By Comparison With Other Factors, Evaluate How Important Stakeholders Are In Stratergic Management
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CHALLENGES OF THE VIKING SEWING MACHINE GROUP IN STRATERGIC MANAGEMENT
INTRODUCTION
The Viking Sewing machine (VSM) company was originally controlled by Electrolux, having acquired it in 1997; but was sold 20 years later to an investment fund, Industri Kapital.
The company is into the business of sewing machine manufacturing and has since grown to be a force to be reckoned within the same industry since 1997.
The mission statement of the company reflects the intention of the management of the company to make the company the leading sewing machine manufacturer in the industry; but these missions cannot be executed without a direction or scope.
It is the direction and scope with which the management intends to follow or execute the mission that is known as Strategy.
But Strategy in itself is not about the careful follow up of the direction and scope as agreed by some school of thoughts in management.
WHAT THEN IS STRATEGY?
There are four different approaches in the analysis of strategy as a tool.
These (Whittington 2001: 3) views as: Classical, Evolutionary, Systemic and Processual.
Whittington (2001: 10) views the Classical and Evolutionary approaches in summary to be profit-making and maximization as the dividend of these strategies while the systemic and Processual approaches strategy as all odds experienced by the management of an organisation including profit making.
Some of the authorities, which believes in the Classical approach of strategy includes: Igor Ansoff and Michael Porter. These theorists view strategy as a “rational process of long -term planning, vital to securing the future of any organisation” (Whittington 2001: 4).
The Evolutionist on the other hand shares their view on strategy as an unpredictable event. They see the markets as a tough and unpredictable investment and as such encourage the keeping of operation cost low and options open. Among the theorists that share this view are Alchian and Oliver Williamson.
The systemic sees strategy as a sociologically efficient thing. And argues that there is no best way to approach strategy and as such people has to achieve strategy by playing by the local rules. Theorists that share this view include Granvotter and Whitley.
The Processualist believes that strategy emerges from the imperfections of organisations and market processes and it is only when this imperfection occurs that true managers can fathom what step to take or strategies to adopt. Some of the theorists that are of this view include Henry Mintzberg.
Whittington (2001: 7) summarizes the characteristics of each of these strategies as seen below:
Classical
Evolutionary
Processual
Systemic
Leadership
Decisions
Planning
Innovation
Diversification
Internationalisation
Organisation
Strategic change
Key: = Major emphasis
= Minor emphasis
From the above table and in relation to the case study, it is assumed that the VSM group adopts the classical approach to strategy.
STRATEGIC MANAGEMENT
Whittington (2001: 4) views the ideology of the Classicist approach to strategy as a rational process of long-term planning, which leads to profit maximization.
The above cannot be true without the proper follow-up of the plans in place by the management of the organisation.
It is the careful follow-up of the plans in order to achieve the objectives and goals of the organisation that is known as strategic management.
Thus, Cole (1994: 4) define Strategic management as a “process directed by top management, to determine the fundamental aims or goals of the organisation and ensure a range of decisions which will allow for the achievement of those aims or goals in long term, while providing for adaptive response in the shorter term”.
STRATEGIC MANAGEMENT AND THE VSM GROUP
With the careful look into the definition of strategic management as used in this piece, it can be observed that strategic management comprise of strategic position, strategic choice and strategic action.
STRATEGIC POSITION
Johnson et al (2005: 17) describe this as “concerned with the impact on strategy of the external environment, an organisations strategic capability (resources and competences) and the influence of stakeholders”.
In order to determine how well the VSM group manages this component of strategic management, Lynch (2006: 450) recommends the analysis of the internal strength and weaknesses as well as the opportunities and threats in the external environment of the company using the SWOT analysis. Also Lynch (2006: 203) recommends the use of the value chain as a tool to identify the strategic capability and where value is added.
THE EXTERNAL ENVIRONMENT AND THE VSM GROUP
Using the PEST analysis to evaluate the external environment in which VSM operates, it would be observed that some of the external factors affecting the operation of VSM often serve as an opportunity for the company to thrive and achieve strategic competitiveness while some others often serve as threats to hinder the company from achieving strategic competitiveness.
Some of the external factors of importance as identified by Hitt et al (2005: 39) and in relation to the VSM group are:
Economic