Answer

Organizational Learning

1. Examine whether the recent recession has driven or inhibited OL strategy.

During economic recessions, firms are usually under a lot of pressure to cut costs and in many cases this might result in the allocation for training and development being cut in order to have more funds available or other ventures. The reduction in funds allocated to training and development might lead to firms reducing the number of trainings that employees attend, which might have negative impact on employee productivity (Kalyar, and Rafi, 2013). Companies usually face a dilemma of whether to reduce the funds allocated to training employees, which might cost them their competitive advantage, or maintain the same level of training and hope that it results in innovative ideas for the future profitability (Guo, Wang, and Feng, 2014). In many cases firms will be downsizing during a recession and reducing the training and development budget seems like a natural fit for a firm that is sacking its employees, hence many firms might choose to reduce training budgets during a recession.

Therefore, one might conclude that the recent recession has inhibited organizational learning as most firms reduce their training and development budgets in order to reflect the hard times that might be facing their companies. However, other firms such as Google and Facebook are taking the opportunity provided by the recession to train their employee in ways of beating the recession by being more creative. Such companies understand that employee creativity and innovativeness might be exactly what they need in order to fight the effects of the recession and emerge on top (Gillies, 2015). The companies that invest in employee learning and development stand to reap the results as they surge ahead of their competitors because if the innovative ideas generated by their employees that put them ahead of their competition (Aksoy, Apak, Eren, and Korkmaz, 2014). This implies that firms should not eliminate employee training and development in its entirety from their company budgets during recessions as this might impact the company’s profitability.

2. Analyse whether and effective OL strategy can be instrumental in achieving competitive advantage.

An effective organizational learning strategy can be instrumental in achieving competitive advantage as it would allow for employee creativity to be unleashed even as employees receive further training and development on crucial operational areas of the company. Organizational learning encourages employee creativity and innovativeness, which is crucial in gaining a competitive advantage over other firms in the same industry that are less innovative.  OL strategy is also crucial in encouraging full utilization of an organization’s resources, which results in effective use of resources and gives the firm a competitive advantage over other firms that might not utilize their resources as well (Cho, Kim, Park, and Cho, 2013). Organizational learning might also result in employees discovering new ways of cutting costs among the firm’s operations and operating at lower costs than other competing firms in the same industry, which creates a competitive advantage for the firm (Abbasi, and Zamani-Miandashti, 2013). The reduction in operating costs for a firm that applies organizational learning is a crucial competitive advantage over other firms without OL strategies.

Organizational learning can also be instrumental in achieving competitive advantage as it ensures that a firm is in a continual learning cycle where employees are learning new ideas each day and implementing the same ideas in their daily operations. The OL strategy can help reduce inefficiencies in the firm’s operations as employees learn new ways to do their jobs on a daily basis in order to eliminate any wastage through organizational learning (Mahmood, Qadeer, and Ahmad, 2015). The overall improvement of process in a firm with an organizational learning strategy is a crucial component of any OL strategy, which allows the firm to implement cost-saving measures on a regular basis at the firm (Gaile, 2013). Employee innovativeness in a firm that has an organizational learning strategy also contributes greatly to cost reductions in the firm as employees invent new ways to do their jobs and reduce overall costs.

3. Evaluate the applicability of an OL strategy for SME’s

Although SME’s do not have the large capital reserves of the much bigger firms, they should not ignore organizational learning strategies as such programs have numerous benefits even for SMEs. SMEs should also implement OL strategies as they are crucial to the overall performance of the organization within its specific industry (Pawluczuk, and Ryciuk, 2015). As stated above OL strategies encourage employee creativity and innovativeness, which might lead to the invention of new products and services that give the firm a competitive advantage. Given the limited resources of SMEs, organizational learning can act as a crucial part of the organization’s overall strategy in that the firm can rely on its OL strategy to gain a competitive advantage over rival firms in the same category (Döös, Johansson, and Wilhelmson, 2015). An OL strategy can allow a firm to find new ways of cutting the costs of its operations, which might make the firm more efficient and hence giving it a competitive advantage over rival firms. The costs incurred by an SME while implementing an OL strategy can easily be recovered through the cost-cutting that might arise out of the OL program as employees discover new ways of reducing the costs of firm operations. Organizational learning might also increase the motivation of employees at their jobs, hence increasing their work output, which might increase the profitability of the SME.