers have to evaluate the all external factors and make strategics accordingly. Further from this, report also concluded that porter's 5 models, that helps organization in gaining competitive advantage from capital market. Strategic capability analysis also helps to assess the abilities of employees and give advices according. Due to strategic capability analysis, them performance of the employees can be easily evaluate and and managers can develop their strategic choices. There are three choices involve s in strategic choices , such as- choice of infrastructure, choice of business model and choice of financial tools.

References

  • Abdulrahman, M.D.A.,and et. al., 2015. Viability of remanufacturing practice: a strategic decision making framework for Chinese auto-parts companies. Journal of Cleaner Production.
  • Chai, J., Liu, J.N. and Ngai, E.W., 2013. Application of decision-making techniques in supplier selection: A systematic review of literature. Expert Systems with Applications.
  • Citroen, C.L., 2011. The role of information in strategic decision-making. International Journal of Information Management.
  • Dekkers, R., 2011. Impact of strategic decision making for outsourcing on managing manufacturing. International Journal of Operations & Production Management.
  • Elbanna, S., Child, J. and Dayan, M., 2013. A model of antecedents and consequences of intuition in strategic decision-making: evidence from Egypt. Long Range Planning.
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