Find Strategic Issue & Use Frameworks from Scholarly Articles to Analyze the Business Case Table of Contents Introduction 3 Strategic Issues Identified 3 Assessing the Strategic Issues Using the Frameworks 4 Strategic Management Formality 4 Cognitive Biases 5 Shareholder Value 7 Conclusion 9 Works Cited 10 Introduction Modern day organizations face various difficulties in order to perform the operations related to decision-making, strategy development, communication and marketing among others. (Kunnas, “Systematic Management of Emerging Strategic Issues”). Hereby, this paper will focus on a case study based on CQUAY Technologies Corporation in order to identify the strategic issues that the company had to face while executing its operations. The study will also take into account three frameworks, namely, the Strategic Management Formality, Cognitive Biases, and Shareholder Value so as to gain an insight towards the strategic issues faced by the organization. Strategic Issues Identified The most important and noteworthy strategic issue that the company and its strategic leaders had to face was related to the decision-making of whether to follow the desired pathway of sale in terms of acquisition, or instead rejuvenate the entire organizational process to continue with the company attaining sustainable growth in its future prospects.
For instance, in 2003, the Board of Directors (BOD) of the company had decided to prepare the organization for an acquisition, which was following the external environmental challenges and disruptions.
However, after a year, in 2004, the scenario of the external environment was observed to probably change indicating aspects, such as rapidly increasing customer demand and improving capital markets, which apparently opposed the decision of selling the company. Though, the internal organizational factors depicted that the company had insufficient funds due to increased operational costs along with cash inflows which were restricted to private capital only.
The company also lacked in creating valuable and sustainable customer base to ensure continuous flow of capital from the market and reward the company with aggressive growth which was required to satisfy the essentiality of additional capital. Therefore, the strategic issues that the company had to face in deciding whether to opt for its sale or continue its operations was related to the gap in strategic management process executed within the company to keep pace with its external environmental factors. Assessing the Strategic Issues Using the Frameworks Strategic Management Formality Henry Mintzberg’s framework of strategic management formality can be quite advantageous in demonstrating the strategic issues faced by the CQUAY.
For instance, Mintzberg framed three modes in this framework, i.e. the entrepreneurial mode, planning mode and adaptive mode (Pearce II, J. A. & Et. Al., “Strategic Management 10E”). CQUAY can be apparently observed to implement each of the modes effectively in its strategic management process. For instance, in its early years, the company was deliberately focused on attaining the identified opportunities and creating new ones with only a few products and services included in Web-enabled database services and technology application products.
In the planning mode, the company was again observed to exhibit its intention of achieving the identified opportunities though inter-organizational collaborative measures such as the joint venture initiated in 2002 with Telus Corporation. It is in this context that the company is facing difficulties in its adaptive mode while modifying its existing competitive approaches keeping pace with the external business environment scenario. A major reason for CQUAY to face disruptions in its adaptive mode can be regarded as its lacuna to recognize the future probabilities in its external environment and thus forecast the future growth prospects of the market as it could have assisted the company in signifying its future objectives efficiently.
A similar kind of examination was also advised by Pozen (2010) stating that it was actually the lack of over-sighting capabilities of BODs that forced the enactment of the Sarbanes-Oxley Act. Cognitive Biases The second framework that can assist in identifying the strategic issues faced by CQUAY is the impact of cognitive biases in its decision-making procedure (Schwenk, “Cognitive Bias in Strategic Decision-Making: Some Conjectures”).
It can be observed that the top level strategic decision makers are not quite effective and accurate in taking resolutions beneficial for both the organization and its stakeholders with reference to the current perplexity witnessed by Calvin McElroy regarding whether to support the acquisition planning. It is in this context that the strategic decision makers of the company exhibit the impact of cognitive biases being influenced by illusionary facts of possessing control over all the facets of the company including its customers and financial health.
This certain aspect can also be gauged by the action of these strategic decision makers avoiding the external factors that can have a strong impact over the sustainability of the business (Das & Teng, “Cognitive Biases and Strategic Decision Processes: An Integrative Perspective”). One of the major causes of such disruptions can be noted as the influence of multiple identity conflicts faced by the company directors. As stated by Hillman & Et. Al. (2008), the identities perceived by the BODs in a company is strongly related to their performance as the strategic decision makers and thus can be regarded as a major cause for cognitive biases.
In addition, cognitive biases possessed by the top level decision makers in CQUAY also influenced them to ignore the power of the competitors in the industry along with the viability of the project of Common Ground. It is worth mentioning that the decision makers in CQUAY engaged almost all the resources in stabilizing the project Common Ground assuming it is quite viable in the market; however, without accepting the competitors’ influence and customer demand for the product.
Simultaneously, they paid minimal attention towards a more crucial aspect of raising sufficient capital to alleviate the financial structure of the company. Hence, it can be stated that cognitive biases act as the other major strategic issue faced by CQUAY in its decision making operations. Shareholder Value Creation and preserving shareholder value can also be considered as a vital issue in the strategic management process of CQUAY focusing on the Four Quadrant Value Propositions framework (Thakor, “Creating Sustained Shareholder Value - And Dispelling Some Myths”).
Even, in the case of CQUAY, the decision makers can be observed to emphasize on pleasing the BODs treating them as the major shareholders by somewhat ignoring the impact of inadequate customer loyalty and lack of strategic forecasting on the sustainability of the business. It is in this context that CQUAY provided deep concern towards the creative quadrant where the decision makers of the company emphasized on continuously innovating new product lines so as to gain the recognition of industry leader and thereby attracting shareholders.
However, the company paid lesser attention towards the other quadrants of creating shareholder value such as the market awareness, efficiency and collaborative quadrants. For instance, the company, in its strategic decision making process does not significantly attribute the external market factors other than taking into account its nearby competitors for competitive advantage. The company also depicts inadequate market awareness that can be regarded as a major constraint to cause the gap between company’s strategic decision of acquisition and external market scenario. Similarly, even though the company intends to manage its operational process focusing on the control quadrant to minimize the costs, secure customer satisfaction, and research and development among others, it still lacks in implementing its strategies to gain these determined objectives.
In addition, the collaborative quadrant, in CQUAY receives minimal attention from the decision makers as no strategic alliances have been mentioned to enhance human resource capabilities and competencies. The impact of ‘influence rents’ can also be recognized in this context. As stated by Ahuja & Yayavaram (2011), companies and its BODs often intend to make the most of their weaknesses in order to gain the benefits of ‘influence rents’ as extra profits which a company may attain taking the assistance of market institutions such as laws, informally characterized business norms and others.
Conclusion With reference to the above discussion, it can be apparently observed that CQUAY faces a few noteworthy strategic issues which require immediate resolution so as to reward the company with long run sustainability. Notably, the company lacks in competitive and efficient strategic planning being inefficient in forecasting external environment changes. Moreover, the company provides least concern on the internal influencing factors such as human resources and other attributes because of the influence of cognitive biases which in turn hampers the shareholder value creation process within the organization.
Works Cited Ahuja, Gautam. & Yayavaram, Sai. “Explaining Inﬂuence Rents: The Case for an Institutions-Based View of Strategy. ” Organization Science 22.6 (2011): 1631-1652. Das, T. K. & Teng, Bing-Sheng. “Cognitive Biases and Strategic Decision Processes: An Integrative Perspective. ” Journal of Management Studies 36. 6 (1999): 757-778. Hillman, Amy J. “Directors’ Multiple Identities, Identiﬁcation, and Board Monitoring and Resource Provision. ” Organization Science 19.3 (2008): 441-456. Kunnas, Peter.
“Systematic Management of Emerging Strategic Issues. ” Doctoral Dissertation Series (2009): 1-162. Pearce II, John A. & Et. Al. Strategic Management 10E Tata McGraw-Hill Education, 2008. Pozen, Robert C. “The Big Idea the Case for Professional Boards. ” Harvard Business Review (2012): 50-58. Schwenk, Charles R. “Cognitive Bias in Strategic Decision-Making: Some Conjectures. ” Faculty Working Paper No. 863, (1982): 1-37. Thakor, Anjan V. & Et. Al. “Creating Sustained Shareholder Value - And Dispelling Some Myths. ” University of Michigan Business School (2009).