Strategic management: Introduction and Data Approach

In order to redefine and restructure organizational operations and have a successful corporate operation, strategic management is a crucial component. Similarly, scenario planning is crucial for reorganizing the organization in light of numerous errors made in the course of original planning. Scenario planning provides managers with a wide range of options that aid in developing a strategy that takes into account a number of viewpoints. The study glosses over a number of internal and external management issues that Australia Post faces. On the same respect, the paper through a critical analysis formulates or establishes possible remedies with consideration of the challenges faced by the Australia Post. The case study used is the Australia Post organisation where a critical analysis of the various events in the organisation is considered. The analysis is done to give the management the insight on the approach to be followed in the development of a strategic plan. The strategic forecasting approach established in the course of the analysis is the scenario judgement.

In additional a SWOT analysis of Australia Post is done where the competition is defined as an external controllable factor. The competitors in the line of mail delivery are FedEx and DHL who are strong in brand recognition and financial strength to push their postal services to the world market. Regal issues also are among the challenges that haunt the Australia Post which has led to the decrease in the profit margin of the institution thus causing a financial crisis. The paper also brings an insight on the relevance of the selected strategic method to other industry offering different services from those offered by the Australia Post.

Introduction and Data Approach

The success of a business organisation is subject to the strategic framework underlying in the management system. Strategic entities such as the use of scenario planning are essential in the management as a tool to predict or forecast the impact of changes made in the organisation (NetMBA 2010, p.1). Scenario planning prepares the management on dealing with the future occurrences based on past experiences which is important in improving the competitive nature of the organisation. Intrinsically, scenario planning to strategic management does not necessarily predict the future of the company but rather attempts to show the possibilities of the set strategy and the possible mechanisms that can be put in place to mitigate their impacts (NetMBA, 2010).

Therefore this paper overlooks on the management of Australia Post organisation in the strategic perspective as well as the mechanism being put in place to rectify strategic odds. The section of this study through empirical evidence overlooks on the loops in strategic management and suggests possible remedies for mitigation purposes. In the progress of the study Austrian post organisation is selected as the case study.

The Case Study

Australia Post organisation has employed several strategic plans in pursuit of management improving the organisational performance. The management plans to reduce the number of employees working in the mail company as a strategic way to reduce operational cost since the organisation has been recording losses in mail delivery (Mcilroy 2015, p.1). Critics argue that the move to reduce mail workers have reduced the overall productivity of the organisation (Mcilroy 2015). However, the organisation has come up with another proposal to increase the number of mail handled per given time. The Australia Post organisation, therefore, has suggested the use of technology or the digital economy as a remedy to decreasing productivity (AUSTRALIA POST 2016, p.1). The move to the digital economy can be seen a way to reduce the number of employees in the organisation and at the same time increase the output of the organisation.

According to 2016 annual report of the organisation proposed future strategy on Postal delivery based on technological advancement (AUSPOST 2016, p.3). The report acknowledges the progress through which the strategy will be realised. Some of the benefits projected to be associated with the proposed strategy would be the improvement of service delivery which will improve the organisation’s financial performance (AUSPOST 2016, p.3). The result of the strategic plan to the financial status of the organisation reflected a positive impression to the organisation as shown in the table below.

Performance indicator

Specific target

performance

Mail delivery

94%

96.2%

Profit before tax

$11.2 million

$41.0 million

Shareholder return on equity

0.5%

2.3%

Ordinary dividend for 2015/16

$5.8 million

$20.0 million

Figure 1 specific target and the performance of Australia Post from 2016 annual reports

Remuneration has been another factor that influences the performance strength of the organisation, and therefore compensation strategy should be part of the strategic planning. The Australia Post has established short-term incentives in pursuit of developing performance-based remuneration scheme (Australia Post 2016, p.3). The strategy is aimed at compensating the individuals or rewarding employees for their contribution in transforming the operations of the organisation (Australia Post 2016, p.3). The organisation enjoys a wide range of stakeholders which includes the Australian government among other that strengthens the existence and performance of the Australia Post (Auspost 2016, p.22). Also, in strategic management, the future of the organisation’s operation is a determinant on the relevance of its services in the market. Australia Post organisation responds to this by considering the possibility of the future global community. Therefore, the organisation has increased the delivery to worldwide destinations covering over 190 countries (Auspost 2016, p.19).

The performance of such organisations can be accelerated by recommending superior strategic frameworks that integrate plans, process and strategy in fulfilment of organisation objectives. These recommendations include multiple options, multiple perspectives, systematic tool-based process and flexibility (Wulf et al. 2010, p.8). Multiple perspectives comprise of a strategy that requires the management to consider viewpoint and evidence from various stakeholders in puzzling the existing assumptions as well as overcoming inertia. On the other hand, multiple options deal with the selection of different options to account for environmental challenges which help the company to prepare for future developments. Another strategic framework is the systematic tool-based process which outlines the specific tools of operation for a smooth application, transition and practice (Wulf et al. 2010, p.8). Lastly, flexibility is another integrative framework in strategic management that asserts that the tools selected should be adaptable to various business environments (Wulf et al. 2010, p.8).

Future Forecasting Methods

Forecasting is a strategy used by companies to figure out the realistic of goals set in the planning of organisation’s operations (Makgraf 2017, p.1). In strategic management, forecasting involves aligning the predictions with strategic goals of the organisation and the aligning of the company operations to ensure the accuracy of the forecasts (Makgraf 2017, p.1). One of the methods used is the analysis of the business environmental status where the management uses to predict the future characteristics of the business environment and make informed decisions which help in dealing with future challenges (Barnat, 2014). Strategic forecasting involves non-statistical, statistical, and qualitative techniques. Forecasting is based on time series analysis, multiple scenarios, judgment forecasting and the Delphi technique.

Judgemental forecasting is a useful model in a situation such as the introduction of new products in the market when competitors enter the market and more importantly in the verge of changing market conditions of the market environment of the organisation’s services (Fuleky 2014, p.2). Judgment forecasting is superior in situations where other statistical methods may not be valid or may not be feasible. However in some cases, the data may be available, and the technique could be used to generate statistical forecasting or adjust the statistical information using judgement (Fuleky 2014, p.4). Additionally, in cases where data is available, both statistical methods and judgmental forecast can be developed independently and then combined to give the final forecast (Fuleky 2014, p.4). It is important to note that where statistical data are available statistical methods should be used as a basis for other methods such the forecast.

Effective judgemental forecasting is based several principles which include; setting the forecasting task clearly, implementing a systematic approach, documentation of the judgement, evaluation of the forecast and segregation of forecasters and users (Fuleky 2014, p.6). Another effective forecast method is the Delphi method which relies on group forecasts rather than individual forecasts. Delphi method, therefore, involves the assembling of forecast experts from the organisation to develop and justify an approach (Fuleky 2014, p.7). The experts selected to come up with individual forecast which is then evaluated by the panel until a consensus is reached (Fuleky 2014, p.7).

Scenario forecasting is generated by considering all conceivable factors in the operations of the organisation. In that case, therefore, relative impacts and enhancers of organisation operations are considered for forecasting (Fuleky 2014, p.8). This technique of forecasting allows for the generation of a wide range of possible forecasts and also defining extremes for analysis (Fuleky 2014, p.8). Like any other form of forecasting, Scenario forecasting underlies on the information from executive opinion, customer intentions and sales force composite (Fuleky 2014, p.9).

The case of Australia Post organisation calls for the use of scenario forecasting. The rationale for this argument is the fact that the management of Australia Post has suggested the restructuring of organisation staffs about future market conditions. For instance, the move to reduce the number of employees can be seen as a way to reduce increasing cost of production. However, in the forecasting perspective, the move can be in line with the future marketing conditions for mail service sector. According to Mcilroy (2015) report on the progress of Australia Post, 23000 out of 36000 staffs work as mailing agents. Therefore the prediction on the era of the digital economy in the mail sector could mean that the company cannot retain all these employees in the handling of postal services. This is because the digital or advanced technology can handle relatively more as compared to human labour.

Scenario forecasting, therefore, becomes a suitable method or criterion for forecasting since the organisation is using future possibilities or future scenes in the mailing sector to restructure its management of resources. The scene forecasted by Australia Post is the increasing competition in the mailing sector by other people coming in and using advanced technology or employing technology in the mailing sector. The market environment for the mailing services is predicted therefore to be the most dynamic and competitive and the Australia Post have come to regulate or align their planning by the future market scene. In that case, therefore, the organisation opt to develop strategies to oversee letters services reforms, support consumer programs, develop new organisation solutions and identity and maintaining domestic and international service delivery. This will help in making the organisation relevance in the future market expectations.

Strategic Development

Strategic development is a process that collectively defines the ability of the management to shape and support strategic decisions of the organisation to achieve the set objectives (Dyson et al. 2007, p.4). Strategic development process depends on the prior activities to planning which includes a series of strategic decision making (Dyson et al. 2007, p.4). The decisions are termed as strategic as they involve consideration of various strategic characteristics. The first characteristic is the breadth scope of the idea, and therefore implications are considered beyond and across the organisation (Dyson et al. 2007, p.4). Another characteristic is the complexity of the business operation and decision-making context in the organisation (Dyson et al. 2007, p.4). The decision also is based on a possibility of an irreversible nature of strategy employed. This is very important in the creation of argument from various perspectives and possible agreement through reaching a consensus. Another characteristic is the significant time interval before the influence of the decision and a wide range of uncertainty over the timescale involved (Dyson et al. 2007, p.4). Finally, the decision is characterised by the challenging of status quo as well as establishing a politicised environment where all decisions raised are contested (Dyson et al. 2007, p.4).

In pursuit of embracing the future of mailing services, the Australia Post considers relevant mission accomplishment that aims at improving and meeting the needs of its customers (Australia Post 2014, p.6). The organisation aims at delivering a solution for the new e-commerce market by digitalising its operations as well as making alliances with established e-commerce agents such as eBay, Amazon and Google (Australia Post 2014, p.6). In the same notion, the Australia Post aims at digitising the traditional postal delivery by the enhancement of postal services in the iOS and Android apps. Another important strategic planning is the modernisation of post offices in Australia to accommodate trends in the mailing industry (Australia Post 2014, p.6).

Like any other organisation, Australia Post faces some internal and external controllable factors as well as internal and external uncontrollable factors. One of the major factors challenging the existence of Australia Post is the dynamic nature of the information technology. The drastic changes experienced in the information technology can strain the organisation in financial resources as the company strives to cope with advancing technology. The company has a history of lagging behind global rates due to technological advancement (Management Chief 2017, p.1). The advancement involves the restructuring of the system aligning it with the operational goals and the new trends. Therefore, technological advancement remains to be an uncontrollable external challenge to the mailing company. Also, Australia Post is using the collaborative techniques with other IT such the Fujitsu to have a wide range of Information technology services in improving their service delivery (Fujitsu 2017, p.1). However, Australia Post has marketing strength due to the well-recognised brand. The strength of the organisation is the lack of stiff competitors to reach Australia Post services (Management Chief 2017, p.1).

Additionally, supply and demand challenges have caused the sheer size of the number of employees which have resulted in the financial burden in the organisation. The demand and supply factor is external but can be controlled. The organisation has been creating the remedy for this factor by finding new markets and improving the workforce (Management Chief 2017, p.1). Another challenge faced by the Australia Post is the increasing digital communication which has led to the decrease of letters posted. The decrease in the number of letters posted is a threat to profit margin as it causes a drop in the marginal profit (Management Chief 2017, p.1). The consequence of fall in letters posted was witnessed in the period between 2007 and 2008 (Management Chief 2017, p.1). Some legislation factors have acted to reduce or negatively influence the Australia Post marginal profit.

For instance, the organisation is required to deliver specified letters per week which is an operational cost that does not match the profit margin of Australia Post organisation (Management Chief 2017, p.1). Another challenge faced by the Australia Post is the stiff competition from international companies such as FedEx and DHL. The two have succeeded in threatening the existence of Australia Post due to the brand recognition as well as financial muscles of the two companies (Management Chief 2017, p.1). FedEx and DHL have established a mechanism for e-commerce in parcel delivery which has made it to mare preferred in postal delivery thereby threatening the profit margin of Australia Post organisation (Management Chief 2017, p.1).

Conclusion

The overall vision of Australia Post is in the restructuring of the organisation operations, and other frameworks cater or minimise the risk and threats faced by the organisation. The direction taken in remaining relevant with technological advancement is the observation of the trend and following and creating frameworks to oversee technological issues. For instance, the Australia Post can establish a team or a committee to suggest and forecast the possible changes in e-commerce and reach a consensus on the possible remedies. Technological issues can be a short-term consideration as technological advancement radicalises within a thin timescale. The improvement in brand recognition is not achievable on the short-term basis as the implementation, and the possible outcome might take years. The difficult is for an organisation like the Australian Post in improving brand recognition is due to the competitor’s ability to continue increasing their brand recognition.

The organisation can adopt an application to curb technological issues. The remedy, in this case, can be the diversifying of organisation’s operations to respond to decreasing in the marginal profit. The diversifying of a business operation can also be adopted by other organisations so as when competition arises in one line of production the other lines can compensate the loss. PepsiCo is another industry facing the marketing challenges due to competition as the Australia Post. PepsiCo has low market penetration power to other venues outside America (Young 2017, p.1). Therefore, the organisation is not able to maximise on potential revenues outside the American market this makes it impossible to increase the marginal profit of the company. Therefore the conclusion is that the challenge is not a unique management issue facing the Australia Post organisation.

The strategy and proposed idea for the Australia Post can be applied to other organisation and work effectively. For instance, the diversifying of organisation and the creation of a team to oversee technological issues is applicable as it can help in changing or curbing remedies. Also, advancement with changing technology can be another important remedy to any organisation as the future of business operation relies on the dynamic changes in information technology. For instance, an organisation such as the PepsiCo can adopt diversity in its operations which can help in increasing marginal profit that can be used to such PepsiCo commodities in the market outside America.

This strategy may not be perfect to other organisation as some organisation do not rely so much on technology in their operations. Therefore any advancement may take time to have a direct impact on the marginal profit of such organisations. The strategy can be adopted by other managers and tried to answer managerial issues or challenges affecting the organisation operations. The strategy, therefore, may not appear to be perfect to others but to some, it can be adopted and tested for validity as well as reliability.

The strategy since it is based on scenario approach changes the perspective of strategic management where the possible future outcomes of the operations are paramount considerations in the current management structure. Also, the ability to view different scenes in the business environment gives a wide range of possibilities and diverse overview of the operational outcomes as well as faults in the system. The information is also paramount in decision-making as the decisions are made based on the critical view of the market scenes both the future and the current market situations. An insight into strategic planning in a wider perspective is generated from the reading where there is an emphasis on a wide range of factors to be considered in designing a strategic plan for the organisation. In such a case, therefore, all factors of production are aligned with goal, prediction and strength as well as the possible threats to the organisation. Also, there is an insight in strategic development where analyses methods are based on different scenarios are to be considered for the critical view and implementation of set frameworks. The implementation of frameworks paves a path for a smooth development process of the selected organisation.

References

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