Question 1 : Strategic Drift
Question 2: Discuss the external factors that influenced change within AEGON
7 Question 3: Critically Discuss the 8 behaviours
Question 4: Evaluate the role of the Auditing Process
14 Appendix 1
2006 financial highlights AEGON in the UK
Question 1 : Strategic Drift
Thompson, Stickland and Gamble (2005) suggest that an organisational strategy should not be perceived as a fixed plan that the organisation utilises to compete within industry but rather view an organisational strategy as a temporary plan of action which is ever evolving to incorporate external environmental influences and internal organisational influences. As organisations continue to evolve their strategic plans due to internal and external stimulus, identified by Thompson et al (2005), organisations drift from the original strategic vision of the organisation.
Sony Corporation a leader in consumer electronic since early 1990, appoints a new CEO in 1995. The CEO believes in an integrated technologies model and steers the organisation into trying to find a way in making this business model profitable.
Charles Handy (1989) described strategic drift as the subtle changes of the organisations strategy that leads the organisation away from its intended destination to a destination that is unintended. Organisations must ensure alignment between the organisations operational activities, through adjustments in the organisations strategy, and the environment within which the organisation operates.
Sony Corporation virtually abandons the consumer electronic business model and in doing so failed to capitalised on the opportunities presented in flat panelled television , mobile devices rather allowing competitors to fulfil the gap and become more of a threat in a once dominant market.
Ken Belson,(2005,[A]), Sony corporation have been losing value since 1995 under the new leadership believing in a business model which does not deliver, as a result it's lost 75% of its value to shareholders and have been repeatedly beaten in markets that it once had control over. Sony Corporation is now trying to introduce change to induce profitability and prevent the demise of a giant.
Egan (2006) makes reference of Miller (1990) and puts forward the idea that organisations are trapped by past successes and thus do not move forward with organisational strategy matching the environment but rather restrict the strategy to that which worked best in the past. Leading to the initiation of strategic drift and culminating in a radical change or demise of the organisation.
Thompson (2005) Intel Corporation were put under extremely high competitive pressure in the 1990's due to the cost advantage held by the Japanese competitors in the production of memory chips. During this period memory chips accounted for 70% of revenues. Intel soon realised that it was unable to meet the Japanese in the ensuing price war and decided to change its strategy to one that allowed the organisation better growth, thus avoiding the Icarus Paradox, Intel Corporations change cam at the most appropriate moment during strategic drift, to avoid the needed transformational change and possible demise, instead becoming more profitable, as the organisation responded to the environments external and internal stimulus.
Figure 1: Strategic Drift : Delbridge,Gratton,Johnson (2006)
Delbridge,Gratton,Johnson (2006) discuss the argument presented by Johson,Scholes and Whittington (2005), organisations have differing phases of change, arguing that an organisation has first incremental change in which the organisation attempts to change in structure and strategy to the stimulus of the external and internal environment, thereafter the organisations may hold firm and not intoduce change, one of the reasons that may be attributed to this is the Icarus Paradox identified by...
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