Strategic Management And Strategic Competitiveness
Introduction
Strategic management is a futuristic form of management and is by far the most important aspect in management of any organization; it states where the business wants to be in future and sets the bridges of going there. Strategic competitiveness is the ability of an organization to outdo its competitors and applying the appropriate strategies which surpass those of its competitors. Strategic competitiveness involves proper planning and analysis of the market, the firm then sets strategies that will enable it achieve a competitive advantage over its customers.
To achieve a competitive advantage, the strategy of the firm should be derived from the internal and external environments of the organization. The internal environment dictates the resources available for the strategy implementation, the external environment presents to the firm the level of competition it faces and assists in strategy formulation. In this paper I will discuss strategic management and strategic competitiveness in the view of the Eaton Corporation.
Eaton Corporation
The Eaton organization has over a hundred years since it was established. It deals in hydraulic, mechanical and electrical technologies, it among the leading technology giants in the world. In 2011 only the organization reached a high of sixteen billion sales across. It has its operations in over fifty countries in the world and over seventy thousand employees. The organization has a global presence with major technological companies seeking its advice and services due to its efficiency. Its vision is to be the most admired company in all its markets and its mission is to provide safe, reliable, efficient, and sustainable power management solutions to its global customers.
Impact of globalization to the organization
Globalization of production and markets has impacted on the Eaton Corporation greatly. First globalization of markets has increased the client base for the organization, the reason behind its soaring sales. Globalization has also seen the organization change its modes of operation. The organization has many FDI’s in over fifty two; it has therefore embraced diversity in its management.
The employees of the organization are from diverse origins and cultures; the organization’s diversification strategy encompasses all the cultures, ideas and opinions of its employees in order to achieve team work and to drive the organization to its goals. Due to globalization, the organization has shifted its management system from the ethnocentric methodology to a geocentric approach whereby it has incorporated the culture in the countries of its Greenfield investments in its management. Globalization of production has benefited the organization as it is able to outsource resources from countries where they are cheaper and therefore cutting down its cost of operation which has had an overall impact of increasing its profitability.
Globalization of markets has brought about unprecedented competition for the organization; Eaton faces stiff competition from other technology giant countries like Japan. This has necessitated for implementation of strategies for ensuring competitive advantage for the organization. Some of the strategies it has enforced for this are diversification, differentiation and innovation. Despite the high level of competition the organization has been able to achieve stability in its sales.
Impact of technology changes to the organization
Technology has improved efficiency in the organization, costs of production have been cut down and sales pushed up. The organization is one of the leading in technological innovation; this is one of the strategies it has used to create its competitive edge. Major technology giants have enquired for Eaton’s assistance in improving their products because of the efficiency the organization’s products enabled by its high-tech. The organization has kept pace with technological changes and used them to create its competitive advantage.
Industrial organization model assessment of the organization of above average returns
The I/O model explains the dominance of the external environment in determining a firm’s strategic actions. The main idea behind the Industrial Organization model is competition. The performance of the firm in the industry will be determined by such factors as economies of scale, diversification, product differentiation, barriers to entry and degree of concentration of the firms. The organization can only earn above average returns by formulating strategies which are adherent to the competition in the industry.
Differentiation of products enables the organization to achieve greater sales than its competitors. The organization should include admirable features in its products that attract consumers. The firm should diversify its operations to achieve a competitive advantage. It should deal with a variety of product lines such that the loss of one brand is compensated by profits from another, diversification should also be in personnel whereby the organization should outsource talent to make sure that its skill is above that of its competitors. Economies of scale can also enable the organization to attain higher than average sales, buying inputs at large scale will enable the organization to receive huge trade discounts, this will substantially cut down its operation costs and consequently enable it achieve higher than average sales, Porter (1998).
Resource based model analysis for the organization
As opposed to the I/O model, the resource based model focuses on the internal environment in achieving competitive advantage. Resources that an organization should consider in determining its strategic actions include: capital availability, skill of its labor force and the competency of its managers. Capability of an organization to achieve higher than normal returns will be dictated by the firm’s ability to formulate its strategic actions based on the resources available.
The Eaton Corporation should therefore formulate its strategy based on the resources at its disposal, its action plans should not be out of its abilities. It should consider its SWOT analyses before making a move in its strategies because strategies outside the resources of the company will be doomed to fail. The organization can still make its strategies better by increasing its resources. The skill can be improved by organizational poaching to acquire better talent; capital availability can be enhanced by embarking on technology to improve the efficiency of capital, these moves can enable the organization achieve higher than average returns despite the competition it faces, Porter (1998).
The vision of the organization which is to be the most admired company in all its markets, promotes its success because it tailor makes its products to suit and surpass its customer expectations, this has enabled it to maintain a high level in sales. Its mission to provide safe, reliable, efficient, and sustainable power management solutions to its global customers also has promoted its success because its products meet customers’ preferences and standards who have in turn developed loyalty to them and consequently maintained high sales for the organization.
Stakeholders for the organization include the customers, the employees and the management. The customers contribute to success of the organization through buying its products, the employees have worked as a team towards the vision of the organization and the managers have ensured outstanding performance through good management of people and resources.
References
Porter, E. P. (1998). Competitive advantage: Creating and sustaining superior performance. New York: Free press
Porter, E. P. (1998). Competitive Strategy: Techniques for analyzing industries and competitors.New York: Free Press
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