Week 17

Can you think of an organization that has implemented a ‘high risk strategy’ that has resulted in success (why was it high risk at the time and why was it a success- was it good luck or good judgment)?

Answer:

There are various organizations that had implemented a ‘high risk strategy’ which has resulted in success. One of them is the wall-mart which is described below:

In Arkansas Sam Walton opened the first store of wall –mart in 1962. In five years, there was the total revenue of $ 12.6 million in sales earned by 25 stores in total. Also, Wal-Mart integrated in sustainability in international business under their CEO H Lee Scott Jr. In 2007 August Bharti enterprises and wall-mart announced an agreement to establish Bharti wall-mart private limited. Currently there are 1800 stores and club setting in 15 markets provide work for more than two million associates, serving more than 176 million of client every year.

Vision and Mission.

Ø  To provide best quality products and services in very low prices, from household items, school supplies as well as top quality groceries.

Ø  To saves the customer money and maintain them the quality of life and live them better.

Ø  To earn a huge amount of profit also by maintaining and satisfying the consumers.

Partnerships:

Ø  Engaged in partnership with hospitals to quickly expand its store and also want the good will a trusted hospital name can provide.

Ø  To implement sustainability in international business partnership with CRM and environmental defense fund.

Ø  Strategic partnership with P & G and several Chinese firms which provide wall mart sustainable business consulting.

Strategy of wall mart (which is successful):

·         To earn profit still by providing same goods as others provides with 2-5 percent lower than competitors.

·         Operational efficiency is very high.

·         Company largest importer of Chinese consumer goods in USA market.

·         Successful utilization of logistic & supply chain management.

·         Worldwide expansion of business for getting the new market opportunity.

·         Use of Information Technology in all area of business.

·         To predict demand for optimization of cost.

·         Bargaining power over suppliers.

Wall mart generates significant advantage through the system it developed to run its warehouse and stores. Wall-mart prefers locations without direct competition from large chains i.e. rural areas. It also fashioned a culture of sustaining values, skills, technology, supplier- customer relationships, HR and approaches to motivation which could not be replicate or copied by the competitors. 

This company also pursue the organic growth strategy in which they construct stores in chief location with room for expansion development and growth via standard and efficient design and standard not by the acquisition but only 10% of space for storage.

Wall mart not only excels at attributes like price but also on time delivery, quality, availability, selection that their competitors cannot compete. Non-commodity, brand based on lower prices, which is a key differentiator and value proposition to most of the world today. In addition wall mart changes their tagline last year from ‘everyday lower price to “save money-Live better, which also demonstrate that they move towards sustainable products with low cost. Due to this wall-mart develop into the leader in low cost retailing industry with revenue of $404.16 billion; also this company is bigger than 160 nations.

Now, do the same for an organization who embarked in a high risk strategy that resulted in some sort of failure (why was it high risk and why did it fail – bad luck or poor judgment)?

There are various organizations that embarked in high risk strategy that resulted in some sort of failure among them one is the British Broadcasting Corporation which is described below:

Overview of the organization

The British Broadcasting Corporations signify a form of broadcasting which is clued-up by the attitude of public services. It is a pioneer in broadcasting and for many years and is a public monopoly organization. Basically, the association get on on the policy of giving the public what they thought is good for them rather than what they want .Today, it exists in a competitive world with its future estimate in the international contexts.

Its home programmers and broadcasts make fund from the levy of TV license fees and from its profit-making activities. For the license fee of BBC to be justified, it is requisite to fabricate high rating shows which are not usually broadcasted by the business broadcasters. The BBC management is free from straight intervention of the government with its actions supervised by the BBC Trust, the previous Board of Governors. The Direct General chosen by the Trust holds the universal management of the firm.

The PEST Analysis:

This analysis in attendance is the external factors which caused the strategic dilemmas and affected its strategic decisions.

Political Factors.

Ø      Government limitations on license fee contract.

Ø      Country’s legislation on outsourcing programme manufacture.

Ø      Preventive legislation from other regime towards the nature of fresh media.

Ø      European Union Competition Regulation barring the abuse of foremost position which may influence the trade among member states

Environmental Factors.

Ø      Geographical partition which limits right to use to technology.

Social Factors

Ø      Growing consumer demand on content.

Ø      Difficulty of the poor people to access different kind of services.

Technological Factors

Ø      Modernism in new media variety and channels

Ø      Media combination and Digitization.

Ø      Integration of customer policy and devices.

Reasons of this business failure due to high risk are as given below:

This company faced the risk of coming out as bureaucratic and inflexible. In recent years showed that BBC to adapt a commissioning model which makes them less of the programmer and more of the designer of programs made by independent production house. However, these two differs in terms of structure cultures and skills.

Among the numerous advantages of the BBC is its inbuilt creativity. However, this necessary element has reduced and become marginalized. Historically, the BBC is run under a bureaucratic and hierarchical structure that is characterized by strong values surrounding the public service ethos. However, these carry out are changed gradually. Ultimately, the BBC was portraying to be an expensive, elitist and lacking of customer focus. This kind of criticism led to an organizational reorganization including the approval of a commissioning form. Throughout the few years of completion, this move has caused the amplified loss of key talents in each the useful function areas of the firm.

Former to the absolute adoption of the commissioning model, the association is countenance with the dilemma of choosing the kinds of programs it will offer to the viewers. The survivals of competitors from around 200 channels create clear threat to the BBC. The increasing prices for talent and broadcasting cost make it even further tricky for the organization to remain pace with the competition.

BBC was indicting of take up market popular programs such as those of the ITV to attract more viewers. The popularization of the UK broadcasting business also led to smaller ground breaking programs because they are high as well as too risky in an industry that has turn into obsessed in ratings.  Therefore, good quality program are less probable to be created.

References:

1. Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 6

2. Johnson, Whittington and Scholes (2011) Exploring Strategy, 9th Edition, Pearson Education, Chapter 11


3. http://ivythesis.typepad.com/term_paper_topics/2009/09/case-study-british-broadcasting-corporation.html#ixzz2AuIDRkjN accessed on march 30th 2013