Managing Strategic Change Aegon

Contents

Question 1 : Strategic Drift 3

Question 2: Discuss the external factors that influenced change within AEGON 7

Question 3: Critically Discuss the 8 behaviours 11

Question 4: Evaluate the role of the Auditing Process...business strategy 14

Appendix 1 15

2006 financial highlights - AEGON in the UK 15

References 16

Question 1 : Strategic Drift

Thompson, Stickland and Gamble (2005) suggest that an organisational strategy should not

be perceived as a fixed plan that the organisation utilises to compete within industry but

rather view an organisational strategy as a temporary plan of action which is ever evolving to

incorporate external environmental influences and internal organisational influences. As

organisations continue to evolve their strategic plans due to internal and external stimulus,

identified by Thompson et al (2005), organisations drift from the original strategic vision of

the organisation.

Sony Corporation a leader in consumer electronic since early 1990, appoints a new CEO in

1995. The CEO believes in an integrated technologies model and steers the organisation into

trying to find a way in making this business model profitable.

Charles Handy (1989) described strategic drift as the subtle changes of the organisations

strategy that leads the organisation away from its intended destination to a destination that is

unintended. Organisations must ensure alignment between the organisations operational

activities, through adjustments in the organisations strategy, and the environment within

which the organisation operates.

Sony Corporation virtually abandons the consumer electronic business model and in doing so

failed to capitalised on the opportunities presented in flat panelled television , mobile devices

rather allowing competitors to fulfil the gap and become more of a threat in a once dominant

market.

Ken Belson,(2005,[A]), Sony corporation have been losing value since 1995 under the

new leadership believing in a business model which does not deliver, as a result it's lost

75% of its value to shareholders and have been repeatedly beaten in markets that it once had

control over. Sony Corporation is now trying to introduce change to induce profitability and

prevent the demise of a giant.

Egan (2006) makes reference of Miller (1990) and puts forward the idea that organisations

are trapped by past successes and thus do not move forward with organisational strategy

matching the environment but rather restrict the strategy to that which worked best in the

past. Leading to the initiation of strategic drift and culminating in a radical change or demise

of the organisation.

Thompson (2005) Intel Corporation were put under extremely high competitive pressure

in the 1990's due to the cost advantage held by the Japanese competitors in the production of

memory chips. During this period memory chips accounted for 70% of revenues. Intel soon

realised that it was unable to meet the Japanese in the ensuing price war and decided to

change its strategy to one that allowed the organisation better growth, thus avoiding the

Icarus Paradox, Intel Corporations change cam at the most appropriate moment during

strategic drift, to avoid the needed transformational change and possible demise, instead

becoming more profitable, as the organisation responded to the environments external and

internal stimulus.

Figure 1: Strategic Drift : Delbridge,Gratton,Johnson (2006)

Delbridge,Gratton,Johnson (2006) discuss the argument presented by Johson,Scholes and

Whittington (2005), organisations have differing phases of change, arguing that an

organisation has first incremental change in which the organisation attempts to change in

structure and strategy to the stimulus of the external and internal environment, thereafter the

organisations may hold firm and not intoduce change, one of the reasons that may be

attributed to this is the Icarus Paradox identified by Miller (1990).

Sony Corporation are now trying to correct the strategic errors its has made and this requires

significant capital resources to return to a competitive position within the products and

markets it has firmly held in its grasp previously.

Delbridge (2006) suggest organisations must be responsive and proactive when trying to

employ an organisational strategy. By doing so the organisation completes continuous change

this ensures that strategic drift is minimised else the organisation may find a radical change is

needed, resulting in discontinuous change