Week 17

Can you think of an organization that has implemented a ‘high risk strategy’ that has resulted in success (why was it high risk at the time and why was it a success- was it good luck or good judgment)?

As the term itself suggests, “High risk strategy” can be very fruitful as well as dangerous for any organization. Many organizations have implemented the “high risk strategy”, and wall-mart is also one of them. ”High-risk strategy” resulted to be a fruitful strategy for them.

Image source: http://graphics8.nytimes.com/images/2007/04/20/timestopics/walmart.topic.395/walmart.topic.395-sfSpan.jpg

In 1962, Sam Walton opened the very first store of wall-mart in Arkansas. It raised to a total of 25 stores in five years’ time and garnering a total revenue of USD 12.6 million. Under the CEO H Lee Scott Jr., wall-mart started to integrate its business internationally too. As a result, Bharti wall-mart private limited was announced by Bharti enterprises and wall-mart as their joint collaboration in August 2007. Currently it is serving a market clients of 176 million every year and has its stores quantity to 1800 with employees and associates more than 2 million and club setting in 15 markets.

It was a high risk strategy at that moment because no one have had tried to serve products to the consumers like wall-mart was willing to do. But, wall-mart rise as a perfect example of “high-risk strategy” being a success. It was a case of good judgment too. Why was “high-risk strategy” by wall-mark a success? And why it was a case of good judgment can be found out with the help of below points:-

Wall-Mart strategy (Which is Successful):

·         Bargaining power over suppliers.

·         Predicting demand for optimization of cost.

·         Information Technology usage in all business areas.

·         Getting new market opportunities through world-wide expansion.

·         Supply-chain management and logistics successful utilization.

·         In USA market, it is the largest importer of Chinese consumer goods.

·         Very high operational efficiency.

·         Making same profits like other competitors even by providing goods in 2-3 percent lower prices than others.

Partnership:

· Strategic partnership with various Chinese firms and P & G for consultancies regarding sustainable business.
· Partnership with Environmental defense fund and CRM to implement sustainability in International business. 
·  Partnership with hospitals to earn goodwill that they can provide and speedily expand its stores.

Vision and Mission:

·    Profit earning (huge) but also satisfying and maintaining customers.

·   To help the customers to maintain quality of life and live better by saving the customers money.
·  Providing goods and services from top quality groceries, school supplies to household items which are of low prices but best quality.

Price is not the only attribute that wall-mart excels on, but also selections, availability, quality and on time delivery that their competitors cannot compete. Wall-mart Company is now bigger than 160 nations with the revenue of USD 404.16 billion. This tells us how successful this company is, and how well it implemented “high-risk strategy”.

Now, do the same for an organization who embarked in a high risk strategy that resulted in some sort of failure (why was it high risk and why did it fail – bad luck or poor judgment)?

As the term itself suggests, “High risk strategy” can be very fruitful as well as dangerous for any organization. Many organizations have implemented the “high risk strategy”, and British Broadcasting Corporation is also one of them. ”High-risk strategy” resulted to be a failure for them.

Image source: http://24.media.tumblr.com/tumblr_m34e7smp1l1qhrkl4o1_500.jpg

British Broadcasting Corporation is a British public service broadcasting corporation. Providing impartial public service broadcasting in the United Kingdom, Isle of Man, and the Channel Islands is its main responsibility. Funds are generated through its profit-making activities and from the levy of TV license fees. BBC Trust supervises BBC and its management is not intervened by government.

Why was it high risk and why did it fail?

Coming out as inflexible and bureaucratic became the main risk factors for the company. BBCs choice of adapting as a commissioning model showed that BBC is less of the programmer and more of the designer of programs made by independent production house, which has been seen in recent years. Though, these two differs in terms of skills and structural culture.

“Inbuilt Creativity” is one of the many advantages that BBC possessed, but the essential element started to reduce and became marginalized. Characterized by strong values surrounding the public service ethos, BBC has always been traditionally run under a hierarchical and bureaucratic structure. Also, the carry outs were also been changed regularly. Eventually, BBC was revealing to be lacking of customer focus, elitist and more importantly expensive. The criticism forced BBC to perform an Organizational reorganization comprising the authorization of a commissioning form. This move resulted in loss of key talents from many useful functional areas of the firm.

There occurred the situations where the commissioning model were in dilemma on broadcasting the types of programs that the viewers would like. There was a clear threat for the firm from other competitor 200+ channels for their survival. It was a really big task for BBC to even survive in the competition but the increasing prices of broadcasting costs and for new talents made it even worse.

Therefore, BBC can be considered to be an example of an organization who embarked in a high risk strategy that resulted in some sort of failure. It is a pure case of poor judgment, and it couldn’t adapt itself with the changing demand and taste of its viewers and couldn’t make proper strategies.

Reference:

About Wall-mart, [Online],  www.usanfranonline.com › Online Education Resources accessed on 25^th March 2013

About Wall-mart, [Online],  www.nytimes.com/packages/pdf/business/26walmart.pdf accessed on 25^th March 2013

About Wall-mart, [Online], www.perishablepundit.com/index.php?date=09/20/07&pundit=1‎ accessed on 25^th March 2013

About Wall-mart strategy, [Online], zenith-consulting.com/research/walMart/Wal-Mart-Strategy.pdf‎ accessed on 26^th March 2013

About British Broadcasting Corporation, [Online], http://ivythesis.typepad.com/term_paper_topics/2009/09/case-study-british-broadcasting-corporation.html#ixzz2AuIDRkjN accessed on 26^th March 2013