Strategic Management Essay

Management Principles

Management and organisational structure are two key elements to the success of any corporation. The organisational structure defines how management will govern the company, by defining the chains of communication and formal authority that managers will use to define tasks and allocate resources. The first step in understanding this process is to get a basic sense of what management is, and what managers do. Then, studies of Virgin and Starbucks will illustrate some of the concepts at work in the study of management.

An organisation is defined as "an organized body of people and resources with a particular purpose" (Merriam-Webster, 2014). This usually means a business, and reflects not only the people within the business but the entire set of resources associated with that business, so all of the tangible and intangible assets are part of the organisation.

Management is the act of managing the different resources within the organisation to achieve a certain objective or set of objectives. For every objective that an organisation has, the people within the organisation must work towards that objective. When one's work is self-directed or focused on an end goal, that is not management, but management is rather when one person directs another, or directs a set of resources. Thus, management implies at the very least direction but it can also involve things like leadership. It is worth remembering that within the context of a for-profit organisation, the management function relates to the needs of the shareholders, as it is their resources that are being managed.

A manager is one who engages in the act of management. The manager therefore is the person who might be the one who assigns people to tasks, manages resources, or draws up strategic plans. The manager acts as an agent for the shareholders, according to classical agency theory, thus the manager is not just directing resources in the organisation towards a specific objective but is doing so with the interests of shareholders mind (Ingram, 2014).

Managers are critical to the success of the organisation in a number of ways. First, the managers are the ones with the formal authority to allocate resources within the organisation. It is the processes and patterns by which resources are allocated to problems that distinguishes whether an organisation will succeed or fail. Thus, the manager's formal authority places the manager in a unique position within the organisation to drive it towards success.

But managers also must set the strategy in the first place. Acting as agents, managers must evaluate the external environment and determine the best strategy and tactics to earn guide the organisation towards its objectives. By devising strategy, the manager is not just someone who implements, but one who formulates as well. This is a slightly different task, but is part of the management function.

Managers perform other roles that are critical to the success of the organisation. For example, managers set the ethical and cultural tone within the organisation. Thus, managers play a leadership role, either formal or informal, that guides in part how different stakeholders perceive the organisation.

Task 2. Organisational structure is defined as the "explicit and implicit rules and policies provide a structure where various work roles and responsibilities are delegated, controlled and coordinated" (Investopedia, 2014). The way that the different divisions are structured within the company is a key component of organisational structure. This includes chains of command, and the way that information flows within the organisation as well. Miles and Snow (1978) discussed organisational structure in terms of how it affects processes within the organisation, and supports specific strategies.

Virgin is a conglomerate with a somewhat unique structure. Ostensibly, Virgin has a matrix structure, which is characterized as being divided among both geographies and businesses. Virgin's matrix of the conglomerate type, where the different businesses have little to do with one another. Seru (2014) notes that this structure's success is often dependent on the firmness of the boundaries between the constituent firms. At Virgin, the structure is designed to leverage the brand and some human resources philosophies across company boundaries, but little else. There are, after all, only limited opportunities for synergy between mobile telecommunications and airlines, and what synergies exist are inconsequential. More important is the idea that the Virgin brand stands for something, and can be attractive to consumers, and this attraction is enough to justify having a suite of unrelated businesses, in multiple different countries. There is continuity in leadership not just because of the highly visible founder/CEO, but because the managers running each business are students of Richard Branson's own leadership style. Thus, the business reflects Branson's vision, and that is one of Virgin's brand promises. The result is that the brand itself can translate to basically any business (Champroux, n.d.) and as long as the senior leadership is maintained, Virgin can continue to operate such wildly disparate companies with just a thin thread of corporate ownership and a brand in common, and enjoy success with each.

The success of Virgin, therefore, has rested on the company's ability to translate leadership style and brand across so many different platforms. The organisational structure provides support for this. At the top of the structure is Branson, but the Virgin head office is responsible for a lot of the day-to-day oversight of the constituent companies, in terms of strategic direction, and corporate philosophy. Beyond that the individual companies that comprise the Virgin Group are able to set most of their own strategy and manage their day-to-day operations.

The organisational chart of Virgin is as follows:

This is a condensed version -- each major operating group will have its unit on the right hand column. The left column represents the operating units at Virgin Group, which are more of a matrix in their relation to the operating groups. Thus, Virgin Atlantic will have the ability to create its own strategy. But there will be input from head office, and from the Development & Strategy division. Those senior departments will advise the functional units on performance, and how they can better contribute to the overall growth of the company. The Virgin Group in this way ensures that each company within the brand family is clearly associated with Virgin, that it has the same organisational culture as exists throughout Virgin. So the overarching bodies are responsible for the development of the vision, brand and strategy, while the different operating units are responsible for executing strategy within the context of their specific business.

The first line management is responsible for the tactical implementation. Most of the employees are dealt with by the first-line management. Within Virgin, the role that the first-line management plays is similar to with any other company. They conduct a lot of work on human resources, and making individual retail outlets/airplanes work. The front line management is also responsible for a lot of work on maintaining the corporate culture as well. First line managers are the ones who make sure that the employees who are dealing with the customers not only execute on the company's strategy but that they are also presenting the Virgin brand in a manner that is consistent with the company's overall strategy. This is an important role to play within the corporation, and while the technical requirements are different within the different companies, Virgin managers are all expected to operate within the confines of the overarching Virgin culture.

Task 3. The global organisation that I have chosen is Starbucks, the American coffee company that is seemingly available in every corner of the world. Starbucks has a defined mission, that being "to inspire and nurture the human spirit -- one person, one cup and one neighborhood at a time." This mission provides little sense of direction, other than alluding to geographic saturation and the fact that they are in the beverage business. So the mission statement is more of a feel-good statement than anything else. Most scholars agree that a good mission statement should have a number of elements that this one lacks, including outlining the target market, the scope of the business, and what outcomes you want your business to have on your customers (Dontigney, 2014).

The company does not publish a vision statement.

Starbucks does, however, have a strategy. Starbucks sells coffee and related beverages and snacks. Using Porter's generic strategies, Starbucks seeks to utilize a differentiated strategy, wherein the company offers its products at a premium price, and seeks to back this up with premium quality and a high level of service. Yet, Starbucks wants to appeal to the mass market, basically seeking both high margins and high volume, through saturation of markets with a large number of locations. This strategy is applied consistently around the world, because the company wants to provide for its customers a consistent brand experience.

A SWOT analysis is valuable as a part of the strategic management process because it helps management to understand the internal and external forces that are shaping the business. The SWOT specifically allows for the combination…