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Corporate Strategy

Corporate Strategy

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Published by Waliyullah
...One of the most powerful techniques for understanding industry and competitive environment is the concept called “strategic group analysis” (Porter, 1980). Strategic group analysis is about analysing ...
...One of the most powerful techniques for understanding industry and competitive environment is the concept called “strategic group analysis” (Porter, 1980). Strategic group analysis is about analysing ...

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Published by: Waliyullah on Feb 07, 2009
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SITUATION ANALYSIS AND CORPORATE STRATEGYSITUATION ANALYSIS AND CORPORATE STRATEGY
TOPICS TO COVER
1.Situation Analysis2.SWOT Analysis3.Portfolio Analysis4.Review Mission and Objectives5.Growth Strategies6.Evolution of Corporate Strategies7.Steps in Charge Process
THE NATURE OF THE ENVIRONMENT
The major problem Strategic Management face is coping with uncertainty in the businessenvironment. The environmental situations are so unpredictable and always changing.However, we can classify the nature of environments as follows:
a.SIMPLE STATIC ENVIRONMENT
Here, the environment is relatively straight forward to understand and not undergoingsignificant changes. Technical processes are fairly simple and competition and marketsare fixed over time, and there may be few of them. In such circumstances, if a changeoccurs, it is likely to be predictable, so it make sense to analyze the environmentextensively on a historical basis, perhaps as a means of trying to forecast likely futureconditions. The simple – static environment corresponds to Emery and Trist’s placid –randomized environment.
b.DYNAMIC ENVIRONMENT
Here, the environment is largely unpredictable. This manager needs to consider theenvironment of the future, not just of the past. This can be done intuitively or byemploying more structured ways of making a sense of the future such as scenarioplanning. This corresponds to Emery and Trists (1995) disturbed reactiveenvironments.
c.COMPLEX ENVIRONMENT
This is an environment that is difficult to comprehend and at the highest level of uncertainty. Complexity is difficult to handle by analysis. Complex environmentscorrespond to Emery and Trist’s turbulent fields. Complexity arising from diversity, sizeand environmental dynamism can be dealt with by ensuring that the different parts of theorganization responsible for different aspects of diversity are separate and given theresources and authority to handle their own part of the environments.
ENVIRONMENT SCANNING
A Major step in Strategic Management is the scanning of the environment. Environmentalscanning is the process of gathering information about events and their relationships within an
 
organization’s internal and external environments. Environmental scanning involves gathering,reviewing and evaluating whatever information about internal and external environments thatcan be obtained from several sources on a regular basis and interpreting them in the light of theorganization’s business sensing the pulse of environmental threats and opportunities is anormal and continuous process in Strategic Management. Through scanning, firms identify earlysignals of potential changes in the general environment and detect changes that are alreadyunder way. There are three types of scanning systems. These are
a.IRREGULAR SCANNING SYSTEM
This consists largely of adhoc environmental studies. They emphasize short-run reactionto environmental crisis with little attention to future environmental events.
b.REGULAR SCANNING SYSTEM
These systems revolve around a regular review environmental components. The focus of this scanning system is primarily retrospective but some thought is given to futureconditions assumed to be evolving within environment.
c.CONTINUOUS SCANNING SYSTEMS
Here, the components of the organizational environment are constantly monitored. Herescanning is an ongoing activity for the organization. Continuous scanning tends to bemore proactive or future oriented than either irregular or regular systems. The use of acontinuous scanning system reflects a serious and sustained commitment toenvironmental analysis. In most organizations, environmental analysis evolves from anirregular system into a regular and then into a continuous scanning system.
PROCEDURE FOR ANALYZING THE ENVIRONMENT
How does one analyze the environment? We have six basic steps of analyzing the external andinternal environment to identify the firm’s strategic position or standing. The steps are asfollows:1.Consider the nature of the organization’s environment in terms of how uncertain it is. Is ita.Static / simple?b.Dynamic? oc.Complex? Does it show signs of change and in what way?2.Undertake a general audit of environmental influences. The aim is to identify which of themany different general environmental factors have influenced the past performance anddevelopment of the organization along with some consideration as to which will in thefuture. This will suggest the extent to which strategies might need to change.
3.
Undertake a structural analysis to identify the key forces operating in the immediatecompetitive environment of the firm. The five forces analysis to be discussed later helps
 
to identify the key force at work in the immediate or competitive environment and whythey are important .4.Analyse and identify the organization’s position relative to its competitors i.e. from theorganization stands in relation to other organizations who are competing for the saneresources or customers, as itself. The four ways of doing this are:I.Strategic group analysis, which maps organizations in terms of similarities anddissimilarities in the strategies they follow.II.The analysis of market segments, which seeks to establish the segments of markets which might be most attractive.III.Competitor analysis which seeks to obtain information about the strengths andweakness of competitors by market segments.IV.Attractiveness analysis which maps the organization’s competitive position inrelation to the attractiveness of the market(s) in which it operates.5.Analysis the internal environment of the firm with the aim of identifying its strengths andweaknesses.
6.
Undertake SWOT (Strengths, Weakness, Opportunities and Threats) analysis where theunderstanding of the external environments (steps 1 – 4) is specifically related to theorganization and its internal environment (step 5). This is intended to identifyopportunities and threats facing the organization and suggesting how well positioned it isto meet these challenges.
ANALYZING THE FIRMS INDUSTRY AND MACRO ENVIRONMENTS
There are two pats into which a company’s external environment can be divided. They are: Theindustry or micro environment in which the company competes, and The macro environmentwhich affects all industries and companies in the.
I.THE INDUSTRY OR MICRO ENVIRONMENT
This consists of competitors, suppliers, customers and all other forces that directly affector have a direct potential affect or have company’s operation. These are the set of factorsin a particular industry – the threat new entrants, suppliers, buyers, product substitutesand the intensity of rivalry among competitors – that directly influences a firm and itscompetitive actions and responses.
II.THE MACRO OR GENERAL ENVIRONMENT
This consists of the general political, economic, social, demographic, legal, technologicaland ecological frame work within which the industry and the company operate. They arethe broader society that can influence an industry and the firms within it. The figure below

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