28 May Discussion Thread: Setting Direction, Advantages / Disadvantages, and Decision Models Strategy is critical to the process of charting a company’s direction in the business environ

Strategic Direction Setting and Decision Models in Agro-Industrial Expansion

 

 

 

Tupin Morgan

School of Business, Liberty University

 

 

 

 

 

 

 

Author Note

Tupin Morgan

I have no known conflict of interest to disclose.

Correspondence concerning this article should be addressed to Tupin Morgan.

Email: [email protected]

 

Introduction

     As an experienced professional working for an international agro-industrial company, I understand the crucial role that strategic direction setting plays in navigating the complexities of expanding into new and emerging markets. With our company poised to enter new territories, it is essential to critically examine our approach to strategy formulation, the key decisions that will shape our path, and the decision models that underpin those choices. Proverbs 16:3 advises us to entrust our efforts to the Lord, and in doing so, our plans will come to fruition. It is with this mindset of wisdom and purpose that I embark on this analysis.

Process: Setting the Company's Direction with Strategy

     Setting the company's direction with strategy is a comprehensive and iterative process that involves several key steps. Firstly, it requires a thorough analysis of the internal and external environment, including an assessment of the company's strengths, weaknesses, opportunities, and threats (SWOT). This analysis helps to identify the key factors that will influence the company's success in the new markets (Gamble, 2023).

     Next, the company must define its strategic vision and mission, which serve as the guiding principles for all decision-making. The vision articulates the company's long-term aspirations, while the mission outlines its purpose and values (Gamble, 2023). These elements provide a clear direction for setting strategic objectives and aligning the efforts of the entire organization.

     The core of the strategy lies in the strategic choices the company makes regarding its target markets, value proposition, and competitive advantages (Baki, 2023). These choices involve a careful balance of focus and adaptability, ensuring that resources are allocated to the most promising opportunities while remaining flexible to changing market conditions.

     Finally, the strategy must be translated into action through a well-defined implementation plan. This plan should align the organizational structure, processes, and culture with the strategic objectives and establish mechanisms for monitoring progress and making necessary adjustments (Gamble, 2023). By following this process, the company can effectively set its direction and position itself for success in the new markets.

Strategic Thinking: Key Advantage or Disadvantage

     One key advantage highlighted in Rumelt's (2011) text is the power of focus in strategy. Rumelt argues that good strategy is as much about what not to do as it is about what to do. By focusing on a limited set of critical objectives and activities, a company can channel its resources and efforts more effectively, creating a significant advantage over competitors who spread themselves too thin.

     This advantage is particularly important in the context of expanding into new and emerging markets. When entering unfamiliar territories, companies face numerous challenges and uncertainties, ranging from cultural differences to regulatory hurdles. By maintaining a clear focus on its core strengths and strategic priorities, a company can navigate these challenges more effectively and avoid the pitfalls of trying to be everything to everyone.

      Moreover, a focused strategy allows a company to develop deeper expertise and specialization in its chosen areas, creating a competitive advantage through differentiation. By excelling in a specific niche or market segment, a company can build a loyal customer base and establish itself as a leader in that space (Rumelt, 2011). This is especially valuable in agro-industrial markets, where customers often seek specialized solutions tailored to their unique needs and constraints.

     The advantage of focus in strategy is crucial for companies expanding into new markets. By concentrating resources and efforts on a limited set of strategic priorities, a company can navigate challenges more effectively, develop deeper expertise, and establish a competitive advantage through differentiation.

Decision Model

Impact of Decision Models on Company’s Direction with Strategy

     In my role as part of the team involved in shaping strategic initiatives for our company, I have primarily relied on a decision model based on rigorous financial analysis. This model involves forecasting market demand, estimating costs and revenues, and calculating key metrics such as net present value and return on investment (Lam et al., 2023). While this approach has been valuable in evaluating specific projects and investments, it has some limitations when it comes to setting the overall strategic direction for entering new markets.

     On the one hand, this financially-driven model helps to ensure that our strategic choices are grounded in sound economic reasoning and that we allocate our resources efficiently. By carefully analyzing the financial implications of different options, we can make more informed decisions about which markets to target, which products to offer, and how to price them.

     However, this model may hinder our ability to think more broadly and creatively about our strategic direction. By focusing narrowly on financial metrics, we may overlook important qualitative factors such as customer preferences, cultural dynamics, and long-term market trends. Additionally, this model may not fully capture the potential synergies and intangible benefits of certain strategic choices, such as building brand reputation or fostering innovation.

Other Decision Models Being Considered

     To overcome the limitations of our current decision model, I am proposing the integration of two additional frameworks: scenario planning and the jobs-to-be-done approach. The first, scenario planning, involves envisioning multiple plausible futures and developing strategies that are robust across a range of potential outcomes (Mortlock & Osiyevskyy, 2023). By systematically exploring the key uncertainties and drivers of change in the emerging markets we are targeting, we can develop a more nuanced understanding of the risks and opportunities we face. This approach enables us to be more proactive and agile in our decision-making, as we can anticipate and respond to changes in the business environment more effectively. By considering multiple scenarios, we can stress-test our strategies and ensure they are robust enough to withstand various market conditions and uncertainties, helping us create more adaptable and resilient strategies.

     The jobs-to-be-done framework focuses on understanding the underlying needs and motivations of customers in a given market (Diderich, 2024). By deeply empathizing with the challenges and aspirations of farmers, food processors, and other actors in the agro-industrial value chain, we can design products, services, and business models that create compelling value propositions. This customer-centric approach helps us prioritize our strategic initiatives and allocate resources to areas that have the greatest impact on customer satisfaction and loyalty. By aligning our strategies with the jobs our customers are trying to get done, we can differentiate ourselves from competitors and build a strong foundation for growth in new markets.

     Integrating scenario planning and the jobs-to-be-done approach into our decision-making process will significantly aid our strategic direction setting. Together, these models provide a powerful combination for anticipating future challenges and opportunities while staying focused on delivering value to our customers. By incorporating these frameworks, we can bring a more holistic and strategic perspective to our choices, complementing our existing financial analysis and enabling us to make more informed and effective decisions about our strategic direction. This approach ensures that our strategies are both forward-looking and customer-centric, positioning us to succeed in the dynamic and complex agro-industrial markets we are targeting.

Conclusion

     As our company embarks on a new phase of growth and expansion into emerging markets, the importance of strategic direction setting cannot be overstated. By carefully examining our approach to strategy formulation, the key decisions that will shape our path, and the decision models that underpin our choices, we can position ourselves for success in these challenging and dynamic environments. Through a combination of rigorous financial analysis, scenario planning, and a customer-centric jobs-to-be-done approach, we can develop a more holistic and adaptable strategy that leverages our core strengths while remaining responsive to changing market conditions.

     By also entrusting our efforts to the Lord and seeking His guidance throughout this process, we can navigate the complexities of these new markets with wisdom, purpose, and confidence. Ultimately, the strategic choices my company makes in the coming months and years will have a profound impact on our ability to create value, compete effectively, and fulfill our mission of nourishing the world. By embracing a thoughtful and disciplined approach to strategy formulation, rooted in a deep understanding of the markets we serve and the capabilities we possess, we can chart a course toward lasting success and make a meaningful difference in the lives of those we serve.

References

Baki, R. (2023). The evaluation of target markets for hazelnut exports with the classification approach of potential market alternatives. British Food Journal, 125(10), 3540-3552.

Diderich, C. (2024). An axiomatic model towards understanding value creation and appropriation in demand-driven markets. Journal of Strategy and Management, 17(2), 375-390.  https://doi.org/10.1108/JSMA-11-2023-0299 Links to an external site.

Gamble, J. E. (2023). Essentials of strategic management: The quest for competitive advantage (8th ed.). McGraw-Hill Higher Education.

King James Bible. (2017). King James Bible Online.  https://www.kingjamesbibleonline.org/ Links to an external site.  (Original work published 1769).

Lam, W. H., Lam, W. S., Liew, K. F., & Lee, P. F. (2023). Decision analysis on the financial performance of companies using integrated entropy-fuzzy TOPSIS model. Mathematics, 11(2), 1-18.  https://doi.org/10.3390/math11020397 Links to an external site.

Mortlock, L., & Osiyevskyy, O. (2023). Strategic scenario planning in practice: Eight critical applications and associated benefits. Strategy & Leadership, 51(6), 22-29.

Rumelt, R. (2011). Good strategy bad strategy: The difference and why it matters. Crown.

Annotated Bibliography

Baki, R. (2023). The evaluation of target markets for hazelnut exports with the classification approach of potential market alternatives. British Food Journal, 125(10), 3540-3552.

Summary of Key Points: In this research article, Baki proposes a novel approach called the Classification Approach of Potential Market Alternatives (CAPMA) to help exporting countries identify potential market opportunities for their products or services. The study focuses on evaluating potential market alternatives for Turkey's hazelnut exports using the CAPMA technique, which combines the entropy method for calculating criterion weights and the ARAS method for ranking alternatives. The approach classifies potential markets into four categories based on their potential to increase exports. The study found that the USA, India, the United Kingdom, and Japan were classified as markets with the greatest potential to increase hazelnut exports from Turkey.

Evaluation of the Quality of the Publication: The British Food Journal is a well-respected, peer-reviewed journal that has been publishing research on food-related topics since 1899. The journal has a rigorous peer-review process and is indexed in several reputable databases, such as Scopus and Web of Science. The journal's impact factor and its long-standing reputation in the field of food research indicate that the publication is of high quality and the research presented in this article has undergone thorough scrutiny before acceptance.

Evaluation of the Quality of the Author: Rahmi Baki, the sole author of this study, is an Associate Professor in the Department of Management Information Systems at Aksaray University, Turkey. He holds a Ph.D. in Industrial Engineering from Kırıkkale University, Turkey. His research interests include Multi-Criteria Decision Making, Fuzzy Logic, Supply Chain Management, Enterprise Resource Planning, and Tourism Management. The author's academic background and research interests are well-aligned with the topic of the study, indicating that he has the necessary expertise to conduct this research. However, the article does not provide information on the author's previous publications or research experience, which would have further strengthened the evaluation of the author's quality.

Where this Fits Into the Discussion: This research article contributes to the discussion on strategic direction setting and decision models in agro-industrial expansion by providing a practical example of how a novel decision-making approach can be used to identify potential export markets for agricultural products. The CAPMA technique proposed in the study can be utilized by exporting countries or firms seeking to diversify their target markets and develop effective marketing strategies. The findings of this study, specifically the identification of the USA, India, the United Kingdom, and Japan as potential markets for Turkish hazelnut exports, can inform strategic decision-making processes in the hazelnut industry. Furthermore, the article highlights the importance of using empirical data and scientific methods in the target market selection process, which aligns with the broader discussion on the role of decision models in shaping strategies and achieving competitive advantage in the agro-industrial sector.

Diderich, C. (2024). An axiomatic model towards understanding value creation and appropriation in demand-driven markets. Journal of Strategy and Management, 17(2), 375-390.  https://doi.org/10.1108/JSMA-11-2023-0299 Links to an external site.

Summary of Key Points: In this conceptual paper, Diderich introduces an axiomatic approach combined with an analytical extension of the jobs-to-be-done framework to understand value creation and appropriation in demand-driven markets. The author argues that in these markets, customer value is defined by the customer rather than the firm, and a firm's profits are driven by the customer's willingness to pay for the value they receive, adjusted by costs. The paper presents a framework to help understand value creation and appropriation and shows how to influence them through strategic decision-making. Key insights include the importance of considering value creation for customers and value appropriation by firms simultaneously, solving a combinatorial optimization problem to choose customer segments, product features, and price, and engaging in a dynamic competitive game to react to competitors' moves over time.

Evaluation of the Quality of the Publication: The Journal of Strategy and Management is a well-respected, peer-reviewed journal that publishes research on strategic management, decision-making, and related topics. The journal is indexed in reputable databases such as Scopus and Web of Science, indicating its high quality and impact in the field. The thorough peer-review process ensures that published articles, including this one, have undergone rigorous scrutiny and meet high academic standards. The journal's focus on strategy and management aligns well with the content of this paper, making it an appropriate venue for publication.

Evaluation of the Quality of the Author: Claude Diderich, the sole author of this paper, is affiliated with Innovated, a consulting firm based in Richterswil, Switzerland. While the author's academic background and credentials are not explicitly stated in the article, the depth of the analysis and the clear presentation of the axiomatic approach and analytical framework demonstrate the author's expertise in the field of strategy and demand-driven markets. The author's affiliation with a consulting firm suggests practical experience in applying these concepts to real-world business situations. However, without further information on the author's previous publications or research experience, it is difficult to fully assess their academic standing and contributions to the field.

Where this Fits Into the Discussion: This paper contributes to the ongoing discussion on strategic direction setting and decision models in agro-industrial expansion by providing a conceptual framework for understanding value creation and appropriation in demand-driven markets. Although the article does not specifically focus on the agro-industrial sector, the insights derived from the axiomatic approach and the analytical extension of the jobs-to-be-done framework can be applied to various industries, including agro-industrial firms seeking to expand into new markets.

The paper emphasizes the importance of considering customer value creation and firm value appropriation simultaneously, which aligns with the broader discussion on the role of decision models in shaping strategies and achieving competitive advantage. The combinatorial optimization problem presented in the article can inform strategic decision-making processes by highlighting the need to simultaneously consider customer segments, product features, and pricing to maximize a firm's profitability.

Furthermore, the dynamic competitive game described in the paper underscores the importance of adaptability and responsiveness to competitors' actions, which is crucial for agro-industrial firms venturing into new and emerging markets. By incorporating the insights from this paper, agro-industrial firms can develop more customer-centric and demand-driven strategies that create value for their target segments while ensuring the firm's long-term profitability.

Lam, W. H., Lam, W. S., Liew, K. F., & Lee, P. F. (2023). Decision analysis on the financial performance of companies using integrated entropy-fuzzy TOPSIS model. Mathematics, 11(2), 1-18.  https://doi.org/10.3390/math11020397 Links to an external site.

Summary of Key Points: This research paper proposes an integrated entropy-fuzzy TOPSIS (Technique for Order of Preference by Similarity to Ideal Solution) model to evaluate the financial performance of companies based on liquidity, solvency, efficiency, and profitability ratios. The proposed model consists of two stages: (1) using Shannon's entropy weight method to determine the objective weights of financial ratios, and (2) employing the fuzzy TOPSIS model to assess and rank the companies based on their financial performance. The study identifies return on equity (ROE) and debt-to-equity ratio (DER) as the most influential financial ratios for evaluating the financial performance of companies in the Dow Jones Industrial Average (DJIA). The companies with good financial performance, such as HD (Home Depot), are determined based on the proposed model for portfolio selection. The proposed model is validated using a mean-variance (MV) portfolio optimization model, generating a higher mean return than the benchmark DJIA index.

Evaluation of the Quality of the Publication: Mathematics is a reputable, peer-reviewed, open-access journal published by MDPI. The journal has a rigorous peer-review process and is indexed in several well-known databases, such as Scopus and Web of Science. The journal's impact factor and its focus on publishing high-quality research in various fields of mathematics demonstrate the credibility and quality of the publication. The paper's clear presentation of the proposed model, its application to a real-world case study, and the validation of the model using a portfolio optimization technique further emphasize the quality of the research.

Evaluation of the Quality of the Author(s): The authors of this paper, Weng Hoe Lam, Weng Siew Lam, Kah Fai Liew, and Pei Fun Lee, are all affiliated with the Department of Physical and Mathematical Science, Faculty of Science, at Universiti Tunku Abdul Rahman in Malaysia. Although the paper does not provide detailed information about the authors' academic backgrounds and research experience, the clarity and thoroughness of the research methodology, data analysis, and presentation of the results demonstrate their expertise in the field of financial performance evaluation and decision-making models. The authors' affiliation with a reputable university and their ability to publish in a well-respected journal further support their credibility as researchers.

Where this Fits Into the Discussion: This research paper contributes to the discussion on strategic direction setting and decision models in agro-industrial expansion by introducing an integrated entropy-fuzzy TOPSIS model for evaluating the financial performance of companies. Although the study focuses on companies in the DJIA, the proposed model can be adapted and applied to agro-industrial firms seeking to assess their financial performance and make strategic decisions for expansion into new markets.

The paper highlights the importance of considering liquidity, solvency, efficiency, and profitability ratios when evaluating a company's financial performance, which aligns with the broader discussion on the role of financial ratios in shaping strategies and achieving competitive advantage. By identifying the most influential financial ratios, such as ROE and DER, the study provides insights that can inform strategic decision-making processes in the agro-industrial sector.

Furthermore, the validation of the proposed model using a portfolio optimization technique demonstrates its potential for guiding investment decisions. Agro-industrial firms can adapt this approach to identify well-performing companies within their sector for strategic partnerships, mergers, or acquisitions, thereby facilitating expansion into new markets. The integration of fuzzy logic in the proposed model also addresses the uncertainty and vagueness often present in financial data, making it a valuable tool for decision-making in the agro-industrial context.

Mortlock, L., & Osiyevskyy, O. (2023). Strategic scenario planning in practice: Eight critical applications and associated benefits. Strategy & Leadership, 51(6), 22-29.

Summary of Key Points: In this article, Mortlock and Osiyevskyy propose a novel typology of eight practical applications and associated benefits of corporate scenario planning. These applications include risk identification, assessing uncertainty, organizational learning, options analysis, strategy validation and testing, complex decision-making, strategic nimbleness, and innovation. The authors provide mini-case studies from various sectors to illustrate each application. They also present a holistic model that groups the applications into inputs, processes, and outputs, demonstrating the relationship between different benefit-driven applications. The authors argue that by fully understanding the associated applications and benefits of scenario planning, organizations can achieve enhanced value and beneficial outcomes from this strategic tool.

Evaluation of the Quality of the Publication: Strategy & Leadership is a well-respected, peer-reviewed journal that focuses on strategic management and leadership issues. The journal is published by Emerald Publishing Limited, a reputable academic publisher, and is indexed in several prominent databases, such as Scopus and Web of Science. The journal's editorial board consists of recognized experts in the field, ensuring the quality and relevance of the published articles. The clear presentation of the novel typology, the use of case studies to support the applications, and the development of a holistic model in this article demonstrate the high quality of the research and its potential to contribute to the field of strategic management.

Evaluation of the Quality of the Author(s): Lance Mortlock is the EY Managing Partner for Energy & Resources and an Adjunct Associate Professor at the University of Calgary, Canada. His affiliation with a leading professional services firm and an academic institution suggests a strong background in strategic management and scenario planning. Oleksiy Osiyevskyy is an Associate Professor of Entrepreneurship & Innovation at the University of Calgary, Canada. His academic position and research interests in strategic management and innovation indicate expertise in the field. While the article does not provide detailed information about the authors' previous publications, their institutional affiliations and the quality of the research presented in this article support their credibility as experts in the field of strategic scenario planning.

Where this Fits Into the Discussion: This article contributes significantly to the discussion on strategic direction setting and decision models in agro-industrial expansion. The proposed typology and holistic model of scenario planning applications can be directly applied to agro-industrial firms seeking to navigate the complexities of expanding into new and emerging markets.

The eight applications identified in the article, such as risk identification, assessing uncertainty, organizational learning, and strategy validation, are highly relevant to agro-industrial firms facing the challenges of market expansion. By adopting scenario planning techniques and understanding their associated benefits, these firms can better anticipate and prepare for potential futures, make informed strategic decisions, and develop the flexibility needed to adapt to changing market conditions.

Furthermore, the case studies presented in the article, although not specific to the agro-industrial sector, demonstrate the versatility and effectiveness of scenario planning across various industries. These examples can serve as inspiration for agro-industrial firms looking to implement scenario planning in their strategic decision-making processes.

The holistic model proposed by the authors, which categorizes the applications into inputs, processes, and outputs, provides a clear framework for agro-industrial firms to structure their scenario planning efforts and maximize the benefits derived from this strategic tool. By understanding the interplay between the different applications and their respective roles in the scenario planning process, agro-industrial firms can develop more comprehensive and effective strategies for market expansion and long-term success.

Discussion Thread: Setting Direction, Advantages / Disadvantages, and Decision Models

 

Ange Desprez 

BUSI 770

School of Business: Liberty University 

May 25, 2024

 

 

 

Author Note 

         Ange Michele Desprez 

         I have no known conflict of interest to disclose. 

         Correspondence concerning this article should be addressed to  

Ange Michele Desprez 

Email: [email protected] 

 

Introduction

         Charting a company’s direction through strategic planning is a critical aspect of business management. It involves evaluating strategic choices and understanding their advantages and disadvantages. Decision models play a vital role in this process, guiding the development of effective strategies. Continuous evaluation and consideration of various decision models are essential for maintaining strategic relevance and effectiveness. This discussion explores the process of setting a company’s direction with strategy, examines a key advantage or disadvantage from Rumelt’s text, and evaluates current and potential decision models.

Process: Setting the Company’s Direction with Strategy

         Setting a company’s direction with strategy involves a systematic process designed to align organizational goals with market opportunities. The first step in this process is environmental scanning, where the company analyzes external factors such as market trends, competition, and regulatory changes, as well as internal factors like resources, capabilities, and core competencies (Gamble, Peteraf, & Thompson, 2021). This analysis helps in identifying opportunities and threats, as well as strengths and weaknesses.

         Next is the strategy formulation phase. In this step, the company develops its vision and mission statements, which articulate its long-term aspirations and core purpose. Based on these foundational statements, strategic objectives are set. These objectives are specific, measurable, achievable, relevant, and time-bound (SMART) and guide the company towar