Strategic management is a set of decisions and activities that directs the long-term performance of an organisation, which includes environmental analysis, strategy formulation, strategy implementation, strategy evaluation and control (Wheelen & Hunger, 2010). And strategic management, which will assure its continuous success and make it secure from changing situation, is an approach to connect the management of organisation with its environment (Ansoff, 1984).
Strategic management can provide coordination between actions, objectives and direction for organisation to achieve organisational goals.
1.1 Core competencies
Strategy is the direction and scope of an organisation over the long-term, which need use its resources to achieves advantage
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In order to build core competencies, it is necessary to meet 3 criteria: market access, benefits consumers, unique and difficult to imitate, which can lead to competitive advantages. Cost leadership strategy and differentiation strategy are 2 important strategies to gain competitive advantages.
1.2 three levels of strategy
Strategic management is a combination of strategy formulation and strategy implementation, which categories into three level of strategy: corporate-level strategy, business-level strategy, and functional-level strategy.
A strategy of organisation makes strategic plan to achieve its mission and objectives. The typical organisation usually uses 3 types of strategy: corporate, business and functional (Wheelen & Hunger, 2010).
Corporate strategy is a firm’s theory of how to gain competitive advantage by operating in several businesses in the same time (Barney, 2012). In other words, corporate strategy focus on the whole business of an organisation, and it concentrates on how to add values to businesses of the organisational (Johnson, et al.,
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Business strategies focus on the individual businesses, and it concentrates on how to compete in the single market or industry (Johnson, et al., 2014). Business strategies can classify into competitive and cooperative strategies (Wheelen & Hunger, 2010). There are 3 generic business strategies: cost leadership, differentiation, and focus strategy.
The functional strategies are the level of the operating divisions and departments in organisation (Mintzberg, Lampel & Ahlstrand, 2009), and functional strategies focus on how to deliver the corporate and business strategies effectively in terms of resources, processes and people (Johnson, et al., 2014). Functional strategies are directed to improve the effectiveness of functional operations of the firm such as manufacturing, finance, R&D, marketing and human resources.
Corporate-level strategy and business-level strategy is about formulating strategy of an organisation, while the functional-level strategy is about how to implement strategies into
Strategy means the approach, plan and knowledge that is used to move in the direction that will allow the company to satisfy the customer’s wants and needs, and obtain their goal, while reaching and maintaining an economical benefit over the competition (Defining Your Business Strategy, 2016). It can further be defined as a means of evaluating at what success level they are currently sustaining, and what success level they desire to obtain and the means they will need to use to get to their desired level (Bryson p. 11). A practical understanding of the value that strategy brings to an organization, is the course that the company is to take and the positioning that the company has for the future, and very possibly survival in a very competitive
It can be said that by means of organisation’s competitive strategy, it can achieve an upper hand in the business market over its rivals. Competitive Advantage offers a beneficial position to business organisations over rivals in regards of some measure like expense, quality, or velocity. An efficient strategy can help an organisation to achieve an upper hand through commitment to its strategic objectives and the capacity to significantly expand execution and profitability (Bartlett & Ghoshal,
The strategies can be business level or corporate strategies. The business level strategies are the actions taken by an organization so as to have an advantage in a single market (Johnson & Scholes 2002). The corporate strategies are actions focused on gaining an advantage in multiple markets or industries. The strategic choice that an organization takes normally depends on the attractiveness of the industry and also its competitive position (Johnson & Scholes 2002). Thus, Wells Fargo applies the corporate strategy as the company has focused its operations in the banking industry.
What are the two types of core competencies that drive a firm’s competitive advantage? Which firms demonstrate a clear competitive advantage because of (a) major value-creating skills/core capabilities and/or (b) superior assets or resources? Which firms have demonstrated sustainable sources of competitive advantage? The two core competencies that drive a firm’s competitive advantage are cost leadership and differentiation.
Corporate Strategy defines the path of a company to achieve long-term goals and objectives. It plays a crucial role in determining the competitive position of an organization. The corporate strategy incorporates all core factors to ensure the success of an organization. Depending on the nature and objectives of the organization, the components of a corporate strategy varies. It is only the corporate strategy that integrates and links the vision, goals, business model and help in appropriate allocation of resources and finally in decision making process.
Firstly, the Boston Consulting Group (BCG) matrix that concentrate the market position of different products. Secondly, the experience curve and the Profit Impact of Market Strategies model which identified a number of strategic variables. Furthermore, competitive advantages model (Porter, 1985) which focus on five different forces in environment of organization, but suit with only stable market. Generic strategy was developed strategies under this school, especially it can identify position in the market. Advantages: -Provide content in a systematic way to the existing way of looking at strategy -Particularly useful in early stage of strategy development, when date is analyzed -This school emphasis on analysis and calculation can be a very strong support to the strategy development process -This strategy suit with big businesses or organization which have ability for operate effective market research in the environment
Competitive advantage is when two or more firms compete within the same markets, one firm possess a competitive advantage over its rival when it earns (or has potential to earn) a persistently higher rate of profit. There are three types of competitive advantage. a) Cost leadership strategy occurs when a firm a delivers the same services as its rivals but at a lower price. b) The differentiation strategy occurs when a firm delivers greater services for the same price of its rivals. c) Focus strategy is a focused approach requires the firm to concentrate along one specific segment either a cost leadership or a specialization strategy.
ARAB OPEN UNIVERSITY FACULTY OF BUSINESS STUDIES (MBA) B 820 _ STRATEGY (TMA ONE)_ TUTOR MARKING ASSESSMENT _ Fall, 2014 TMA ONE: Answer Bader Abdullah AL-Sumri (130348) Question 1: strategies, deliberate or emergent 1) Introduction Planning, and particularly strategic planning, has been characterized as a learning process.
“An organizational strategy is the sum of the actions a company intends to take to achieve long-term goals (Johnson, 2016)”. Organizational strategy is derived from a company 's mission, which tells why an organisation is in business. There are three important aspects of organizational strategy such as resources, scope and the company’s core competency (Johnson, 2016). As Johnson (2016) postulated that top management produces the larger organizational strategy, while middle and lower management adopt goals and plans to satisfy the overall strategy. Germano (2010) states that leadership has a significant impact upon organisation and its success, whereby leaders determine values, culture and employee motivation.
The four building blocks of competitive advantage can be used to help a company become more profitable and stay ahead of their competition. The four factors are superior efficiency, quality, innovation, customer responsiveness. All four building blocks are important to any company. However, I believe that customer responsiveness is the most important because having loyal and happy customers can make or break any company. The four building blocks can help companies grow and become the leader in their industry over their rivals.
It refers to the patterns of communication, interpretation and adjustment between individuals. Both the verbal and nonverbal responses that a listener then delivers are similarly constructed in expectation of how the original speaker will react. Workers contribution is more involved in this theory. (Markes, 1999) Contributions 1)
STRATEGIC MANAGEMENT CASE STUDY: MCDONALD’S CORPORATION 1. INTRODUCTION McDonald’s Corporation is the world’s leading fast food restaurant chain with more than 34,000 local restaurants serving approximately 69 million people in 119 countries each day. More than 80% of McDonald’s restaurants worldwide are owned and operated by independent local franchisees. Its revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants (McDonald’s, n.d.).
In 1985, Harvard Business School Professor Michael Porter published his new book “The Competitive Advantage” which focuses the organisation internal environment. In this book, along with an in depth analysis of the competitive strategies which are Cost leadership, differentiation and Focus, he also concentrates on the firm’s value chain. 1. Cost Leadership: In cost leadership, an organisation aims to become the low cost provider in its industry. Examples are Aldi, Lidl, Ryan Air etc 2.
The term of strategy is defined as “the basic long term goals and objectives of an enterprise and the adoption of courses of actions and the allocation of resources necessary for executing these goals” (Chandler,
TASK 1.1 Importance of operation management Operations management (OM) is the business function responsible for managing the process of creation of goods and services. It involves planning, organizing, coordinating, and controlling all the resources needed to produce a company’s goods and services. Because operations management is a management function, it involves managing people, equipment, technology, information, and all the other resources needed in the production of goods and services. Operations management is the central core function of every company. This is true regardless of the size of the company, the industry it is in, whether it is manufacturing or service, or is for-profit or not-for-profit.