Business Level Strategy Business level strategy concentrates on developing a firm specific model that will allow the firm to gain competitive advantage over its rivals in the industry such as in which it operates. Business strategy would focus on improving its competitive position of a company’s or business unit’s products within the specific industry or market segment that the company and/ or its business units serve. The question explored in business level strategy is: How a company can best be competed in the industry that they are in? For an example Honda motors, Japan has a domestic market for its products and also it operates internationally. Thus business strategy should be crafted focusing on the ways of how it out beat the domestic competitors who operates both in the domestic market and as well as the in the international market like Mazda, Mitsubishi, Suzuki, Toyota and Nissan and competitors in Continue reading
Strategic Management Basics
Concept of Resource Based View (RBV)
The resource based view is defined as a business management tool utilized to know the strategic resources available to firm. The basic principle of the resource based value is that the basis for a competitive advantage of a company lies primarily in the application of the group of valuable resources at the firm’s disposal. In order to change a short-run competitive advantage into a maintained competitive advantage requires that these resources are heterogeneous in nature and not perfectly mobile. In other words, this will change into valuable resources that either perfectly imitable or substitutable without great effort. If these conditions are remained, the company’s group of resources can help the firm sustaining above average returns. The recent dominant view of corporate strategy – Resource Based Theory or Resource Based View (RBV) of company – is based on the theory of economic rent and the view of the company as Continue reading
Most Important Strategic Options in Business
Based on a careful analysis of the external and internal business environment and the company’s profile, various strategic options are available for a business. An analysis of the external environment of business might involve the use of industry analysis, PEST or an equivalent, and also Porter’s five force analysis, which would help to identify the opportunities and threats that may exist for the business. For the internal analysis a company would carry out a resource audit, examining physical, human, and financial resources together with intangibles such as brands, patents, etc and would then look at its value chain as a means of assessing the efficiency and effectiveness of all aspects of its operation. Any element of the value chain is capable of adding or destroying value. The aim of the internal analysis is to identify the company’s strengths and weaknesses and as a result the company should be able to Continue reading
Need of Corporate Vision Statements
A corporate entity needs a vision because “where there is no vision, the people perish”(Proverb 29:18). This quotation from the holy writ aptly captures the essence of vision both at individuals and corporate level. Vision is important in that it guides and perpetuates corporate existence. Vision is viewed as a mental picture of a compelling future situation. It originates from creative imagination, the act or power of perceiving imaginative mental images or foresightedness. Corporate vision could be thought of as related to intuition. This is, however, not to eliminate other sources of corporate vision. Corporate vision can be associated with external agencies imposition of strategy or vision and, they can be deliberately formulated as part of strategic planning process. Notwithstanding the process leading to the emergency of vision, from strategic management perspectives, corporate vision creates a picture of a company’s destination and provides a rational for going there – Somewhat Continue reading
The Importance of Core Competencies in Strategy Formulation
Strategy allows an organisation to deliver its vision. To develop a deliberate strategy which could potentially increase the sustainability of an organisation clearly requires the identification of core competencies but often a single strategy is not the answer. Organisations require a headline strategy to fit a brief which resonates the vision but several strategies are required over many departments such as research and development, production and marketing to deliver the main strategy. The process of strategy development is complex and methodology depends on several factors including the availability of resources and the external environment. The first step in strategy development is the identification of core competencies then followed by the the process of leveraging resources so they can be exploited for maximum benefit. Strategy development is a crucial step in attaining competitive advantage but a strategy is only as successful as its implementation. The process of leveraging core competencies therefore Continue reading
Intuition and Analysis in Strategic Decision Making
In the global marketplace, intuition and rational process both play a crucial role in effective strategic decision making. In various firms, intuitive process is used under the strategic management to develop effective decisions for attaining organizational goals and objectives. Intuition indicates to solve the problem with the help of using sensing and without using rational process. It can be discussed as a process to reach at the conclusion with the help of fewer information those are required for taking appropriate decisions. It is a built-in capacity that is used by the individuals to reach at the solution of the problem effectively. At the same time, it is negatively related with the stable competitive environment. Intuition is used as a business tool in many organizations to conduct and run the business successfully. Intuition is a psychological function supports to individuals for using her/his experiences and knowledge to isolate and integrate the Continue reading