Term Paper on "Strategic Management the Twenty First Century Competitive"

Term Paper 5 pages (2092 words) Sources: 1+

[EXCERPT] . . . .

Strategic Management

The twenty first century competitive landscape is influenced by a great many factors, all of which are equally important in the general scheme of things. However, the two main things that exert the main influence over the twenty first century landscape are those of the ongoing technological revolution, and the increasing globalization. Technology is actually revolutionizing the manner in which companies conduct their business, by shortening, to a great extent, the very life cycle of the new products and services that are being launched daily. In other words, the time that a product takes to travel from its conception to its delivery to the delivery point has become alarmingly short, and all the companies are trying to find the ways and means with which to obtain a sufficient return on their investments. (Texas A& M. Management Professor Defines 21st Century Competitive Landscape)

According to Michael Hitt, Professor of management in a Texas University, several companies are in a quandary because of the fact that they do have to be continually innovative and also have to turn out new products continuously, while at the same time figuring out the best ways in which to get returns on their investment before another new product can take the other one's place. A perfect example of this phenomenon is that of the computer microprocessor company Intel Corporation. Intel's products typically have a life of about eleven months before another new product has to be launched to take the older one's place. "It is incredible," feels the Professor, how a company invests so much money in the creation of a product, and has to make another product even before it can start getting returns on the other one. Therefore, if a company were to hope for any sort of return, then they must have a firm hold in the market, and also take full advantage of the increasing globalization of today. Why must companies try to sell their products all around the world? This is because of the fact that today, the entire world is considered to be one vast marketplace, and when a company finds that it is not doing well in the domestic market, then it can definitely expand and sell to outside markets, thereby obtaining returns very quickly on their investments. (Texas A& M. Management Professor Defines 21st Century Competitive Landscape)

Today, more and more businesses are therefore, forced to compete in an increasingly global environment which is more competitive than ever before. This does not mean that the atmosphere is conducive to the development of the business; rather, the environment is totally chaotic and unorganized, because it is undergoing rapid change, and is therefore as a result, extremely complex and also unpredictable. Everywhere in the world, companies are realizing that if they were to survive and also to grow in this type of environment, then they must invest in innovative ideas and thinking, and the managers of the firms must be taught these particular thinking skills. Those traditional sources of the so-called 'competitive edge' like for example, product and process technology, protected markets, and financial resources are no longer enough to provide the edge. (Organizational decline and the Impact of Environmental Challenges of the 21st century)

In short, in the twenty first century, business growth is difficult to sustain, and at the same time, decline is quick in coming. This environment has come to be known as the 'new competitive landscape', and also as 'hyper competitive', and as 'globally competitive'. The four most important attributes that change the way in which business today is conducted are therefore, globalization, the rapid technological changes taking place everyday, hyper competition, and also outsourcing. It can be stated therefore, that the basic and fundamental nature of competition has changed drastically, and today, companies have to do more to keep up with the changing trends, and also if they wanted a reasonable return on their investments. (Organizational decline and the Impact of Environmental Challenges of the 21st century)

A Typical Resource-based model on average returns is exemplified by the real life Domino's Pizzas, a company that has been doing excellently for itself over the years, in this highly competitive market. This is the model that they lay importance on: when there is strategic competitiveness, a company must create and develop a value creating strategy, and this strategy must demonstrate a sustained competitive advantage for the company. In other words, this company must formulate a strategy that another company is not developing at the same time; when this is achieved and then the company would be able to provide the customer with very definite benefits and advantages that the competitor will not be able to duplicate. This strategy would result in 'above average returns', which in other words means that the company would be able to achieve returns in excess of what he expects to earn from any other investment with similar risks. Therefore, the strategic management process can be said to involve the entire gamut of commitments and decisions and actions in this process, and then the company would stay within the competition. (Strategic Management and Strategic Competitiveness)

The resource-based model of above average returns as stated by 'Business Coach' is as follows: the manager would have to, at the outset, study the resources or the inputs of the firm's production process, after which the second step would be to firmly determine the capability or the capacity of these resources to perform the required set of activities or services. The third step would be for the manager to take steps towards determining the competitive advantage that his own firm has over others, and whether or not his firm would be able to actually out perform the rivals'. The next step would be to locate an industry that has the opportunities and capabilities that can be possibly exploited by his company, after which he would be able to select and formulate the strategic operation that he feels would be the best for the company to gain an above average returns for the company. Finally, he can sit back and enjoy the fruits of his labor by seeing the superior returns that his hard work and effort would have gained him. (New Paradigm: Resource-based theory)

The current view of business strategy is that of, as seen above, resource based theory, or in other words, resource-based view of a company. This view is based on the idea of economic rent, and also based on the assumption that a company is but a collection of capabilities. This view has an inherent advantage because of the fact that it is coherent and plays a role of integration in planning well ahead of its competitors. In comparison to traditional models of strategy, like that of Michael Porter's 'Five Model' strategy, the new resource-based perspective demonstrates the need for a close fit between the external market where the company operates, and its own internal capabilities. The opinion is that a company's internal environment or the various resources and the capabilities within the firm, becomes more important to the determination of the strategic action to be taken, rather than the external environment where it works. In this method, the company's internal resources including its capabilities would be responsible for providing the manager with a basis for a successful strategy that would earn the firm an above average returns on its investment. (New Paradigm: Resource-based theory)

All firms need to know plenty about their competitors if they were to expect to perform well in the present competitive landscape. Also known as 'competitive intelligence', this refers to the legal and ethical means that several companies utilize in order to gather information about their competitors. Competitive intelligence is also the coordinated and the purposeful monitoring of the competitor within a specified marketplace, wherever it may be. When such intelligence is used, then the company would be able to figure out what exactly the next move of the rival company may be, even before it is executed. Acquiring foreknowledge about the competitor's plans may also enable the firm to plan out their business strategies based on the competitor's ideas, so that they may be able to countervail their strategies. Competitive intelligence not only involves intelligence at the tactical collection level, but it also needs to be integrated not the company's already existing information infrastructure. Thereafter, an in depth analysis of the available information has to be made, after which such information has to be distributed to the pertinent personnel, and it is only after all the initial steps have been completed that it would be possible for the management of the firm to make the necessary business decisions based on that information and the analysis of the same. (What is Competitive Advantage?)

The Marketing Survey that was conducted by the A/E/P and Environmental Consulting Firms in the year 2000 reveals inside information on why and how firms acquire pertinent information about their competitors. However, the findings showed that almost three fourths of all the firms in… READ MORE

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