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................................. 6 UNDERSTAND THE STRATEGIES THAT ORGANIZATIONS USE TO ACHIEVE COMPETITIVE ADVANTAGE: ..................................................................... 18 UNDERSTAND THE ROLE OF STRATEGIC BUSINESS PLANNING IN ORGANIZATIONS: 3 .................................................................................................................................................................................................. 3 UNDERSTAND THE IMPACT OF INTERNAL AND EXTERNAL FACTORS ON ORGANIZATIONS: ....................... 12 REFRENCES: .................................................................................................................Contents UNDERSTAND THE ROLE OF STRATEGIC BUSINESS PLANNING IN ORGANIZATIONS: ...............................

Realistic goals are believable. The mission and vision statements explain the purpose of organization as well as its broader future perspective respectively. The strategic mission and vision can be lofty and motivational. too broad or based too far in the future. but bottom line goals must be immediately actionable. process and innovation goals daily. So. Believable goals are actionable. There are tools and techniques corporate managers can use to manage the goal. during the goal-setting process. A lack of employee buy-in can significantly undermine the effective implementation of goals. Actionable goals are goals where each employee or team member knows exactly what she has to do and when. Realistic: falls in line with actionable. where all employees or team members personally identify with the goals and the corporate mission behind the goals. tools and resources they need to accomplish the goals. It's often an afterthought.A goal can be defined as a specific desires state over a specific period of time. This is often referred as buy-in. Actionable: Goals should be actionable. Specific: Goals should be very specific and clear. For this reason. corporate leaders should make sure employees in the organization understand the what. The goals are established in an organization to attain the objectives developed according to the mission and vision statement of the organization. Measurable. you cannot manage it. Measurable: If you don't measure it. Actionable. goal setters should make sure that goals are realistic for employees and team members. goal setters should ask themselves. goals cannot be vague. After communicating the goals. SMART is an acronym for Specific. One popular methodology used by large corporations is the balanced scorecard methodology. Organizations should use the SMART principle when setting goals. customer. Realistic and Time Bound. "Is it measurable?" If the goal is measurable. The balanced scorecard is a measurement and performance tracking methodology used to measure and balance financial. 4 . goal setters must ensure employees and team members have the skills. To support this realistic requirement. why and how of the goals as well as are able to identify how they can benefit from and help to implement the goals. For this reason. then it fits the SMART framework. This is a key attribute that many corporate leaders and goal setters do not consider when setting goals. Developing best objectives and strategies do not work for an organization until and unless they develop goals which ensure their success.

and artistic. 5 . include everyone in the decision making process. therefore. traits or qualities that help define the organization and the people who work there. financial. achievement. Vision and mission statements provide direction.Time Bound: A goal is not a goal unless it is time bound. Your values are your corporate culture. When it comes to culture and values. To establish urgency and motivate immediate action. to each other. Organizational values guide your organization’s thinking and actions. managers must carefully examine how that organization operates. defining and adoption of organizational values must be an organizational commitment. focus. Support an employee's behavior by demonstrating to them (likely through training). You can think of your organizational values in terms of dimensions: prosocial. While circumstances may change. your departments and your employee. The values of an organization express what it stands for and guide everyone’s behavior when dealing with everything from product development. Values are the standards that guide our conduct in a variety of settings. set a clear start and completion date. Measure and reward their success by integrating them into each employee's performance objectives. how they can use these values as they would use tools to do their job. see what people spend their time on and what they talk about. ideally values do not. to customers and suppliers. Values are living (not static). and energy to accomplish shared goals. Integrating these values must be a priority for everyone. They serve as a decision-making tool in daily interactions that guide behavior. How Do You Find Organizational Values: Grady writes the following point on finding the values?  In order to understand and identify the values of an organization and to gauge their influence on the company. To figure out your organizational values. It's not easy work. Values express the integrity that individuals and organizations believe in. it is far better to observe those people in their day-to-day activities. actions speak louder than words.  While it may be helpful to listen to people describe what they believe the values of the organization are. Ultimately. but it is valuable in aligning the goals and objectives of your organization. An organization’s values might be thought of as a moral compass for its business practices. market.

It is a tool that defines the routes that when taken will lead to the most likely probability of getting from where the business is to where the owners or stakeholders want it to go. There is a need for all people in the corporation to understand the direction and mission of the business. and how they allocate their time and energy. It helps to establish the strategic goals for an organization and also the way to achieve them. The benefit of the discipline that develops from the process of strategic planning. leads to improved communication. Strategic planning is to a business what a map is to a road rally driver. is driven from the top down. Companies consistently applying a disciplined approach to strategic planning are better prepared to evolve as the market changes and as different market segments require different needs for the products or services of the company. Strategic planning is a process that brings to life the mission and vision of the enterprise. they are usually revealed by employees’ actions and thinking. considers the internal and external environment around the business. An employee’s actions are more revealing than their words UNDERSTAND THE IMPACT OF INTERNAL AND EXTERNAL FACTORS ON ORGANIZATIONS: Strategic business management and planning is the basic need of an organization.  Note how employees spend their time. better selection of tactical options and leads to a higher probability of achieving the owners’ or stakeholders’ goals and objectives. is the work of the managers of the business. strategic plans meet detours and obstacles that call for adapting and adjusting as the plan is implemented. It facilitates effective decision-making. 6 . how they communicate within the organization and how they go about their daily job responsibilities and tasks. how they set their priorities. And like a road rally. Although values are often difficult to define. As a company grows and as the business environment becomes more complex the need for strategic planning becomes greater. and is communicated to all the business stakeholders. both inside and outside of the company. A strategic plan. well crafted and of value.

health consciousness. population growth rate. For example. the environment law requires the world’s automobile manufacturers to reduce emission of green house gasses. which consists of political-legal. technological forces – usually called PEST. and thus influence strategy formulation of exporters. though it need not consider them to be of equal importance. For example. Therefore. Stakeholders can be defined as all entities that are impacted through a business running its operations and conducting other activities related to its existence. The external environment consists of variables that are outside the organization and not typically within the short-run control of top management. Socio-cultural force is about the cultural aspects. The impact of stakeholder needs and expectations on businesses is inescapable and ubiquitous. Businesses exist to meet the expectations of one specific stakeholder in the sense that businesses are set up and operated to produce profit for their owners and investors. socio-cultural. For example. Businesses must consider the needs and expectations of its stakeholders. Economic force influences strategy formulation through economic growth. age distribution. Certain stakeholders such as owners and investors are more important than others. External threats are characteristics of the external environment that may prevent the organization from achieving its strategic goals. so on and so forth. Businesses also must consider the needs and expectations of other stakeholders because of their ability to help and hinder their 7 . and therefore these manufacturers have to reformulate their product strategy. interest rates. career attitudes and emphasis on safety. Trends in social-cultural factors affect the demand for a company's products and how that company operates. exchange rates affect the costs of exporting goods and the supply and price of imported goods in an economy. Political-legal force influences strategy formulation through government and law intervention. organizations must formulate appropriate strategies to take advantage of the opportunities while overcome the threats in order to achieve their strategic goals. The impact can be direct in the case of the business's customers and suppliers or indirect in the case of the communities in which the business chooses to place its locations. They may be general forces within the macro or remote environment. exchange rates and the inflation rate. economic. increasing health consciousness can influence strategy formulation of fast-food companies that may have to adopt product innovation strategy.External environment aims to help an organization to obtain opportunities and threats that will affect the organization’s competitive situation. External opportunities are characteristics of the external environment that have the potential to help the organization achieve or exceed its strategic goals.

operations. The results of the first questionnaire are compiled. Scenario writing typically yields best. the forecaster generates different outcomes based on different starting criteria. and a second questionnaire based on the results of the first is presented to the experts. a group of experts responds to a series of questionnaires. if the business chooses to ignore its host communities. They are often used when time 8 . SCENARIO WRITING: In Scenario Writing. they remain essential in estimating an organization's forward prospects. In the Delphi Technique. DELPHI TECHNIQUE: The RAND Corporation developed the Delphi Technique in the late 1960s. The experts are kept apart and unaware of each other. such as analysts and potential investors. SUBJECTIVE APPROACH: Subjective forecasting allows forecasters to predict outcomes based on their subjective thoughts and feelings. On the other hand. For example. that disregard becomes a black mark on its reputation and can result in other sanctions if relations become bad enough. The only stakeholders that businesses can ignore are the ones with little interest and influence on their operations. a business should be considerate of its host communities because that improves its reputation and strengthens its market presence. This questioning. compilation and requisitioning continue until the researchers have a narrow range of opinions. historical quantitative data and are given more credence by outside parties. Some are based on subjective criteria and often amount to little more than wild guesses or wishful thinking. free from criticism and peer pressure. While no forecasting tool can predict the future with complete certainty. Forecasting techniques help organizations plan for the future. who are asked to reevaluate their responses to the first questionnaire. worst and middle options. Others are based on measurable. The decision-maker then decides on the most likely outcome from the numerous scenarios presented. Subjective forecasting uses brainstorming sessions to generate ideas and to solve problems casually.

weekly and monthly basis. It is 9 . and shareholders. or employees) required for production. organizations can be much more proactive in dealing with the task environment than in dealing with the macro environment. or longer. the environment of business is composed of the microenvironment and microenvironment. distributors. daily. namely suppliers. TIME-SERIES FORECASTING: Time-series forecasting is a quantitative forecasting technique.or downward-sloping line to represent increasing or decreasing trends. Subjective forecasts are subject to biases and should be viewed skeptically by decision-makers. It is often shown as an upward. It consists of sets of forces and conditions that originate with suppliers. creditors. The trend component refers to the data's gradual shifting over time. on a daily basis. seasonal and irregular components make up the time series. Broadly speaking. yearly. monthly. competitors. impact the organization’s ability to obtain inputs and discharge of its outputs. distributors. component parts. Factors in the microenvironment are largely within the control of the managers. competitive or task environment. Irregular components happen randomly and cannot be predicted. respectively. Suppliers: Suppliers are individuals or organizations that provide (supply) an enterprise with the various inputs (such as raw materials. Cyclical components lie above or below the trend line and repeat for a year or longer. Forces in the microenvironment result from the actions of four main elements or groups. weekly. Trend. Let’s examine these main actors. customers. cyclical. The microenvironment is also called the operating. customers. The data may be taken over any interval: hourly. These groups affect the manager’s or firm’s ability to produce on a daily. as well as trade unions. These forces. and competitors. In this way. The annual increase in gas prices during the summer driving season and the corresponding decrease during the winter months is an example of a seasonal event. It measures data gathered over time to identify trends. The business cycle illustrates a cyclical component. Seasonal components are similar to cyclical in their repetitive nature. and the community in which the business operates. and thus significantly impact short-term decision making.constraints prohibit objective forecasts. but they occur in one-year periods.

they can raise the prices of inputs that they supply the organization. Changes in the nature. the manager becomes constrained and challenged.important that the manager ensures a reliable supply of input resources. Another major supplier-related threat that confronts managers pertains to prices of inputs. changes in the numbers and types of customers or changes in customers’ tastes and needs result in opportunities and threats. Distributors: In the microenvironment of business. Distributors are organizations that help other organizations sell their goods and services to customers. The changing nature of distributors and distribution methods can also bring opportunities and threats for managers. The organization must have a customer 10 . the power of the distribution may be weakened if there are many options or alternatives. another group of actors are distributors. The effectiveness of the supply system determines the organization’s long-term survival and growth. or types of any supplier result in forces that produce opportunities and threats to which the managers must respond if their organization is to prosper. Customers are the individuals and groups that buy the goods and services that an enterprise produces. then. A supplier’s bargaining position is especially strong if the supplier is the source of an input and if input is vital to the organization. The decisions that managers make on how to distribute products to customers can have an important effect on organizational performance. numbers. Customers: Customers are another group of actors in the operating environment of business. A forward looking organization must meet the needs and wants of its customers or exceed the customers’ expectations. In contrast. If distributors are so large and powerful that they can threaten the organization by demanding that it reduces the prices of its goods and services. When supplies bargaining position with an organization is so strong.

contract of employment. individuals as well as businesses have problems. These forces originate beyond the firm’s operating situation. Political: The political and legal forces are paralleled to the social environment. during periods of unhealthy economic growth occasioned by such factors as inflation. and high taxes. and falling prices reduce access to resources and lower profit. These forces on factors affect the conditions of procurement (buying) and sales market. high interest rates.orientation to succeed in this competitive. In the same vein. The macro environment is also called the external or remote environment. than with events in the microenvironment. socio-cultural. political and legal. and law of collective bargaining. A high level of rivalry often results in price competition. These regulations influence business operations either positively or negatively. or new entrants. Others are equal employment opportunity. and technological forces that affect the organization and its operating environment. This is more serious in the case of emerging enterprises. among others. unpredictable and challenging business environment. MacroEnvironment: This environment refers to the wide ranging economic. Economic: The economic forces have significant impact on the success of any organization. Competitors: Competitors are businesses that produce goods and services that are similar to a particular organization’s goods and services. identify and respond to). Put differently. Rivalry between competitors is potentially the most threatening force that managers must deal with. among others. they are organizations that are vying for same customers. rising unemployment. political and 11 . Besides. This is because laws are ordinarily passed following social pressures and problems. The macro environment presents threats and opportunities that are often difficult to grapple with (that is.

Socio-cultural: Socio-cultural forces have to do with the attitudes and values of the society. in order to survive and prosper in this competitive and challenging business environment. Corporate managers must adapt or adjust to these changes. and these to a great extent. In sum. in application. Technology refers to the application of knowledge base which science provides. and diffusion into new industries. in design. and in expectations of society form the company with regard to its social responsibility. and preferences of consumers. The changes constitute threats and opportunities for any manager.government leaders. To outperform the competitors an organization can: 12 . in relation with employees. among others. in efficiency. the impact of the social forces is felt in changing needs. It is a well established fact that information and communication technology has revolutionized business operations. in materials. Changes in socio-cultural factors also impact the business enterprise in its internal relations with employees within the context of changes in attitude to work changes in political awareness. Consequently. the actions or political activities by pressure groups and lobbying groups should be taken into consideration. Technological: Technological forces or factors could be said to be the most pervasive in the environment. UNDERSTAND THE STRATEGIES THAT ORGANIZATIONS USE TO ACHIEVE COMPETITIVE ADVANTAGE: High-performance organizations consistently outperform competitors and realize bottom-line impact from their human capital functions. shape behavior. and cultural norms. organizations that apply knowledge that is rapidly changing and complex are highly vulnerable. when considering investments or projects. tastes. These changes bring about new inventions and gradual improvements in methods.

If you haven’t done a customer survey within the past 12 months. 2. 3. which will help you understand their needs better. Put in place a formal process to ask customers why they are cancelling your service or why they chose a competitor’s product. their marketplace reputation and their weaknesses and strengths. too many projects at once. what they are offering. Don’t compare progress to internal 13 4. You’ll soon spot patterns suggesting weaknesses to fix. Most companies do not share their survey results widely internally – you’ll be better than average if you do. This dooms you to an endless replay of the same mistakes over and over. You’ll get a chance to see them in their working environment. Focus outside the 4 walls – and use social media to help. but never bother to track or analyze lost sales or lost customers.e. It’s a lot easier to beat the competition when you are focused on it. or whether they have any problems you can help them with. Call on your customers to see how they are doing. marketing and customer service personnel become and stay familiar with competitive offerings. it’s time for one. too little focus. Know your customers’ needs and wants better than your competitors. Set clear growth and profitability goals. This can be done by phone or by online questionnaire. Are you spending more time bringing a customer into your sales process than figuring out why they left? You’re not alone – many companies (including competitors) put their efforts on filling the sales funnel. sales. The problem most small businesses face is too much distraction.. Know your competitors. And communicate the results widely through your company – a survey is no good unless you use the data gathered. Insist that your product development. how your company stacks up against competitors.1. . What are your sales targets? What steps do you need to take each week to meet your sales goals? Break it down into small steps. like something out of the movie Groundhog Day. Or go on customer visits. Find out why customers leave. Not just a fuzzy idea of where you want to be next week. Comparisons should be to external standards – i. next month or next year – your goals must be much more specific. Compile the results into a report that is shared with managers and other key personnel each month.

A firm positions itself by leveraging its strengths. and focus.standards. The firm sells its products either at average industry prices to earn a profit higher than 14 . Companies that track these two metrics better appreciate the value of keeping existing customers happy. Review.. The following table illustrates Porter's generic strategies: Cost Leadership Strategy This generic strategy calls for being the low cost producer in an industry for a given level of quality. services or business models. But it makes sense to measure how your business performs compared to others with roughly similar products. Have you measured your progress against others in your industry? Sure. i. and may cause you to rethink how much effort you place on getting new customers once you realize the typical high cost. 6. review. three generic strategies result: cost leadership. how much it costs to get each new customer? These metrics can be eye-opening. Benchmark. Checking out what competitors are doing…and even their reputation in the marketplace…has never been easier with social media. Know your “customer numbers. you want your business to be unique/original/one of a kind. 5. review.e. not just day to day in the beginning while it remains a shiny new priority but monthly/quarterly/yearly to determine whether you’re on the right path. Michael Porter has argued that a firm's strengths ultimately fall into one of two headings: cost advantage and differentiation. None of this stuff will be any good to your business if you don’t track your results and review your findings. These strategies are applied at the business unit level.” Do you know your customer retention rate? Do you know your acquisition cost for new customers. 7. differentiation. By applying these strengths in either a broad or narrow scope. They are called generic strategies because they are not firm or industry dependent. Knowing how your business stacks up can tell you how much and where to improve.

if suppliers increase their prices the firm may be able to pass along the costs to its customers who cannot find substitute products easily. or below the average industry prices to gain market share.  Corporate reputation for quality and innovation. Efficient distribution channels. the firm can maintain some profitability while the competition suffers losses. this investment represents a barrier to entry that many firms may not overcome. Firms that succeed in a differentiation strategy often have the following internal strengths:    Access to leading scientific research. Even without a price war.   High level of expertise in manufacturing process engineering. The firm hopes that the higher price will more than cover the extra costs incurred in offering the unique product. In the event of a price war. the firms that can produce more cheaply will remain profitable for a longer period of time.that of rivals. Differentiation Strategy A differentiation strategy calls for the development of a product or service that offers unique attributes that are valued by customers and that customers perceive to be better than or different from the products of the competition. The cost leadership strategy usually targets a broad market. The value added by the uniqueness of the product may allow the firm to charge a premium price for it. Highly skilled and creative product development team. as the industry matures and prices decline. having a small component count to shorten the assembly process. for example. Because of the product's unique attributes. 15 . Firms that succeed in cost leadership often have the following internal strengths:  Access to the capital required to make a significant investment in production assets. Strong sales team with the ability to successfully communicate the perceived strengths of the product.  Skill in designing products for efficient manufacturing.

therefore. and this entrenched loyalty discourages other firms from competing directly. firms pursuing a focus strategy have lower volumes and therefore less bargaining power with their suppliers. a share leader in a mature industry might build on a cost or product differentiation advantage and pursue a Marketing Strategy aimed at increasing volume by promoting new uses for an old product or by encouraging current customers to buy and use the product more often. total volume stabilizes. This can be shortsighted. As a market matures. The premise is that the needs of the group can be better serviced by focusing entirely on it. Aging brands such as Adidas. Thus. All segments of a market and all brands in an industry do not necessarily reach maturity at the same time.Focus Strategy The focus strategy concentrates on a narrow segment and within that segment attempts to achieve either a cost advantage or differentiation. However. Thus. however. Because of their narrow market focus. Thus. A primary marketing objective of all competitors in mature markets. a product’s financial success during the mature life-cycle stage depends heavily on the firm’s ability to achieve and sustain a lower delivered cost or some perceived product quality or customer-service superiority. firms pursuing a differentiation-focused strategy may be able to pass higher costs on to customers since close substitute products do not exist. replacement purchases rather than first-time buyers account for the vast majority of that volume. A firm using a focus strategy often enjoys a high degree of customer loyalty. Businesses that survive the shakeout face new challenges as market growth stagnates. is simply to hold their existing customers—to sustain a meaningful competitive advantage that will help ensure the continued satisfaction and loyalty of those customers. Firms that succeed in a focus strategy are able to tailor a broad range of product development strengths to a relatively narrow market segment that they know very well. Johnson’s baby shampoo. success in 16 . and Arm & Hammer baking soda experienced sales revivals in recent years because of creative Marketing Strategies. Some firms tend to passively defend mature products while using the bulk of the revenues produced by those items to develop and aggressively market new products with more growth potential.

an industry leader might attempt to increase market share via aggressive pricing or promotion policies aimed at driving out weaker competitors. changing customer demographics. as Johnson Controls has done in its automotive components businesses. When the market environment in a declining industry is unattractive or a business has a relatively weak competitive position. tastes. by acquiring weaker brands and reducing overhead by eliminating both excess capacity and duplicate marketing programs. the firm may recover more of its investment by selling the business in the early stages of decline rather than later. If few exit barriers exist. and countless other factors affect organizations in ways that managers are often unprepared to handle. Unfortunately. rapid changes in technology.mature markets requires two sets of strategic actions: (1) the development of a well-implemented business strategy to sustain a competitive advantage. technological advances. No organization is immune to risk. however. and loyalty. The key to business risk management is achieving a proper balance of risk 17 . The speed of change. Eventually. The nature and consequences of business risks facing organizations are becoming more complex and substantial. and (2) flexible and creative marketing programs geared to pursue growth or profit opportunities as conditions change in specific product-markets. Alternatively. The earlier the business is sold. a firm might decide to harvest a mature product by maximizing cash flow and profit over the product’s remaining life. customer satisfaction. Management has to decide how much risk is acceptable and to create a control structure to keep those risks within appropriate limits. firms sometimes support dying products too long at the expense of current profitability and the aggressive pursuit of future breadwinners. higher customer expectations. the more uncertain potential buyers are likely to be about the future direction of demand in the industry and thus the more likely that a willing buyer can be found. As a product starts to decline. An appropriate marketing strategy can. increased competition. Or it might try to consolidate the industry. each organization's business risks change constantly. an organization cannot eliminate business risks. produce substantial sales and profits even in a declining market. Moreover. or lifestyles. and development of substitutes result in declining demand for most product forms and brands. managers face the critical question of whether to divest or liquidate the business. Risk is inherent in operating a business or running a program.

if management does not consider environmental changes carefully.and http://www.bia.brandingstrategyinsider. a research institution's strategic management process should be designed to reduce business risk and attain its goals and objectives by implementing an appropriate and effective control environment. including an effective control environment. management can be reasonably sure that it has identified the significant business risks and responded to them appropriately. An organization must expose itself to a certain level of risk to satisfy the expectations of its customers and stakeholders.html#. if an organization has a strong risk-management process. REFRENCES: A balance is achieved when the risk and reward expectations of stakeholders are understood and a system of controls that appropriately responds to the organization's risk exposure is in place. its existing control activities may no longer be adequate or appropriate. If management fails to identify a significant risk or does not adequately consider business risks. Therefore. the organization is unlikely to have in place control activities to manage those risks.UlP1M9IyYlE 18 .htm http://www. However.

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