Organizations carry out strategic management to position themselves at a competitive with the others. The strategy provides an overview of what the organization needs at the end and the process to follow in achieving the set goals. This project presents an outline of the stages in strategic management. It starts with the process of generating an alternative strategy using the Estee Lauder Companies. The process involves carrying out the needs analysis, and identification of strategies, which can work. The project also selects the best approach based on the priority of the organization. The next stage in strategic management is implementation. The strategic management team identifies the procedure for implementation through the assignment of duties to members of the company and allocation of resources. The last step is the evaluation of the plan to find out whether it meets the desired goals and development of an action plan to solve any identified problem.
Alternative Strategy Generation
Possible alternative strategies
One of the possible alternative global approaches is uniform brand names. Currently, the company is offering products under different brand names in different countries. According to the company CEO Fabrizio Freda, the company maintains different brand characteristics to keep it at the top (Estée Lauder Companies, n.d). From one of the external factor analysis, consumer practice is changing whereby they are searching the products online. Having a common brand name will enable the customers to locate the products because of the optimized search engine by the name which will appear many times. Common brand name increases recognition by the customers, and therefore, it will be easy to introduce a new product in the market (Mastering Strategic Management, 2016c, Competing for international market, p. 228). Also, there will be a competitive advantage from the competitors who might want to penetrate a market where the company has the brand already. Other than having distinct brand names, a uniform brand name will secure the company against losing any of the brands with arguments of low quality.
Another possible alternative corporate level strategy is backward integration. Currently, the company is producing products under different licenses like Kiton. Also, it is developing and selling other products like FKIRT brands under prescriptive. The strategy will help Estée build another long-term product from the emerging market like the anti-agers products in the US and later to the global market. Also, by having a complete chain of production and producing its products under its license, it will be able to protect the quality of its brand. With permits from other companies, it is easy for such companies to use negative public relation against Estée. Backward integration will create a barrier for other companies to join the market.
Estée can also employ the acquisition as a corporate strategy. The strategy will help them to focus on small markets (Mastering Strategic Management, 2016d, Selecting corporate level strategy, p. 246). Small markets have the potential to develop into a large market segment. Developing a market segment creates a barrier for other competitors to enter because of the foundation laid. The company can acquire other organizations, which have given it licenses to produce and sell their brands like Kiton. Diversification through acquisition also enables the company to enjoy large economics of scale thereby able to offer low prices while still maintaining high quality.
A potential business-level strategy for the company is an integrated low-cost/differentiated strategy. Currently, the company is using a differentiated strategy. However, integrating differentiation and low-cost approach will help the company to overcome the need of the customers who are insisting on environmentally friendly products as well as low cost (Mastering Strategic Management, 2016a, Supporting business level strategy, p. 140). It will be easy to implement the strategy since it is building on an existing mechanism of differentiation. This strategy will also enable the company to focus on small segments like the LGBT community.
Cultural and organizational to consider in analyzing alternative approach.
One of the organizational factors to consider in choosing alternative strategies is the horizontal and vertical linkages. The vertical linkage is an organization map, which shows the relationship between the subordinates and the supervisors (Mastering Strategic Management, 2016e, Executing strategy through organizational design, p. 279). There can be several relationships where one of them involves each employee reporting to one supervisor only. Also, there can be a case where each employee is reporting to, several supervisors. The strategy employed should fit the current map to avoid failure of the objective. Producing its products, for example, may not work properly where the employees are getting instructions from different supervisors because there will be confusion (Mastering Strategic Management, 2016f, Leading ethical organization, p. 320). The company may end up having low-quality products against the target.
Another organizational factor to consider is the boundary between units. Boundaries define the extent to which a company can integrate units to have similar products, which will serve under the same brand name. Also, the boundaries define the extent to which units can be merged to have efficiency in the production chain (Mastering Strategic Management, 2016f, Leading ethical organization, p. 320). Strategies that require creating efficiency in the production chain to lower product prices will not work well where the boundaries are tight. However, having clear division discourages management layers, which means that differentiation is possible. A company can assign different units of the task of coming up with differentiated items of one product. Differentiation strategy will, therefore, work in such an organization.
Social responsibility and language are some of the cultural factors the company should consider while choosing among the alternative strategies (Mastering Strategic Management, 2016c, Competing for international market, p. 228). Social responsibility is the commitment the company has in serving the customers. The company should consider whether it commits to offering low prices, health or quality products. Sometimes differentiating may lead to low-quality products, which will be against the culture. Also, the company should consider whether the strategy it settles on does not take away other privileges the customers were enjoying like packaging and gifts (Mastering Strategic Management, 2016f, Leading ethical organization, p. 324). In this case, the company will have to take the strategy which does not change the customer’s attitude towards the brand negatively. Another cultural factor to consider is the mission and artifacts of the company. Mission defines how work is done and what the company is all about. The strategy picked should be in line with the mission and mode of dressing and other personal behaviors of the company (Value Based Management.net, 2016, par. 2). Employing a strategy, which shifts the taste of the brand, will affect the market for the products.
Out of Integrated strategy, acquisition, backward integration, and consistent brand name strategy, acquisition gets the priority. The acquisition involves a company purchasing other companies at the same level although in most cases the acquired company is usually small. The strategy carries the other three in d
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