Current Strategic Potential Essay Example for Free

Current Strategic Potential canvassThe strategic potential of an enterprise (SPE) depends on the ability of an enterprise to take into account and properly task both the internal and outside(a) conditions of its activities (Ginevicius et al. 2010). This delegacy to know the strategic potential of an administration, in other linguistic communication what it can do, one has to analyse how contrasting environss can be much or little rich in opportunities or hostile and how organisational capabilities ( resources and competences) can enable or constrain strategies.This essay allow for examine which information tools are necessary to assess the current strategic potential of Lufthansa. A internationally leading aviation group focusing on the core competencies of its five business areas Passenger airway Group, Logistics, MRO, Catering and IT Services. The ability to analyse and evaluate the external conditions (environment) internal conditions (capabilities) is a compl ex phenomenon and dependent of an organisations activities and usage of appropriate tools. The essay will argue that for an organisation like Lufthansa with global comportment and complex operations, to assess external environment PESTEL whereas for diagnosing strategic capabilities think of reach Value vane are the most appropriate tools.Due to the reason that Lufthansa is an multinationally operating organisation it faces international challenges. These international challenges govern as well the internal organisation as the external environment. The external environment has abundant furbish ups on the Lufthansa. To conduct external environment abstract of Lufthansa it is essential to have information about the company, its financials, operations, global electronic network, Strategy statement, Markets customer segment research studies, information about alliances classnerships,Flight Schedules/Routes, Environmental challenges / studies ( e.g. Noise pollution, zip fast ener consumption controls related information), Fleet information (type aging of fleets), Competitor comparison reports, Legislation and regulations ( e.g. preferential airdrome powerfuls if any) and Customer satisfaction studies. When it comes to select the tools for external environment compend, there are quite few tools / technique available but two major / widely employ tool / techniques are PESTEL doormans Five forces.However use of PESTEL provides a wide overview reveal threats and opportunities presented e.g. by technological changes (i.e. fuel effective engines, airframes, internet) or shift in market demographic, profound issues much(prenominal) as restriction on mergers, governmental such as security controls etc. PESTEL analysis helps to uncover issues likely to have major impact upon the upcoming of the industry, regions or markets. The identification of the key drivers in macro environment changes help focus on what is most important and can be used to cons truct scenarios of alternative possible future. PESTLE-analysis tries to make the future more comprehensible and predictable though we have to take into account that future is something which cannot be forecasted, as unpredictable events might occur.Porters five forces framework which helps identify the attractiveness of an industry in ground of five competitive forces is another option to analyse external environment.However to be used cautiously as not necessarily complete even at the industrial level for example, * Defining the right industry, most industries can be analysed at different levels e.g. different markets and even different segments within them e.g. air lane industry has different geographical markets (Europe, Middle East, China etc.) with different segments (leisure, business freight). The competitive forces are different for each of these markets so must be analysed separately * Converging industries, definition of industry is too laborious because of continuous change of boundaries e.g. high tech area is converging. * Complementary organisation, analysts argue that industry analyses needs to admit sixth force due to the organisation that are complementary rather than competitors. An example is Microsoft Windows software and McAfee each is better because of others. Complementarity implies a significance shift in perspective. While Porters five forces sees organisations as battling against other for share of industry value, whereascomplementors may cooperate to increase the total value available.Others tools / techniques for external environment analysis such as Strategic group analysis, market segment analysis and the strategy canvases. These tools / techniques covers exactly the inner layer of the environment and help identify strategic gaps or opportunities thus misses the wider view of external environment for a company such as Lufthansa, thus may not be considered for analysis of Lufthansa.Strategic capabilities of an organisation con tribute to its long term survival or competitive advantage. Two components of Strategic energy are resources (what an organisation has) which includes physical, financial and humans resources and competence (what it does well) how well these resources are deployed. The tools / techniques available to diagnose organisational capabilities includes, * Benchmarking, means to understand the relative performance of organisation * The Value chain and Value network, to understand how value to a customer is realised and can be developed * Activity mapping, means of identifying more detailed activities which underpin strategic capabilities * SWOT, summarises the strengths, weakness, opportunities and threats likely to impact on strategy festeringTo diagnose Lufthansas capabilities (Resources competencies) the Value chain Value network is more appropriate tool/ technique.As it helps to understand the Lufthansas primary and secondary activities and how company give to achieve competitive advantage by delivering value to the customer. The value chain can be used to diagnose and create competitive advantages on both cost and differentiation. The value chain is as well as expert to understand the strategic position as generic description of activities help managers understand if there is a cluster of activities providing benefit to customer located within particular area of value chain. It also take for analyzing competitive position of the organisation using VRIN ( Value, Rarity, inimitability, Non substitutability) criteria, advertise value chain helps to anaylse the cost and value of the of the activities. Since Lufthansa is part of wider value network (i.e. inter-organizational links relationship to create a product or services) it will further helps to understand the strategic position of the organisation.Other tools / techniques available to assess the capabilities of Lufthansa / organisation may not be able to stand simply because the value chain can be use d to diagnose and createcompetitive advantages on both cost and differentiation. Whereas Benchmarking is limited to comparing input output or outcomes and process not identify the reason for relative performance in terms of underlying capabilities. Benchmarking may also lead to measurement distortions which mean you get what you measure. Activity mapping useful it is the danger is that, in desire to explain capabilities underpinning their strategy managers may identify capabilities as too abstract a level. SWOT on the other hand may produce long list of strength weakness opportunities and threat so prioritization remains an issue, it may be used as a summary not as a substitute of analysis, it also lacks of specificity thus making value chain value network analysis more authentic to produce the needed analysis.To understand what kind of information is essential to conduct such analysis its important to draw a value chain map of the organisation. Below table is a representation o f the value chain of an airline and give fair idea of the information needed for such an analysis. Conclusion,To assess the strategic potential PESTEL (for external environment), Value chain Value network (to diagnose strategic capabilities) tools / techniques are the most appropriate. With PESTEL broad macro environment of the organisation in terms of political, economic, social, technological, environmental and legal factor is analysed.This leads to identification of key drivers in macro-environment which are used to construct alternative scenarios with regard to environmental changes. The strategic capabilities which provide competitive advantage on the basis of their value, rarity, inimitability and non-substitutability (VRIN) are diagnosed through Value chain Value network analysis. Thus considering international nature of Lufthansa operations and global presence both tools (PESTEL Value chain Value network) to be used to assess its strategic potential.References,Johnson, G , Whittington, R, Scholes, Kevan 2011, Exploring Strategy,9th edn, Pearson Education Limited, EnglandRichard J. Speed, 1989Oh Mr Porter A Re-Appraisal of combative Strategy, Marketing Intelligence Planning, Vol. 7 Iss 5 pp. 8 11Permanent link to this documenthttp//dx.doi.org/10.1108/EUM0000000001043Rainer Feurer, Kazem Chaharbaghi, (1997),Strategy development past, present and future, raining for Quality, Vol. 5 Iss 2 pp. 58 70Permanent link to this documenthttp//dx.doi.org/10.1108/09684879710167647Joan Magretta, (2012),Michael Porter answers managers FAQs, Strategy Leadership, Vol. 40 Iss 2 pp.11 15Permanent link to this documenthttp//dx.doi.org/10.1108/10878571211209305G. 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