What is Strategic Management. Tthe strategic management process in a company
Strategic management is the so-called art of planning business at the highest level and to the greatest extent. In other words, it involves the establishment of the company’s short- and long-term goals, means of their achievement, analysis of market conditions, internal and external factors influencing the company’s performance, development of the company’s organizational culture and various social policies like environmental protection, rights equality, etc (Harris & Caron, 2007). The example of the properly developed strategic management can be Coca-Cola Company, which understands the necessity of launching new markets and sees the development of its international branches as one of its strategic aims. Moreover, Coca-Cola is concerned with the needs of its employees. It is reflected in various programs presenting educational and recreational possibilities for the latter. Environmental protection is also one of the major points in the strategic plan of Coca-Cola for the next decade (Rabin & Miller, 2000).
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What is the difference between deliberate and emergent strategy?
Developing their strategic plans for some periods in the future, the companies, as a rule, are equipped with a set of strategies they intend to use to achieve their strategic goals. The two most significant types of these strategies are deliberate and emergent ones. The major difference between the two lies in the nature of their appearance. In other words, a deliberate strategy is the planned and structured program of achieving certain goals under certain circumstances. The outcomes of this strategy are usually intended and predictable. On the contrary, an emergent strategy is the way of a company’s behavior that is formed spontaneously. In other words, having no specific goals a company tests its actions in practice to see their outcomes and either implement or reject this strategy (Rabin & Miller, 2000).
Define strengths, weaknesses, opportunities and threats
Strengths, Weaknesses, Opportunities and Threats (SWOT) are the most important aspects of a company’s behavior in this or that situation. Thus, a company should critically and realistically assess its possibilities to be aware of its own strengths and weaknesses. This, in its turn, helps the company in assessing the probable opportunities that it might get from a certain situation, as well as possible threats that this situation might mean for the company. SWOT analysis is the basis of the strategic planning of any company (Harris & Caron, 2007).
Why is analysis of trends important?
The analysis of trends is the basis of the forecasts that are necessary to formulate a company’s strategic goals. The trends are the moves on the market in respect of price, supply and demand of a certain kind of production. The importance of trends analysis lies in its ability to predict the future development of the market and direct a company’s activities in a necessary way (Harris & Caron, 2007). An example of a successful trend analysis might be the policy of Mrs. Beasley’s bakery introduction to the market the so-called “Obama cakes”. Seeing the increasing popularity of the politician, the bakery launched the product with Obama’s name and his face on the package to improve its sales, its image and attract new customers.
What are some of the most critical economic factors for a firm to track? Why are they important?
The major economic factors that every company should be aware of are the value of the national currency and possibilities of its devaluation or revaluation, the price climate in the market which is affected by inflation rates and amounts in which credit and mortgage programs are accessible to the consumers (Harris & Caron, 2007). What is also important is the situation with either high or moderate interest rates at banks offering the above-mentioned programs. The complexity of these factors is important for every company to be sure in its tomorrow, i. e. be aware of the coming changes and be ready to meet them, for example by changing the product line, modifying the price policy, etc (Rabin & Miller, 2000).
What are strategic groups? Why are strategic group maps useful?
The term “strategic group” is used in categorization of companies representing the same branch of industry or dealing in the same area of business. Thus, for example, the companies dealing in the area of beverage production can be subdivided into the strategic groups of those that produce alcoholic and soft beverages, mass-consumed or elite and expensive beverages, etc. This categorization is important for companies to know their competitors on the market and be aware of their possible actions (Harris & Caron, 2007). Drawing from this, strategic group maps, i. e. graphical representations of groups and competitors within them, are useful for observing the external conditions in which a company develops. Strategic maps also provide information on recent changes in those companies’ market shares, prices and supply-demand relations (Rabin & Miller, 2000).
What are the basic categories of organizational resources and capabilities and how are they interconnected?
Speaking about the resources and capabilities of an organization, it is necessary to stress their interrelation, as resources are the basis for the capabilities formation. Company’s resources can be tangible (raw materials, goods, and equipment), intangible (technology, brand names, reputation) and human (employees and service they provide). Accordingly, organizational capabilities are reflected in the ability of a firm to put its resources into practice. This can be carried out through realizing a company’s main strengths and weaknesses and understanding the changes that resources use might bring into that relation (Harris & Caron, 2007).
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What is corporate governance?
Corporate governance is the set of procedures, policies and, the most important, bodies that regulate the performance of a company. The major body of corporate governance is the Board of Directors which executes the control over the company together with other stakeholders, creditors, investors and employees. The activities of all these members of the corporate governance constitute the guidelines for formulating the strategy of this company for a certain period in future (Harris & Caron, 2007).
What are the functions of a board of directors?
Accordingly, the Board of Directors, as the major body of the corporate governance, is appointed to fulfill the following functions. The most general among them is the supervising function. In other words, the major activity entrusted with the Board of Directors is the control over the performance of the organization as a whole and its specific departments in particular (Harris & Caron, 2007). Moreover, it is the Board of Directors that appoints or dismisses the CEO of the company and supervises his or her work. This body is also in charge of the financial issues of the company providing for the adequate funding and adopting the annual budget. Finally, the Board of Directors accounts to the stakeholders and investors for the results of the company’s performance for a certain period of time (Rabin & Miller, 2000).
The value chain
The value chain is the chain of subsequent activities directed at adding value to the final product of a company. There are several stages through which a product goes until it is launched into the market. These activities can be primary and support ones. The primary activities in the value chain include raw material receiving, production, processing, logistics, marketing, and maintenance. The support activities are limited to infrastructure management, human resources management and information technology supply. It is important to notice that value added by the value chain is larger than values of the separate stages of this chain combined. Only after the value chain, a product acquires its market price (Harris & Caron, 2007).
Harris, Jeffrey & Caron St. John. Foundations in Strategic Management. South-Western College Pub, 2007.
Rabin, Jack & Gerald Miller (Eds.) Handbook of Strategic Management. CRC; 2 edition, 2000.