BUILDING AN ORGANIZATION CAPABLE OF GOOD STRATEGY EXECUTION : PEOPLE, CAPABILITIES, AND STRUCTURE

BISMILLAHIRRAHMANIRRAHIM

Alhamdulillah, this is the second last chapter for this subject Strategic Management. This week Miss Ummi covered two topic, for the first topic, Miss Ummi describe about building an organization capable of good strategy execution. Before she started the lecture, she ask all the student to answer a few question that related to ourselves. The test called MBTI, it stand for Myers Briggs Type Indicator which test the people personality. The result from the test will show us which job scope that suitable for our personality.

After answer the question and we know which job scope that suitable for us, Miss Ummi started the lecture. Capability means a measure of the ability of an entity such as department, organization, person and system to achieve its objectives, specially in relation to its overall mission. Based on the definition we can see that building an organization capable of good strategy is really important so that every mission, vision, and objective of the company can be successfully achieve. 

The Action Agenda
for Executing Strategy

Building an organization capable consist in hiring a correct people for their job. The company also need to prepare a continuous training so that the employee understand the company objective. There are three types of action inn building an organization capable of proficient strategy execution which is :

1. Staffing the organization

• putting together a strong management team
• recruiting and retaining talented employees

     2.  Acquiring, developing, and strengthening key resources and capabilities

• developing a set of resources and capabilities suited to the current strategy
• updating resources and capabilities as external condition and the firm's strategy chance
• training and retaining company personnel to maintain knowledge-based and skill-based capabilities 

     3.  Structuring organization and work effort

• instituting organizational arrangements that facilitate good strategy execution
• establishing lines of authority and reporting relationship
• deciding how much decision-making authority to delegate 

After finish discuss this chapter, Miss Ummi continue with the last topic for this subject which is Managing Internal operations: Action that promote good strategy execution. In this chapter, we learn about why resource allocation should always be based on strategic management. Every organization in this world would like to have an improvement, not just only improvement but a continuous improvement. Firm objective is to avoid any failure so they can generate their business by their good strategy.

There are several tools firm can use for managing a continuous improvement, which is stated below:

• benchmarking
• best practice
• process reengineering 
• six-sigma quality programs
• total-quality management

Six-sigma quality programs is the business management strategy used in many different industries in an effort to improve the quality of products or services produced by the business through the removal of defects and errors. The strategy involves creating groups of people within the business or organization who have expert status in various methods, and then each project is carried out according to a set of steps in an effort to reach specific financial milestones. In six-sigma quality programs, they need to follow five step which is:

1. define
2. measure
3. analyze
4. improve
5. control

CORPORATE CULTURE AND LEADERSHIP : KEYS TO GOOD STRATEGY EXECUTION

BISMILLAHIRRAHMANIRRAHIM

For this week, there is no lecture and face to face tutorial. Miss Ummi post a task in facebook group. We need to answer the task through GOALS. The topic notes that Miss Ummi told us to read by ourselves is about corporate culture and leadership : keys to good strategy.

 After read the notes, I try my best to answer what Madam Huda ask. This is my answer :

CORPORATE STRATEGY : DIVERSIFICATION AND THE MULTIBUSINESS COMPANY

BISMILLAHIRRAHMANIRRAHIM

We always heard about diversified company, but what is exactly diversified is? Diversified means a business that operates in more than one industry or market, and uses different distribution channels as a matter of corporate strategy. In this chapter we learnt about corporate strategy : diversification and the multibusiness company. What does crafting a diversification strategy entail? There were four step in diversification strategy which is :

1. picking new industries to enter and deciding on the means of entry 
2. pursuing opportunities to leverage cross-business value chain relationships and strategic fit into competitive advantage
3. establishing investment priorities ant steering corporate resources into the most attractive business units
4. initiating actions to boost the combine performance of the cooperation's collection of business.

Diversification is good for business because it can broaden the company market and it will improve the performance of the business. But when should the firm consider diversifying? The company can start diversifying when :

• it can expand into business whose technologies and product complement its present business
• its resources and capabilities can be used as valuable competitive assets in other business
• cost can be reduced by cross-businesses sharing or transfer of resources and capabilities
• transferring a strong brand name to the products of other businesses help drive up sales and profits of those businesses

Diversification is also a strategy that include every element, values, department, and shareholder of the firm. Every strategy that the manager implement need to focus on the effect to shareholder, if the strategy will give more profit, then the shareholder will be happy and give their support but if different situation occur, it will effect he firm entirely. So, how the diversification adds value to the shareholder? To prove that the diversification strategy really adds value, the firm need to undergo a test which is :

1. the attractiveness test
2. the cost of entry test
3. the better-off test 

Miss Ummi also taught us about synergy. Synergy is the action that occur when the company show a better performance. Beside that, synergy is a state in which two or more things work together in a perticularly fruitful way that produces an effect greater the sum of their individual effects. Expressed also as "the whole is greater than the sum of its parts"

There are three options in diversifying a new business which is:

1. acquisitions of an existing business
2. internal new venture (start up)
3. joint venture

Acquisition can happen from taking custody of records. It also might happen when a firm taking possession of an asset by purchase. Sometimes it also occur when other firm taking control of a firm by purchasing 51 percent or more of its voting shares. On the other hand, joint venture define as a new firm formed to achieve specific objectives of a partnership like temporary arrangement between two or more firms. Joint venture are advantageous as a risk reducing mechanism in new-market penetration, and in pooling of resource for large projects. They, however, present unique problems in equity ownership, operational control and distribution of profits or losses. 

O-SHIMA JAPANESE RESTAURANT

BISMILLAHIRRAHMANIRRAHIM

This week is a special week because there is no lecture, Miss Ummi change the lecture to a sharing business talk and experience from the founder and owner of O-SHIMA JAPANESE RESTAURANT Madam Asnidar Hanim Yusuf. This business talk from Madam Asnidar really interesting and really enthusiastic because as a Malay women who own a japanese restaurant is a rarely thing to see, but she succeed to prove that there is nothing we cant do if we put our full effort on it. 

Madam Asidar who possessed a bachelor of engineering from university in Japan start her idea to open a japanese restaurant come from the interest of eating sushi. She told us that she and her husband really love to eat sushi when they stay in Japan. From the passion of eating sushi, they decided to open a Japanese Restaurant but based on Halal Ingredients. 

O-Shima Japanese Restaurant is a 100% Halal restaurant in Malaysia that served Japanese food. She said this is the other reason why she wanted to open a sushi, because it is really hard to find a Halal Japanese restaurant. So, this is her opportunity to served the Muslims by offering a Halal japanese food. Although there are many obstacle she need to overcome in becoming a successful businesswomen.

She share with us the problem she need to face in Japan which is a high cost to get halal certificate from the japan government. She also said that almost every japanese restaurant will served their sushi with liquor. That is why when customer come to her restaurant in Japan the customer ask for liquor, but she tell the customer that her restaurant is based on Halal food, so there is no liquor. 

What I get from this talk is that be positive all the time. A negative thinking will destroy your thinking and make your action meaningless. She said that there is no success without failure, she also have an experience in fail. Money is not everything, do not neglect Allah rule. Make every action as Ibadah because Allah will pay for every Ibadah that we do.  

STRATEGIES FOR COMPETING IN INTERNATIONAL MARKET

BISMILLAHIRRAHMANIRRAHIM

This topic is a very interesting topic, because it was something that playing around in my head. Sometimes I keep asking about how to make business in international market. It is not easy to start a new business in international market as a new entry or a new competitor against others older competitor because there are many differences in terms of currency, language, rules and regulation and others factor. 

When we talk about KFC, MCDONALDS, SUBWAY and other fast food company, all of the brand are well-known in international market. Almost every country we can see this company provide their product. What are the primary reason a companies choose to compete in international market? There are several reason why the companies enter the foreign market, which is:

• To gain access to new customer. 
• To achieve lower cost through economies of scales, experience and increased purchasing power
• To gain access to resources and capabilities located in foreign markets
• To spread business risk across a wider market base

International market is totally different from home country business market. In terms of risk, the risk companies face is in the political and economic risk. Although in the home country also the companies facing the political and economic problems, but the problem or risk in international market is far more complicated. The political risk in international market stem from instability or weaknesses in national government and hostility to foreign business. Beside that, the economic risks stem from the stability of a country's monetary system, economic and regulatory policies, the lack of property rights protections.

Beside that, as I mention before about the different currency from our country and the others foreign country, there will be effects of exchange rate shifts which is exporters experience a rising demand for their goods, whenever their currency grows weaker relative to the importing country's currency. On the other hand, companies usually use the greenfield venture when competing in international market. 

Greenfield venture is a type of venture where finances are employed to create a new physical facility for a business in a location where no existing facilities are currently present. A greenfield investment originally referred to locating new company buildings on a pasture that was literally a green field, but the term is often used generally in modern business communication. A greenfield venture also means a subsidiary business that is established by setting up the entire operation from the ground up. 

Miss Ummi also taught us the three strategy approaches in competing internationally which is multidomestic strategy, global strategy, transnational strategy. International strategy means strategy that company use in competing market between two or more countries. A multidomestic strategy means the companies offering their product from a different variety based upon the value in the country they wanted to market their product. A global strategy have a different meaning from multidomestic strategy because using global strategy, companies tend to offer a same product everywhere. On the other hand, the transnational strategy means an international business structure where a company's global business activities are coordinated via cooperation and interdependence between list head office, operational divisions and internationally located subsidiaries or retail outlets. A transnational strategy offers the centralization benefits provided by a global strategy along with the local responsiveness characteristic of domestic strategies.

Three approaches for competing internationally:

• Global Strategy : Think Global - Act Global
• Transnational Strategy : Think Global - Act Local
• Multidomestic Strategy : Think Local - Act Local

STRENGTHENING A COMPANY'S COMPETITIVE POSITION: STRATEGIC MOVES, TIMING, AND SCOPE OF OPERATIONS

Alhamdulillah, this is the sixth lecture for Strategic Management subject. This week Miss Ummi taught us about how to strengthening a company's competitive position. This chapter discussed about which strategy that good time to implement and also what scope that best to use. To maximizing the power of particular strategy, there are three choices that complement a competitive approach which is:

1. Offensive and defensive competitive actions
2. Competitive dynamics an the timing of strategic moves
3. Scope of operations along the industry's value chain

 Offensive competitive strategy is one of the corporate strategy consisting of attempting to pursue changes within its industry. The companies involved in offensive competitive strategies typically invest in technology and research & development R&D in hopes of staying head of their competition. Companies also use this type of strategy when acquire other companies. Strategic offensive principals focus on building a competitive advantage and later convert the advantage to form a sustainable advantage. Sometimes a company's best strategic is to seize the initiative, go on the attack, and launch a strategic offensive to improve its market position.

Before start the offensive competitive action, the company need to make sure that at the time of attack, the competitor is in their weak state. The company also need to attack the competitor weakness not their strength, because if they attack the strength, then it is a waste action, it will not effect anything.

There are several options to act in offensive strategy which is:

• offer a good or better product at a lower cost to attack competitor
• make use the research and development to make a new innovation on the company product
• observe others firm improvement and adopt or adapt the good improvement

A blue-ocean strategy also an offensive competitive action that offers growth in revenues and profits by discovering or inventing new industry segments that create altogether new demand. A term coined from the 2005 book, The Blue Ocean Strategy, by W. Chan Kim and Renee Mauborgne that describes the opportunities of vast untapped market spaces, or "Blue Oceans", that can be developed by expanding market boundaries or launching new industries.

Defensive competitive action define as a management approach designed to reduce the risk of loss. For example, even a relative aggressive business might employ a defensive strategy when it comes to investing its extra liquid funds in certificates of deposit or relatively stable bonds and stocks. The purpose of defensive competitive action is:

• lower the firm's risk of being attacked
• weaken the impact of an attack that does occur
• influence challengers to aim their efforts at other rivals

Horizontal scope define as growth of a company based on expanding existing methods of business including expansion into other locations, addition of more stores, building more outlets for distributions, or enlarging a territory geographically. On the other hand, vertical scope means a merge of companies at different stage of production and/or distribution in the same industry. When a company acquires its input supplier it is called backward integration. When it acquires companies in its distribution chain it is called forward integration. Fro example, a vertically integrated oil company may end up owning oilfields, refineries, tankers, trucks, and gas (petrol) filling stations. Also called vertical merger.

THE FIVE GENERIC COMPETITIVE STRATEGIES: WHICH ONE TO EMPLOY?

Miss Ummi started the lecture by asking the student who ever get on a plane or travel by plane before. She ask about which airlines that give an affordable ticket price. In my opinion and also my other members in the lecture hall agree that Air Asia provided the lowest airline ticket price. So, what does this airlines story related to our lecture? Actually it really related because Miss Ummi would like to introduce us with competitive strategies company use to compete with other rivals. 

Competitive strategy means an action plan that is devised to help a company gain a competitive advantage over its rival. This type of strategy is often use in advertising campaigns by somehow discrediting the competition's product or service. Competitive strategies are essential to companies competing in markets that are heavily saturated with alternatives for consumers.

There is five generic competitive strategies which is:

1. Low-cost provider
2. Broad differentiation
3. Best-cost provider
4. Focused low cost provider
5. Focused differentiation

Lower-cost provider means a pricing strategy in which a company offers a relatively low price to stimulate demand and gain market share. It is one of the high demand strategy used by many companies. It is usually employed where the product has few or no competitive advantage or where economies of scale are achievable with higher production volumes. Also called low price strategy. Example of company that use this strategy is Air Asia, Mydin, KFC, MCD.

Broad differentiation means a product that offer a unique product attributes that a wide range of buyers find appealing and worth paying for. A unique product will make the costumer happy to use it and they will repurchase it again. A unique product means that the product should have a value that there is no other rivals have. The value or element that only your company have. Example of company that use this strategy is Louis Vuitton, Apple, Sony, Rolex, Rado.

Best cos provider means a hybrid of low-cost provider and differentiation strategies that aim at providing desired quality/features/performance/services attributes while beating rivals on price. Best cost provider combine the low-cost provider which provided a product with a little or low cost and differentiation which provided a unique attributes product.

Focused low cost provider means a strategy that only focused fully to low cost operations or activities. This strategy did not put much effort on the rivals, it only pay full attention to the market niche or market segmentation. It just concentrating on a narrow buyer segment.

Focused differentiation means the strategy only concentrating on a narrow buyer segment and outcompeting rivals by offering niche members customized attributes that meet their tastes and requirements better than rival's product.

EVALUATING COMPANY'S RESOURCES, CAPABILITIEAS, AND COMPETITIVENESS

           In this chapter we learn about company resources, capabilities, and competitiveness. This three element is very important for every company because this element is a main thing to have before we can start our business. Before we proceed to the main discussion, let me give the definition of resources, capabilities and competitiveness. 

          Resource means an economic or productive factor required to accomplish an activity, or as means to undertake an enterprise and achieve desired outcome. Three most basic resources are land, labor and capital. Other resources include energy. entrepreneurship, information, expertise, management and time. Capability means a measure of the ability of an entity (department, organization, person, system) to achieve its objectives, specially in relation to its overall mission. last but not least, competitive means good, service, or offer that can hold its own against competing product because its offer an attractive value for money proposition to its buyer. This three element need to be evaluate so that we can form a good and excellent business strategy. Starting a business by evaluating the firm's internal situation which include resources, capabilities and competitiveness as stated below:

1. How well is the firm's present strategy working?
2. What are the firm's competitively important resources and capabilities?
3. Is the firm able to take advantage of market opportunities and overcome external threats to its external well-being?
4. Are the firm's prices and cost competitive with those of key rivals, and does it have appealing customer value proposition?
5. Is the firm competitively stronger or weaker than key rivals?
6. What strategic issues and problems merit front burner managerial attention?

A success strategy comes from an excellent planning. How do we find out that our planning is success? there are specific indicators of strategic success which is growth in firm's sales and market share, increasing profit margins, net profits, ROI, growing financial strength and credit rating and many more.

In this chapter also we learnt about SWOT analysis which is powerful tool for sizing up a firm's. SWOT analysis stand for Strength Weakness Opportunity and Threats. Strengths and weaknesses analyze the internal factor of the company, for the external factor we analyze the threats that occur. An opportunities come from the business market.

Beside SWOT analysis, Miss Ummi also taught us about value chain. This is another way to analyze the company strategic management but in terms of internal activities happened. Value chain analysis examine the value chain of an enterprise to ascertain how much and at which stage value is added to its goods and/or services, and how it can be increased to enhance the product differentiation (competitive advantage).

Company Value Chain

Beside SWOT and value chain analysis, benchmarking also tools that we can use to evaluate the internal activities of company. Benchmarking is a measurement of the quality of an organization's policies, products, programs, strategies and their comparison with standard measurement or similar measurement of its peers. The objectives of benchmarking are:

1. to determine what and where the improvement
2. to analyze how other organizations achieve their high performance levels
3. to use this information to improve performance.

Evaluating A Company's External Environment

BISMILLAHIRRAHMANIRRAHIM

This is the third week of lecture for our Strategic Management subject. In this week I learn about the external environment that influence the business strategy. Every business will facing a different circumstances, so, in this topic, I learn how the company observe the environment so that they can improve their company or use their resources to the maximum. What is the definition of external environment? External environment is conditions, entities, events or factors surrounding an organization that influence it activities and choices and determine the opportunities and risks. There is two types of environment in terms of business, which is macro and micro. Macro-environment encompasses the broad environmental environmental context which the firm has no direct control. Question about what are the strategically relevant factors in the macro-environment.

Before we answer the question, we use PESTEL analysis to analyze relevant external factors in macro-environment. PESTEL analysis focuses on principal components.

• P olitical factors
• E conomic conditions (local to worldwide)
• S ociacultural forces
• T echnological factors
• E nvironmental factors (the natural environment)
• L egal/regulatory conditions

Beside PESTEL analysis, an organization also use The Five Competitive Forces to observe how strong are the industry's competitive forces. The Five Competitive Forces is:

• competition from rival sellers
• competition from potential new entrants
• competition from producers of substitute products
• supplier bargaining power 
• customer bargaining power
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  

The Business Vision And Mission

Week 2 [Topic 2 : The Business Vision And Mission]

Vision and mission is very important in every aspect of our life. In this topic, we describe the nature and role of vision and mission statements in strategic management. Why is it the vision and mission of the company really important, the answer is because it will be like a guideline to achieve what are the purpose of the business. If we know clearly what are the vision and mission, and we as the worker or the president of the company will put our full effort to gain the benefit from the strategic management. Simple explanation for vision and mission is:

• Vision: should answer 'what do you want to become?', and should be short and clearly understand. 
• Mission: how to make vision come true. It also called creed statement and statement of purpose.

Example of vision statement from several company

The important of vision and mission statement

1) to ensure unanimity of purpose within the organization

2) to provide a basis, or standard for allocating organizational resources

3) to establish a general tone or organizational climate

4) to serve as a focal point for individuals to identify with  the organization's purpose and direction

5) to specify organizational purpose. 

The Nature of Strategic Management

Bismillahirrahmanirrahim

Week 2 [First Topic: The Nature of Strategic Management]

The first topic for this subject is The Nature of Strategic Management. We start our lecture by definition of Strategic management. What is Strategic Management??? Strategic Management can be define as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

This is the stage we can see through Strategic Management :

1) Strategy Formulation :
    develop vision and mission, identify an organization external and internal strength or weaknesses
2) Strategy Implementation :
    establish annual objectives, sometimes it also called 'action stage'
3) Strategy Evaluation :
    review external and internal factors that will give a good impact

There were several key terms that we always use in this subject, it is

• Competitive advantage
• Strategist
• Vision
• Mission
• External threats and external opportunities
• Internal strengths and internal weaknesses
• Objectives
• Strategies

Week 1 [First meeting, strategic management???]

A new day in a new semester for a third year in USIM, as a degree student of Muamalat Administration, my first class for this semester start with subject Strategic Management. My first expectation about this subject is that my brain will full of new formula!! but that was a great for me i guess :) usually what student set in their mind for the first class in the first week is that there is an ice breaking!! and that was awesome for me to hear from my friend to introduce them self over and over again.!

My lecturers' name for this subject is Dr. Ummi Salwa, she ask us to call her miss ummi, such a beautiful name. Our first task for the first week is to build the tallest tower by using newspaper provided by miss ummi. She also allowed us to use our own resources to make the tower. At the same time, i have no idea of doing the tower and the connection between the strategic management subject. we are given 20 minutes to build up the tower. When the times up, she ask us to bring it down to the stage to do an examination to that tower. First of all, she will examine which group build the tallest and later she examine the strength of the tower base itself.

After the task end, she ask us about what we have learn based on the task given. Miss ummi always use cordless mic, because she love to move around, up and down. Sometimes it make me panic and nervous, because I dont really like to be the people attention. Fuhhh, luckly I'm not the chosen one to briefly tell what we learnt from the task. But, what I learn from the task is to find the best strategy. In every group, we need to have someone that can lead the task. Someone that have a good leadership. The leader will discuss with other members on how to achieve their goal, to make the tallest tower. Miss ummi explain that in achieving any goal that we have set up, we need to have a knowledge on that particular thing. After we have the knowledge, only then we know how to achive it.

After the ice breaking, she briefly explain about the subject and what we will learn from this subject. Before she end the class, she told us to make a blog that we will use as our place to share what we learn from the lecture. So, here I am, my FIRST experience as a BLOGGER... hoooyaaa... hehe