NAME: Janelle Ramdeen

Module Title: Business Strategy

Module Code: 6WBS0009

Student ID: 18001261

Word Count:

Assignment 2

Question 2

Strategy is, in the long -run, about ‘being different. It means deliberately choosing
different set of activities, to deliver a unique mix of value’ (Porter (1996). The three-
horizons framework, (Baghai et al (2000), suggests that organisations should think of
themselves as comprising three types of business or activity defined by the ‘horizons’ in
terms of years. Critically discuss, with examples, the impact of this approach on strategic
planning

Answer

In today’s world with the emergence of technology and innovation, business are required
to strategically plan ahead by developing strategies to respond and adapt to possible
market changes which can impact on the viability of their business. Moreover, the
external business environment fosters conflict and uncertainty that challenges the core
operation of the business. Innovation harnesses and transforms one’s creativity and
imagination into a world of possibilities (ASQ , 2018). Moreover, it is the driving force
behind developing, improving, designing new products, processes or services.
Therefore, organizations need to harness and capitalize on their innovative capabilities
in order to achieve and maintained sustainable growth in the long run and its strategic
competitive advantage over its market rivals. Thus, increasing market share overtime.

The three horizons is a strategic framework that prompts discussion which identifies the
present portfolio of the business and optimizes it current model. It connects the present
with the desired future. Likewise, it identifies the ‘seen’ disruption and probability of
occurrence (Hobcraft, 2015). Thus, this model is a thinking tool that transforms, offers
new insights and possible alternatives for the business. Moreover, the findings offer
different perspectives that assist with decision making, optimization of allocated
resources. As well as the action required to manage uncertainty and conflicts that
challenges the culture of innovation which stimulates present and future growth of the
business as illustrated in Figure 1.

Figure 1 illustrates: The three horizon for growth and value proposition

Horizon one represents the company’s core business today and the parameters of
uncertainty. The model utilizes its capabilities to optimize, defend, enhance performance
and protect the existing model which generates profit and cash flow, while pursuing
existing markets (Mckinsey & Company, 2019). However, as the world and the external
environment changes overtime aspects of the model may become displace or reinvented.
Therefore, organizations continue to invest to improve operational efficiency. For
example, Google Inc, is one of the worlds rapid growing and innovative web that have
maintained it’s core business model of being dominant search engine. Moreover, with
extensive strategic planning they have minimize their risks and capitalize on
opportunities. The search engine, the most valuable resource generated 22.9 billion in
2011, the company have also expanded their services through acquisition with YouTube
and 100 other companies. Hence, planning ahead enable Google to maintained their
long term competitive advantage over it closest rivals Microsoft Bing and Yahoo search
with their superior infrastructure, innovate services and market share (Mathew, 2016).

Horizon two, is an arena of disruptive innovation in the medium term. Resources are
allocated to expand and build emerging business. Therefore, organizations are becoming
more proactive by reviewing previous business plans and developing strategies to adapt
to the evolving technologies, emerging trends and consumer demand. Linking where
they are now and their desired future, by investing largely in sales and distribution,
customer acquisition through marketing and product development of existing and new
products. Positioning themselves to fuel revenue growth and increase market share
(Management and Framework, 2018) . Over the last decade through innovation and
evolving technologies Zara have achieved a sustainable competitive advantage through
its speed and response to the latest fashion trends (Digitalistmag.com, 2018) Fuelling
creativity from sketch, to catwalk, to the streets designing the future. The company
continues to expand and increase market share with online sales $553€ million pounds
in 2014 (Burgen, 2014 ) Forcing the once exclusive industry like Victoria Secret to
rebrand and reinvent themselves, in order keep up with evolving technologies. Moreover,
retailers have invested in online 3D virtual fitting rooms, to give the customers an overall
experience. (TRI Mirror, 2018).

Horizon three, is where the organization go beyond its core business model. The focus
in the long term is developing the seed of tomorrow business by exploring possible future
growth activities, acknowledging the levels of uncertainty and venturing into new
business. As well as , Investing in small amounts on emerging opportunities and strategic
alliance. This approach, though risky will act as a cushion if the current business fails and
will not impact on the new business. The organization will be able to stay in business,
gain market share and sustain their competitive advantage in the long run despite seen
disruption and likelihood of occurrence (Management and Framework, 2018). Google Inc
continues to provide services that is low cost and remained customer centric. Moreover,
they launched Project Loon, a radical approach to internet connectivity for rural areas via
a network of balloons (Simonite, 2018) . This pilot project will generate revenue , growth
and increase market share over time. Hence, Google have maintained their core
capabilities, ventured into new and innovative markets. Thus, securing the company’s
viability now and in the future by keeping up with evolving technologies and maintaining
their competitive advantage by strategically planning their future.
Over time, companies mature and face declining sales, profit and growth with little or no
control over the external business environment. However, with continuous strategic
planning companies can optimize their core capabilities and resources, expand and
build emerging business through innovation and transformation. Thus, maintaining the
company’s viability and long term competitive advantage over its rivals.

Question 4.
The strategic development or large organisations is often described in terms of
systematic analysis and exploration, Grant (2003) However, in reality this is not the way
that strategy develops in practice. Mintzberg(1985) suggested that such plans will
inevitably be subject to change and emergent strategies will have to be developed.
Discuss, with examples ,why the traditional rational planning process usually has to
respond to constantly suggests that organisations changing circumstances.

Answer

Organization strategies according to Mintzberg and Walters (1985) can be intended or

emergent. In some cases characteristics of both are utilized by organizations, which
can be term ‘ deliberately emergent. However, there is no general consensus on which
approach is best. Each strategy has its pros and cons ( Manuwa, 2014). The world is
constantly changing through disruptive innovation and evolving technologies (Mc
Kinsey, 2013). Moreover, they are face with the possibility of their product or service
becoming obsolete. Therefore, they are constantly capitalizing on their innovative
capabilities to maintain market share and overall profitability. For example, floppy disks
developed by IBM was used universally as a data format from the late 1970s into the
1990s and was eventually replace by CD R and CD RW in the late 90’s. Therefore, IBM
intended strategy, developed into an emergent strategy over time (Who invented it,
2019).
Henry Mintzberg’s argued that it is really difficult to get the right strategy and plans can
inevitably change overtime. Therefore, the 5Ps of strategies were developed and are
outlined as follows:
 Plan – Intended strategy - direction or course of action in the future.
 Pattern – Realised strategy – strategies successful usually based in the past, but
not always intended.
 Position – Organization decides its market position. It offers exclusives products
or services to gain a competitive advantage.
 Perspective – Considers the market from organization perspective, its ideals and
vision and endorses strategies based on these from inside the organization to
exploit the market.
 Ploy – The strategy is plan and executed with intention to outdo their competition
and maintained the competitive advantage. (Mindtools, 2018)

Figure 1 illustrates how emergent strategy works

Figure 2 Intended, Emergent and Realized Strategy (opentextbc.ca, 2019)

Intended strategy are strategies the organization plans to execute to achieve a

desired outcome (Manuwa, 2019). For example, Fredrick Smith an undergraduate
student design a delivery system by quickly routing packages through a central hub
and then to the desired destination (Opentextbc.ca, 2019). This primarily intended
strategy work well and his fortune grew to $ 2.1 billion U.S (Donahoe, 2011).
Emergent strategies is a pattern of actions or behaviour that develop overtime in an
organization. The adoption of these actions was never explicitly intended and differs
from the intended strategy to accommodate a chosen reality (Rivera, 2012). For
Example Mark Zuckerberg created a web site called ‘Face Mash’ that evolve to
online social network called Facebook for Harvard students only, overtime due to its
popularity and overwhelming success, the social network was made available to
everyone. Today, Facebook connects new and existing friends. Therefore,
Zuckerberg’s intended strategy gave rise to an emergent strategy from opportunities
that arise overtime (opentextbc.ca, 2019). Today, from the spark of simple idea that
evolve overtime his net worth is $50 billion U.S. (Celebrity Net worth, 2019)
 Realized is a strategy that the firm actually follows. It is a combinations of its
intended and emergent strategies. For example, Fed Ex intended strategy to
provide a fast delivery via a centralised hub, remains the principal driver of the
firm realized strategy (Opentextbc.ca, 2019).
What is the difference between Deliberate and Emergent Strategy?

Deliberate vs Emergent Strategy

Deliberate strategy is an approach to Emergent strategy is the process of identifying

strategic planning that emphasizes on unforeseen outcomes from the execution of

achieving an intended business strategy and then learning to incorporate those

objective. unexpected outcomes into future corporate plans.

Inception of the Concept

The concept deliberate strategy was Henry Mintzberg introduced the framework for

introduced by Michael Porter. emergent strategy as an alternative approach to

deliberate strategy.

Approach to Management

Deliberate strategy implements a top Emergent strategy implements a bottom up approach

down approach to management to management.

Flexibility

Deliberate strategy takes a rigid Emergent strategy is favoured by many business

approach to management, thus is practitioners due to its high flexibility.

largely considered to be less flexible.

Figure 3 Source :https://www.differencebetween.com/

In today’s dynamic business world most entrepreneur and firms begin by pursuing an
idea that eventually become an intended strategy. However, overtime opportunities and
challenges arises owing to disruptive technology and innovation. Therefore, firms may
choose a different direction that was not intentional . Ultimately, both the intended and
emergent strategy contribute to the realized strategy of the entrepreneur or firm.
Question 5.
Porter (1985) argues that one fundamental approach to competitive advantage is to
have structurally lower costs than its competitors. This cost leadership strategy
involves becoming the lowest-cost organisation in a domain of activity. With examples,
critically discuss and evaluate how such companies have developed their cost
leadership strategies and whether they have achieved competitive advantage

Answer
Competitive advantage through the cost leadership approach
A competitive advantage is the key to any company’s success. It helps the firm to achieve
both market and financial superiority over its competitors. A Competitive advantage is
difficult to maintain, if not impossible (Corporate Finance Institute, 2019). However, firms
need to continually adjust, adapt and evolve their competitive advantages and
positioning. Thus, the viability of a firm depends on their response to customer needs
and expectation, challenges from competitors and the ability to reduce operational cost
while improving efficiency. A company can pursue a lower costs than its competition or
by differentiating itself along dimensions valued by customers to command a higher price
in order to sustain its competitive advantage.

Porter's three generic strategies describe how a company pursues competitive

advantage across its chosen market scope.
Cost Leadership – A firm sets out to become the lowest cost producer in its
industry (Cleverism,2019). Examples Walmart, Payless and Zara
Differentiation – A firm seeks to be unique in its industry along some dimensions
that are widely valued by buyers (Cleverism, 2019). Examples iPhone and Apple
(Priceintelligently.com, 2019).
Focus - This strategy focuses on a narrow competitive scope with in an industry.
The firm selects a segment or group of segments in the industry and tailors its
strategies to serving them to exclusion of others( Cleverism, 2019). Examples
BMW and Mercedes - Benz (Slideshare.net, 2019)
Figure 1 Porter’s Generic Strategies

Benefits of Cost Leadership Strategies

Cost leadership is a broad approach companies used to established a competitive
advantage by having the lowest cost of operation in the industry. Moreover, firms are
driven by their efficiency, size and scale etc (My accounting course, 2018). Companies
that are low cost operators have achieved economies of scale and as a result may
benefit from a higher profit margins. Despite selling products or services lower than its
rivals. Furthermore, low cost providers benefit from customer loyalty and attracts
potential customers, thus, increasing market share overtime (Bizfluent.com, 2018) .
Additionally it creates a barriers to entry for example Kmart attempted to engage
Walmart and the price war ended in a disaster owing to Walt mart operational
efficiency. Walmart, was able to sustained themselves with a smaller profit margin than
Kmart (Open textbooks for Hong Kong, 2019 ).
Finally, low cost providers have the capital resources to fund growth and future
investments (Bizfluent.com, 2018). However, on the other hand cost leaders are face
with the challenges of brand loyalty, customers are willing to a pay a higher price for
their brand of choice.

Successful Cost Leaders

Many companies have had great success fulfilling the role as a cost leader while still
offering products that consumers want and appreciate at the lowest cost. Walmart an
American multinational retail corporation, attracts price sensitive customers by offering
the lowest price goods. They built their own warehouse and buy in large volumes an
extensive range of products at attractive prices. Hence, reducing operational cost per
unit and achieving economies of scale. Walmart, continues to maximize their sales
volume and inventory turnover with minimal expense. Thus, increasing market share
and higher profits ( Bartleby.com, 2019).
Zara have continued to maintained an edge over its rivals through its pricing strategy.
With a general focus on customer service and supply chain management. The
company’s business concept is to offer affordable and high end fashion and quality at
an affordable price, using technology and disruptive innovation to speed up the design
process. Thus, they have maintained a strong market position, increase sales and profit
growth (Pratap, 20 19).

In closing, cost leadership strategy involves becoming the lowest cost provider in the
industry. A vast majority of companies like Walt Mart and Zara ha