Strategic management is the process regulated and formatted by the top level management in accordance with the policies and the rules of the top level management. These are developed in order to acquire the market share as well as to attain the goals and the objectives in the target market. The strategies developed and adopted by the management are the tools through which the efficiency could easily be enhanced in order to attain the desired goals and the objectives for the organization. Apart from these, there are certain actions which are implemented by the top level management on behalf of the directors and the organizational owners in order to attain the better and effective outcomes. For implementation of the tools and the techniques, organization is required to analyze the internal and external environment. This will help the management to adopt certain crucial set of strategies through which organization could be Continue reading
Strategic Management Terms
Reverse Merger – Meaning and Example
Normally, a small company merges with large company or a sick company with healthy company. However in some cases, reverse merger is done. When a healthy company merges with a sick or a small company is called reverse merger. This may be for various reasons. Some reasons for reverse merger are: The transferee company is a sick company and has carry forward losses and transferor Company is profit making company. If transferor Company merges with the sick transferee company, it gets advantage of setting off carry forward losses without any conditions. If sick company merges with healthy company, many restrictions are applicable for allowing set off. The transferee company may be listed company. In such case, if transferor Company merges with the listed company, it gets advantages of listed company, without following strict norms of listing of stock exchanges. In such cases, it is provided that on date of merger, Continue reading
What is Departmentalization?
Departmentalization is the grouping of activities and responsibilities by sub-units of the organization. These sub-units are called departments. The division of labor or degree of departmentalization is driven by the need for specialization whether by process or purpose within an organization. The most common way of process departmentalization is the division of the firm into business functions, such as purchasing, manufacturing, sales, accounting, etc. Departmentalization specifies how employees and their activities are grouped together. It is a fundamental strategy for coordinating organizational activities, because it influences organizational behavior in the following ways: Departmentalization establishes the chain of command – the system of common supervision among positions and units within the organization. It frames the membership of formal work teams and typically determines which positions and units must share resources. Thus, departmentalization establishes interdependencies among employees and subunits. Departmentalization focuses people around common mental models or ways of thinking, such as Continue reading
Strategy Diamond – The Five Elements of Strategy
All organizations have strategies. The real question for a business is not whether it has a strategy but rather whether its strategy is effective or ineffective, and whether the elements of the strategy are chosen by managers, luck, or by default. You have probably heard the saying, “luck is a matter of being in the right place at the right time”–well, the key to making sure you are in the right place at the right time is preparation, and in many ways, strategizing provides that type of preparation. Luck is not a bad thing. The challenge is to recognize luck when you see it, capitalize on luck, and put the organization repeatedly in luck’s path. The strategy diamond model was developed by strategy researchers Don Hambrick and Jim Fredrickson as a framework for checking and communicating a strategy. The strategy diamond framework can be used systematically to examine a Continue reading
Learning Organization – Characteristics, Benefits and Limitations
The phenomenon of globalization has turned the business world into a global dynamic village for business exchanges. Indeed, competition is becoming increasingly fiercer and simultaneously using Learning Organization as a strategy has become a MUST for companies’ success and development. Adopting such strategy helps organizations to innovate and acquire knowledge in order to survive and thrive in the current rapid changing environment. Some key definitions by distinguished writers on Learning Organization are as follows: “The essence of organizational learning is the organisation’s ability to use the amazing mental capacity of all its members to create the kind of processes that will improve its own”- Nancy Dixon “A Learning Organization is one that consciously manages its learning processes through an inquiry-driven orientation among all its members”- Kim D. “A Learning company is an organization that facilitates the learning of all its members and continually transforms itself”- M. Pedley, J. Burgoyne and Continue reading
Business Tactics – Meaning and Types
Business Tactics are specific operating plans which are part of and fit into the larger strategic plan. In warfare, tactics are plans made to fight and win battles. Strategy is the larger set of plans to win wars. Similarly business tactics can be viewed as short term plans to achieve smaller goals – also called targets- and are part of a larger strategic plan to achieve long term goals. A useful way of viewing tactics is to consider them as linking elements between strategy formulation and strategy implementation. There are two types of primary tactics viz. Timing Tactics and Market Location Tactics. Timing refers to the order in which a firm makes market moves in relation to its competitors. A firm may choose to be first in the market with a product or new features to an existing product. This is known as a first mover tactic. Usually a firm Continue reading