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Just In Time Strategy For A Turbulent World

1239 words - 5 pages

JUST-IN-TIME STRATEGY FOR A TURBULENT WORLDUniversity of PhoenixJanuary 25, 2009Linda StewartMBA/580Instructor: Dr. Conrado SampangJUST-IN-TIME STRATEGY FOR A TURBULENT WORLDThe article discusses difficulties of companies in business forecasting due to rising risk levels and uncertainty. The author recommends using a "portfolio of initiatives" approach to strategy to reduce the number of risks taken by a company. Chief executive officers (CEO) can view corporate strategy as a portfolio, where the goal is to maximize the favorable outcomes for the enterprise as a whole. By organizing initiatives around a common theme, CEOs increase the likelihood of achieving these goals. The value of familiarity in business environment is discussed. The following approaches are:A new approachFamiliarity breeds opportunityA portfolio in actionA disciplined searchManaging a portfolio of initiativesA flexible and evolutionary approachUncertainty and rising levels of risk make it impossible for companies to determine the future. But a portfolio-of-initiatives approach to strategy can help ensure that companies take full advantage of their best opportunities without taking unnecessary risks. The classic approach to corporate strategy starts with a presumption: that with sufficient analytical rigor and an adequate assessment of the probabilities, strategists can pave a predictable path to the future from the matter of the past. In this world, they make reasonable assumptions about the evolution of product markets, capital markets, technology, and government regulation and, in effect, "assume away" most risk. Globalization and technology are sweeping away the market and industry structures that have historically defined the nature of competition. The result is an economic environment that is rich in opportunity but also marked by a substantial increase in awareness of risk and aversion to it-a phenomenon reflected in the rise of risk premiums throughout the world even while the risk-free cost of capital remains low.An analogy may help. Consider the management problem of moving supplies and ships across the Pacific Ocean during World War II. The starting point for the strategist was to recognize that controlling the environment-the weather in the Pacific-was beyond anyone's power but that risks could be minimized and schedules roughly set through the study of weather patterns and the use of navigational aids. But the real challenge was to consider factors beyond natural forces-factors such as enemy submarines, other enemy ships, and air attacks, analogous to corporate competitors with unknown capabilities and plans.The strategist's answer was to deploy whole convoys with a mix of aircraft carriers, battleships, destroyers, escort ships, troop ships, and supply ships. Convoys improved the ability of each ship to cross the ocean and, crucially, helped to ensure, through "portfolio effects," that sufficient supplies made it across the ocean even when some ships didn't. The...

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