Formal scenario planning emerged during the Second World War, when it was used as a part of military strategy as countries prepared themselves for different contingencies. Since then, the use of scenario planning has become increasingly popular. Scenarios are tools for ordering one’s perception about alternative future environment in which today’s decision might be framed. In practice, scenarios resemble a set of stories, written or spoken, built around carefully constructed plots. These stories can express multiple perspectives on complex events, scenarios give meaning to these events. Scenarios are powerful planning tools precisely because the future is unpredictable. Unlike traditional forecasting or market research, scenarios present alternative images instead of extrapolating current trends from the present. Scenarios also embrace qualitative perspectives and the potential for sharp discontinuities that econometric models exclude. Consequently, creating scenarios requires decision-makers to question their broadest assumptions about the way the world works so that they can Continue reading
Strategic Management Terms
Big Hairy Audacious Goal (BHAG): A Tool for Goal Setting
Big Hairy Audacious Goal (BHAG) is the term coined by James C Collins and Jerry I Porras in their well known book “Built To Last”. Visionary Companies set Big Hairy Audacious Goals (BHAGs) that raise the bar and inspire people across all levels. According to Collins and Porras: “A true BHAG is clear and compelling, serves as a unifying focal point of effort…It has a clear finish line, so the organization can know when it has achieved the goal. It is tangible, energizing, highly focused. People get it right away; it takes little or no explanation.” BHAG is a goal, not a statement and it has a clear finish line. It’s a highly focused, tangible, and energizing goal. They typically take a 10- to 30-year commitment, but they are exciting, tangible and something everyone just “gets” without any further explanation. BHAGs only help an organization as long as it has Continue reading
Organizational Performance – Meaning, Definition and Measures
Managers are concerned with organizational performance–the accumulated end results of all the organization’s work processes and activities. It’s a complex but important concept, and managers need to understand the factors that contribute to high organizational performance. After all, they don’t want (or intend) to manage their way to mediocre performance. They want their organizations, work units, or work groups to achieve high levels of performance, no matter what mission, strategies, or goals are being pursued. Managers measure and control organizational performance because it leads to better asset management, to an increased ability to provide customer value, and to improved measures of organizational knowledge. In addition, measures of organizational performance do have an impact on an organization’s reputation. Managers at high-performing companies do–they manage the organizational assets in ways that exploit their value. Asset management is the process of acquiring, managing, renewing, and disposing of assets as needed, and of designing Continue reading
Alignment – A Strategic Management Concept By Kaplan & Norton
Alignment is a key factor in effective implementation of strategy. Most large organizations are divided into business units which are out of sync and work at cross purposes. The challenge is to coordinate the activities of these units and leverage their skills for the benefit of the organization as a whole. Kaplan & Norton call this alignment on their book “Alignment: Using the Balanced Scorecard to Create Corporate Synergies.” “Most organizations attempt to create synergy, but in a fragmented, uncoordinated way,” Robert S. Kaplan and David P. Norton. By aligning the activities of its various business and support units, an organization can create additional sources of value in various ways. Financial synergies can be generated through centralized resource allocation and financial management. Value can also be created if corporate headquarters can operate internal capital markets better than external market mechanisms and share knowledge across business units, in a manner that Continue reading
Role of Mission Statements in Guiding Marketing Planning
It is vital that a marketing plan has a mission statement that states the purpose of the marketing plan, and explaining why a person is in a business. Both personal and business goals should be included in the mission statement. Although the mission statement is usually a short paragraph, of one to three sentences long, but it is important because it focuses a company’s attention on the company’s most important goal. The mission statement will review company’s business goals and objectives and identify marketing strategies that will achieve them. The managers and employees who do not understand their organizations goals and objectives will face a significant challenge and have a higher likelihood will not achieve it. Without a clear understanding, managers and employees might be making a decisions without the benefit of the guidance that provided by the organizations goals and objectives. Many of them will get lost along the Continue reading
Market-Based and Resource-Based Theories of Competitive Advantage
The competitive advantage, a concept introduced by Michael Porter in 1985 has become one of the key concepts in management science today. A firm is said to have a competitive advantage when it is implementing a value creating strategy not simultaneously being implemented by any current or potential competitors. Over the past 25 years, a large body of literature engaged in analyzing how organisations can achieve and, more importantly, sustain a competitive advantage. During this process, two different perspectives or ‘schools of thought’ emerged. The first school of thought is that an organization’s competitive ability depends more on the external environment and industry attractiveness. This perspective is referred to as the market based view and was largely triggered by Porter. The second school of thought is based on the internal environment i.e. the fundamental attributes of an organisation, in terms of strengths and weaknesses determine a firm’s ability to compete. Continue reading