Strategic Drift

direct four organisations that, in your view, be in the different bods of strategic frame (see Exhibit 5. 2). Justify your selection. Strategic drift, as defined by Gerry Johnson in Exploring Corporate Strategy, is the tendency to develop strategies incrementally on the basis of historical and ethnical influences, plot of land giveing to keep pace with a changing milieu. In such(prenominal) circumstances the strategy of the organization gradually drifts away from the realities of its environment and towards an internally determined view of the populace of management.Strategic drift occurs when a company, oddly one that has enjoyed considerable success, responds far too slowly to changes in the external environment and continues with the strategy that once served it very well. There argon four phases in strategic drift incremental change (phase 1), strategic drift (phase 2), coalesce (phase 3) and trans stageional change or death (phase 4). Phase 1 is characterized by relati vely long periods during which strategies are either unchanged or change incrementally.This change is loosely in keeping with the environment or may consent slight variations around a flourishing floor as the company avoids drifting too far from roughly ancient successes. In phase 2 the environment grows at a quick rate than the self-coloreds strategies. This may occur for several reasons, that is while one may be aware that changes are happening, the finish may non be so easily appreciated except in hindsight or as reflected done and through the financials it could also be that while the changes are observed they are interpreted in terms of the familiar consequently resulting in the wrong conclusion being drawn.There is also the patch where although the firm may see the environmental drift, it refuses to reorient as it binds itself to the successful strategies of the past. These strategies become the companys core around which it revolves and has its competitive adv antage. some separate contributory factor squirt also be unwillingness of the firm to alter the current relationships with suppliers, client unspiritual or the internal skills to align with the merchandise. Phase 3 may be a period of flux as management pressured to alter the firms strategies in receipt to downturn in profit does so but not in any clear direction.Internal jut uponry may be highschool as solutions are sought to determine which strategy to follow. There may also be loss of confidence in the company resulting in lowering share prices. As the situation worsens there are tether options in phase 4. The firm can die, be taken everyplace by an early(a) organization or simply go through a period of transformational change. Motorola found itself in phase 4 of the strategic drift in the late 90s as in response to depressed profits it was forced to conduct a series of layoffs, restructures and restrategising before transforming.According to Sydney Finkelstein article on Why smart exe push downives fail, Motorola which was founded in 1928 has had a long tradition of technological innovations. It solidified its genius as a earthly concern leader in this area through innovation with the television, pager, microprocessor, analogue phone among other things. Motorolas first cellular system began commercial operation in 1983 with them becoming the world clear cellular phone supplier shortly thereafter. They claimed 60 per pennyime of the US mobile securities industry, r notwithstandingues growing at an average of 27 percent to $27 billion in 1994, while net income surged 58 per cent a course to $1. billion. During this period, although digital mobile applied science was introduced, it was not embraced by Motorola even after receiving several signals from the market. The market signals included direct prodding by their customers requesting that they provide the freshly applied science especially based on the benefits offered ontogenesis in r oyalty income from digital patent it licensed to Nokia and Erikson and finally the locomote market shares and profit. Motorolas shares dip to 34 percent in the former(a) 1998s, while Nokias share went from 11 per cent to 34 per cent during the same time period.That same year Motorola laid off 20,000 employees. Motorola was to the full poised with the potential to primary(prenominal)taining their position as market leader exploitation digital engineering hitherto they chose to rely on internal omen models that predicted carriers would be better off with analogue phones rather than digital. Sony whose mission education was a clever company that would make new high technology produces in ingenious ways aggressively marketed its hardware entering the gargantuan league when it formed a joint venture with CBS Records in 1975 with the assemble of the new technology the Betamax home videocassette recorder.Within two years a new videocassette recorder (VCR) make by it arch-rival Matsushita using the VHS standard became the product of choice for consumers. This happened as Sony was too busy defending the hardware than marketing and creating customers. Matsushita, on the other hand, aggressively aligned electronics firms to their brand so that when gesture picture studios began to release a larger number of their library titles VHS was the format of choice. We didnt put enough effort into making a family. The other side, coming later, made a family, founder Akio Morita later stated.Sony also reason out that the compelling reason for the purchase of hardware is software. Resulting from slightons learnt from competition with arch rival Matsushita, Sony adjusted their strategy. Consequently, convinced that its record library had helped guarantee the success of the constringe Disc, Sony looked to CBS Records to provide the software necessary to ensure the success of its new digital Audio Tape. In the years that followed Sony acquired expensive movie studios to showcase their cogent arsenal of hardware.As much attention was not paid to the American management team and the lavish spending spree on restoration production, management, and television ballooned. Overheads increased by 50 per cent to $300 billion by 1991, some $60 million greater than other study studios, and its $700 million production budget were n proterozoic twice that of its competitors. The average Sony perplexity picture cost $40 million versus the industry average of $28 million. In November 1994 Sony announced a $3. 2 billion write-off cerebrate to Columbia Pictures which wiped out nearly 25 per cent of Sonys shareholders equity.It was not until Sony found itself here in phase 3 of the strategic, drift having major(ip) decline in shareholder values, that it restructured its management team and strategies. Wang Labs based on strategies created in an attempt to avoid the mistakes of the past found itself in phase 4 of the strategic drift as it filed for bankrup tcy in 1992. An Wang, an armorer and innovator, sold several of his creations to companies who used them to make products for commercial uses. Resulting from one such deal with IBM in 1956, Wangs feeling of being cheated by the electronic computer giant biased his emerging decisions towards them.Starting from the late 80s Wang Labs lost out when the world shifted from using word processors to PC, however they were blind by their love for the word processors and made major losses as IBM took the PC to the market. Wang could have raise capital by issuing shares however because he felt that he had given up too much of the company in a similar past transaction he refused and instead opted to seek loans According to Paul Golding, antecedent to 1999 the Jamaican telecommunications domain was dominated by Cable and Wireless Jamaica (C&WJ), which changed its name in 2008 to lime (Landline Internet Mobile, Entertainment).In 1988 the company was granted five exclusive licenses severall y for 25 years, which would be valid until 2013, with options for extensions for a further 25 years. The licenses made C&WJ the sole supplier of the islands domestic and international prognosticate portion and guaranteed an after-tax rate of return of 17. 5% 20%. C&WJ was quite a comfortable with the strategies they employed especially as they were a monopoly in these early years. This resulted in the organization being stuck in phase 1 as they became complacent, relying on the same old strategies as technology boomed globally.They were out of pinch with customer demand and the untapped potential of the market. Liberalization of the telecommunications market commenced with the granting of two new carrier licenses for the provision of domestic mobile voice, data, and information religious services. In April 2001 Digicel launched its mobile telecommunication company in Jamaica. Rates rose from 4 per cent in 2001 (Digicels launch year) to close to 100 per cent today making it o ne of the close highly penetrated countries in the world and driving a grassroots level ICT development crossways Jamaica. Of the less than 2. million local population, Digicel Jamaica has 2 million customers, representing a 75% market share. Additionally, scores of small entrepreneurs owe their successes to a reliance on their Digicel phones, especially in areas where there were no preceding(prenominal) mobile signals by the competition. On October 27th, Digicel announced its intention to move its Jamaica and Group offices to a brand new facility on the waterfront in downtown Kingston, demonstrating its commitment to spearhead the greening of this area of the capital city of the first country in which Digicel launched rachis in 2001.In April 2001, when Digicel launched its GSM mobile service in Jamaica, the company evaluate delveing the 100,000 customer plateau by the end of its first year in operation. Instead, it hit the 100,000 mark a mere 100 age after launch. Never befo re in the countrys account of mobile telecommunications had such tremendous growth been seen in a net income, as Digicel broke record after record on its way to particular(a) its major competitor as the mobile provider with the largest customer base in the island. It took LIME, its major competitor approximately 10 years to reach the 400,000 customer mark.In comparison, it took Digicel about 13 months to reach the same figure. Digicels customer base in 2010 was over 2. 1 million customers in a population of 2. 8 million. Digicel raised the bar where an acceptable level of network coverage was concerned. Jamaicans living in rural parishes finally had a bona fide option for mobile communications. With an island-wide network of over 1,000 cellular towers spread across all 14 parishes, Digicel firmly established itself as the mobile provider with the premier network coverage across the country.Digicel currently appears to be in Phase 2 of the strategic drift as its strategy of provid ing islandwide service has materialised and it continues to be poised towards supplying any further required hardware. even there is growing concern that Digicel needs to review its customer service as well as its rates. If you really want to understand a company, you need to understand its history and culture. In analyzing an organization one of the most common flaws is to disregard the past in trying to make sniff out of the present.Culture is also a major component of history, as is highlighted with Motorola that is cognise as an engineering-driven company. It is likened in its mindset to an internal think-tank, focused on the market while customers are secondary. Digicel is also similar in this regards as its main focus appears to be on the hardware and to a lesser extent the customer. Motorolas had an insular culture where its workforce had a fortress mentality, cut off from reality, in-bred, with tremendous self-confidence, and a lack of concern with the outside world.One f ormer CEO stated, every time we stumble valuablely it is because we have been so successful in one generation of the technology that we dont focus on replacing ourselves with the next technology quick enough People make sense of new issues in the context of past issues they are potential to address a conundrum in much the same way as they dealt with a previous similar one. Moreover, they are likely to search for evidence that supports those inclinations.So some data will be seen as more important than other data, and some may not be taken on lineup at all. The important points are * The interpretation of events and issues in terms of prior experience is inevitable. The idea that managers approach strategic problems and issues entirely dispassionately and objectively is unrealistic. * Such interpretation and bias arise from experience of the past, not least with regard to what is seen to have worked or given rise to problems. So the future is likely to be made sense of in terms of the past.As with individuals, so also with groupings managers do not operate purely as individuals they work and interact with others, and at the incarnate level, too, there are reasons to have experience to count. This is reflected in the taken-for-granted assumptions and ingrained organizational routines that are collectively referred to as organizational culture. Such taken-for-granted assumptions and routines can be especially important as an influence on the development of organizational strategy.For a group or organization to operate effectively, there has to be a generally accepted set of assumptions which in effect, represents the collective experience without which people would have to reinvent their world for different circumstances. As with individual experience, this shared taking into custody allows the collective experience gathered over years to be brought to bear to make sense of a given situation, to inform a likely course of action, and to gauge the likelihoo d of the latters success. Such collective thinking typically stretches even beyond the organization.Managers may assume that they can manage the environment, but the evidence is that the environment largely determines managerial action. If managers alter themselves to the influence of the history of their organisation they stand a better casualty of better appreciating their current strategy and may be able to fall upon and avoid strategic drift. Managers would more likely to be able to question the extent to which the strategy they are seeking to develop is usefully apprised by that history as distinct from being driven or captured by it.