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Hawassa University
Faculty of Business and Economics
Department of Business Management
Lecture note for the course Business Policy and Strategy (Mgmt 492)
Chapter One: Introduction to Business Policy and Strategic Management - A firm’s plan
to gain Competitive advantage
1.1 Meaning of Strategic Management
Strategy can be defined in various ways. Some of these definitions are given below:
Strategy is the determination of the basic long-term goals and objectives of an
enterprise and the adoption of the courses of action and the allocation of resource
necessary for carrying out these goals.
Strategy is the pattern of objective, purposes, goals, and the major policies and plans
for achieving these goals stated in such a way so as to define what business the
company is in or is to be and the kind of company it is or is to be.
Strategy is a unified, comprehensive and integrated plan designed to assure that the
basic objectives of the enterprise are achieved.
Combining the above definitions, we will not attempt to define strategy yet in a novel
way but try to analyze the elements we have come across. We note that a strategy is:
1. It involves a plan or course of action or a set of decision rules making a pattern
or treating a common thread;
2. It is a way of stating the current and the desired future position of the company,
and the objectives, goals major policies and plans required for taking the
company from where it is to where it wants to be.
3. It outlines the pattern or common thread related to the organization’s activities
which are derived from the policies, objectives, and goals;
4. It is concerned with pursuing those activities which move an- organization from
its current position to a desired future state; and
5. Concerned with the resources necessary for implementing a plan or following a
course of action.
Still, strategic management can be defined in various ways. Strategic management is
that set of managerial decisions and actions that determines the long-run performance
of an organization. It includes environmental scanning, strategy
formulation, strategy implementation, evaluation and control.
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We observe that different authors have defined strategic management differently.
Strategic management is considered as both decision-making and planning, or the set
of activities related to the formulation and implementation of strategies to achieve
organizational objectives. The emphasis in strategic management is on those general
management responsibilities which are essential to relate the organization to the
environment in which a way that its objectives may be achieved.
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strategic management requires considering changes that will take place in the
external environment.
3. Requires larger resource commitment: Strategic management determines
the future direction of an organization. In the process, substantial allocation of
resources is proposed. Therefore, if there are failures of strategic management,
the whole lot of resource of the organization will be allocated in the wrong
direction.
4. Requires involvement of top management : Since the future prospective
success or failure is determined in the strategic management, top management
groups are actively involved in determining major corporate objectives and
framing out strategies.
1.4 Key Terms in Strategic Management and the Strategic Management Model
1. Competitive Advantage
Strategic management is all about gaining and maintaining competitive advantage.
This term can be defined as “anything that a firm does especially well compared
to rival firm”.’ When a firm can do something that rival firms cannot do, or owns
something that rival firms desire, that can represent a competitive advantage. Getting
and keeping competitive advantage is essential for long-term success in an
organization. Theories of organization present different perspectives on how best to
capture and keep competitive advantage—that is, how best to manage strategically.
Pursuit of competitive advantage leads to organizational success or failure. Strategic
management researchers and practitioners alike desire to better understand the
nature and role of competitive advantage in various industries. Normally, a firm can
sustain a competitive advantage for only a certain period due to rival firms imitating
and undermining that advantage. Thus it is not adequate to simply obtain competitive
advantage.
2. Strategists
Strategists are the individuals who are most responsible for the success or failure of
an organization. Strategists have various job titles, such as chief executive officer,
president, owner, chair of the board, executive director, chancellor, dean, or
entrepreneur. Writers on organizational behavior say, “All strategists have to be chief
learning officers. We are in an extended period of change. If our leaders aren’t highly
adaptive and great models during this period, then our companies won’t adapt either,
because ultimately leadership is about being a role model”
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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Strategists help an organization gather, analyze, and organize information. They track
industry and competitive trends, develop forecasting models and scenario analyses,
evaluate corporate and divisional performance, spot emerging market opportunities,
identify business threats, and develop creative action plans. Strategic planners usually
serve in a support or staff role. Usually found in higher levels of management, they
typically have considerable authority for decision making in the firm. The CEO is the
most visible and critical strategic manager. Any manager who has responsibility for a
unit or division, responsibility for profit and loss outcomes, or direct authority over a
major piece of the business is a strategic manager (strategist). In the last five years,
the position of chief strategy officer (CSO) has emerged as a new addition to the top
management ranks of many organizations. This new corporate officer title represents
recognition of the growing importance of strategic planning in the business world.
Strategists differ as much as organizations themselves and these differences must be
considered in the formulation, implementation, and evaluation of strategies. Some
strategists will not consider some types of strategies because of their personal
philosophies. Strategists differ in their attitudes, values, ethics, willingness to take
risks, concern for social responsibility, concern for profitability, concern for short-run
versus long-run aims, and management style.
Microsoft’s mission is to create software for the personal computer that empowers
and enriches people in the workplace, at school and at home. Microsoft’s early
vision of a computer on every desk and in every home is coupled today with a
strong commitment to Internet-related technologies that expand the power and
reach of the PC and its users. As the world’s leading software provider, Microsoft
strives to produce innovative products that meet our customers’ evolving needs. At
the same time, we understand that long-term success is about more than just
making great products. Find out what we mean when we talk about Living Our
Values (www.microsoft.com/mscorp/).
Another example of a mission statement of the Ethiopian Electric Power Corporation
(EEPCo) is
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practices responsive to the socio-economic development and environmental
protection need of the public”.
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factors such as employee morale, production efficiency, advertising effectiveness, and
customer loyalty.
6. Long-Term Objectives
Objectives can be defined as specific results that an organization seeks to achieve in
pursuing its basic mission essential. Long-term means more than one year. Objectives
are for organizational success because they state direction; aid in evaluation; create
synergy; reveal priorities; focus coordination; and provide a basis for effective
planning, organizing, motivating, and controlling activities. Objectives should be
challenging, measurable, consistent, reasonable, and clear. In a multidimensional
firm, objectives should be established for the overall company and for each division.
7. Strategies
Strategies are the means by which long-term objectives will be achieved.
Business strategies may include geographic expansion, diversification, acquisition,
product development, market penetration, retrenchment, divestiture, liquidation, and
joint venture.
Strategies are potential actions that require top management decisions and large
amounts of the firm’s resources. In addition, strategies affect an organization’s long-
term prosperity, typically for at least five years, and thus are future-oriented.
Strategies have multifunctional or multidivisional consequences and require
consideration of both the external and internal factors facing the firm.
8. Annual Objectives
Annual objectives are short-term milestones that organizations must achieve to reach
long-term objectives. Like long-term objectives, annual objectives should be
measurable, quantitative, challenging, realistic, consistent, and prioritized. They
should be established at the corporate, divisional, and functional levels in a large
organization. Annual objectives should be stated in terms of management, marketing,
finance/accounting, production/operations, research and development, and
management information systems (MIS) accomplishments. A set of annual objectives
is needed for each long-term objective. Annual objectives are especially important in
strategy implementation, whereas long-term objectives are particularly important in
strategy formulation. Annual objectives represent the basis for allocating resources.
9. Policies
Policies are the means by which annual objectives will be achieved. Policies include
guidelines, rules, and procedures established to support efforts to achieve stated
objectives. Policies are guides to decision making and address repetitive or recurring
situations.
Policies are most often stated in terms of management, marketing, finance/
accounting, production/operations, research and development, and computer
information systems activities. Policies can be established at the corporate level and
apply to an entire organization at the divisional level and apply to a single division or
at the functional level and apply to particular operational activities or departments.
Policies, like annual objectives, are especially important in strategy implementation
because they outline an organization’s expectations of its employees and managers.
Policies allow consistency and coordination within and between organizational
departments.
Substantial research suggests that a healthier workforce can more effectively and
efficiently implement strategies. Take for example the “No Smoking” policies with in
most organizations. No Smoking policies are usually derived from annual objectives
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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that seek to reduce corporate medical costs associated with absenteeism and to
provide a healthy workplace.
Perform
External
Implement Implement
Establish Generate, Strategies – Strategies
Long – Evaluate, Manageme –
Develop Vision & nt Issues Marketing, Measure & Evaluate
Term & Select Performance
Mission Statements Finance,
Strategic Strategies
Managem Accountin
g, R&D,
Perform
Internal
Audit
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meetings are commonly held off-premises and are called retreats. The rationale for
periodically conducting strategic-management meetings away from the work site is to
encourage more creativity and candor from participants. Good communication and
feedback are needed throughout the strategic-management process.
Application of the strategic-management process is typically more formal in larger and
well-established organizations. Formality refers to the extent that participants,
responsibilities, authority, duties, and approach are specified. Smaller businesses
tend to be less formal. Firms that compete in complex, rapidly changing environments,
such as technology companies, tend to be more formal in strategic planning. Firms
that have many divisions, products, markets, and technologies also tend to be more
formal in applying strategic-management concepts. Greater formality in applying the
strategic-management process is usually positively associated with the cost,
comprehensiveness, accuracy, and success of planning across all types and sizes of
organizations.
Defining business
mission, purpose and Developing Implementing Evaluating and
objectives Strategies Strategies control of Strategies
Compan
y
profile
Feedback Externa
l
Environ
m
ent
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Then follow the other components of the model. Not every component of the
strategic management process deserves equal attention each time planning
activity takes place.
3) The third implication of viewing strategic management as a process is the
necessity of feedback from implementation, review, and evaluation to the early
stages of the process. Feedback can be defined as the collection of post
implementation results to enhance future decision making. As shown in the model,
strategic managers should assess the impact of implemented strategies on
external environment and the company policy. Strategic managers should also
analyze the impact of strategies on the possible need for modifications in the
company mission.
4) The fourth implication is the need to regard the strategic management process
as a dynamic system. The term dynamic characterizes the constantly changing
conditions that affect interrelated and interdependent strategic attitudes. Since
change is continuous, the dynamic strategic planning processes must be
monitored constantly for significant shifts in any of its components as a precaution
against implementing an obsolete strategy.
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notion of centralized staff planning is being replaced in organizations by decentralized
line-manager planning. The process is a learning, helping, educating, and supporting
activity, not merely a paper-shuffling activity among top executives. Strategic-
management dialogue is more important than a nicely bound strategic-management
document. The worst thing strategists can do is develop strategic plans themselves
and then present them to operating managers to execute. Through involvement in the
process, line managers become “owners” of the strategy. Ownership of strategies by
the people who have to execute them is a key to success!
Although making good strategic decisions is the major responsibility of an
organization’s owner or chief executive officer, both managers and employees must
also be involved in strategy formulation, implementation, and evaluation activities.
Participation is a key to gaining commitment for needed changes. An increasing
number of corporations and institutions are using strategic management to make
effective decisions. But strategic management is not a guarantee for success; it can
be dysfunctional if conducted haphazardly.
High-performing firms seem to make more informed decisions with good anticipation
of both short- and long-term consequences. On the other hand, firms that perform
poorly often engage in activities that are shortsighted and do not reflect good
forecasting of future conditions. Strategists of low-performing organizations are often
preoccupied with solving internal problems and meeting paperwork deadlines. They
typically underestimate their competitors’ strengths and overestimate their own firm’s
strengths. They often attribute weak performance to uncontrollable factors such as a
poor economy, technological change, or foreign competition.
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reduced resistance to change, and
a clearer understanding of performance-reward relationships.
Strategic management enhances the problem-prevention capabilities of organizations
because it promotes interaction among managers at all divisional and functional
levels. Firms that have nurtured their managers and employees, shared organizational
objectives with them, empowered them to help improve the product or service, and
recognized their contributions can turn to them for help in a pinch because of this
interaction.
In addition to empowering managers and employees, strategic management often
brings order and discipline to an otherwise floundering firm. It can be the beginning of
an efficient and effective managerial system. Strategic management may renew
confidence in the current business strategy or point the need for corrective actions.
The strategic-management process provides a basis for identifying and rationalizing
the need for change to all managers and employees of a firm; it helps them view
change as an opportunity rather than as a threat.
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Fear of the Unknown - People may be uncertain of their abilities to learn new
skills, of their aptitude with new systems, or of their ability to take on new roles.
Honest Difference of Opinion - People may sincerely believe the plan is
wrong. They may view the situation from a different viewpoint, or they may
have aspirations for themselves or the organization that are different from the
plan. Different people in different jobs have different perceptions of a situation.
Suspicion - Employees may not trust management.
To summarize what has been said so far concerning the benefits of strategic
management, using strategic management approach, managers at all levels of the
firm interact in planning and implementing. As a result, the behavioral consequences
of strategic management are similar to those of participative decision making.
Therefore, an accurate assessment of the impact of strategy formulation on
organizational performance requires not only financial evaluation criteria but also non-
financial ones such as measures of behavior - based effects.
The benefits of strategic management can be condensed into five points as follows:
1) Strategy formulation activities enhance the firm’s ability to prevent problems.
Managers who encourage subordinates’ attention to planning are aided in their
monitoring and forecasting responsibilities by subordinates who are aware of
the needs of strategic planning.
2) Group-based strategic decisions are likely to be drawn from the best available
alternatives. The strategic management process results in better decisions
because group interaction generates a greater variety of strategies and
because forecasts based on the specialized perspectives of group members
improve the screening of options.
3) The involvement of employees in strategy formulation improves their
understanding of the productivity - reward relationship in every strategic plan
and, thus, heightens their motivation.
4) Gaps and overlaps in activities among individuals and groups are reduced as
participation in strategy formulation clarifies difference in roles.
5) Resistance to change is reduced. Though the participants in strategy
formulation may be no more pleased with their own decisions than they would
be with authoritarian decision, their greater awareness of the parameters that
limit the available options makes them more likely to accept those decisions.
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Failing to use plans as a standard for measuring performance
Delegating planning to a “planner” rather than involving all managers
Failing to involve key employees in all phases of planning
Failing to create a collaborative climate supportive of change
Viewing planning to be unnecessary or unimportant
Becoming so engrossed or absorbed in current problems on which insufficient
or no planning is done
Being so formal in planning that flexibility and creativity are stifled
Even the most technically perfect strategic plan will serve little purpose if it is not
implemented. Many organizations tend to spend an inordinate or excessive
amount of time, money, and effort on developing the strategic plan, treating the
means and circumstances under which it will be implemented as afterthoughts!
Change comes through implementation and evaluation, not through the plan. A
technically imperfect plan that is implemented well will achieve more than the
perfect plan that never gets off the paper on which it is typed.
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An important guideline for effective strategic management is open mindedness. A
willingness and eagerness to consider new information, new viewpoints, new ideas,
and new possibilities is essential; all organizational members must share a spirit of
inquiry and learning. Strategists such as chief executive officers, presidents, owners of
small businesses, and heads of government agencies must commit themselves to
listen to and understand managers’ positions well enough to be able to restate those
positions to the managers’ satisfaction. In addition, managers and employees
throughout the firm should be able to describe the strategists’ positions to the
satisfaction of the strategists. This degree of discipline will promote understanding and
learning.
No organization has unlimited resources. No firm can take on an unlimited amount of
debt or issue an unlimited amount of stock to raise capital. Therefore, no organization
can pursue all the strategies that potentially could benefit the firm. Strategic decisions
thus always have to be made to eliminate some courses of action and to allocate
organizational resources among others. Most organizations can afford to pursue only
a few corporate-level strategies at any given time. It is a critical mistake for managers
to pursue too many strategies at the same time, thereby spreading the firm’s
resources so thin that all strategies are jeopardized.
Strategic decisions require trade-offs such as long-range versus short-range
considerations or maximizing profits versus increasing shareholders’ wealth. There
are ethics issues too. Strategy trade-offs require subjective judgments and
preferences. In many cases, a lack of objectivity in formulating strategy results in a
loss of competitive posture and profitability. Most organizations today recognize that
strategic-management concepts and techniques can enhance the effectiveness of
decisions. Subjective factors such as attitudes toward risk, concern for social
responsibility, and organizational culture will always affect strategy-formulation
decisions, but organizations need to be as objective as possible in considering
qualitative factors.
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and more companies are becoming ISO 14001 certified, as indicated in the “Natural
Environment Perspective.”
A new wave of ethics issues related to product safety, employee health, sexual
harassment, AIDS in the workplace, smoking, acid rain, affirmative action, waste
disposal, foreign business practices, cover-ups, takeover tactics, conflicts of interest,
employee privacy, inappropriate gifts, security of company records, and layoffs has
accented the need for strategists to develop a clear code of business ethics. A code of
business ethics can provide a basis on which policies can be devised to guide daily
behavior and decisions at the work site.
The explosion of the Internet into the workplace has raised many new ethical
questions in organizations today.
One reason strategists’ salaries are high compared to those of other individuals in an
organization is that strategists must take the moral risks of the firm. Strategists are
responsible for developing, communicating and enforcing the code of business ethics
for their organizations. Although primary responsibility for ensuring ethical behavior
rests with a firm’s strategists, an integral part of the responsibility of all managers is to
provide ethics leadership by constant example and demonstration. Managers hold
positions that enable them to influence and educate many people. This makes
managers responsible for developing and implementing ethical decision making. Many
scholars on the issue offer some good advice for managers: All managers risk giving
too much because of what their companies demand from them. But the same
superiors, who keep pressing you to do more, or to do it better, or faster, or less
expensively, will turn on you should you cross that fuzzy line between right and wrong.
They will blame you for exceeding instructions or for ignoring their warnings. The
smartest managers already know that the best answer to the question “How far is too
far?” is don’t try to find out.
A man (or woman) might know too little, perform poorly, lack judgment and ability, and
yet not do too much damage as a manager. But if that person lacks character and
integrity - no matter how knowledgeable, how brilliant, how successful - he destroys.
He destroys people, the most valuable resource of the enterprise. He destroys spirit.
And he destroys performance. This is particularly true of the people at the head of an
enterprise. For the spirit of an organization is created from the top. If an organization
is great in spirit, it is because the spirit of its top people is great. If it decays, it does so
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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because the top rots. As the proverb has it, “Trees die from the top! No one should
ever become a strategist unless he or she is willing to have his or her character serve
as the model for subordinates.
No society anywhere in the world can compete very long or successfully with people
stealing from one another or not trusting one another, with every bit of information
requiring notarized confirmation, with every disagreement ending up in litigation, or
with government having to regulate businesses to keep them honest. Being unethical
is a recipe for headaches, inefficiency, and waste. History has proven that the greater
the trust and confidence of people in the ethics of an institution or society, the greater
its economic strength. Business relationships are built mostly on mutual trust and
reputation. Short-term decisions based on greed and questionable ethics will preclude
the necessary self-respect to gain the trust of others. More and more firms believe that
ethics training and an ethics culture create strategic advantage.
Internet fraud, including hacking into company computers and spreading viruses, has
become a major unethical activity that plagues every sector of online commerce from
banking to shopping sites. More than three hundred Web sites now show individuals
how to hack into computers; this problem has become endemic nationwide and
around the world.
Ethics training programs should include messages from the CEO emphasizing ethical
business practices, the development and discussion of codes of ethics, and
procedures for discussing and reporting unethical behavior. Firms can align ethical
and strategic decision making by incorporating ethical considerations into long-term
planning, by integrating ethical decision making into the performance appraisal
process, by encouraging whistle-blowing or the reporting of unethical practices, and
by monitoring departmental and corporate performance regarding ethical issues.
In a final analysis, ethical standards come out of history and heritage. Our fathers,
mothers, brothers, and sisters of the past left us with an ethical foundation to build
upon. Even the legendary football coach Vince Lombardi knew that some things were
worth more than winning, and he required his players to have three kinds of loyalty: to
God, to their families, and to the Green Bay Packers, “in that order.”
1.10 Challenges in Strategic Management – the 21st century challenges
Three particular challenges or decisions that face all strategists today are
1) Deciding whether the process should be more an art or a science,
2) Deciding whether strategies should be visible or hidden from stakeholders, and
3) Deciding whether the process should be more top-down or bottom-up in their
firm.
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contends that firms need to systematically assess their external and internal
environments, conduct research, carefully evaluate the pros and cons of various
alternatives, perform analyses, and then decide upon a particular course of action. In
contrast, Mintzberg’s notion of “crafting” strategies embodies the artistic model which
suggests that strategic decision making be based primarily on holistic thinking,
intuition, creativity, and imagination. Mintzberg and his followers reject strategies that
result from objective analysis, preferring instead subjective imagination. “Strategy
scientists” reject strategies that emerge from emotion, intuition, creativity, and politics.
Promoters of the artistic view often consider strategic planning exercises to be time
poorly spent. The Mintzberg philosophy insists on informality whereas strategy
scientists (and this teaching material) insist on more formality. Mintzberg refers to
strategic planning as an “emergent” process whereas strategy scientists use the
term “deliberate” process.
The answer to the art versus science question is one that strategists must decide for
themselves, and certainly the two approaches are not necessarily mutually exclusive.
In deciding which approach is more effective, however, consider that the business
world today has become increasingly complex and more intensely competitive. There
is less room for error in strategic planning. Recall the points discussed before about
the importance of intuition and experience and subjectivity in strategic planning that
certainly require good judgment. But the idea of deciding upon strategies for any firm
without thorough research and analysis is unwise. Certainly, in smaller firms there can
be more informality in the process compared to larger firms, but even for smaller firms,
a wealth of competitive information is available on the Internet and elsewhere, and
should be collected, assimilated, and evaluated before deciding on a course of action
upon which survival of the firm may hinge. The livelihood of countless employees and
shareholders may hinge on the effectiveness of strategies selected. Too much is at
stake to be less than thorough in formulating strategies. It may not behoove a
strategist to rely too heavily on gut feeling and opinion instead of research data,
competitive intelligence, and analysis in formulating strategies.
Some reasons to be completely open with the strategy process and resultant
decisions are:
1. Managers, employees, and other stakeholders can readily contribute to the
process. They often have excellent ideas. Secrecy would forgo many excellent
ideas.
2. Investors, creditors, and other stakeholders have greater basis for supporting a
firm when they know what the firm is doing and where the firm is going.
3. Visibility promotes democracy whereas secrecy promotes autocracy. Domestic
firms and most foreign firms prefer democracy over autocracy as a
management style.
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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4. Participation and openness enhances understanding, commitment, and
communication within the firm.
Reasons why some firms prefer to conduct strategic planning in secret and keep
strategies hidden from all but the highest-level executives are as follows:
1. Free dissemination of a firm’s strategies may easily translate into competitive
intelligence for rival firms who could exploit the firm given that information.
2. Secrecy limits criticism, second guessing, and hindsight.
3. Participants in a visible strategy process become more attractive to rival firms
who may lure them away.
4. Secrecy limits rival firms from imitating or duplicating the firm’s strategies and
undermining the firm.
The obvious benefits of the visible versus hidden extremes suggest that a working
balance must be sought between the apparent contradictions. Some scholars say that
in a perfect world all key individuals, both inside and outside the firm, should be
involved in strategic planning, but in practice particularly sensitive and confidential
information should always remain strictly confidential to top managers. This balancing
act is difficult but essential for survival of the firm.
So at last but not least, strategists in successful organizations realize that strategic
management is first and foremost a people process. It is an excellent vehicle for
fostering organizational communication. People are what make the difference in
organizations.
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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strategy formulation, it must scan the external environment to identify possible
opportunities and threats and its internal environment for strength and weaknesses.
Environmental Scanning is the monitoring, evaluating, and disseminating of
information from the external and internal environment to key people within the
corporation. A corporation uses this tool to avoid strategic surprise and to insure its
long term health. Research has found a positive relationship between environmental
scanning and profit.
Source of Opportunities
a) Unexpected Events
Unexpected events such as political turmoil, war breaks, government policy changes,
floods and other natural or man made changes can provide opportunities to a
business organization. The event can be unexpected success (good news) or an
expected failure (bad news). For example, if war breaks out where it is unexpected, it
changes the economics and demand structure of the warring parties and their
populations. This can provide opportunity if it is ethically pursued. Similarly, a break
through in a peace negotiation also provides opportunity since it changes the
economics of the former opponents.
b) The process need
This opportunity has its source in technology’s inability to provide the “big
breakthrough “. Technicians often need to work out a way to get from point A to point
B in some process. Currently, efforts are being made in areas of super conductivity,
fusion, interconnectivity and the search for a treatment and cure for AIDS. Process
need opportunities are often addressed by programmed research projects, which are
the systematic research and analysis efforts designed to solve a single problem such
as the efforts against AIDS.
c) Changes in Technology
Changes in technology changes market and industry structures by altering costs,
quality requirements and volume capabilities. This alteration can potentially make
existing firms obsolete, which are not adjusted to it and are inflexible. But changes in
technology may create opportunity for those who make themselves ready for the new
technology.
d) Demographic Changes
Demographic changes are changes in the population or subpopulation of society.
Theses can be changes in the size, age, structure, employment, education, or
incomes of these groups. Such changes influence all industries and firms by changing
the mix of products and services demanded the volume of products and services, and
the buying power of customers. Some of these changes are predictable since people
who will be older are already alive and birth and death rates stay fairly stable over
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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time. Population statistics are available for assessment, but opportunities can be
found before the data are published by observing what is happening in the street and
being reported in the newspaper.
e) Change in Perception
People hold different perceptions of the same reality, and these differences affect the
products and services they demand and the amount they spend. Some groups feel
powerful and rich, others disenfranchised and poor. Some people think they are thin
when they are not, others think they are too fat when they are not. The manager can
sell power and status to the rich and powerful, and sell relief and comfort to the poor
and oppressed/demoralized customers.
f) New Knowledge
New Knowledge is often seen as the ‘superstar’ of business opportunity. It is not
enough to have new knowledge but there must also be a way to make products from it
and to protect the profits of those products from competition as the knowledge is
spread to others. In additions, timing is critical. It frequently takes the convergence of
many piece of new knowledge to make a product.
Source of Threats
The forces that can provide opportunity for an organization may sometime pose threat
to business. Some of the sources of threats are discussed below.
a) Threat of Substitute
When managers propose long term plans to launch new products, they are not clear
whether other competitors will substitute their product and service or not. Hence, a
potential threat will originate from the possibility of their product being replaced easily
and early. So, it is important for managers to understand the nature of substitute
products for these reasons.
b) Threat of Integration
A threatening environment will be created when competitors have strong relationship
with suppliers, customers and the community. The customers will neglect the new
proposal if competitors have strong relationship with their supplier, regardless of the
quality of product offered by the new firm. And sometimes, the community,
surrounding the business, will reject the products of the venture due to strong
relationship with the existing firms.
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One way to identify and analyze developments in the external environment is to use
the issues priority matrix as follows:
1) Identify a number of likely trends emerging in the societal and task
environments. These are strategic environmental issues - those important
trends that, if they occur, determine what the industry or the world will look like
in the near future.
2) Assess the probability of these trends actually occurring from low to
high.
3) Attempt to ascertain the likely impact (from low to high) of each of these
trends on the corporation being examined.
A corporation’s external strategic factors are those key environmental trends that are
judged to have both a medium to high probability of occurrence and a medium to high
probability of impact on the corporation. The issues priority matrix can then be used to
help managers decide which environmental trends should be merely scanned (low
priority) and which should be monitored as strategic factors (high priority). Those
environmental trends judged to be a corporation’s strategic factors are then
categorized as opportunities and threats and are included in strategy formulation.
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Objectives - are end results of planned activity. They state what is to be
accomplished by whom and should be quantified if possible. The achievement
of corporate objective should result in the fulfillment of the company’s mission.
Some of the areas in which a company might establish its objectives are:
o Profitability or net income
o Efficiency or low cost
o Reputation (being considered as top of all firm)
o Contribution to employees (employees security or wage adjustment)
o Contribution to society (tax paid, participation in charities, providing needed
products or services)
o Market leadership (market share)
o Technological leadership (innovativeness)
o Survival (avoiding bankruptcy).
Policies - are broad guideline for decision making that links the formulation of
strategy with its implementation. Companies use policies to make sure that
employees through the firm make decisions and take actions that support the
corporation’s mission, its objectives and its strategies.
Resources - consists of both human and non human resource. The profiles of
the employees with their number need to be analyzed and compared with the
anticipated activity. The materials resource such as machineries and their
obsolescence can help in evaluating the organization’s internal strength and
weakness.
The firm’s choice of direction and action (strategy), its organizational structure, and its
internal processes are influenced by a host of external factors. These factors, which
constitute the external environment, can be divided into three interrelated
subcategories: factors in the remote environment, factors in the industry
environment, and factors in the operating environment. The success of the firm’s
strategy is also affected by the realistic analysis of its internal capabilities and its
consistency with conditions in the external environment.
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
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Remote Environment
Social
Technology
Economic
Ecologic Industry Environment
Political
Entry Barrier
Supplier Power Operating Environment
Competitors
Buyer Power
Creditors
Substitute Availability
Customers
Competitive Rivalry
Labor
Suppliers
The Firm
The remote environment comprises factors that originate beyond, and usually
irrespective of, any single firm’s operating situation. It presents firms with
opportunities, threats, and constraints, but rarely does a single firm exert any
meaningful reciprocal influence. There are five forces in the firm’s remote environment
with the popular acronym STEEP factors, which stands for Social, Technological,
Economic, Ecological, and Political factors.
a. Social Factors
The social factors that affect a firm involve the beliefs, values, attitudes, opinions, and
lifestyles of persons in the firm’s external environment; as developed form cultural,
demographic, religions, educational, and ethnic conditioning.
Like other forces in the remote external environment, social forces are dynamic. As
social attitudes change, so does the demand for various types of clothing, books, and
so on. The constant change in social environment is the result of efforts of individuals
to satisfy their desires and needs by controlling and adapting to environmental factors.
Several changes have occurred in the social environment. One of the most profound
social changes in recent years has been the entry of large numbers of women into
the labor market.
Those social changes affected business in the following areas:
Hiring and compensation policies and resource capabilities of employers.
Expanded demand for a wide range of products and services necessitated
by women’s absence form the home. For instance convenience foods,
microwave ovens, and day-care centers are results of such changes.
A second profound social change has been the accelerating interest of consumers
and employees in quality of life issues. Evidence of this change is seen in recent
contract negotiations. In addition to traditional demand for increased salaries, flexible
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
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hours, four-day workweeks, opportunities for advanced training, lump-sum vacation
plans have come into the scene.
A third profound social change has been the shift in the age distribution of the
population. Changing social values and a growing acceptance of improved birth
control methods are expected to raise mean ages. A result of the changing age
distribution of the population is increased demands for modifications of retirement
policies and lobbies for tax exemptions by the senior citizens.
b. Technological Factors
Awareness of technological changes that might influence the industry is important to
the firm in order to avoid obsolescence and promote innovation. Creative
technological adaptations can suggest possibilities for: new products, improvements in
existing products, and improvements in manufacturing and marketing techniques.
A technological break through can have a sudden and dramatic effect on a firms
environment. It may generate sophisticated new markets and products of significantly
shorten the anticipated life of a manufacturing facility.
Firms in a turbulent growth industries must strive for an understanding both of existing
technological advances and the probable future advances that can affect their
products and services. In other words, they need to foresee advancements and
estimate their impact on an organization’s operations through technological
forecasting.
c. Economic Factors
Economic factors concern the nature and direction of the economy in which a firm
operates. Because consumption patterns are affected by the relative affluence of
various market segments, in its strategic planning each firm must consider economic
trends in the segments that affect its industry. As far as economic factors are
concerned, the firm must consider the general availability of credit, the level of
disposable income, the propensity of people to spend, prime interest rates, inflation
rates, and trends in the growth of the gross national product (GNP).
d. Ecological Factors
The term ecology refers to the relationship between human beings, other living things
and air, soil, and water that support them. Threats to life-supporting ecology caused
principally by human activities in an industrial society are commonly referred to as
pollution. Specific concerns under ecological environment include global warming,
loss of habitat and biodiversity, and pollution of air, water, and land.
The global climate has been changing for years. However, it is non evident that
humanity’s activities are accelerating tremendously.
A change in atmospheric radiation, due to ozone depletion, causing global
warming.
Solar radiation that is normally absorbed into the atmosphere reaches the
earth’s surface, heating the soil, water, and air.
Loss of habitat and biodiversity refer to the extinction of important flora and
fauna is occurring at a rapid rate due to disturbance of the natural habitat by
the human activities.
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Air pollution is created by dust particles and gaseous discharges that
contaminate the air.
Water pollution occurs principally when industrial toxic wastes are dumped or
leak into the waterways.
Land pollution is caused by the need to dispose of ever-increasing amounts of
waste.
As a major contributor to ecological pollution, business now is being held responsible
for eliminating the toxic by-products of its current manufacturing processes and for
cleaning up the environmental damage that it did previously. Increasingly, managers
are required by the government or are being expected by the public to incorporate
ecological concerns into their decision making.
Many large businesses are realizing that their decisions must no longer ignore
environmental concerns. Every activity is linked to thousands of other transactions
and their environmental impact. Therefore, corporate environmental responsibility
must be taken seriously and environmental policy must be implemented to ensure a
comprehensive organizational strategy. Such firms are called ‘Eco-efficient’ business
since they produce more useful goods and services while continuously reducing
resource consumption and pollution.
e. Political Factors
The direction and stability of political factors is a major consideration for managers in
formulating company strategy. Political factors define the legal and regulatory
parameters within which firms must operate.
Although most of laws and regulations are commonly restrictive, some political actions
are designed to benefit and protect firms through patent laws, government subsidies,
and product research grants.
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Customer Function: Government demand for products and services, can create,
sustain, enhance, or eliminate many market opportunities.
The framework for industry and competitive analysis hangs on developing probing
answers to the following seven questions.
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The collective answers to these questions boils understanding of a firm’s surrounding
environment and form the basis for matching strategy to changing industry conditions
and to competitive forces,
a. Threats of Entry
New entrants to an industry bring new capacity, the desire to gain market share and
often substantial resources. The seriousness of the threat of entry depends on the
barriers present and on reaction from existing competitors that the entrant can expect.
1. Economies of Scale
Economies of scale deter by forcing the aspirant either to come in on larger scale or to
accept a cost disadvantage. Economics of scale also can act as hurdles or barriers in
distribution, utilization of the sales force, financing, and nearly any other part of a
business.
2. Product Differentiation
Brand identification creates a barrier by forcing entrants to spend heavily to overcome
customer loyalty. Advertising, customer service, being first in the industry, and product
differences are among the factors fostering brand identification.
3. Capital Requirement
The need to invest large financial resources in on order to compete in the market
creates a barrier to entry. Capital is necessary not only for fixed facilities but also for
customer credit, inventories, and absorbing start-up losses.
5. Government Policy
The government can limit or even foreclose entry to industries, with such controls as
license requirements and limit on access to raw materials. The government also can
play a major indirect role by affecting entry barriers through such controls as air and
water pollution standards and safety regulations.
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A supplier group is powerful if:
It is dominated by a few companies and is more concentrated than the industry
it sells.
Its products are unique or at least differentiated.
It poses a credible threat of integrating forward into the industry’s business.
The industry is not an important customer of the supplier group.
As indicated above, the supplier group will be powerful if its product is unique. This is
so because buyers’ cost of switching or changing suppliers raises as its product
specifications ties it to particular suppliers.
Buyers group poses the above threats in that when the product is a major component
or significant fraction of the buyers’ product, the buyer is likely to shop for a favorable
price and buy selectively. The less profitable the buyer is, the more price sensitive it
would be. Similarly, where the quality of the buyers product is not as such affected by
the industry’s product, buyers are generally more sensitive to price and pose a threat
to the industry.
Substitute products that deserve the most attention strategically are those that are:
Subject to trends improving their price-performance trade-off with the industry’s
product.
Produced by industries earning high profits.
Substitutes often come rapidly into play if some development increases competition in
their industries and causes price reduction or performance improvement.
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
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Rivalry among existing firms becomes intense when the following factors are present:
Competitors are numerous or are roughly equal in size and power.
Industry growth is slow, enhancing fights for market share.
The product lacks differentiation or switching costs.
Exit barriers are high and keep the companies competing even though they
earn low profit or losing.
Fixed costs are high or the product is perishable, creating a strong temptation
to cut prices.
The rivals are diverse in strategies, origins, and personalities.
While the company must live with many of the above factors, it may have some
latitude for improving matters through strategic shifts. For example, the company may
try to raise buyers switching costs through product differentiation.
* Industry Structure
An industry is a collection of firms that offer similar products or services. Similar
products or services mean that customer perceive products to be substitutable for one
another. Defining industry and its boundary is incomplete without an understanding of
its structural attributes. Structural attributes are the enduring characteristics that give
an industry its distinctive character. Industries vary widely in their nature of
characteristics.
The variation among industries can be explained by examining four variables that
industry comprises:
1) Concentration
This variable refers to the extent to which industry sales are dominated by only a few
firms. In a highly concentrated industry (i.e. an industry whose sales are dominated by
a handful of companies), the intensity of competition declines over time.
The reason for inverse relation between concentration and competition is that, high
concentration serves as a barrier to entry into an industry, because it enables the
firms that hold large market shares to achieve significant savings in production costs
and to lower their prices.
2) Economies of Scale
This variable refers to the savings that companies within an industry achieve due to
increased volume. Simply, when the volume of production increases, the long-range
average cost of a unit produced will decline. Economies of scale can result from
technological and non technological sources. The technological sources are higher
level of mechanization or automation and a greater up-to-datedness of plant
and facilities. The non technological sources include better managerial
coordination of production functions and processes, long-term contractual
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
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agreements with suppliers, and enhanced employee performance arising from
competition.
3) Product Differentiation
This variable refers to the extent to which customers perceive products or services
offered by firms in the industry is different. Differentiation of products can be real or
perceived (fancied):
Real differentiation results from the use of different design principles
and different construction technologies.
Perceived (Fancied) differentiation results from the way in which firms
position their products and from their success in persuading customers about
the differences.
Real and Perceived differentiations often intensify competition among existing firms.
On the other hand, successful differentiation poses a competitive disadvantage for
firms that attempt to enter an industry.
4) Barriers to Entry
These are obstacles that the firm must overcome to enter an industry. Barriers can be
tangible or intangible.
a. Competitive Position
Assessing its competitive position improves a firm’s chance of designing strategies
that optimize its environmental opportunities. Development of competition profile
enables a firm to more accurately forecast both its short and long term growth and its
profit potentials.
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
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Although the exact criteria used in constructing a competitor’s profile are largely
determined by situational factors, the following table includes the most often used
criteria of competitor’s profile.
Once appropriate criteria have been selected, they are weighted to reflect their
importance to a firm’s success. Then the competitor being evaluated is rated on the
criteria; the ratings are multiplied by the weight; and the weighted scores are summed
to yield a numerical profile of the competitor.
b. Customer Profiles
Developing a profile of a firm’s present and prospective customers improves the ability
of its managers to plan strategic operations, to anticipate changes in the size of
markets, and to reallocate resources so as to support forecast shifts in demand
patterns. The traditional approach to segmenting customers is based on customer
profiles constructed from geographic, demographic, psychographic, and behavioral
information.
Geographic Variables
It is important to define the geographic area from which customers come or could
come. This is so because every product or service that the company offers to the
market has some quality that makes it variably attractive to buyers from different
locations.
Demographic Variables
These variables are most commonly used to differentiate groups of present and
potential customers. Demographic information such as age, sex, marital status,
income, and occupation is comparatively easy to collect, quantify, and use in strategic
forecasting. Such information is the minimum basis for a customer profile.
Psychographic Variables
Psychographic variables refer to customers’ personality and life styles. Accordingly,
the personality and lifestyles of customers are often better predictors of customer
purchasing behavior than geographic or demographic variables.
Behavioral Variables
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These variables refer to the buyer’s behavior data. Accordingly, as a component of the
customer profile, such data are used to explain and predict some aspects of customer
behavior with regard to a product or service. They include such information as usage
rate, benefits sought, and brand loyalty.
c. Suppliers
Dependable relationships between a firm and its suppliers are essential to the firm’s
long-term survival and growth. A firm regularly relies on its suppliers for financial
support services, materials and equipment. In addition, it occasionally is forced to
make special requests for such favors as quick delivery, liberal credit terms, and
return of broken-lot orders. Particularly at such times, it is essential for a firm to have
had an ongoing relationship with its suppliers. In assessing a firm’s relationship with
its suppliers, several factors should be considered.
With regard to its competitive position with its suppliers, the firm should address the
following important points:
The competitiveness of the suppliers’ price
Quantity discounts offered by suppliers
The amount of their shipping charges
The suppliers’ production standards
The competitiveness of the suppliers’ abilities, reputations, and services.
Strategy must plan realistic requirements on the firm’s internal capabilities. That is, the
firm’s pursuit of market opportunities must be based not only on the existence of such
opportunities but also on the firm’s key internal strengths.
The following discussion will looks at the several ways managers achieve greater
objectivity as they analyze their company’s internal capabilities. Managers often start
their internal capabilities. Mangers often start their internal analysis with questions like
“How well is the current strategy working?” “What is our current situation?” or
“What are our strengths and weaknesses?”. Two approaches that provide answer
to the above questions are discussed bellow. The approaches are SWOT (Strength,
Weakness, Opportunity and Threat) Analysis and functional analysis. The Value
chain analysis will also be addressed here to complement the briefing.
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a) Opportunities
An opportunity is a major favorable situation in a firm’s environment. Key trends are
oral sources of opportunities. The following points could represent opportunities for
the firm:
Identification of a previously over looked market segment
Changes in competitive or regulatory circumstances
Technological changes, and
Improved buyer or supplier relationships.
b) Threats
A threat is a major unfavorable situation in a firm’s environment. Threats are key
impediments to the firm’s current or desired position.
Firms usually face threats when:
New competitors enter the industry
Market growth is slow
Bargaining power of key buyers and suppliers increase, and
Technological changes occur.
The most common way to use SWOT analysis is as a logical framework guiding
systematic discussion of a firm’s situation and the basic alternatives that the firm might
Hawassa University, Faculty of Business & Economics, Department of B. Management Course Title: Business Policy & Strategy (Mgmt 492)
Course Instructor: Suleiman K.
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consider. For instance, what one firm sees as an opportunity could be seen as a
potential threat by another.
The patterns represented by the four cells in the figure are discussed as follows:
Cell 1
This is the most favorable situation as the firm faces several environmental
opportunities and has numerous strengths that encourage pursuit of those
opportunities. This Situation suggests growth-oriented strategies to exploit the
favorable match.
Cell 2
In this cell, a firm with key strengths faces an unfavorable environment. In this
situation, strategists would use current strengths to build long-term opportunities in
more opportunistic product markets.
Cell 3
A firm in this cell faces impressive market opportunity but is constrained by internal
weaknesses. The focus of strategy for such a firm is eliminating the internal
weaknesses so as to more effectively pursue the mark of opportunity.
Cell 4
This is the least favorable situation with the firm facing major environmental threats
situation clearly calls for strategies that reduce or redirect involvement in the products
or markets.
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In general, SWOT analysis highlights the control role that the identification of internal
strengths and weaknesses plays in the firm’s search for effective strategies. The
careful matching of a firm’s opportunities and threats with its strengths and weakness
is the essence of sound strategy formulation.
The functional approach is one way managers have traditionally sought to isolate and
evaluate internal strengths and weaknesses. Accordingly, the key internal factors are
a firm’s basic capabilities, limitations, and characteristics. The following lists are
typical internal factors, some of which would be the focus of internal analysis in most
firms.
MARKETING
Firm’s products & services = breadth of product line
Market share or sub market shares
Channels of distribution &number, coverage and control
Product & service image, reputation, and quality
Pricing strategy and pricing flexibility
After sale service and follow-up.
PERSONNEL
Management team
Employee’s skill and morale
Employee turnover and absenteeism
Efficiency and effectiveness of personnel policies
QULAITY MANAGEMENT
Relationship with suppliers & customers
Procedures for monitoring quality
INFORMATION SYSTEMS
Timeliness and accuracy of information
Ability of people to use the information provided
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Primary activities are those involved in the physical creation of the product,
marketing and transfer to the buyer, and after-sale support. Support activities assist
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the primary activities by providing infrastructure of inputs that allow them to take place
on an ongoing basis.
The data necessary to support value chain analysis can be formidable, particularly
given its non traditional format. Traditional accounting identifies costs in broad
expense categories - wages, benefits, travel, supplies, depreciation, and so on. Value
chain analysis uses activity-based costing which requires managers to
“disaggregate” these broad numbers across specific tasks and activities.
Once the company’s value chain has been documented and the costs are determined,
managers used to identity the activities that are critical to buyers’ satisfaction and
market success. Three considerations are essential at this stage in the value chain
analysis:
The company’s basic mission needs to influence manager’s choice of activities
that they examine in detail.
The nature of value chains and the relative importance of activities within them
vary by industry.
The relative importance of value chain activities can vary by a company’s
position in a broader value system that includes the value chains of its
upstream suppliers and downstream customers or partners involved in
providing products or services to end users.
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A manager’s assessment of whether a certain internal factors such as production
facilities, sales organization, financial capacity, control systems, or key personnel - is
a strength or a weakness well be strongly influenced by his or her experience in
connection with that factor.
Although historical experiences provide a relevant evaluation frame work, strategists
must avoid tunnel vision in making use of it, because, using only historical experience
as a basis for identifying strength and weaknesses can prove dangerously in accurate.
b) Stage of Industry Evolution
The requirements for success in industry segments change over time. Strategists can
use these changing requirements, which are associated with different stages of
industry evolution, as a framework for identifying and evaluating the firm’s strengths
and weaknesses.
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Industry analysis involves identifying factors associated with success in a given
industry. The key determinants of success in an industry may be used to identify a
firm’s internal strengths and weaknesses. By scrutinizing industry competitions, as
well as customer needs, vertical industry structure, channels of distribution cost,
barriers to entry, availability of substitutes and suppliers, a strategist seeks to
determine whether the firm’s current internal capabilities represent strengths or
weaknesses.
Global environment is one of the special complications that confront a firm operating
internationally. Globalization refers to the strategy of approaching world divided
markets with standardized products. Awareness of the strategic opportunities faced by
global corporations and of the threats posed to them is important to planners or
strategist. Understanding the global markets and the environment is a required
competence of strategic managers, because, the growth in the number of global firms
changes the structure of the competitive environment. The following discussion
addresses issues such as reasons for globalization, considerations prior to
globalization, complexity of the global environment, and international strategy
options.
c. Tax Incentives
Some countries differ in tax incentives to attract foreign business to their countries. An
important motive for extending such tax incentives is to increase scarce foreign
exchange and create jobs at home. A company finding such tax concessions viable
will establish a plan in the low-tax country and sell the manufactured goods locally, as
well as from export there to its primary markets.
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In order to maintain the profit margin, a firm may go globally where it can produce
goods at lower costs using cheap labor and materials or selling them at higher prices.
In a similar way, external and internal assessments may be conducted before a firm
enters global markets. External assessment involves careful examination of critical
feature of the global environment. Particular attention begins to be paid to the status
of the host nations in such areas as economic progress, political control and
nationalism. Internal assessment involves identification of the basic strengths of a
firm’s operations. These strengths are particularly important in global operations,
because they are often the characteristics of a firm that the host nation values most.
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Global strategic planning is more complex than pure domestic planning. There are at
least five factors that contribute to the increase in complexity.
An inherent complicating factor for many global firms is that their financial policies
typically are designed to further the goals of the parent company and pay minimal
attention to the goals of the host countries. Moreover, different financial environments
make normal standards of company behavior (concerning the disposition of earnings,
sources of finance, and the structure of capital) more problematic. Thus, it becomes
increasingly difficult to measure the performance of international division.
In order to see the strategy options in global environment, carefully examine the
following figure,
The figure represents the basic multinational strategy options that have been derived
from a consideration of the location and coordination dimensions. Low coordination
and geographic dispersion of functional activities are implied if a firm is operating in a
multi-domestic industry and has chosen a country-centered strategy. This allows each
subsidiary to closely monitor the local market conditions it faces and to respond freely
to these conditions.
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High coordination and geographic concentration of functional activities result from the
choice of a pure global strategy. Although some functional activities, such as, after
sales service, may need to be located in each market, light control of those activities is
necessary to ensure standardized performance worldwide.
High foreign investment with extensive coordination among subsidiaries would
describe the choice of remaining at a particular stage, such as that of an exporter.
Export - based strategy with decentralized marketing would describe the choice of
moving toward globalization, which a multinational firm might make.