Executive Summary
For an organization to be successful in its operations, effective strategic thinking must have been employed in the long run. A business with incorporated strategic thinking can articulate its goals clearly, take advantage of the opportunities coming up to achieve the set goals, and adapt to changing environments. Strategic thinking is essential in managing strategies because it provides an overall direction analysis to businesses, helping them choose competitive landscapes that are better to compete in. This paper describes strategic thinking and its incorporated models that enable businesses to anticipate, plan, and adjust to the changing business environments. I have used IT Oracle Company as a real-life example to illustrate how specific models have been integrated and contributed to the success of this company. Some of the strategic thinking models explored in this paper include Porter’s 5 forces, PESTLE analysis, SWOT analysis, and the role of vision and mission statements in contributing to the company’s success.
In strategy management, it is essential to execute a strategy to ensure the business thrives and succeeds. Management leaders must have the necessary skills for executing strategies to enable the company’s overall success. Strategy execution models were developed to outline leadership activities for effective strategic execution. This paper elucidates understanding, translating, communicating, measuring, and adapting activities required for skilled strategy execution. IT Oracle Company has been used to explain how these activities can be incorporated and contribute to business operations.
1.1Introduction
Strategic management is an essential process for the success of a business. It involves identifying, setting goals and objectives, and finding effective ways to implement and manage those strategies to ensure business success. A company with a well-formulated management strategy is likely to be well prepared to navigate challenges and adapt to changing business environment in the future. Strategic management helps achieve a company’s goals faster because it helps to clearly define the company’s vision, opportunities, and current market status. Strategic management also helps companies outperform their competitors by enabling them to have clear intentions in their course of action.
Additionally, strategic management involves strategic thinking that incorporates specific approaches and models that help implement effectively. For instance, Porter’s 5 forces analysis, PESTEL analysis, SWOT analysis, and vision and mission statements. These models familiarize companies with their external and internal environments and play a significant role in business strategies. They help companies make informed decisions and plan strategically for the business’s success.
A company like Oracle IT Company can reap huge benefits by employing effective strategies in their management systems. This company is a technological company specializing in computer software products and technology. Strategic management can help set clear goals, navigate risks, offer a competitive advantage, and foster innovation and adaptation to newer technologies that guarantee business success. The company has a great chance of succeeding in its technological advance if comprehensive strategic models are implemented.
2.0 Porter’s 5 Forces Analysis
Porter’s 5 forces analysis is a model that helps assess and analyze a company’s competitive environment to make effective corporate strategic decisions. The model gives market information about forces that can shape a business despite competition, the operations that can maximize a company’s profitability, and the available opportunities that will ensure success in the face of competition (Goyal, 2020). Porter’s 5 forces include competition in the industry, new entrants into the industry, power of suppliers, power of customers, and threats of substitute products.
2.1 Competition in the Industry
Porter’s 5 forces suggest that competitive rivalry is the most significant contributing factor to an attractive industry. Competition rivalry is likely to be experienced by companies to claim a market share where the competitors compete on price, quality, service, and expenses. The intensity of competition rivalry suggests the power a company is likely to possess (Nikolastsiri 2023).
In the case of Oracle IT Company, competition rivalry is very high, with the company competing for a share in the technological market with other big technological and computer and software developing companies like Microsoft and Amazon. To maintain its competitive advantage, Oracle uses a higher bargaining power over its competitors because they can negotiate more favorable terms than its competitors. Oracle must also keep innovating and producing unique products and services that outdo its competitors.
2.2 New Entrants
New entrants into the market influence the power a company has; that is, if new companies can easily enter into a company market, claim a market share, and become potential competitors, then the power of existing companies is usually weakened. New entrants usually offer alternative products and prices, which can pose a high threat to existing companies by reducing profits. If new entrants find it hard to enter markets due to high entry barriers, then the profitability of existing companies is not threatened.
In the case of Oracle, new entrants into the market are not given the chance to pose profitability threats. This is because the company has significantly invested in its brand and set the entry barriers very high such that it cannot be threatened in any way (Nikolastsiri 2023). Oracle has dramatically invested and specialized in complex cloud computing services, software, and artificial intelligence technologies that put its competitors off the hook. New entrants would encounter financial barriers to compete with Oracle because the technology industry requires high capital to invest in developing, infrastructure, and marketing cloud computing and software applications. Additionally, Oracle tackles the threat of new entrants by developing economies of scale to lower the fixed cost per unit. Oracle can also spend on its R&D to make it a dynamic company and established player responsible for defining market standards.
2.3 Supplying Bargaining Power
Suppliers are known to be very powerful and influential in driving the cost of inputs. They can set higher prices or reduce the quality of inputs if the bargaining power of suppliers is high. Supply bargaining power is affected by the number of suppliers offering the input; for instance, if alternative suppliers are available, the bargaining power is reduced. Alternatively, in the case of low switching costs, a company can reap big profits by keeping its input costs low.
Oracle’s bargaining power of suppliers tends to be low but can vary depending on the specific market. This is because Oracle connects to various suppliers of its hardware and software components across the globe; this means that the supplier bargaining power is weak as the company does not rely on a single supplier. In addition, switching costs are relatively low for the suppliers, making them less likely to apply significant bargaining power as they lose their business from becoming too demanding. Oracle can also counter supplier’s power by accumulating dedicated suppliers whose business entirely depends on the company or producing other products using different materials so that they can have alternatives to choose from in case of a rise in the price of the material.
2.4 Bargaining Power of Buyers
The bargaining power of buyers can vary depending on the products and services offered. Buyers have considerable power in determining prices and quality of products and services. Buying power tends to be high when buyers are few and there are many sellers. A strong buying power suggests reduced prices and increased demand for quality services as the customers have the power to negotiate lower prices and better quality.
Oracle IT company has a high bargaining power of customers due to high customer independence. There are many software and technological providers customers can choose from; thus, it becomes easier for them to negotiate prices and deals to their advantage. Switching costs makes it possible for customers to negotiate terms since they can threaten to switch from one competitor to another if they are unsatisfied. Also, the high competition in software and technology providers gives buyers options, subsequently increasing their bargaining power. The vast customer base and rapid innovation of new products in Oracle helps the company in limiting buyer’s bargaining power
2.5 Threat of Substitutes
Substitute goods and services are considered to threaten a company’s existing products and services. That is, if there are no close substitute products and services, then companies will have more power to charge high prices and set favorable terms when offering their products and services. However, if substitute products are available, the company’s power will be reduced as customers have various products to choose from.
The threat of substitutes for Oracle is considered low because it specializes in software solutions. Finding close or direct substitutes offering the same functions of cloud computing and technological applications offered by Oracle is very challenging to attain. The company is focused not only on business products but also on offering services. The company also concentrates on understanding the needs of customers rather than what they are buying. The company also has increased switching costs for the buyers.
3.0 PESTEL Analysis
PESTEL analysis is a widely used tool that assesses a business’s external environment. The analysis is a mnemonic comprising political, economic, social, technological, legal, and environmental factors. In business strategies, PESTEL analysis is considered a strategic tool important in guiding management leaders in strategic decision-making. A company can carry out thorough market research by examining and providing knowledge on its political, economic, social, technological, legal, and environmental factors (Yüksel 2018). PESTEL analysis is also essential for adopting effective strategic planning in businesses. and fostering strategic thinking (Goyal, 2020). Strategists can use PESTEL analysis to assess and manage risks, identify opportunities, understand market changes, and adapt effectively to business environments. The components of the PESTEL framework are as follows;
3.1 Political Factors
Political factors determine the extent to which a government can impact a market. These factors include taxes, trade barriers, political stability, and environmental regulations. For instance, a government may issue tax policies that affect a company’s profitability. Some trade barriers can also hinder effective business operations.
Being an international company, Oracle is vulnerable to political risks threatening its survival. The company has reduced the impact of these risks because it is strategically located such that risks, such as military invasion and political instability, are significantly low. After all, America has a highly stable political environment, thus ensuring smooth business operations(Mahru 2023). Additionally, Oracle has strategies developed to aid in quick adaptation to changing policies. The company is also an advantage because America incorporates democratic government systems and fair tax policies, making it save and earn a lot.
3.2 Economic Factors
Economic factors are considered economic variables and indicate a business’s economic performance. These factors also affect decision-making in business strategies involving demand, supply, and price of goods and services. They include inflation, economic growth rates, disposable income, savings, and investments.
Economic factors such as inflation, economic growth, and exchange rates are likely to influence the performance and the financial curve of Oracle (Mahru 2023). The company should thus pay attention to economic factors that directly influence the business and adjust accordingly to adapt fast to these economic changes. For instance, Oracle should focus on efficient financial markets where they will easily amass their financial and human capital. Oracle should also assess the economic growth rates of the country and choose high economic growth rates areas so that they can access all opportunities necessary for achieving targeted goals and generating more revenue.The company should adopt strategies that counters inflation effects because it is likely to experience the adverse effects of rising inflation; that will, in turn, cause an increase in output cost budgets for software products and services.
3.3 Social Factors
Social, cultural factors are also known to influence the social market environment and the running of a business. These factors include cultural norms and expectations, demographics, attitudes, ethics, values, and living standards.
Oracle company is likely to be affected by the social cultural norms and attitudes of their population. To adapt and adjust to the upcoming trends, Oracle is supposed to develop strategies in support of these changing social trends. The company must, therefore, act accordingly to handle social factors and adapt quickly to the changing socio-cultural environment. To counter challenges resulting from social factors, Oracle should analyze their spending patterns priorities and ensure enough capital is set aside to adapt to changing social environments. Additionally, the adopted marketing strategies should ensure diversity and inclusion so that the company can reap big from high populations. Additionally, Oracle can adapt with the trends of cultural and societal norms by researching thoroughly about the cultural norms affecting consumer’s perception towards the company.
3.4 Technological Factors
Technological factors, including research, development, innovation, and technology, are known to influence business processes significantly. These factors are connected with advancement and innovations in technology and may affect businesses positively or negatively.
With the rising technological innovations and advancements, Oracle is significantly affected(Mahru 2023). Oracle should consider regular research on the present and future technological trends to ensure the business thrive. With rising technologies such as artificial intelligence that foster sustainable practices, Oracle must develop strategies that make it outperform its competitors in sustainable service providing. Oracle can also keep up with technological advancements trends by modernizing latest technological developments to provide efficient quality services, for instance, shifting from manual to automation processes.
3.5 Environmental Factors
Environmental factors take into account the impacts of the surrounding environment and ecological factors. These factors include climate, weather, energy consumption laws, and environmental protection laws.
With the government issuing laws that a company’s practices must be sustainable and environmentally responsible, Oracle should understand and keep updated on environmental regulations to avoid complaints in the market. For instance, Oracle should base their technological advancements and brand image on sustainability while fully complying with environmental regulations.The company should also incorporate sustainable practices, such as developing a design software that is eco-friendly and able to sustainably convert their data centers green and make the energy to be renewed and sourced by solar panels. Although the company will incur extra costs, it will have reduced emission of carbon emissions from the data centers while fostering sustainable environmental practices.
3.6 Legal Factors
Legal factors are considered from the external and internal viewpoints of the business environment. These factors include employment laws, product safety, data protection laws, and consumer rights and laws. Companies need to have insights into the legal practices so that when trading, they can make and maintain their own set of regulations for the employees to comply with.
Oracle IT company is eligible to face claims in case they do not follow the given legislations. To avoid conduct charges it has incorporated some of the legal factors, including data protection regulations when collecting, storing, and using data. Oracle has instituted laws regarding data protection that maintain a high level of confidentiality of customer data. Complying with these laws ensures the avoidance of legal problems while ensuring the company’s reputation. The company has also ensured proper mechanisms to tackle discrimination issues in the business. Oracle should also ensure it is well conversant with customer laws related to discount, quality and pricing terms.
4.0 SWOT Analysis
SWOT analysis is a model that helps analyze and assess internal and external factors influencing a company. SWOT acronym stands for strengths, weaknesses, opportunities, and threats. It shows the areas where the company is performing best and the areas requiring improvement.
In business strategy, SWOT analysis forms the basis of creating a business strategy. It helps organizations have insights into all the factors involved in effective decision-making in business strategies (Gurl, 2019). An organization must assess the four aspects of strengths, weaknesses, opportunities, and threats for practical strategic thinking and brainstorming in strategic planning. SWOT analysis components include;
4.1 Strengths
Strengths are internal factors that give an overview of what an organization performs best in and the things that contribute to its competitive advantage. The strengths may include a strong brand, a loyal customer base, and competitive technology. Strengths offer a guarantee of successful business operations.
Oracle possesses the following strengths: a loyal and vast customer base, being one of the most recognized brands due to its competent and quality products in the software and technological industry. This makes the company generate huge revenues. Additionally, Oracle has a diverse portfolio and is able to attract customers with different needs and tastes. The company provides diverse solutions in software, cloud computing, and other technological applications (Team 2023). Oracle has also been experiencing a constant, stable financial performance in the last couple of years, with a subsequent increase in its revenues (Oracle 2023).
4.2 Weaknesses
Companies that possess strengths also possess some weaknesses. Weaknesses are setbacks that hinder a company from performing at optimum levels. They stop or delay a company from achieving the set goals and objectives. A company can deal with its weaknesses by either eliminating them or improving the weaker areas to ensure the business remains competitive. Some weaknesses may include weak brand, high turnover rates, debt increase, or lack of capital.
Oracle suffers from the weaknesses of ethical issues. The company is regulated by a law that it should not under any circumstance associate itself with political affairs; it, however, broke this code and engaged in unethical operations when it campaigned for Donald Trump in the federal elections (Gurl, 2019). Also, the R&D software does not operate optimally because less capital is invested in its innovation compared to Microsoft. Oracle has a large workforce and thus incurs high operational costs and decreases the profit margin of Oracle. Additionally, the company is associated with low marketing spending because of its negligence in marketing its products properly; this tends to give advantage to their competitors.
4.3 Opportunities
Opportunities are external factors and possibilities available and promising for companies to achieve success. A company should, therefore be able to spot and exploit arising opportunities because they might be the ones to give them a better competitive advantage.
Oracle company can take the opportunity to increase its spending on R&D innovation in the future (Team 2023). This will be a plus for the company because of innovation advancements in the modern world. Oracle can develop more cost-efficient and innovative products to increase customer base and increase revenue. Oracle can also switch to new operations, such as manufacturing smartphone gadgets, as an expansion strategy because it already has a well-software-developed brand and, in turn, increases its customer base and revenues.Additionally, Oracle can restructure their marketing strategy by spending more on marketing to accumulate more customers.
4.4 Threats
Threats are also external factors that possess the potential to harm operations and negatively impact a business. Threats are capable of retarding a company’s growth and jeopardizing the company’s success. Threats must be countered timely before they negatively impact the business. Common threats include rising costs for inputs, unfavorable competition, and tight labor supply.
Oracle faces threats in the following areas: global recession; this is likely to happen due to the pandemic of the Russia-Ukraine war. Recession is most likely to cause product demand to fall thereafter, lowering the revenue generated. Following high competition from other software and technological providers offering close substitutes, Oracle feels threatened. To compete with these potentially competitive companies, Oracle must be innovative and strategize effectively to outperform them. Oracle tends to also face the threat of close substitutes; this is because SAP, a company in Germany, is known to produce the same products as Oracle. Oracle must then adopt strategies that will make it maintain a competitive advantage.
5.0 Role of Vision and Mission Statements
5.1 Mission Statements
A mission statement is responsible for shaping the culture of a business; this is done by outlining a company’s business, its goals, and strategies required to achieve the set goals. This statement focuses more on the current status of the business and the steps it intends to take to achieve the set objectives. The mission statement for Oracle IT Company is to “Help people see data in new ways, discover insights, and unlock endless possibilities”. This statement highlights its operations and its aims in unlocking a wide variety of businesses (Oracle, 2023). The statement states the primary objective, which is to help people see data in various innovative ways. To achieve this statement, Oracle provides reliable data services and incorporate database security to maintain customer satisfaction and expectations. The aspect of unlocking ideas and possibilities explains the central purpose of Oracle in innovating and developing new ways of handling data.
5.2 Vision Statements
Vision statements, on the other hand, focus on the future of the company by directing the company on the way to go. It declares the future purpose and aspirations of a business. Vision is essential in strategy management because strategies are intended to achieve the visions set and satisfy the mission statements (Chun, and Davies, 2021). In the case of Oracle Company, a vision statement provides a clear sense of direction and purpose for the company. It outlines Oracle’s ambition to be a leader in the technology industry and sets a strategic course for the future. Moreover, it emphasizes Oracle’s commitment to empowering organizations, which underscores its customer-centric approach. It communicates Oracle’s dedication to providing solutions that meet the evolving needs of its customers. Oracle’s vision statement reflects its focus on innovation and staying at the forefront of technology. This commitment to innovation is crucial in a rapidly changing industry like information technology. According to (Chun, and Davies, 2021),a well-crafted vision statement helps align the interests of various stakeholders, including shareholders, employees, customers, and partners. In the case of Oracle, its vision statement clearly communicates its long-term objectives and its dedication to creating value for all stakeholders.
6.0 Strategy Execution; Strategy Execution Cycle
In the reinforcement of an effective management strategy, a strategy must be executed efficiently and ensure it aligns with the given strategy. Strategy execution is critical because it indicates whether an organization will survive or collapse. It is a critical process in strategic planning as it involves actualizing a company’s strategic plan into action to achieve the company’s objective. Management leaders should be skilled and know how to turn a strategy into action (Srivastava 2019. The cycle describes the activities as follows;
6.1 Understand
This action requires leaders to be familiar with market needs and the broader market environment in which the company operates such that they can be eligible to make sound decisions (Gartner 2023). They should also be well informed on the broader strategies and know if the organization’s priorities align with the set goals; they should also be able to break down strategic goals and objectives into actual tasks that can be implemented by an organization. Oracle can integrate this action to define and clarify its strategic goals and objectives and get to know whether they align with the set priorities of the company. Additionally, the company can also ensure the staff understands strategic objectives and how they can participate to achieve them.
6.2 Translate
This action emphasizes that leaders should be able to translate their chosen strategies, goals, and priorities into active plans. A skilled leader should have efficient information on the needed requirements, responsible stakeholders, resources required and the means of guaranteeing success in actual strategic execution (Epstein & Manzoni 2023). The leader should also be able to focus on activities with the highest priorities. In the case of Oracle, the clearly defined goals and objectives should be translated into significant performance estimates used in the measuring process.For instance, Oracle can develop strategies to achieve translating its strategic plan in alignment with its objectives. The company also ensures effective translation activities for proper allocation of resources, and while making adjustments to adapt to business changing environment. Translation actions are also employed during the incorporation of technological advancements while executing business strategies.
6.3 Implement
This action requires leaders to have the skills necessary for assessing, planning, and developing capabilities and processes required for the successful implementation of strategy (Oracle Strategy Management 2023). The leader should also know how to access human capital and systems required for the effective execution of the identified goals and priorities. Oracle company can use this implement action to execute strategic objectives to actual plans that are capable of analyzing resources needed, capabilities, and responsibilities of the company. The company can involve implementation action when deploying technology in their products to satisfy customer needs. Implementation actions can also be applied and adjusted to fit the company’s strategies with changing business environment.
6.4 Measure
A leader should monitor and measure the progress of the company in alignment with the implemented goals and initiatives. This action allows the leader to correct and decide who is responsible for the commitments made during translation (Gartner 2023). Oracle can use this action to ensure the analyzed resources and capabilities are parallel to the strategic plan execution. The company can also ensure monitoring and evaluation of the significant indicators and ensure they are parallel to the plan; in case of changes, management leaders can make effective adjustments.Oracle can use measure activities when assessing the collected data about customer preferences and attitudes necessary to better their services. The company can also use this activity in assessing their performance after a period of time.
6.5 Adapt
A leader with information about the broader market environment should know potential changes that can affect the business and be able to develop strategies that will enable a business to adapt and adjust to the changing business environment easily. Oracle has well-installed mechanisms that help in identifying challenges while providing the necessary means to counter those challenges. It also possesses mechanisms capable of adjusting strategy with the changing business environment. For instance, in case of technological changes and trends, a company may use adapt actions to adjust and explore the new trends. The company can also use this action in making decisions to choose from a variety of potential adaptations while responding faster and efficiently to changing market conditions.
7.0 Conclusion
The above paper summarizes strategic management in collaboration with strategic thinking, planning, and strategy execution. Strategic thinking is essential for a company to attain success in the market. Strategic thinking enables companies to maintain their competitive advantage. In collaboration with strategy management, strategic thinking provides the overall direction analysis favorable for the success of the company. Strategic thinking incorporates Porter’s 5 Forces, PESTEL analysis, SWOT analysis, and the role of vision and mission models essential for the anticipation, planning, and adjusting to the changing business environment. These models play a significant role in business strategies as they help companies make informed decisions and plan strategically for the success of the business. Oracle IT company has been applied as a real-life example to explain in detail how the company has incorporated the different factors of the discussed models to outperform and maintain a significant competitive edge against its competitors. A practical implementation of a management strategy integrates efficient strategy execution. Strategic execution enables the achievement of a company’s objectives by actualizing the strategic plan into an actual plan. Successful strategy execution involves understanding, translating, implementing, measuring, and adapting activities incorporated in the strategy execution cycle. Oracle IT company has also been used to show how it can incorporate the activities in ensuring successful strategy execution.
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