Strategic Management

Strategic management is the art and science of formulating, implementing and evaluating cross-functional decisions that will enable an organization to achieve its objectives. It involves the systematic identification of specifying the firm’s objectives, nurturing policies and strategies to achieve these objectives, and acquiring and making available these resources to implement the policies and strategies to achieve the firm’s objectives. Strategic management, therefore, integrates the activities of the various functional sectors of a business, such as marketing, sales, production etc. , to achieve organizational goals. It is generally the highest level of managerial activity, usually initiate by the board of directors and executed by the firm’s Chief Executive Officer (CEO) and executive team.

Business Combination Strategies

A combination strategy is the pursuit of two or more of the previous strategies simultaneously. For example, one business in the company may be pursuing growth while another in the same company is contracting. In the spring of 1989, for instance, Texas Air was rapidly expanding its Continental Airlines unit. But its Eastern Airlines operation was being consolidated. Eastern’s management was selling off routes and planes, cutting back the number of cities served, and making plans for operating a much smaller airline.

A combination strategy simultaneously employs more than one of the other strategies. This often reflects different strategic approaches among subsystems.… Read the rest

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Strategies for Stability

Stability strategy is a strategy in which the organization retains its present strategy at the corporate level and continues focusing on its present products and markets.  The firm stays with its current business and product markets; maintains the existing level of effort; and is satisfied with incremental growth. It does not seek to invest in new factories and capital assets, gain market share, or invade new geographical territories. Organizations choose this strategy when the industry in which it operates or the state of the economy is in turmoil or when the industry faces slow or no growth prospects. They also choose this strategy when they go through a period of rapid expansion and need to consolidate their operations before going for another bout of expansion.… Read the rest

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Divestiture Strategy

Selling a division or part of an organization is called divestiture. Divestiture strategy is often used to raise capital for further strategic acquisitions or investments. Divestiture strategy can be part of an overall retrenchment strategy to rid an organization of businesses that are unprofitable, that require too much capital, or that do not fit well with the firm’s other activities.

Divestment is a difficult decision for the management of any organization. The barriers that impede an organization from following a divestment strategy have been described as follows:

  • Structural (or Economic) Strategy. Characteristics of a business’s technology and its fixed and working capital impede exit, especially if the business is a core competence to the company.
… Read the rest
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Business Turnaround Strategies

When a firm has experienced a serious decline in its market position, it is a candidate to mount an all-out effort to turn the firm around and improve its market position. Use of a turnaround strategy appears to be most appropriate when the firm’s decline is caused by internal actions such as improper strategy selection or poor implementation and execution of a workable. If the analysis indicates the firm’s present strategy is appropriate, then the problem is poor implementation. If the analysis indicates the firm’s present strategy is inappropriate, then the problem is improper strategy selection.

Turnaround strategies attempt to revitalize businesses in a slump.… Read the rest

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Business Growth Strategies

A growth strategy means increasing the level of the organization’s operations. This includes such popular measures as more revenues, more employees, and more of the market share. Growth can be achieved through direct expansion, a merger with similar firms, or diversification. Firms like Wal-Mart and McDonald’s have pursued a growth strategy by way of direct expansion. When Texaco absorbed Gulf Oil, it chose the merger route to growth. When Philip Morris bought General Foods, it was using diversification to achieve growth.

Business growth strategies seek greater size and the expansion of current operations. Wal-Mart is pursuing a highly aggressive growth strategy.… Read the rest

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Socially Responsible Strategies

A question of central interest here is, how can corporations formulate socially responsible strategies? How can companies assure that corporate domain choice strategies and competitive strategies are responsive to social needs and do not harm the public interest? There are two basic approaches to dealing with these questions.

First is to evaluate the social merits of each corporate and business strategy selected based on financial, technological, and market criteria. For each strategy, one could ask these questions: What social good does the strategy contribute? Does the strategy create any public risks or harm? Does the strategy harm the interests of our stakeholders?… Read the rest

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