BUS501: Strategic Management

5a. Apply modern strategic management techniques in a globalized environment 

• How does organizational culture impact strategy?
• What elements of a Theory Y management style are most necessary to successful strategy implementation?
• How do international trade concepts impact strategy?

Now that you understand how companies determine their strategies, let's explore what should be considered to successfully apply a strategy. First, you'll want to consider the organizational culture. Organizational culture refers to the beliefs, values, behavior, and material objects that constitute a way of doing business.

It is also important to consider managerial and leadership theories since you will depend on your people to help you execute the strategy. McGregor addresses theory x and theory y in the context of management. Theory X managers believe workers need to be watched and told what to do, in other words, micromanaged. Theory Y managers believe empowering employees can help meet organizational goals because they assume their employees are self-disciplined, self-motivated, and capable of being committed to the organization. You can see where these theories are important in strategy because you need your people to help you reach organizational goals.

Another important aspect of applying strategic management is the consideration of global operations and international trade. International trade theory relates to what types of products and services countries should produce, based on what they can do well and most efficiently. For example, according to Porter, we need to consider international trade in the context of the market conditions in a particular region or country, look at the demand for the product or service in that country, determine if the country or region has the necessary suppliers to produce the product or service, and the local strategy that will be applied when doing business in that country. Since many organizations are global, international trade and global business may be important in the overall organizational strategy.

To review, see Organizational Culture, MacGregor's Theory X and Theory Y, and What Is International Trade Theory?.

 

5b. Choose the best alternative strategy under technological uncertainty 

• What is the diffusion of innovation?
• Why do you think diffusion of innovation is important when developing a strategy?
• Which consumer group would you consider yourself to be when adopting new technology?

Diffusion of innovation theory seeks to explain how, why and at what rate new ideas and technology spread through cultures. Understanding diffusion of innovation theory can help you choose the correct strategy in the constantly changing world of technology. For example, suppose you believe that a new technology your company intends to sell will not be widely accepted at first. This means you know that it is likely a narrow market, which informs you what Generic strategy you might want to choose (differentiation). Of course, as your product becomes more widely accepted, you may need to implement a different strategy, such as cost leadership. As you can see from this chart, the bottom notes the groups of people adopting a particular innovation. You can see how the market share increases as more people adopt the new technology on the right.

To review, see The Diffusion of Innovation.

 

5c. Synthesize strategy options to maximize competitive advantage 

• What is design thinking?
• How is the business model canvas used to generate innovation in an organization?
• Why is innovation an essential part of a strategy?

The idea of innovation is an important thing to remember when applying an internal and external analysis (SWOT and PESTLE), determining your competitive advantage(s), and creating a Generic strategy. Companies must continually innovate to obtain and sustain competitive advantages in today's fast-changing global world. Innovation "ingredients" include design thinking, lean startup, business model canvases, and agility. Design thinking allows us to generate new ideas, and lean startup is focused on elements needed in the organization to support the innovations. Business model canvas is a way organizations can apply their competitive advantages to develop new ideas. Agility is focused on the ability to find ways to continuously deliver new products, services, and features to the customer. You can see a summary of each of these elements below. The top left quadrant addresses lean startup and the process for design thinking. The right quadrant addresses the business model canvas, and the bottom left illustrates agility. Considering innovation is key to creating a strategy and finding new competitive advantages in the market.

To review, see A Four-Part Recipe for Sustaining an Innovation Pipeline and The Diffusion of Innovation.

 

Unit 5 Vocabulary 

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• diffusion of innovation theory
• organizational culture
• Theory X
• Theory Y