Competitive strategies are concerned with how a strategic business unit achieves competitive advantage in its domain of activity meanwhile competitive advantage is about how an strategic business units (SBU) creates value for its users both greater than the costs of supplying them and superior to that of rival SBUs. An SBU can have lower costs than its competitors or it can have products or services that are so exceptionally valuable to customers that it can charge higher prices than competitors. There are two basic criteria that can help in identifying appropriate SBUs: Market-based criteria and Capabilities-based criteria. For Market-based criteria, if the parts of an organization are targeting same types of customers through the same sorts of channels and facing similar competitors, they might he regarded as the same SBU. As for Capabilities-based criteria, if they have similar strategic capabilities then the parts of an organization should only be regarded Continue reading
Strategic Management Concepts
Definition of Globalization – Stages of Globalization
A very commonly used term, globalization can mean different things to different people. At a broad level, globalization refers to the growing economic interdependence among countries, reflected in the increasing cross border flow of goods, services, capital and technical know how. At the level of a specific company, globalization refers to the degree to which competitive position is determined by the ability to leverage physical and intangible resources and market opportunities across countries. “Globalization refers to the multiplicity of linkages and interconnections between the states and societies that make up the present world system. It describes the process by which events, decisions, and activities in one part of the world come to have significant consequences for individuals and communities in quite distant parts of the globe. Globalization has two distinct phenomena: scope (or stretching) and intensity (or deepening). On the one hand, it defines a set of processes which embrace Continue reading
Strategic Thinking – Meaning and Definition
Organizations nowadays look towards strategic thinking as a substitute for traditional directions of strategic management which is focused on strategic planning. Strategic thinking has become an important key to success to every organization and became the major pathway that management must pass through, so as to face the challenges of modern day environment. Globalization had brought a lot of impacts on organizations. Those impacts made organizations particularly the Small and Medium Sized Enterprises SMEs to be aware of any changes that are happening everyday. The main reason for doing so, is to be able to compete with each other and in order to keep surviving in the business area. Organizations also need to adopt a good strategy to give satisfaction to its internal environment such as suppliers and employees of the organization, so organizations could never stand without having strategic thinking which helps to predict the present situation of the Continue reading
The Driving Forces in an Organization
Every organization has different structure. Those structures created as achieved organization goal. There are things, situations, events etc. that occur within an organization that affect the way an organization operates, either in positive way or negative way. These things, situations, events that affect the way an organization operates are called driving forces. There are two kinds of driving forces as follows: 1. Internal Driving Forces Internal driving forces are those kinds of things, situations, and events etc. that occur within an organization and basically under the organizations control. Once again these internal driving forces can affect the organization in either a positive or negative way. For example, decreased job satisfaction may lead to increased absenteeism, more voluntary resignations and even strikes. In turn, such events will often lead to changes in management policies and practices. There are many kind of internal force drives. Some are explained here; 1.1 Strategic Sometimes Continue reading
Market Activated Corporate Strategy (MACS) Framework
Market Activated Corporate Strategy (MACS) Framework was developed in the late 1980s. But it wasn’t developed at once. There were several predecessors to this framework. Once of the first can be the BCG Growth-Share Matrix. This matrix represents the market growth rate and the relative market share, and according to the level, the business units were divided into 4 categories. It was used very often before, but over the time more comprehensive tools were designed, to eliminate the weaknesses of BCG Matrix, like the fact that is takes into consideration only two factors, avoiding many many others that have a huge impact on profitability. BCG Matrix also assumes the independence of each business unit, therefore it leads to underestimation of the interconnection that often exists (as “Dogs”, for example, sometimes help in gaining competitive advantage) Another predecessor is the old nine-box matrix, developed by McKinsey. It covers industry attractiveness and Continue reading
Strategic Planning – Meaning, Process and Approaches
Strategic planning is the process of deciding on the goals of the organization, on changes in these goals, on the resources used to attain these seals, and on the policies that are to govern the acquisition, use and disposition of these resources. The word strategy is used here in its usual sense of deciding on how to combine and employ resources. Thus strategic planning is a process having to with the formulation of long-range, strategic, policy-type plans that change the character or direction of the organization. In an industrial company, this includes planning that affects the goals of the company, policies of all types (including policies as to management control and other processes); the acquisition and disposition of major facilities, divisions, or subsidiaries, the markets to be served and distribution channels for serving them; the organization-structure (as distinguished from individual personnel actions); research and development of new product lines (as Continue reading