An organization is a common platform where individuals from different backgrounds come together and work as a collective unit to achieve certain targets and goals. It contains individuals with different specializations, educational qualifications and work experiences all working towards a common objective. Culture is something which one inherits from the ancestors and it helps to make a distinction between one individual and others. It is termed as culture with the attitude, identify and behavioral patterns by means of governing the way an individual interacts with others. Meanwhile, strategic management is the process in which a management team develops a mission and vision, objectives and goals, roles and responsibilities and values which ensure the success of the organization. Organizational culture significantly influences the performance of an organization. Furthermore, strategic management helps in making the organizational culture through developing the vision, mission and values. So the appropriate strategic management would improve the Continue reading
Strategic Management Concepts
Porter’s Generic Competitive Strategies
In 1985, in his book Competitive Advantage: Creating and Sustaining Superior Performance, Michael Porter, outlined a set of generic strategies that could be applied to all products or services. In coping with the Porters model of five competitive forces, there are three potentially successful generic strategic approaches (also known as Porter’s Generic Competitive Strategies) to outperforming other firms in an industry: Overall cost leadership. Differentiation. Focus. Sometimes the firm can successfully pursue more than one approach as its primary target, though this is rarely possible as will be discussed further. Effectively implementing any of these generic strategies usually requires total commitment and supporting organizational arrangements that are diluted if there is more than one primary target. The generic strategies are approaches to outperforming competitors in the industry; in some industries structure will mean that all firms can earn high returns, whereas in others, success with one of the generic Continue reading
Accounting Methods Used in Merger and Acquisition Transactions
The two principal accounting methods used in mergers and acquisitions are the pooling of interests method and the purchase method. The main difference between them is the value that the combined firm’s balance sheet places on the assets of the acquired firm, as well as the depreciation allowances and charges against income following the merger. The pooling of interests method assumes that the transaction is simply an exchange of equity securities. Therefore, the capital stock account of the target firm is eliminated, and the acquirer issues new stock to replace it. The two firms’ assets and liabilities are combined at their historical book values as of the acquisition date. The end result of a pooling of interests transaction is that the total assets of the combined firm are equal to the sum of the assets of the individual firms. No goodwill is generated, and there are no charges against earnings. Continue reading
Resource Based View (RBV) of Competitive Advantage
Jay Barney’s approach is known as resource based view of competitive advantage operates on the assumptions that firms are heterogeneous in terms of their control of important strategic resources and that resources are not perfectly mobile between firms. Firm resources are defines as strengths that firms can use to conceive of and implement their strategies. Classifications of resources are physical capital resources, human capital resources and organisational capital resources. Physical technology, plant and equipment, geographic location and access to raw materials come under physical capital resources. Human capital resources are the training, experience, judgement, intelligence, relationships and insight of the individual managers and workers of the firm. Organisational capital resources include the formal reporting structure, the informal and formal planning, coordinating and controlling systems, the informal relations among groups within a firm and other agents in the firm’s environment. Summary of resource based view is that firm can only have Continue reading
The Importance of Strategic Management in Business
Strategic management provides the framework for all the major business decisions of an enterprise such as decisions on businesses, products and markets, manufacturing facilities, investments and organizational structure. In a successful corporation, strategic planning works as the pathfinder to various business opportunities; simultaneously, it also serves as a corporate defense mechanism, helping the firm avoid costly mistakes in product market choices or investments. Another reason for the importance of strategic management is that it provides a sense of direction so that organization members know where to expend their efforts. Without a strategic plan, managers throughout the organization may concentrate on day-to-day activities only to find that a competitor has maneuvered itself into a favorable competitive position by taking a more comprehensive, long-term view of strategic directions. Yet another reason for the importance of strategic management is that it can help highlight the need for innovation and provide an organized approach Continue reading
The Importance of Mission and Vision Statements
The corporate strategy starts through Vision and Mission Statements can be accessed by culture, core values and its core values on which it competes. Mission statement shows the exact purpose of the organization. This statement is primary objective of the organization to show the plans, aims and programs of the company. A mission statement is bit different from the vision statement. A clear mission statement also focus on what are the advantages which is you are offering to your patrons as well as consumers it also tells you exact purpose of your organization. A good mission statement is like a born of success for the organization. It is very for the companies to find out the ways and also do the regular confirmation whether company or organization is on the right way or not. A purpose of a clear mission statement to an organization to align the people as well Continue reading