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Strategy & Management

Strategic Management

The development and implementation of the primary goals and initiatives undertaken by an

organization's managers on behalf of stakeholders, based on consideration of resources and an

assessment of the internal and external environments in which the organization operates, is

referred to in the management field as strategic management.

Strategic management which entails identifying the organization's goals, developing plans and

policies to achieve those goals, and then allocating resources to carry out the plans, gives a

corporation its overall direction. Academic researchers and working managers have developed a

range of models and frameworks to help with strategic decision-making in the context of

complex settings and competitive dynamics. Because strategic management is dynamic, models

could also include a feedback loop to monitor results and direct future planning Michael Porter

names three guiding concepts for strategy:

 Establishing a "exceptional and valuable [market] position"

 Deciding "what not to do" in order to make trade-offs

 Achieving "fit" through coordinating firm operations to advance the selected plan

From a portfolio viewpoint, corporate strategy entails deciding what line of business to

enter. How will we compete in this market is a topic that corporate strategy must address.

Strategic management and operational management are frequently distinguished in

management theory and practice, with operational management being primarily concerned with

increasing efficiency and containing expenses within the parameters established by the

organization's strategy.
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KEY LESSONS:

Strategic management is a tool that can be used by businesses, colleges, nonprofits, and

other organizations to set goals and accomplish them.

Organizations that are flexible may find it simpler to modify their organizational structure

and plans, whereas companies that are rigid may struggle in a changing climate.

A strategic manager can develop strategies for firms to achieve their benchmark goals

and supervise strategic management plans.

Knowledge of Strategic Management:

Strategic management is the term used in the management field to describe the creation

and execution of the main objectives and initiatives undertaken by an organization's managers on

behalf of stakeholders, based on consideration of resources and an assessment of the internal and

external environments in which the organization operates.

A corporation's overall direction is determined by strategic management, which involves

determining the organization's goals, creating plans and policies to achieve those goals, and then

allocating resources to carry out the plans. A variety of models and frameworks have been

established by academic scholars and practicing managers to aid in strategic decision-making in

the context of complex environments and competitive dynamics. Due to the dynamic nature of

strategic management, models might potentially incorporate a feedback loop to track outcomes

and guide future planning. Organizational leaders concentrate on studying the environment

broadly and learning from previous methods as a result of this reality. In order to ensure that the

entire organization is moving forward, future strategies are then developed using the collective
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knowledge, and employee behavior is subsequently directed by it. For these reasons, both an

internal and external perspective is necessary for effective strategic management.

In order to ensure that the organization achieves the objectives outlined in its strategic

management plan, strategic management encompasses both internal and external communication

procedures as well as tracking.

Strategic Management's Five Phases

Strategic management includes the examination of internal and external influences, the

management of resources, and the development of strategies. One of five key phases can be used

by businesses to carry out their strategy.

A business must first establish clear, doable goals. The organization's objectives must

state what it wants to achieve and why. Once the goals have been established, the company may

subsequently identify the targets or the methods for achieving them. At this point, the company

can outline its vision and its objectives, both long-term and short-term.

The ability to assess, grasp, and describe how internal and external elements impact an

organization's operations, goals, and capacity for competition follows. Analytical methods like a

SWOT analysis are helpful at this point.

Based on the results of the study, the firm may then develop its strategy, outlining how it

will achieve its goals. At this stage, the firm will decide on the necessary staff, tools, and

resources, as well as how they will be allocated among various tasks and the performance

standards that will be utilised to assess success. Getting the backing of important stakeholders

and business leaders is also crucial.

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The strategies must now be put into practice. The entire process—from planning to carry

out—implements the strategy. In this phase, the resources are used in line with their designated

roles and duties.

The last stage of strategic management is evaluating the effectiveness of carried out

activities using predefined metrics. The company will also assess whether outdated strategies

need to be swapped out for more successful ones. The company should maintain its tried-and-

true business strategies while keeping an eye on both its internal operations and the external

business environment.

Examples of a good strategic management

For instance, a for-profit technical college wants to increase new student enrollment and

enrolled student graduation rates over the course of the next three years. By making the college

the best value out of the five for-profit technical colleges in the area, the goal is to increase

revenue.

Then, strategic management entails ensuring that the institution has the funds to create

state-of-the-art classrooms and hire the best teachers. The college also invests in its programmes

for marketing, student recruitment, and retention. The management of the college routinely

assesses whether its goals have been achieved.

For instance, a for-profit technical college wants to increase new student enrollment and

enrolled student graduation rates over the course of the next three years. By making the college

the best value out of the five for-profit technical colleges in the area, the goal is to increase

revenue.
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Then, strategic management entails ensuring that the institution has the funds to create

state-of-the-art classrooms and hire the best teachers. The institution also invests in its

programmers for marketing, student recruitment, and retention. The management of the college

routinely assesses whether its goals have been achieved.

The Importance of Strategic Management

The goal of strategic management is to assist a company in finding ways to increase its

level of competitiveness. The most crucial part of planning itself is, therefore, putting strategic

management plans into action. Plans are put into action by setting benchmarks, realigning

financial and human resources, and appointing leadership resources to manage the development,

marketing, and distribution of goods and services.

Strategic management is crucial in business because it enables an organization to identify

areas for operational improvement. They frequently have two options: either they can use an

analytical method to find prospective risks and possibilities, or they can just adhere to broad

rules. An organization may opt to use a prescriptive or descriptive approach to strategic

management depending on the nature of the business. A prescriptive model outlines tactics for

creation and implementation. A descriptive approach, on the other hand, explains how a business

can create these strategies.

What Constitutes Strategic Management's Core Components?

Strategic management cannot be approached in a one-size-fits-all manner. However, a number of

fundamental elements are acknowledged as being important. Setting goals, reviewing

organizational structures and the business environment, developing and implementing strategies,

and monitoring and controlling them are a few of these.

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Strategic concerns differ from findings made earlier in the planning process due to their unique

characteristics.

1) They advocate for an important choice that has to be made at the highest levels of the

neighborhood's public health system and community. 3. They put a lot of emphasis on what will

be achieved, who will gain, and who will provide services.

2) A conflict or tension that has to be resolved is the root of the majority of strategic issues.

Disparities between the current state of capabilities and those necessary to provide the Essential

Services, the roles of the local health agency and other community agencies, the needs of the

community and the resources available to meet those needs, and others may be the root of these

tensions or conflicts.

3) There isn't a single, obvious optimum solution to strategic issues. If there is a simple, quick

solution to an issue, think about finding out why it hasn't been applied yet. More often than not,

these issues will be operational concerns for particular organizational members rather than

strategic issues for the public health system.

4) The strategic issue must be able to be handled by the neighborhood public health system. If

the neighborhood public health system is unable to handle an issue, it may be strategic but not at

the community level. On a national scale, issues like attaining universal healthcare, abolishing

poverty, or curing a contagious disease would be seen as strategic, but few towns would have the

capacity to handle them. How to Recognize Strategic Issues You can use the following

procedures to find strategic concerns.

Tools of strategy for solving issues

Here are my top 6 suggestions for strategy analysis tools:

 SWOT
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The most fundamental type of strategic analysis is the SWOT. Just enumerate the

organization's advantages, threats, and weaknesses.

A SWOT analysis is what?

Strengths, Weaknesses, Opportunities, and Threats are referred to as SWOT.

Of all the strategy analysis tools and methodologies, the SWOT Analysis is unquestionably the

most essential. Additionally, it is the most well-known.

 Value Chain of Porter

A straightforward (graphical) way for identifying and characterizing a company's primary

operations and comprehending how they contribute to value generation is the value chain.

Use Cases of the Porter's Value Chain Analysis:

A straightforward graphical technique for

 Explaining and recognizing a company's primary functions,

 Recognizing the value they offer, and Identifying a company's sources of difference and

competitive advantage
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The illustration below illustrates a typical value chain as initially defined by Porter:

Naturally, this value chain reflects a typical company that deals in tangible commodities.

Manufacturing or distributions are examples. A service organization's value chain could look

entirely different. Consider an Investment Management Value Chain as an illustration.

Finding the processes that best represent each action is crucial for getting the most out of

value chain analysis. Every company should be distinct. Therefore, even at this high level, each

value chain may differ.

 The Strategy Canvas

The book "Blue Ocean Strategy" popularized the Strategy Canvas. It can help you

comprehend how a company sets itself apart from its rivals.

Four simple steps to creating a strategy canvas

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To put it simply, if all of your rivals compete on price, you can decide to develop a

premium brand in order to compete on quality rather than price. Of course, in reality, things are

rarely so straightforward, so you'll need to seek for a special mix of elements rather than just one.

And here is where the Strategy Canvas's visualization technique really shines

An illustration of a Southwest Airlines strategy canvas is shown in the diagram below

(based on an analysis from "Blue Ocean Strategy"). It demonstrates how Southwest Airlines built

out its strategic differentiator by combining the ease, affordability, and lack of fuss of driving

with the quickness and welcoming service of an aircraft. In reality, Southwest was able to

enhance the level of service and speed they provided by eliminating the airline add-ons. I won't

go into further depth here because you can read a lot of case studies on Southwest Airlines.

You may create your own Strategy Canvas in 4 rather easy steps.

1. Identify the rivals

To create a Strategy Canvas, you must first identify your competitors. In actuality, this is

crucial to any kind of strategic thought. You might be able to identify specific competitors by

name depending on the nature of your industry, or, as in the case of the example above, you
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could find it simpler to divide them into fewer semi-homogeneous categories. Regardless of

whether you are currently on the market or not, don't forget to mention your own company.

Always consider the issue from the viewpoint of the consumer when finding rivals. Who

or what else could meet your customers' needs? Southwest Airlines would not have realized that,

in many situations, customers are deciding between flying and other forms of transportation if

they had not done this instead of simply listing the other airlines. If they had not adopted this

wider perspective, it is doubtful that they would have gained the insight that resulted in their very

effective plan.

2. List the competitive reasons.

The next stage is to determine the criteria your clients use to select the goods or services

you are providing. These are the pricing, meals, lounges, seating options, etc. in the

aforementioned scenario.

There are several research techniques you may do, but speaking with your target audience

directly is the simplest method to achieve this. Keep in mind that it's crucial to target customers

who already use your product or service, those who do so but from a rival, and potential

customers who don't now use it but could in the future (especially if your strategy is successful).

Also keep in mind that sometimes individuals are unsure about what they want, so you might

need to be a bit inventive to find out.

3. Assess the opposition

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Drawing the actual chart is the third stage. For each competition or kind of competitor,

draw a line indicating how well they do in relation to each of the attributes that your consumers

value.

Strategy Canvases created on this premise might differ greatly, and if handled effectively,

the resulting debate can be a useful team-building and strategically exercise.

To obtain a more precise and unbiased image, you may question your clients directly by

just speaking with them or by utilizing a range of research approaches.

4. List the ways you distinguish from your competitors.

Your new plan is now ready to be mapped out on the Canvas. The goal is to draw a line

that differs significantly from any rivals' or organizations’ lines. Your competitive differentiator

is that difference, that special combination of competitive characteristics.

Then consider:

Which elements will you intensify?

Southwest Airlines, as an illustration, increased the number of departures.

Which elements will you reduce?

IKEA, for instance, cut back on in-store service.

Which elements will you take out?

For instance, Southwest Airlines did away with in-flight catering and seating options.

Which elements will you include?

For instance, IKEA introduced the option to pick up furniture from the shop the same day

you made the purchase rather of placing an order and then having to wait for production and

delivery.
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Of course, any differentiation won't enough. To maintain your business goals, you must

choose a combination that a sizable portion of your target clients will find appealing. You'll

definitely need to use a variety of different strategy tools from your toolbox to do this.

It takes skill to create a Strategy Canvas that is truly useful, but with a little effort, anyone

can master the art of creating diagrams that are truly perceptive. When you do, they are an

excellent instrument for expressing straightforward yet effective strategic concepts.

4. PESTEL

Making sure you take into account a wide range of potential sources of opportunities and

dangers is made easier by using the PESTEL framework. The letters stand for the firm's

environment's potential and risks in the areas of politics, economy, society, technology, the

environment, and law.

A PESTEL analysis:

An organization's important external risks and opportunities are identified, categorized, and

analyzed using the PESTEL framework, which is a corporate strategy framework.

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The six letters that make up PESTEL stand for the six most frequent categories: P stands

for "political," "economic," "social," "social-and-economic," "technological," "environmental,"

and "legal."

5. Pareto Analysis:

The Pareto Principle states that 80% of earnings are generated by 20% of the items,

services, consumers, or distribution. An effective visual representation for this is a Pareto chart.

However, the accuracy of it is dependent on how trustworthy your cost allocation system is.

The 80:20 rule is another name for the Pareto principle. According to this rule, 20% of

the input results in 80% of the outcome. It may be used in many different types of strategic

analyses.

The most widely used example is that 80% of a company's income come from 20% of its

customers. See For instance, your firm is profitable, but are you? This is closely connected to the

idea that 80% of a company's income come from 20% of its goods or product lines. However,

other uses may also be quite valuable. For instance, Wired Magazine says in The Good Enough

Revolution: When Cheap and Simple is just OK that consumers may attach 80% of a product's

worth to 20% of its features. They claim that just 20% of the functionality in Microsoft Office

programmers are used by the majority of users. They thus increasingly rely on less feature-rich

office programmers like Google Documents. These have different benefits but less features.

Naturally, "80:20" is only a figure of phrase. Any number might be used. They aren't

even required to add up to 100% and aren't constrained by it either. Therefore, it's possible that

15% of the items generate 110% of the revenue. According to this illustration, a 10% loss is

caused by the remaining 85% of the items. (This reduces the total profit to 100% once more.)
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In a Pareto analysis, the value produced (the outputs) is identified and attributed to the inputs. It

is frequently mapped out as follows:

In order to achieve this attribution, good Pareto analysis depends on a cost accounting system,

such as an Activity-Based Costing (ABC) system for data.

A company can use Pareto analysis to make judgments on where to direct its resources

and attention. Finding loss leaders uses it particularly well. These then may be:

I frequently hear that loss leaders must continue to operate merely because they help

cover overhead and fixed expenditures. However, if you take into account that over time, all

expenses are changeable, this argument falls apart. Loss leaders, though, could make sense in

situations where they draw clients who go on to purchase more lucrative goods. It is also helpful

for businesses seeking for a focus point to help them reposition themselves in the market after

losing their way.

6. BCG Matrix
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Any organization with many product or service lines, or multiple consumer segments, can

use the BCG Matrix. Plot each product, service, or market segment's market share vs. its pace of

expansion. Afterward, take into account tactical alternatives based on their relative placement on

the chart.

The Boston Consulting Group is honored in the name of the BCG matrix. It is a

technique for strategy analysis that aids in understanding the strategic possibilities offered across

a variety of different:

Business divisions

 Products

 Services

 Clientele groups

 Channels

The model demonstrates that a portfolio business's component elements are not all

equally strategic. By doing this, it makes it easier to do subtler strategic analysis.

The BCG matrix, in its most basic version, plots each source of value according to:

Its market share, as well as

How quickly that market is expanding.

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Value may come from company divisions, goods, services, client groups, or distribution

networks. In other words, you would select one of these factors, like product, and then create a

comparison chart of all the items the company offers.

A preliminary division into four quadrants can then be made for the resulting portfolio

analysis. The graph on the right illustrates this.

Utilizations and Restrictions of Strategy Tools

In the first technical essay on our new website, we will discuss four well-known strategic

planning tools, including their applications, abuses, and limits. They are all genuine and

important tools, but when used improperly, they may be highly harmful and present a very false

impression.

You must first have a thorough grasp of your line of business in order to be able to design

a sensible and viable plan or strategies. You can discover as you get this insight that you are in

several businesses, each requiring a unique strategy or combination of methods. Further

investigation may reveal that some of these enterprises are at best minor, contribute nothing to

the overall picture, and should thus be disposed.

SWOT analysis is a straightforward and well-known positioning method, so let's start

there. It creates a strong visual representation of the company's status by categorizing aspects and

performing an evaluation (Strengths and Opportunities are positive, Weaknesses and Threats are

negative) However, when employed alone, SWOT analysis can be a little shallow, frequently

prejudiced, and even dangerously incomplete if performed by an unskilled person. As a tool,

SWOT does not rate the variables it discovers or draw conclusions about the consequences of the
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variables it identifies. Ranking the elements and identifying and addressing their consequences

are necessary for SWOT to be effective. E.g. what major trends or themes were found in the

SWOT analysis? Is the company out of balance, responding slowly, or losing its competitive

edge? Do some of the threats target the company's weak points, making it more vulnerable? Are

there any possibilities emerging specifically in regions where the company is particularly strong,

indicating that offensive techniques may be used to excellent effect?

Understanding the external impacts on the business is crucial since the external

environment may have a substantial impact on it. This goes along with knowing where the firm

is today and where it wants to be.

In order to analyze these outside impacts or changes, PEST analysis is useful. The letters

P, E, S, and T stand for political (and regulatory) influences or changes, economic changes,

social (and demographic) changes, and technological advancements. As not all components have

visible effects, PEST analysis needs to be reviewed often. While the political and economic

effects of a sovereign debt crisis are pretty evident, other contributing factors—trends that may

be small right now but gradually gain strength over time—are less obvious.

The five primary forces at play in the immediate market in which your company operates

are examined using Porter's Five Forces analysis since they may have a significant impact on

profitability. These five forces are supplier power, substitutes, buyer power, entrance barriers,

and competitive obstacles. Having an advantage over competitors may result from knowing how

these factors operate.

While each of the aforementioned tools is significant and useful in its own right, when

developing a strategy, their combined use yields the best results. When each tool is used with the

appropriate caution and as a set, the results can be quite striking.

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References

 Hunger, J.D., 2020. Essentials of strategic management.

 Wheelmen, T.L., Hunger, J.D., Hoffman, A.N. and Bam ford, C.E., 2017. Strategic

management and business policy (Vol. 55). Boston: Pearson.

 Booth, S.A., 2015. Crisis management strategy: Competition and change in modern

enterprises. Rutledge.

 Darrow, I.L., 2015. The involvement of middle management in strategy development—

Development and implementation of a foresight-based approach. Technological

Forecasting and Social Change, 101, pp.10-24.

 Punt, A.E., Butterworth, D.S., de Moor, C.L., De Oliveira, J.A. and Haddon, M., 2016.

Management strategy evaluation: best practices. Fish and fisheries, 17(2), pp.303-334.

 Den Hoyer, G., 2011. New public management: A strategy for democratic police reform

in transitioning and developing countries. Policing: An International Journal of Police

Strategies & Management.

 Qian, Y., 2014. Brand management and strategies against counterfeits. Journal of

Economics & Management Strategy, 23(2), pp.317-343.

 Bordoloi, S., Fitzsimmons, J.A. and Fitzsimmons, M.J., 2018. Service management:

operations, strategy, information technology. ed. New York: McGraw-Hill Education.

 Bordoloi, S., Fitzsimmons, J.A. and Fitzsimmons, M.J., 2018. Service management:

operations, strategy, information technology. ed. New York: McGraw-Hill Education.

 White, C., 2017. Strategic management. Bloomsbury Publishing.

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