Global strategic management
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GLOBAL STRATEGIC MANAGEMENT
Strategic analysis is the process of evaluation of a business in relation to its internal and external environment with an aim of formulating a strategy that will lead to the attainment of its laid goals and objectives (Ansoff 2007). One purpose of analyzing strategic factors is to identify an environment where an organization can use its competencies to tackle an opportunity. The goal is to find that chance that is suited to the internal and the external environment of the firm that the competitors cannot take advantage. The firm will then obtain a large share of the market. It helps the company to manage transition and internal and external environmental changes in order to maintain its competitiveness in the market. There are models and strategies that can be applied in strategic analysis.
Strategic Planning Models
Model One “Basic” Strategic Planning. This is a simple process by small organizations (Ansoff 2007). This simple strategic planning process includes identification of the mission statement though mission statements change with time. Then there is the selection of goals that will lead to the accomplishment of the mission. Approaches to reach the goal are set after a thorough examination of the internal and external environments where an action plan, which is closely monitored, is then put in place.
Model Two - Issue-Based (or Goal-Based) Planning
This detailed type of planning involves an analysis of SWOT to know the strengths, weaknesses, opportunities and threats that may be involved. There is identification of priority areas, design of programs to tackle the priorities. It is establishment of action plans and their development, budgeting in order to balance between income and expenditure and strategic review.
Model Three - Alignment Model
This model is vital for organizations that require the smoothening of their strategies or making diagnosis on the problematic areas. It is also helpful to organizations that are experiencing a numerous issues concerning internal efficiencies. It includes, outlining of the organization’s mission, strategies, resources and support mechanisms, identification of the efficient and problematic areas and making of adjustments strategies.
Model Four - Scenario Planning
This one can be used together with other models to help planners in strategic thinking (Ansoff, 2007). The model is beneficial in defining strategic issues and goals that are supposed to be accomplished. It involves selection of factors and changes that might affect the organization, suggestion of remedial measures and strategies that can be used to respond to the changes.
Model Five - “Organic” (or Self-Organizing) Planning
This old model moves from general to specific. It involves articulation of the organization’s cultural values using the storyboard and dialogue techniques.
Strategic Planning Strategies
SWOT is an acronym for Strengths, Weaknesses, Opportunities and Threats. It is by far the most popular strategy that involves an analysis of the strengths and weaknesses of business plus the opportunities that abound and the threats that exist in order to be able to major on the strength and fight weaknesses to take advantage of the existing opportunities while avoiding the impacts of the threats posed. The SWOT analysis classifies the internal aspects of the company as strengths or weaknesses and the external factors as opportunities or threats (Gregory, et al, 2007).
Internal factor include, the culture of a company, its image, staff, hierarchical structure, operation efficiency and capacity, market share, economic resources and branding. External factors include the customers, competition, market dynamics, supply and demand, social factors, economic trends, business regulations and politics.
This is a strategy that analysis the environment in which a business operates (Baertz & Beamish, 2007). The environmental factors can be Political, economic social, or technological. Political factors include legal issues and disputes, Regulations imposed by businesses by the government, tax and tariff policies, political stability, and labor union issues. Economic factors include capital, customers’ ability to purchase, inflation and foreign exchange rates and the general economic growth of the business environment. Social factors include things to do with health, demographics, age distribution and career choices, while technological factors include rate of change of technology. PEST analysis can be made effective by ensuring that one aligns positively with the strong transition factors that affect the environment of the business. Taking advantage of change rather than opposing it ensures greater chances of success. This analysis also helps one to avoid responding in a manner that will lead to failure given that the factors in question are beyond control.
The strategy analyses information and ideas in away that will help connect future uncertainties with the present decisions. The method is mainly used as a strategic management strategy involving getting a variety of perspectives and predicting the changes in society, economy, politics and technology. Patterns are drawn and priorities listed in order to create an idea and scenarios, complete with early warning signals and their reviews.
Porter’s five forces theory
The Porter's five Forces tool is a strategic analysis strategy that helps one to understand the dimensions of power in a business, which helps to gauge the power of the present versus the power of where you are venturing into (Baertz & Beamish 2007). This is important because with that understanding one can take advantage of a strong situation and improve a weak one especially in planning. It is especially important in the launch of new products to gauge whether they will be profitable or not. Five forces analysis asserts that the five critical factors that determine the competitive edge in a situation. These include power of supply, purchasing power, and competitive rivalry, threat of substitution and threat of new entry.
The most commonly used models are PEST and SWOT, however PEST is useful before SWOT and it aids in the identification of SWOT factors (Gregory, et al ,2007) PEST evaluates a market and the presence of competitors from a perspective of the business, SWOT is evaluation of a business either your own or that of a competitor. PEST is applicable and relevant in large and complex business but SWOT can be used even for very small local businesses. Every business can benefit from a SWOT analysis especially by completing a SWOT analysis of their competition, which can give some feed back into some aspects of the PEST analysis. The strategy that I would recommend to be used is the SWOT analysis .This is because; it is very user friendly especially in an early stage of strategic planning to make people aware of the position of the firm. However, it requires detailed research in order for one to have a comprehensive understanding of both the internal and the external factors, and how to innovate a plan that is geared towards cost reduction and efficiency.
SWOT analysis was used on one of the leading brands in the world, The Wal-Mat. It was found out that its strengths are its good reputation and the convenience it offers its customers due to the availability of a wide variety of goods and services under one roof. Strength is its global expansion efforts and its extensive use of modern technology to serve its clientele. Its training program and human resource management were its other strengths. The weaknesses of the brand were its size, which inhibits control and lack of specialization. It is also not present in many countries in the world. Its opportunities are associating with other global brands and wide room for expansion. Its threats include emerging competition globally, political interference in new environments, and the pitfalls of the global economic crisis, which has affected people’s purchasing power.
Part 2: Reengineering
Reengineering in business means a complete restructuring of the business which involves designing again the processes used in the business and re strategizing with a view to improve efficiency and quality of performance. It involves making improvements in the business processes in order to make it stronger and compete favorably in the market. The purpose of reengineering is to get rid of practices that derailed the performance of a business and adopt new ones that will increase its efficiency (Thompson& Strickard, 1995). In the process of Reengineering, a new business model may be incorporated; workers lay of, company’s leadership changed in with a view to bringing freshness in the operation of the company.
Reengineering is a great concept in the business world because it helps in fixing defective and ineffective programs. Efficiency has been achieved in many sectors through reengineering, especially where the old guard is replaced with the young fresh and innovative generation of leaders. For the world to move to the next level in business, outdated principles and procedures must be discarded, and reengineering carried out in totality and not in small doses.
Reengineering has happened even in the public sector by the government though many public reengineering processes have failed. This is because sometimes governments carry out reengineering to justify excess spending. Many public reengineering practices have not succeeded mainly because of lack of clear guidelines and objectives, which means that it is being carried out as a publicity stunt. Notable institutions that have carried out reengineering are banks.
Nearly all banks have reengineered especially in teller and customer service areas. There is now electronic CSR, imaging technologies in banks; automated teller machine among others. This has helped banks to cut on costs while improving their efficiency in the handling of customers.
Ansoff, H.I (2007). Strategic Management. Macmillan: Palgrave
Baertz, M.C, Beamish (2007).Strategic management: Canadian cases. New York: Mc Graw-Hill/Irwin
Gregory, G.D, et al (2007). Strategic management. New York: Mc Graw-Hill/Irwin
Thompson, A.A, Strickard, J.(1995). Strategic management: concepts and cases. California: Irwin