Strategic Management Essay Paper on The concepts of Discontinuities and Megatrends

The concepts of discontinuities and megatrends

Abstract

This paper identifies and focuses on strategic management and the specific types of environmental development known as discontinuities and megatrends. Discontinuities and megatrends in the form of rapid technological developments, regulatory reformations, organizational overhauls, as well as social-cultural developments are the source of opportunities and threats to an organization. Organizations respond to these megatrends and discontinuities in particular ways in trying to sustain its exercise at different periods.This paper therefore outlines the concepts of discontinuities and megatrends. It also explains where these concepts fit within strategic management. 

Introduction

            Any form of business plan that is based on assumptions that a company makes concerning forces that has an effect on its marketplace including customers, and the market setting. Such market forces are the key sources of market discontinuities. In this era of rapid, unstable, and discontinuous change, strategic management is a static, dynamic interplay of planning, implementation, and evaluation. Megatrends in a given industry may emerge from global discontinuities, however not all discontinuities usually produce megatrends. It usually depends on an industry (Lecture notes, n.d). In most cases, business megatrends results from technological advances or novel methods of conducting businesses. Business megatrends may be hastened by financial crises, changes in social realism that define marketplace or the risk of disagreement over assets. The politics of the cold war for instance, triggered the innovations that lead to the launching of both space race and the rapid growth in the area of micro-fabrications, as a result allowing the Information Technology megatrend (Lubin & Esty, 2010).

Discontinuities and Megatrends

            Discontinuity can be described as a change that cannot be predicted by a continuance of historical trends and that if it takes place, can radically affect the performance of a company. Discontinuity is the state of stepping from one product to a novel one in the production line. Production usually changes; moreover, firms usually hire different innovative employees for every particular production (Kaplan, Murray & Henderson, 2003). Global Discontinuities, in a given industry may result in Megatrends, however not all discontinuities usually produce megatrends. It usually depends on an industry. Megatrends can be described as lasting processes of transformation with a wider scope and a remarkable impact. They are regarded as dominant factors, which may shape the future. Megatrends have the capacity of influencing a broader range of activities, procedures, and perceptions in an organization for several years. Discontinuities that occur in a wider global external environment may be the source of the general environmental megatrends in a given industry.

Where the concepts of Discontinuity and megatrends fit within the Strategic Management process

            The strategic management process implies defining a firm’s strategy. It can be described as the process by which managers make choices concerning a set of strategies for the firm that will enable it to attain better performance. Strategic management is normally a continuous process that appraises the business in which a firm is involved. Discontinuities may be described as a set of considerable changes normally occurring abruptly or discontinuous bursts. Discontinuity is a specific occurrence or behavioral dynamics that are perceptible in rapid changes in variables of an entity under observation, and thus, usually associated with the terms of unsteadiness, volatility, and nonlinearity (Deeg, 2007). In strategic management process, the nature of such transformations, instabilities or suspicions may vary. The changes may occur in the form of an uncertainty in technological environment, owing to the growth of a new technology that may affect the structure of the industry. In addition, these discontinuities may take place in competences as well as other resources that are necessary in designing and manufacturing a product. Apart from being controlled by technology, uncertainties are also controlled by market environment as well as competitive environment. All such discontinuities that affect a business environment are mainly characterized by the force of the external influencing factors, from an uncomplicated continuum with just a few to complex continuum with many. Discontinuities are not only triggered by external environments but also by an emerging phenomenon that occurs within the inside environment. These kinds of discontinuities are normally linked to gaps within the work environment, tasks or relationship. The discontinuity within a business can manifest itself as a major transform processes, practices or even routines, or a change in production (Ghezzi, 2013).

            Discontinuity is mainly considered as an organizing element of the global economy. One cannot build strategies, structures, and systems on the initial assumption of continuity. To address the challenges of discontinuity, a firm should learn to transform rapidly without losing control of operations. The biggest task of management includes taking strategic control of firms and concurrently decentralizing operational control-loosening controls without losing control. This necessitates clearly understanding the business environment, the company and its culture, recognizing the company’s capacity of responding is a significant factor in deciding whether the changes can be tackled and how they can be handled. It is important for one to set the strategic management direction, communicating at all levels, the company’s need to have a precise idea of where it is heading and why. Establishment of a new strategic vision requires an empowered management and transformation champions to make things possible and control the transformation process: expecting the unpredicted; keeping track of development; continuing improving and learning from experience (Kachru, 2005).

            The increasing significance of strategic management is due to several persisting megatrends; the modernized and cheaper communication and transportation have resulted in increasing global trade and awareness. Production time has been reduced. Additionally, the web technology has resulted in increasing competition in many industries, which for a number of companies, has made it hard to compete. It is clear that the conventional strategic management concepts must adapt to the every evolving demands of and the trends in the web based environment. A modernized strategic management approach necessitates an analysis of the strategic resources, skills, capabilities, as well as core competencies. The critical subjects of these kinds of approaches are the elements of competitive advantages. Critical resources are the best adaption of a company to its environment, the possession of resources, skills, and capabilities that are important, rare, and hard to be copied by competitors (Magnusson, Lindstrom  & Berggren, 2003). Since social media has created another channel for corporate business and strategic questions, concepts such as open innovation, social media management as well as crowd sourcing has become a significant element of strategic management.

The model used to assess the role and impacts of discontinuities and megatrends for an organization

            Discontinuities can be linked to the types of environments such as technological, regulatory, institutional and competitive as well as socio-cultural. The models used to assess the role and impacts of discontinuities and megatrends for an organization include uncertainty, hostility, munificence, dynamism, and complexity. Uncertainty includes the non-predictability of results. Hostility captures the level of threat posed by the organization because of the complexity and greatness of competition and instability of the industry (Kaplan, Murray & Henderson, 2003). Dynamism is characterized by the pace of change and innovativeness in the industry and the uncertainty and unpredictability in actions of competitors and clients. Complexity is the variations in the company’s market owing to diversity in production as well as market orientations. The triggers for discontinuities and the impacts can be traced through systems theory as well as organizational economies. The theories outline the long associated involvement of technological and societal factors interrelated in a number of actions and reactions in environment (Kaplan, Murray & Henderson, 2003). Understanding discontinuities in its nature and dimension is critical for the companies to establish its response.

            The growth of megatrends does not have noticeably delineated phases. Instead, it is marked by a continuum of transitions, which are more precisely identifiable after the fact than as they are recounting. Regardless, assessment of megatrends as they are evolving is significant in terms of offering a basis, scenarios, and guidance that can be utilized in decision-making concerning future development and investment. Megatrends are universal, sustained, and macroeconomic forces that define the future of an organization and its increasing rate of change. Megatrends have diverse implications and impacts for various industries, organizations, and individuals. An analysis of the megatrends and their impacts forms a significant component of an organization’s future strategy, growth and the innovation process (Lubin & Esty, 2010).

How CEOs should respond to these change situations

            Response of any kind of environmental development necessitates the CEOs to predict, discover, and re-examine priorities.  The capabilities are seen as emerging, inclusive, as well as entrepreneurial decision-making capabilities. It cases of discontinuities and megatrends, the abilities of anticipating the extent of impact and timing of growth through scanning process would differ. Studies in the changes of organizational structure and communication system are a form of response to the different environmental setting. CEOs perceiving uncertain environmental developments should respond with either comprehensive strategy formation or innovation in adaptation (Kaplan, Murray & Henderson, 2003). The participation of the various levels of management, incorporation of learning from previous experiences of having dealt with similar type of development could vary. It should be appreciated that the response depends on the capability of environmental scanning process in the company. Discontinuity makes the retort crucial in terms of its attentiveness, timing, and identifying opportunities. It makes the retort specific in terms of addressing indecision of precedence and preferences. An organization’s response is guided by its dynamic capabilities. Dynamic capacity is an organization’s ability of integrating, establish, and reconfiguring internal and external proficiency in addressing rapidly changing environment. It is the capability to renew competences and resource base. The capabilities are entrenched in processes as well as high-level routines for adapting in the changing environment (Eisenhardt & Martin, 2000). They are considered as higher order capabilities that help in creating, extending, upgrading, protecting and keeping relevant, the organization’s unique asset base (Teece, 2007).  

Case Example: R.R. Donnelly & sons limited

            R.R. Donnelly & sons company experiences in addressing the issue of discontinuity is an example of an entrenched company that faced some difficulties in responding to the impending discontinuities. The organization was established in the year 1894 in Chicago. It was started as a small printing house managed by a family. By the year 1995, it was the world’s largest printing company with about 41000 workers in about 22 countries. The key customers of the business were telephone companies, direct mail merchandisers as well as ret ail houses that needed large-scale printing for their businesses. By the late nineties, the growth in technology was distinguished. The clients also started demanding for customized products. A major transformation in office computing systems established new opportunities in printing and its distribution systems. The desktop publishing became popular because of its flexibility and speed. Filmless printing techniques such as the digital four colors, computer to plate gained momentum in printing sector. The flexibility decreased cycle time and customization of systems helped to develop the printing presses at the same time globally.

            The company read the lines of the rising competition with differentiated technology platform are responded boldly establishing a new division known as digital division that focuses on new technology. This ensured sensing of an impending discontinuity and getting ready for it. The company reorganized the divisions and introduced new information architecture having linked with upstream players such as content owners as well as downstream customers. The companies virtually become an electronic warehouse and distributor with crucial capability of printing on demand. In the newly introduced infrastructure systems, data files were received and stored in databases and copies were made on specific demand from any store. The response of the company was very timely to venture into new business format with adapting the new technology platform and re-confirming its leadership in the printing industry.

Conclusion and implications

            As discussed in the paper, in this era of rapid, unstable, and discontinuous change, strategic management is a static, dynamic interplay of planning, implementation, and evaluation. Megatrends in a given industry may emerge from global discontinuities, however not all discontinuities usually produce megatrends. Discontinuity is the change that cannot be predicted by a continuance of historical trends and that if it takes place, can radically affect the performance of a company. Megatrends are the lasting processes of transformation with a wider scope and a remarkable impact.  This implies that, Discontinuity and megatrends are mainly considered as an organizing element of the global economy. One cannot build strategies, structures, and systems on the initial assumption of continuity. To address the challenges of discontinuity, a firm should learn to transform rapidly without losing control of operations.

References

Deeg, J. (2007), “Organizational discontinuity: evolutionary, revolutionary and re-evolutionary

             change”,Management Revue. The International Review of Management Studies, Vol. 20No. 2, pp. 190-208

Eisenhardt, K.M., & Martin,J.A. (2000). Dynamic capabilities: what are they? Strategic

             management journal, 21,1105-1121.

Ghezzi, A. (2013). Revisiting business strategy under discontinuity. Management Decision,

             51(7), 1326-1358.

Kachru, U. (2005). Strategic Management: Concepts and Cases. New Delhi: Excel Books.

Kaplan, S., Murray, F., & Henderson, R. (2003). Discontinuities and senior management: Assessing the role of recognition in pharmaceutical firm response to biotechnology. Industrial and Corporate Change, 12(4), 203-233.

Lubin, D. A., & Esty, D. C. (2010). The sustainability imperative. Harvard business review, 88(5), 42-50.

Magnusson, T., Lindstrom, G., and Berggren, C. (2003). Architectural or Modular Innovation? Managing Discontinuous Product Development in Response to Challenging Environmental Performance Targets. International Journal of Innovation Management, 7 (1), 1-26.

Teece, D. J. (2007). Explicating dynamic capabilities: The nature and micro foundations of (Sustainable) enterprise performance. Strategic Management Journal, 28, 1319-1350.