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
Strategic Management Terms
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
Organizational Reflection
A successful organization can be described as thinking and seeing organization. Such organizations are characterized by high levels of information flow and awareness among all its members. The availability of information improves the awareness and understanding of organizational weaknesses, strengths, threats and opportunities. The organization members are also able to understand the history and strategic future plans for their organization as well as full awareness of the resources within the organization and the changing competitor environment. On the other hand, a thinking organization is an understanding organization that has a well stipulated vision, mission, objectives and the business environment that are well understood by all the stakeholders. Many organizational businesses collapse because they lack both foresight and hind sight necessary for understanding the current position of the organization. In ensuring an organization adopts the thinking and seeing style, reflection must become a part of the organizational practices and culture. Reflection Continue reading
Difference Between Business Strategy and Corporate Strategy
Business Level Strategy Business level strategy concentrates on developing a firm specific model that will allow the firm to gain competitive advantage over its rivals in the industry such as in which it operates. Business strategy would focus on improving its competitive position of a company’s or business unit’s products within the specific industry or market segment that the company and/ or its business units serve. The question explored in business level strategy is: How a company can best be competed in the industry that they are in? For an example Honda motors, Japan has a domestic market for its products and also it operates internationally. Thus business strategy should be crafted focusing on the ways of how it out beat the domestic competitors who operates both in the domestic market and as well as the in the international market like Mazda, Mitsubishi, Suzuki, Toyota and Nissan and competitors in Continue reading
What is Competitive Advantage? Definition and Meaning
The choice of industry affects firm performance but, within any given industry, some companies are more profitable than others. Why do some companies do better than their competitors? A firm that formulates and implements a strategy that leads to superior performance relative to other competitors in the same industry or the industry average has a competitive advantage. The greater the performance, the greater is its competitive advantage. A sustained competitive advantage occurs when a firm maintains above-average performance for a number of years. “When a firm sustains profits that exceed the average for its industry, the firm is said to possess a competitive advantage over its rivals. The goal of much of business strategy is to achieve a sustainable competitive advantage” (Porter, 1985) Strategy describes the goal-directed actions a firm intends to take in its quest to gain and sustain competitive advantage. The firm that possesses competitive advantage provides superior Continue reading