STRATEGIC MANAGEMENT

Strategic Management

Strategic Management

Introduction

The strategic planning process is one that has been used in some form for as long as companies have been in business. A formal top-down model became a simplified methodology in the 1970s because it made the process more deliberate. With this model, an organization's leadership periodically defines an overall strategy which is then communicated throughout the organization to be implemented. This strategic planning process starts with the company's mission to set goals or objectives. With goals in mind, a situation analysis can then be conducted so a strategy can be formulated and ultimately implemented. This process is most useful for business-unit-level strategic management. With large corporations, the overarching strategy set by executives applies to managing the businesses' comprehensive portfolio.

For example, ABC Corporation is made up of six different, but complimentary companies. The executives of ABC Corp set an overall strategy for the six companies it manages. This strategy focuses on deciding on how to allocate resources among the, individual business, units and how they can take advantage of synergies to grow the overall business. In turn, the management teams of each of the corporation's business units use the strategic planning process to set the course for their companies.

The usage of Porters 5-Forces Model in Strategic Management

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 (Clayton, 1996, 25). The Porters 5 Forces model comprises these five factors described below:

Figure 1: Porter's 5 Forces Model

Business Strategy Elements

Strategy development involves looking at ground realities and formulating an approach that can achieve desired results in the context of these realities. It follows that strategy will differ from context to context. Readymade strategies rarely work, and, this is the main problem with strategy development; businesses have to take pains to observe, think and plan. All businesses need:

1.Marketing Strategy to ensure that they can get a profitable volume of orders for what they offer, at a remunerative price.

2.Technology Strategy to select the most appropriate technology, obtain the requisite know-how and implement it in their business.

3.Operational Strategy to carry out operations at low enough costs while ensuring that they can deliver a quality product or service to their customers.

4.Human Resource Strategy to hire, train, develop and retain people who are equipped to handle the varied tasks involved in running the business with the required degree of competence.

This is the reason why businesses need to define their business strategy for meeting the requirements of various departments. A business strategy then assists businesses in meeting their goals and objectives in a proper ...