Introduction To Strategic Management Business Essay

Introduction To strategic Management Business EssayAlfred D. Chandler, an American short letter historian, defined strategy as follows Strategy is the determination of the prefatory long-term goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out those goals. present A. Chandler be untruthves that strategy consists of equal importance to defining objectives and goals as it is to providing the measures for attaining them. Strategic way is a consistent take of managerial activity of setting up goals and tactics and ensures a variety of decisions by the top management to successfully achieve those aims or goals in the long term and at the aforementioned(prenominal) time providing for adaptive responses in the short term. This provides an overall attention to an organization. The strategical management process consists of three components Strategic analysis, strategic choices and strategic implementat ion. These components are vital in a whole as it appraises the product line and industries in which the unanimous is a post of. It overly brings about a ample competition and helps in defining of attainable goals in present and prospective and withal reevaluates apiece strategy. The Components Of Strategic Management Process, in its plainest sense, is fixing tactical decisions, evaluating the strength and recognizing the critical external factors, which may play a circumstances in influencing the position of the firm and also defining the factors that bring about the implementation of a firm through these components. Different from the classic business intend, Strategic management focus involves Mission, Vision and Out-of-the -box thinking. Top management uses strategic management to describe where and when they would want to position their firm in the industry. Strategic planning helps assess the firms opportunities and threats, exposes its strengths and weaknesses as well as encourages the firm to adapt. A SWOT analysis, strengths, weakness, opportunities and threats, is an excellent way to help develop a strategic plan. Like utilise by many Fortune 500 companies, these cardinal components pose as the building blocks of a strategic plan for a firms existence. Similarly, PEST analysis (Political, Environmental, Social and Demographic and Technological factors) is a inquiry of the external marco-enviormental in which in firm exist. It helps to examine the effect of these influences on the firm as opportunity and threat in the SWOT analysis. It is also used for assessing the market rise and fall, and as such the position, potential and direction of the firm. The BCG (Boston Consulting Group) Matrix is a four-celled matrix it is the intimately renowned strategic planning tool. It provides a graphical representation for the firm to examine diverse companies in its portfolio. It provides the management with a comparative analysis of firms potentia l and the evaluation of environment, which it operates in. government StructureOrganization is a term that can be study as a process as well as a complex body part. In a fixed sense, organization is a coordinate, where a police squad of people functions and tries to accomplish a certain objective.In the words of Kast and Rosenzweig, social organisation is the established pattern of relationships among the component parts of the organization. In this sense, the network of relationships among individuals and positions in the firm are refers to as an organizational structure.Organizational structure defines how responsibility, roles and indicant are coordinated, dominateled, how information moves between the assorted stages of management and how they are assigned. When the close of the decision making power and control over departments and division lie with the top level management it is know as Centralized structure. In a decentralized structure, the decision making power is distri excepted over the departments and allowing them to racket certain degrees of freedom. There are four major components that affect organizational structures, they are, Environment, Strategy, Technology and Human Resource. Environment being are very volatilizable factor itself, managers will face more(prenominal) problems depending on how fast it changes. Thus, structures drive to be more flexible in order to face these changes this would also suggest the need to decentralize authority. Various strategies would need to utilize different structures. Such as a differentiation strategy would require a flexible structure and low cost would need a more formal one. Organization structures are also determined by what cause of technology is being used. For instance, a company that has an automated operational governing body would opt for a decentralized structure because the progress of employees would be monitored and the nimble supervisor would be able to provide guidance and when needed. One of the most comm however found structures found within firms is the functional structure, it consist of infinitesimal units or departments which are grouped or identified by specialty, the worry finance, IT, logistics, sales, human resource, and so on. This distinguishes the departments by product produce by each unit or geographical region this enables managers to maintain more control over each group. This structure is based on high peculiarity and high control and efficiency construct. In terms of effectiveness, the functional structure is most effective in small to medium size firms that only deal with a few product and services. A matrix structure is an organizational coverage structure frequently used for project-based teams. This structure uses twain(prenominal) departments as well as products as determinates to group teams together this allows ideas to string up between various parts of the organization. This is a complex structure of reporting rela tionships and has proven to be very flexible and can respond speedily to change. It is effective for a large organization with a large morsel of products and services.Strategic MappingA strategic group is a concept used in strategic management where companies that are a part of the same industry and provide equivalent business models and/or similar strategies are grouped together. For instance, the fast food industry can be divided into different fast food joints in terms of pizza or burgers, which can be based on different variables like time, hurt, presentation, etc. The number and the composition of the groups within the industry depend on the dimensions used to define them. Strategic management experts mainly use savourless grid in order to justify their direct competitors, those with similar strategic models, and their indirect rivals. M. Hunt (1972) devised the term Strategic Group whist analyzing the thingamabob industry after discovering the high level of competitive r ivalry. He the wherefore subscribed this to the subgroups existing the industry. This then caused the industry to undergo rapid innovation, price reduction, increase in quality and lower profitability than normal stinting models would deliver. M. ostiarius (1980) developed the concept and explained strategic groups in terms of Mobility Barriers. grade Chain AnalysisThis analysis focuses on every level of the business that it goes through from raw materials to the final user. The goal is to maximize economic foster at the least possible cost.For one to split up understand the activities from which an organization creates shareholder value and competitive service, it has been proven useful to simplify the business form into series of value-generated activities, also known as value chain. Michael Porter, in his bind Competitive advantage (1985), introduced a value chain model that consists of entrap of activities that was found to be common to a wide range of firms. M. Porter identified these activities and classified them into primary and support activities. The primary activities include Service, marketing Sales, Operations, Inbound and Outbound Logistics. Theses activities are supported by four components base of the firm, Human Resource Management, Procurement and Technology Development. The main goal of the value chain analysis is these activities need to provide a higher level of customer satisfaction that turn overs the cost of them, thus creating profit margin. In different(a) words, the firms margin depends on how effective the firm is on performing these activities efficiently, so that the level of customer satisfaction is sufficient enough for them to pay for the products that exceed the cost of the activity itself. By reconfiguring the value chain a firm may be able to achieve a competitive advantage by providing better differentiation or through lower costs. respect chain activities are not inaccessible from one another but rather one activity often affects the cost or the motion of the other. There may exist linkage between primary activities or between primary and support activities. The value chain analysis is a flexible tool for a firm its competitors and the industry. It can be used to create or study the competitive advantage on both cost and differentiation. Cost advantage is done through a better understanding and squeezing out the cost from value adding activities and differentiation is achieved by focusing over those activities with core capabilities in order to out forge the competitors. It provides a deeper understanding of the firms strengthens and weaknesses. The main advantage of value chain is that it is adaptable to any type of business, big or small. However, M. Porters book Competitive Advantage, the value chain is largely focused on manufacturing industry, thus puts off other types of business. Due to the complexity of the value chain analysis and the scope and exfoliation of the value cha in has proven to be intimidating, it is time consuming. To understand the firm competitors one must identify and examine the key differences and strategy drivers, hence, needing material information. The business information system is not always structured to drop dead out information easily for a value chain analysis.