Usually during the course of the project’s life, you would monitor and evaluate it closer to the finishing end of the project. This particular model modifies that by looking in on and evaluating essential sections of the implementation phase in order to get positive results. It is essential that you understand what works and what must be changed within a timely manner. When managing the project, you must learn how to see the project from a strategic viewpoint. If you only concentrate on the day to day tasks of executing the project, how will you ever be knowledgeable about which project tools are actually getting the job done? How do you assess the effectiveness of what you are doing? What should your guidelines be?

For the purpose of creating a strategic management model that supports the present usage and the long term effect of the project from the very beginning, answer these questions:

* What is the overall goal of the project?
* How do all of the planned activities of the project relate to that goal?
* What has happened or changed since the start? Why?
* How will it look in the next three years? What will be the effect?
* How can this effect be assessed? What qualitative and quantitative guidelines do you possess to prove the credibility of your project’s success?
* Who will benefit from the success of the project? Will there be winners and loser? Why

A strategic management model in seven steps:

1. Study the project’s actual aim and purpose.
2. Measure the objectives, activity and value of the project.
3. Measure the present strength, success and achievement. Take into consideration the quantitative and qualitative outcome.
4. Study what added to these successes.( Look at the internal/external assets and abilities.)
5. Measure the hardships and gaps. Study what added to them.
6. Modify your present project’s plan so that you can use the best methods and plans to fill in the gaps.
7. Create a productive outlook. What is it about this project that is inspirational enough to put it in progress? How will you know if your project is successful?
This strategic management model will help you manage and lead at the same time.

Considerations:

Visualise the process of using this strategic management model.

Visual models allow us to see the big picture

Visual models and frameworks are a right brain activity, just like leadership.

Embrace them!

A simple definition of what strategic management is a process by which someone analyze and learn from their internal and external environments and established strategic direction, create strategies which are intended to achieve goals.

Careful planning will ensure business success even in the most volatile economies. This is a perfect example of an internal environmental factor.

External environmental factors will include global environmental forces such as technological, political, economic or socio cultural trends. Rising oil prices will affect the way how domestic production are priced. The war in the middle east also affect the Philippines since we have a large number of overseas Filipino worker, and a large number of them returning all at once will strain government resources in finding them work at home.

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1) Generating some fresh and authentic concepts and ideas. This could well, be deceiving. 2) Certain strikingly unusual and worthwhile answers or solutions. Could extrapolate (to infer unknown infos from known infos) to reach at crucial or artistic thinking Where creativity management or artistic thinking is utilized to minimize that bunch to plausible concepts. In creativity management, it suggests that being creative could be determined or ascertained according to some levels of newness. 3. Generating a bunch of concepts-a number of assorted ideas and a bunch of uncommon ones. The most utterly “methodical” definition though functional on a measurable extent. 4. Conveying some unconventional thoughts or ideas. Indicate inventiveness in creativity management possesses some intellectual, practicable, and meaningful factors. 5. Makes use of creativity as generation of thoughts and ideas and identifies/recognizes problems or dilemmas. Also, utilization and application of innovation to select concepts when it comes to advancement and commercialization in creativity management.

It supplies a substantial difference in being creative and in being cutting-edge. 6. Blending and amalgamation-the blending and unification of current components or features to come up with something new and fresh. For instance, a problem solving approach called Synectics, developed by William J.J. Gordon. It’s the method of taking two components and deliberately conceiving new links and components from them.

At its very basic, strategic management involves the ability to efficiently achieve predetermined goals.

Appropriate goal setting

First of all, it involves the setting of appropriate goals. Many managers overlook the necessity of seeing to it that goals are reasonable and achievable. Now, in some instances, overshooting goals or being too ambitious in your targets is not that crucial.

However, for management that is the directing force behind a business plan that works to maximize numbers of people and expensive materials and equipment, proper goals are essential.

The reason goals have to be achievable is because they provide the periodic psychological rewards for the people in seeing that the work that they do is actually achieving the desired results. Nothing can work to dishearten an individual more than endlessly working at something that is not yielding good results. Add to that the constant pressure of always having to meet a deadline or a time period that is just around the corner can drain and exhaust even the most hardworking of individuals.

On the other hand, if you provide tasks within a specific time goal that is realistic, you have the reward of being able to check off tasks on that master plan, while at the same time recognizing the successful completion of work stages for the organization as a whole.

Developing predictive ability

One of the best ways to maximize strategic planning is by predicting how internal and external forces might operate or interact in the future.

This type of forecasting really involves the ability to foresee trends. Thus you are able to identify potential opportunities for growth, as well as identify potential difficulties ahead.

By being able to identify and reasonably foresee these two areas, you can prepare sufficiently to explore those possibilities when they arise. You are also better able to manage risky or difficult times ahead simply by being better prepared to cope with such difficulties.

Good communication and networking

One area in which to focus on is good communication – both internal and external.

Good internal communication involves clear and unambiguous communication. Thus, instructions to be followed must leave no room for doubt, expectations must be clear and rules and regulations must be well-known.

Many times, you will find that most people actually appreciate the clarity in your communications with them. Misunderstandings can be the root cause of greater disagreements and conflicts later on. And they can be avoided by the simple expedient of being clear and mindful in how you communicate with people.

This also works in your external relations outside of the group. Should a customer place an order, make sure you have gotten it right and that there is no room for misunderstanding either in the terms or in the warranties. Should another organization look towards dealing or negotiating with you, good and clear communication can pave the way for a more fruitful relationship and networking connection in the future.

Following through and adapting accordingly

Constantly check back with that original plan you worked so hard at formulating. And if you see areas where you might be lagging behind, do the appropriate follow-through.

And you also have to remember that strategic management should never be seen in a vacuum. As circumstances and social factors change, the appropriate adjustments in your plans and policies should be made accordingly. This can help ensure steady growth and the ability to adapt to changing circumstances.

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This podcast presents Chapter 2: What is strategic management? from the book Strategic Management for MBAs by Patrick Mc Namee. It introduces readers to the discipline of strategic management.

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Benedict Smythe recommends PDL Courses for training in most professional skills including assertiveness skills and Supervisory Management skills

Strategy Management

A case study of Wal-Mart

Introduction

            Porter (2002) states that root of the problem lies in the lack of distinguishing between operation effectiveness and strategy. The expedition for productivity, quality and speed has resulted in management tools and techniques, total quality management benchmarking, time based competition, outsourcing, partnering, reengineering, change management.  In any organization, strategy management is the key to its success. There are many theories based on this assumption that without a proper strategy and planning, it is difficult for any industry to survive irrespective of its size. It is necessary to understand here that all the major corporate organizations have established themselves, thanks to superior strategic planning and implementation. The retail industry is making news everywhere with not only the traditional industries increasing their outlets but some major corporate industries also intruding into this industry like Fresh @ Reliance of Reliance Industries, More of Aditya Birla Group in India. Wal-Mart, a US based retail industry, which is known as the giant in the retail industry has survived and is still the huge enterprise in the world which deals with almost all the F&B products, apparels, etc. It is not only the largest company in world but also the largest company in the history of world.(Fishman, 2006) The present paper is divided into four sections to understand and answer as what makes Wal-Mart the best in the industry, 1) retailing industry at the time of Wal-Mart’s innings, 2) Wal-Mart’s Competitive advantage and key components, 3) Wal-Mart’s Strategy and 4) Sustainable growth of Wal-Mart.

I. Retail Industry – Wal-Mart says Hello!

            Strategic decisions are ones that are aimed at differentiating an organization from its competitors in a way that is sustainable in the future. (Porter, 2002) Porter strongly advocates that decisions in business can be classified as strategic if they involve some innovation and difference that results in sustainable advantage. According to Patrick Hayden et al (2002) the retailing industry adopted the style of discounting on its merchandise after the Second World War. It is learnt that discount retailing was not the strategy at the time Kmart, Target and Wal-Mart first started operating their business. Frank (2006) states that when Sam Walton was franchising for Ben Franklin’s variety store, invented an idea of passing on the savings to his customers and earning his profits through volume. Prior to Wal-Mart’s entry into the market, Sidney and Hebert from Harrison founded Two Guys discount store in the year 1946 which dealt in hardware, automotive parts and later on groceries. Two Guys was the forerunner as compared to today’s retailers like Super Target, Wal-Mart which succumbed to the economic recession. Another discount store set up by Eugene as E.J. Korvette, which is often cited as first discount store which did not raise from 5 & 10 cents roots and eventually declared bankruptcy due to inability to compete with the new entrants.

            Porter (2002) states that combination of operational effectiveness and strategy is essential for superior performance which is the primary goal of any organization. He also says that a company can perform its rivals only if it can operate in different ways which are not in practice. Much emphasis had been laid on strategic positioning like variety based positioning, needs – based positioning and access based positioning.

            Along with Wal-Mart, other stores that started operating were Target, Woolworth (Woolco) and K-Mart. However, Target has been functioning successfully, courtesy Wal-Mart, but other two failed in their operations and filed bankruptcy.( Michael Bergdahl, 2004) Porters five forces model explains what strategic decisions should be made and on what basis.  The model explains the basic strategies to be considered while starting a business like bargaining power of suppliers. While franchising of Franklin he always looked for cheaper deals and thought of passing his savings to the customers and earning through the margin on volume of bulk purchases. Through the way of discount stores, shoppers were given the cheapest price as compared to any other store. In regard to threats of new entrants, Wal-Mart has been constantly in the news for acquisition of other small retail shops in view of its expansion. But nevertheless it has stiff competition from likes of Super Target, Tesco, etc. it is the world’s biggest retail industry. 

II. Key Components of Wal-Mart Business Model

            Wal-Mart is the leader in retailing industry with fiscal revenue of $244.52 billion in 2003 making it the world’s largest corporation. Mike reports that Wal-Mart as of 2002 had 1,283,000 employees growing at 11.2%. The above data explains that strategy of Wal-Mart is extraordinary which manages and operates over 4150 retail facilities globally. The key components of Wal-Mart (The Value Chain), which offers cheap prices than its competitors includes firm infrastructure like frugal culture, no regional offices and pleasant environment to work. Managements take lots of visits and it is learnt there are no rehearsals before any meeting which is usually scheduled on every Saturday. In any organization, human resource is the key to development and Wal-Mart efficiently manages its sources. Wal-Mart terms its employees as associates. Manager compensation is linked to the profit of store operated by him, within promotions, compensation offered to associates depending on company’s profits and also offered some incentives on their performances. The workforce at Wal-Mart is not unionized as the company takes all the measures of their benefits and provides them training on related issues. Technology plays a vital role in development of the organization and Wal-Mart is well equipped with technological innovations like POS, store performance tracking, real time market research, satellite system and UPC. Wal-Mart procurement measures like hard-nosed negotiations, partnerships with some vendors, centralized buying, planning packets, etc. helps at large the cause of providing the goods and services on cheap prices. The other factors that increase the margin of profit for Wal-Mart are inbound logistics with frequent replenishment, automated DCs cross docking, pick to flight, EDI, hub and spoke system. Wal-Mart strategy of operation is innovative with big stores in small towns with monopoly in the market at low rental costs, local prices, concentric expansion, merchandising in brand name, private labels, little space for inventory, store within store, etc. In relation to marketing and sales, merchandising is tailored from locals, spent less on advertising and the prices are fixed low and it depends on the store manager to fix the latitude of pricing. All the above factors combined together form the key components of Wal-Mart which not only increase the margin of profits through bulk sales but also boost the confidence of the customers with services like point of sale information system and everyday low prices.   

III. Wal-Mart Strategy

            Wal-Mart dominates the American retailing industry due to number of factors like its business model which is still a mystery and its effectiveness in not letting the rivals let know about the weaknesses. Wal-Mart made strategic attempts in the its formulation to dominate the retail market where it has its presence, growth by expansion in the US and Internationally, create widespread name recognition and customer satisfaction in relation to brand name Wal-Mart and branching into new sectors of retailing.

            It is learnt that Wal-Mart strives on three generic strategies consisting of Focus Strategy, the Differentiation Strategy and overall cost leadership. Managers strive hard to make their organizations unique, distinctive and identify key success factors that will drive the customers to buy their products.Thus, firm specific resources and capabilities are crucial in explaining the firm’s performance. The Resource Based View (RBV) explains competitive heterogeneity based on the premise that close competitors differ in their resources and capabilities in important and durable ways. The company’s capability can be found through its functionality, reliable performance, like Wal-Mart superior logistics. (Helfat, 2002) Wal-Mart has firm infrastructure, well equipped in human resource with management professionals and technologically too.

            Any organizations thrive hard to be successful for which it needs to have better resources and superior capabilities. Wal-Mart has strong RBV with economically and financially very strong enough to stand still in the time of crisis. Pereira states that dominating the retail market is its key strategy. Wal-Mart operates on low price strategy which is operated as every day low prices (EDLP) which builds trust among the customers.(Brunn, 2006)The strategy lies in purchasing the goods at lower prices and selling the goods to customer at much lower prices, cutting the price as far as possible and increasing the profit by increasing the number of sales. This ferociously increases the competition in the market and Wal-Mart competes with all its competitors till it is dominant it the market.

            Wal-Mart is expanding seriously and rapidly which is also its strategic goal. Wal-Mart employs over 1.3 associates, owns over 4000 stores out of which 3000 are in US and serves around 100 million customers weekly. Wal-Mart has acquired many international stores and merged with some super stores like ASDA in UK. Wal-Mart far flung network of retail outlets has ensured that Wal-Mart interacts with and has impact on virtually every locality within US. (Helfat, 2002) The expanded strategy has led the hunger of Wal-Mart to many European Countries. It is learnt that three countries with no Wal-Mart stores became part of corporation’s international presence wherein the domestic retail chains were taken over by Wal-Mart including 122 Woolco stores in Canada, 21 Wertkauf stores in Germany and 229 ASDA units in United Kingdom. The takeover strategy by Wal-Mart keeps the company at forefront when entering into the new market and the number of competitors is also minimized. The strategies have helped the Wal-Mart to rein in number one position in international countries making it the largest retailer in the world.

            It is seen that Wal-Mart has significantly the Porters five force model wherein through proper strategic planning and strategic implementation has led to removal of barrier entry, rivalry from competitors and pricing norms. In regard to substitutes, Wal-Mart in order to achieve its aim of customer satisfaction has selling goods under its own legal brand.  Wal-Mart’s big box phenomenon has changed the retailing industry in the United States which is often considered as discount stores and makes profit through high volume of purchases and low markup on profits.(Parnell, 2008)Wal-Mart with its low cost and ever expanding strategy has made a dramatic impact since 1962 when Sam Walton first started his business. With this strategy, Wal-Mart has now over 4000 stores and outlets in US and other countries through acquisition and mergers.

IV. Sustainability in Discount Retailing – Wal-Mart

            According to Porter, (2002) operational effectiveness and efficiency are the key elements of success in any organization. A company can outperform its rivals or competitors in the market only with superior management and efficient control creating a difference from the others which eventually attracts customers. Porter defines operational effectiveness as performance of similar activities as its rivals but better than them. In a study, it is stated the Wal-Mart is expert in manipulating perceptions. It is termed that low price is not the strategy of Wal-Mart but the advertisement manipulates the consumer perceptions by making them think that its prices are lower than its competitors’ price using ‘price spin’. Wal-Mart makes the consumer addicted coming to its stores by convincing them the prices are lower than in the other stores by selling itself cheaper by advertising that ‘we have lower prices than anyone else’ and placing a ‘opening price point’. The ‘opening price point’ is the lowest price in the store which is kept at high visibility which makes consumer believes that the products in this store are really cheaper. (Race Cowgill, 2005)

            The SWOT analysis of Wal-Mart reveals that it is most powerful retail brand, reputation for money, value, commitment, and provides wide range of products. It is growing at a brisk pace with expanding its horizon to other parts of world through acquisition and merger. Wal-Mart has good opportunities in markets of Europe and China and focuses on acquiring the market through acquisition of smaller stores and merger with leaders in the specific markets. Wal-Mart is always under threat to sustain its top position in market nationally and internationally. Global leader in the industry leaves the organization vulnerable to many socioeconomic and political problems of the country.

            Sustainability at the top place is the most important job that makes its managers strives hard to frame the policies and strategy to compete with its rivals in the market. Slack, Imitation, Substitution and Hold-up are some of the threats to any organization in retail industry. However, Wal-Mart with its visionary goal of attaining zero waste status and reaching 100% renewable energy has planned to launch number of sustainability initiatives. (GreenBiz, 2008) Imitation increase profits by increasing the supply. But imitation puts reputation, relationship at stake. James Hall reports that Wal-Mart is planning to open convenience stores as Tesco has started and operating in US called Fresh & Easy Neighborhood Markets. (James, 2008) Such tactics will create mixed response among the consumers while degrading the reputation of the leader in market. Substitution reduces the demand for what a firm uniquely provides by shifting the demand elsewhere due to changes in technology. The threats of substitution can be subtle and unexpected like minimizing expenses through videoconferencing instead of air flights to long distance meetings with its managers of other stores, etc. Therefore, substation is an especially effective way of attacking dominant rivals in the market. Substitution offers mixed responses after identifying and understanding the threats. The organization should fight the threat and merging with them, switching to different options of substitution to be in the market. Hold-up diverts the value to customers, suppliers or complementors who have some bargaining leverage which results in tough negotiations, contractual agreements and vertical integration.

            Wal-Mart is having great network with almost over 7800 stores       and Sam’s Club locations in 16 markets worldwide. It employs more than 2 million associates and serves more than 100 million customers every year. According to Fishman (2006) Americans spend $26 million every hour at Wal-Mart which makes it believable that Wal-Mart is financially very strong and is capable of combating any threat from its rivals in the market. Wal-Mart is ever expanding its boundaries by way of acquisition and mergers. Thus Wal-Mart with such a vast network of stores and alliances in the forms of ASDA, Target and many other stores is well protected enough to sustain its top position in the retail industry.

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