STRATEGIC MANAGEMENT

Strategic Management

Strategic Management

Case Study 1

The implementation of an effective strategic plan for enabling PowerGen to meet their strategic goals related to their current operations and performance

1.1 Description of Strategic Planning Process

The strategic planning process is a process that is used by many companies since they have started their business operations. A formal organizational hierarchy became a common structure during the 1970s because it created a painstaking process in this regard. In this model, an organization's leadership regularly classify an overall strategy which is then corresponded in the entire organization for proper implementation. The strategic planning process begins along with the company's mission in setting up the overall goals and objectives. While keeping the goals in mind, situation analysis is then. This process is normally handy for business unit level strategic management. The main target of the large corporations is creating an overarching strategy prepared by executives applies which is relevant for businesses' comprehensive portfolio (Arnoldo, 1996, 47).

For instance, ABC Corporation is formed with the help of six different, but complimentary companies. The executives of ABC Corporation create a broad strategy for managing six companies. This strategy has a main focus in allocating resources among the, individual business, units and acquiring benefits of synergies for growing the global business of several companies. In return, the management team of an individual corporation's business units makes a use of strategic planning process in setting the course for their companies.

1.2 Porters 5-Forces Model

This model was developed by Michael E. porter in his book. Since that time, this model has become one of the major tools of analyzing the competitive environment of an industry. In any environment industry is facing competition for profit. According to porter there are five competitive forces that shape any industry and any market. These forces will determine that how intense competition and also determine the profitability of the industry. Corporate strategy objective should be to modify these forces in such a way that improves the organization profitability. The Porters 5 Forces model comprises these five factors described below:

Figure 1: Porter's 5 Forces Model

In the case of PowerGen, they are facing the threat from substitute products because of the strong competition in the industry. Since PowerGen have privatised, they are now bound to face the market forces that prevails in a typical private industry. PowerGen will not only have to provide services to consumers but would also need to compete the rivals operating in the industry. They will have to be cost efficient and at the same time need to develop strategies for achieving maximum revenues in their balance sheet. The inferior force included in the model is regarding bargaining power of suppliers. PowerGen is only going to achieve this factor once they will be able to acquire strong foothold in the industry. For that, PowerGen would have to earn maximum revenues and bear reasonable costs to make it possible for them to be one of the most profitable companies in the ...