Strategy implementation and control is very important in each and every business because is just one of the many difficult tasks of business managers. It involves applying the process of management in order to come up with the desired results and is inclusive but not limited to developing information and decision making, approaches to leadership, resource allocation and designing organization structure (The Nature Of Strategy Implementation, 2005). It is the most important topic in management and one of the most significant management skills. It incorporates systematic thinking in order to change intentions in to actions and taking care of factors related to strategy implementation. This paper will focus on the advantages and disadvantages of implementing a business strategy that involves operating an acquired company as separate business entity and secondly merging the two to become one company. In addition, the paper will also focus on means of evaluating the success of the strategy.
Operating the Companies as two Different Business Entities
What are the Disadvantages of the Strategy?
To begin with, managing the acquired company becomes difficult since managers are forced to adhere to polices formulated by the senior management even under a different business environment. No one can negate the fact that polices should be established in relation to each business environment. However, this is not possible when two companies have the same senior management. Secondly, the management of the acquired business entity will have little incentive to commit their energy to the success of their company as their main aim will be to meet the targets of the parent company. As a result, the growth of the acquired company may be slow and face many hindrances (Kaplan, Norton, & Rugelsjoen, 2010).
Lastly, freedom of the managers of the acquired company is greatly curtailed and so are other operations in that company. For instance, if the company needs to make an important change in the production department, such a decision cannot be implemented promptly because the senior management has to be consulted. It is true that there are efficient and effective means of telecommunication but since the management may not be well oriented with the other business environment, they may take quite sometime to respond. Some business decisions can wait but others require urgency if the success of the business entity is expected. For instance, in marketing, some strategies need to be changed or adapted immediately especially while the competitors are involved. Failure to act promptly in marketing may not only cause short-term problems but it may affect the long-term performance of the business.
What are the Advantages of the Strategy?
One of the immediate benefit is better governance which results from having polices in a central place and also having data centrally placed place which makes accessibility easier and less time consuming. When two companies are managed by one management, it is very important to have data at a central place since a lot of decisions that are made daily require the use of such data and statistics. In addition, it is vey important to have such data at the central place for comparison purposes and by so doing, it becomes pretty easy to establish the trend that the business is taking.
Secondly, efficiency results which later translate to more growth since the business can make it to respond to changes in the business environment more dynamically. For instance, if the business requires more quality products, policies to enhance quality can be formulated centrally and implementation is also easier and cost effective (Immediate Benefits, 2010). On the same note, it is important to mention that the business may benefit from economies of scale while still operating as different business entities. For instance, incase the company is dealing with the similar products, purchasing can be done by the parent company and due to buying in large scale; the cost may be greatly reduced. Reduction of cost of production directly results to increased profits.
Merging the two Companies
What are the Disadvantages of the Strategy?
One of the major disadvantages of operating the two companies as one business is that the company stands to lose more incase a certain risk is undertaken and leads to a loss. It is not all business decisions that end up being successful. There are many risks that are undertaken daily in course of running of any company. Some turn out to be successful while others end up being unsuccessful and causing much loss which may take some time to be corrected (Kaplan, Norton, & Rugelsjoen, 2010). Secondly, some problems in management may arise because managing a large company is more difficult than managing two companies independently.
What are the Advantages of the Strategy?
One advantage that ought not to be overlooked is the fact that the company will reap the benefits of operating as a large scale like having a large market share and at the same time reaping the benefits of the economies of scale. Producing in large scale is very effective since it ensures that the company will never run out of stock. Secondly, raw materials can be purchased in large scale and by so doing the cost of production will turn out to be low which leads to increased profits. On the same note, it is important to mention that other costs like the marketing cost will be also be reduced after merging the two companies not to mention that the management will also be the same.
Finally, there is greater control when the companies are merged. Better control in business is very important because the senior management should monitor every activity that takes in the company. Better control results because all business activities take place at the same place not to mention the same management. In addition, policy formulation and implementation becomes easier since the management will be dealing with one single company.
How will you know if the strategy is working?
Evaluation can be done to test whether the strategy is working since one question that characterizes strategy implementation and control is the direction that the strategy takes (Daft & Marcic, 2008). It can be done differently but to begin with, it would be important to check the sustainability of the strategy. For instance, if the strategy will result to large economies of scale, then that can be translated to mean that the strategy is effective and should not be done away with. Secondly, if there are no resource constrains involved in the implementation process, then means that strategy is feasible. Lastly one can check the acceptability of the strategy by focusing on the reaction of the stakeholders which include shareholders, customers and the employees, to mention just a few. Continuous monitoring and reviewing can be very helpful in the evaluation process meant to test whether the strategy is effective.
Strategy implementation and control is very essential since it allows the managers to only major in the business practices that can be beneficial to the business. For instance, while evaluating the effectiveness of the policy, the manager is able to take into consideration the effect of the same on the major stakeholders. In addition, the process allows the manager to identify major advantages and disadvantages of every strategy. In this case, having a central management is beneficial since it allows for better control of the company and implementation of policies. On the other hand, it becomes increasingly hard for the acquired company to change the policies to suit any change economically and politically. Such a situation greatly affects that the success of the company. Operating the two companies as one merged company is also beneficial because the strategy allows the business to reap from the benefits of economies of scale. Whichever the case, there are pros and cons of both strategies.
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