Strategic Management Terms

How to Develop a Mission Statement

The most common initial act in establishing organizational direction is an organizational mission. The statement that describes the mission talks about the target market and also talks about its strategy to be profitable by providing good customer service through friendly and knowledgeable people. It is essential to look into external influences like labor, conditions, competitors, government rules while considering mission statement.

Company’s mission statement should define stakeholders expected return along with the measurement of the performance of the company through those returns. The expected profit too should be included in the organization’s mission. Moreover, the company should come to consensus as to what all areas should be measured like margin growth, efficiency, competitive cost position, product quality, market share etc.… Read the rest

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Types of Defensive Strategies

The defensive strategy is mainly to discourage the challenger firms to attack and is further divided into the pre-entry (protecting a firm by making it difficult for another firm to enter in the same industry – increase the entry barriers or it takes place before the market leader firm is attacked by the challenger firm) and the other one is the post-entry (making the life difficult for the competitor firm once it has entered the market).

Pre-Entry Defensive Strategies
  1. Fortify and Defend: This mainly works by convincing the challenger firm that it is absolutely unprofitable to enter the market or it decreases the profit expectations of the about-to-enter firm.
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Strategic Planning Process – Five Stages of Strategic Planning Process

Any company who is trying to become major power in market has to have a properly defined strategy. Strategy is the term which is used to define specific outline according to which the company is going to act in future. It gives a well designed structure that the company will follow in coming time. Strategy is decided according to changing market trends, changing customer’s needs, changing stake holder’s interests and changing actions of competitors. Company need to have proper information about the target they are going to achieve. As per the target they set a strategy.

Organizations have definite values and missions.… Read the rest

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Organizational Leadership

Organizations play a very important role in societies. From birth to death we deal with organizations, small or large, public or private. Organizations formed by human beings sometimes even control us, dominate society, stifle development or progress, promote growth and change, alter our environmental conditions, and at the same time fulfill our human and societal needs. Their role is multidimensional and dual in nature: they can contribute to the progress and satisfying human needs, but at the same time they can be a major obstacle in fulfilling accomplishments. They are a powerful instrument in governance and the promotion of democratic values.… Read the rest

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Scenario Planning as a Strategic Management Tool

Formal  scenario planning  emerged during the Second World War, when it was used as a part of military strategy as countries prepared themselves for different contingencies. Since then, the use of scenario planning has become increasingly popular.

Scenarios are tools for ordering one’s perception about alternative future environment in which today’s decision might be framed. In practice, scenarios resemble a set of stories, written or spoken, built around carefully constructed plots. These stories can express multiple perspectives on complex events, scenarios give meaning to these events. Scenarios are powerful planning tools precisely because the future is unpredictable. Unlike traditional forecasting or market research, scenarios present alternative images instead of extrapolating current trends from the present.… Read the rest

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Reverse Merger – Meaning and Example

Normally, a small company merges with large company or a sick company with healthy company. However in some cases, reverse merger is done. When a healthy company merges with a sick or a small company is called reverse merger. This may be for various reasons. Some reasons for reverse merger are:

  1. The transferee company is a sick company and has carry forward losses and transferor Company is profit making company. If transferor Company merges with the sick transferee company, it gets advantage of setting off carry forward losses without any conditions. If sick company merges with healthy company, many restrictions are applicable for allowing set off.
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