Shell Oman Marketing Company: Strategic Management

Introduction

During the past few decades, researchers have shown their considerable interest in the “strategic management”, which encompasses the analysis of organization’s competitive environment, and evaluation strategies’ which helps the organization to achieve the excellent performance. The term “strategic management” itself demonstrates its gist of handling all undertaken efforts tactically. However, different philosophers have differently defined the connotation of this term, stating it to be the most requisite function to be adopted by the businesses operating globally (Baylis, Wirtz and Gray, 2018). This not only gives a competitive edge to the entities to combat the rising level of competition in the market, but together helps in applying the most preferred strategy. As a result, to which, the organizations can perform well and timely reach their definite objectives as well as generate productive outcomes at the end.

Many academics have developed many “sophisticated normative models” which latterly has been empirically tested by many researchers and concluded that the practical implementation of strategic management practices are very fruitful for the organizations (Hofer et al., 1984; Thompson and Strickland, 1984; Robinson and Pearce, 1984). Researchers argued that organizations can use these normative models in order of successful implementation of strategic management policies in the organization which in turn improve the performance of the organization (Rue, 1973; Malik and Karger, 1975). In today’s contending world of business, it is important for the organizations to carry a strategic outlook towards work. This in turn necessitates them to operate with effectively designed strategies assisting in timely accomplishment of their undertaken goals and objectives. Strategic management is thereby referred to be a significant part in the field of administration and includes the formulation as well as implementation of firm’s leading initiatives by its top management as stated by Hickman and Silva (2018).

It is usually done on behalf of the owners and other business associates with an aim to manage the accessible resources of an enterprise in the most effective manner. It therefore needs constant planning, monitoring, investigation and assessment of entity’s all strategic moves to timely meet its undertaken goals. In order to make the clear indication about the strategic management-organizational performance nexus, researchers have started investigating the effects of strategy on performance and determined strategic management of organization as one of the most important factor of having direct effects on the organizational performance (Combe et al., 2005). However, Young et al. (2008) believed that corporate governance significantly influences the effects of organization’s strategic management on the organizational performance. This is so because the interference of the any organizational authority is important for the implementation of strategic management policies. A sufficient amount of researchers has investigated the role of corporate governance (such as directors and executives) on the successful implementation of strategic management policies and revealed the significant contributions of governance on practical implementations of organizational strategic management which in turn significantly enhances the organizational performance (Rechner and Dalton, 1991; Westphal and Fredrickson, 2001).

Many other researchers (i.e., Al-Azzam et al., 2015; Filatotchev et al., 2006) also highlighted the importance of governance in strategy. In strategic management, corporate governance refers to the set of “internal rules and policies which determine that how to direct an organization or a company” (Filatotchev and Toms, 2003). In any organization, it is the decision of the CEOs or board of directors (corporate governance) that which type of strategic management can be made or implement by the managers in the organization. The decision of corporate governance regarding the implementation of the strategies are for the goodwill of the organizations as the corporate governance (CG) is greatly important from shareholders as well as stakeholders (employees, customers, society at large and company) point of view for survival and defensible growth of a firm. Strategy assimilates inner environment with the inclusion of corporate governance and outer environment. The CG meets interests of all stakeholders plus company’s own long-run interest in a highly balanced way, by controlling and regulating the immoral, misleading, and unethical acts and ideas of CEOs, BODs (board of directors) and other policymakers. Consequently, strategic management must be under supervision, preview, and control of CG practices and provisions of a firm. Generally, it is believed that CG is considered responsible for strategy choice, strategy formulation and strategy implementation. This belief of strategy choice, formulation and implementation significantly contributes to high and good performance of an organization.

Problem Identification

There is no doubt that competitiveness in Shell Oman marketing company has increases day by day. Currently, the Shell Oman company is required to use all of their resources in order to gain the competitive advantage in the market for which the strategic management of the organization is prerequisite (Nixon and Burns, 2012). Strategic management is an approach which helps the company to use its organizational resources to the best effect. In this regard, the company needs to create and gather information for a basic analytical tool relevant to cost competitor, sales volume and market share. Strategic information is essential and important for senior managers for managing their firm’s resources with the strategic opportunities in order to obtain competitive advantage (Dixonn and Smithe, 1993). The knowledge about costs of competitors of the shell Oman company permits it to recognize whether their competitors can alter their position in market or not, thus, the company can formulate its strategy through the manipulation of prices which result in the agency conflicts. Agency conflicts create hurdle in the strategic management of the organization. These hurdles, in turn, adversely affect the performance of the organizations.

Researchers in the field of CG believe that conflicts can be fixed by firm’s board of directors. In the meantime, number of directors in a firm’s board (board size) has significant effect on a company’s performance (Cormiet et al., 2010). The reason is that that the directors in a firm board (as shareholders’ representative) handle monitoring. In line with the perspective of agency theory, “the presence of directors is expected to oversee the management and protect the shareholders’ interests” (Fama & Jensen, 1983). In this regard, present study assumes that Shell Oman marketing company faces the same problem i.e., the company follow price manipulation strategy for its strategic management which result in the agency conflict which in turn create hurdles in its strategic management. These hurdles can be solved by the board members of the organization (corporate governance).

Ansoff’s Matrix

Ansoff’s matrix is a tool used to determine the best marketing strategy for a company in a given situation. It consists of four areas differentiated based on whether it is targeting a current or emerging market and using a current product or developing a new one (Planellas and Muni, 2019). Companies with existing products targeting current markets resort to market penetration, and those with new products engage in product development. Businesses targeting emerging markets with current products participate in market development, and those with both new products and new markets conduct diversification. Based on these four strategies, the company can determine its future course of action.

The shell Oman company pursues an existing market of different established businesses that seek marketing services. However, with the rapid development of technology and new techniques, marketing as a discipline is currently in the process of continuous evolution. As such, to gain a competitive advantage, the shell Oman company will have to stay innovative and match its opposing companies. To that end, it will need to develop new products using the strategy by the same name in Ansoff’s matrix.

Agency Theory

Agency theory concerns the effect of corporate governance on organizational strategic management which significantly affects the organization’s performance. It focuses on the conflicts between principals and agents. According to the theory, the CEOs, and board of directors of the organizations (corporate governance) are the principles of the organization, while the organizational staff, i.e., managers or employees are the agents. Principle party is liable to give the commands to the agents regarding all the organizational activities. It is thereby stated that all the strategic decisions of the company are dependent on the principle agents. For instance, without the approval of corporate governance, the managers are unable to take or practically implement the decisions (Jensen and Meckling, 1976). The theory argues that principle authority of the organization not only help in the decision making or the strategic management of the origination but also positively contribute to the organizational excellence (Rahmawati et al., 2015). According to Probohudono (2012), the theoretical lenses of the agency theory provides the perfect mechanism to assess the corporate governance-strategic management- organizational performance nexus in Shell Oman marketing company because this company performs regular rotations to monitor to reduce the information asymmetry to improve their performance. Many researchers have found the corporate governance as a driving factor of organizational strategic management (Honggowati et al. 2017).

Conclusion

Present study discusses the common problems which are faced by the shell Oman marketing company, that is agency conflict which usually occur during the process of strategic management. Present study argues that this problem can be resolved by the corporate governance of the company who is liable to take the decisions for the company. Agency theory also supported this solution. The theory argues that the practical implementation of organizational strategic management is based on the principle authority (corporate governance) of the organization which not only resolve the agency conflicts but also contribute to improve the performance of their organization.

Reflective Essay

Present course helps me improve my understanding of strategic management in different organizational activities. The focus of the course was on the practical implementation of the strategic management theories in different organizational contexts. After studying this course I become able to know that how the organizations can take the strategic decisions in order to improve their performance as we all are aware that the fundamental objective of any organization is to perform better for which the strategical management is needed. This unit has duly enhanced my understanding towards the concept of strategic management along with its importance in today’s world of business that is full of rivalry. Due to which, the businesses are struggling hard to successfully position themselves in the market. Present course helps me to know that the strategic management not only help the organization to perform better but also develop the personal skills and attributes among the employees of the organizations.

The explicit focus of this course was on the simulation game, which refers to the advices of different instructors which are supplied through a personal computer that engrosses the beginners in a decision making process in a synthetic or simulated environment to learn the significances or the values of their decisions. These games are having the sufficient capacity to improve the work related knowledge and skills of the employees (garris et al., 2002). The learning based on games has sturdy relations with experimental learning as it permits the learners to construct and develop knowledge by testing the ideas of learners in “a trial-and-error approach” (Aldriuh, 2003). The simulation games permit active learning as the learners have “to do something to gain knowledge” and yield meaning via their own maneuver (Shafer et al., 2005).

In present course, I also play a simulation game, named platform wars. Which gave me the dual benefits. Due to this game, first I learned that how to take and implement the strategic decisions. Second, it makes me understand that there are some principle forces (i.e., corporate governance) in the market that determine the effectiveness of any decision’s implementation.

I played this game against one of my fellow. During this game, I took confident business decisions i.e., the decisions regarding the prices of the consoles etc., and implement different business strategies to see the aftereffects of altering the console prices. First, I took a strategic decision and reduced the price of console by $100 per unit although its per unit cost is of $125 to subsidize the five games and paying 20% of royalty to the game maker(the process is shown in Screenshot 1 i.e., Figure 1 in appendix). This reduction in prices, increases my market share as compare to my competitor. The reason of increase in my market share is the increased number of consumers who prefer to buy at a lower price. However, on the other hand this reduction in the price of console reduces my net profit and I face a loss of 240 & This loss is because of the high per unit cost of the console. The loss I faced was greater than my opponent faced. I reached at the conclusion that not everyone can take the effective strategic decisions. This game doesn’t make me clear the exact theoretical reason behind the negative profits because my competitor doesn’t face the same loss. Therefore, I make another strategic decision in order to know the exact reason behind this loss. I wanted to confirm that either the reason behind the loss was only the reduction of console price or there were some other reasons. In order to confirm the reason. I took another strategic decision that is “premium pricing”.

This time, I double the price of console, and charge $250 price per unit. The per unit cost of console is $105.06. I also increased total number of subsidized games to provide more gaming options to the buyers. I was very surprised to see the immense increase in the revenue. I faced the revenue of $1.1B with a net profit of 402.0M(the process is shown in Screenshot 2 i.e., Figure 2 in appendix). But unfortunately, this strategic decision reduces the market share i.e., consumers start substituting their consumption to the suppliers who are offering the lesser price. However, I successfully contested with the rival participant in huge numbers in each of the two critical metrics. It made me understand the importance of competitive pricing in practical situations when the company is attempting to balance both of its market share and profits. Also makes me clear that the strategic decisions taken by the management or the employees of the organization do not always work as a mean of earing profits. Knowing that organization always requires some principle authority (i.e., good corporate governance) in order to make the effective strategic decisions. Moreover, the game provides different learning opportunities i.e., how to compete with others? It engaged a computerized based environment in which I get interacted with other people and during this interaction I make many decisions which help them to know the importance of the strategic decisions. The game also increases the bargaining power in me. More importantly, it assists me in gaining sufficient understanding of the ways in which a company or its strategist needs to analyze the marketplace with exact parameters that are required to be taken into consideration for the same. After which, I am enough confident about performing my duties well and strategically implement the planned tactics to get productive outcomes at the end.

In conclusion, I will say that simulation games developed the strategic thinking as they are having the potential to improve the learning skills. I also get the guidance that how to make the strategic decisions. The simulation game gives me the clear understanding about the organizational strategic management. With the help of this, I am able to know that one can’t implement any decision alone, we need a support of some principle authority (corporate governance) for the practical implementation of the decisions. Specifically, I am able to know that as compare to the traditional modes of study, the learning from the simulation games maximizes the work related or task related competencies of the individuals as the decisive purpose of the simulation game is to feat the motivational capacity of the students to let them get the deeper understanding regarding the working skills and strategy.

My ability to think that the development of some relevant skills are of utmost importance to perform as a competent marketing strategist, which involves the refinement of the analytical skills. The game enabled me to think in a critical direction, I also realized that implementing strategy is not a Conker. The organization need a corporate board for the successful implementation of strategy. This is so because the corporate board deeply analyze the whole situation before implementing any change. In other words, a corporate board scrutinize the pros and cons of a particular strategy before its implementation which in their turn reduces the agency conflicts. Meanwhile, the game also upgraded my knowledge regarding the models and theories of strategic management with a practical implementation of the same on a workable case.

As a result, I can easily refer these theoretical models to any realistic business that is operating in any industry. After reading this course work I have applied one of the theoretical model (agency theory) in shell Oman company after analyzing its problem. Last but not the least, I wants to say that this module has greatly boosted my investigative skills by which, I can now easily excerpt the resourceful information provided on internet, books and journals, etc., and clearly examine any past researches done on similar topic to further use it in my evaluations. Also greatly developed my personality and made me competent in terms of fulfilling my professional responsibilities as a strategic thinker. Similarly, this module has supported me throughout in enhancing my knowledge to greater level in which I felt more endowed and determined in investigating the state of problems in any company as I found one in the Shell Oman company. However, my personal interest in this field is also encouraged me to do that. For which, I was able to conduct an effortless study, without getting distracted from the difficulties I dealt in linking the models and extract their usefulness to pick the most efficient one.

The application of this simulation game was assumed in appreciation of 7 stages. The first two stages involve the identification of student necessities and educational capabilities. The 3rd stage consists of setting the learning objectives and is based on program of learning outcomes. In 4th stage, trigger occasions are reflected by tasks mandatory to be accomplished by the students when pleasing with simulation game in smearing concepts of strategic management, frameworks and theories. Trigger occasions were principally the scenarios (i.e. “application of knowledge and problem solving”). In line with 5th stage, non-financial and financial indicators were utilized as measures of performance and were unveiled to students in the real-time. Stage 6 of performance identification and development of feedback involved tutors giving feedback to the students in weekly meetings. In the final stage, complete developing feedback session was held with the students concerning reflections on learning using simulation and in program of the study. Though a modest essence was often apparent, “simulation game was not played in market conditions”, such as weak or strong performance by a group did not influence the achievements of other related groups.

Taken the learning experience form the module study and simulation game, seeing myself as a future leading manager of Shell Omanor other future company, my utmost strategy would be to carefully choose among different schools available and use the advantageous aspects from each school according to then business situation.

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