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Strategic Market Diagnosis and Prescription of " Free Market Economy"

Updated on April 4, 2011
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Christopher F. Bueno is currently the Dean of the College of Education, University of Northern Philippines, Vigan City.

             The decaying capitalist structure of the “free market economy” has been wrongly prescribed by many management gurus. They say that this is the death of capitalism and free enterprise economy as tangled by the global concerns of recession, unemployment, corporate bankruptcy, and other variables of market meltdown. They blame the economic system of capitalism by Adam Smith no one thought that the overemphasis of the diagnosis and prescription of management gurus along quality management, ISO, financial management have left the business firms remained imbalance for this decade. Find out the answer as Savior redefines the balance business strategic variables to sustain the vibrance of the “free market economy”. Remember that capitalism through its market structures and systems did not fail from the time of industrial revolution only now that we have experience the market failures on the global market.

            The strategic plan may provide the basic diagnosis and prescription on the role of the corporate world in sustaining to get the bulk of market shares as defined by the business goals, vision, mission, and philosophy. This is further supported by well integrated internal environment variables along the business operation of quality management programs, quality assurance, ISO, benchmarking and kaizen, financial accounting system, and other marketing programs that may improve the organizational productivity.

              The concept strategic planning confines in the organizational analysis (along environment scanning and SWOT analysis) to strategically operate the desired organizational outcome for productive purpose. It is necessary to have strategic plan for the firm or business to find the competitive edge on the product or service market in order to get higher market share in the service area. The competitive environment strategic planning provides better opportunity to strategically defined the higher market share as a result of strategic planning.

            Historically, the strategic planning evolves in its original form as the annual profit budget which was confined with the financial viability in the firm’s yearly operation. It had been able to evolve into long range planning that extends 2-5 years which exceeds the annual profit. Finally, the corporate and strategic planning has been used by service and product companies are directed more on the expected environmental conditions. The competitive condition of the company provides better opportunity to increase the profitability level in the competitive market.

            The blueprint of corporate culture provides the basic ingredients of the internal locus of the business firm along the strategic direction based on vision, mission, philosophy and the objectives of the business firms. The business financial report on huge profits basically considered the quality products in the market designed by the strategic decisions of the smart decisions of the top management and the operational management. This produces the domino effects of organizational promotions by the smart guys in the heart and mind of the classic management authority.

            However, the corporate world would not statically limit the power house of the internal environment by the visionary leaders, dynamic organization’s culture and values, and the quality management designed product and service with ISO certifications. The gurus of business management may formulate the by the organizational analysis conferring the commitment with the questions that must be answered on :

(1) Where do we want to be in the future?

(2) What will we look at that time?

(3) What will be doing differently?

             The corporate world should magnify these organization directions for the duration of 5 to 10 years by that time the competitive edge will be able to produce good results as to the level of productivity and profitability. The business firms directed to the strategic vision that all resources of the organization may fulfil such visionary direction. The clear cut organizational goals, missions, objectives are articulated to finally respond the needs of time.

            There were many success management strategies that provided names of famous management gurus such as Covey, Deming and etc. that gave the famous household names of corporate culture and values that succeeded the business firms. You will find the business centers and libraries full of business management books to secure the ISO design on quality management. No doubt the art of business must rely so much about the internal organizational networks of management vision, values, philosophy and objectives to target the clients’ satisfaction from the quality management principles.

            Actually, Savior has no objection about that quality management design for the organizational productivity and profitability. There is no objection about the highly technical financial analysis as to the profitability indicators income flows, financial liquidity, assets and liabilities, cash flow statement and depreciation values. The accounting and management system may provide the heart and soul in the internal organization for the business firm.

          Until the world was shocked by the stocks exchange melt down in New York financial market. The world financial market collapsed that followed the breakdown of corporate enterprises in business with domino effects of the entire society. The world experienced the global recessions not only in the United States but also in Europe and Middle East. There were slow down of market system in Asia yet survive by the strong shock waves of financial failures from the industrialized nations of this region. The international trade and global corporate business experienced the unexpected retreat of organizational resources as they need to reduce the personnel and manpower, salaries, and other compensation package. No one thought the worst of the financial crisis in the global markets accounted the rise of unemployment, bankruptcy of business, heavily losses of credit accounts, close shops, and other shocking news of corporate world.

           The 21st century is the business period for the decay and decadence for capitalism as designed by the Adam Smith in the “Wealth of the Nations” .It was the centrepiece of global market development for more than 5 centuries. It is only the remaining economic system that attached by the ideals of democratic government from the “free market enterprise”. The quality management principles and ISO certification with the strategic vision of the business enterprise could not survive the global recessions to improve the system of corporate governance. The competent accountant and CEO Managers have run out of business options to clear the clouds of darkness in the financial market. But how come the global market of other Asian countries not those of industrialized nations survived such financial shocks.

           What went wrong in the financial markets, investments, stock exchanges, global markets management? How can we survive these financial shocks particularly the business firms? These are the intriguing dialectical concept in business. Let us take this case, the corporations are too engrossed in the heart and mind of the internal environment as to the quality management and service-oriented of management. The corporate success has been confined by sustaining the strength of the organization by taking into consideration the idea of benchmarking and quality shifting. The ISO and management quality system have been continuously focus in the business enterprise. These are the important quality configuration as to the market shares of the stakeholders and clients. The higher market shares taken in the business firm then the productivity and performance output now defines the success of the management decisions. So improve the organizational systems as much as possible come up with strategic management design of the product then you can expand the market.

           The organizational weaknesses are properly diagnosed by management experts the financial consultants are directed to study the market financial viability with strong marketing promotion program. The management experts provide infrastructure investments as coordinated by marketing advertising in a dynamic and vibrant corporate culture. The internal environment organization complexities may have been the subject of too much discussion including the market design and promotion. Of course, these are the basic consideration in business firm but too much emphasis on its strategic internal design may lead to over investment.

          Actually, the global market system on the capitalist market structures and the Adam Smith ‘”free market design” are not the main root of business collapse. However, there is poor diagnosis by management experts as to the global demand by the different market systems. Notice that capitalism survived in many centuries of economic growth and development. The existence of developed and industrialized countries have been the by product by the market structures of capitalism. However, the 21st century has over emphasized internal management tools in financial accounting, management approaches,

         The business diagnosis must position the balance of the internal and external environment as the strategic market in the corporate world should know as the harmony of the business enterprise. There is no doubt that the internal environment has been matured long time ago as management diagnosis and prescription are made available through the constant review of the organizational analysis. The other organizational side must respond to the external environment which has long forgotten except on the strategic management on the target stakeholders and clients in the possible shared market. There are pass by consideration as to the importance of the external environment although the passive business responses have been developed for the 21st century as the proactive image building of any corporations or companies that may uphold business integrity and quality of service to the clients.

             The business balance mechanism might be secret of sustainable success as the external environment must given the same importance with that of the internal environment in the strategic management. Let us now take into consideration about the value of external environment. Basically, these are the political, economic socio-cultural, technological factors that might affect the operation the business firm. Likewise, identifying the SWOT analysis may bring better value for the outside opportunities and threats derive from the environmental factors. The business and management books may not value so much the environmental opportunities and threats that might have influence to the productivity on the market share for the business firms. The external environment can only be find in the strategic management. We also can find extensive explanations about management approaches, process, tools, systems and techniques. However, you can find few explanations about the external environment that may produce the lifeblood in any organizations or corporations exist in the market place.

             Let us take the case of political factor in the external environment that may directly influence the business firms. The basic consideration in the production process may come into play about the government policies and support about cheap labors. The production of certain goods and services has to consider the political viability for the existing market of the business firm.

           There are complexities of market forces and regulations along the political considerations in the external environment by evaluating the opportunities and threats. The corporations or any business firms may consider the cheap labor, economic incentives, political stability and friendly business regulations. The environmental opportunities may look further as to the productivity and higher return of investments. However, the environmental threat on the business viability or feasibility relies so much about the economy that does not sustain economic growth, political stability and integrity. But in the 21st century the reliance on the static political factors being considered by corporations are becoming so complex that you cannot simply rely past judgement when the business storms come in particularly in a fully developed and matured society.The underlying concern on business storms such as global recession, financial fraud, government change of administration and the complementation of natural disaster may strike the business in total death and bankruptcy. It is no longer safe to assume the political stability and integrity with friendly political environment to response the aftershock of business that may lead to death.

            The corporations and any business firms in the 21st century are no longer safe as the market forces define now the global market impact as to the external environment where the market share is always present. The political factor is not only the concern in the external environment as it chained the forefront of societal activity along environmental factors that may include natural disasters; the socio-cultural factors that may change the image of the shared market; technological factors; and the human societal consciousness about the complementary and dynamic nature of social development that dictates the demand in the market forces.

          The 21st century may find interesting human struggles as to the political reforms on the rational view of “human freedom and integrity”. Likewise, the idea of freedom is contagious as the traditional societies are transforming the social image of “freedom’ not on tyranny. The political stability has deeper meaning on government regulation, issue of graft and corruption, environmental compliance and other political consideration.

         The human culture defines so much about the shared values and the way of life as complemented by the rule of law and the unexpected natural disasters. The socio-cultural divergence has a new image from the technology-based system that acculturate the minds of the society. The human decadence on the respect of traditional ideologies no longer a popular belief as the market forces may not only be in the marketing program such as advertisements and other marketing promotions. The market segmentation is to delicate not to respond the external environment as the fads and fashion on internet and media entertainment overrule the human culture of nations.

           The strategic market in the 21st century is now on the external environment and must redefine the center stage of corporate strategic management. The key management issues are the social impact of the global market share such as socio-cultural magnitude of market shares; transforming political environment regulation and productivity; complementation of financial management forces along the external environment; systemic social approach of business development; strategic business mitigation on natural calamities; strategic mitigation on financial fraud; corporate social responsibility; and social equity mechanism.

          In the business world, these complementary concepts on external environment are not well known in the strategic management. In corporate board meeting the geographical location of the offices, market shares of goods and services, production line all other investments are situated in the heart of the external environment consequences. What might be the reaction of the corporate board members to solve the business problems by using the competent tool of business management in these scenarios?

  1. The corporate location has been struck by the super cyclones and storms that have displaced thousands of people destroyed the entire corporate and commercial centers.
  2. The Arab nations are now at the center stage of destruction as the people demonstrated in the corporate districts and destroyed the once bustling cities with billions of dollars investments.
  3. The epitome of commercial districts rage into rabble by the earthquake ( with the 8.9 Richter scale intensity) destroyed the famous sky towers of the multi-national corporations.
  4. The financial fraud in the stock exchange has now reached to its height as the investor worried in their investments and resulted to the global recessions in Europe now in Asia.

          None of the management strategies come into play once the business situations are in turmoil in the shared market. Of course, there is always risk in business! What if business mitigation is also directed from the external environment as part of the strategic management endeavour as balance by the management tools. That might pursue strategic difference to handle the looming complexities of the political, economic, and technological factors. Remember, the strategic mitigation in the share market is something to do with the socio-cultural and environmental factors. The market share responds to human collectives values that created the demand as they appreciated the teaching of management gurus within the corporation called “home”. Explore the strategic market shares then corporations may now balance the harmony of business.


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