4.0 Structural Type that will maximize the Strategic Capabilities of eBay
4.1 Critical analytical discussion of structural theories
4.2. The structural and generic approach strategy
The major determinant into employing a triumphant competitive strategy is identifying the type of structure that a business embraces. There are diverse business strategies and each and every business must fall below a particular structure. It is also very significant to have a knowledge concerning a particular strategy and the conditions under which it functions. Functional structure is a type of structure that is mostly preferred for large business enterprises. Employees working under functional structure are mostly assigned special tasks on individual bases depending on the level of expertise pertaining to a particular task. Employee’s specialization drives them into becoming specialists into their line of duties. Functional structure is often featured by a certain extent of formalization, enhancing each functional unit to have standards ways of carrying out their operations. In essence, functional structure is suitable for companies dealing in standardized goods and services at large capacities. Matrix structure portrays the contemporary reality on how businesses are being operated both internally and externally. This type of structure absolutely solves nothing, it’s the way people operate makes the structure thrive well. Organization structures play a vital role towards businesses, as they help managers be able to interpret the internal strategies/operations of the business that help them function. A project based structure is one that emanates from such. Multidivisional (M-Form) structure integrates functional divisions whereby each division is classified as a distinct business entity, and hierarchy of order emanates from the top corporate officer, who passes on responsibilities for everyday activities. Last but not the least; the hybrid structure is an organization structure in which there are several organization designs used.
4.2.1. Sustainable Competitive Advantage
This capability is fascinating since it concludes that a company’s competitiveness depends on how it does what it does. This does not mean the market is not important. An excellent team can bring achievement to a plan that looks average on paper. The team has to have mounting potentials to make the operations highly successful. Strategic capabilities are a set of aptitudes, income, and skills all put together. Being capable of doing something is having a generally dependable and consistent ability to accomplish the set goals and the objectives. The strategic capability should balance the objectives and the outcomes. This capability is also a mark of high skill intrinsic in organization that simplifies all activities.
These potentials will usually be as a result of the aggressive managers working with the company. They have to be well skilled to the current standards and also and also fully determined to put in their best (Johannesson and Palona, 2010). The resources have to be made exclusive making it hard for any other company to emulate the products. This will provide added advantage to the company and will keep it in control. With all this we can conclude that strategic capability is having high height schedule, capital and competences that are documented as significant in order to generate and maintain an aggressive advantage.
Cost efficiency also is an important instrument in effective strategic capability. With proper management and organization the company is able to cut down on expenses. The cost efficiency is affected by four factors. These are economies of scale, supply costs, experience and product design. With economies of scale, the production level should be able to meet the cost of the organization setup, capacity and resources which is very high. Supply cost is determined by the location and the ownership of the raw materials.
Tangible resources are physical assets of an organization such as plant, labor and finance. We have intangible resources which are not physical. They include information, reputation and knowledge. Capabilities for achieving and sustaining competitive advantages can be determined by the following factors. The first one is the value whereby the product has to be of high value. The value of any item determines how fast it will move in the market. The second is rarity. It is important to make the products as rare as possible. This makes eBay a one stop shop where the client is able to get everything. Once an item floods in the market, it becomes monotonous and the competition becomes very high. The values of the items tend to fall too with different organizations giving lower prices to attract the customers. The product has also to be inimitable. Once a product is imitated, it losses its original value. There are companies whose specialty is making imitations and so it is important the item on sale so be as inimitable as possible. Substitution is also another factor that affects the competition of the products.
Dynamic method has helped eBay in its marketing hence we can say it’s a strategic capability that has elevated business at eBay. Dynamic capabilities are the organizations aptitude to renovate and reconstruct its strategic potential to meet the demands of the changing environment. It is important to understand the capabilities in relation to the value of network. This is by picking the activities that are of central importance to the company. It is also important to note the profit pools. If there is need for outsourcing, it is important to know which companies to partner with.
When developing strategic capabilities, it is important to know what should be added or changed. All resources should be exploited to the maximum. The organization should be able to extend beyond its boundaries.
I can summarize strategic capabilities as being able to deal with sufficiency and appropriateness of resources and competences necessary for any company’s success. Its goal is to establish core competences that lead to competitive advantage. In all this cost efficiency is fundamental. Where we have dynamic circumstances, dynamic capabilities are very necessary. The methods of identifying organizational capabilities comprise of value chain and networks. They also include activity mapping and benchmarks. Lastly the SWOT analysis is important (Thompson and Martin, 2005).
4.2.2Strategic Competencies
Strategic competence is a combination of talent, procedures, information and facts which create significant and substantial value for clientele of the company and distinguishes the company from its competitors. It is the ability of an organization and its employees to increase, maintain, recall construe, and position applicable and significant information, abilities, towards longer term survival of the company. They should be able o provide good service to both clients and the stakeholders.
Strategic competence also constitutes the ability of the organization and its staff to operate within their cognitive restraint in a way that enables them to uphold a high level of receptiveness to the eventualities facing them especially in the current deteriorating economy. This Meta level competence signifies a convergence of employees and managerial distinctiveness suitably configured to facilitate the uncovering of the weak signs indicative of the need for change and take instant action. This will reduce the risks of cognitive and unfairness and apathy.
This competence can be considered as a collective learning as well as a diversified production skill and the integration of several streams of technologies available in the organization. The resources themselves have to be changed to competencies. An organizational strategic competence solely revolves around the company’s employees. We also have competition of collective dialogue. This involves rumors and conflicts or strategic conversation that seems to be taking everyone’s attention (Godbout 2000).
Competence in an organizational design is a key determinant of a company’s ability to create the functional competencies that confer a firm a competitive edge. Timmers (1998) asserts that effective business model, structure and controls create incentives that encourage the human resource to maximize efficiencies and effectiveness of their units thereby protecting their company’s competitive position in the market. In addition, in order to survive in the long term it is critical for an organization to continually examine the external environment and constantly review its strategies and resources to maintain competitiveness and long-term sustainability
Competitiveness develops over a long period of time. This is determined by the experiences of the employees which in turn bring about cost efficiencies. With this experience curve the growth might not be optional. The fast mover products are of added advantage (Godbout 2000).
4.2.3 Strategic core competencies
Core competencies are those abilities that are significant to a business accomplishing competitive advantages. The first point in scrutinizing this kind of competition is realizing a competition between businesses is a race of competence mastery as it is for markets place and control. Hamel et al (1994) realized that strategic core competencies are Organization-level core competences which refers to those definite capabilities which mean the “collective learning” of the organization. These are the organization’s fields of power and behaviours the company is well known for. Equally Godbout (2000) referred to Core competence as a product of a calculated management strategy through premeditated planning and knowledge and its use. We can also view it as a technique of generating new businesses in regard to customer’s needs. Core competence concept highlights on how aggressive advantage is connected to organization’s exclusive capital and unique assets which comprise the basis of a value-added procedure. Core competence is developed and accomplished when unique activities and tasks are performed well by organization. Gilgeous et al (2001) stresses that core competence are those potentials that facilitate organizations to contact a broad diversity of market while playing a major role to customer’s contentment and opinion. He also realized that these competencies are hard to copy by competitors. It is vital for companies to look for and install methods and procedures towards increasing potential for those aspects of business activities that are very significant yet not specific. In analyzing planned capabilities a number of logical tools can be applied. For the purpose of this review, the SWOT study would be used to seriously scrutinize EBay’s ability. To show a clearer image and appearance of this study, it is very important to give a background introduction of SWOT analysis and also validate the use of the analysis for this report (Hitt, Bierman, Shimizu, and Kochhar, 2001).
Bradford et al, (2010), realized that SWOT analysis offers information that is supportive to a company in harmonizing the organization’s income and means against the competitive business setting within which it works Being a tool that recognizes the power, drawbacks, openings and intimidations experienced by an organization, SWOT is a basic, uncomplicated replica that analysis what an organization is capable of doing and what threats can come by.
Why the author chose on SWOT was because it is known to buttress the expansion of strategic thinking. It is an analysis that assists the management team to focus on the company strong point and hence building more opportunities. It also helps to anticipate of future threats and taking early precautions to minimize any losses that would come with them (Hitt, Bierman, Shimizu, and Kochhar, 2001).
Core competencies lead to competitive advantage when they relate to an action that underpins the significance in the product features. This is also reflected when the levels of performance are highly significant in comparison with the competitors. Competitive advantage also occurs when the product cannot be imitated (Aaker, 2007).
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