Strategic management is regarded as the implementation of certain actions and conduction of the particular events that involve the participation of the leading management of the company, the related companies and rivals within the industry of the operation of the company causing the efficient performance of the business unit.
The main question posed by the strategic management is why some companies have the better performance within one market or industry in comparison to the rivals.
In order to plan the appropriate strategy for the company, it is vitally important to consider all possible options so that company may take the leading positions in the industry.
B) strategy of ploy is used by the company that has the desire to take the particular action which should undermine the status of the rival in the market within other companies;
C) strategy of pattern is applied so that the business unit may adequately respond to the performance of the rivals and their items produced;
D) strategy of position means that company finds its unique competitive advantage so that be it could be ascertained from the competitors in the appropriate manner;
E) strategy of perspective implies that the leadership of the company assesses the competitive advantage and develops the strategy accordingly.
Intended strategy is regarded as the plan that the management of the company intends to realize within the particular period of time and is provided into the strategic plan, while the emergent strategy means the unexpected plan that address the challenges the company faces through the realization of its activity in the market.
Realized strategy is the plan followed by the company as the outcome of the intended strategy. In this respect, the realized strategy involves the elements of the intended strategy, deliberate strategy and the emergent strategy. In the realized strategy the company should include the main aims and objectives that should be perceived.
The strategic management in the ancient times teaches how the companies should respond quickly to the challenges of the competitive environment. For example, the creation of Trojan horse provides the instrument of combating the competitors in order to achieve the leading position. Meanwhile, the notion of the strategic management has been developed from the military conditions where the leaders had to reply to the opponents, find their strengths and weakness.
Strategic management has become the field of study in the last century, when the Chinese strategist mentioned that it resembles the piece of art and science that should be explored further. Afterwards, in 1959 the importance of the study of the strategic management has been accepted in order students could be able to address the challenges created by the business units. By virtue of this study, the students gain the knowledge in marketing finance, accounting.
Strategic management process covers four stages that lead to the understanding of the changes in the business environment and the impact of these challenges over the performance of the company. The process involves the following elements: understanding strategy and performance, environmental and internal scanning, strategy formulation, strategy implementation.
At first, the company should understand the personal strategy and performance and then proceed to the assessment of the surrounding environment for the new ideas and events that may influence the activity of the company. In this respect, the company is able to consider its resources and perspective plan which should suit to them. Afterwards, the strategy formulation means the elaboration of the particular actions to be taken. Finally, the implementation is the last element of the process. This stage covers the maintenance of the corporate culture and business ethics.
Vision of the company covers the aims and objectives that should be achieved upon particular period of time. At the same time, the mission of the company implies the features that support the identity of the business unit and identify the position of the company within the competitors in the particular industry. The main difference between the mission and vision is that the first elements addresses the future perspectives, while the mission analyzes the current and past performance of the company.
It is widely accepted that for the purposes of successful performance in the market, the business unit should establish the specific, measurable, aggressive, realistic and time-bound goals under the title “SMART” tendency. Thus, specific goals mean that management defines the future perspectives in the exact manner with the proper calculations. Measurable objective means that company is able to describe it in the qualitative manner. Aggressive goal means that company establish the high objectives that involves the strong actions on behalf of the company in order to overcome the challenges. Realistic goal is considered as feasible objective that should be achieved without any damages to the welfare of the company. Time-bound objective covers the establishment of the particular deadlines within which the goals should be perceived.
The balance scorecard covers the following dimensions: financial, customers, internal business process and learning and growth. Financial dimension is used for the evaluation of the performance of the company in order to define the profits and expenses. Customer dimension means the analysis of the expectations of the company in relation to the performance of the company as to the attraction, retention from the goods produced and satisfaction of the services provided. Internal business process dimension considers the efficiency of the organizational structure of the company related to its performance. This dimension involves the description of the sources for the production of particular goods.
Triple Bottom line is regarded as the combination of the following essential elements: people, planet, profits. These constituents allow to define the framework of the social corporate responsibility towards the staff and its customers align with the maintenance of the environmental surroundings.
There are a lot of types of the CEO's among which the most important are the following: icons, scoundrels, hidden gems and silent killers. Icons refer to the CEOs that have the high level of the reputation, such as Warren Baffet and Bill Gates. In fact that scoundrels have the relative level of the fame while the reputation is not high. This group of CEOs covers the people that become provident CEO due to the hard work irrespective of its family status and origins. Meanwhile, the next type as hidden gems implies the beneficial reputation and decreased amount of the fame. In this case the company usually performs successfully in the market while the world is not familiar with this CEO. Finally, the silent killers are the CEOs that try to avoid the factors that may damage the performance of the company without understanding that particular factors may influence the status of the business unit.
Icons - Steve Jobs, Bill Gates, Amancio Ortega
Silent killers - Lee Scott, Wal-Mart
Hidden gems - Carly Fiorina, Hewlett-Packard
Scoundrels – Leona Hemsley.
There are some major generations of the workers: traditionalists, baby bloomers, Generation X and Y. Traditionalists appreciate the personal interaction and loyalty between the colleagues. Meanwhile, this category of the workers is ready to change due to the respective changes in the working environment. Baby bloomers represent the major group of the employment population, which consider the time as the most valuable source of the effective performance. Generation X are flexible workers so that they can be engaged in different spheres. Finally, the Generation Y is the share of the workers that believes in the technological progress and innovations.
The decision making process is quite complicated procedure that implies the existence of the limitations imposed over the actions of the CEOs. In this regard, there are anchoring and adjustment bias which take place in case the person should address the challenges related to the calculation and evaluation of the financial targets. Availability bias refer to the type of the information that is usually not open for public in order to hide certain facts that may damage the attitude of the people to the product. The bias related to the escalation of commitment when the person goes on to pursue the failing strategy even accepting the fact of loosing activity. Hindsight bias refer to the situation when the individual analyzes the otucomes of the particular event and its consequences. Overconfidence bias is referred to the wrong perceptions on behalf of the individual that some portion of the successful realization of the strategy can be achieved. Representatives bias exist in case the managers base understanding of the situation on the stereotypes.
The issue of the CEO salary and perks represents the controversial challenge for the financial turnover of the company and the equality between the workers. Usually, in the American firms the salary of the CEO is 200 times higher than the average payment pertaining to the regular worker. Moreover, the salary of the CEO is not linked to the general performance of the company as well as the question of the amount of the compensation payments are not established by the contract between the CEO and board of the directors.
The takeover of the company may have several forms. In case with the leveraged buyout the company is bought and sold out within the framework of the stock market. Corporate raiders are the persons that intend to provide the takeover, while the hostile takeover try to realize the unsolicited turn.
With acceptance of the importance of the social corporate responsibility, the increase in scandals have appeared within the territory of the United States of America. The most famous is the scandal related to the activity of Apple. This company was noticed to use the child labour in its plants for the production of the items what does not correspond to the legislation and violates it. This scandal damaged the reputation of the company significantly in 2009. In order to recover its status and position, Apple developed the corporate responsibility strategy and accepted the Business Ethics Code.
In order to avoid the similar scandals related to the ethical issues, the authority of the Congress has passed the legislation addressing Sarbanes-Oxley Act. The provisions of this act stipulate the requirement to provide the financial statements for the managing authorities for evaluation of the activity of the company in correspondence to the reasonable and honest practices. In addition, the level of transperancy should be increased within the premises of these business units. Actually, this act should prevent the exposure to frauds by the CEOs of the companies.
The provident legal firm Kinder, Lydenberg and Domini&Co has conducted the analysis of the framework of the corporate social responsibility. The elements are the following:community, product quality and safety strenghs, diversity, support of the employee relations and friendly environment, corporate governance. For the purposes of the evalutation of efficient corporate social responsibility, the strenghts and weaknesses of the company are addressed. The company should be able to provide the adequate housing and education witin the charitable dimension. At the same time, the strenghts of the corporate social responsibility should be diversified in order to promote the sustainability of the human rights for women, minorities.
The resource based theory means the resources should be regarded as the assets pretaining to the particular company in the manner that these resources are valuable, rare, difficult and non-substitutable. At first, the resources should be valuable so that the company could have the opportunity to develop the strategy for the maintenance of the available opportunities and address the related challenges. As to the rare resources, the company should have unique element. At the same time the goods and services provided by the company should eliminate all the opportunities at hand of other companies to copy these products. Meanwhile, the resource should be nonsubstitutable so that the rivals within the same industry can not find the appropriate alternatives to the successful goods and services.
The main difference between the resources and capabilities that the first notion covers the property of the business unit, while the later defines the actions that may be taken on behalf of the company. However, the amount of the resources and capabilities may increase from time to time depending on the performance of the company.
Tangible resources refer to the resources that can be measured in quantified manner and seen by the individual. In this regard, the tangible assets cover the physical property that can be transferred or moved. In contrast, the intangible resources can not be ascertained by the individual. These resources cover the knowledge, skills, reputation and status of the company.
The primary activities of the value chains are considered to be the actions of the company that are taken for the production of the goods and their further distribution, delivery. The primary activities include the inbound logistics and operations, where the management over the delivery of the raw materials is considered.
The alternative support activities within the value chain are the surveillance over the firm infrastructure, management of the human resource, technology, procurement.
In order to develop the efficient value chain, the management of the company should explore the places of the distribution the products in order to meet the expectations of the customers.
The difference between the value chain and supply chain lies in the fact that the first term examines the performance of the activities of the company. In fact the supply chain covers the value chain and defines the process of the production of the products, its distribution.
Beyond the resource-based theory, there are several other theories to be applied for the evaluation of the performance of the company. They are the enactment, environmental determinism, institutional theory, transaction cost economics. Enactment theory implies that executives of the particular company should develop the friendly and beneficial environment within the premises of the company in order to satisfy the needs of its staff and customers. Environmental determinism describes the structure of the firm as separate organism similar to the body and development of the animal while every company shoudl adjust to the changing circumstances in the surrounding environment. Transaction cost economics is used for the determination of the strenghts of the company in order to remove the unnecessary elements of the production. Actually, the company may use several theories which should vary accordingly to the different business situations.
The main generic strategies are the cost leadership, differentiation, focused cost leadership and the focused differentiation.
The success of the business-level strategy lies in the resources of the firm in its competetive advantage and the range of the operations performed by the company.
The limitations of the generic strategy imply that the company should choose the strategy based on the circumstances of the industry. For example, the company may share the huge amount of the expenses on the advertising and save the budget for the purchase of the particular materials, Therefore, the application of the generic strategy should be evaluated on the case-by-case basis.
The main essence of the natural cost leadership strategy that the company may offer the products at the minimal price with the adequate quality in order to attract the particular group of the clients. For example, Apple attracts the consumers that may spend less money by purchasing Apple Iphone 5C.
The majority of the business units rely on the economies of scale wih the purpose to obtain more benefit and revenue. This approach is ised in case the costs for the production ofthe offered goods in the market decrease while the capabilities of the firm have been increased.
Main advantage of the cost leadership is that the company is able to alleviate the fluctuations in the price in order to maintain the position of the good in the market. For example, Samsung tries to support the price for its goods on the similar level as Apple. At the same time, the cost leadership allowes to limit the competition within the relevant industry. However, the main disadvantage in the fact that there is a necessity to produce huge amount of the items of the production. Wal-Mart is the example of the application the cost strategy.
The core meaning of the differentiation strategy is that the company should produce the product of premium class that attracts the attention of the customers immediately. At the same time, the clients should be able to pay the relevant price for this item. In this regard, the company resembles the unique opportunity for the client to have this particular good or service while the rest of the competitors can not provide this opportunity. Besides, the company should promote the status of its products by virtue of the spread of advertisement.
The main advantage of the differentiation strategy that the company may request from the clients to pay the highest amount of money for this unique good that leads to the high level in the general turnover of the firm. At the same time, the client of this company is regarded as stable and loyal as he will not have the desire to loose the opportunity to enjoy the opportunity to have the unique good. Although, the risk as the negative side exists due to the fact that the client may not have the desire to pay additional amount of money for having the exclusive thing, while the competitors may copy the products on the relevant level. Coca-Cola, Rolex. IBM may serve the role of the examples of the companies using this type of the strategy.
Under the notion of the focused cost leadership strategy, the firm should compete with other business units for the prices over the particular product due to the fact the industry is quite specialized. For example, the company may satisfy the needs of the narrow group of people by provision the unique opportunities for them. For example, Kopi Luwak from Bali suits for the interpretation of the core essence of this strategy.
The pro is in the fact that the company has the opportunity to chaneg the price for the product respectively to the needs of the clients and the environment created by the rivals. At the same time, the barriers for the entrance to the market are high so that the new comers are prevented to be engaged in the maintenance of the competition within the specialized market. As to the disadvantages, the demand for the products is quite small so that the company can not take the global status.
This strategy is complex within the implementation process as the company should pay additional amount of money for the advertisement in order to promote the exclusive features of the goods produced. Therefore, the company should consider on the proper allocation of the financial resources in order to stay at the same positions in the marker. For example, several designers of clothes or Netflix.
The company is regarded as stuck in the middle as it can not develop the appropriate strategy which will highlight the main advantages of the goods and its main features. Therefore, the customers can not understand why they should buy the goods of this company. Company Arby represents the suitable example.