Growth is a way of life. Almost all organizations plan to expand. This strategy is followed when an organization aims at higher growth by broadening its one or more of its business in terms of their respective customer groups, customers functions, and alternative technologies singly or jointly — in order to improve its overall performance. There are four types of expansion (Growth) strategies Expansion through concentration Expansion through integration Expansion through diversification Expansion through cooperation 1. Expansion through concentration It involves converging resources in one or more of firms businesses in terms of their respective customer needs, customer functions, or alternative technologies either singly or jointly, in such a manner that it results in expansions. A firm that is familiar with an industry would naturally like to invest more in known business rather than unknown business. Concentration can be done through Market Penetration: It involves selling more products to the Continue reading
Strategic Management Concepts
Business Level or Generic or Competitive Strategies
Business level strategies are popularly known as generic or competitive strategies. Business level strategies are intended to create differences between the firm’s position relative to those of its rivals. To position itself, the firm must decide whether it intends to perform activities differently or to perform different activities as compared to its rivals. Michael Porter classified these strategies into overall cost leadership, differentiation and focus. The first two strategies are broader in concept as their competitive scope is wide enough whereas the third strategy i.e the focus strategy has a narrower competitive scope. The experience curve: Cost has been correlated with the accumulated experience by the experience curve. The underlying principle behind the experience curve is that as total quantity of production of a standardized item is increased, its unit manufacturing cost decreases in a systematic manner. The concept of the experience curve was presented by BCG in 1966 Continue reading
Role of Mission Statements in Guiding Marketing Planning
It is vital that a marketing plan has a mission statement that states the purpose of the marketing plan, and explaining why a person is in a business. Both personal and business goals should be included in the mission statement. Although the mission statement is usually a short paragraph, of one to three sentences long, but it is important because it focuses a company’s attention on the company’s most important goal. The mission statement will review company’s business goals and objectives and identify marketing strategies that will achieve them. The managers and employees who do not understand their organizations goals and objectives will face a significant challenge and have a higher likelihood will not achieve it. Without a clear understanding, managers and employees might be making a decisions without the benefit of the guidance that provided by the organizations goals and objectives. Many of them will get lost along the Continue reading
Effects of Innovative Culture on Organizations
Growth creates a need for structure and discipline, organisation changes which can strain the culture of creativity that is so vital to future success. To sustain competitive advantage, companies need to institutionalize the innovation process; they need to create an internal environment where creative thinking is central to their values, assumptions and actions. Management changes and management generally is about implementation. When the managers of an enterprise feel pressured, the fear-driven response is generally to implement better and which generally results doing more of the same only quicker or cheaper. While this is great for doing more of the same, it is still the same and meanwhile everything else is changing — customer’s needs, technology, society, macroeconomics and geopolitics are all changing. Innovation is the engine of growth. It is also a mindset — meaning it is influenced by beliefs, values, and behavior. Company culture therefore has a huge influence Continue reading
Choosing Business Strategies and Tactics
There are a few steps that have to be taken to ensure that the choice of Business Strategy made by an organization is sound. Firstly there should be the realization that resources and capabilities have to searched for and located and the search has to be systematically made over each of the functional areas including Marketing, Production, Sales and Finance. After this is done, the feasibility of using these resources individually or collectively has to be determined. This is a serious exercise and should involve senior and top management. A firm may have manufacturing skills in plenty, but if the challenge facing the company is to increase market penetration, priority will have to be given to strengthening the marketing and sales functions and provide them with the lions share of the operating budget to achieve the company’s aims. Another requirement to kept in mind, is that skills and capabilities identified Continue reading
The Relevance of Stakeholder Management in International Business Context
Stakeholders can be defined as an internal and external party to the organization which is having interest in the operations of the organization. Stakeholders can create an impact on the actions, objectives, and policies of the organization. Stakeholders may get affected by the objectives, policies, and actions of the business. Stakeholders may have a direct or indirect interest in the operations of the organization. Stakeholders of an organization can be of different types. These different types of stakeholders include management and employees, customers, investors and suppliers, banks and other financial organizations, government, trade unions and pressure groups. The term stakeholder management can be defined as the process of engaging and enrolling the stakeholders in the operations of the business so as to make them accountable, responsible, consulted and informed. Stakeholder management is concerned regarding the fit between the values or the organization and expectations of the stakeholders for determining the Continue reading