Approaches to Business Strategy

This assignment will produce a report that will analyse business environments and how they are considered in strategy formulations. The assignment will go on to show the understanding of the process of strategy planning and examine different approaches to strategy evaluation and selection. Finally it will analyse the realisation of the implementation of strategy. Throughout the assignment it will relate to two different organisations and the strategies within them. One of the most successful industrial enterprises in the UK was a company called GEC.

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GEC grew as Arnold Weinstock was appointed MD in 1961. He acquired a great many profitable engineering and defence companies. Over half of its sales and profits came from the defences businesses. Arnold Weinstock’s way of doing business was to have managers working with budgets and all monies were to be kept in a holding centre, where GEC built up a cash stockpile of over  2 billion and increased share holder value. Weinstock did not believe in buying over priced businesses that did not perform well. This caused the city money men to think that GEC was stuck in the ‘old economy’.

When Weinstock reached the age of 70 in 1996, he was pressured into resigning, as MD of GEC, and recruiting George Simpson as his replacement. Simpson was only supposed to hold this post temporarily, until Simon, Weinstock’s son, was able to take the reins of MD. Later in 1996, Simon died and Simpson became the undisputed head of GEC. Simpson was considered to have all the entrepreneurial qualities needed and was greatly admired, by the city of London, for the successful running and selling of both Rover and Lucas.

Simpson believed the GEC needed to move into the new high-tech world of telecoms and the internet, taking GEC out of the ‘old economy’. Simpson saw GEC as becoming a global company rather than staying an European company. To do this Simpson bought his own people in, sold of its defence businesses and most of its consistently profitable elements. To signal the organisations intentions to become a leading telecoms company, GEC’s name was changed to Marconi. In late 2000 other telecoms companies were issuing sales and profit warnings.

The telecoms recession and the dotcom bubble began to collapse. Oticon is a Danish family owned business, established in 1904. Oticon was the first hearing instrument company in the world. By the 1970’s it was the number one hearing aid manufacturer of the world. During the 1980’s Oticon started loosing money and its market share due to the evolution of new technology for ‘in the ear’ hearing aids. Larger companies such a Siemens, Phillips, Sony etc, were dominating the market.

Oticon was a very dated and traditional company that was departmentalised and very slow moving. Although Oticon had a very distinguished history it was a small company in a global market. The technology market was moving forward at a very fast pace and entering the ‘digital era’, but Oticon was still strong in analogue technology. The appointment of Lars Kolind in 1988 saw a big turnaround in just 2 years. Kolind set about waking and shaking up a company that had been sleeping for ten years. Kolind’s strategy for the turnaround started with big cost cuts.

These cuts allowed Oticon to make a profit for the first time in two years of 16million. Even with this turnaround Kolind could not see a future for the company. Kolind done some research to find a suitable competitive advantage for Oticon. With this done Kolind set about implementing a strategy to achieve this advantage. GEC’s (Marconi) main customers were the government; this made GEC majorly reliant on them for continuous orders. GEC kept the government’s unemployment figures low as they employed a large amount of workers.

It was also very encouraging for everyone to see the UK’s biggest Industrial Conglomerates, making record profits, during one of the worst recessions, the country had ever seen. Economical Weinstock was legendary for keeping tight control on cash and focusing on financial measures. He had an intimidating management style and to ensure businesses made a profit he put enormous amounts of pressure on managers to keep within their forecasted budgets. GEC continued to grow and become financially successful in acquiring a cash stockpile of over  2 billion.

This meant that GEC did not need to gain financial assistance from elsewhere for any future investments. Social GEC was a place were workers and the communities surrounding them were able to feel secure in their jobs, especially during times of hardship, like the recession and provide families with a regular income. GEC workers gain training and learnt life long skills. Technological As 50% of GEC’s business was defence, GEC would of invested a lot into research and development. This would ensure that the countries defences were at their best and its technologies were new and up to date.