The growing competition in the business industry has made it necessary for any company to stay in competition or have a competitive advantage over its competitors, adequate and relevant information about the competitors need to be received or known at the right time in other to make a good strategic business decision. Competitive intelligence is defined as a systematic process that transforms random bits and pieces of data into strategic knowledge. This information comprises about competitors, customers, technological, environmental, product and market in. other to make a good strategic decision. Competitive intelligence is described as those activities a company undertake in determining and understanding its industry as well as identifying and understanding the competitors, also determine and understand their weaknesses and strength and anticipate their next move(s). This definition of competitive intelligence tends to identify/determine, understand and anticipate industry and competitors. Furthermore competitive intelligence is a process of monitoring the Continue reading
Strategic Management Tools
The Concept of Strategic Groups
Meaning of Strategic Groups Strategic group is a group of firms within an industry which face the same environmental forces, have same resources and follow similar strategy in response to the environmental forces. These strategies include pricing practices, level of technology investment and leadership, product scope and scale capabilities, and product quality. By identifying strategic groups, analysts and managers are better able to understand the different types of strategies that multiple firms are adopting within the same industry. For example, the restaurant industry can be divided into several strategic groups including fast-food and fine-dining based on variables such as preparation time, pricing and presentation. The number of groups within an industry and their composition depends on the dimensions used to define the groups. The concept of strategic groups in strategic management stems from an observation by Hunt (1972). Hunt coined the term strategic groups to describe a group of firms 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
Quantitative Strategic Planning Matrix (QSPM)
Quantitative Strategic Planning Matrix (QSPM) is a strategic management tool used in the evaluation of strategic options and determination of relative attractiveness of strategies. The QSPM technique determines which of the selected strategic options is feasible, and it actually prioritizes these strategies. A basic tenet of the QSPM is that firms need to systematically assess their external and internal environments, conduct research, carefully evaluate the pros and cons of various alternatives, perform analyses, and then decide upon a particular course of action. The Quantitative Strategic Planning Matrix (QSPM) consists of three stages that are used in the strategies formulation process. The first step is to define key strategic factors. Then, once this has been determined, a SWOT analysis, or other similar form of analysis, is performed to objectively weigh the pros and cons of each strategic factor in numerical form. Finally, based on the information found in the analysis, a Continue reading
Value Net Framework
The Value Net Framework, also known as Coopetition Framework is an analytical strategy tool developed by Adam Brandenburger and Gary Nalebuff in 1996, combining strategy and game theory, in order to describe and analyze the behavior of multiple players within a given industry or market. The Value Net Framework is an alternative to Porter’s Five Forces framework, extends the five forces framework more general by examining the role of complementors. The frameworks fundamental idea is that cooperation and competition coexist. Cooperation and competition are both necessary and desirable when doing business. Cooperation is required to increase benefits to all players (focus on market growth), and competition is needed to divide the existing benefits among these players (focus on market share). Co-opetition Co-opetition is a neologism representing the ambivalence of competition and cooperation in business relationships. Co-opetition is part competition and part cooperation. It describes the fact that in today’s business Continue reading
Parenting Fit Matrix
Normally multibusiness companies comprise two elements: business units, which could theoretically be independent companies, relating directly to the capital markets; and one or more layers of other line and staff managers above or outside the businesses, which we refer to collectively as “the parent”. The businesses are directly involved in value creation: they produce goods and services and attempt to sell them for more than their cost. But the parent is involved much less directly. Its ability to create value depends largely on its influence on the businesses and the way it supports them. The parent acts as an intermediary between the businesses and outside investors. It clearly incurs costs, both direct and indirect. It is therefore justified only if, through its influence, it creates more value than these costs. If it does not, businesses and shareholders would be better off without it. This bottom-up view challenges the very existence Continue reading