Strategic Leadership The term ‘strategy’ is very common in the business world today. However, the word ‘strategy’ has been broadly used that it has lost clear meaning. Despite the significance of strategy, there is astoundingly little consensus on what it means. Nonetheless, the fact is that behind every success, there must be a strategy. A strategy is an ambiguous term normally linked to long-term planning, prearranged goals, and a preferred system of creating a balance between the organizational resources and externalities. The contemporary schools of thought in strategic management strongly suggest that strategy should be comprehended as the creation of the organization’s goals, which is realized through joint effort, regarded as a constant process, and distinctive strategic vision and core values are terms that are often used in strategic management. Strategic vision refers to the executive views on the long-term direction. On the other hand, core values are the principles and Continue reading
Strategic Management Concepts
3 Important Models of Organisational Growth
An organization is a group of people who work together with coordinated efforts to achieve certain objectives or goals. Organisations are established by individuals or groups of individuals. During their formation, there is usually very little to talk about by the owner(s) and too much for them to do. Just like human beings, organisations need to grow so as to enable the owner or owners realize their objectives. If the aspect of growth is removed, then it becomes almost impossible for an organisation to exist beyond its formation stage. The signs of growth are expansion and increase in financial base. It also includes increase in the number of employees and diversification of a business as well as the separation of the owner from the business. Organisations also grow through mergers and acquisitions, all in the spirit of attaining their mission and vision. Business management commentators have described various models of organisational Continue reading
Innovation in Large versus Small Firms
In 1940s, Austrian economist Joseph Schumpeter argued that large firms would be more effective innovators and he point out that better able to obtain financing for R&D projects and better able to spread costs of R&D over large volume. Large size firms may also enable for greater economies of scale and learning effect and taking on large scale or risky projects. However, large firms might also be disadvantaged at innovation because; R&D efficiency might decrease due to loss of managerial control Large firms have more bureaucratic inertia More strategic commitments tie firm to current technologies Small firms often considered more flexible and entrepreneurial. Many big firms have found ways of “feeling small” because break overall firm into several sub-units and can utilize different culture and controls in different units. A large firm gains experience in choosing and developing innovation projects, it may learn to make better selections of projects that Continue reading
Firm That is Stuck in the Middle
The three Porters generic competitive strategies are alternative, viable approaches to dealing with the competitive forces. The converse of the previous discussion is that the firm failing to develop its strategy in at least one of the three directions – a firm that is stuck in the middle – is in an extremely poor strategic situation. According to Porter, a company’s failure to make a choice between cost leadership and differentiation essentially implies that the company is stuck in the middle. Porter argued that cost leadership and differentiation are such fundamentally contradictory strategies, requiring such different sets of resources, that any ï¬rm attempting to combine them would wind up “stuck in the middle” and fail to enjoy superior performance, Cost leadership requires standardized products with few unique or distinctive features or services so that costs are kept to a minimum. On the other hand, differentiation usually depends on offering customers Continue reading
Analysis of Competitive Position Using Porter’s Five Forces Model
Michael Porter’s Five-Forces Model of competitive analysis is a widely used approach for developing strategies in many industries as the intensity of competition among firms varies widely across industries. According to Porter, the nature of competitiveness in an industry can be viewed as a composite of five forces: rivalry among competing firms, potential entry of new competitors, potential development of substitute products, bargaining power of suppliers and bargaining power of consumers. There are 3 steps to use Porter’s Five Forces Model can reveal whether competition in a given industry is such that the firm can make an acceptable profit. Firstly, identify key aspects or elements of each competitive force that impact the firm. Secondly, evaluate how strong and important each element is for the firm. Lastly, decide whether the collective strength of the elements is worth the firm entering or staying in the industry. Rivalry among the competing firms is Continue reading
The Growth of Strategic Planning
Many of today’s most successful business organizations continue to survive because many years ago they offered the right product at the right time; the same can be said for nonprofits and government organizations. Many critical decisions of the past were made without the benefit of strategic thinking or planning. Whether these decisions were based on wisdom or luck is not important. They resulted in momentum that has carried these organizations to where they are today. However, present day managers increasingly recognize that wisdom and intuition alone are not sufficient to guide the destinies of large organizations in today’s ever changing environment. These managers are turning to strategic planning. In earlier, less dynamic periods in our society, the planning system utilized by most organizations extrapolated current year sales and environmental trends for 5 and 10 years. Based on these, they made plant, product, and investment decisions. In most instances, the decisions Continue reading