Strategic management is that ideas and injunctions that enable the organization achieve its objective or long-term target to perform a better performance. The purpose of strategic management is to seek the opportunities for better future of the organization. Generally, good strategic management practices can improve the organization performance and achieve the organization target objectives. The strategies on an organization are made by the management itself to ensure the successful of the organization. The strategic management process consists of three stages which are strategy formulation, strategy implementation and strategy evaluation. Strategy formulation want to ensure that the organization achieve the objectives that they have been made. Strategy formulation includes the decision on what business to conduct, how to allocate the resources, and whether want the business join or enter to international market. Besides, strategy formulation phase includes developing a vision and mission, identifying an organization external opportunities and threats, determining internal Continue reading
Strategic Management Terms
Organization Design
Designing organizations is a complex exercise. Organization Design involves making choices about how to group individuals and structure their tasks. According to Harvard Business School professor Robert Simons, in his article “How Risky is your Company?”, organization design must take into account the company’s strategy, competitive environment, stage of the life-cycle and various other factors. In short, it is a fine balancing act. In the early days of an organization, organization design receives little attention. But over time, problems emerge as the charisma of the founders becomes insufficient to manage a larger enterprise. Systems and processes become important. This is when a functional structure is typically chosen. After some time, the functional structure becomes inadequate to respond to the needs of the market place because of centralized decision making. At that point, a divisional structure becomes necessary. But with time, a divisional structure leads to fiefdoms. Coordination becomes difficult, resources Continue reading
Divestitures in Business – Concept, Reasons, and Benefits
In the modern world, so many organizations are using several strategies to enhance their performance and improve their competitive advantages. Some of the mostly relied on strategies are divestitures or mergers & acquisitions. The two though somehow different have some similarities. Mergers and Acquisitions refers to two companies combining together to form a single entity or one parent company absorbing another company and completely eliminating the entity of the target company to incorporate its operations in the parent company. Divestitures or rather divestment on the other hand is the opposite of investment and refers to the reduction/addition of the firm’s partial assets or complete sale of an existing business by a firm due to some ethical or business reasons. One of the reasons behind the above corporate strategies is to increase the firm’s chances of survival in a market environment characterized by many competitors and in particular perfect market industry. This is Continue reading
Process Reengineering – History, Definition and Process Steps
The driving force behind all the changes which are taking place in the all the firm of the world are two Cs: customers, competition. The demands of the customers are changing day by day and this change in demand of customers pose new sets of challenges to the firms every now and then and hence firms have to change or modify their offering to customers accordingly. Firms who are able to do it in less time and less cost turn out to be the industry leaders. Firms set their mission and vision statements on the basis of their short term and long term strategy and to attain those goals firms need to adjust themselves with the constantly changing environment. We have seen dominance of Japanese firms in automobile and electronic components, the reason for this dominance of Japanese firms over other firms round the world is their techniques. They change Continue reading
Judo Strategy in Business
Judo Strategy, a term coined by David Yoffie of Harvard Business School in his book ” Judo Strategy: Turning Your Competitors’ Strength to Your Advantage”. “In the martial art of judo, a combatant uses the weight and the strength of his opponent to his own advantage rather than opposing blow directly to blow. Similarly smart companies aim to turn their opponent’s resources, strength and size against them.” Judo strategy in business scenario effectively means avoiding direct confrontation and leveraging the strength of the opponent to create space. Judo strategy can help small companies to enter new markets and defeat stronger rivals. Through movement, flexibility, and leverage, new players can occupy uncontested ground and turn the strengths of dominant players against them. Movement: In this step one needs to maintain a low profile so that while his business is under growing stage he can avoid attacks from well established players. At Continue reading
Institution-Based View of Business Strategy
An industry-based view, illustrated by Porter (1980), decides firm strategy and performance. Sustainable competitive advantages can be discovered by industry analysis and by selecting from the generic strategies. The competitive strength and the firm’s ability can maintain positional advantages through the efficient and effective implementation of competitive strategy. Secondly, a resource-based view (RBV), was demonstrated by Barney (1991), advocates that firm-specific differences determine strategy and performance. RBV emphases internal resources and capabilities of organisations. RBV portraits companies as idiosyncratic bundles of resources and capabilities that are available for distribution by the organization’s business units. Heterogeneity in the resources and capabilities is the reason of variations in organization performance. Sustainable competitive advantage is not the result of correct position in the external environment but is derived from the organization’s internal resources, which are valuable, inimitable, rare, and nonsubstitutable. Industry-based view and resource-based view are complementary because they settle the relationship between Continue reading