STRATEGIC MANAGEMENT

Strategic Management



Strategic Management

Strategic Management

The management that relies on human potential as the basis for the organization, directs production activities to customers requests quickly responds and conducts timely changes in the organization, meet the challenges of the environment and allows to achieve competitive advantage, which enables the organization to survive in the long term, while achieving their goals. The objects of strategic management are the organizations strategic business units and functional areas of the organization (Khanna, 2005).

Every organization has a different strategy and approach towards business working style. However, they also face challenges in strategic human resource management. One of the greatest challenges will be faced in managing strategic human resource is that obtaining human capital, hiring suitable employees for achieving the strategic gaols of the organization. However, it is very important to train the employees accordingly, and play a crucial role in attaining the strategic goals of the organization. Developing an organizational culture which focuses towards one strategic goal and work accordingly to achieve it, is another great challenge faced by strategic human resource management. Job satisfaction is vital as it is highly important to keep the employees satisfied with their jobs so that they can perform well; nevertheless, they also have to reduce the turnover rate and maintain that employees do not leave.

Strategic management directly impacts the problems that directly connected with the general objectives of the organization. Problems related to external factors that are out of control. "Problems of strategic management are most often arising as a result of numerous external factors. Therefore, to avoid mistakes in choosing a strategy, it is important to determine what economic, political, scientific, technical, social and other factors influence the organization's future. The core of strategic management is the system of strategies, including a number of interrelated specific entrepreneurial, organizational, and labour policies (Dyer, 2006).

Concepts, tools and techniques

1. Cost Leadership Strategy

The concept is simple: to be the lowest cost producer in its industry. This can be achieved by seeking economies of scale (e.g. through technology) or through privileged access to raw materials. A successful strategy of cost leadership generates direct benefits for the company: high efficiency, low overhead, limited benefits, intolerance of waste, careful review of budget requests, awards related to the concentration of costs and an extensive employee participation in attempts to control costs(Mui, 2007).

However, this approach has some risks: competitors may imitate the strategy, reducing the profits of the industry in general; the technological advancements in the industry may become ineffective strategy or buyer interest diverted to other features of differentiation other than price. Economies of scale: Producing in high volumes lead to cost savings, which makes it very difficult for new entrants and others to compete (Schendel, 2006).

2. Differentiation Strategy

Giving the product or service an attribute that perceived throughout the industry as unique. To do so, the company selects one or more attributes that many buyers in an industry perceive as important, and set exclusively to meet those ...