Strategic Management and Global Business free essay sample

Individuals who pass through this program learn skills, gain knowledge and experience required to manage human, physical, and financial resources, practical management and complex strategic matters of international and domestic businesses. Global business management is a rich field which offers a wide range of career fields. The first year of the program covers broad fundamental business knowledge and skills field second year deals with advanced strategic and global and international courses that are applied in both domestic and international businesses thus making it global business management program (Tallman, 2009). Fast food industry is a vast organization that has experienced a continuous growth over the years. Fast foods are food that is prepared and served swiftly. Fast foods are sold in stores or restaurants with precooked ingredients and served to clients in packaged form as take –away. Fast foods are distributed in franchise operations, which are part of restaurant chains, which deliver standardized foodstuffs to every restaurant from central locations. We will write a custom essay sample on Strategic Management and Global Business or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page In 2006, the National Restaurant Association estimates that food restaurants in U. S. would reach US $142 billion, a 5% increase from 2005. According to U. S. Bureau of Labor statistics, the industry employs an estimate of 4. 1 million U. S. workers are employed either in serving or GLOBAL BUSINESS MANAGEMENT3 food preparation. In 2006, the global fast food market grew by an approximate of 4. 8%, a volume of 80. 3 million billion transactions thus attaining a value of 102. 4 billion Euros. In other countries like India alone, the food industry growth of 41% a year (Talwar, 2002). Yips drivers of globalization The increase in trend to market globalization is due to various reasons. In several markets, customer preferences and needs come in the front line. The drivers include; (Retrieved April 17, 2013, from http://essaybank. degree-essays. com/international-relations/yips-drivers-of-globalisation. php). Porter’s5forcesframework Developed to access the attractiveness of various ndustries. It is vital since it helps industries to identify the origin of competition in an industry. It is used for strategic business units, and not in the whole organization. Economies of scale The capital cost requirement will vary depending to scale and technology. Cost efficiency It is a significant strategic capability in every firm since they are bound to ensure continued and achievable cost efficiency. It may be achieved through having appropriate resources and capability to manage costs. Management of cost related issues is a fundamental thing in achieving competitive advantage. Sustainable competitive advantage For an organization to survive, its capabilities must meet client’s specifications at least to the threshold level. It must continue to manage its costs in an effective manner and advance in its capabilities. To attain competitive advantage firms should consider the resources and competencies that may deliver competitive advantage for a long time. Rarity of strategic capabilities To achieve competitive advantage, the strategic capacity of an organization should be different from those of other institutions. Competitive advantage can be based on the rare competencies; for example, years of experience. Rarity may be on how an individual possess the competence GLOBAL BUSINESS MANAGEMENT4 and how flexible it is to transfer it elsewhere. Robustness of strategic capabilities Strategic capability that deliver competitive advantage, is not easy to attain. It requires individuals to consider capabilities that have a high possibility to last for long, and that the competitors will not be able to obtain or copy. Robustness in the sense that it is non-imitable. Power or interest matrix It is particularly significant since it help to outline the political context within which individuals pursue their strategies. It is usually done by classifying stakeholders in relation to the power they have and the extreme of their interest in opposing or supporting a given strategy. Power Power can be defined as a process where an expectation can   affect strategies and purposes. In most organizations power is unevenly distributed between the shareholders. Power is the ability of groups or individuals to induce others to follow a certain course of action. Power emanate from different sources. People or groups may attain power from their rank in their organization or through corporate governance arrangement. There is the need to understand indicators of power due to the many sources of power. These are mainly the observable characteristics that stakeholders have been able to exploit different or a single source of power. Corporate parent Corporate parent is the level of management above the one in the business units. A corporation division in a firm looking after various business units assumes the role of corporate parenting. This level of management is free of direct interaction with the competitors and the buyers. Product or market diversity It is a critical area since it relates to value addition by corporate parent to the business units product differentiation and services offered. GLOBAL BUSINESS MANAGEMENT5 Diversification may be made because ; some add more value than others. This may be done through economies of scope, the efficiency gained from applying the organization existing capabilities to new products or services, and markets. Second, the gains from utilizing corporate managerial capabilities to new markets and product or services. Third, diversity in the range of product and services which consequently increases market power. Diversity can help a firm to overcome competition since a firm can subsidize one product from the surpluses from another firm. Diversification thus can be defined as strategic management beyond current products and markets within the value network of a firm. Managing the corporate portfolio This may include the mechanisms that managers use to show the necessity of form, and diversity of business units within the portfolio, which they may see viable to add in the organization. Several tools are used to help managers to make preferences on what to include in the portfolio. These tools give different weight in the following; the balance of the portfolio in relation to the needs and markets of the corporation, the degree of fitness a business unit accrue in relation to responsibilities of corporate parent and potential synergies. Finally, the attractiveness of business units in the portfolio, in terms of profitability and growth. The growth share matrix (BCG) One of the most common and appropriate ways of conceiving the balance portfolio is examining the relationship between market growth and share of an organization. The growth share matrix allows examination of business units in terms of market segment and growth rate of a given market that is the life cycle of the market. It is a way of GLOBAL BUSINESS MANAGEMENT6 analyzing the development and balance of a portfolio. Thorough scrutiny reveals that market growth is significant for business units seeking to dominate in a market, since it is easier to dominate at its high growth rate. BCG matrix is used in accessing the balance of an organization portfolio of activities. Manager’s concentrates on identification of geographic markets that are likely to provide sensible balance of growth capacity and cash yielding high share in mature markets. However, significant caution should be taken in using BCG matrix due to many reasons such as the analysis should be done in strategic business units and not road markets, difficulty in deciding the market share and growth, and the fact that many organizations the critical resource to be balanced and planned are not cash but the creativity capacity. Strategic development and Ansoff matrix The development direction of an organization is significant since it outlines the firm’s strategic position. Ansoffs matrix helps the managers in strategic departm ent to identify the direction for strategic development of a firm. Development directions are the strategic options in an organization in terms of market coverage or products owing to stakeholder’s expectations and strategic capability of a given firm. Consolidation This is the stage where firms strengthen and protect their position in their current market using the current products. Market situation is a dynamic such that it keep changing thus consolidation also means gradual change. In consolidation companies may engage in reshaping and creativity to improve the quality of a firm’s product and services. Consolidation may call for reshaping with downsizing from some activities. Some organizations withdraw from some activities since their products and assets may not be affected by GLOBAL BUSINESS MANAGEMENT7 hanges over time, necessity of prioritization of activities, firms have significant competitive advantages, and the expectations of dominant stakeholders. Consolidation concentrates with maintenance of market share in the existing markets. Market penetration Organizations gain market share in this stage. The ease of which organizations attain market penetration depends on market growth rate. New and small markets can gai n share when there is gradual market growth in these organizations. Product development Changes in business environments may result to increase in demand for new products and services in relation to the already existing provision. In product development organizations deliver new products in the markets. Retailers tend to follow constant changes in customer preferences by introducing a new product lines. If product life cycles are short, product development becomes a vital requirement of a firm strategy. However, despite the attractiveness of product development, they may not match with the customer’s expectations resulting to unpleasant dilemmas for organizations. Although invention of products is vital for an organization future trend, it deems unprofitable, expensive, and risky since new product ideas are not available in the markets and those which turn out do not survive. Organizational change There is a different time for changes to occur. For instance, if there is a high possibility that if a given food industry is facing abrupt decline in profits or turnover from rapid changes, its market segment experience different change as compared with a firm where management predicts the significance of change in the future. Food industry needs to diversify their views, experience, and opinions since using same strategies bring homogeneity which may slow change. Forcefield analysis Forcifield analysis offers the solution to change problems that should be attended to by examining GLOBAL BUSINESS MANAGEMENT8 forces for and against change. It helps to answer questions such as to what should be introduced to bring change? How the current situation may bring change and how to reinforce this? How the current situation may hinder change and how to overcome the obstacles. Styles of managing change In order for organizations to achieve change, they are confined of   being cautious on the style of management they adopt. There is a high possibility that a change may have an adverse effect if those affected by the change develop strategies and plans to reinforce or overcome changes. Styles of managing change may be collaboration, people affected by strategic change becomes involved in change agenda. Another style is education and communication, exploring the reason for and means of change (Laszlo and Laugel 2000). Intervention This is the coordination of authority over processes of change agent who elaborates features of the change process. Intervention do not only involve stakeholders in originating ideas, but also in partial implementation of solutions. Direction It involves the application of personal managerial authority to come up with effective strategies for future and the process of change. It can be viewed as top down management of strategic change. It may be seen as individuals transparent by leaders in the organization, or clarification of foremost priorities and factors. In some instances, a directive style becomes coercion which includes issuing edits or imposition about change. There may be explicit use of power which is vital whenever a food industry is facing a crisis. In conclusion, the principle strategic management issues include cost effectiveness, competitive advantage, economies of scale, organization change since they are crucial in maintaining and enhancing smooth future trend of GLOBAL BUSINESS MANAGEMENT9 an organization. Thorough analysis using Yips strategies, food industry is a global industry. These Strategies are extremely vital in ensuring the food industry thrives and faces competition thus becoming distinct from the other sectors. PART 2 COMPANY SECTION The McDonalds are known globally as one of the topmost ranked fast food chain. They are found in most cities, from Pretoria to Paris. McDonalds lead in the non-U. S. system as compared to other fast service chains. They come in the first place with more than three times the sales in KFC, which is ranked in the second position due to the highest sales around the globe. The McDonalds are operating in global basis since McDonalds restaurants spread all over the globe thus can be referred as McDonaldization of the global society. Observers put forward that the company should be commemorated for their up to standard service in markets where they enter. The McDonalds restaurants are found in 119 countries around the world serving an estimate of 68 million customers every day. The business began in 1940; the first restaurant was opened by two brothers Maurice and Richard McDonalds in San Bernardino, California. The company headquarters are located in McDonald’s headquarters complex, McDonalds Plaza in Oak Brook, Illinois. Some of their products include various types of chicken sandwiches, hamburgers, breakfast items, soft drinks, desserts, and French fries. In most Markets, these restaurants offer localized fare, salads, and vegeterian items, and wraps (Kincheloe, 2002). The value chain concept by Michael Porter can be used in the identification and evaluation of the different mechanisms used by McDonalds to achieve a competitive advantage via global coordination and configuration of its value adding activities. His GLOBAL BUSINESS MANAGEMENT10 work was a response to the critics he had faced that his five forces framework had no implementation methodology that link internal capabilities and opportunities in the competitive market. His framework laid emphasis on industrial attractiveness as the determining factor of the profit potential of all companies within an industry. Great differences exist between companies working under the same industry that can only be explained by looking at the company’s participation in the firm’s specific competitive advantages or in successful strategic groups (Porter, 1985). Value chain analysis helps individuals to understand a firm’s principal competencies and differentiate the activities that determine and guide competitive advantage. The McDonalds cost structure can be subdivided into separate functions with an assumption that the cost drivers for every activity are independent. Porter’s work was immensely significant since he condensed the cost analysis in to a generic template comprising of four support activities and five primary activities. Porter was mainly concentrated on the globalization of firm’s value- adding activities. Globalization provides businesses with an opportunity to examine its operations. It is able to take into consideration locational and other related advantages resulting from economic conditions, skills, and resource around the globe. When a company configures its activities, it is able to take advantage of the persisting differences by co-ordinating its global activities appropriately, thus attaining global competitive advantage. Few markets and industries are not fully global though they display global features. A global strategy of complete world standardization may tend o be difficult to achieve, and a as a result, exceedingly few firm adopt this strategy. Global corporations such as McDonalds make minor adjustments to their strategies as national circumstances demand. GLOBAL BUSINESS MANAGEMENT11 A global industry is an industry where competitive advantage depends on economies of scope and economies of scale gained across markets. On the other hand, global markets are characterized by extensively standardized products. Michael porter argues that industries are either global or multi-domestic. Firms compete with each other everywhere. Multi-domestic industries compete in each national market but independently of other national markets. In the value chain analysis, the primary activities include the following; Inbound logistics Include warehousing, transportation, material handling, and inventory control. McDonalds focuses on providing conveniences to the people who need to east fast foods at competitive prices providing significant value for the client’s money. McDonald’s competitive advantages are their focus on production and utilization of raw materials around the globe and the consistency of their quality. The world also recognizes McDonalds brand also counts in their competitive advantage. Operations Involves; packaging, testing, machine operation, maintenance and assembly. McDonalds focuses on becoming cost leaders offering their foods at prices that are distinct from that of their competitors. They ensure their store is efficient and ensures low costs of operations. Keeping the cost of operations lowest possible levels will place the company stores to attain superiority over the other food restaurants since they will be able to serve their customers at low prices than any other fast food company. Outbound logistics Involves; transporting, order processing, distribution, and warehousing. Another competitive advantage in McDonalds Fast Foods Company is the swift delivery of their foods. McDonalds have straightforward method of processing food thus being able to maintain swift food delivery advantage. It must be easy to learn and execute among the employees which results to low failure thus ensuring quick production and service GLOBAL BUSINESS MANAGEMENT12 of their foods (Esty, 2006). Marketing and sales Include; selling, advertising, channel management, promotion, and pricing. The competitive advantages comply to McDonalds vision; â€Å"McDonalds vision is to be the worlds best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness, and value, so that we make every customer in every restaurant smile. Service Include; servicing, installation, and spare parts management. Just like any other competitive firm, McDonald’s competitive advantages are what make it ranked the topmost as compared to others. These features are the ones that make it remain the topmost fast food distributor in the world. On the other hand, support activities include: Firm infrastructure This includes; finance, general management, investor, planning relations. McDonald’s competitive advantage primarily lies on brand recognition. Its brand is not only known in national markets, but also in international markets. McDonald’s restaurants are operated by affiliate, franchisee, or the corporation. There are several sources of corporation finances such as royalties and fees paid by the franchisees, rent, as well as the sales from the company’s restaurants. McDonald’s revenue increased by 27% in 2007 attaining $22. 8 billion, and 9% growth in operating income reaching $3. 9 billion. Human resource management Include; promotion, recruitment, reward systems, and education. McDonald’s employees are highly skilled which enable them to process of cooking as uncluttered as possible thus achieving quick production and delivery. Training in McDonald’s is highly structured. It fundamentally starts with crew training, each level of crew system is more generalized and complex. Training starts with an hour orientation in the company. In every training room is equipped with a video player. Includes step-by-step manuals and video tapes, which capture every detail necessary for training. The level of GLOBAL BUSINESS MANAGEMENT13 competency is examined, and activities are kept in check by SOC-Station Observation Checklist. The follow-up in SOC stations ensures the trainees are certified. McDonald is highly committed to educating the youth since according to their principles, education is among their priorities. McDonald’s benefits include; Mcdiect shares, MAC card, wages increases, competitive wages, flexible hours, paid vacation, and life insurance. Technology development Include; IT, research and development, and process development. Cost effectiveness is a crucial issue to McDonald’s stores. They are ensuring that the store is efficient and strictly low cost of operations. In the McDonalds, the process of cooking is unembellished for all employees to ensure swift production and delivery. Procurement This is the supplier contract negotiations, purchasing of raw materials, and lease properties. McDonald is priorities lie on the consistency of production, quality, of food and use of raw materials around the globe. By subdividing a firm into principal functions, Porter was able to join classical accounting to strategic capabilities by use of value as the main concept. That is how a firm can organize itself to compete freely owing to the relative cost structure, how the structure of the value chain helps the firm to put competitive prices, and how differentiation of the product is enhanced by this composition to meet different customer needs. PART 3 CHANGES AND IMPLEMENTATION Recently, McDonald’s introduced nutrition labels on its menu whereby it assumes that other fast food companies will follow the same. However, the time for the competitors to abide by these changes is not yet known. According to Marion Nestle, a nutrition expert, McDonald’s enacted such changes before an implementation of regulations as required by Affordable Care Act to generate publicity. There GLOBAL BUSINESS MANAGEMENT14 is a high possibility that the competitors will be forced to make these changes too (Holbeche, 2006). Christopher Shanahan, an analyst at Frost and Sullivan believes that some competitor companies such as Taco Bell, KFC, and Pizza Hut may be reluctant in making these changes until regulations are made. This is because they have few healthy options and fear of the customers change in purchasing and eating habits as a result of the change in menu updates. However, fast food companies and other restaurants will eventually adapt to the menu labeling standards as per the Affordable Care Act, though they have not yet been authorized by the Food and Drug Administration. Through analysis of the trend in fast food industry, the strategy of outsourcing may not be much effective. Everything In the business world outsource, however, McDonalds’ should be cautious in this since in the future outsourcing will collapse due to the wholesale idea of outsourcing competencies of fast food stores. They can outsource other business operations but not their core competencies. The company should understand the benefits of outsourcing which include expansion of business operations, knowledge of market offshore, and supplier relations. Good understanding of these benefits will leave McDonald’s at an advantage of preventing business failure, competition, and instances of reduced profits. McDonald’s will keep abreast with market risks and other business setbacks. This; however, leaves McDonald’s as the leading fast food industry due to its competency in the formulation and implementation of strategic policies that are based on understanding of customer needs (Dunbar, 2006). McDonald’s should come up with a business plan that captures social changes either brought by the government or by the customers. GLOBAL BUSINESS MANAGEMENT15 They can also develop a joint venture with other organizations such as supermarkets where they can sell their products. McDonald’s should focus on customer identification, corporate social responsibility and edge closer to organizations that are significant to the society. They should also come up with promotional strategy (Promotional mix) and advertising campaigns. In conclusion, strategic management has significantly helped McDonald’s as the largest fast food corporation in Europe. Their well organized competitive advantage strategies have also played a vital role in company welfare. The recent food preparation â€Å"Made for You† made McDonald to develop a solid relationship with the customers since they provide fresh and hot food to the customers leading to an increase in consumption of McDonald’s food. 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