Strategic Plan Literature Review

Strategic Plan Literature Review
Strategic Plan Literature Review

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Strategic Plan Literature Review

A fundamental technique applied by management accountants in managing an organization is strategic planning. Strategic planning a comprehensive method that consists the determination of what an organization should become and how it can achieve its goals and objectives Griffin (2013). In strategic planning mission and vision for the business are laid out. It does not necessarily involve describing how to achieve the goals of the business but to describe where the business is going.

Though strategic planning is a paramount need for an organization’s growth through recharging, an organization is mostly tired of coming up with new ways due to the scarcity of resources (Byron 2011). This paper is intended to analyze strategic planning as a management accounting function by going through literature reviews to ascertain the applicability, characteristics, and assumptions underlying the technique.

Literature review

Bain (2015) researched on strategic planning and its applicability in organizations. According to the author, strategic planning exploits the full potential of a business and acts as a link between the objectives of the business and the resources required to achieve the objectives. According to Bain (2015), a clear strategic plan should address the following issues.

1.    A full insight into an organization’s mission, goals, and objectives.

2.    Explore all the potential business gaps and markets for emerging opportunities and threats.

3.    Provide an understanding of the future market segments and priorities.

4.    An analysis of the company’s weaknesses and strengths and its competitors together with processes in the value chain that need to be changed or adopted.

5.    Identification, assessment, and evaluation of strategies and creation of a business model that can differentiate the business with competitors.

6.    Preparation of programs and policies for proper implementation of the strategies.

7.    Allocation of resources, responds to environmental changes and monitoring of performance.

Strategic Plan Literature Review

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Strategic planning is used by management accountants to change the performance of a business, promote discussions that provide facts that are politically sensitive, the creation of a model that integrates all the functions of the organization, and have proper context for making budgeting decisions (Amy 2012). Through strategic plans, managers get more insightful information for decision making and business appraisal.

The assumption made in developing strategic plans is that resources are readily available, and the organization is underperforming. Also, it is assumed that the external factors and internal factors provide all the required information for making strategic plans. However, it’s hard to get complete strategies since competitors do not give information that is relevant for benchmarking and the process is also implicated b social and political factors (Byron 2013).

Another scholar, Paul (2013) made a comprehensive research on the essential requirements for strategic planning. The author also assumes that the organization making strategic plans is financially struggling. According to the author, strategic planning is a functional process that provides the difference between a struggling organization and an innovative-driven organization.

The reason behind strategic planning is to create a cultural environment that believes in planning not just for the company to strive out of its low performance but long after regaining form (John 2012). Successful strategic planning incorporates ideas, inspiration, hard work, and determination. Most strategic plans are currently static and should evolve to being more adaptive and directive.

Strategic Plan Literature Review

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Paul (2013) noted that the essential elements of a successful strategic plan involve:

1.    Beginning at the top.

For a unified mission and vision, top management should take priority in implementing the strategic plans. The plan does not only involve management accounting but all other senior departmental managers including the CEOs. The senior managers should drive the strategies and give reasons behind each plan for effective accomplishment of organization goals. A strategic plan involves all the processes of an organization, and it is through coordination of the different functions and processes that a cohesive strategic plan is formulated. Management should be leaders in their job to ensure the strategies fall in place.

2.    Inclusion of strategic plan at all levels

Management accountants should involve all the levels of employees while designing a strategic plan. As proven by the lean approach, each has different ideas, and if given the right conditions, the ideas can be put to work (Khan and Join 2010). The sales team, financial accountants, casual workers, and even customers should be involved in strategic planning. Involving all levels of the organization in strategic planning ensures that passion for the internal community is strong for all the people working at the organization. Employees get motivated to work even extra hard when they feel they are considered a part of the organization.

3.    Concentrate more on skill than vision

Though a strategic plan is guided by the vision of the organization, skills and expertise required is key to the achievement of the firm’s goals. Different skill sets should be applied while crafting the strategic plan (Bain 2014).

4.    Have a guidebook for making decisions

The strategic plan should be used by all the functions of the organization to make decisions. Mission, vision, and decisions should be the core of the strategic plan and should provide advance decisions for the firm. The strategic plan should be the first thing to be viewed and applied daily as it is a representative of the organization.

5.    Flexibility

Though the strategic plan is used as a guidebook, the market keeps on changing, and it should be designed in a way that it can be changed. Priorities and economic conditions shift making the tasks laid out for accomplishment to change and evolve.

A well-documented strategic plan uses the past to forecast the future and creates a specialized culture for the organization. Strategic plans impact the organization socially by integrating the different functions and departments (Erica 2012). It is ethical in its form since all the stakeholders are involved hence ensuring that the needs of each are looked into before it is implemented.

Strategic Plan Literature Review

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Dennis (2013) talked about an organization looking beyond strategic plan. There are so many challenges faced by organizations that they wonder whether they will survive, let alone succeed. One of the main ways of re-starting an organization is through strategic planning. At the beginning of strategic planning, organizations are always excited yet mostly they end up failing in their mission. Failure by organizations results from strategic plans lacking some primary components such as:

1.    A detailed assessment of the organizational structure.

2.    A vision that is clear with uptight measures.

3.    A clear and comprehensive funding structure to acquire all the necessary resources.

4.    A plan that is detailed for implementation by both the staff and the management.

After the process of making the strategic plan, management accountants involved in the process always say that the process gave them insights into fulfilling the goals of the organization, that the functions were fully engaged and so on. The managers involved in the process should have greater confidence in the improvement of the organization and also the know how to accomplish the goals (James 2012). All the staff and board of directors should also be excited because they know where they are as an organization and where they are going.

According to Dennis (2013), effective process of strategic planning begins by first establishing the current position of the organization and the internal obstacles that it’s facing and all the hindrances to its achievement. Establishing obstacles is done by having a comprehensive face to face interviews with all the involved stakeholders both internal and external.

Before the interviews are done, it is crucial to collect and review information about the organization. Information management needs to have include budgets and financial statements, table of organization used by management, board minutes, marketing and public relations schedules and a better understanding of all the components. It’s only after there is a detailed list of information that a strategic plan can be prepared.

Strategic Plan Literature Review

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The vision presented by the strategic plan should create enthusiasm, commitment and should be well understood. After a clear identification of where the organization intends to go, review of all services and programs is done to determine processes that need to be changed or improved. Few goals should be set to enhance attainability. Also, during strategic planning, it is an appropriate time to outsource activities or involve other organizations so as to achieve the goals of the organization (Graham 2014).

After a comprehensive assessment of the organization is done, inspirational mission and vision for the organization is established as the foundation for the strategic planning. It is only by going beyond the traditional methods of strategic planning that the employees can be re-energized to impart new life to the whole organization.

According to Bill (2014), Strategic planning is no longer creating vibrancy and energy in organizations. The inability of the managers to forecast the future was the major contributing factor to the decline in the use of strategic planning. Instead of directing resources to opportunities that were productive, strategic managers accepted any project that was brought forward.

Also, strategic plans were not interrelated to the main action plans, and if action plans were described, they were so vague such that managers continued to do their operations in the usual way. A lot of time would be spent in drafting an attractive mission statement that wasn’t practiced. 

Strategic Plan Literature Review

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All the above scholars identify strategic planning as a core function of management. It is through having a strategic plan that the direction of an organization is established. However, a plan is incomplete without the involvement of both the internal and external stakeholders. According to Ronald (2013) the plan should be at par with the regulations of the market as well as company’s policies. It should create a correlation between the social aspects of the organization as well as the political aspects.

Leaders should be incorporated and should be first in coming up with effective strategies. It is through proper leadership that common goals and team work is established (James 2011). An organization that does not incorporate teamwork as a core social aspect does not succeed. It is, therefore, necessary to involve all the stakeholders in the designing of the strategic plan.

Before commencing to write a strategic plan, the management should have clear information on all the organization functions. The sales people, accountants, human resources, budgetary committee, financial managers and all internal, as well as external stakeholders, should be involved. When all stakeholders are involved, it’s easy to get a clear picture as to what is ailing the organization.

The obstacles undermining the performance of the organization should be established (Steven 2013). Involvement of all the functions and stakeholders ensures that all ideas are incorporated and weighed against each other to get a common goal. A strategic plan is not necessarily designed to show how goals are to be achieved but where the future of the organization lies.

The reason so many strategic plans are set but do not work is because resources are not directed where they can be mostly profitable. Managers become so blinded with setting up mission and vision for the organization that they do not plan for specific issues that will lead to profitability in an organization.

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Historical data on cost allocation strategies, budgeting, financial statements, and performance is used to generate a strategic plan. The strategic plan also incorporates forecasting and cost analysis since the plan should lie within the available resources (Mark 2013). The more information and stakeholders are involved, the best the outcome. A strategic plan should not be just a documented plan, but it should provide a clear mission and vision for the organization and should be a guide to employees and all staff. The plan should create a culture of team work and leadership. When all the stakeholders are involved, the employees feel part and parcel of the organization and get motivate to put their best feet forward.

References

Amy Beinstein, 2012. How the next big management ideas will arise. Available from http://www.strategy-business.com/strategy_and_leadership

Bain, 2015. Strategic planning: Available from http://www.bain.com/publications/articles/management-tools-strategic-planning.aspx

Bill Conerly, 2014. The death of strategic planning: Available from http://www.forbes.com/sites/billconerly/2014/03/24/the-death-of-strategic-planning-why/

Byron Simerson, 2011. Strategic planning. A practical guide to strategy: Available from https://books.google.com/books?isbn=0313384800

Dennis Miller, 2013. Beyond strategic planning: Available from http://www.thenonprofittimes.com/news-articles/beyond-strategic-planning/

Erica Olsen, 2011. Strategic planning: Available from https://books.google.com/books?isbn=1118050568

Graham Kenny, 2012. Strategic planning and performance management: Available from https://books.google.com/books?isbn=1136362177

Griffin, 2013. Management: Available from https://books.google.com/books?isbn=1439080992

George Steiner, 2010. Strategic planning: Available from https://books.google.com/books?isbn=1451602537

James Otoole, 2011. Best leadership: Available from http://www.strategy-business.com/strategy_and_leadership

John Bryson, 2011. Strategic planning for public and non-profit organizations

Khan and Join, 2010. Management accounting: Available from https://books.google.com/books?isbn=0070681961

Ken Favaro, 2013. One company, two identities, one strategy. Available from http://www.strategy-business.com/strategy_and_leadership

Lisa, 2013. Workforce asset management. Available from https://books.google.com/books?isbn=1118417119

Mark P, 2013. Managerial accounting: Available from https://books.google.com/books?isbn=1118237641

Max Mckwoen, 2012. The strategy book.

Nicomachean Ethics, 2014. Available from https://books.google.com/books?isbn=162466119X

Norman and Paolo, 2010. Management accounting and control systems: Available from https://books.google.com/books?isbn=0470714476

Paul Redman, 2013. Five essentials of strategic planning: Available from http://ssir.org/articles/entry/five_essentials_of_strategic_planning

Richard Newton, 2014. The management book. Available from https://books.google.com/books?isbn=0273750356

Ronald Smith, 2013. Strategic planning for public relations: Available from https://books.google.com/books?isbn=1136172475

Susan, 2010. Leaders who use their powers for good: Available from http://www.strategy-business.com/strategy_and_leadership

Zuckerman Alan, 2012. Healthcare strategic planning: Available from https://books.google.com/books?isbn=156793434X

Ralph Adler, 2013. Management accounting: Available from https://books.google.com/books?isbn=1136007296

William Pirraglia, 2010. Why is strategic planning important to business? Available from http://smallbusiness.chron.com/strategic-planning-important-business-2671.html

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Culture and Strategy Research Paper

Culture and Strategy

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Culture and Strategy

Abstract

The relationship of organizational culture and progression has been subject of different examinations over the span of the latest years. The colossal number of social variables under investigation has incited an isolated thought of society for development.

Further, managerial practice requires a concealed structure remembering the final objective to pick what society should be completed in order to improve and to study if a specific culture is a convincing and powerful coordination instruments. The motivation behind this paper is to inspect the idea of the hierarchical culture and give a brief discourse on the methodologies utilized for overseeing it in culture and strategy of organizations.

  1. Introduction

Hierarchical culture emphatically influences organization and administration, which ascend out of its slant and its substance. Hierarchical society is described as a course of action of assumptions, qualities, norms, and perspectives, appeared through pictures which the people from an organization have made and gotten through basic experience and which offer them some help with deciding the essentialness of their general surroundings and how to absorb it. (Janićijević, 2011).

Presumptions, qualities and gages which the general population from a firm shares completely shape their interpretative game plans. Through interpretative courses of action, the general populations from an association assign repercussions to events inside and outside the association and comprehend reality that incorporates them (Janićijević, 2011). The conduct, activities and trades of the general population from an association rise out of the inducing that reality of that association has for them.

Various leveled society is a sort of aggregate interpretative course of action shared by the general population from an association, because of which they dole out proposals to events, individuals, and occasions inside and outside of the association correspondingly and treat them moreover (Janićijević, 2011). In this way, the lifestyle of an organization surmises that each one of the people from the organization likewise appreciate the organization.

The character of different parts of management and organization, for instance, methodology, structure, activity style, Organizational taking in, a game plan of prizes, and motivation, rises totally from the way in which delegates and administration understand authoritative reality and carry on in it (Janićijević, 2011). Thusly, Organizational society, through its effect on the interpretative plans and direct of the people from an organization, shares in framing distinctive portions of organization and administration.

Subordinate upon the qualities and measures contained by the Organizational society, top organization picks the technique and courses of action progressive structure, boss shape their drive style, delegates depict their behavior of intuition and needs, and the human asset executive plots the pay framework in an affiliation. A solid sort of the effect of Organizational society on an association and organization is found in the way that parts of an association and organization vary in various sorts or sorts of legitimate society. By the day’s end, specific sorts of society in association’s propose different techniques, legitimate structure models, pay frameworks, organization styles, and so forth  (Janićijević, 2011).

One of the key parts of organization that are impacted by definitive society is the organization of progressive society. Definitive society impacts the choice of satisfactory Organizational culture organization correspondingly it impacts every single another bit of organization. Social suppositions and qualities shared by the general population from an association pick the path in which workers and executives will value the association itself, and thusly the satisfactory approach to manage transform it (Janićijević, 2011).

Culture and Strategy

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What will be resolved as a suitable, effective, or steady methodology for changing the association will rely on upon an exceptionally fundamental level on the common suppositions and estimations of operators and managers worked in their interpretative game plans. Whether the developments are incremental or radical, complete or deficient, encouraged starting from the top or from the base up, concentrated on the culture of the “hard” or of the “touchy” some segment of association, will all, metaphorically talking, rely on upon how the pioneer and the general population from the association see its working and a suitable, strong, or down to earth method for taking off improvements (Aguiree, Post, and Alpern, 2013).

This is the motivation driving why the strategy of legitimate culture organization will be all around assorted in various Organizational social requests. For instance, if various leveled society is told by the estimation of adaptability, this recommends the general population from the association will consider cultures to something unprecedented and obliging for the association and themselves.

For this situation, cultures are slanted to be reliable, and thusly additionally incremental in nature, in light of the way that there will be no need for radical cultures adequately by virtue of the way that they are consistent (Janićijević, 2011). Additionally, cultures will be driven with less resistance yet rather more eagerness by the agents. Then again, if Organizational society contains the estimations of predictable quality and conservatism, then the general population from the association will consider cultures as dangerous, both for themselves and the association.

Cultures will be phenomenal, yet when they do happen they will be radical and wide. They will be composed to a wonderful level of resistance from and an all around insignificant level of sponsorship by the general population from the association, who will be for the most part sit out of gear powers of progression (Janićijević, 2011).The degree of this paper is to appreciate and examine the legitimate society and organization philosophies to manage the troubles stood up to by the various affiliations.

Culture and Strategy

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  • Review of Strategies for Organizational Culture

In the extent of various leveled culture association, the considered scholastic specialists and honing boss has been basically focused on three central solicitation: what cultures, why it cultures, and when it cultures. Along these lines, the three key subjects in various leveled culture research have been causes or variables of legitimate culture, definitive culture content, and the character of the progressive culture process.

The conclusion came to has been that authoritative cultures are begun as a result of either internal or external causes. From this time forward, two sorts of hierarchical culture have been isolated by the measure of cause: authoritative headway and alteration (Aguiree, Post, and Alpern, 2013).

Concerning culture content, the survey of forming demonstrates that progressive cultures are segregated in two imperative courses: cultures of definitive statics (structure and framework) and cultures of legitimate segments (process), besides cultures of work structure (assignments) and cultures of social structure (relations)). At long last, research has displayed that, as showed by the character of the strategy, various leveled cultures can be tireless or sporadic.

Tenacious cultures are incremental (first request cultures), divided, and transformative while sporadic cultures are radical (second request cultures), complete, and dynamic. The part of the pioneer in the midst of the time spent culture has moreover been a fundamental issue in definitive culture research (McGuire, 2003; Madu, 2005).

Not at all like the issues of cause, substance, have process, and authoritative culture organization, hierarchical culture methods been less present in investigation. Authoritative culture framework joins the system, strategy, or route in which cultures are realized in an affiliation. This definition proposes that movements are continually orchestrated and that, at whatever point we examine culture execution method, we truly discuss masterminded hierarchical cultures (McGuire, 2003; Madu, 2005).

The way that the primary course of action of authoritative culture strategy oversees organized culture system in like manner adds to this impression. In any case, this does not for the most part should be the circumstance. Cultures can similarly be unconstrained or unconstrained, and their anticipated approach, strategy, or the best approach to constitute a culture framework. They can be a strategy for recognizing authoritative culture, regardless of the way that the movements are off the cuff (McGuire, 2003; Madu, 2005).

Culture and Strategy

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While most specialists while examining business or corporate approach truly mean adjusted, formalized, organized decisions, distinctive scientists point out that strategy, can rather be fathomed as a bona fide security partner particular business decisions and giving them consistency, which is new and just thusly legitimized as a framework, rather than a normal, orchestrated decision arranged early (McGuire, 2003).

Likewise, in the field of hierarchical culture, culture framework may be fathomed as a masterminded decision of the administrators of advancement, furthermore as a creating case of development through which cultures are recognized and which grabs its shape entirely when the movements have been made sense of it. Starting now and into the foreseeable future, the discernment of legitimate society structure in this paper is to some degree more wide than the one in the much grasped work by Chin and Benne, who were the first to accumulate progressive society frameworks (McGuire, 2003).

The judicious observational system is developed on the suspicion of the common sense of Organizations and the comprehensive group who constitute them (Sami, 2012). Affiliations are seen as a shrewd means for completing the common focuses of their kin through aggregate activity. Individuals are overseen as regular creatures lead with no other individual’s data interest.

Along these lines, societies are executed by demonstrating the general population from an association that they are reasonable, i.e., reinforced and critical from the viewpoint of accomplishing progressive objectives, furthermore obliging to the self-vitality of the general population from the alliance (Sami, 2012). The supposition is that the general population from the relationship in which the developments are performed will, as normal creatures, carry on as exhibited by their reasonable given side hobbies.

Therefore, in the event that they are given watch that a society is to their most essential purpose of inclination, they will remember it.Cultures are driven through the typical system of information party and utilization of learning in dealing with the issues that the affiliation faces. Essentially, cultures are driven through the methodology of utilization and testing of specific theories, which give off an impression of being adequate in a given setting (Long, 1997).

Culture and Strategy

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Authoritative cultures are driven in five stages: issue conspicuous verification, information get-together and examination, the time of alternative diagrams, determination of the perfect procedure, and execution of the game plan. In the adjusted framework, the key driver of societies is accurately the data with respect to the issue which should be taken care of and the conceivable fundamental reasoning strategies.

On the off chance that the data is instigating and clear, and on the off chance that it is decisively in all actuality, the general population from an association will, as shrewd creatures, perceive the execution of societies (Luthans, and Doh 2008; McGuire 2003). It is thusly vital that data gathering is driven purposefully and in a methodologically noteworthy way, ideally by an authority (it is as regularly as could reasonably be expected the case that advice are contracted in this way).

The strategy of granting information concerning the issue and with respect to the movements which will deal with the issue is uneven and beginning from the top. Correspondence includes top organization, or authorities picked by top organization, showing the “truths” of the bona fide condition, the theoretical model which enables the offered situation to be understood ‘legitimately’, and also the proposition for culture which really ascend out of this perception (Luthans, and Doh 2008; McGuire 2003).

No dialog or talk is joined into which the people from the affiliation would be allowed to test, address, or rename the “truths” or theoretical models showed to them (Luthans, and Doh 2008; McGuire 2003).

Culture and Strategy

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It is clear that the executives of headway in this system are the top association, and that the heading of progression is starting from the top. The part of the general population from the connection is sit without moving and is obliged to enduring the data and acting in like way. The level of support of the alliance individuals is low, and the response to this course of action of the people in the developments is, most perfect circumstance, assertion. As a last resort, the imperviousness to culture is high (Luthans, and Doh 2008; McGuire 2003).

  • Leadership/Management and Organizational Culture

Organizations are not any more liable to accomplish business objectives without a key business process that are associations liable to accomplish new social abilities without a key authority process. Whenever consolidated, the business methodology and authority system can work all the while to grow new center capacities essential for the association’s future.

We present the defense that it is administration, as a deliberate gathering of similarly invested individuals, which can exhibit and take part in the better approaches for doing and being that advances the way of life and empowers diverse business results (Dilobe &Haccoun, 2010; House, Javidan, Hanges, & Dorfman, 2002; Eromafuru 2013; Woszczyna , 2011; Salamzadeh, , Ahmadi & Akbari, 2012; Eromafuru, 2013).

Culture and Strategy

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 It is an initiative that imagines future course, adjusts assets, and rouses the dedication of individuals toward this normal reason. A Leadership Strategy can control that basic procedure of the association’s advancement through initiative toward a typical reason for building the couple of, new capacities inside of the heart of the association – its way of life. Adjusting to culture recommends that associations need go to new center capabilities. The movement from an item prompted administrations drove IBM required that the way of life of this once ambling behemoth turn into a group based, the client engaged, elegant organization (McGuire, 2003).

Figure: Leadership Strategy McGuire (2003).
Figure: Leadership Strategy McGuire (2003).

Figure: Leadership Strategy McGuire (2003).

According to Haccoun et.al, (2010);  Dorfman et.al, (2002); Eromafuru (2013); Woszczyna , (2011); Akbari et. al, (2012); Eromafuru, (2013), the key mechanical assemblies for executing society in perceiving observational procedure are assignments, or work positions, and not the social structure of the affiliation and the relations within it. Consequent to the affiliation is appreciated as a prudent contraption for achieving shared targets, societies in it are recognized fundamentally through changing the formal, masterminded, “hard” parts: endeavors, structures, methods, methodologies, strategies, and the association with its environment.

Simply first demand societies can be instated and coordinated through the sound observational system since the method does not allow renaming of the assumptions of reality; this future a bit of second demand societies. As a rule, societies don’t require all that much time; beside when the information gathering technique is greatly mind boggling (McGuire, 2003).

Culture and Strategy

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A deterministic, as opposed to the voluntary supposition of human activity, underlines this technique. The procedure of progress does exclude the through and through freedom and decision of individuals from the association. The strategy, or of progress, is as of now dictated by the target way of the issue, and it is the undertaking of the individuals who settle on choices in the association simply to apply it to sufficient information and hypothesis (Dorfman et.al, 2002; Eromafuru, 2013).

Power coercive strategy translates that a connection is seen as a political structure in which the general population who have the force likewise have the advantage to deal with the association and along these lines change it. The man is not a run of the mill but rather a political being, who submits to the will of the all the more compelling. Along these lines in force coercive framework force is the key driver and contraption for society (Dorfman et.al, 2002; Eromafuru, 2013).

The general population who have the force;  when in doubt the pioneer or top association, coordinate the developments and, by mauling the force they have, power these developments on interculture individuals from the connection. The general population from the alliance is relied on to obey and execute the developments unquestioningly. This strategy depends on upon the supposition that the advantage to urge the course of aggregate activity in one party in like way climbs up out of force. Along these lines, the sub-par individuals from a social event in like way anticipate that the pervasive individuals will set the course in which the developments will be executed (McGuire, 2003).

The correspondence is one-sided and coordinated starting from the top. It comprises of the pioneer or administration achieving a choice with respect to the tackling of an issue, and after that conveying to their devotees and association individuals how, when, where, and who will execute the progressions which will take care of the issue. The main operators of progress are the pioneer or administration of the association who has the ability to execute the progressions.

Culture and Strategy

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The interest of the individuals from the association in culture is low, and their part is uninvolved and boils down to minor dutifulness. In this methodology, the data stream course is starting from the top, in light of the fact that the specialists of progress just advises the association individuals from what is anticipated from them and does not get input. For the same reason, the culture exercises are one-sided (Dorfman et.al, 2002; Eromafuru, 2013; McGurie, 2005).

The power-coercive methodology can deliver just first request culture since it does exclude changing the suppositions, qualities, or states of mind of the individuals from an association. The pioneer who applies this culture system is not keen on changing the convictions and estimations of the individuals from the association so they acknowledge the progressions; rather, the pioneer, by the utilization of force, just drives them to consistence.

This is the reason the progressions will be conceivable just inside of the current worth structure, which prompts first request cultures. Of the considerable number of systems, force coercive procedure prompts the quickest results and this is its primary leverage and the motivation behind why it is utilized generally regularly. In any case, its inconveniences are exceptionally various; for instance, the decimation of inspiration and dedication, extremely solid imperviousness to cultures, and the absence of comprehension of cultures prompting their wasteful usage (Dorfman et.al, 2002; Eromafuru, 2013; McGurie, 2005).

They all Dorfman et.al, (2002); Eromafuru, (2013); McGurie, 2005) concur this society strategy is centered around relations and social structure, as opposed to on work structure and assignments. Since reliance relations are the establishment of this framework, it commonly relies on upon the relations between the effective overseers of societies and the humble individuals from the association. Therefore, control coercive strategy depends on upon relations and the social, nice, “delicate” segment of relationship as an instrument for society.

Power coercive strategy translates the viewpoint of human activity as unshakable, compelling a perspective of the world in which individuals are free directors who can independently pick their activities. In any case, this totally adaptability infers just to the capable pioneer or chief and not to the straggling remains of the alliance (Dorfman et.al, 2002; Eromafuru, 2013; McGurie, 2005)…

Culture and Strategy

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The developments are driven by first changing the suppositions, qualities, standards, and viewpoints shared by the association individuals, and after that besides changing their activities and correspondences, or relations. Along these lines, it is unequivocally these relations and social segments of the alliance that are the vital instruments of headway in regularizing re-educative framework, and not its “hard” parts, i.e. tries.

In this structure, societies happen at the level of relations between the connection individuals. Standardizing re-educative methodology merges the system of reframing, or changing, the socially-made picture of reality, from which societies of both aggregate suppositions and qualities rise (Dorfman et.al, 2002; Eromafuru, 2013; McGurie, 2005).

By researchers, Dorfman et.al, (2002); Eromafuru, (2013); McGurie, (2005); Akbari et. al, (2012); in this manner societies in this reasoning are created both starting from the top and from the base up, and the data stream is multilateral. In the standardizing re-educative structure, the managers of headway in a connection are both the association and the authorities. The alliance individuals are dynamic people in society with an irregular state of endeavor: from this time forward the solidness to culture is sensibly low.

Societies composed by regularizing re-educative philosophy assemble the dedication of the association individuals to the new picture of reality and new connection and is of a higher quality than the past two strategies which request the alliance individuals’ insistence and detached assent. The regularizing re-educative methodology might start and induce second request society since it determines changing the path in which the general population from an alliance handles their general surroundings. However the execution of this strategy takes longer, as creating suspicions, qualities, gages, and dispositions is not a quick technique.

Culture and Strategy

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  • Conclusion

The paper has demonstrated that there is a theoretical explanation behind the supposition that various leveled society is one of the variables in the determination of authentic society association systems. In a split second it is the key to correctly test this presumption by testing the speculations made in this paper. It is also fundamental to look at it and how the way of life impacts the ability of the way of life framework and its flourishing. From this paper, a supposition additionally develops that there might be a criticism impact of organization society strategy on various leveled society.

Inside and out that truly matters, this paper can be prescribed to affiliation association which is planning progressive societies, to help with picking the association strategy for society that is awesome with the way of life of their affiliation. This will add to the suitability and accomplishment of the way of life procedure. With the target this should be conceivable they should have an OK learning of the way of life of the connection they are changing, besides of the open organization society procedures.

Culture and Strategy

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References

Aguiree, D., Post, R. V., & Alpern, M. (2013). Culture’s role in enabling organizational culture. Booz & Company.

Dilobe, N., & Haccoun, R. (2010). Measuring Core Dimension of Organizational Culture: A Review of Research and Development of New Instrument. University De Catholique.

Divan, S. M. (2012). CHANGING “THE WAY WE DO THINS” (Unpublished doctoral dissertation). California State University, Sacramento, LA.

Donell, O., & Boyle, R. (2008). Understanding and Managing Organizational Culture. Dublin, Ireland: IPA.

Eromafuru, E. (2013). Building and Sustaining Organizational Culture through Innovative and Strategic Leadership. International Journal of Humanities and Social Sciences3(11).

Heracleous, L., & Langham, B. (1996). Strategic culture and organizational culture at hay management consultants. Long Range Planning29(4), 485-494. doi:10.1016/0024-6301(96)00040-4

House, R., Javidan, M., Hanges, P., & Dorfman, P. (2002). Understanding cultures and implicit leadership theories across the globe: an introduction to project GLOBE. Journal of World Business37(1), 3-10. doi:10.1016/s1090-9516(01)00069-4

Huiri, D. (2011). THE IMPORTANCE OF STRATEGIC MANAGEMENT. SAVONIA UNIVERSITY OF APPLIED SCIENCES.

Janićijević, N. (n.d.). THE INFLUENCE OF ORGANIZATIONAL CULTURE ON ORGANIZATIONAL PREFERENCES TOWARDS THE CHOICE OF ORGANIZATIONAL CULTURE STRATEGY. ECONOMIC ANNALS18(193).

Long, D. D. (1997). Building the Knowledge Based Organizations: How Culture Drives Knowledge Behaviors. Center for Business Innovation.

Lunenberg, F. (2011). Understanding Organizational Culture: A Key Leadership Asset.National Forum of Educational Administration and Supervision Journal29(4). Retrieved from http://faculty.mu.edu.sa/public/uploads/1360754959.415organizational%20cult63.pdf

Luthans, F., & Doh, J. P. (2008). International Managment (9th ed.). McGraw Hill.

Madu, B. C. (2005). Organizational culture as a driver of competitive advanatage. Journal of Academic and Business Ethics3(2). Retrieved from http://www.aabri.com/manuscripts/11791.pdf

McGuire, J. (2003). Leadership Strategies for Culture Culture Developing Culture Leadership as an Organizational Core Capability. The Center for Creative Leadership – Friends of the Center Leadership Conference, Florida.

Pudelko, M., Reiche, B. S., & Carr, C. (2011). WHY INTERNATIONAL STRATEGY AND CROSS-CULTURAL MANAGEMENT MATTERS IN BUSINESS RESEARCH AND EDUCATION. Schmalenbach Business Review.

Salamzadeh, Y., Ahmadi, A. A., & Akbari, J. (2012). Relationship between Organizational Culture and Strategy Implementation: Typologies and Dimensions. Global Business and Management Research: An International Journal4(3).

Sami, W. (2012, November). Organizational Culture. Helbing and Associates, 2-8.

Sliwa, M. (2011). Strategies for Culture. Culture for Development (3). mik.

Trompenaars, F. (1996). Resolving International Conflict: Culture and Business Strategy.Business Strategy Review7(3), 51-68. doi:10.1111/j.1467-8616.1996.tb00132.x

Tsai, Y. (2011). Relationship between Organizational Culture, Leadership Behavior and Job Satisfaction. Retrieved from BMC Health Services Research website: http://download.springer.com/static/pdf/576/

 Woszczyna K. (n.d.). THE IMPORTANCE OF ORGANIZATIONAL CULTURE FOR INNOVATION IN THE COMPANY. Scientia Oeconomia2(3). Retrieved from http://www.wsb.edu.pl/container/Wydawnictwo/Do%20pobrania/szczepanska-woszczyna-m.pdf

Culture and Strategy

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Transocean Case Study Essay Paper

Transocean
Transocean

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Transocean Case Study

1.0 Introduction

The paper will evaluate the strategic position of Transocean, a major player in global offshore drilling services in the oil and gas industry. Strategic management is a process that entails formulating and implementing main objectives as well as initiatives a company takes based on the available resources. It also takes into consideration the evaluation of external and internal environment in which the firm operates.

Founded in 1953, the company is headquartered in Houston Texas. Transocean administrative division has since shifted to Vernier, Switzerland for tax and client servicing reasons. Various models such as STEEPLE, Ansoff and Porter’s Five Forces will be used to paint the company’s strategic position when it comes to, macro-environmental review, competition, diversification strategy, market development, product development and market penetration. To wrap up, the paper will make recommendations regarding the direction the company has to take to remain sustainable.

1.1 Analysis of Transocean Limited

Transocean is a prominent global provider when it comes to offshore drilling services for energy establishments. The company owns and operates the world’s most multipurpose flotillas that concentrate on deep-sea and extremely harsh environment drilling (Deepwater.com, 2016). With a fleet of sixty-one portable offshore drilling components, the company offers powerful rigs for deepsea drilling. Transocean helps clients to establish and develop oil as well as natural gas stockpiles.

The company offers an exceptional drilling performance that is anchored in a solid experience that spans more than a half a century. Transocean shares are listed on the New York Stock Exchange under the acronym RIG and Swiss Stock Market under the acronym RIGN.Transocean operates more than 140 offshore rigs in almost all mainmarine markets. Apart from offering drilling services offshore, the company offersdrill management services globally. Transocean operates not just the largest extreme-deepsea flotilla of drill ships global, but it is also the largest offshore fleet worldwide.

The company hires more than 20,000 employees with the technical expertise that is the envy of their business rivals(Deepwater.com, 2016). Moreover, Transocean provides management and accomplishment services for assessment and production firms regarding offshore drilling schedules. The company’s mission is to become a leading offshore drilling organisation that provides rig-based services with a global reach, by incorporating a highly dedicated workforce,state of the art machinery and ultra-modern technology, while concentrating on technically demanding environments (Transocean, 2007b)..

The company is dedicated to values that represent its focus, innovativeness, safety, trust and reliability. The company promises to surpass not just the anticipations of theclient, but employees and shareholders as well (Deepwater.com, 2016). Transocean’s strategic goals include getting aligned with its customers when it comes to supporting and ensuring delivery of clients’ business objectives.

The company conducts its operations with distinction which is characterized by safety and efficientoffshore solutions (Deepwater.com, 2016). In addition,Transocean keeps on enhancing its corporate culture and processes to optimize returns. Lastly, the company not only attracts but also nurtures and retains the industry’s best employees.

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2.0 Industry Trends

Drilling oil and gas was previously dependent on backlogs. Contract bores alter their rates based on their rig charges relative to retailing oil and gas prices. Usually, contract bores tend to wait on the day down, and speedily adjust their prices upwards depending on how the markets are performing (Redall, 2012). There has been a widespread pattern of extreme deepsea rig business with strong daily charges.

However, there has been a downward trend in mid-water rig markets. The most lucrative market lies of the Gulf of Mexico and West African coastal line, down to the south of Africa. The demand for deep-sea rigs is anticipated to remain jerky in the short-term(Helman, 2015).As of now, approximately 206 floaters are operating under contract across the industry (Deepwater.com, 2016).A large percentage of the total number is idle for completing major contracts.

3.0 Analysis the different types of strategic options

3.1Ansoff Matrix:

    Existing Markets    Market Penetration      Product Development  
    New Markets  Market Development      Diversification    

Existing Products

New Products

Transocean is a dominant player in a market that is not highly saturated. However, to remain at an edge over its closest business rivals, the company has adopted different approaches. Based on the Ansoff matrix, Transocean has been using a low pricing model to penetrate the market. When it comes to market development, Transocean has been offering ultra-deepsea drilling and management services in various parts of the world. What makes the company the envy of its business rivals is the fact that Transocean’s product development strategy works magic. Apart from ultra-deepsea boring services, the company offers rig and deepsea drilling consultancy services which is certainly some form of diversification hence competitive edge.

In short, Transocean operates in the same market by adopting a horizontal strategy in terms of expanding the product line. Lastly, Transocean has a predominantly diversified portfolio. To diversify risks, the company has necessitated mergers and acquisitions when it comes to financial management and technical expertise. The company operates in various regions such as the United States, the Gulf of Mexico, the North Sea, West Africa, and Southeast Asia, Middle East and the Arctic.

3.2Porter’s Five Forces

3.2.1Competition

Transocean threat of competition is moderate to high. For example, following a merge in mid-2007 between Rig and Transocean’s chief rival Global Sante Fe, this attempt reduced competition particularly, in ultra deep-water segments. While Transocean has almost a monopoly in ultra deep-water drilling, It is likely to enjoy less competition in ultra deep-water, especially in harsh climates that require technical personnel.

In fact, this contributed to the need for anti-trust lawsuit following the merger between RIG and GSF. Nonetheless, the firm has exposure to different offshore markets such as jackupsegment that is associated with intense competition in various regions globally as well as pricing (Porter, 2008). By and large, the organisation has less competition in ultra deep-water segments, with a somewhat intense competition in mid-water floater and also jackup segments.

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3.2.2 New entrants

Transocean enjoys a low threat of new entrants. With respect to offshore contract drilling sector, it requires huge investment in fleet and rigs before getting inflows from gas and oil organisations (Porter, 2008). This makes nearly impossible for new firms to enter this sector.

3.2.3 Substitute

The main threat of substitute is the changing the energy source from hydrocarbon to renewable sources across the world, which is not likely in the short-run (Turner, 2007). Therefore, the threat of substitute is low.

3.2.4Purchasing power

Transocean’s purchasing power is moderate. Much as exploration and production firms have power when it comes to negotiating, especially in mid-water floaters and jackupsegments, they have sufficient ability and provision of idle rigs. In essence, the buyers are in aposition to negotiate low daily rates in the contracts while ultra deep water segments maintain stringent rates (Schlumberger, 2008).

3.2.5Suppliers’ power

The supplier power is moderate. Transocean providers have some degree of power. For instance, suppliers like National Oilwell Varco take part in the decision making in constructing Transocean’srigs andother essential parts. Luckily, this is crucial for Transocean since National Oilwell Varco has a few plans of increasing the fleet of drillships. In general, benefits from pricing since they are the main clients to themajority of their specialised providers (Porter, 2008).

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3.3 STEEPLE

3.3.1 Social

The organisation takes part in various social activities, including charitable contributions to developing environmental initiatives to increase its reputation.

3.3.2 Technological

Technology is necessaryfor drilling sector as such Transocean gets its strength in technological development. While oil drilling and the ecology are related, so is technology and demand. Drilling in deepwater is more and more vital from drilling organisations since they are considered to be more profitable. The firm is positioning itself to capitalize in this segment. For instance, in 2007, Transocean acquired a drillship worth USD 470m to take advantage of deep-water drilling, which allows the firm to drill up to ten thousand feet.

Due to advanced underwater drilling, there has been a decrease in jackup rigs demand (Associated Press, 2007). This presentsTransoceanwith the opportunity to beat their rivals like Noble Corporation in the struggle for innovation. Currently, the firm is leading in deep-water exploration (Katsaros & Christy, 2005).

3.3.3 Economic

Cost is a major challenge for drilling organisations. As oil price rises, the cash flow increases too, which makes organisationsinvest considerably in drilling activities? Furthermore, the new techniques of recovering oil though they are essential in the growth of petroleum production, are leading to an increase in the gasoline price. Implicitly, thehigh price of oilis required to make drilling firms profitable. High global investment drives drilling.

With great interest to drill in foreign regions, global investors are significantly investing, hence leading to expansionof oil and gas sector (Maksoud, 2007).Even though raising oil cost will adversely influence Transocean, in reality, will be beneficial in the long run. Oil cost is inelastic. In other words, afluctuation will insignificantly affect demand. Therefore, increasing oil prices willboost cash flow for Transocean, which means additional business like funding new drilling projects.

3.4.4 Environmental

On environmental protection, Transocean is committed to enhancing its stringent police on Environmentalmanagement system (EMS). Transocean’s EMS visitation is conducting its operations in a standardised manner that fulfills the high levels of stipulated laws to drive continuous enhancements while instilling ownership across its facilities (Transocean, 2007a). The organisation is environmentally sustainable by way of using green products and assessment is utilized as part of routine operations.

The firm also focuses on recycling. Additionally, Transocean has set up a recycling plan, where recyclables are sorted and compressed in rigs. After compression, they are transported to Tech Oil Products and donated to a recycling hub in the ARC of Iberia.

Transocean has collaborated with different oil and gas firms such as Subsea 7, and BP in the SERPENT project. Thisentails necessitating access to the installations, in partnership with their customers to present scientific knowledge to experts in the SERPENT project (Dictionary.Cambridge 2012). In turn, the analysts conduct various projects including assessing biodiversity and effects of drilling on the environment.

The analysts also work on the company’s rigs to study marine species (Transocean, 2007a). By and large, Transocean protects the environment in which it operates to demonstrate that the company recognises the consequences of natural demand shifters.

3.4.5 Political/Legal

Oil presents this organisation with a strong political force. Because oil is the primary source of energy internationally, thus, the supply of oil is related to power regardingpolitics; oil firms leverage authority over regimes (Dictionary.Cambridge 2012). With no oil organisations, United States is likely to lose its dominance in developing nations remarkably. Though oil drilling firms are fundamental in giving regimes the authority, they are still regulated and work as per government laws, such as prohibiting drilling in particular regions like the Gulf of Mexico to protect the environment.

In 2007, the Congress was promoting the closure of a quarter-century ban on the production of offshore energy. This decree banned 85 percent of all drilling in United States’ continental shelf, greatly affecting oil drilling firms including Transocean (Kamalick, 2007). Furthermore, the Congress were supporting the opening of additional shorelines, which was associated with renewable sources of energy, as such they sought for support from environmentalists. While regimes exercise their authority on oil and gas providers, these providers, in turn, have authority over the very regimes.

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3.4.6Ethical Standards

Transocean aspires to ensure financial discipline in their disclosure, honesty and candor in all their engagements with clients, ahigh esteem for employees, customers and suppliers, the safety of employees, property and the ecosystem and technical leadership. Loyalty to these core values demands the company to execute its operations in tandem with thelaw and the utmost standards of business ethics.

In advancing that objective, the company embraces the Code of Business Conduct and Morality, the firm’s environment is also a corrupt free zone and an Anti-Corruption and Business Conduct Policy takes care of that. Again, directors and employees are not allowed to enhance the culture of inside trading. Nonetheless, all employees should adhere to the privacy policy.

4.0 Recommendations

Since oil is directly associated with international authority, oil drilling organisations have authority over regimes, nevertheless, with another alternative, Transocean should continuously go this direction to maintain the lead if the primary source changes

Much as the company has advanced drillship tools, it should take a notch higher by researching new products in comparison to its rivals.When it comes to maintaining competitiveness in oil and gas industry, Transocean should use differentiation strategy that will be vital in developing clients’feedback and service delivery. The differentiation strategy should focus on quality rigs, particularlydeep-water drilling and ability to survive environmental disasters such as hurricanes.

While this threat of substitute islow, in future it may reduce the demand for oil. For that reason, Transocean should create awareness among clients about the benefits of oil in comparison to other energy sources. This can be carried out through advertisements. For instance, the organisation should use ads that demonstrate even with the use of alternative sources such as ethanol, which is considered environmentally sustainable compared to oil. Ethanol requires aconsiderable quantity of biomass. In the even that US, ethanol from corn is employed on a large scale, then it will contribute to increased costs of corn.

The prices of beef will also skyrocket remarkably as cows feed on corn products. On the other hand, if Brazilian corn is used thatis produced from sugar; rainforests in the region will be cut to provide land to grow sugar. Creating awareness through ads will help Transocean increase the demand for oil while increasing the demand for petroleum products from the company.

The company should embrace Ansoff model to diversify its portfolio. Instead of concentrating on drilling and consultancy, the company can take a leap of faith and venture in other business like marine transport, finance, healthcare, real-estate, heavy metal processing among others. Diversification is critical because it will help the company spread risks, when oil business is at its low.

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5.0 Conclusion

The study set out to evaluate Transocean position in the offshore drilling services. The company’s background, values and strategic goals were highlighted at the outset. To understand the company’s product and market development; market penetration and diversification, the Ansoff Matrix was used. The Porter’s Five Forces were employed to establish the intensity of the competition. However, STEEPLE model was used to evaluating the company macro-environment. In the end, the paper touched on the best practices as assured by ethics codes. Recommendations were made regarding the corporation’s future. 

6.0 Bibliography

Associated Press 2007. JP Morgan Securities analyst upgrades GlobalSantaFe, Transocean to “neutral.” Retrieved 17th March. 2016 from Factiva.

Berman, A. 2007. Drilling advances. World Oil, 19. Retrieved March 17, 2016 from Business Source Premier Database

Deep Sea Drilling Project 2015.” The Columbia Encyclopedia, 6th ed.. 2015. Encyclopedia.com. 17 Mar. 2016 <http://www.encyclopedia.com>.

Dictionary.Cambridge 2012. PESTLE analysis. [online] Available at: http://dictionary.cambridge.org/dictionar0y/business-english/pestle-analysis?q=pestle+analysis [Accessed: 6th august 2012].

Helman, C, 2015. Forbes.com, Retrieved March 17, 2016 from http://www.forbes.com/sites/christopherhelman/2015/03/16/oil-layoffs-itemized-75000-andcounting/

Deepwater.com, 2016. Deepwater.com accessed on 18th March. 2016 at <http://www.deepwater.com/>

Katsaros, J.&Christy, P. 2005. Getting It Right the First Time: How Innovative Companies Anticipate Demand. Westport, CT: Praeger

Kamalick, J. 2007. Untitled. Chemical Business Americas, p. 26. Retrieved March 17, 2016

Maksoud, J. 2007. International investment pours into Africa. Pipeline and Gas Journal,pp. 42-44.

Porter, M. 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 15 January 2011.

Redall, B, 2012. Reuters.com, Retrieved March 17, 2016 from http://www.reuters.com/article/us-fieldservices-powerstruggleidUSBRE8AC05S20121113#y2LttEqUfwzf4Kja.97

Schlumberger 2008. Day rate. Oilfield Glossary. Retrieved March 17, 2016 from http://www.glossary.oilfield.slb.com/Display.cfm?Term=day%20rate

Transocean, Inc. 2007a. Responsibility. Retrieved March 17, 2016 from www.deepwater.com

Transocean, Inc. 2007b. Our company. Retrieved March 17, 2016 from www.deepwater.com.

Turner, H. (2007). Conversation about Transocean and alternative fuels.

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Strategic Management: Transocean Case Study

Strategic Management
Strategic Management

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1.0 Introduction

The paper will evaluate the strategic position of Transocean, a major player in global offshore drilling services in the oil and gas industry. Strategic management is a process that entails formulating and implementing main objectives as well as initiatives a company takes based on the available resources. It also takes into consideration the evaluation of external and internal environment in which the firm operates.

Founded in 1953, the company is headquartered in Houston Texas. Transocean administrative division has since shifted to Vernier, Switzerland for tax and client servicing reasons. Various models such as STEEPLE, Ansoff and Porter’s Five Forces will be used to paint the company’s strategic position when it comes to, macro-environmental review, competition, diversification strategy, market development, product development and market penetration. To wrap up, the paper will make recommendations regarding the direction the company has to take to remain sustainable.

1.1 Strategic Analysis of Transocean Limited

Transocean is a prominent global provider when it comes to offshore drilling services for energy establishments. The company owns and operates the world’s most multipurpose flotillas that concentrate on deep-sea and extremely harsh environment drilling (Deepwater.com, 2016). With a fleet of sixty-one portable offshore drilling components, the company offers powerful rigs for deepsea drilling. Transocean helps clients to establish and develop oil as well as natural gas stockpiles.

The company offers an exceptional drilling performance that is anchored in a solid experience that spans more than a half a century. Transocean shares are listed on the New York Stock Exchange under the acronym RIG and Swiss Stock Market under the acronym RIGN.Transocean operates more than 140 offshore rigs in almost all mainmarine markets. Apart from offering drilling services offshore, the company offersdrill management services globally. Transocean operates not just the largest extreme-deepsea flotilla of drill ships global, but it is also the largest offshore fleet worldwide.

The company hires more than 20,000 employees with the technical expertise that is the envy of their business rivals(Deepwater.com, 2016). Moreover, Transocean provides management and accomplishment services for assessment and production firms regarding offshore drilling schedules. The company’s mission is to become a leading offshore drilling organisation that provides rig-based services with a global reach, by incorporating a highly dedicated workforce,state of the art machinery and ultra-modern technology, while concentrating on technically demanding environments (Transocean, 2007b)..

The company is dedicated to values that represent its focus, innovativeness, safety, trust and reliability. The company promises to surpass not just the anticipations of theclient, but employees and shareholders as well (Deepwater.com, 2016). Transocean’s strategic goals include getting aligned with its customers when it comes to supporting and ensuring delivery of clients’ business objectives.

The company conducts its operations with distinction which is characterized by safety and efficientoffshore solutions (Deepwater.com, 2016). In addition,Transocean keeps on enhancing its corporate culture and processes to optimize returns. Lastly, the company not only attracts but also nurtures and retains the industry’s best employees.

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2.0 Strategic Industry Trends

Drilling oil and gas was previously dependent on backlogs. Contract bores alter their rates based on their rig charges relative to retailing oil and gas prices. Usually, contract bores tend to wait on the day down, and speedily adjust their prices upwards depending on how the markets are performing (Redall, 2012). There has been a widespread pattern of extreme deepsea rig business with strong daily charges.

However, there has been a downward trend in mid-water rig markets. The most lucrative market lies of the Gulf of Mexico and West African coastal line, down to the south of Africa. The demand for deep-sea rigs is anticipated to remain jerky in the short-term(Helman, 2015).As of now, approximately 206 floaters are operating under contract across the industry (Deepwater.com, 2016).A large percentage of the total number is idle for completing major contracts.

3.0 Strategic Analysis the different types of strategic options

3.1 Ansoff Matrix:

    Existing Markets    Market Penetration      Product Development  
    New Markets  Market Development      Diversification    

Existing Products

New Products

Transocean is a dominant player in a market that is not highly saturated. However, to remain at an edge over its closest business rivals, the company has adopted different approaches. Based on the Ansoff matrix, Transocean has been using a low pricing model to penetrate the market. When it comes to market development, Transocean has been offering ultra-deepsea drilling and management services in various parts of the world. What makes the company the envy of its business rivals is the fact that Transocean’s product development strategy works magic. Apart from ultra-deepsea boring services, the company offers rig and deepsea drilling consultancy services which is certainly some form of diversification hence competitive edge.

In short, Transocean operates in the same market by adopting a horizontal strategy in terms of expanding the product line. Lastly, Transocean has a predominantly diversified portfolio. To diversify risks, the company has necessitated mergers and acquisitions when it comes to financial management and technical expertise. The company operates in various regions such as the United States, the Gulf of Mexico, the North Sea, West Africa, and Southeast Asia, Middle East and the Arctic.

3.2 Porter’s Five Forces of Strategic analysis

3.2.1 Competition

Transocean threat of competition is moderate to high. For example, following a merge in mid-2007 between Rig and Transocean’s chief rival Global Sante Fe, this attempt reduced competition particularly, in ultra deep-water segments. While Transocean has almost a monopoly in ultra deep-water drilling, It is likely to enjoy less competition in ultra deep-water, especially in harsh climates that require technical personnel.

In fact, this contributed to the need for anti-trust lawsuit following the merger between RIG and GSF. Nonetheless, the firm has exposure to different offshore markets such as jackupsegment that is associated with intense competition in various regions globally as well as pricing (Porter, 2008). By and large, the organisation has less competition in ultra deep-water segments, with a somewhat intense competition in mid-water floater and also jackup segments.

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3.2.2 New entrants

Transocean enjoys a low threat of new entrants. With respect to offshore contract drilling sector, it requires huge investment in fleet and rigs before getting inflows from gas and oil organisations (Porter, 2008). This makes nearly impossible for new firms to enter this sector.

3.2.3 Substitute

The main threat of substitute is the changing the energy source from hydrocarbon to renewable sources across the world, which is not likely in the short-run (Turner, 2007). Therefore, the threat of substitute is low.

3.2.4 Strategic Purchasing power

Transocean’s purchasing power is moderate. Much as exploration and production firms have power when it comes to negotiating, especially in mid-water floaters and jackupsegments, they have sufficient ability and provision of idle rigs. In essence, the buyers are in aposition to negotiate low daily rates in the contracts while ultra deep water segments maintain stringent rates (Schlumberger, 2008).

3.2.5 Suppliers’ power

The supplier power is moderate. Transocean providers have some degree of power. For instance, suppliers like National Oilwell Varco take part in the decision making in constructing Transocean’srigs andother essential parts. Luckily, this is crucial for Transocean since National Oilwell Varco has a few plans of increasing the fleet of drillships. In general, benefits from pricing since they are the main clients to themajority of their specialised providers (Porter, 2008).

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3.3 STEEPLE

3.3.1 Social

The organisation takes part in various social activities, including charitable contributions to developing environmental initiatives to increase its reputation.

3.3.2 Technological

Technology is necessaryfor drilling sector as such Transocean gets its strength in technological development. While oil drilling and the ecology are related, so is technology and demand. Drilling in deepwater is more and more vital from drilling organisations since they are considered to be more profitable. The firm is positioning itself to capitalize in this segment. For instance, in 2007, Transocean acquired a drillship worth USD 470m to take advantage of deep-water drilling, which allows the firm to drill up to ten thousand feet.

Due to advanced underwater drilling, there has been a decrease in jackup rigs demand (Associated Press, 2007). This presentsTransoceanwith the opportunity to beat their rivals like Noble Corporation in the struggle for innovation. Currently, the firm is leading in deep-water exploration (Katsaros & Christy, 2005).

3.3.3 Economic

Cost is a major challenge for drilling organisations. As oil price rises, the cash flow increases too, which makes organisationsinvest considerably in drilling activities? Furthermore, the new techniques of recovering oil though they are essential in the growth of petroleum production, are leading to an increase in the gasoline price. Implicitly, thehigh price of oilis required to make drilling firms profitable. High global investment drives drilling.

With great interest to drill in foreign regions, global investors are significantly investing, hence leading to expansionof oil and gas sector (Maksoud, 2007).Even though raising oil cost will adversely influence Transocean, in reality, will be beneficial in the long run. Oil cost is inelastic. In other words, afluctuation will insignificantly affect demand. Therefore, increasing oil prices willboost cash flow for Transocean, which means additional business like funding new drilling projects.

3.4.4 Environmental

On environmental protection, Transocean is committed to enhancing its stringent police on Environmentalmanagement system (EMS). Transocean’s EMS visitation is conducting its operations in a standardised manner that fulfills the high levels of stipulated laws to drive continuous enhancements while instilling ownership across its facilities (Transocean, 2007a). The organisation is environmentally sustainable by way of using green products and assessment is utilized as part of routine operations.

The firm also focuses on recycling. Additionally, Transocean has set up a recycling plan, where recyclables are sorted and compressed in rigs. After compression, they are transported to Tech Oil Products and donated to a recycling hub in the ARC of Iberia.

Transocean has collaborated with different oil and gas firms such as Subsea 7, and BP in the SERPENT project. Thisentails necessitating access to the installations, in partnership with their customers to present scientific knowledge to experts in the SERPENT project (Dictionary.Cambridge 2012). In turn, the analysts conduct various projects including assessing biodiversity and effects of drilling on the environment.

The analysts also work on the company’s rigs to study marine species (Transocean, 2007a). By and large, Transocean protects the environment in which it operates to demonstrate that the company recognises the consequences of natural demand shifters.

3.4.5 Political/Legal

Oil presents this organisation with a strong political force. Because oil is the primary source of energy internationally, thus, the supply of oil is related to power regardingpolitics; oil firms leverage authority over regimes (Dictionary.Cambridge 2012). With no oil organisations, United States is likely to lose its dominance in developing nations remarkably. Though oil drilling firms are fundamental in giving regimes the authority, they are still regulated and work as per government laws, such as prohibiting drilling in particular regions like the Gulf of Mexico to protect the environment.

In 2007, the Congress was promoting the closure of a quarter-century ban on the production of offshore energy. This decree banned 85 percent of all drilling in United States’ continental shelf, greatly affecting oil drilling firms including Transocean (Kamalick, 2007). Furthermore, the Congress were supporting the opening of additional shorelines, which was associated with renewable sources of energy, as such they sought for support from environmentalists. While regimes exercise their authority on oil and gas providers, these providers, in turn, have authority over the very regimes.

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3.4.6Ethical Standards

Transocean aspires to ensure financial discipline in their disclosure, honesty and candor in all their engagements with clients, ahigh esteem for employees, customers and suppliers, the safety of employees, property and the ecosystem and technical leadership. Loyalty to these core values demands the company to execute its operations in tandem with thelaw and the utmost standards of business ethics.

In advancing that objective, the company embraces the Code of Business Conduct and Morality, the firm’s environment is also a corrupt free zone and an Anti-Corruption and Business Conduct Policy takes care of that. Again, directors and employees are not allowed to enhance the culture of inside trading. Nonetheless, all employees should adhere to the privacy policy.

4.0 Recommendations

Since oil is directly associated with international authority, oil drilling organisations have authority over regimes, nevertheless, with another alternative, Transocean should continuously go this direction to maintain the lead if the primary source changes

Much as the company has advanced drillship tools, it should take a notch higher by researching new products in comparison to its rivals.When it comes to maintaining competitiveness in oil and gas industry, Transocean should use differentiation strategy that will be vital in developing clients’feedback and service delivery. The differentiation strategy should focus on quality rigs, particularlydeep-water drilling and ability to survive environmental disasters such as hurricanes.

While this threat of substitute islow, in future it may reduce the demand for oil. For that reason, Transocean should create awareness among clients about the benefits of oil in comparison to other energy sources. This can be carried out through advertisements. For instance, the organisation should use ads that demonstrate even with the use of alternative sources such as ethanol, which is considered environmentally sustainable compared to oil. Ethanol requires aconsiderable quantity of biomass. In the even that US, ethanol from corn is employed on a large scale, then it will contribute to increased costs of corn.

The prices of beef will also skyrocket remarkably as cows feed on corn products. On the other hand, if Brazilian corn is used thatis produced from sugar; rainforests in the region will be cut to provide land to grow sugar. Creating awareness through ads will help Transocean increase the demand for oil while increasing the demand for petroleum products from the company.

The company should embrace Ansoff model to diversify its portfolio. Instead of concentrating on drilling and consultancy, the company can take a leap of faith and venture in other business like marine transport, finance, healthcare, real-estate, heavy metal processing among others. Diversification is critical because it will help the company spread risks, when oil business is at its low.

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5.0 Conclusion

The study set out to evaluate Transocean position in the offshore drilling services. The company’s background, values and strategic goals were highlighted at the outset. To understand the company’s product and market development; market penetration and diversification, the Ansoff Matrix was used. The Porter’s Five Forces were employed to establish the intensity of the competition. However, STEEPLE model was used to evaluating the company macro-environment. In the end, the paper touched on the best practices as assured by ethics codes. Recommendations were made regarding the corporation’s future. 

6.0 Bibliography

Associated Press 2007. JP Morgan Securities analyst upgrades GlobalSantaFe, Transocean to “neutral.” Retrieved 17th March. 2016 from Factiva.

Berman, A. 2007. Drilling advances. World Oil, 19. Retrieved March 17, 2016 from Business Source Premier Database

Deep Sea Drilling Project 2015.” The Columbia Encyclopedia, 6th ed.. 2015. Encyclopedia.com. 17 Mar. 2016 <http://www.encyclopedia.com>.

Dictionary.Cambridge 2012. PESTLE analysis. [online] Available at: http://dictionary.cambridge.org/dictionar0y/business-english/pestle-analysis?q=pestle+analysis [Accessed: 6th august 2012].

Helman, C, 2015. Forbes.com, Retrieved March 17, 2016 from http://www.forbes.com/sites/christopherhelman/2015/03/16/oil-layoffs-itemized-75000-andcounting/

Deepwater.com, 2016. Deepwater.com accessed on 18th March. 2016 at <http://www.deepwater.com/>

Katsaros, J.&Christy, P. 2005. Getting It Right the First Time: How Innovative Companies Anticipate Demand. Westport, CT: Praeger

Kamalick, J. 2007. Untitled. Chemical Business Americas, p. 26. Retrieved March 17, 2016

Maksoud, J. 2007. International investment pours into Africa. Pipeline and Gas Journal,pp. 42-44.

Porter, M. 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 15 January 2011.

Redall, B, 2012. Reuters.com, Retrieved March 17, 2016 from http://www.reuters.com/article/us-fieldservices-powerstruggleidUSBRE8AC05S20121113#y2LttEqUfwzf4Kja.97

Schlumberger 2008. Day rate. Oilfield Glossary. Retrieved March 17, 2016 from http://www.glossary.oilfield.slb.com/Display.cfm?Term=day%20rate

Transocean, Inc. 2007a. Responsibility. Retrieved March 17, 2016 from www.deepwater.com

Transocean, Inc. 2007b. Our company. Retrieved March 17, 2016 from www.deepwater.com.

Turner, H. (2007). Conversation about Transocean and alternative fuels.

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Strategic Change at the American Red Cross

Strategic Change
Strategic Change

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Strategic Change at the American Red Cross

American Red Cross is a non-profit humanitarian organization which provides emergency assistance or services and disaster relief to Americans. In addition, the organization educates people inside the United States on how to avert risks in the society. It is beyond doubt that the American Red Cross performs functions significant to the lives of Americans. 

Founded in May 21, 1881, the organization has alleviated human suffering in various ways. It has save a number of lives especially those affected by natural disasters and victims and survivors of war or terror attacks. The lives of the police or army policies are in the hands of the American Red Cross, a role which further highlights its significance (McGovern, 2011).

The organization has been applauded by most Americans for its effective service delivery. However, the organization has been plagued with a number of problems in the recent past and this has subjected the lives of many Americans to danger. The organization continues to face other challenges have impacted its growth and development. With the significance of this organization in mind, it is critical for the entity to pursue strategic change as a way of realizing stability and growth which it enjoyed in the 20th century.

The nature of disasters has changed significantly hence becoming hard to save the lives of Americans using the traditional methods employed in the 20th century. The causes of death around the world have become complex hence demand more complex solutions. Therefore, strategic change should be assumed in order to turn around things in the country and to restore confidence that Americans had in it.

Additionally, the activities of the organization have expanded. While it was meant to help those affected by natural disasters, soldiers and victims of war, American Red Cross is expected to offer community education and outreach. Generally speaking, strategic change is necessary at American Red Cross in order to change its design of response to disasters hence effectively alleviating human sufferings (The American Red Cross, 2014).

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SWOT Analysis of the American Red Cross

Strengths

Strong brand quality

The success of the American Red Cross is largely influenced by its brand strengths.  It has strong brand quality which is attributed to its contributions to humanitarian history. The entity has gained popularity and respect from the Americans owing to the previous contributions to saving humanity. For an entity to have a strong foundation, it must have depth.

The American Red Cross is supported by more than 700 locally chapters throughout the United States, which perform more than 200,000 blood drives every year. This explains why this organization is the largest blood supplier in the country (The New York Times, 2015).

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Strong resource base

It is not easy for an entity to achieve strong quality brands if there are no sufficient resources. The American Red Cross has a wide network of both human and financial resources, and this explains why it has been able to deliver the services as expected by the public.

Advanced volunteers network            

         The strengths of the American Red Cross lie in the advanced volunteers’ network. There is a high number of youth who have volunteered to support the functions of the organization. The entity has youth marketing program which has about 169,000 volunteers, and all of them work towards ensuring realization of the organization’s objectives and mission (The American Red Cross, 2014).

A high trust from the public

      The American Red Cross is trusted by majority of the Americans, some of them have volunteered to supports its functions. Majority of the Americans are of the view that the organization is effectively delivering its mandate. There has been no case of corruption or mismanagement of funds, and this is the main reason why majority of the Americans have donated their money to support organization’s programs (The New York Times, 2015).

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 Youth Marketing Strategy

    The presence of the youth marketing strategy puts the American Red Cross ahead of other humanitarian organization in the United States. With this strategy, the company has been able to use interactive mediums to conduct marketing activities.

Better Coordination

          Proper coordination of activities is one of the aspects which have contributed to the success of the American Red Cross. This means that the company is functioning effectively and efficiently (McGovern, 2011).

The strengths discussed above are critical for the success of the strategic change process. The American Red Cross should capitalize on this strength in order to succeed in this pursuit.

Weaknesses

Poor Handling of the Resources

       Management of resources is critical for success of any organization. Hurricane Katrina wrought a widespread devastation which compelled Americans to rethink of the responses adopted by the government as well as the humanitarian organizations. The American Red Cross, which is the de factor human side of the Federal Emergency Management Agency, was on the spotlight.

The issues which unfolded after this unforgettable event raised eyebrows about mismanagement of the resources by the entity. The entity later admitted that it had miscalculated the number of personnel to engage in evacuation of the victims in hotels and motels.

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Assumption that it is a government project

    There is a widespread believe that the American Red Cross is the project of the government hence should be supported and funded fully by the government. Consequently, the number of supporters continues to decline every year (Weerawardena & Mort, 2012).

Low Transparency Level

     The American Red Cross has been accused of providing misleading information and data about how it has been spending Donor’s Dollars. How the company used Hurricane Sandy funds remains a secret up to now, something which would definitely inflict a competitive harm (The American Red Cross, 2014).

In the pursuit of the strategic change, the American Red Cross must identify these weaknesses and establish the right approaches to handle them as it would negatively affect the whole process.

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Opportunities

Wide network which enables the company reach global community

          The American Red Cross has established its presence in majority of the parts in the United States. However, it has the opportunity to capitalize on its ability to establish more presence in all regions both locally and internationally and this would enhance its efficiency in delivering the services.

New Media Channels Exploding

         The modern generation is innovative and technology savvy. This provides a golden opportunity for the American Red Cross to embrace new technologies to market its operation. Additionally, the entity can use celebrities to influence the actions of the modern youth (Dolnicar & Lazarevski, 2009).

New Ways of Connecting to the Public

         Other than social media platforms, which have emerged in the recent past, the American Red Cross can use blood drive activities to connect to the public.

Threats

Huge Competition

         There are numerous humanitarian organizations which offer services similar to those of the American Red Cross. Some of its rivals offer to pay those who donate blood (The American Red Cross, 2014).

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Regulatory Compliance

 The government of the United States established policies which governs operations of every non-profit organization. For the American Red Cross to perform its operations, it must meet specific requirements. In some cases, meeting all the requirements is costly to the company. In the event that the organization is not able to meet the regulatory compliance, then the strategic change process will not be undertaken.

Busier Target

  The American Red Cross depends on the contributions of the young professionals, majority of whom are always busy. As such, the entity risk delays of its operations in some situations. Therefore, strategic change process is likely to be negatively affected.

Appreciative Inquiry 4-D cycle

Discovery

   While the organization faces some challenges and shortcomings, it is also important to highlight that it has good history marked with great successes. The organization uses the success story of the past as a tool for developing better outcome for the future (Whitney & Cooperrider, 2011). Notably, the fundamental goal of this strategy is to capitalize past success to create an image of excellence for its customers and shareholders. This strategy will paint the organization as effective and excellent thus making customers and shareholders ignore any shortfall associated with it.

Dream                                      

       In regard to design, the organization projects poor strategies. Specifically, it has poor strategy in regard to sustainability as it depends mainly on donors as one of their sources of finances. With great scrutiny and many conditions that come with this source, sustainability is not secured (Whitney & Cooperrider, 2011).

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Design

          Evident in its strategies, American Red Cross has successfully crafted a good and ideal organization using the positive successes from the past. This will inform a clear image of the future and this will be felt both at individual and organization levels, making the organization to achieve future possibilities.

Destiny

         In regard to this strategy, the organization posts positive results. For instance, there is a great sense of belonging and purpose within the organization, and employees as well as shareholders taking part in major decisions. This will create a shared vision that will also be executed through shared values (The American Red Cross, 2014).

Comparison of the Organizational Outcomes using the Two Analysis Methodologies

       From SWOT analysis, it is clear that the American Red Cross has the right resources and capabilities necessary for successful strategic change. The organization can capitalize on its strength to succeed in this pursuit. Strong quality brand is vital in this endeavor. The company is trusted highly by the public and this is important towards realization of the intended objectives of strategic change.

Notably, the weaknesses discussed are likely to pose challenges in this process. The company has the responsibility to identify these weaknesses and convert them to be strengths if predetermined objectives are to be achieved. Appreciative Inquiry analysis points out some of the strengths that are similar to those identified by SWOT analysis.

AI identifies good long history as one of the aspects which will enable the company succeeds with regard to this strategic change. The strategic change is closely linked to the mission of the company, which is to offer quality services, something which is also identified in SWOT analysis.

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Conclusion

        The American Red Cross has gained popularity for its strong quality brand and the nature of services it offers to Americans within and outside the United States. While it is easy to conclude that the organization is doing perfectly well, critical analysis shows otherwise. The nonprofit organization has faced myriad of challenges in the recent past, which has negatively service delivery.

This demands the management to undertake strategic change so as to restore the pride of the company. To achieve the intended results, it is important for the management to employ SWOT analysis and Appreciate Inquiry 4-D analysis to understand some of the aspects that will influence the process.

References

Dolnicar, S. & Lazarevski, K. (2009). Marketing in Non-Profit Organizations: An International Perspective. International Marketing Review, 26(3), 275-291.

McGovern, G.  (2011). The American Red Cross: On the Path to Stability and Growth. Retrieved March 31, 2016 from http://www.redcross.org/images/MEDIA_CustomProductCatalog/m6340469_PresidentialThree-YearReport.pdf

The New York Times (2015). Re-Examining the Red Cross. Retrieved March 31, 2016 from http://www.nytimes.com/2005/12/04/opinion/reexamining-the-red-cross.html?_r=0

The American Red Cross. (2014). About Us. Retrieved from, http://www.redcrossblood.org/about-us

Whitney, D. & Cooperrider, D. (2011). Appreciative Inquiry: A Positive Revolution in Change. New York: ReadHowYouWant.com.

Weerawardena, J. & Mort, G. S. (2012). Competitive Strategy in Socially Entrepreneurial Nonprofit Organizations: Innovation and Differentiation. Journal of Public Policy & Marketing, 31(1), 91-101.

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Strategic Planning Research Paper

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Strategic Planning

Task 1

1.1. Factors informing the process of strategic planning  

According to Bain (2014), the success of any strategy is determined by the strategic plans put in place. Effective strategy implementation requires a clear understanding of the process of strategic planning (Favoro, 2015). The set strategies should be in line with the firm’s goals and objectives since they represent the financial strength and sustainability of an organization. It is impeccable for strategic managers to show a clear strategic path for resource allocation and decision making to get the best strategies out of the available alternatives.

The vision of a business is the representative of what the organization wants to look like in future. Additionally, a vision statement tends to provide a picture of what the organization wants to achieve in the long run. On the other hand, the mission statement is short-term and aims to provide the purpose of the organization. The mission statement shows the stakeholders the position of the organization and its capability in the near future.

The goals of an organization provide the means with which it aims to achieve its mission statement, while the objectives are the desired returns that an organization would want to achieve (Iowa, 2011). Finally, the core competencies are the main differentiating factors of an organization from its competitors. Resources, skills, and activities that competitors cannot imitate provide for an organization’s core competencies.

All the laid strategic plans must be consistent with the goals, objectives, mission, core competencies, and vision of an organization since they are the determinants of the expectations of an organization’s stakeholders. Since strategic planning involves laying the foundation for achievement of strategies with the available resources, when all the stakeholders are satisfied as per the mission and vision statement, it becomes possible to implement the strategies for realization of positive results.

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There are a number of issues that affect the process of strategic planning. Strategic planning is referred to as a phase-by-phase procedure with the purpose of advancing the an organization. Of the issues that affect the process of strategic planning, there are five major factors that influence the procedure. Confusion of the strategy with the plan, disconnection from the reality, ineffective strategic analysis, lack of consistent ownership, and complicating the innovative process are some of the issues relating to strategic planning.

During the strategic planning process, some plans seem to liaise with already existing policies, making the current approaches seem void and managers may do away with the strategies. In the course of the process, some employees are not involved and still, the process is intellectual and involving making the strategic managers to be detached from the real world and come up with unreal plans (Bain, 2016). When there is great involvement and use of comprehensive analysis, the process ends up with so many details that make it unattainable.

Also, since it’s only a part of employees that are involved in strategizing and planning, it can be said that the process is now owned by all the employees hence making it difficult for them to be accountable and responsible for mistakes resulting from strategy implementation (Long, 2012). New strategies bring about new control measures which eventually reduces flexibility and innovative nature of an organization. All these issues dampen the process of strategic planning and it’s up to the strategic managers to deal with them before commencing the process to avoid loopholes for successful implementation.

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1.3. An evaluation of strategic plans systems

The techniques used for formulation of strategic plans differ in accordance to the strategy. There is a variety of techniques used for strategic planning but the chosen technique should provide the best possible strategic outcome. The main methods used for strategic planning include; directive, command, coordination, emergent and directive strategic techniques (Iowa, 2011).

A directive technique is used in large organizations that have a simple way of doing things. The technique involves a comprehensive study of the internal and external environment for the top management to carry out strategic plans. However, if the organization is large and complex, the suitable technique is coordination where all the departments and resources are integrated together to find the most suitable strategy.

A command technique is used in small and medium enterprises where the owner or owners get involved in the strategic planning process.  The owner is responsible for strategy formulation, planning, assessment, and implementation since there are few stakeholders involved in the process. A combination of internal and external team of experts is used for strategic planning in the case of emergent technique.

 Therefore, the effectiveness of a strategic technique is highly dependent on the type and nature of an organization. It is crucial for strategic managers to be familiar with their organizations in order to apply the best technique. Combining the different techniques provides for application of the internal and external environment, available expertise skills, as well as associating all the stakeholders in the strategic planning for effective results.  

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Task 2

Successful organizations understand the need to update the existing strategies as well as develop new ones to have a sustained growth. Apart from understanding the objectives, mission, core competencies, goals, and mission of an organization; it is important to understand the micro and macro environment before formulating new strategies. SWOT analysis, PESTEL analysis, and Michael Porter’s analysis are some of the main tools that can be used in assessing the environmental factors affecting an organization for the formulation of new strategies (Sun, 2015).

2.1. McDonalds

McDonalds operates as a food chain and has a presence in 200 nations. Founded in 1955, it has continuously grown in market share and revenue through diversification of products and engagement in online selling to increase customer value for maximum satisfaction.

2.2.     McDonald’s organizational audit

To carry out McDonald’s organizational audit, SWOT analysis is necessary.  SWOT analysis is carried out to determine the strengths and weaknesses of an organization, as well as identify the opportunities and threats that an organization faces for the formulation of a sustainable strategy for an increase in market share.

Strengths

  1. Ever since it was founded in 1955, the company prides itself in a great market share where it has established itself in 119 countries with more than 40 million customers.
  2. Offers a variety of products and menus for customers. The diversity of products makes the company have a sustained growth and increase in revenues over time.
  3. Utilizes up-to-date knowhow such as online marketing to increase customer value and market share.

Weaknesses

Although the company has a sustained organization environment, its main weakness is in the product delivery after the emergence of E-commerce. It is difficult to deliver products to all its consumers due to infrastructural problems and bad weather.

Threats

Just like other food chains, the company’s main threats are:

  1. Intense market competition since there is free market entry.
  2. Rapid changes in consumer tastes and preferences.
  3. Penetration of the web

Opportunities

  1. Globalization that has created numerous avenues for expansion of the company.
  2. Technology advancement leading to diversification of trade through e-commerce.

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2.3. McDonald’s environmental audit

The intention of carrying out an organization audit is to understand the market that a firm operates in. Since McDonald has an international manifestation, its environmentally friendly inventory is influenced by technological, political, legal, economic, environmental, and legal factors.  The environmental audit is a global one. Through the of PESTEL model, it is possible to carry out an environmental audit on McDonald’s.

2.4.      PESTEL Analysis

Some governments may encourage the company’s presence in their countries by giving out incentives while some may restrict operations hence influencing the strategies set up by McDonald’s strategic managers. Economic factors that affect the strategies set by the company include inflation, recessions, demand, and the supply of the products. Also, the company’s operations are socially affected in terms of the culture of the different market segments such that McDonald has to formulate strategies are consistent with certain cultural orientation.

There are some governments that impose high tariffs and taxes on foreign companies or reduce the rates to encourage the companies and McDonald is not left out. In addition, the strategy of the company is affected by innovations like information technology as well as electronic-commerce, which have an impact on the manner in which company operations are carried out. All these PESTEL factors influence the company and the way it formulates its strategies.

2.5. Significance of stakeholder analysis in strategy formulation

Stakeholders are the persons who are directly or indirectly affected by the operations of an organization. Like other businesses, McDonald’s stakeholders include: employees, customers, lenders, investors and the government. To effectively formulate a new strategy, it is important for a company to analyze all the stakeholders’ needs and expectations of the company (Duggan, 2014). A stakeholder analysis is a procedure used to assess and determine the effect of the key persons in an organization as well as their influence in the organization.

A company`s appraisal is considered to: decide the individuals that will undesirably or definitely have an influence on organizations operations, comprehend the influence of the shareholders on the business, and come up with approaches that are reinforced by all shareholders as well as reduce the difficulties the institute might go through  when implementing the strategies.

2.6.      Advantages of stakeholder analysis in formulating a new strategy

  1. It is possible to get expertise opinions that assist in shaping of a strategy as well as gaining support for effective strategy implementation.
  2. When stakeholders are involved in strategy formulation, an organization increases its chances of getting extra resources.
  3. It gives a clear understanding of the opinions people have for the company hence providing room for improvement through the new strategies.
    1. New strategy for McDonald’s

With the rapid changes that are taking place in the market, the best strategy that McDonald should adopt is e-commerce so as to increase its market share and increase consumer’s value.

Task 3

It is important that various alternative strategies are looked into before implementation. Each strategy has its advantages and disadvantages and it’s the strategy with the best outcome that should be taken (Duggan, 2013). In line with the vision and mission of Marks and Spencer, substantive growth, market entry, limited growth, and retrenchment are some of the available alternative strategies. This section outlines the four alternative strategies and recommends a strategy for Marks and Spencer

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3.1. Background

Mark and Spencer is a multinational retailer offers a variety of products in clothing and accessories (Mark & Spencer 2016). The company was founded in 1884 and is one of the leading retailers in the world.

3.2. Evaluation of the alternative strategies by Marks and Spencer

Substantive growth strategy is formulated through mergers and acquisition. Suppose a business if sturdy in terms of finances, then this implies that it is able to consider a strategy. Marks and Spencer has a big market share but it can merge with another firm to increase the share for sustained growth. Also, an expansion strategy exists by acquiring another business as it will be at a reduced cost and procedures.

An inadequate development approach is integrated using a joint venture thus leading to a diminished competitive edge, thus Marks and Spencer do not consider it. Reduction of cost and assets as well as revenue generation is some of the retrenchment strategies available for Marks and Spencer. The company can reduce its operation cost in Middle East. Moreover, the company should strategize on taking up extra market segments in the world to increase its market share.

3.3. Recommended strategy for Marks and Spencer

The company best alternative strategy is sustained growth through mergers and acquisition. The firm is already financially stable and strong hence is in a position to acquire or merge with other businesses in the same line. The strategy is the best of the other alternatives since it will lead to cost reduction with increased market share and sales.

Also, the microeconomic challenges faced in some of the countries can be phased out through mergers with firms that are already stable in those economies. The competitive nature of the clothing industry requires uniqueness of strategies which can only be achieved by liaising with firms that already understand the culture of the people in the various market segments.

Task 4

A strategy is void unless it is implemented. After successful strategic planning it is crucial to identify proper methods for implementation. Implementation is the final stage and the way it’s carried out determines if the strategy will be successful (Sage, 2014).

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4.1. Honda’s Background information

The company is multinational and operates in the automobile industry. It is the second largest automobile and was founded since 1959. The company operates globally and has sells a variety of products.

4.2. Responsibilities and roles of personnel in strategy implementation

The formulated strategy has to be communicated to the different stakeholders either formally or informally. The functions of each organization are influenced by the novel approach and needs the application of an informed communication to reach out regardless if it is horizontal or vertical.

The personnel equipped with the implementation process are responsible for mapping the strategy, integrating the organization for delivering the strategy, and carrying out the change process as impacted by the new strategy.

The personnel have the role of mapping the new strategy to the internal and external users to make them have an idea of the prospects of the new strategy to the operations and image of the organization. By mapping the strategy, the personnel will also be involved in positioning the strategy to the existing culture of the organization so that it fits with the firm’s expectations. Finally, the personnel are tasked with the change process that results from the new strategy.

The middle management and outside parties are the ones that take the responsibility of strategy implementation. The middle managers implement the strategic plan that has been set up by top managers through making sense of the strategy to other stakeholders, interpretation and re-adjustment of the stakeholders view on the strategies, and advising the senior management on the implications of the new strategy (Lewis & McKone, 2015). Shareholders are convoluted in the modification procedure and compelled to make the policy flexible as envisioned by the organization.

 4.3. Resource requirements for implementing a new strategy for Honda

Resource allocation is a strategic process aimed at aligning all of organizations resources to its goals and objectives. Resources are in form of finance, human labor, and infrastructure. All these resources must be used in such a way that they lead to the achievement of the strategies.

Honda required resources are finance and human resources since it is already in possession of the materials and tools required for strategy implementation. To achieve its innovative process of generating unique products, the company needs expertise skills as well as finance to undertake the process of research and development as well as start-up capital for the new venture.

4.4. SMART targets

For achievement of strategy implementation in Honda, SMART goals must be set. SMART stands for specific, measurable, attainable, realistic, and time-oriented. A strategy should be specific and clear to avoid complications during its implementation. A realistic target is achievable and falls within a specific time frame that is also measurable and is agreeable by all stakeholders. When a target is SMART it is easily implemented and is successful in the long run (Haughey, 2014).

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Conclusion

Strategic management is one of the crucial functions of a business. If all stakeholders are involved in the strategy formulation process, it becomes easier to implement and the required resources are made available. A strategy is said to be successful if it’s SMART has been analyzed using SWOT and PESTEL tools. After formulation, it requires different parties to take up the process of communicating the strategy in order to integrate all the functions of the organization for successful implementation of the strategies.

References

Bain, 2015. Strategic planning. [Online] available at: http://www.bain.com/publications/articles/management-tools-strategic-planning.aspx

Balanced Scorecard Institute 2016. Strategic planning [online] Available at: http://balancedscorecard.org/Resources/Strategic-Planning-Basics

Duggan, T 2013. Strategic management and how to allocate resources [online] available at: http://smallbusiness.chron.com/strategic-management-allocate-resources-11682.html

Duggan, T 2014. What are the roles and responsibilities of strategic project manager? [online] available at: http://smallbusiness.chron.com/roles-responsibilities-strategic-project-manager-10260.html

Favoro, K 2015. Defining strategy, implementation and execution [online] available at: https://hbr.org/2015/03/defining-strategy-implementation-and-execution

Haughey, D 2014. SMART goals: [online] available at: https://www.projectsmart.co.uk/smart-goals.php

Honda 2016. Honda[online] available at: http://corporate.honda.com/innovation/

Iowa 2011. Basics of strategic planning. Retrieved from: https://www.fpm.iastate.edu/worldclass/strategic_planning.asp

Lewis A & McKone D., 2016.  Strategic planning[online] available at: https://hbr.org/topic/strategic-planning

Long, N 2012. What is the role of an employee in the implementation process? [online]  available at: http://smallbusiness.chron.com/roles-employee-implementation-process-36334.html

Mark & Spencer 2016. Mark and Spencer Online. [online] available at: http://www.marksandspencer.com/?extid=ps_ggl_ROW_Brand_InternationalBrand&kwid=29649850_Google+Adwords&s_kwcid=AL!2750!3!76493220287!e!!g!!mark%20and%20spencer&device=c&ef_id=VqCuxgAAAWf@2QeZ:20160323111459:s

McDonalds 2016. Strategies. [online] available at : http://www.mcdonalds.co.uk/ukhome.html

Sun, L 2011. Environmental factors in strategic planning. Retrieved from: http://www.leoisaac.com/planning/strat016.htm

Sage, S 2015. Strategic implementation[online] available at.: http://onstrategyhq.com/resources/strategic-implementation/

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Transocean Strategic Management

Strategic Management
Strategic Management

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Transocean Strategic Management

1.0 Introduction

The paper will evaluate the strategic position of Transocean, a major player in global offshore drilling services in the oil and gas industry. Strategic management is a process that entails formulating and implementing main objectives as well as initiatives a company takes based on the available resources. It also takes into consideration the evaluation of external and internal environment in which the firm operates.

Founded in 1953, the company is headquartered in Houston Texas. Transocean administrative division has since shifted to Vernier, Switzerland for tax and client servicing reasons. Various models such as STEEPLE, Ansoff and Porter’s Five Forces will be used to paint the company’s strategic position when it comes to, macro-environmental review, competition, diversification strategy, market development, product development and market penetration. To wrap up, the paper will make recommendations regarding the direction the company has to take to remain sustainable.

1.1 Analysis of Transocean Limited

Transocean is a prominent global provider when it comes to offshore drilling services for energy establishments. The company owns and operates the world’s most multipurpose flotillas that concentrate on deep-sea and extremely harsh environment drilling (Deepwater.com, 2016). With a fleet of sixty-one portable offshore drilling components, the company offers powerful rigs for deepsea drilling. Transocean helps clients to establish and develop oil as well as natural gas stockpiles.

The company offers an exceptional drilling performance that is anchored in a solid experience that spans more than a half a century. Transocean shares are listed on the New York Stock Exchange under the acronym RIG and Swiss Stock Market under the acronym RIGN.Transocean operates more than 140 offshore rigs in almost all mainmarine markets. Apart from offering drilling services offshore, the company offersdrill management services globally.  Transocean operates not just the largest extreme-deepsea flotilla of drill ships global, but it is also the largest offshore fleet worldwide.

The company hires more than 20,000 employees with the technical expertise that is the envy of their business rivals(Deepwater.com, 2016). Moreover, Transocean provides management and accomplishment services for assessment and production firms regarding offshore drilling schedules. The company’s mission is to become a leading offshore drilling organisation that provides rig-based services with a global reach, by incorporating a highly dedicated workforce,state of the art machinery and ultra-modern technology, while concentrating on technically demanding environments (Transocean, 2007b)..

The company is dedicated to values that represent its focus, innovativeness, safety, trust and reliability. The company promises to surpass not just the anticipations of theclient, but employees and shareholders as well (Deepwater.com, 2016). Transocean’s strategic goals include getting aligned with its customers when it comes to supporting and ensuring delivery of clients’ business objectives. 

The company conducts its operations with distinction which is characterized by safety and efficientoffshore solutions (Deepwater.com, 2016). In addition,Transocean keeps on enhancing its corporate culture and processes to optimize returns. Lastly, the company not only attracts but also nurtures and retains the industry’s best employees.

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2.0 Industry Trends

Drilling oil and gas was previously dependent on backlogs. Contract bores alter their rates based on their rig charges relative to retailing oil and gas prices. Usually, contract bores tend to wait on the day down, and speedily adjust their prices upwards depending on how the markets are performing (Redall, 2012). There has been a widespread pattern of extreme deepsea rig business with strong daily charges.

However, there has been a downward trend in mid-water rig markets. The most lucrative market lies of the Gulf of Mexico and West African coastal line, down to the south of Africa. The demand for deep-sea rigs is anticipated to remain jerky in the short-term(Helman, 2015).As of now, approximately 206 floaters are operating under contract across the industry (Deepwater.com, 2016).A large percentage of the total number is idle for completing major contracts.

3.0 Analysis the different types of strategic options

3.1Ansoff Matrix:

    Existing Markets    Market Penetration      Product Development  
    New Markets  Market Development      Diversification    

Existing Products

New Products

Transocean is a dominant player in a market that is not highly saturated. However, to remain at an edge over its closest business rivals, the company has adopted different approaches. Based on the Ansoff matrix, Transocean has been using a low pricing model to penetrate the market. When it comes to market development, Transocean has been offering ultra-deepsea drilling and management services in various parts of the world. What makes the company the envy of its business rivals is the fact that Transocean’s product development strategy works magic. Apart from ultra-deepsea boring services, the company offers rig and deepsea drilling consultancy services which is certainly some form of diversification hence competitive edge.

In short, Transocean operates in the same market by adopting a horizontal strategy in terms of expanding the product line. Lastly, Transocean has a predominantly diversified portfolio. To diversify risks, the company has necessitated mergers and acquisitions when it comes to financial management and technical expertise. The company operates in various regions such as the United States, the Gulf of Mexico, the North Sea, West Africa, and Southeast Asia, Middle East and the Arctic.

3.2Porter’s Five Forces

3.2.1Competition

Transocean threat of competition is moderate to high. For example, following a merge in mid-2007 between Rig and Transocean’s chief rival Global Sante Fe, this attempt reduced competition particularly, in ultra deep-water segments. While Transocean has almost a monopoly in ultra deep-water drilling, It is likely to enjoy less competition in ultra deep-water, especially in harsh climates that require technical personnel.

In fact, this contributed to the need for anti-trust lawsuit following the merger between RIG and GSF. Nonetheless, the firm has exposure to different offshore markets such as jackupsegment that is associated with intense competition in various regions globally as well as pricing (Porter, 2008). By and large, the organisation has less competition in ultra deep-water segments, with a somewhat intense competition in mid-water floater and also jackup segments.

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3.2.2 New entrants

Transocean enjoys a low threat of new entrants. With respect to offshore contract drilling sector, it requires huge investment in fleet and rigs before getting inflows from gas and oil organisations (Porter, 2008). This makes nearly impossible for new firms to enter this sector.

3.2.3 Substitute

The main threat of substitute is the changing the energy source from hydrocarbon to renewable sources across the world, which is not likely in the short-run (Turner, 2007). Therefore, the threat of substitute is low.

3.2.4Purchasing power

Transocean’s purchasing power is moderate. Much as exploration and production firms have power when it comes to negotiating, especially in mid-water floaters and jackupsegments, they have sufficient ability and provision of idle rigs. In essence, the buyers are in aposition to negotiate low daily rates in the contracts while ultra deep water segments maintain stringent rates (Schlumberger, 2008).

3.2.5Suppliers’ power

The supplier power is moderate. Transocean providers have some degree of power. For instance, suppliers like National Oilwell Varco take part in the decision making in constructing Transocean’srigs andother essential parts. Luckily, this is crucial for Transocean since National Oilwell Varco has a few plans of increasing the fleet of drillships. In general, benefits from pricing since they are the main clients to themajority of their specialised providers (Porter, 2008).

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3.3 STEEPLE

3.3.1 Social

The organisation takes part in various social activities, including charitable contributions to developing environmental initiatives to increase its reputation.

3.3.2 Technological

Technology is necessaryfor drilling sector as such Transocean gets its strength in technological development. While oil drilling and the ecology are related, so is technology and demand. Drilling in deepwater is more and more vital from drilling organisations since they are considered to be more profitable. The firm is positioning itself to capitalize in this segment. For instance, in 2007, Transocean acquired a drillship worth USD 470m to take advantage of deep-water drilling, which allows the firm to drill up to ten thousand feet.

Due to advanced underwater drilling, there has been a decrease in jackup rigs demand (Associated Press, 2007). This presentsTransoceanwith the opportunity to beat their rivals like Noble Corporation in the struggle for innovation. Currently, the firm is leading in deep-water exploration (Katsaros & Christy, 2005).

3.3.3 Economic

Cost is a major challenge for drilling organisations. As oil price rises, the cash flow increases too, which makes organisationsinvest considerably in drilling activities? Furthermore, the new techniques of recovering oil though they are essential in the growth of petroleum production, are leading to an increase in the gasoline price. Implicitly, thehigh price of oilis required to make drilling firms profitable. High global investment drives drilling.

With great interest to drill in foreign regions, global investors are significantly investing, hence leading to expansionof oil and gas sector (Maksoud, 2007).Even though raising oil cost will adversely influence Transocean, in reality, will be beneficial in the long run. Oil cost is inelastic. In other words, afluctuation will insignificantly affect demand. Therefore, increasing oil prices willboost cash flow for Transocean, which means additional business like funding new drilling projects.

3.4.4 Environmental

On environmental protection, Transocean is committed to enhancing its stringent police on Environmentalmanagement system (EMS). Transocean’s EMS visitation is conducting its operations in a standardised manner that fulfills the high levels of stipulated laws to drive continuous enhancements while instilling ownership across its facilities (Transocean, 2007a). The organisation is environmentally sustainable by way of using green products and assessment is utilized as part of routine operations.

The firm also focuses on recycling. Additionally, Transocean has set up a recycling plan, where recyclables are sorted and compressed in rigs. After compression, they are transported to Tech Oil Products and donated to a recycling hub in the ARC of Iberia.

Transocean has collaborated with different oil and gas firms such as Subsea 7, and BP in the SERPENT project. Thisentails necessitating access to the installations, in partnership with their customers to present scientific knowledge to experts in the SERPENT project (Dictionary.Cambridge 2012). In turn, the analysts conduct various projects including assessing biodiversity and effects of drilling on the environment.

The analysts also work on the company’s rigs to study marine species (Transocean, 2007a). By and large, Transocean protects the environment in which it operates to demonstrate that the company recognises the consequences of natural demand shifters.

3.4.5 Political/Legal

Oil presents this organisation with a strong political force. Because oil is the primary source of energy internationally, thus, the supply of oil is related to power regardingpolitics; oil firms leverage authority over regimes (Dictionary.Cambridge 2012).   With no oil organisations, United States is likely to lose its dominance in developing nations remarkably. Though oil drilling firms are fundamental in giving regimes the authority, they are still regulated and work as per government laws, such as prohibiting drilling in particular regions like the Gulf of Mexico to protect the environment.

In 2007, the Congress was promoting the closure of a quarter-century ban on the production of offshore energy. This decree banned 85 percent of all drilling in United States’ continental shelf, greatly affecting oil drilling firms including Transocean (Kamalick, 2007). Furthermore, the Congress were supporting the opening of additional shorelines, which was associated with renewable sources of energy, as such they sought for support from environmentalists. While regimes exercise their authority on oil and gas providers, these providers, in turn, have authority over the very regimes.

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3.4.6Ethical Standards

Transocean aspires to ensure financial discipline in their disclosure, honesty and candor in all their engagements with clients, ahigh esteem for employees, customers and suppliers, the safety of employees, property and the ecosystem and technical leadership. Loyalty to these core values demands the company to execute its operations in tandem with thelaw and the utmost standards of business ethics.

In advancing that objective, the company embraces the Code of Business Conduct and Morality, the firm’s environment is also a corrupt free zone and an Anti-Corruption and Business Conduct Policy takes care of that. Again, directors and employees are not allowed to enhance the culture of inside trading. Nonetheless, all employees should adhere to the privacy policy.

4.0 Recommendations

Since oil is directly associated with international authority, oil drilling organisations have authority over regimes, nevertheless, with another alternative, Transocean should continuously go this direction to maintain the lead if the primary source changes

Much as the company has advanced drillship tools, it should take a notch higher by researching new products in comparison to its rivals.When it comes to maintaining competitiveness in oil and gas industry, Transocean should use differentiation strategy that will be vital in developing clients’feedback and service delivery. The differentiation strategy should focus on quality rigs, particularlydeep-water drilling and ability to survive environmental disasters such as hurricanes.

While this threat of substitute islow, in future it may reduce the demand for oil. For that reason, Transocean should create awareness among clients about the benefits of oil in comparison to other energy sources. This can be carried out through advertisements. For instance, the organisation should use ads that demonstrate even with the use of alternative sources such as ethanol, which is considered environmentally sustainable compared to oil. Ethanol requires aconsiderable quantity of biomass. In the even that US, ethanol from corn is employed on a large scale, then it will contribute to increased costs of corn.

The prices of beef will also skyrocket remarkably as cows feed on corn products. On the other hand, if Brazilian corn is used thatis produced from sugar; rainforests in the region will be cut to provide land to grow sugar. Creating awareness through ads will help Transocean increase the demand for oil while increasing the demand for petroleum products from the company.

The company should embrace Ansoff model to diversify its portfolio. Instead of concentrating on drilling and consultancy, the company can take a leap of faith and venture in other business like marine transport, finance, healthcare, real-estate, heavy metal processing among others. Diversification is critical because it will help the company spread risks, when oil business is at its low. 

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5.0 Conclusion

The study set out to evaluate Transocean position in the offshore drilling services. The company’s background, values and strategic goals were highlighted at the outset. To understand the company’s product and market development; market penetration and diversification, the Ansoff Matrix was used. The Porter’s Five Forces were employed to establish the intensity of the competition. However, STEEPLE model was used to evaluating the company macro-environment. In the end, the paper touched on the best practices as assured by ethics codes. Recommendations were made regarding the corporation’s future. 

6.0 Bibliography

Associated Press 2007. JP Morgan Securities analyst upgrades GlobalSantaFe, Transocean to “neutral.” Retrieved 17th March. 2016 from Factiva.

Berman, A. 2007. Drilling advances. World Oil, 19. Retrieved March 17, 2016 from Business Source Premier Database

Deep Sea Drilling Project 2015.” The Columbia Encyclopedia, 6th ed.. 2015. Encyclopedia.com. 17 Mar. 2016 <http://www.encyclopedia.com>.

Dictionary.Cambridge 2012. PESTLE analysis. [online] Available at: http://dictionary.cambridge.org/dictionar0y/business-english/pestle-analysis?q=pestle+analysis [Accessed: 6th august 2012].

Helman, C, 2015. Forbes.com, Retrieved March 17, 2016  from http://www.forbes.com/sites/christopherhelman/2015/03/16/oil-layoffs-itemized-75000-andcounting/

Deepwater.com, 2016. Deepwater.com accessed on 18th March. 2016 at <http://www.deepwater.com/>

Katsaros, J.&Christy, P. 2005. Getting It Right the First Time: How Innovative Companies Anticipate Demand. Westport, CT: Praeger

Kamalick, J. 2007. Untitled. Chemical Business Americas, p. 26. Retrieved March 17, 2016

Maksoud, J. 2007. International investment pours into Africa. Pipeline and Gas Journal,pp. 42-44.

Porter, M. 2008. The Five Competitive Forces That Shape Strategy. Harvard Business Review, 15 January 2011.

Redall, B, 2012. Reuters.com, Retrieved March 17, 2016 from http://www.reuters.com/article/us-fieldservices-powerstruggleidUSBRE8AC05S20121113#y2LttEqUfwzf4Kja.97

Schlumberger 2008. Day rate. Oilfield Glossary. Retrieved March 17, 2016 from http://www.glossary.oilfield.slb.com/Display.cfm?Term=day%20rate

Transocean, Inc. 2007a. Responsibility. Retrieved March 17, 2016 from www.deepwater.com

Transocean, Inc. 2007b. Our company. Retrieved March 17, 2016 from www.deepwater.com.

Turner, H. (2007). Conversation about Transocean and alternative fuels. 

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Manchester United Football Club; Strategic Analysis

Manchester United Football Club
Manchester United Football Club

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Manchester United Football Club; Strategic Analysis

Executive summary

The main purpose of this report is to provide a critical analysis of Manchester United Football Club internal and external factors affecting its strategy formulation and implementation. PESTLE Analysis and SWOT analysis are some of the tools used to access the factors affecting strategic management and evaluation in the company. Finally, a recommendation is to be given for the best applicable strategy using Ansoff Matrix.

a. Corporate objective

One of Manchester United’s business objective is to increase revenue by expanding its businesses. The company’s strategies comprise of expansion of global portfolio sponsorship, development of the retail business, enhancement of broadcasting news and taking advantage of the digital technology. Additionally, Manchester obtains revenue from some businesses: broadcasting, sponsorships, retail, merchandising and licensing, mobile content, and match-day tickets (Manchester United, 2016).

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b. Macroeconomic analysis

PESTLE Analysis

Strategic decisions made by the company are highly affected by macro-economic factors such as taxes, governing laws and regulations, as well as demographic changes (Sue, 2013).

1. Political factors

These comprise of the laws and regulations that govern the way an organization carries out its activities. The government regulates a company’s activities through tariffs, taxes, and incentive provision. Since the company’s goal is to increase revenue in its existing business ventures, it is important to adhere to tax payments to ensure that its activities are not interrupted through legal claims. For example, the company had a case for failing to pay taxes as required.

It, therefore, calls for managers to ensure that the company liaises with the set regulations to ensure the business activities run smoothly. In many countries, there are stadiums that fans use to watch football matches (Aileron, 2013). Also, broadcasting corporations are charged for airing the football matches. The revenue collected by the governing authorities as a result of the football matches in connection with the company help in enhancing the stakeholder relationship leading to minimal regulations.

2. Economic factors

Inflation, living standards, and growth capacity of a set target market influence the strategies set in place. Since the company runs some businesses, it formulates specific plans for the different ventures. In the retail, merchandise, and mobile business, the company markets the products in new and emerging economies to increase its market share. More products are shipped in countries that are facing inflation since the value of the product rises against the local currencies. The company also manufactures products in varying degree of performance for different income earners to increase specific customer value and avoid market discrimination.

3. Social factors

Different countries exhibit varying social and cultural perceptions. To take advantage of the social issues, the company the company employs players from different social backgrounds to increase its global penetration. Since football is social, it provides room for the company to integrate different groups of people by the provision of uniformed merchandise.

The sale of t-shirts and shoes with the company’s logo keeps its fans united and, in essence, leads to increasing in revenue collected from the sale of tickets (Manchester United, 2016). The company’s fans are united through the United’s anthem and uniform products. The company’s strategic managers make use of the unity amongst its fans to diversify its product portfolio for increased revenue and profits.

4. Technological factors

The world has become a global community due to the improvised technological advancements. Digital technology is one of the major technological advancement that is used for business strategies. The majority of consumers watch football through the social sites. The company uses the sites such as Instagram, Facebook, and Twitter to market its match-day activities for ticket sale as well as its merchandise.

Fans are united through the sites and made aware of the company’s strategies as well as get their needs for an increase in customer value. The company was able to generate more than $10 million in revenue in the year 2015 through its mobile content activity. Through the website, followers are updated about the company’s activities and products making technology a vital element in its strategy formulation.

5. Environmental factors

The internal and external environment is another factor affecting strategic formulation and implementation by the company. Provision of conducive work conditions, as well as an exercise in corporate social responsibility, are some of the measures Manchester takes into consideration to make its strategies effective. The company outsources its operations and follows the set environmental protection standards to ensure it minimizes pollution and protects the environment.

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6. Legal factors

Legal standards and regulations should be followed to ensure that there are market sustainability and growth. Through its legal team, the company takes care of legal issues and ensures all departmental functions operate as required by the legal authorities to ensure there are no obstacles while carrying out its normal business operations.

c. Competitive analysis

SWOT analysis is another effective method used to assess the potential implications of a strategy (Ovidijus, 2013). In the case of Manchester United, one of its main strength is a wide base of fans and popularity. The company uses the loyalty from fans to market its different product portfolios for increased revenue. Still, the company has a strong financial strength. Hence, it’s able to finance its operations and satisfy all its stakeholders.

The company’s main weakness is its concentrated market making due to stringent rules of the European Football Clubs making it hard to diversify its product portfolio in other countries. However, the company has a great opportunity for increasing its market share since more people are getting attracted to football and associated products.

Being one of the best football clubs, the company uses the opportunity to strengthen its products and harness more fans through its uniform products. However, the company faces intense competition from other English clubs such as Manchester City that have an equal fan base making it hard to penetrate. To phase out the competition, the company maximizes its already popular name to increase its market share and to give out customized products (Manchester United, 2016).

d. Internal analysis strategic capabilities

Strategic capabilities consist of financial, human, and capital resources that an organization uses to formulate and design its strategies. To make a strategy effective, the different strategic capabilities must be integrated. Regarding resources, there are those that are basic and unique. The unique resources are the core competencies of an organization while the basic resources are those that must be present for a strategy to be implemented.

General workforce, finances, and infrastructure are the basic resources. Brand name, trademarked products, and expertise skills or differentiated product portfolios are some of the core competencies that a company takes advantage of in formulation of strategies. Manchester United’s core competencies are brand name and a wide fan base that makes it attract some of the best players as well as market its subsidiary products.

ManU’s business functions comprise of financing, purchasing and supplies, production, human resources, marketing and research and development. All these departments are integrated together to ensure that daily operational functions run smoothly (Mackenzie, 2015).

e. Basis of competitive strategy

1. Key market segments

Manchester FC has a line of business venture it operates. In line with the retail and merchandise, the company targets young adults for its branded t-shirts and other merchandise. Most fans are young adults and form the highest market. The middle-income earners mostly attend the live matches and form the market segment for the match-day business venture.

2. Business strategy

The increase in product portfolio is one of the company’s business strategies. Differentiation by using its trademark and logo is one of the methods the company has been using to ensure the products reach to its target market, and the consumer’s value is maximized (Ovidijus, 2013). Fans go for their company’s products, and it is through differentiation that Manchester has been able to retain and increase its market share. Since wide fan base is one of the organizations strengths, it uses it to increase its sale in merchandise and tickets.

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3. Strategic choice

New product development is the best strategy the company can use to increase its market share and revenue (MSG, 2011). Since the company already has a wide and increasing market share, increasing in product portfolio is likely to get a high customer recognition thus increasing its revenue. The existing products have a high market share and sales revenue, and the company is assured of market penetration of a new product since the existing fans will be the ones to purchase the new product. A new product will lead to increased revenue.

f. Strategy evaluation

Product development is the most suitable since the existing products have already attained high market share and market awareness. Since the company has many fans who are loyal, the new product will have high acceptance rate amongst the different stakeholders as it is feasible and has a high potential for generating returns.

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g. Conclusion and recommendations

Manchester United faces social, environmental, political, legal, and economic issues in its strategy formulation and implementation. All these factors influence the outcome of strategy, and the company takes them into consideration before formulating and implementing a strategy.

8.1. The company has been maximizing its strengths effectively since it takes advantage of the wide fan base to increase its product portfolio for increased market share and revenues.

8.2. The main weakness that the company has when compared to its major rivals is a concentration in the European market which has limited fan base compared to other regions where its competitors exist. Financial problems is another weakness the company faces due to the imminent player transfers that cost the company a lot of finances.

8.3. The main threat faced by Manchester FC is competitors. Since the company is operating profitably and has a high market capitalization, it can be said that it is managing its threats effectively. The company increases its fan value by designing custom made products at low prices making the fans remain loyal.

8.4. Manchester’s vision is to be one of the best clubs that provides the best returns to its shareholders and sponsors. The increase in product portfolio is one of the strategies the company uses to increase revenue. When there is high revenue, the returns are high thus the vision of the company is not different from its strategy since strategies are formulated in line with the vision of the company.

References

Airelon, 2013. Aligning your business with your vision [online] Available at: http://www.forbes.com/sites/aileron/2013/10/09/aligning-your-business-with-your-vision-part-1/#6a9b0a012b70

Alexandar, 2010. Strategic analysis [online] Available at: https://books.google.co.ke/books?id=94ok06qiE0EC&printsec=frontcover&dq=strategic+analysis&hl=en&sa=X&redir_esc=y#v=onepage&q=strategic%20analysis&f=false

Jim, 2012. The five steps of strategic management process [online] Available at: http://smallbusiness.chron.com/five-stages-strategic-management-process-18785.html

Leigh, 2013. Business alignment strategies [online] Available at: http://smallbusiness.chron.com/business-alignment-strategies-4637.html

Mackenzie, 2015. How to align your entire company with your strategies [online] Available at https://moz.com/blog/how-to-align-your-entire-company-with-your-marketing-strategy

Manchester United, 2016. Manchester United Charter [online] Available at http://www.manutd.com/~/media/Files/PDF/ClubCharter/2012/Manchester_United_Club_Charter.ashx

Manchester United, 2016. Investor relations [online] Available at: http://ir.manutd.com/company-information/business-model.aspx

MSG, 2011. Strategy formulation process [online] Available at: http://www.managementstudyguide.com/strategy-formulation-process.htm

MSG, 2012. Strategic Management [online] Available at: http://www.managementstudyguide.com/strategic-management.htm

Ovidijus, 2013. Strategic management and strategic planning process [online] Available at: https://www.strategicmanagementinsight.com/topics/strategic-planning-process.html

Richard, 2015. Four steps to align your organization to its strategic plan [online] Available at: http://www.projecttimes.com/articles/four-steps-to-align-your-organization-to-its-strategic-plan.html

Ruth, 2010. Management of risk [online] Available at: https://books.google.co.ke/books?id=BcM-b4DTttcC&pg=PA88&dq=pestle+analysis&hl=en&sa=X&redir_esc=y#v=onepage&q=pestle%20analysis&f=false

Sue, 2011. Pestle Analysis [online] Available at: http://pestleanalysis.com/what-is-pestle-analysis/

50minutes, 2015. PESTLE analysis [online]. Available at: https://books.google.co.ke/books?id=h_uQCgAAQBAJ&dq=pestle+analysis&hl=en&sa=X&redir_esc=y

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Strategic Human Resource Management

Strategic Human Resource Management
Strategic Human Resource Management

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Strategic Human Resource Management

Introduction

Strategic human resource management is a very broad area of study. It has also evolved over time, making it difficult to summarize the concept in a few words. As such, there is not one single definition that can fully encompass what the concept is about. However, there are certain key aspects which help to put the definition of this concept into context.

Strategic human resource management (SHRM) revolves around systematically connecting and integrating human resource concepts to match and meet corporate needs. Every organization has laid out structures intended to assist in the achievement of set goals and aspirations.

In order for these goals to be realized, there has to be a systematic and practical manner through the strategies of human resource management are merged with the needs of the organization. SHRM concerns itself with overseeing a smooth integration of the two. Since its emergence, human resource management has evolved. As organizations keep up with the dynamism in their respective fields, HRM has had to keep up. There is a lot of materials that have been written in regard to this topic, including the constant evolution. The focus of this discussion is literature review on this topic and what various authors thing about SHRM.

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Background Information

Human resource strategies play a crucial role as they address all fundamental issues arising from management of various issues on human resource. There is need to ensure that there is alignment between the needs of an organization and the strategies of human resource. The human resource department is in charge of the personnel who form the human resource of an organization.

As such, it is pertinent to ensure that there is a blend between the two. On one hand, human resource practices are more concerned about the welfare of the personnel in the organization. On the other hand, every organization has set goals which must be achieved. Sometimes, there is a clash between the two and hence the need to have middle point where the needs of both can be harmonized.

Literature Review

Why is it so important to have integration between business or organizational strategies and human resource management? Authors on this topic have provided a myriad of reasons as to why the integration is essential. Mello (2014) notes that integration of human resource management with business strategies contribute significantly to improvement of performance within the organization.

Further, Storey notes that with proper integration of the two aspects, the competitive advantage o the organization is increased. The competitive advantage is increased since the human resource management is customized to meet the specific needs of an organization. Due to the unique system of HRM it is not easy for other organizations to imitate, giving the organization in context a niche.

Crucial Aspects of SHRM

Strategic human resource management is supported by two main tenets. The first tenet is the integration of human resource with specific business needs and the second is the devolution of human resource management to the managers.  Millimore (2010) notes that integration of the two is considered successful when all matters pertaining to human resource are considered to be crucial in business strategy.

In the past, business strategies have been formulated devoid and in total failure to consider the impacts on human resource management. The impact thereof is that in most cases, the human resource strategies and business strategies clash leading to a deadlock. Armstrong (2011) therefore recognizes the importance of such an integration thereby avoiding a deadlock.

Resource- Based View

       There are a number of theories that have been developed all of which seek to explain the relationship that exist between performance of an organization and human resource management. The resource-based view is one of the theories whose arguments have been used by researchers to assert this position.

According to this theory, organizations gain what is seen as competitive advantage or a niche for themselves when the resources within the organization are well taken care of. Blau & Schoenherr (2011) is of the view that the most valuable asset and resource for any organization is its human resource. The integration of human resource management will hence have a direct impact on the performance of the organization.

     The resource based theory is certainly a departure from previously held views where business strategy would focus more on the external environment. Prior to the evolution of human resource management, business organizations put more focus on the external environment including the market while completely ignoring the human resource.

It is not until the recent past that the perception changed. Human resources are now considered an integral part of business strategy and this has evidently seen a shift in performance by organizations. The integration of the two aspects has seen an alignment of goals for both concept which together work for the betterment of organizations.

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Findings

           From the above discussion, there are a number of findings. The first finding is that there is indeed a relationship between human resource management and performance of an organization. The second finding is that when the two aspects are integrated systematically, then there is evidence of improved performance for organizations.

There is need for more studies to be conducted with an aim of proving that the relationship between SHRM and organizational performance is causal. This means that strategic human resource management has direct impact on the performance of an organization. This means that failure to properly integrate the two will have ripple effect on the performance of a business firm.

Conclusion

         Human resource management sits at the center of good performance of every organization. Unfortunately, until very recently, human resource management has always been set aside during business strategizing. The role of HRM was not appreciated as more focus would be on the external environment of the business. However, with multiple researches conducted on the topic, the role of human resource management is now recognized and appreciated. Further, the need to integrate human resource management with business strategies has seen improved performance of organizations.

              As the name suggests, the integration must be strategic meaning that it must be done in a certain manner. The most important factor of consideration during integration of human resource management and business strategy is alignment of goals of each department. Recognition that human resources is one of the most valuable asset for each organization is a step in the right direction for organizations.

Management of human resources has grown in leaps and bounds to become the centerpiece of organizations. More organizations are now investing in this area as they seek to create a niche for themselves by increasing their competitive advantage.

References

Armstong, M. (2011). Strategic Human Resource Management: A Guide to Action. London: Sage

Blau, P.M., & R. A. Schoenherr (2014). The Structure of Organizations. New York: Basic  Books.

Mello, J. (2014). Strategic Human Resource Management. New York: Prentice Hall

Millimore, M. (2010). Strategic Human Resource Management: Contemporary Issues. London: Sage

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