Strategic Management deals with the process of translating an organization’s vision into long term goals which will enable it to compete with sustained competitive advantage in its business environment. Business Strategy is an important component of Strategic Management. It deals with how a firm competes along the three dimensions of its competitive space namely customers and markets, products and services, and technologies including skills and capabilities. A firm’s competitive advantage is determined by the breadth of its target market. The target market could be mass market which means it is attractive to a large number of customers spread across most income and occupation groups(demographic groups). On the other hand, the market could appeal to a narrower range of customers with specific requirements. Let us take a few examples. Internationally WalMart the giant U.S. retailer, Timex the leading watch brand, Gateway in P.C.s are good examples of firms with very large Continue reading
Strategic Management Concepts
Survival Strategies for Businesses
Survival strategies to help businesses get through the rapid fluctuations of business cycles. Take the following business survival strategies to insulate your business in the event of tough times. 1. Non-growth Strategies A non-growth strategy refers to that strategy where there is no growth in earnings. This does not necessarily mean no turnover. A company might pursue a non-growth strategy, if it saw its non-economic objectives as more important than its economic objectives. The primary reasons for adopting a non-growth strategy may include, Pressure from public opinion; Maintain an acceptable quality of life; Lack of enough additional staff with sufficient expertise and loyalty; Enable the owner-manager to retain personal control over operations; and Dis-economies of scale of the particular production set-up. In certain cases, there could even be negative growth, by paying out dividends larger than current earnings, so that shareholders are effectively receiving a refund of their capital investment, Continue reading
Case Study: Pepsi’s Fast-Food Troika
The mid-1990’s were not particularly kind to Pepsi Co. Its flagship Pepsi product was losing ground to Coke in the United States and abroad, and Diet Pepsi had slipped to fourth among soft drinks (behind Coca-Cola’s Sprite citrus soda). Even the fast-food chains that had provided Pepsi with substantial revenue growth over the prior two decades — Pizza Hut, Taco Bell, and Kentucky Fried Chicken — were experiencing declining revenues. Only the Frito-Lay snack division continued to outperform its rivals. In 1997 Pepsi spun off its fast-food operations into an independent company called Tricon. When it acquired Pizza Hut and Taco Bell in the 1970s, Pepsi seemed intent on becoming the world’s largest fast-food vendor. After it successfully digested the pizza and taco chains, it was widely expected to further expand its fast-food empire. By the mid-1980s, Pepsi’s next target was rumored to be Wendy’s Continue reading
Henry Mintzberg’s 10 Schools of Strategic Thought
Strategic management has become well established in all the sectors of the economies especially in the large organizations. Every business has some specific purposes a reasonable of a business is to create customers and to build a profit generating market. A customer is the foundation of the business. Survival ability is a kind of competence function of the management and nature of the business, nature of ownership, and the financial strength of the enterprises are interested. A stable enterprise always struggles to minimize the managerial tensions of the business. It is the strategy of assistance in an external environment. Ohmae’s definition of strategic management is quite different. He drew three groups of strategic management which are customer, Corporation and competitors. The generator also described the importance of theme by moving from abstract idea of strategy to the concrete strategic planning of its implementation. There are different ideas and arguments among Continue reading
Johnson and Scholes Cultural Web Model of an Organization
The cultural web provides a way of auditing an organisation’s culture. It can also identify possible barriers within the existing culture to change. The web can also be used to describe the way an organisation should look after a transformation. This particular angle is of importance for this management project, because management felt that there was a clear difference between the current cultural web and the desired one within the organisation. Culture is defined in many different ways. However, in most definitions elements like “basic assumptions and beliefs of an organisation or “the accepted way of working and behaving in an organisation” are included. Johnson and Scholes describe organisational culture as: “the deeper level of basic assumptions and beliefs that are shared by members of an organisation, that operate unconsciously and define, in a basic fashion, an organisation’s view of itself and its environment.” The assumptions and beliefs are in Continue reading
The Stability Strategy in Management
Stability strategy implies continuing the current activities of the firm without any significant change in direction. If the environment is unstable and the firm is doing well, then it may believe that it is better to make no changes. A firm is said to be following a stability strategy if it is satisfied with the same consumer groups and maintaining the same market share, satisfied with incremental improvements of functional performance and the management does not want to take any risks that might be associated with expansion or growth. Stability strategy is most likely to be pursued by small businesses or firms in a mature stage of development. Stability strategies are implemented by ‘steady as it goes’ approaches to decisions. No major functional changes are made in the product line, markets or functions. However, stability strategy is not a ‘do nothing’ approach nor does it mean that goals such Continue reading