Question One:
Concerning appropriate literature and organizational examples related to the case study, critically evaluate the advantages and disadvantages of strategic alliances over other forms of external strategic development such as mergers and acquisitions, in a globalized environment.
A strategic alliance according to Mockler (1999) is an agreement formed between two or more parties for them to pursue agreed-upon objectives that are needed while the organizations remain independent. the partners forming the strategic alliance p vide the needed resources such as distribution channels products, funding, manufacturing capability, expertise, knowledge, intellectual property,d capital funding with the hope that the benefits that will be accrued from the alliance will be greater compared to the individual efforts. For example, most of the major UK impact on the natural environment. They mostly use green energy firms formed a strategic alliance with DONG Energy and Siemens Project Ventures to develop onshore and offshore wind farms around the UK. According to American Management Association (2003p.56), a merger occurs when one organization is combined and disappears into another organization. Acquisition, on the other hand, is a term used in describing an ownership transfer. This could be in form of the purchase of the business assets, stock, and a merger of the organization buying the business (Gleich et al 2010p.119). An example of merger and acquisition is NuGen, a joint venture formed between GDF-Suez and Iberdrola and later joined by Toshiba, a Japanese company. Similarly, through acquisition, Toshiba in 2006 acquired a US firm, Westinghouse Nuclear that provides world-leading products of boiling water reactors. Through strategic alliances, mergers, and acquisitions, the target market. The new brand tried capturing the energy industry has seen invasion by international corporations.
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Beamish (1998p.84) pointed out some of the advantages and disadvantages of a global strategic alliance. The advantages include:
- Instant market access, or the speeding of entry into a new market
- The exploitation of new opportunities in the market to strengthen the position of the corporation
- Sales increase
- Gaining new technology and skills
- Development of new products with more profits
- Sharing of resources and fixed costs
- Enlarging the distribution channels of the corporation
- Broadening of the corporations political and business contact base
- Gaining greater knowledge of international culture and customs
- Enhancement of the corporate image in the global marketplace
However, the disadvantages include:
- Less equity stake or weaker involvement of the management
- Less efficient communication
- Due to the partner’s presence, there is the fear of market insulation
- Poor allocation of the resources
- Loss of control over important issues like operating costs, product quality, and employees.
According to American Management Association (2003p.27), some of the advantages and mergers and computer literacy. This will facilitate the introduction of the ICT curriculum in the college that is can be comprehended by the Dubbo teaching staff. The acquisition include;
- Acquisition of a larger competitive advantage while the companies that are rigid to changes are left behind. This eventually can lead to drastic losses in profit and market share of an existing market
- Entry into new markets
- Elimination of competitors
- analysis shows that the project was entirely beneficial. The major areas of expenditure for the project were on transport, Acquisition of assets and expertise
- Transfer of skills
- Efficiencies increase
- Saving of costs
- Consolidation of power and control over markets and governments
However, the disadvantages of mergers and acquisition as observed by Gleich et al (2010) include:
- Loss of skilled employees by the corporation except those in the leadership position and is costly
- Employees retrenchment leads to loss of motivation and this could result in a loss in productivity and revenue reduction
- Improper or rushed new structures of the new organization
- Improper management due to increased costs
- Duplication if the merger is on companies that have been producing similar products
- Resistance to any change initiatives in the future.
Question Two:
“The effective use of knowledge is the key to sustained competitive advantage”. Discuss this statement concerning the strategic importance of knowledge within the energy industry
In the modern business landscape, companies strive to come up with mechanisms of becoming different from their competitors in the market and to get a competitive advantage. The changes created by the information age have shifted companies to be more concerned with the holistic and steadfast interests in leveraging the intangible assets. Information management as a gateway to gaining a competitive advantage has evolved recently into the management of knowledge that is strategically focused.
Knowledge management is a strategy of ensuring the right people get the right knowledge at the right time and assisting people in sharing and putting information in ways that will improve the performance of the organization (Logan & Stokes 2004p.226). The acknowledgment concept deals with the creation of structures that incorporates the technological resources elements that are more advanced and the indispensable decision making and human response input. According to Stapleton (2003), knowledge is only created as an interpretation of information and evaluation from a mental model context. This is because companies and individuals have different mental models. Therefore, knowledge management is the creative information mining from different sources with the main purpose in mind for business opportunities.
It is critical to understand the distinction between explicit and tacit knowledge. Explicit knowledge is first codified and then stored in the memory of the organization and then made available to the employees in the entire structure (Chilton & Bloodgood 2014). For instance, Schlumberger Company explores, extract gas utilizes the information technology, communities of practice, and network in facilitating sharing of knowledge and innovation in all its activities. Tacit knowledge, on the other hand, is a personal knowledge that is possessed by an employee of the corporation that may be difficult to communicate or express to others (Logan & Stokes 2004). For example, all the six big energy supplying companies in the energy industry in the UK employ managers that are knowledgeable in their businesses. Iberdrola Company even stated that the basic foundation for the formation and protection of the value of a company is intellectual property.
According to Stapleton (2003), it is hypothesized that five components are essential in producing effective knowledge management. These include harvesting, filtering, dissemination, configuration, and application. They must be combined to achieve a competitive advantage. To share their knowledge, the companies developed in 2008, a knowledge management policy, that outlines how the knowledge of groups and individuals is captured used in the line with the requirements and competencies to help in the development of the core strategy of the company. EDF Company, in its nuclear plants, uses communities of practice and knowledge sharing to ensure safety is paramount to avoid disasters.
Question Three:
“An organization’s strategic focus should take into account people, planet and profit, for them to be considered truly socially responsible”. Critically evaluate this statement concerning academic literature and examples from the energy industry
Corporate social responsibility is an integrated form of corporate self-regulation in the model of business whereby a business monitors and ensures that it complies actively with the ethical standards, the spirit of the law, and international norms. The CSR process aims to embrace the company’s responsibility for their actions and also encourage a positive impact through their activities to their customers, environment, communities, organizations cannot ignore the importance of change management or the elements that go with the same. employees, and their stakeholders (Hunnicutt 2009). For example in the energy industry in the UK, Eon Centrica, RWEnpower among the six major companies in the energy industry have invested in renewable energy like biomass, hydropower, and wind farms to protect the environment, and to lower prices for the consumers
The CSR concept has a long history that is associated with the way it impacts the behavior of an organization. According to Timpere (2008), CSR has constantly changed for the past 60 years. The primary focus in the 1950s for CSR of businesses was to do good to societies. Key ideas, people, events of the 1960s were instrumental in shaping the social change during that decade. However, the business managers in the 1970s applied the traditional functions of management when dealing with the issues of CSR. The social and business interest came closer in the 1980s and the companies became even more responsive to the stakeholders. CSR was approved universally n the 1990s while in the 2000s it became an important issue for strategy.
In a corporation, stakeholders are constituencies and individuals that contribute involuntarily or voluntarily, to its capacity of wealth creation and activities and are the potential risk bearers and beneficiaries. CSR should therefore mean corporate stakeholder responsibility. Stakeholder theory according to Timpere (2008) is organizational management theory and business ethics that addressed values and morals in organizational management. The link between CSR and the stakeholder theory outlines how the stakeholders play their roles in a company to give back to the community. The investments of the shareholders are used to finance CSR activities, the employees engage directly in the CSR activities while the competitors also engage in CSR to be relevant with their competitors
Critics and proponents of CSR debate many concerns that include the relationship of CSR to the nature of business and fundamental purpose and the questionable motives for performing CSR. These include the hypocrisy and insincerity concerns. Another key CSR debate is to determine the responsible actors that are responsible to make sure that companies behave in an environmentally and socio-economic sustainable manner (Timpere 2008).
A theory is a set of concepts with statements in which degree and as to how these are correlated, with statements where the theory can be termed valid. The theories associated with corporate social responsibility include the institutional theory, CSR theory, legitimacy theory, reputation theory, strategic CSR theory, credibility theory, moral CSR theory among others (Hunnicutt 2009).
References
American Management Association. (2003). Corporate growth through merger and acquisition. New York, American Management Association
Beamish, P. W. (1998). Strategic alliances. Cheltenham, Edward Elgar Pub.
Chilton, M. A., & Bloodgood, J. M. (2014). Knowledge management and competitive advantage: issues and potential solutions. Accessed from http://search.ebscohost.com/login.aspx?direct=true&scope=site&db=nlebk&db=nlabk&AN=643614.
Gleich, R., Kierans, G., & Hasselbach, T. (2010). Value in due diligence contemporary strategies for merger and acquisition success. Farnham, Surrey [U.K.], Gower. Accessed from http://public.eblib.com/EBLPublic/PublicView.do?ptiID=581312.
Hunnicutt, S. (2009). Corporate social responsibility. Detroit, MI, Greenhaven Press.
Logan, R. K., & Stokes, L. (2004). Collaborate to compete: driving profitability in the knowledge economy. [Etobicoke, Ont.], Wiley.
Mockler, R. J. (1999). Multinational strategic alliances. Chichester, Wiley.
Stapleton, J. J. (2003). Executive’s guide to knowledge management: the last competitive advantage. Hoboken, NJ, J. Wiley & Sons.
Timpere, A. R. (2008). Corporate social responsibility. New York, Nova Science Publishers.
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