In the strategic management process, the decision-making process is very crucial, more so in the strategy formulation and implementation phases. For an organization to form lucrative and feasible plans, it will have to adopt decision making in order to choose from the many alternatives of plans (Davids and Forest 654). Therefore, from a strategic management perspective, decision making is always viewed as a cognitive process involving the best course of action or the best option among many. At the end of it all, there is a choice made in the decision-making process, which may or may not prompt a course of action. Decisions are either made by groups or by individuals (Kahneman and Tversky 121).
This involves three different perspectives, the cognitive perspective, the normative perspective, and the psychological perspective. It is important to differentiate decision making and problem analysis. Often, problem analysis is prior to decision making (Kahneman and Tversky, 119). Strategic management involves the implementation of major decisions or goals identified by an organization’s top management on behalf of the other key stakeholders of the organization (Davids and Forest 675).
While analyzing the business environment, several approaches are used, the SWOT analysis is one of these approaches. SWOT analysis is used to analyze both the internal environment and the external environment of an organization. The strengths and weaknesses present an internal environment perspective, while the opportunities and threats present the external environment perspective. These are used differently by an organization to gain a competitive advantage.
This project analysis for BestBuy Co. presents several primary concerns during the phase for decision making. These primary concerns include, but are not limited to: the company policies such as the warranty policy, the global market of BestBuy Co., the supply chain, the services offered, brand enhancement, and the legal framework affecting the activities of BestBuy Co. such as the lawsuit. Other important primary concerns are the geographical coverage, expansion strategies, and the profit margin.
Therefore, the top management of BestBuy Co. will address these concerns as they are making the strategies to enhance BestBuy operate in the competitive edge. It is important to note that some of the primary concerns present challenges to BestBuy Co., and, therefore, appropriate strategies have to be formulated. Proper execution of formulated strategies and provision of requisite resources for implementation will enable the management of this organization to operationalize its plans in the desired manner for economic gains and competitive advantage.
Evaluation of Alternative Long-Term Generated Objectives and Corporate Strategies
In the decision-making process, long-term objectives for BestBuy Co., as illustrated in the SWOT conversion table, will be evaluated against the corporate strategies. The long-term objectives are 16, which will be evaluated against six corporate strategies. These corporate strategies include market development, product development, market penetration, forward integration, related diversification, and product diversification (Hill and Gareth, 115).
As such, market penetration simply refers to the ability of a company to enter into new markets by the use of new approaches. This, in turn, increases a company’s market share, therefore, increasing the customers’ base. In line with this corporate strategy, BestBuy Co. formulated the following long-term objectives. It established an online market and online stores that would lead to a 60% growth in total revenue by the year 2018. Furthermore, it implemented the ‘going green’ programs and recycled programs, which would enable the effect of 20% more earnings by the year 2018. Finally, BestBuy Company’s aim was to gain 30% of the market share in the Chinese market by the year 2019, after the opening of 28 new stores in China. As regards market development, the company targets the development or initiation of new markets or simply the discovery of untapped markets. Market development occurs when a company opens new shops or stores in new places. This increases sales and profits.
In our case, BestBuy Co. uses the corporate strategy to envisage the development of new markets by planning to open 200 new stores in Asia by the year 2018, hiring 2000 employees and equipping them with relevant skills needed to undertake the Chinese market, and opening 200 new stores in the European market by the year 2019. With respect to Product development, this happens in the long-term when a corporation starts producing or making new products or improving the existing products. In our case, BestBuy Company has outlined several long-term objectives to be undertaken for product development; these include plans to purchase new 2000 new and the latest equipment for production by the year 2019, finding new 500 quality-based manufacturing for its products by the year 2018, and use 10% of its cash flow to train its employees for every product specification by the year 2018.
Moreover, they are planning to use 20% of cash flow to improve in product quality of the existing products by 2018, hire 200 specialists for different products by the year 2018, extend the 30 days for return and exchange policy by the year 2018, and introduce 100 new products or brands by the year 2018. BestBuy engages in forwarding integration, a corporate strategy whereby a company forms strategic partnerships with its distributors with the aim of ensuring quick access to its products by its customers. In our case, BestBuy has outlined a long-term objective for forwarding integration. Therefore, BestBuy has planned to sell its products to 200 new companies by the year 2018.
Moreover, BestBuy considers engaging in related diversification, a corporate strategy whereby a company acquires new businesses that have similar operations. This is an objective that is mostly seen as a plan to reduce competition. As such, BestBuy has envisaged acquiring 5 Chinese electronic retailers by the year 2018 that are deemed, competitors. Finally, BestBuy has considered product diversification in order to increase the scope of production or simply to manufacture new products in order to minimize losses and increase turnover. To this end, BestBuy has planned to introduce 100 new brands of products by the year 2018. The long-term objectives for BestBuy Company have been evaluated against its corporate strategies in order to gain insights into BestBuy Company strategy directions.
Recommendations for Long-Term Objectives and Corporate Strategy Reasoning and Advantage Creation
For BestBuy to move in the right strategic direction and achieve its long-term objectives with ease, it should provide the requisite resources needed to foresee the execution of its envisaged plans. Moreover, BestBuy should form a specialists’ panel, which will be tasked with the mandate of overseeing the implementation phase of the strategic management process. It is also highly recommended that BestBuy Company undertakes a variety of new corporate strategies other than the six aforementioned strategies. These strategies will be inclusive of other strategies such as backward integration, horizontal integration, and turnaround strategies (Davids and Forest 587).
This will, in turn, enable BestBuy to increase its long-term objectives, minimize risks associated with this type of business, and generate high profits. It is also highly recommended that Bestbuy conducts periodic monitoring and evaluation in order to establish and check the progress made towards the achievement of the long-term objectives. This will enable BestBuy Company to operate in a competitive edge and minimize operational risks. Other strategies, such as backward integration, will enable BestBuy to acquire its raw materials with ease. This means that there will be no scarcity of raw materials, and the raw materials acquired will be of high quality, and there will be no delays in the procurement procedures.
Recommendations for Short-Term/Annual Objectives Reasoning and Advantage Creation
An analysis of the BestBuy Company objectives establishes that the intents outlined are envisaged to be achieved either by 2018 or by 2019. Therefore, BestBuy Company has no short-term objectives to be achieved within a year. It is, therefore, recommended that BestBuy relooks its long-term objectives. This means that the long-term objectives should be broken into phases which should have specified timelines. This will, in turn, lead to the progressive achievement of the proposed objectives (Kahneman and Tversky 117). This will ensure that there are frequent monitoring and evaluation of the progress achieved with respect to the objectives outlined.
For instance, recruitment of the 2000 employees can be done in phases instead of recruiting all of them at once. A recruitment plan can be put in place to enable BestBuy to recruit employees with desired skills and expertise; this will involve the recruitment of small numbers of employees instead of large numbers. Moreover, the proposed 100 new brands can be introduced in phases in order to create room for reviews and modifications of the new brands if it is identified that the product positioning in the market is wanting.
Davids, Fred, and Forest David. Strategic Management: A competitive based approach, Concepts and cases. New York: St. Martin’s, 2014. Print.
Hill, Charles, and Gareth Jones, Strategic Management Theory: An Integrated Approach. New York: Random, 2012. Print.
Kahneman, Daniel, and Tversky Amos. Choice, Values, Frames. Cambridge: Cambridge University Press, 2000. Print.