Running head: FORCES AND TRENDS RESEARCH
Forces and Trends Research
Grace P. Jones
University of Phoenix
MBA580/Strategies for Competitive Advantage
Instructor: Christina Behling
March 30, 2009
In the current times of deep environmental change caused by deteriorating economical conditions, a firm’s ability to embrace change and adapt is vital to survival. According to a study by Stoica (1995), adaptability was defined as below: “The capability of the organization to adjust to changes. It permits us to develop a theoretical framework for adaptability in the context of information search, filtering, and responsiveness. Indeed, in order to be capable to adjust to changes, the organization has to search for information about potential changes, to filter the information collected, and to use it in finding the best response” (p. 17). An organization can be defined as a living entity, and adaptability is an important aspect of any living being, as stated by Charles Darwin: “It is not the strongest of the species that survives, nor the most intelligent. It is the one that is most adaptable to change” (Bradford and Rabkin, 2002). Managers must act as they are directing an ecosystem. They must be aware of their organization’s environment, continually realign with the marketplace, create perpetual newness, and learn under pressure (Bradford and Rabkin, 2002). Many organizations can offer guidance on the remote and industry environment. Forces and trends impact an organization, such as, ecology, substitute products, economy, political factors, human capital, social factors, threat of entry, rivalry, technology, competitive analysis, and customers.
Pearce and Robinson (2004) have stated that the long-term objectives in a good strategic plan should be flexible, with adaptability to unforeseen or extraordinary changes in the competitive environment or environmental conditions. This flexibility or adaptability comes at a cost, though. McKee, Varadarajan and Pride (1989) wrote that actions to increase the ability to a firm to adapt to environmental changes are costly; hence it appears reasonable to anticipate that the level of adaptability will vary depending on the strategy of the firm.
Shimizu and Hitt (2004) enlist some factors that may hinder adaptability, and one deserves particular attention: the inaction and preference for status quo caused by environmental uncertainty and resistance to change. An organization that is resistant to change will have low strategic adaptability. The work of Smith and Graetz investigate how diversity within an enterprise enhances its strategic adaptability: “diversity is organized into an enterprise, creating an organizing form that is characterized by minimal hierarchy and maximum heterogeneity” (2006, p. 235).
A firm will be able to more easily adapt to change by consistently assessing its external environment. If a firm knows that the population is aging it may decide to produce products that will serve the purpose of an older population. McDonald’s adapted well to the obesity epidemic. The company realized that not offering products that are healthier would be to the company’s detriment. “Changing the environment could have sharply cut America’s health costs. And if it was done by shifting to healthier foods, it did not have to cripple the industry. That was a lesson McDonald’s, Coke, Pepsi, and others may have started to learn,” (Pearce & Robinson, 2005, p. 79).
A company can also make decisions that will alleviate the affect of new entrants to its industry. Companies that have barriers to entry are less likely to be detrimentally affected by new entrants to the market. Six major sources of barrier to entry including: economies of scale, product differentiation, capital requirements, cost disadvantages independent of size, access to distribution...
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