Term Paper: Impact of Big Data on Business Strategy

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¶ … Big Data on Business Strategy

Business Strategies

The competitive nature of today's business environment is driving companies to use technology driven business strategies (Berman & Hagan, 2006, p.28). Big Data and technology are undoubtedly impacting on business strategy progression. The research indicates that Big Data offers real-time application, which allows businesses to move information to analytics tools from various systems and sources. The ability for a business to analyze the behavior of a consumer based on experiences depends on the ability of their Database system to load, transform, analyze, and present data. Technology is finding wide application in organizations, creating opportunities for strategy formulation, implementation, assessment, and evaluation. This research finds it necessary to identify key technological advances that are affecting business strategies for today's organization. To achieve this, I will map out the development of business strategy from its inception in the 1970s to the current situation. This will identify key approaches in the area, and develop a road map to show how technology is adopted into the business environment. The goal is to use this road map to show that the introduction of Big Data in the world is the beginning of Big Data application in business strategies in the near future of organizations.

The research shows that the evolution of business strategies has gone along with the revolution of management approaches. This evolution in strategic management influenced corporate strategies. Changes in management occurred mainly in the 1970s, when the trustees and managers in control of companies turned to managerial capitalism (Kaen, 2003). Modern capitalism went through 2 major evolutions, 1930s to 1970s 'managerial capitalism,' and the 1980s and 2000s 'shareholder capitalism. Managerial capitalism dominated the business scene for its association with innovation and growth driven by trained executives from large international and national firms (Kaen, 2003). In this phase, monopolies under the check of labor unions and government formed the business process. Business strategies led to relatively tame business cycles, which realized an increase in investor growth, and the gap between the rich and poor decreased.

Currently, evolution in communication and information technology in the business world is responsible for the development in management information systems (MIS). The field is premeditated to assist in acquiring managerial skills necessary in developing the strategic capability and supporting the dynamics of businesses and organizations. Information technology systems have led to the need for management approaches that integrate business processes and technology. A manager today requires skills that will assist in the choosing the right business strategy to remain competitive. Managers require developing infrastructure, processes, and systems. This also requires being informed on the use of technology to increase the competitive advantage of the organization, this being one of the main functions of management. This research finds that effective business strategy requires an understanding of the functions of management, business processes, and that of the enterprise strategy in order to identify resources and issues in the current market. This is necessary to identify the value and opportunities Big Data can offer an organization today.

History and Evolution of Business Strategy & Leadership

Business strategy has substantially advanced in the last fifty years, from the capstone ideals to the present rigorous and integrative approach. Three schools of thought that contributed to the development of the field of strategy, as scholars, economists and behaviorists have been identified (Bowman, Singh & Thomas, 2001, p.31). Scholars from the mid 1960s and early 1970s, focused on the elements and process of strategy from top management, within and without the company. These scholars are like Chandler Alfred (1962), Rumelt (1974), Mintzberg (1978) and Pettigrew (1987) developed the process approach to strategy. Economists influenced this field in the late 1970s and 1980s, by focusing on the industrial structural characteristics that limit strategies like cost and price, entry barriers, growth patterns, profitability rates and economies of scope and scale (Bowman, Singh & Thomas, 2001, p.31). Later generations of economists developed gaming in strategy, by factoring in issues in a competitive environment linked with competitive rivalry and industrial competition. Economists who contributed to business strategy are, Dixit and Nalebuff (1991), Saloner (1991), and Camerer (1985) (Bowman, Singh & Thomas, 2001, p.31). The third contributors to the evolution of business strategy are behaviorists from the 1980s and 1990s, who built on earlier work (Bowman, Singh & Thomas, 2001, p.31). These are like Pettigrew (1987), Burt (1997), Hannan and Freeman (1989), Tversky & Kahneman (1986) (Bowman, Singh & Thomas, 2001, p.31). Behaviorists have focused on equilibrium and the optimization of economics, survival, and functioning of firms, behavior of people, and the inter- and intra-organizational networks (Bowman, Singh & Thomas, 2001, p.31). I find that while many of these theories are not used exclusively, each group has contributed to business strategy, with trace influences still evident in today's integrative strategies.

The first definitive business strategy is can be traced is that of Chandler (1962), whose strategy has roots in business policy, industrial economic school, and prescriptive model of objectives for management (Whittington, 2008, p.267). This strategy is "Corporate Strategy," which defines the role of management as a definite strategy process that will achieve organizational goals. The next remarkable strategy was Ansoff strategy, which focuses on the combination of products and markets, and the continued evaluation of the markets for effective exit and entry decisions (Moussetis, 2011, p.103). Corporate strategy later evolved in the 1970s to incorporate organizational and business dynamics like market penetration, firm size, market share, diversification, acquisitions, mergers, vertical integration, and the general portfolio theory (Moussetis, 2011, p.104).

Business strategy evolved further in the 1970s with the contribution of Henderson Bruce's Boston Matrix. In this theory, business strategy focuses on growing markets' market share as a profitable area for any organization (Allio, 2010, p.30). The Boston Matrix has various variations to fit multitude of market conditions affecting businesses. These are like the off the shelf strategy used in American corporations, the McKinsey Matrix and the General Electric (Allio, 2010, p.32). This led to new strategies like George Steiner's strategic planning, which is a systematic approach. Steiner's approach requires strategy to be a part of management. The 1980s ideologies were under the influence of Michael Porter's Five Forces Theory (Grundy, 2001, p.247). Porter's approach postulates three methods through with businesses can gain a competitive advantage. These are low cost production, differential production and focused production. His theory led strategic thinking away from market share to firm and product differentiation (Grundy, 2001, p.247). A significant business strategy that emerged during this period was Kenichi Ohmae's 3C's Framework, where the basis of the strategy is customers, competition and the corporation. In the 3C's approach, corporation-based strategies strive to develop the strengths of the company in relation to competitors, at all functional aspects of business (Bowman, Singh & Thomas, 2001, p.34). Customer-based strategies entail consumer preferences, market segmentation and should the basis of all other strategies. Competitor-based strategies entail the search of sources of differentiation in a firm's business processes.

The 1980s also marked the use of military strategies in business strategies. This approach arose from the narrative of the Art of War by Sun Tzu, where military strategy aims at defeating and gaining advantage over the enemy by fighting few battles (Bowman, Singh & Thomas, 2001, p.35). The analogy of military strategy is not in use today, but has wide application in Philip Kotler's model. The mid 1980s and 1990s have historical significance to the evolution of business strategy, as the period marks the beginning of the realization of innovations. Dynamic business strategies arose from the need to keep up with the hasty technological developments, especially in industries like communications, information technology and computers (Bowman, Singh & Thomas, 2001, p.36). Innovative strategy is not only in the technological industry, but is in use as innovative management. Rothwell and Christensen postulated innovative strategic management, to manage responsiveness and flexibility to innovative changes.

To these theorists business strategy is to follow strategic intent by having a perception that the lack of resources is not an obstacle to development and growth, but ambition is important as it drives a businessperson to seeking ways around obstacles (Eckhardt & Shane, 2003, p.334). Therefore, business strategy seized to be about formal planning and the sequential development of objectives, mission, action plans, and tactics. Strategy became the "fly-by-wire" approach, where learning occurs in the process. Opportunity -- based strategy found its place in today's world following the effects of a continuously changing business environment. The strategy is more applicable today as information technology and computers are in every aspect of business (Eckhardt & Shane, 2003, p.334). An opportunity-based strategy in this case also encompasses technology-driven strategies, which make use of available technology to support business strategies. Another practical example of opportunity-based strategies, are Big Data strategies, which are overcoming the challenges of an explosion of information, with advanced database management technologies (Lovas & Ghoshal, 2000, p.876). Today's business is driven by the motivation of gaining a competitive advantage by continuously assessing and formatting its strategies to fit into the… [END OF PREVIEW]

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