What is a corporate strategy? Why is it important for a small business to identify a corporate strategy? What are possible consequences that a small business may experience if it does not have a defined corporate strategy? 2. What is the difference between horizontal growth and vertical growth? Name a real-world company that focuses more on horizontal growth and a company that focuses more on vertical growth. Why do these two companies choose different growth strategies? 3. What steps need to be taken before we implement an organizational strategy? Why are time frames so important to the implementation of an organization’s strategy? What role does the sequence of execution play? 4. Why and when do firms create value through diversification? 5. List the reasons why diversification fails to add value. Which one do you believe is most common? Which is least? 6. Describe the advantages of outsourcing and the conditions under which it might be advantageous to outsource an activity to an external supplier. 7. Define crowdsourcing and explain the different ways that companies can use an external crowd to do its work (e.g., types of crowdsourcing). 8. When using the 7 S model to create alignment, why do managers need to make sure all the Ss align with the organization’s strategy? What problems follow misalignment?

Q1 Corporate Strategy

A corporate strategy typically comprises of clearly stated, long-term vision of the business, seeking to come up with corporate value and encourage the employees to implement the needed actions aimed at achieving consumer’s satisfaction. Moreover, the organizational method is considered as an ongoing process that requires a continuous effort to engage the investors in trusting the organization with their finances; thus, enhancing the business’s equity (Purce, 2014). A majority of institutions able to deliver consumer value unfailingly are strategically those that revisit their planned corporate technique more often with the aim of enhancing the areas that might not achieve the intended outcomes. However, a business that does not have a corporate strategy is likely to miss essential business objectives, and this will result in an unrealized set of duties, the competency and lack of consumer value appreciation.

Q2 Horizontal Growth and Vertical Growth

Flat growth is considered as the act of incorporating other essential assets, infrastructure, and organizations of the same business or in the same degree of production with the intention of increasing the existing operations as compared to the establishment of modern services. On the other hand, vertical growth is considered as the process of engaging into a new activity with the primary objective of reducing the business’s reliability on other organizations in the process of production and distribution of goods and services (Moatti et al. 2015). An example of a company using the horizontal growth technique is the Taco Bell that is typically known for lunch and dinner services and decided to incorporate more operation hours and the addition of breakfast into their menu. First Solar is another business that uses the vertical growth technique as it produces solar panels and has finished several acquisitions of smaller organizations within their supply chain. The reason as to why these two companies use different growth technique is that; the two processes come with their wants, and it also depends on what the business is seeking to accomplish.

Q3 Organizational Strategy

Some of the essential steps to be taken before the actual implementation of an institutional strategy include knowing where the business is through carrying out both the internal and external audits to get the precise knowledge of the marketplace, the competitive surrounding, and the institution’s competencies. The second step engages highlighting the crucial considerations including where the business ought to be in the coming years as it sets the direction of the company over the long-term and adequately defining the mission and vision. The third stage is highlighting the things that need to be accomplished as priority concerns (Purce, 2014). A time frame is essential in the process as it typically allows more corporation and proper articulation of the needed duties by employees. It is also useful as it defines what ought to be completed within a given time thus allowing efficiency. The sequence of execution plays a significant duty of lowering the gap existing between brilliant techniques and superior performance.

Q4 Diversification

To enhance institution expansion and to come up with modern options of value, a majority of organizations have resolved to the growth of product diversification method as it enables the organizations to create value and diverse market opportunities. Businesses that can be categorized as collections of institutional capabilities including the expertise in marketing or new-product growth as considered to be diversified (Nath, Nachiappan & Ramanathan, 2010). Executives also engage in value addition through diversification when they want to gain the market power and stability. This is typically done through pooled negotiation strategies together with the use of vertical integration. Businesses that benefit from incorporating a stable parent institution can apply diversification strategy to boost a bargaining position with the clients and suppliers.

Q5 When Diversification Fails

While diversification has been significant in other organizations, for others it has been considered as a failure and a costly error; thus, when engaging in a new business, a good strategy is essential. Some of the reasons why diversity fails to incorporate value to the market are; the advantages of diversification quickly erode when adding more than 30 holdings, and over-diversification leads to average performance (Nath, Nachiappan & Ramanathan, 2010). The most common reason is that of erosion as market risk affects stock indiscriminately and cannot be diversified away with more baskets of assets. Therefore, no matter how diversified one is, if the economic data sours, all are susceptible to decrease. The least consideration is that of the average performance within the business where a portfolio having even 50 stocks is spread so thin thus the investor can only hope to acquire returns consistent with the broader market.

Q6 Advantages of Outsourcing

Outsourcing is the process in which various organizations entrust the procedure of their operational functions to other vendors (Sørensen, 2012). The process has numerous advantages that include the increased efficiency where more experience will be incorporated into the business operations and skills in delivering services. It also comes with the cost advantages as jobs can be accomplished at a lower cost and better quality. Outsourcing also leads to skilled resources where a business can stop investing in employing and training valuable assets. Typically, outsourced personnel are well trained and educated in the various business areas and experienced in controlling the business essential want to outsource. Some of the conditions that lead to outsourcing within an organization are when it wants to reduce and control the operating cost together with increasing the organization’s focus. Also, outsourcing is done when a business wants to free some of its internal sources for other reasons and also to utilize the use of external resources.

Q7 Crowd-Sourcing

Crowd-sourcing is typically a sourcing model in which people or institutions acquire goods and services that incorporate ideas and finances from a massive relatively vast and often rapidly growing group of internet users. It strategically divides the duties between participants with the aim of achieving cumulative feedback. Crowd-sourcing originates from a lesser specific more public group and its various forms such as “idea competitions” provides methods for an institution to learn past the “base of minds” articulated by the employees. External crowd can be described as a mixed group of individuals that are not employed by a given institution having the change ideas (Sørensen, 2012). The external crowd inputs are used together with the crowd science and machine learning algorithms in providing the needed services.

Q8 The Seven Elements

According to Alshaher, (2013), the McKinsey 7S model engages seven independent considerations that are grouped as either “hard” or “soft” elements where hard elements are considered to be easier to outline thus making the management to directly influence them, while the soft aspects can be hard to describe, less tangible and more affected by culture. Moreover, the model is centered on the theory stating that, for a business to perform adequately, the seven considerations ought to be aligned and mutually reinforcing. Therefore, the reasons as to why the executives should make sure all the Ss align with the business’s strategy are to enhance the performance of the organization, evaluate the likely effects of future alterations within the market, and also to know how effective to incorporate a proposed technique.

 

References

Alshaher, A. A. F. (2013). The McKinsey 7S model framework for e-learning system readiness assessment. International Journal of Advances in Engineering & Technology, 6(5), 1948.

Moatti, V., Ren, C. R., Anand, J., & Dussauge, P. (2015). Disentangling the performance effects of efficiency and bargaining power in horizontal growth strategies: An empirical investigation in the global retail industry. Strategic Management Journal, 36(5), 745-757.

Nath, P., Nachiappan, S., & Ramanathan, R. (2010). The impact of marketing capability, operations capability and diversification strategy on performance: A resource-based view. Industrial Marketing Management, 39(2), 317-329.

Purce, J. (2014). The impact of corporate strategy on human resource management. New Perspectives on Human Resource Management (Routledge Revivals), 67.

Sørensen, I. E. (2012). Crowdsourcing and outsourcing: the impact of online funding and distribution on the documentary film industry in the UK. Media, Culture & Society, 34(6), 726-743.