MAN7SMC: Strategic Management of Change

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Strategic Management of Change

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Executives Summary
The aim of this report is to critically analyse and evaluate how the recent changes in the
corporate governance policies and expectations relating to corporate social responsibility
require organisations to change their policies relating to environment opportunities and
threats or develop new capabilities to address these challenges. This report assessed the
examples of Apple, Panasonic and IKEA to understand how their management has dealt
with this issue. The importance of compliance with corporate governance theories is
discussed in this report along with their role in protecting environmental resources.
Moreover, the CSR approach adopted by these corporations are analysed in this report to
understand how to reduce their carbon footprint. The importance of environmental analysis
and the role of environmental forecasting while forming business strategies are discussed in
this report along with evaluation of key tools. Lastly, a conclusion is drawn, and
recommendations are given for corporations to incorporate their strategic management
tools and corporate government theories to develop sustainable development policies in
the business.

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Table of Contents
Introduction...............................................................................................................................3
Corporate governance...............................................................................................................4
Company CSR Approach.............................................................................................................5
Environmental Analysis..............................................................................................................7
Conclusion..................................................................................................................................8
Recommendations.....................................................................................................................9
References................................................................................................................................10

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Introduction
The importance of compliance with effective corporate governance policies has increased
substantially between corporations. The impact of organisations on society is significant,
therefore, it is expected from multinational corporations that they ethically conduct their
operations while focusing on achieving the interest of their stakeholders rather than
increasing their profitability. The pressure on corporations to implement environment-
related policies has been increased in the past few years, and many corporations have
implemented different strategies to reduce their carbon footprint (Jo and Harjoto, 2012).
This is a major issue relating to corporate social responsibility (CSR) policies because
corporations have to disclose the damage which they did to the environment, and they have
to select alternative ways to conduct their operations which resulted in increasing their
operation costs (Khan, Muttakin and Siddiqui, 2013). In this report, the strategic
management challenges faced by corporations will be discussed to understand how changes
in corporate governance and expectations relating to CSR require the organisations to deal
directly with environmental opportunities and threats or develop new capabilities. This
report will take the example of three corporations to understand how they have faced this
strategic management issue and how their executives have handled this challenge. Firstly,
the report will focus on Apple Incorporation and how the company’s corporate governance
strategies are focused on using 100 percent recyclable energy to build their products.
Another example is Panasonic which is using a recycling-oriented manufacturing approach
for sustainable development. Lastly, example of IKEA will be analysed because the company
has announced to invest €1 billion in sustainability efforts.

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Corporate governance
Corporate governance is defined as the rules, activities and processes which direct and
control a company’s operations and the decisions of its executives in order to create a
balance between the interest of all stakeholders which include shareholders, customers,
employees, government, suppliers, the environment and others (Schwartz, 2017).
Organisations are expected to implement and comply with corporate governance policies to
ensure that they did not violate the interest of other stakeholders while solely focusing on
increasing the profitability of the enterprise. There are different theories which can be
adopted by corporations to ensure that they are able to assess the key interest of
stakeholders and implementing strategic management policies to achieve those objectives.
A good example is the Core Competence Model which was developed by Gary Hamel and
C.K. Prahalad. This model is a good strategic management and competitive advantage tool
which enable corporations to implement a sustainable business approach. This model
focuses on the combination of collaborative, integrated, specific and applied skills, attitude
and knowledge (Gupta, 2013). Hamel and Prahalad provided that corporations should not
focus on giving a good fight to their competitors, instead, they should create a new
competitive space while looking at the future rather than at the past. There are four
competencies provided in this model which include resources, capabilities, competitive
advantage and strategy. The resources are referred to the sources which are crucial for the
development and acquisition of skills and technologies.
The capabilities are referred to various possibilities which can be used in building core
competencies. The competitive advantage defines the challenge which is important to
acquire and develop the largest possible market share based on core products. The strategy
is referred to the plan which is developed in order to create the largest possible market.
Based on these four factors, the corporations can develop strategic management strategies
which enable to avoid destroying environmental resources to expand their business (El
Namaki, 2012). Instead, they can rely on these factors to develop a strategy which provides
them a competitive advantage by achieving sustainable development. Another key theory is
the VRIO framework which is used by corporations for developing capabilities which assist
them in achieving sustainable development while focus on the interest of their

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stakeholders. VRIO is an acronym for valuable, rare, inimitable and organised. These four
factors can be used by corporations to achieve and sustain competitive advantage. Value is
referred to factors which resulted in adding more value for customers than compared to the
products or services of competitors (Lin et al., 2012). Rarity is defined as the control of the
corporation on the scare resources or capabilities. Imitability is referred to how expensive it
is to duplicate the company’s resources and capabilities. Organised factor defined whether
the company has appropriate system, processes, culture and structures to capitalise on the
resources and capabilities.
Company CSR Approach
In the case of Apple, the company has adopted a corporate structure which is focused on
protecting the environment and its resources. The corporation is known for manufacturing
its products without any harmful substances which resulted in destroying the environment.
The CSR model of the company focuses on maintaining transparency in its operations while
focus on protecting scare resources (McRitchie, 2017). The company uses ‘built
environment’ approach to achieve sustainable development. The term ‘built environment’ is
used to define human-made surrounding which is built by humans to be used for human
activities. The corporation built its own resources which assist the company in powering its
resources globally with 100 percent of renewable energy (Apple, 2018). This is a significant
achievement by Apple which has encouraged corporations to adopt environmental policies
as well. The company is able to achieve this milestone by building solar panel power plants
in Chine to power its factors. Moreover, it uses both wind and water energy to fuel its
operations across the globe. The company has used core competency model to align
resources with capabilities to develop a business strategy which provides the company a
competitive advantage and making its first-ever technology-based trillion dollar company
(Dauvergne and Lister, 2012). Thus, it shows the changes brought forward by corporate
governance policies which resulted in increasing expectations for CSR policies which
companies have to adopt in order to deal differently with environmental opportunities.
Another example is Panasonic which is a Japanese electronics company which changed its
perception in customers by adopting new sustainable policies. As per the strategy
management policies of the company, sustainability is a key part of the corporate

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citizenship activities based on which it focuses on finding new opportunities and developing
new capabilities for energy saving products of their products such as recycling-oriented
manufacturing (Panasonic, 2018). For instance, the company shifted its headquarters from
Secaucus, New Jersey to Newark in 2013 to revitalising the city and achieving its
sustainability mission. The corporation built LEED certified tower which is near the Newark
Penn Station which resulted nearly reducing 50 percent of the transit time of workers who
communicate to work (Yoneda, 2013). Due to the actions of the company, more than 500
cars were off the road every day which reduced the pollution in the city. The company has
complied with principles of core competency model because it did not focus on the cost of
shifting its headquarters; rather it focused on the long-term perspective of achieving
sustainable development by taking small steps. It shows that corporations can find key
opportunities and threats relating to the environment to take business decisions which
resulted in achieving sustainable development.
IKEA is a good example to understand how investment in environmental protection can lead
to positive outcomes for the company as well as society. In 2015, the company announced
that it is investing €1 billion in its sustainability efforts which include purchase of renewable
energy for its stores and offices and implementations of sustainable manufacturing
procedures (Fraser, 2015). This is a substantial amount because it is higher than the
amounts pledged by many countries to the UN Green Climate Fund in which Germany was
the biggest donor with €750 million. It shows how strongly the executives of IKEA believe in
investing in environmental protection and it also reflects on the strategic management
policies of the company as well (Paters, 2015). As per VRIO model, the company used its
valuable resources which are rare because no other competitors are investing this much
amount in implementing environmental protection policies. IKEA implemented solar panels
on its stores across the globe and used alternative sources along with renewable energy for
its operations which is an inimitable factor which is appropriately organised by the
company. Thus, it shows that corporations across the globe are changing their CSR policies
to ensure that they differentiate their procedures to achieve organisational goals and
develop new capabilities to protect the environment.

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Environmental Analysis
Environmental analysis is referred to a strategy tool which is used by organisations to
identify all internet and external factors which affects its operations. It is important because
it enables executives to form business strategies which are focused on future opportunities
and challenges due to emerging factors across the globe (Alkhafaji and Nelson, 2013). Many
organisations rely on environmental forecasting while developing strategic management
policies. It is referred to projected trends or result of an environmental event which is based
on past experiences which affect the performance of the company and force the executives
to change its strategies; it is a key process which is used by corporations while complying
with corporate governance policies (Keupp, Palmie and Gassmann, 2012). For instance,
Panasonic was able to determine that the reduction in the transit time will improve the
productivity of employees while reducing pollution and creating a positive image of the
company.
Similarly, Apple and IKEA used environmental forecasting model to determine that
investment in renewable energy will result in benefiting the companies in the long run;
therefore, they made substantial investment in sustainability policies by changing their CSR
structure. SWOT and PESTLE are two different models which are used by corporations for
environmental analysis. SWOT is used for determining key strengths of the company to
exploit future opportunities while forming strategies to avoid threats; it is a tool for internal
analysis (Gorener, Toker and Ulucay, 2012). PESTLE framework is used for external analysis
which assists corporations in determining six different factors which affect their
performance at the same time. The key limitation of SWOT is that it is prone to ambiguity
and its factors are subjective which leads to false results. The limitations of PESTLE model is
that it did not offer full picture because it did not focus on internal factors and the factors
evaluated in this model change quickly which means that the strategy can become
ineffective after some time (Zalengera et al., 2014).

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Conclusion
In conclusion, the changes made in corporate governance policies and expectations relating
to corporate social responsibility structure require corporations to change their procedure
regarding how they deal with environmental opportunities and threats or develop new
capabilities. Apple, Panasonic and IKEA have successfully implemented policies which
achieve the interest of their stakeholders while ensuring that they reduce their carbon
footprint. The corporations should conduct environmental analysis while complying with
corporate governance policies to generate a competitive advantage in the industry. They
can use theories such as core competence and VRIO to identify how they can use their
current resources to achieve a sustainable competitive advantage. Moreover,
environmental forecasting through tools such as SWOT and PESTLE can assist corporations
in being prepared for changes in the future environment which enable them to maintain
their sustainable approach. Apple, Panasonic and IKEA changed their CSR framework to
implement new strategic management policies which provided them a competitive
advantage in the industry while sustaining their future growth.

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Recommendations
Based on the above analyse, it can be evaluated that strategic management and corporate
governance policies are closely related. Organisations should comply with theories of both
factors to ensure that they achieve sustainable targets such as Apple, Panasonic and IKEA.
Following recommendations can assist corporations in combining these two factors to
improve their environmental objectives.
 Corporations should prioritise the protection of environmental resources rather than
increasing profitability. They can achieve this by changing their CSR structure to
comply with relevant corporate governance policies related to environmental
protection.
 Organisations should use the Core Competence and VRIO theories to find out the key
factors which can assist them in implementing a sustainable approach. They should
combine the information of these models with environmental analyse tools such as
SWOT and PESTLE to ensure that they are able to rely on their key capabilities while
exploiting environment related opportunities.
 Environmental forecasting should be aligned with stakeholder analysis which will
enable corporations to identify factors which affect their performance and the
interest of their stakeholders. It will assist executives in forming business strategies
that enable them to implement sustainable business approach.

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References
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