While some firms hope to yield above expected normal returns from implementing business strategies, they must however be consistently conversant with the future value of those strategies than other firms playing in the same market. Other firms gain advantage in strategy implementation which is either a manifestation of these special insights into the future value of strategies, or a manifestation of a firm’s good fortune and luck, as sometimes, the price of the strategic resource acquired may be based on expectations on the return potential of that strategy However, unexpected greater organisational profits can simply be unexpected, a surprise, and a manifestation of a firm’s good luck and possibly not its ability to accurately anticipate the future value of a strategy. Even well-informed firms can be lucky in this manner. Some organizations’ actual returns on strategies could be greater than the expected returns; this resulting difference is often regarded to Continue reading
Business Strategies
Case Study: iTunes Strategic Innovation
iTunes is a media player computer program used for playing, downloading, saving, and organizing digital music and video files on desktop or laptop personal computers. It can also manage contents on iPod, iPhone, iPod Touch and iPad devices. iTunes can connect to the iTunes Store to purchase and download music, music videos, television shows, iPod games, audiobooks, podcasts, movies and movie rentals , and ringtones. It is also used to download application software from the App Store for the iPhone, iPad and iPod Touch. iTunes has been criticized for not being able to transfer music from one portable device to another. iTunes was introduced by Apple Inc. on January 9, 2001. The Strategic Innovation Behind iTunes Over the past decade, Apple Inc. has been extremely successful in formulating and implementing a coherent and focused strategic vision. Its success is evident not just in the company’s bottom line results but also Continue reading
Business Combination Strategies
A combination strategy is the pursuit of two or more of the previous strategies simultaneously. For example, one business in the company may be pursuing growth while another in the same company is contracting. In the spring of 1989, for instance, Texas Air was rapidly expanding its Continental Airlines unit. But its Eastern Airlines operation was being consolidated. Eastern’s management was selling off routes and planes, cutting back the number of cities served, and making plans for operating a much smaller airline. A combination strategy simultaneously employs more than one of the other strategies. This often reflects different strategic approaches among subsystems. For example, an M-form conglomerate like General Electric might seek growth overall, but it may do so by pursuing growth in some divisions, stability in others, and retrenchment in still others. Combination strategies are common, especially for complex organizations operating in dynamic and highly competitive environments. Many, Continue reading
Effects of Leadership and Organizational Climate on Innovation
Now more than ever, companies are putting more attention to innovation that make their products and services more competitive, thereby enable them to survive and flourish in the changeable and challenging global environment. Innovation is seen as the first attempt to carry out a new creative idea, and translate it into practice. However, it isn’t easy; it’s a difficult and complex task. There are two primary factors influencing the success of innovation: technical resources (people, equipment, knowledge, money, etc.) and the abilities in the organisation to manage these resources to encourage innovations. However, the latter is the precondition which can place high premiums on innovation. Organisation is a kind of breeding ground for generating creative idea and capturing new opportunities. An innovative organisation has several key components: appropriate structure, effective team working, external focus, leadership, key individual, creative climate and etc. All the factors are absolutely essential. All innovative organisation Continue reading
Divestiture Strategy
Selling a division or part of an organization is called divestiture. Divestiture strategy is often used to raise capital for further strategic acquisitions or investments. Divestiture strategy can be part of an overall retrenchment strategy to rid an organization of businesses that are unprofitable, that require too much capital, or that do not fit well with the firm’s other activities. Divestment is a difficult decision for the management of any organization. The barriers that impede an organization from following a divestment strategy have been described as follows: Structural (or Economic) Strategy. Characteristics of a business’s technology and its fixed and working capital impede exit, especially if the business is a core competence to the company. Corporate Strategy. Relationships between the various business units within an organization may deter divestment of a particular business unit. Managerial Strategy. Aspects of company’s decision making process inhibit exit from an unprofitable business. Such aspects Continue reading
Case Study of Dell: Simple but Effective Marketing Strategy
In 1984, with only $1,000 in startup capital, Michael Dell established Dell as the first company in its industry to sell custom-built computers directly to end users, bypassing the dominant system of using resellers to sell mass produced computers. Since a young age Michael Dell has been intrigued and fascinated in the idea of eliminating unnecessary steps. So it was not surprising when he established a company where there marketing strategy was based on eliminating the middleman. “We sell computers directly to our consumers, deals directly with our suppliers, and communicate directly with our people, all without the unnecessary and inefficient presence of intermediaries. We call this “the direct model,” and it has taken us, to use a common phrase at Dell Computer Corporation, “direct to the top””. The direct business model eliminates retailers that add unnecessary time and cost, that could diminish Dell’s understanding of customer expectations. The direct Continue reading