Strategic Management and Leadership - of Ribena Drink - Case Study Example

Ribena: Student’s name: Institution: Date: Introduction An organization should ensure that its strategies are all round, the strategies set should at first instance look at the immediate resources, the current resources and the future resources in the organization and the relationship among the various resources. By looking at the resources in the organization, the organization should understand that not all strategies work very well in every setting and establish a strategy that will best suit its setting. For a clear strategy of an organization to be established, an organization has to ensure that there is an effective strategic planning process and a strategic framework. Both the strategic planning process and the strategic framework should be meaningful and actionable and meaningful to the functioning of the organization (King 1998, p. 6). All kinds of organizations, both large and small should have a practicable strategic framework that all members of the organization (formal and informal members, management and non management members) understand clearly. Need to understand strategic management and leadership A practical strategic framework should have a vision and a mission. The vision is the broader picture of the organization. It is through the vision that the corporate goals of an organization are adapted. The vision of an organization enables an organization understand the competitive future directions and essentially the bigger picture outside the organization.re likely to face, the technological direction that are anticipated, the global styles. It is also through the mission that the long term and short term periods of the organization are set (Anderson 2000, p. 49). By setting a time frame, long term or short term, the organization tries to ensure that all members in the organization are well aware of the time period that is set to ensure that certain goals are achieved. A practical strategic framework is essential because through it, the tool of communication is achieved. Strategic management and leadership is an ingredient for any organization. This is because it helps in providing the direction and extent that ensures the success of an organization (Bosse 2009, p. 453). For the strategies set down to be maintained and accomplished, an organization needs leaders who are strategic to consistently maintain the sense of direction when enforcing the goals and objectives set forward. An organization should also have a strategic planning process and a strategic framework. A strategic planning process is an effective and simple method that should be used to keep the future of the company in the forefront. By keeping the organization in the forefront, the members of the organization ensure that the long term goals are more productive and that they are deliverable (King 1998, p.16). They should also ensure that the goals are appropriate to the work done and that a significant contribution is made towards the achievement of the long term goals of the organization. The strategic process of an organization should be a method that the organization uses to evaluate the product and the strategy set aside and they are both tactful and strategic in ensuring that the future goals are in line with their work. Strategic formulation It is not very easy to get an organization to a good strategy that governs and directs it though most organizations assert that they do have good strategies. Study shows that most organizations have sets of performance goals instead of formulating good strategies. For an organization to acquire good strategy, it should be able to back up an argument with a coherent action. Successful strategy formulation is an essential ingredient of an organization. Strategy formulation is divided into two categories; corporate strategy and business strategy. Corporate strategy is whereby an organization chooses the types of businesses it will engage in while business strategy is whereby an organization sets the required frameworks it will use to achieve success in the businesses it engages in. Both the business and corporate strategies entail market analysis, planning, and commitment of resources, monitoring and goal setting to be effective. Strategic formulation is important because it enables an organization plan its capital budgeting. By planning its capital budget, organizations are able to allocate funds where they will be most effective and very much able to return the highest profits to the investments. It also enables an organization to be ready for any prospect of change in the anticipated future and to prepare for alteration rather than wait until the market forces compel it to change. Lack of a clear strategic plan and formulation gives the decision makers of the organization no direction rather than the status quo maintenance of the organization (Nutt 2008, p. 64). A successful strategy formulation must have a corporate strategy, it then should articulate a mission statement that that is in accordance with the definition of the business, and it should then ensure that the strategic objectives and goals are set. After setting the objectives and goals, the organization should then take specific steps to implement the business strategy objectives and goals. It should then review the effectiveness of the set goals and strategies, performance and if possible it can change its strategies if they are not working as anticipated. Decision making process in strategic management Proper management of an organization requires proper actions and decisions about how and when the organization should enter new ventures and when the organization should exit other ventures. The management of organizations should set time for the business growth, downsizing and exit periods from other businesses. If the decision making of the management too slow or too fast or the management just fails to set time for solving and setting some solutions in the organization, the sound strategies may go askew. Through the decision making process, the management of the organization gets the chance to decide and allocate the required resources to run the activities in the company towards the strategic objectives. It is through the decisions that the business risks and maximum security risks in the organization are balanced. Decisions in an organization occur in different sectors and the directions that the management chooses has major implications on the organization’s strategy. The decision making process in an organization is something that the management should do with utmost certainty in all circumstances. Decision making tools should be adequately used by the members making the decisions. The decision making tools include; decision trees, payback analysis and simulations. Coherent actions Most strategies fail because they are not supported by coherent actions. For there to be coherent action, actions in the organization should coordinate and put together upon each other while focusing on the organizational energy this means and shows that strategy is very important and if not enacted, it can be rendered worthless because it is costly because of the time wasted by the organization, effort, and money. Coordination in an organization should be consistent and it cannot occur without strategy. According to Anderson in his book, Good Strategy/ Bad Strategy (29), an organization makes a bad strategy when it tends to avoid hard choices and in instances where leaders are very unwilling to give an explanation of the challenges nature. Good strategy is an example of a coherent action that the organization could have undertaken to avoid the legal and reputational situation that resulted from their situation. By using good strategy, the organization could have effectively used both thought and action to tackle the issue. Kernel strategy is a key factor in good strategy. It mainly focuses on the harmonization and coherence that an organization imposes on a system by design and policy. Good strategy can be applied to an organization when a leader identifies the critical issues affecting the organization then puts a lot of focus and concentrated action to them. Good strategy tends to acknowledge the challenges in the organization and provides an appropriate solution on how to deal with them (Rumelt 2011, p. 36). Bad strategy tends to ignore the power of focus, choice and variety and instead tries to accommodate a multitude of conflicting interests and demands. Through bad strategy, organizations have become less able to solve problems that may occur in the organization. This is done by using corporate board signs on strategic plans. For an organization to be said to be using bad strategy, it is because of the following reasons; the failure to face the challenges at hand, mistaking goals for strategy, having bad strategy objectives and fluff. By failing to face the problem or challenge, it becomes complex for an organization to evaluate the quality of the strategy and the challenge and how to tackle it. By failing to examine and identify the challenges, an organization lacks a strategy and all that is being relied on is a stretch goal the organization wishes would happen. By mistaking goals for strategies, an organization fails to generate conditions that make the strategies effective (Thegard 2002, p. 143). Having bad strategy objectives occurs when an organization identifies a challenge it proposes a way to approach it but due to the use of the same way that the original challenge was solved and failed, the propose becomes of little value to the organization. The vital part of a developing organization is to appreciate in detail who the major and minor competitors are and whether they have weaknesses and strengths that the organization can work upon. For a competitor to be determined, the goods they produce should be analyzed, their prices, their market and the channel of supply should also be determined. For an organization to create and defend competitive advantage, it should ensure that it has clear information of the market and channels of each firm so as to avoid direct competition especially through market segmentation or product segmentation. Competitive advantage arises when an organization implements a strategy that other organizations or competitors find very unable or costly to duplicate or copy. An organization can only be said to be confident and have competitive advantage if other organizations have tried to imitate its strategies and have failed (Hitt 2011, p. 29). Study shows that not all future competitions arise from present or previous competitors. Most competitors are in most instances found along the sidelines of the organization. Through the assurance of a guaranteed market, suppliers get motivated and venture into vertical integration. As a result, raw materials and products in organizations cover a competitive cost advantage. The level of competition in markets is also determined by the barriers to market entry. This is in most cases through retail where the competitive industry tends to have low costs entry into the market. Research shows that not all market barriers are caused by financial aspects. An organization should be able to determine and know what features keep its competitors at bay especially when evaluating the prospective for others to share in their profits in the market (Hoskisson 2011, p. 214). For an organization to be able to create and defend competitive advantage, the management of the organization should first adopt a new mindset that values, embraces and promotes integration, speed, innovation, flexibility and challenges that come about due to the frequent changing of conditions in the business market. Risk Management Risk is defined as the uncertainty on the economic gains and losses an investor encounters when venturing into a particular investment. Organizations should learn the various ways of managing risk. By effectively incorporating ways of managing risks, investors’ uncertainty is reduced. The process of understanding, evaluating and addressing the risks and ensure that they are handled well is called risk management. Risk management practices may influence strategies adopted by the organization through various ways; organizations will have to incorporate the risk assessment as part of the strategic planning process whether negatively or positively. The organization can then establish what should be done to ensure that the potential risks are managed. Risk can be said to be either negative or positive. Negative risk is risk that has no good thing rising from it while positive risks are a type of risk that opportunities can rise from. From a risk management perspective, disasters can come in several ways; through business disaster, natural disasters, and through sudden changes to the resources in the organization (Weick 2011, p. 86). Risk management strategies to manage negative risks which include threats to an organization include transferring the threat to another channel, finding ways to reduce the probability of the risk, avoiding the threat/ risk and accepting some or even all the consequential particulars of the threat/ risk. By avoiding the risk, an organization refrains from carrying out any activity that could harbor the risk. Though avoiding of the risk may seem as the most appropriate method, it leads to the losing out of an organization’s potential gain. Avoiding of a risk makes an organization lose out on the likelihood of gaining profits. Reducing of the risk takes place when an organization tries to reduce the harshness caused or by reducing any chances of any more loss arising. Risk sharing takes place when an organization shares the burden of loss, gain and reducing of the risk with another party (Trehan 2011, p. 14). A company also has the choice of fully accepting the risk and taking full responsibility of it. It is shown that all risks that are not transferred and avoided are usually accepted. Retaining of a risk takes places when the risk or threat to be face is small and the loss is not that much or if the avoiding or sharing the risk will cost the organization so much. In most organizations, risks with greater magnitude are handled first then the ones with lower magnitude handled later. This process is called the prioritization process. Through risk management, organizations have the chance to look for ways to improve the potential risk instead of blocking the risks without trying to find out ways of settling them (Hui 2015, p. 12). Allocating resources can be said to be one of the risk management practices. This will affect the strategies adopted by an organization because the resources put on the risk could have been used to achieve one or two of the objectives and goals that the company intended to so to increase the profits. Risks in an organization can be identified through the industry culture, practice and compliance. Limitations of risk management Though risk management is essential in an organization, it has limitations that can affect the strategies of the organization. Focusing so much on the risk management process can make an organization not manage to keep up and finalize most of the projects and objectives it planned to complete or even start. An organization should be able to distinguish between uncertainty and risk before starting to take time on the risk management plans. Another limitation would be that, a lot of time can be wasted if the risk or threat was not properly assessed and this can lead to spending a lot on an unlikely risk instead of using the resource on something else that would have been profitable to the organization. Effective risk management An organization is supposed to benefit from a risk management program especially if it is effective. An effective risk management program has the ability and confidence to respond to any existing or emerging risk that is or would face the organization. Through the effective risk management, an organization is able to show that they know and understand their risks and those they have developed an efficient strategy in managing them (Ulwick 2011, p. 46). An effective risk management program increases the consistency and communication by providing a standard framework for all members in the organization. It also ensures that the reporting and analyzing of corporate risks are enhanced. Effective risk management benefits an organization in terms of saving resources, time and energy put to tackle the risk. Through an effective risk management scheme in an organization, if a risk is reported, it is dealt with immediately to save time and with utmost conciseness and flexibility. This in turn helps an organization improve and facilitate all the decision making processes and capabilities in the company. Management theories Several theories can be used and applied to the Ribena case study. Some of the theories are the agency theory, network theory, contingency theory, cost theory, resource dependency theory and behavioral theory. The agency theory is mainly about how a firm’s managers, shareholders and the people employed cooperate and coordinate. Hitt in his book, Concept Strategic Management Competitiveness and Globolization (2011. p.202) states that for any strategy to be effective and successful, managers should be overly concerned with acquisition making process. in the Ribena Case, for the organization to have avoided any legal or reputational situations, the managers should have practiced and exercised due diligence, prepared for the negotiation process and tried to engage in the managing of the integration process. Cost theory is used to implement the cost leadership strategy. This theory is used by managers to sell standardized products to the customer. For this theory and strategy to be effective, Hitt (2011, p. 330) suggests that the cost leadership should be implemented through manufacturing of new products rather than the development of new products. The cost theory enables firms and organizations sell products at low cost and reasonable sources of differentiation. The network theory or the resource dependency theory is also used through the theory. Through the theory, firms can not be able to secure capabilities and resources without interacting with bigger and individuals beyond their boundaries. It is usually used to ensure improvement in the organization through cooperative and competitive endeavors. Organizations should compete with several different firms in both global and local states to enhance competitiveness. Contingency theory is about the structure and strategy of an organization. It shows how the organizational structure of a firm is by specifying how the relationship, procedures, authority and the decision making process are carried out. Through this theory, a firm specifies the work to be done and how it should be done. If implemented correctly, the structures provide stability and flexibility to the firm. In respect to the Ribena Case, the organization was to specify to all members all required duties and roles on decision making and how to solve such issues in case they arise in the future. Conclusion The Glaxo Smith Kline Company which manufactured the Ribena drink has an obligation not only to its customers locally or globally, it also has the obligation to the management of the organization. For Glaxo Smith Kline organization to avoid the reputational damage it underwent, it needed to coherent actions which could have prevented the legal and reputational situations that resulted from their action. Some of the coherent actions it needed were to ensure the organization implemented on good strategy/ the kernel as a mean of solving the Ribena drink situation. By using the good strategy, the organization could have at first looked at the challenge/ problem then developed a guiding policy to deal with the challenge. Strategic leadership is also a coherent action that the organization could have taken into account. Through strategic leadership the organization comes up with ways that would enable it to make appropriate decisions for the management. Coming up with correct strategies formulation is another coherent action the organization should have taken to avoid the legal and reputational situation. Through strategic formulation, the organization can be able to formulate appropriate strategies that would be effective to it. The coherent actions can in turn affect and cause potential problems to an organization if not implemented wisely and correctly. The kernel strategy which is also called a good strategy if not implemented well can turn out to be a bad strategy to the organization. This can only happen if the strategies formed tend to ignore the power and focus of choice and instead tries to accommodate a mass of conflicting interests and demands. The strategy formulation can also cause potential problems to an organization especially if the new strategies formulated tend to threaten the market share of existing competitors. It can also cause problems if the strategy formulation process selects inappropriate strategies to be used in the organization (Hitt 2011, p. 238). Strategies and structures of an organization go hand in hand and even influence each other. This is promoted through the contingency theory. Most organization tends to change the structure especially when faced with declining performance in the organization. In instances when risk management process is taken in a slow pace when solving, the organization can end up having ethical issues that would spoil the reputation of the organization in the long run. The risk management of the organization should be effective so as to curb such issues in case they arise. Theories of strategic management should also be implemented and used by the Glaxo Smith Kline Company. 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