Question 1 “The aim of strategic management is to ensure that an
organisation achives a competitive advantage and sustains its competitive
advantage over competitors.” Apply the process perspective of strategic
management process to the Michelin company, focusing on the ‘History of the
Michelin Guide’. In your answer, you need to explain each stage in the
process perspective of strategic management and apply it to Michelin and the
development of the Michelin Guide as an effort of the company to sustain its
competitive advantage. (21 marks, of which 7 marks will be awarded to each
of the stages correctly explained and applied to the case)
Introduction: Strategic management involves a systematic process to ensure
an organization achieves and maintains a competitive advantage. The
process perspective of strategic management is typically divided into stages:
environmental scanning, strategy formulation, strategy implementation, and
strategy evaluation. This approach can be applied to Michelin’s development
and use of the Michelin Guide as a strategic tool to sustain its competitive
advantage.
1. Environmental Scanning:
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,Explanation: Environmental scanning involves analyzing both internal and
external factors that could affect the organization. This includes assessing the
competitive landscape, market trends, and internal capabilities.
Application to Michelin: In the early 20th century, Michelin recognized the
changing landscape of the automotive industry and the need to support
drivers with better information. The company noticed that the growing number
of cars increased the demand for reliable travel information. This led Michelin
to create the Michelin Guide, initially aimed at assisting drivers with maps,
restaurant recommendations, and hotel accommodations.
2. Strategy Formulation:
Explanation: Strategy formulation is the stage where an organization
develops strategies to address the opportunities and threats identified during
environmental scanning. This involves setting objectives and deciding on the
strategic direction.
Application to Michelin: Michelin’s strategy formulation involved positioning
the Michelin Guide as a prestigious and authoritative source of travel and
dining information. The company decided to leverage the guide to not only
provide value to drivers but also enhance its brand’s reputation and influence.
This strategy was intended to differentiate Michelin from its competitors and
align with its core objective of enhancing the travel experience.
3. Strategy Implementation:
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, Explanation: Strategy implementation involves putting the formulated
strategies into action. This includes resource allocation, operational
adjustments, and organizational changes required to execute the strategy.
Application to Michelin: Michelin implemented its strategy by developing a
rigorous system for evaluating restaurants and hotels. The company hired
anonymous inspectors to review establishments and award stars based on
quality. This implementation required significant investment in training and
maintaining the credibility of the guide. By effectively executing this strategy,
Michelin established the guide as a trusted and influential publication in the
hospitality industry.
4. Strategy Evaluation:
Explanation: Strategy evaluation is the process of assessing the
effectiveness of the implemented strategies and making necessary
adjustments. This involves monitoring performance, analyzing outcomes, and
refining strategies as needed.
Application to Michelin: Michelin continuously evaluates the impact of the
Michelin Guide by tracking its influence on the restaurant industry and its
alignment with Michelin’s brand image. The company reviews feedback from
both consumers and industry professionals to ensure the guide remains
relevant and respected. Regular updates and expansions of the guide reflect
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