Strategic Management Involvement - Essay Example

Running Head: STRATEGIC MANAGEMENT Strategic Management [Intuition's Strategic Management We are told by on strategy that we should keep the environment under constant review. Form the point of view of strategic management, what is the practical use of knowing what is going on in the environment Can environmental scanning tools be distinguished in terms of ( a ) the information they provide and ( b ) the use that can be made of that information, and which tools would you use in what circumstances Introduction Strategy - There is no absolute answer about what is strategy, as it will change with its external and internal environment. Henry Mintzberg (1994) emphasized on the affect that people make use of "strategy" in more than a few diverse ways, the most frequently used strategies the four strategies that are mentioned below: Strategy is a plan, a "how," a means of getting from here to there. Strategy is a pattern in actions over time; for example, a company that regularly markets very expensive products is using a "high end" strategy. Strategy is position; that is, it reflects decisions to offer particular products or services in particular markets. Strategy is perspective, that is, vision and direction.(http://home.att.net/nickols/strategy_definition.htm) Mintzberg gives importance to the fact that strategy develops over time as intentions have a collision with each other as well as contain an altering reality. therefore, one may start off with a viewpoint and then come to the conclusion that it calls for a fixed place , this place is known as the position which it will take , this can only be achieved through a well crafted plan with the ultimate conclusion and strategy that reflected in a fixed pattern evident in major decisions as well as actions over the fixed time (Hensley 1992) . This pattern in decisions as well as actions clearly defines what Mintzberg called "realized" strategy. The examples given below clearly describe the situations in which this realized strategy will completely fail: Change in condition Customers didn't respond the way we had hoped. The organization resisted change The skilled that we need is not develop in time. In this case, a constant review of the environment may able to reduce any dissatisfaction of the failure of the strategy. External analysis is clearly described by Fahey and Narayanan (1986), they imply that organizations always in order scan the environment to recognize the ever changing trends and new patterns, keep an eye on all the specific trends as well as patterns, estimate the future course of the monitored changes and patterns, and then in the analysis the organizational impact these changes and patterns will have on the organization (Dolence etal 1997). Merged long with internal analysis of the organization's, well defined vision , mission statement , strengths, and weaknesses, external analysis greatly helps decision makers in creating strategic directions as well as strategic plans. The first and foremost goal of environmental scanning is to make the decision makers aware of the potentially important external changes long before they take shape so that decision makers have enough lead time to act in response to predicted the change. Therefore, environmental scanning plays a very important role for the organizations to manage change (Capon 1987). Environment Domains is a very board area, External environment refers to those people, resources, leadership and communication structures existing outside the organizational structure which may involve the following sector Industry sector Raw material sector Financial sector Market sector Technology sector Government sector International sector Internal and External Analysis Internal analysis of the organization is a practice that to help us to identifying the Strengths and weakness of the company, which point out some key factors that able the organization to get a better advantage of the market. And the most common tools are Core Competencies Stakeholder Analysis Value Chain Financial Analysis Core Competencies Core competencies can be defined as capabilities that are vital to an organization that wants to achieve competitive advantage. The first and foremost point for the analyzing of core competencies is accepting the fact that competition among businesses is as much a battle for perfection in competence as it is for a good position in the market and market power. Senior management may not be able to pay attention on each and every activity of their business as well the competencies it requires to make those activities functional (Cope 1987). So the main goal for the management to pay complete attention on their competencies that strongly affects the competitive advantage of their business . Distinctive Competencies Firm-specific strengths that assist a company to increase it's competitive advantage by just of introducing new and different products and/ or selling their products on lower costs than its competitors by its vast resources and capabilities (Alef etal 1996). Resources signify inputs into a firm's production development - these recourses can be capital equipment, skilled employees and their skills, names of their brands , finances as well as managers who are highly talented. An important resource that tends to create an extremely strong demand for the products of a company might show the way to distinctive competency. Capabilities represent also represent the firm's ability to incorporate the firm's individual resources in order to attain a preferred objective. Capabilities grow over time as a consequence of multifaceted interactions that take complete advantage of the interrelationships among a firm's resources which are tangible and intangible, this may be based on the growth, transmission as well as exchange or information sharing and knowledge this interrelation is usually carries out by the employees of the organization . Superior Efficiency is the is the main driver to success, Efficiency will tend to lower the manufacturing cost/ running cost, As a result, a higher profit will be make by the organization. In this time, we may able to increase the spending in the R & D, to develop a higher quality of the product, as the quality increase we are able to sell our product in a higher price and generate more profit. As a result we can lower the production cost, higher the profit of the company, and keep monitoring what our customer need and satisfy our customer. These will create a highly competitive advantage for the organization. Analysis the external environment will assist you in identifying possible pastoral opportunities and threats which you may be facing. Opportunities are potential areas of new or expanded pastoral gains (Brown, etal 1994). They are areas you may not have previously been aware of, such as areas of changing political or economic climate, or change in leadership at the parish or diocesan level, or in areas of technological changes. You will know them when you see them. These are an area which helps facilitate or expand the apostolate of your organization/movement. On the other hand, Threats are those you may have probably knew about and could be easier identified than opportunities. Threats are those that hinder your organization or movement in accomplishing its task (Hearne etal 1985). There are number of tool are available to help us to identifying these opportunity and threads, the most common one are the Port's Five Forces and SWOT analysis, to help us identify our market position. SWOT analysis (Strength, Weakness, Opportunity and Threads) SWOT analysis is used by companies to identify company strengths and weaknesses. The companies identify their strengths and weakness so that so that they can maintain their strengths and eradicate their weakness. An additional function of SWOT is to identify the opportunities and threats that tend to take place as a result of external factors - particularly those that have an immense effect on the company's strengths and weaknesses. The strengths and weakness of the Company have to be identified in each and every characteristic of the business relative to the rest of the market relative to previous performance or expected performance relative to customer demand It is also essential to understand that weakness give rise to opportunities . To make things clearer it can be said that correcting a weakness gives rise to a marketing opportunity. In the same way, failing to sustain strength is a threat to the organization. A way to carry out a SWOT analysis perceived company must first list down their strengths, weaknesses, opportunities and threats. While doing so the company must also analyze the fact if there are any weaknesses that might terminate the company strengths and possible threats to the company strengths , they may also list down the opportunities that will arise after correcting the weakness. Porter's Five Forces Analysis Porter's five forces analysis greatly assists the marketer in contrasting an environment that is highly competitive. It is very similar to PEST analysis which is an environmental audit tool. This tool tends to give complete attention to a single, Strategic Business Unit. Porter's five forces consist of the bargaining power of customers, the bargaining power of suppliers, the threat of new entrants, the threat of substitute products, the intensity of competitive rivalry. (See figure 2 given in appendix) Strategy Formulation Once a complete blue print of firm and its environment is present in front of the management, detailed strategic alternatives can be designed. While every firm has its own strategy, there are also some also strategies that can be used equally by a wide range of firms these strategies are known as generic strategies. Implementation It is most likely that the strategy may be articulated in high-level theoretical terms and priorities. So that strategy can be implemented more effectively, it should be clearly translated into a few more comprehensive policies that can be clearly understood at the functional level of the organization. When these strategies take the shape of functional policies they tend to highlight practical issues that may not have been in the attention of the management areas such as: Marketing Research and development Procurement Production Human resources Information system In addition to creating these well defined functional policies, in the implementation phase identifies the necessary resources and puts them in place so that the organization can successfully go through the change. Example Environmental Scanning: Ford Motor Company Ford Motor Company is the Second's large industrial corporation of cars and trucks with products sold in more than 200 countries, and had already produced 260 millions of vehicles. With inherent large-scale growth issue, and pressure, Ford trying to increase their competitive advantage by re-organizes their infrastructure of their organization. What they have done is use a list of scanning tools to analyze their current position of the company. A key step in the process was the use a Ansoff Matrix analysis to identify the current Market position and it will given you a general ideas that what you can do without detail thinking. Then with the Porter's Five Force, After that will use of a SWOT analysis which drew on information and data collected during the market audit, the focus of attention was both on internal and external factors and these provided a valuable input into formulation of marketing objectives and strategies. The aim of such an analysis, in essence was to identify ways in which to exploit the organization's strengths or capabilities and maximize the opportunities offered by the market, while addressing corporate weaknesses and minimizing external threats. Conclusion In today's world of swift, and change that is unforeseen, amplified uncertainty, the global nature of business, as well as swift technological advances, Strategic planning can formulate an essential involvement to the organization's development and continued existence in vague environments. This unit emphasizes on the significance of an effective environmental scanning system to provide vital information to the strategic decision making process. To conclude it can be said that the procedure of making strategic decisions typically not only involves the complete analysis of the strengths and weaknesses of the organization but is also identifies and analysis the threats and opportunities in the external environment. Bibliography Alef, Edward R. & Berg, Daniel. (1996). the learning factory. Lanham, MD: University Press of America. Brown, L.R., Flavin, C., & Postel, S (1994); How to Shape An Environmentally Sustainable Globe. New York: W.W. Norton, Capon, N (1987); Corporate Strategic Planning. New York: Columbia University Press, Cope, Robert G. (1987). Opportunity from strength: Strategic planning clarified with case examples. Washington, D.C.: ERIC Clearinghouse on Higher Education. Dolence, Michael G., et al (1997).;working toward strategic change: A step-by-step guide to the planning process. San Francisco: Jossey-Bas Gerry Johnson, Kevan Scholes, Richard Whittington (2004;) Exploring Corporate Strategy: Text Only FT Prentice Hall; 7Rev Ed edition Hearne. J.C. and Heydinger, R.B (1985); "Scanning the External Environment of a University: Objectives, Constraints, and Possibilities." Journal of Higher Education, 56 (4), 419-445. Henry Mintzberg (1994); the fall and Rise of Strategic Planning , Harvard Business Review. Hensley, Oliver D. (Ed.) (1992); Strategic planning for university research. Lubbock, TX: Texas Tech University Press. http://home.att.net/nickols/strategy_definition.htm retrieved on 5 August 2007. Liam Fahey , V. K. Narayanan (1986) ; Macroenvironmental Analysis for Strategic Management, Thomson Learning Appendix Figure 1 Read More