Share
Explore BrainMass

Generic and Functional Strategies

1. Develop a generic, competitive strategy to position your organization in the marketplace.

2. Produce functional strategies for your organization. Marketing (product, place, price, and promotion), human resources, and financial strategies are an essential part of this assignment. Also, include other functional strategies that pertain to your organization. The strategies should be consistent with the grand strategy, meet goals and objectives, and move the organization towards its mission.

3. Describe how the strategies fit strategically and enhance the organization's competitive advantage.

4. Three movements in corporations are likely to affect the nature of corporate strategies. These are (1) corporate downsizing (reduction in staff), (2) outsourcing (focusing on one's core competencies and letting other firms sustain the other elements of one's business), and (3) re-engineering (a radical redesign of business processes to cut costs or gain in service and time). What are the repercussions of these three movements for your organization, your competitors and your customers? What role does information technology and software play in these changes? What effect do these changes have on the generic and functional strategies of your organization? How would you as a strategic manager address these changes within your organization?

Solution Preview

1. Develop a generic, competitive strategy to position your organization in the marketplace.

Mission of Able Corporation

"Our Mission is to become the global leader in the power tools industry by displaying extraordinary leadership in terms of innovation, quality and customer service in various segments of the power tools industry"

Corporate Level Strategy

We will have both organic and inorganic growth strategy to become the global leader in the power tool industry. This will lead to the following benefits:

BENEFITS OF LARGE SIZE

Organization will reap benefits of economies of scale and size by this takeover. A merger can also improve a company's standing in the investment community: bigger firms often have an easier time raising capital than smaller ones.

Staff reductions and other cost reductions

It will also lead to sharing of overheads, common distribution and marketing channels. All these will lead to reduction in cost and increase in profits

Limitations

The McKinsey study concludes that companies often focus too intently on cutting costs following mergers, while revenues and, ultimately, profits suffer. Merging companies can focus on integration and cost-cutting so much that they neglect day-to-day business, thereby prompting nervous customers to flee. This loss of revenue momentum is one reason so many mergers fail to create value for shareholders.

Financial risks

ERODE SHAREHOLDER'S WEALTH

Overlapping subsidiaries or redundant staff may be allowed to continue, creating inefficiency, and conversely the new management may cut too many operations or personnel, losing expertise and disrupting employee culture. For the acquisitions to not be considered a failure, it must increase shareholder value faster than if the companies were separate, or prevent the deterioration of shareholder value more than if the companies were separate.

Tackling Different Cultures

The chances for success are further hampered if the corporate cultures of the companies are very different. When a company is acquired, the decision is typically based on product or market synergies, but cultural differences are often ignored. It's a mistake to assume that people issues are easily overcome. For example, employees at a target company might be accustomed to easy access to top management, flexible work schedules or even a relaxed dress code. These aspects of a working environment may not seem significant, but if new management removes them, the result can be resentment and shrinking productivity.

Business strategy

The essence of strategy formulation is coping with competition (Pearce and Robinson, 2004). A competitive advantage is an advantage over competitors gained by offering consumers greater value, either by means of lower prices or by providing greater benefits and service that justifies higher prices. Michael Porter identifies three fundamental competitive strategies and lays out the required skills and resources, organizational elements and risks associated with each strategy. These are product differentiation, cost leadership and Focus. Competitive strategy raises the following questions:
Should we compete on basis of low cost (and thus price) or should we differentiate our products or services on some basis other than cost or product differentiation.

Should we focus on niche or should we have head to head competition.

The differentiation and cost leadership strategies seek competitive advantage in a broad range of market or industry segments. By contrast, the differentiation focus and cost focus strategies are adopted in a narrow market or industry.
Our strategy will be of product differentiation and we strive to develop brand for the demanding customers. In addition to building superior brands, we will create innovative products to keep up with the changing environment.

2. Produce functional strategies for your organization. Marketing (product, place, price, and promotion), human resources, and financial strategies are an essential part of this assignment. Also, include other functional strategies that pertain to your organization. The strategies should be consistent with the grand strategy, meet goals and objectives, and move the organization towards its mission.

Functional strategy
Human resource strategy

Human Resource management involves the development of organization systems and practices for the planning, acquisition, development and utilization of manpower. HR policies must be fair, reasonable and employee friendly. Organization structure is one of the key elements of the strategy implementation. Thus key objectives of it are:
- Building a capable organization
- Allocating ample resources to strategy-critical activities
- Establishing strategy supportive policies & procedures
- Instituting best practices & mechanisms for continuous improvement

"The organic structure is more flexible, more adaptable to a participative form of management, and less concerned with a clearly defined structure. The organic organization is open to the environment in order to capitalize upon new opportunities." (Telecollege)

We will have organic organizations structure as we believe in empowerment and responding to the environment in fast manner. There is greater flexibility so important for global business to be successful. The multi-task multi-functional role of team members is so important in the global marketplace. Innovation is facilitated by flexible organizations. It also increases productivity. Thus we have to move away from the definition of employees and be more of "partners" who would function independently, take decisions independently, and work as a part of extremely high-powered, self sufficient teams, empowered to take their own decisions.

Financial strategy

Our goal will be to maximize the wealth of the investors. For this we will have apt capital structure and we will invest in only those projects which ...

Solution Summary

By using Able Corporation, this solution creates a competitive strategy for the company, its functional strategies, and discusses how these strategies enhance the company's competitive advantage. It also explains how three movements in corporations can affect Able Corporation.

$2.19