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strategic management
General purpose: Summary and Analysis; Strategic Management
Specific purpose: Analysis of strategic management in reference to, The Role, Use and
Activation of Strong and Weak Network Ties: A Qualitative Analysis, by Jack S. L.
Organizational pattern:
Introduction
I. In the article The Role, Use and Activation of Strong and Weak Network Ties: A Qualitative Analysis, Jack uses Granovetters strong and weak tie hypothesis to explain the structure and operation of networks. Although the hypothesis has become an established paradigm, there are many questions related to the real use and value of each tie discussed. The study in this article tends to extend the work of Granovetter. It uses the ethnographic approach to study the networking activities of fourteen respondents. The main aim of the article is to establish the understanding of roles of ties. In addition, Jack explores the use of the ties and how they are activated to be used in business activity. From his findings, strong ties are imperative in any business activity (Jack, 2005).
A. Strong ties provide knowledge and information necessary to learn business activities.
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B. Strong network ties also enhance personal and business reputations.
II. Jack (2005) views social capital as an important facet that helps businesses thrive. From his point of view, social capital is not a homogenous issue. It is personalized and particular to the context in which a person is embedded in. This social capital is normally present in the network connections and interactions between and among individuals and forms the basis upon which a successful business can thrive (Jack, 2005).
A. The family can be considered to be a reliable source of social capital. On the one hand, the family may offer a range of benefits. On the other hand, however, the family may also constrain entrepreneurial development. Unless there are specific successful types of social capital, then some of them might not be rendered as successful network ties that facilitate business success.
III. The author notes that network ties are vital in information gathering and contextual problem-solving. Jack (2005) is keen to note that, it is the way people perceive the network ties that is important. The attitude that they hold determines the level of success of such entrepreneurial ventures.
A. Strong ties invoke weaker ties.
IV. Economic actions are vital elements in any enterprise. They are influenced by social relations and may be constrained or influenced by the position that an entrepreneur or business holds in the social realm that creates network ties (Jack, 2005).
A. Entrepreneurs should try to create more social network ties that are as important as any physical or other resources that assist the business to progress.
1. The stronger the network ties, the stronger the decisions that entrepreneurs make; more often than not, most people tend to ignore some of the most important tools of decision making the network ties.
2. Entrepreneurs need this network because they might not get time to collect information from the external business environment, but people who are closely related to the business will ultimately assist them to collect data that will be necessary to improve business quality.
V. Granovetter (1973) terms the entrepreneurs social periphery as a weak social tie which is often less utilized for the well-being of businesses.
A. They are likely to give heterogeneous information unlike the strong ties from the social core that will most likely provide homogenous information.
1. Basing his argument on this statement, Jack recommends that these unutilized factors ought to be put into useful tasks (activated), so that they can contribute to the success of the business. This argument is very viable in any business venture.
2. For instance, the social core may include business workers/employees, relatives among others. The social periphery may consist of customers and any other people who can give an objective view of the enterprise. Although never regarded highly, the social periphery is quite vital since it is likely to provide an objective view of how the business is running, including the analysis of failures. This will ultimately assist the business owner in making informed decisions.
VI. Jack states that networks are built, incorporated and formed through the development of trust (Jack, 2005).
A. An entrepreneur must experience trust in both commercial and non-commercial contexts.
1. Trust is normally developed either in a formal or informal manner.
2. Trust can be based on shared norms and values or both.
VII. The roles that an entrepreneur designates to people in the network influence the success of the business.
A. There are roles designed to be the core ones and there are those that are designed to be the periphery.
B. There are roles that seem far away from the business, yet they are vital elements in the progress. They are called the strong-weak ties.
Strategic Management Analysis
I. Every firm manages its economic activities with a grand aim of obtaining profit from it. However, this aim may seem waning at times, thus interfering with an entrepreneurs expected returns or total turnover.
A. A bright entrepreneur would not give up his business but would serially construe mechanism through which his business can thrive.
1. Strategic management seems a probable remedy that can help serve interests of the entrepreneur in the right way. At this juncture, the entrepreneur will need to carry out a qualitative analysis of his firm.
2. Restructuring and revising boundaries of his firm are some of the detrimental measures that should be embraced. Here, he has to consider resulting ramifications from his prioritization in management, like the impact they will have on workers and firms customers.
II. Strategizing on the way forward by the firm is a vital move the owner must be keen on when implementing changes and innovation.
A. For instance, a mass protest of Cadbury workers took place when the companys production rights were acquired by the Krafts food company. Normally, in such instances, workers rights are distorted; in this case, Cadbury feared the consequent adverse effects such as retrenchment and salary decrement among other adversities.
B. The owner has to tread carefully when employing a management stratagem such as creating a horizontal integration with his rival company.
1. He must weigh the benefits and costs that relate to such a strategy.
2. He may decide to form acquisitions and mergers, alliances, or simply increase his net workings with other related companies.
3. He must choose among the three alliances: equity, joint venture, or non-equity, and pick the most appropriate one. Briefly, companies with related production activities face challenges due to stiff competition among them. During such instances, they may decide to have joint activities in three forms; these are net workings, acquisition and mergers, and alliances.
4. In mergers, two companies that are not related at all decide to combine their resources to form a single entity. Total purchase of a company or its takeover by another one forms the basis of acquisition theory. However, in both the acquisition and merger, the companys social core and periphery are always disadvantaged. For example, Cadbury workers had to demonstrate their complete dissatisfaction with the acquisition of Cadbury by the Krafts food company. Their future was blurred and they risked losing their jobs. Moreover, this move helped Krafts company almost monopolize the market. Thus, he could easily exploit consumers and prompt some countries to apply stringent consumer protectionism measures.
III. Acquisition and merging of companies pave way for horizontal and vertical integration. Horizontal integration entails harmonizing working conditions of two companies that are on the same level due to a number of advantages.
A. There is drastic lowering of competition intensity, reduced costs of production, more product differentiation, in addition to ensuring new distribution channels and market proliferation. Companies engaging in acquisition or merges activities hold justification reasons pertaining to these activities.
B. Desire to mitigate market competition is one of the ultimate goals.
C. Capability to integrate and solve co-agent principles forms another ground as to why companies prefer merging.
1. Many entrepreneurs are not interested in upholding their shareholders value but are after the well being of their business.
IV. Forming of business alliances is another strategic management plan that managers employ.
A. Rival companies may decide to work harmoniously through a treaty.
1. Each business is assigned an obligation within the industry such as the retail distribution of a product.
2. Manufacturing and sourcing of raw materials for the same product can be assigned to another company.
3. A third company can be mandated to oversee designing and branding of the product to boost its market worth. Therefore, each company is given an opportunity to share profit of the production and distribution chain of the product equitably.
B. A lot of benefits are accrued to a business strategic alliance such as making a firm within an industry become more competitive.
1. Alliances help firms access new markets in addition to helping them circumvent market uncertainty.
2. There is creation of a value chain that helps in complimentary assets access by the firms involved.
3. Firms gain new knowledge and management ideas from this alliance platform.
C. Strategic alliances take different forms such the non-equity measure.
1. A contract is awarded to the most competitive bidder in a move that depicts dismal strategic meaning.
2. Equity is another form of strategic alliances where a procedure is used and partners are allocated positions that they can oversight in an industry.
3. Joint venture is the last form of strategic alliances where multiple partners unite efforts to create a new industry or organization.
4. Long-term contracts must be arranged in the non-equity agreements. In this case, explicit knowledge sharing takes place. During such an arrangement, a firm is free to terminate or establish ties with another company. However, weak ties can present a challenge in service delivery due to a firms laxity.
5. Equity alliances depict close ties between companies where trust is highly exuded. However, there is limited flexibility to firms.
6. Joint ventures form stand-alone companies which exhibit strong ties. Therefore, there is great trust as primary firms remain committed. Nevertheless, joint venture may seem imperfect at times due to the opportunistic behavior of some companies. It is also costly and time consuming for the realization of a joint venture.
V. Networking is the situation where a firm strives to create a good relationship with other parties.
A. A firm must be compatible with other firms and must remain committed to delivering quality services and products to its customers.
B. The owner must be ready and willing to incorporate social capital where his skills to handle his social core and peripheral are critical.
1. He must exude characteristics that allow his workers work optimally, thus, registering optimum production.
C. A firm must strive to ensure that it keeps in touch with its business peripheral customers by taking care of their needs.
D. The firm must always strive to achieve customer satisfaction. Building of trust between firms is also a critical ingredient that helps boost a firms image.
From the above article summary and the strategic management discussed, there are several similarities that arise. First, it is evident that network ties are vital factors for the success of any business venture. This is because it facilitates entrepreneurs to get more information from both the social core and the social periphery. In addition, concerns regarding development of trust have been expressed in both cases. In conclusion, network ties have been identified as a key factor in facilitating the development of entrepreneurship.
