6.

STRATEGIC MANAGEMENT

6.1 MEANING OF CORPORATE STRATEGY, TACTICS AND STRATEGIC MANAGEMENT

CORPORATE STRATEGY

Is a long term plan of action for the whole organisation designed to achieve a particular goal.

It is a future plan, based on an assessment of the company’s current position and external
environment, containing key business objectives and decisions needed to achieve them.

 Successful business will have a vision and ultimate goal.

 Its strategy will be a clear plan and set of policies that should push it towards achieving this
vision.
 A corporate strategy asks the big question. Which markets and products do we want to be
in?
 A corporate strategy also makes big decisions e.g. Can we expand from manufacturing
operations into retailing?
 All businesses need a corporate strategy to provide integration, direction and focus.

FACTORS THAT INFLUENCE A CORPORATE STRATEGY

 RESOURCES AVAILABLE
All business resources are finite.
Scarce resources force firms to choose strategies to pursue.
A strategy to launch a new product nation-wide might have to be scaled down because of
lack of resources.
 OTHER STRENGTHS OF THE BUSINESS
It’s wiser to apply the firm’s strengths when devising future strategies.
A long term plan that takes the business away from a proven field of operation may require
new skills and expertise which the business might not have.
Expansion might be achieved if low performing areas are sold off. This way the firm
concentrates on its current successes.
 COMPETITIVE ENVIRONMENT
Competitors’ actions are a major constraint or limit on business strategy.
Innovations by competitors may be difficult to copy or better.
All businesses operate in a competitive environment to a greater or lesser extent.
 OBJECTIVES
Increasing shareholders’ wealth in the short term might not be best served by investing in
extensive research and development with a payback into the future.

MEANING OF TACTIC

The short term policy or decision aimed at resolving a particular problem or meeting a specific part
of the overall strategy

Tactics are methods a business uses to carry out a strategy.

Tactics provide a means by which a strategy is implemented. They can be altered.