Durability of competitive advantage determines how long the competitive advantage can be sustained and is considered in terms of the ability of competitors to imitate through gaining access to the resources on which the competitive advantage is built. The key to investing is not assessing how much an industry is going to affect society, or how much it will grow, but rather determining the competitive advantage of any given company and, above all, the durability of that advantage. The products or services that have wide, sustainable moats around them are the ones that deliver rewards to investors. —Warren Buffett (1999) The durability of competitive advantage of a company is a function of three factors: the height of barriers to imitation, the capability of competitors, and the general dynamism of the industry environment. 1. Barriers to Imitation Barriers to imitation are factors that make it difficult for a competitor to copy Continue reading
Strategic Management Basics
Importance of Organizational Culture in Strategic Management
Culture plays an important part in our society. It refers to beliefs and codes of practice that makes a community what it is. It also plays the same role in organizations. A strong organizational culture will provide stability to an organization as it has significant influence on the attitudes and behaviors of organization’s members. Most of company’s top managers have a strong awareness that the culture of a company is crucial to everything they do and plays irreplaceable part in their success. However, not many companies can admit that they can describe their culture and fully understand how important it is in the success of their businesses. There are various explanations and elements to define organizational culture. For some, it means top management beliefs and values about how they should manage the organization and conduct the business. For some, it is an evolutionary process relating to people that creates unique Continue reading
The Concept of Business Growth
Meaning of Business Growth Business growth is a natural process of adaptation and development that occurs under favorable conditions. The growth of a business firm is similar to that of a human being who passes through the stages of infancy, childhood, adulthood and maturity. Many business firms started small and have become big through continuous growth. However, business growth is not a homogeneous process. The rate and pattern of growth varies from firm to firm. Some firms grow at a fast rate while others grow slowly. Also, not all enterprises survive to grow big. This may be due either to the nature of the firm or the entrepreneur. Some entrepreneurs do not want to grow their ventures, choosing instead to pursue other interest, spend more time with family or develop other business activities. Generally, the term ‘business growth’ is used to refer to various things such as increase in the Continue reading
Relationship between Strategic Management and Human Resource Management
Every organisation is trying to become more efficient and more productive. The key to an organisations success is to become more global and advance from a technological prospective. In order to become more efficient and to make its goals achievable, an organization should focus the most important assets of all other resources, which is the human capital or the intellectual assets. After all, none other than a person or an employee executes every achievement or any activity in an organization. Thus keeping this particular asset in good terms and managing it up to a standard is quite a challenge in terms of time and similarly finance. However, having a well organized and a well-managed human resource brings more significance to an organizations well being. This article will investigate how Strategic Management (SM) and Human Resource Management (HRM) are related, and then evaluated the role they play in providing organisations with Continue reading
Important Elements of Merger Procedure – Scheme and Valuation
Scheme of Merger The scheme of any arrangement or proposal for a merger is the heart of the process and has to be drafted with care. There is no specific form prescribed for the scheme. It is designed to suit the terms and conditions relevant to the proposal but it should generally contain the following information as per the requirements of sec. 394 of the companies Act, 1956: Particulars about transferor and transferee companies Appointed date of merger Terms of transfer of assets and liabilities from transferor company to transferee company Effective date when scheme will came into effect Treatment of specified properties or rights of transferor company Terms and conditions of carrying business by transferor company between appointed date and effective date Share capital of Transferor Company and Transferee Company specifying authorized, issued, subscribed and paid up capital. Proposed share exchange ratio, any condition attached thereto and the fractional Continue reading
Behavioural Issues in Strategy Implementation
It is vital to bear in mind that organizational change is not an intellectual process concerned with the design of ever-more-complex and elegant organization structures. It is to do with the human side of enterprise and is essentially about changing people’s attitudes, feelings and – above all else – their behavior. The behavioral of the employees affect the success of the organization. Strategic implementation requires support, discipline, motivation and hard work from all manager and employees. Influence Tactics: The organizational leaders have to successfully implement the strategies and achieve the objectives. Therefore the leader has to change the behavior of superiors, peers or subordinates. For this they must develop and communicate the vision of the future and motivate organizational members to move into that direction. Power: it is the potential ability to influence the behavior of others. Leaders often use their power to influence others and implement strategy. Formal authority Continue reading