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Autor: anton • June 11, 2011 • 3,808 Words (16 Pages) • 863 Views
Question 1 : Strategic Drift 3
Question 2: Discuss the external factors that influenced change within AEGON 7
Question 3: Critically Discuss the 8 behaviours 11
Question 4: Evaluate the role of the Auditing Process...business strategy 14
Appendix 1 15
2006 financial highlights - AEGON in the UK 15
Question 1 : Strategic Drift
Thompson, Stickland and Gamble (2005) suggest that an organisational strategy should not
be perceived as a fixed plan that the organisation utilises to compete within industry but
rather view an organisational strategy as a temporary plan of action which is ever evolving to
incorporate external environmental influences and internal organisational influences. As
organisations continue to evolve their strategic plans due to internal and external stimulus,
identified by Thompson et al (2005), organisations drift from the original strategic vision of
Sony Corporation a leader in consumer electronic since early 1990, appoints a new CEO in
1995. The CEO believes in an integrated technologies model and steers the organisation into
trying to find a way in making this business model profitable.
Charles Handy (1989) described strategic drift as the subtle changes of the organisations
strategy that leads the organisation away from its intended destination to a destination that is
unintended. Organisations must ensure alignment between the organisations operational
activities, through adjustments in the organisations strategy, and the environment within
which the organisation operates.
Sony Corporation virtually abandons the consumer electronic business model and in doing so
failed to capitalised on the opportunities presented in flat panelled television , mobile devices
rather allowing competitors to fulfil the gap and become more of a threat in a once dominant
Ken Belson,(2005,[A]), Sony corporation have been losing value since 1995 under the
new leadership believing in a business model which does not deliver, as a result it's lost
75% of its value to shareholders and have been repeatedly beaten in markets that it once had
control over. Sony Corporation is now trying to introduce change to induce profitability and
prevent the demise of a giant.
Egan (2006) makes reference of Miller (1990) and puts forward the idea that organisations
are trapped by past successes and thus do not move forward with organisational strategy
matching the environment but rather restrict the strategy to that which worked best in the
past. Leading to the initiation of strategic drift and culminating in a radical change or demise
of the organisation.
Thompson (2005) Intel Corporation were put under extremely high competitive pressure
in the 1990's due to the cost advantage held by the Japanese competitors in the production of
memory chips. During this period memory chips accounted for 70% of revenues. Intel soon
realised that it was unable to meet the Japanese in the ensuing price war and decided to
change its strategy to one that allowed the organisation better growth, thus avoiding the
Icarus Paradox, Intel Corporations change cam at the most appropriate moment during
strategic drift, to avoid the needed transformational change and possible demise, instead
becoming more profitable, as the organisation responded to the environments external and
Figure 1: Strategic Drift : Delbridge,Gratton,Johnson (2006)
Delbridge,Gratton,Johnson (2006) discuss the argument presented by Johson,Scholes and
Whittington (2005), organisations have differing phases of change, arguing that an
organisation has first incremental change in which the organisation attempts to change in
structure and strategy to the stimulus of the external and internal environment, thereafter the
organisations may hold firm and not intoduce change, one of the reasons that may be
attributed to this is the Icarus Paradox identified by Miller (1990).
Sony Corporation are now trying to correct the strategic errors its has made and this requires
significant capital resources to return to a competitive position within the products and
markets it has firmly held in its grasp previously.
Delbridge (2006) suggest organisations must be responsive and proactive when trying to
employ an organisational strategy. By doing so the organisation completes continuous change
this ensures that strategic drift is minimised else the organisation may find a radical change is
needed, resulting in discontinuous change