Critical Analysis of the Implementation of the Strategy, Proposal
Reviewing of the SAA Proposed Strategy
Introduction
In assignment 1, the proposed strategy for Singapore Athletics Association (SAA) was typically diversification conscious. This strategy was chosen after a careful analysis of the SWOTS. It should be noted that an organization implements the above strategy when it incorporates multiple businesses in its boundaries (Clark and Barney 2007). In adhering to this notion and its perceived motto of “the bigger, the better”, SAA intends to diversify its business activities through a process of synergy.
Here, the closely related activities of swimming and walking races are to be incorporated with the primary activity of the association-running. This will be under the athletics umbrella. Though the proposed strategy is geared towards attaining growth for the association as opposed to increasing its profit, it should be noted that it is poised to encounter challenges in its implementation stages.
This paper therefore presents a critique of the chosen diversification strategy. In doing so, the critique will be based on five recent strategic management articles. While keeping the tone of the argument within conventional strategic management brackets, three of the articles will support the strategy while the remaining two will refute it.
Supporting the Diversification Strategy
In his article, Olsen (2006) opines that diversification is a strategy that involves entering new markets with new products or services. As such, he concludes that it involves a degree of innovation especially on the part of the management.
This article relates to the diversification strategy at SAA in a number of ways. Ideally, in the execution of this strategy, this article proposes merging, acquisition or a complete venture into new business. In the same way, SAA is to implement its diversification strategy by merging the related sporting activities of running, swimming and walking.
The article gives preference to the adoption of related diversification as opposed to unrelated diversification. In the same manner, the diversification strategy at SAA favours the related diversification by proposing the merging of related sporting activities through a process of synergy that allows independent organizational parts to be merged to achieve effective.
To support this diversification strategy, Olsen lists the following as the benefits that are likely to be accrued by no-profit organizations adopting this strategy;
The organizations are likely to make use of the already established infrastructure in making this strategy a success. In the same manner, SAA will make use of the existing infrastructure in the running field to incorporate the walking and swimming activities.
The merging companies are likely to share the brand name, marketing, public relations and corporate knowledge. On the same course, the SAA brand name is likely to be shared by the incorporated sporting activities namely running, walking and swimming.
Exchanging management skills and know-how. This is likely to be effected when the association incorporates best performing managers from the two acquired associations.
The organization is likely to benefit from research and development which are likely to lead to emergence of new service capabilities at the organization. For instance, if various researches had been conducted by the independent associations, then their findings are likely to be of great benefits to the three associations which would have now merged.
The strategy is likely to avail benefits of economies of scale to the particular organizations. This will be so because of the shared costs.
There is more control by the management. In making key decisions, the management does not have to wait for approval from other companies. The management at SAA will have the final say on the key decisions to be implanted at the association.
There is complete retention of profits. Despite the many pros in support of this strategy, this article goes ahead to highlight the following as the major draw backs that are likely to face organizations implementing this strategy:
The successful implementation can be hampered by the scarce time and money resources common in many organizations. In the same line, SAA has been encountering financial difficulties due to less funding and unreliable donations from politicians.
The inadequate expertise skills amongst the employees. For the case of the SAA, it should be noted that experts are needed in drafting policies that are to govern the running of this association.
The organization is likely to be exposed to more risks since a lot of rewards are naturally accompanied by risks. The same is likely to affect the expanded SAA, since the three depended associations are likely to share their previous challenges in their new found partnership.
On his part, Grant (2005) points out that any successful strategy should possess the following common factors;
Should possess simple and long term goals
Should have a clear and insightful understanding of the surrounding competitive environment
Should be clear in appraising internal strengths in addition to protecting weaker areas.
Should effectively implement the best laid strategies
The four common factors are in support of the implementation of the diversification strategy at SAA. This is so because in selecting this strategy, the analysis of the association’s objectives as well as the SWOT analysis were carefully analysed. From the objectives analysed, it was clear that the goals of this association are:
To be among the leading athletics association within the region
Enhance both athletics and cultural development in Singapore
Develop a competent administrative body within the association.
To provide strict punishments to those who break the association’s set rules and regulations.
The appraisal of the internal strengths and the protection of the weaker areas were clearly handled under the SWOT analysis. In identifying its strengths, the association noted that the sources of funding were abundant to it. The funding was not only limited to state funding but was open to volunteers, donors as well the politicians of the country.
However the association went on to enlist delayed funding as a weakness and to protect itself from this weakness, the association was to implement this strategy to provide more funds for its growth. From this articles point of view, the implementation of the diversification strategy at SAA is therefore bound to succeed.
While supporting diversification strategies among on-profit social organizations, Clark and Barney (2007) argue that the diversification is one of the answers needed in utilization of key competencies at organizations. The paper goes on to state that diversification may other than it being affected by core competencies also creates impacts on the on the growth and development of these key competencies. As such therefore, it can be generally asserted that this theory stresses on the role of core resources and resource based diversification as vital mechanism of reducing risks.
The arguments presented in this theory are in support of the successful implementation of the diversification strategy at SAA. This is the case because in its endeavour to diversify, the association placed a lot of attention on the need to accumulate the many resources that were being utilised independently. These resources include the staffing and money amongst others.
Refuting the Diversification Strategy
Richard and Teece (1994) argue that many researchers tackling diversification strategies have ignored the importance of organizational structure for the strategy performance relationship. They expound by stating that diversification alone will not produce superior performance; the corporate managements at organizations must also adopt the appropriate internal arrangements. In trying to address the need for diversification, this article lists the stimulants as reduced transactional cots, economies of scope, governance characteristics and free- cash flow activities.
However, on a negative perspective this paper goes ahead to state that the considerations above aren’t enough in justifying an organization’s decision to venture in diversification. The article goes ahead to enlist the correct organizational structure and control systems as the key issues upon which the strategy should be implemented upon.
As such, the SAA diversification strategy isn’t going to be implemented successfully. This is so because in the choice of its strategy, the organizational structures and the control systems were not given any attention. The two were given a complete “blackout” at the time of the selection of the strategy.
In his Stress-Test-Your-Strategy-The-7-Questions-To-Ask theory, Simons (2010) alludes that the weakest parts and the inefficiencies that exist in proposed strategies should be identified only by asking the following 7 key questions;
Who is the primary customer?
In the case of SAA, the primary customers are the sportsmen of the three activities.
How do the organization’s core values prioritize the (in this particular situation) employees and clients?
The diversification strategy at SAA has not elaborated on the prioritization aspect.
What critical performance variables is the organization interested in?
The SAA should have stated some of the variables to test the success of this strategy. For instance the number of trophies the association is able to scoop each year.
What strategic boundaries has the organization set?
In this case, SAA should have defined the rules and regulations to govern it, and the kind of punishments to be forwarded to those who break them.
How is the organization generating creative tension?
The SSA should have set stretch goals or come up with ranking orders for its sportsmen. The best performers should then be rewarded and the worst performers deregistered.
How committed are the employees helping each other?
The type of relationships that exist within the working fraternity at the organization has not been defined in any way.
What strategic uncertainties keep the owners of the strategy awake at night?
The management should have continued to thoroughly scan the uncertainties that exist within its competitive environment and forward the intelligence for protective measures to be taken. For instance, the costs of running the association activities should be carefully reviewed and set at maximum level so as to enable its smooth running.
In conclusion, from the comparative analysis done above, it is oblivious that the diversification strategy at SAA has both its strengths as well as its weaknesses. As a result of these, it is important the people to implement it should try and review the factors discussed above. This will assist them in overcoming the identified challenges.
References
Clark, DN & Barney, JB (2007), Resource-based theory: creating and sustaining competitive advantage. Oxford University Press, New York.
Grant, RM (2005), Contemporary strategy analysis, Wiley-Blackwell, Malden, USA.
Olsen, E (2006), Strategic planning for dummies, Wiley Publishing. Inc., New Jersey.
Richard, RP & Teece, DJ (1994) Fundamental issues in strategy: a research agenda, Harvard Business Press, USA.
Simons, R (2010), Stress-test-your-strategy-the-7-questions-to-ask, Harvard Business Press, London.
