Strategic Management Meaning Of Strategic Management Business Essay

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Introduction of Strategic planning and implementation: Strategic planning can be noted as a procedure where the manager of an institute reviews the values and vision of the institute and designs a tactical path in order to attain confident objectives while justifying risks and tactical implementation may be defined as a process where the administration of an institute gears the designs strategic plan on a day-to-day basis. Furthermore, strategy planning is an exercise and requires the leadership group to estimate the past, know the current and forecast the prospect. Tactical plan usually starts with the vision as set forth by the leader of the organization (Romeo, 2008).On the other hand; the strategic planning approach visualizes tactical managerial processes as rationally sequenced activities that permit administration to systematically decide a suitable tactical pathway for the whole institute. In the mean time, writer describes scheme as the willpower of long-term goals and objectives by the business control, and visualized as a pattern of policies and plans urbanized by top administration to attain prearranged goals(Andrews, 1980, Chandler, 1962).The strategic planning process has been explaine3d as the growth of decision-making rules that direct prospect directorial actions(Ansoff, 1965) .central tactical planning systems are urbanized to put together practical activities and co-ordinate long-term organizational actions that debatably should facilitate corporate adaptation.( Ansoff, 1988, Lorange, and Vancil, 1995). Many of those above features are included in the straight tactical administration concept which emphasizes a requirement for a orderly come close to to scheme growth. The tactical administration concept builds on a number of chronological ladders in the scheme add to process, like, goal formulation, environmental analyses, strategy formulation, implementation and control (Andersen, 2000). Setting targets, co-ordinating activities, monitoring performance, reallocating resources, and strategies to reduce performance gaps are linked to the use of tactical planning as a means of coordination and arrange within large organizations (Grinyer, 2007

Strategy implementation processes:

Strategy implementation processes cover planning, implementation, monitoring, evaluating, and reviewing where implementation includes managing change, obtaining support for change, structuring for change, developing a positive culture, setting milestones for achievement, and getting people aligned (Haberberg, and Rieple, 2001).

Role of strategic planning in an organization: Research has argued that strategic planning can improve a company's chances of doing the right thing at the right time for the most part because scheme planning has a better understanding of its operate and its background has available more timely and exact in order and forecasts, is repetitively recognizing and evaluating its options, uses improved techniques of assessment, and reacts more quickly to a altering surroundings (Fvelclz, 1994). Researchers have concluded that company level planning have an improved reward for the stockholders than parting level planning because company executives have more of a businesswise position than do division level managers which permits them to sight the corporation as a collection of assets. It has further claimed that corporation level surroundings up can be powerfully extended by reallocating property to achieve a most excellent likely advantage unite as seen by its stockholders. According to Finance theory, well-organized diversification of a collection of corporation possessions needs that the covariance of profits between divisions is factored into the asset decisions and that capital is allocated accordingly (Fvelclz, 1994). Alternatively, vital company level participation in tactical planning leads to a long term income earnings ratio most likely concerns their role in ecological preparation which covers information about the social, financial, supporting and technical environments. Research has further claimed that business level executives are most likely more efficient than division level managers in the manner of ecological planning because their more traditional day-to-day functions carry them in closer contact with the outside surroundings. For example, the chief monetary officer continually takes account of political and financial factors in his/her role of moving up funds and commencing with nationwide and global monetary markets. Furthermore, business executives act together more closely with members of the board of directors, whose role regularly is to proffer communal, fiscal, following and scientific skill. In short, business executives are in an improved place and are more able because of their data to behaviour ecological planning than are division level managers (Karger, and Malik, 1975).

Poter's five forces of strategic change:

At corporate level Porter's generic strategies suggest routes to competitive advantage:

Segment focus

b) Cost leadership

c) Differentiation

Business may be stuck in the middle of the triangle without knowing, but in fact may need at least one option for sustainability. These generic strategies will be influenced by the bases upon which positioning is determined.

By combining Porter, Ansoff and SWOT, the derived strategies can be classified as:

Aggressive : Cost leadership + market penetration, leveraging on strengths to pursue opportunities

Competitive : differentiation + market/product/service development with less actionable strength than major competitions

Conservative : segment focus + niche market penetration to consolidate strengths into a superior position in the market where few threats are present or anticipated

Exit : diversification into new markets because little potential exists for current business and where weakness and threats for exceed actionable strengths or current market opportunities (Kotler, 1994).

Poter's five forces to analyse for change in an organization:

Most useful frameworks to analyse competitive arrangement is developed by Michael E Porter. Porter where he has suggested that rivalry in a business is ingrained in its fundamental economic composition and goes away from the behaviour of present challengers. The state of rivalry is based upon five basic spirited forces. Moreover, these factors conclude the ultimate profit probable in an industry where income probable is calculated in provisos of long run return on invested capital. The goal of competitive strategy is to find a position in the industry where the company can best defend itself against these forces, or can influence them in its favour. Knowledge of these underlying pressures highlights the critical strengths and weaknesses of the company, shows the position in the industry, clarifies the areas where scheme changes give way the greatest pay-off, and highlights areas where industry trends hold greatest significance as opportunities or threats. The aim of bloodthirsty scheme is to discover a place in the industry where business cans most excellent guard itself beside these forces. Facts of these fundamental pressures highlights the significant power and weaknesses of the company, shows the position in the industry, clarifies areas where scheme changes give way the most recompense, and highlights areas where business trends hold the most significance as opportunities or threats (Drucker, 1973)

Five forces model Source: Rice, (2010F. Rice

Industry competitors and rivalry determinants

Who is competing?

number and history of competitors

size

market shares

How competitors deliver KSF's

Rivalry determinants of a business organization

growth rates in the industry

brand loyalty

switching costs

product differentiation

investment requirements

over / under capacity to meet market needs

Exit barriers, rational emotional (Kotler, 1994).

These factors will help to understand industry structure and the intensity of rivalry, but this is further pressured by threats from new entrants and substitutes. In addition, the bargaining strength and power of suppliers and buyers will add further pressure.

BARGAINING POWER OF BUYERS

There are two main sources:

Bargaining leverage from buyer concentration, buyer volumes, switching costs and their ability to backward integrate

Price sensitivity in relation to total purchases, quality perception, brand identity and the incentives offered to confirm a purchase decision

THE THREAT OF SUBSTITUTES:

The Determinants of substitution threat is a function of

The availability of valued close substitutes

The price performance of substitutes

The willingness for buyers to change

The switching costs involved

THE THREAT OF NEW ENTRANTS TO AN ORGANIZATION

New entrants to an industry increases supply and may place pressure on price based competition, if the product / service offering is directly comparable to the provision made by existing competitors. However, the threat of new players is related to the market entry costs and level of investment. Entry barriers such as brand identity, buyer switching costs, access to channels, real product differentiation and expected competitor retaliation make the successful entrance more difficult, especially in established markets. New entrants also have to take into account the cost of the experience and the experience curve effect.

CUSTOMERS: Customers in the external market place are the source of survival, growth, sustainability of business and profit. Therefore, it is essential to know WHO are the existing and potential buyers, their LOCATION and PURCHASING POWER, plus the MOTIVES that will induce and sustain purchase so that their needs are being met.

At external level, broad classifications are needed. At internal level, customers profiling and tracking is vital for business success.

The following diagram offers same broad bases for the segmentation of an organization

Source: Drucker, 1973

SOURCES OF INFORMATION:

Sources of information or intelligence are needed to provide an analysis of the external environment. Confirmation using desk research and field research may be needed on a regular basis to track these dynamic environments. Thought may need to be given to the design of an information system so that formal and informal sources are captured on a systematic basis. In this way relevant, timely information flows can contribute towards the analysis process and in so doing assist decision making.

RESOURCE AND CAPABILITY ANALYSIS

THE RESOURCE AUDIT: This should be a regular review of the organisations ability to achieve its ambitions. It is a fact finding mission upon which strategy decisions are made because the output of the audit will highlight weaknesses and strengths. A Sample checklist to conduct a resource audit is shown below

Checklist for reviewing the business's resources

1 MANAGEMENT AND PEOPLE

Staffing levels and turnover

Management: Culture and style, responsiveness, adaptability, attitude to risk, power, general competence and skills, use of management information systems

Operational employees: morale, training and development, work conditions

2 OPERATIONS

Operational restrictions

Legal, regulatory framework Operational processes

Operational profitability, flexibility, efficiency, capacity Facilities and plant

Age, location, ownership, condition, usage R and D record, expenditure and capability Control and quality

Relationships and coordination with support functions Suppliers: Contracts, relationships

Products/services

Product /service range: Main, niche, specialised, gaps, potential, dropped products Brand names, patent, and copyright.

Comparative ratings: Market share, profitability, rating by trade, rating by customer, price level, value for money, fitness for purpose, packaging

MARKETING

Pricing: Stability, market vs. cost, elasticity and constraints

Sales Performance: By Product, geographic spread, customer type, distribution channels Customer data: Loyalty, turnover, attitude Promotion: Effectiveness, expenditure/sales Reputation: Complaints procedures, response times

FINANCE

Track record: Profit, dividends, interest, cash flow, balance sheet

Asset management record

Major changes in accounting policies

Profit and cash flow forecasts

Control of debtors and creditors(Dibb. Et al., 1997).

Conclusion: Strategic management is a crucial part of an organization where implementation, monitoring, evaluating, and reviewing are the processes of strategic strategy implementation. Porter's five forces are threats of new entrants, bargaining power of buyers and suppliers, industry competitors and threats of substitute's products. In this economic turbulent down turn, strategic role of a manager is unavoidable where managers have to be foresightness, visionable, goal centred, flexible and updated with frequently changeable global environment. Sources of information or intelligence are needed to provide an analysis of the external environment. Entry barriers are the brand identity, buyer switching costs, access to channels, real product differentiation and expected competitor retaliation make the successful entrance more difficult, especially in established markets. New entrants also have to take into account the cost of the experience and the experience curve effect. Confirmation using desk research and field research may be needed on a regular basis to track these dynamic environments to fight with competitors. Strategy is the backbone of competitive advantage where no managers can achieve the organizational success without using this weapon in these frequently changing customers' expectations scenario.

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