Strategic planning & management assignment essay writing help: Factors & uses of strategic management
Q?? Factors & uses of strategic management??
Solution::
Introduction
Strategic management is an important process in today’s organizations and requires a good devotion of time and money to make strategic decisions (Harrison and St. John 2009). There are several academic models that are framed for assisting the firms for analysing the marketing condition and situation both at the micro and at the macro level. The essay analyses the importance of academic models for managers in terms of facing challenges and making decisions. Further, Porter’s five force model is selected for analysing its strengths and weaknesses and how the weaknesses can be overcome.
Reasons for why models are so commonly used in strategic management
In the current business scenario it can be seen that the society is evolving rapidly. There are drastic changes in the lifestyles and habits of people in all around the world, as seen 50 years ago. People and businesses are highly influenced by the rapid changes in the technologies. So, strategic management represents that creative part of management that results into the creative thinking. Strategic management is associated with the aims and directions of the organizations which they adopt in order to face the competition. Strategic management takes into account the choice, analysis and implementation of the elements which are termed as the strategic models. Models can be said to be as the simplification of the facts and figures associated with reality and removal of the unnecessary details, which leads to the proper evaluation of the fundamental information’s. There are several varieties of models associated with the strategic management which aids the managers in facing challenges and taking decisions (Kossowski 2007).
Some models aids the managers in effective planning and some helps in analyzing the strategies, some are used for tactics and also organizing of the company’s activities in terms of people and resources and also their models for the effective implementation and execution of the company practices and operations. Managers at the top level are mostly faced with several challenges, and this challenge can be the success of some new item or product, the utilization or implementation of new technology or decision related to the adoption of new materials or aspects related to the growth of new products and services. Each firm can have different objectives, this can be to generate increased profits or develop market share and so on. In order to attain these different objectives the managers needs to take several vital decisions which are mostly influenced by the models adopted at the strategic management level (Narayan 2000).
In this era of internationalization organizations and companies and their managers are faced with the more and more complex challenges like international competition, new emerging markets, technological improvements, economic and political changes and so on. For the purpose of facing such problems and challenges the managers and organizations need to use the models related to strategic management and gather potential information which aids them in effective decision making. Models are also commonly used because the strategic management decisions needs to be highly successful otherwise they may lead to failures and losses and may also affect the organizations in terms of their reputations and long term profitability (Harding, Harding and Long 1998).
Senior managers need to utilize several conceptual models like BCG matrix, Porters Five Force model etc., in order to be efficient particularly in the decision making processes. Strategic management models can be said to be as the mode of the strategic management. As per the strategic models several steps needs to be taken in order to attain the organizational objectives, and different models are adopted by different organizations as per their convenience and usability. So it can be said that the strategic models are commonly used in the strategic management in order to take appropriate decisions which will make the organization to attain its goals (Orcullo 2008).
Factors explaining how models help senior managers deal with the challenges facing them
There are several factors that can help to explain how the models in the strategic management help the managers in facing challenges. There are several goals of the models and each model has a different goal to provide specific information to the managers when used in some specific business condition. The factors have been explained below:
Provide Framework: The main goal of the strategic models is to provide framework to the business which helps in improving the performance of the business. Models are commonly used in the strategic management because they help the managers by providing several important information and data (external and internal) which helps them to analyze and think more strategically and face challenges in an effective and efficient manner. Looking at the external point of view the organizations can use the PESTEL framework model, as this helps the organization in analyzing the external environmental factors associated with the organization and its environment (Davenport, Leibold and Voelpel 2007).
Prediction of future: Strategic management models can be used to predict the future of the industry and the corporate environment the firm is working in and can help the senior managers to take important decisions related to the strategic management. The future can be predicted through use of several models of strategic management such as, SWOT analysis, balanced scorecard, BCG etc. The models can tell the present position of the firm in the industrial market so as to decide which direction it has to take in future, thus facing the challenges presented by the changing flexible and dyna,ic market of the firm (Henry 2008).
Use of models in improving decision-making
Strategic management models help the managers to understand the practical realities that are present behind the decision-making of the organizations. The models are required for answering the question related to strategy, such as what type of products the firm should make, what are the potentially attractive markets that are suitable for the firm to enter, what operations are required to be outsourced and how the competition should be dealt with. Managers have to make critical and crucial decisions regarding the formulation of the strategy and its execution. There are several models in strategic management, such as value chain model, BCG matrix, porter’s fiver forces model, national diamond model, SWOT analysis, etc. (Henry 2008)
With the help of use of these models, the decision making of the firm can be improved. For instance, SWOT is a useful strategic management model that can be used for understanding as well as decision making for all types of situations encountered in business. It can be used for decision making related to the method of sales distribution, opportunities for making an acquisition, decisions related to change of suppliers, outsourcing decision for the service, resource or activity, and analysis of any investment opportunity, taking decisions regarding availability of strategic options such as entering the new market or launching the new product (Karagiannopoulos et al 2005).
The decision making is improved as the evaluation of the position of the company can be done in terms of its range of products and services. Models, such as BCG matrix facilitates the manager to think about the products and services of his company and take decisions related to which investment opportunity to look upon, which product or service should be kept and which should let go. The responsibility of the manager is to search the opportunities that could provide best returns to the company and the company could best allocate its resources so as to maximize the profit in future (Roy 2011).
As the strategic management process has become more and more complex as well as costly. To ease the purpose of mangers in strategic decision making, models of strategic management are used. All the models are distinct but are related to each other. Use of these models improves decision making of the managers and helps them take crucial strategic decisions for the organizations (Ahlstrom and Bruton 2009).
Porter’s Five Forces Model
Five forces of competitive position model developed by Michael Porter provide a simplified perspective for assessment and analysis of competitive position and strength of the corporation in the industry. It is a model for developing an understanding of where the power lies in the business situation. The model is useful for business managers as it helps in understanding the current competitive position of the company and also the strength of the desired position which the company is considering to move into. When business managers have a clear understanding of where the power lies, they can take the advantage of the situation of strength, can well improve the situation of weakness and avoid taking wrong decisions or steps (Griffin 2010).
The five forces analysis model has five important forces which determine and analyses the competitive power in the business industry and the environment the company is working in. The five forces are as follows:
Entry barriers: The threat of new entrants is driven by certain number of factors in the industry and the market, such as absolute cost advantages, government policy, switching costs, brand identity, the economies of scale, distribution access, access to inputs, proprietary products, etc. The new entrants can quickly weaken the position of the existing players in the market if the factors in entry barriers are favourable for them such as low economies of scale, low switching costs for buyers, etc. (Parnell 2003)
Bargaining power of suppliers: It determines how easy it is for suppliers to drive up the prices. The force is driven by the number of suppliers present in every key input, the factor of uniqueness present in the product and services provided by the suppliers, the strength and control of the suppliers over the company, the cost of switching for suppliers, etc. When the number suppliers are less, and the need for suppliers is more, the bargaining power of suppliers becomes high (Parnell 2003).
Bargaining power of buyers: The power of buyers depend on the number of buyers, the significance of each important buyer to the business, their cost of switching, etc. If the business management has to deal with few but powerful buyers, then the latter has the power to dictate terms to the company (Roy 2011).
Competitive rivalry: The degree of rivalry depends on number of factors, such as exit barriers, fixed costs and value added in the long run, industry concentration, differences in products, growth in the industry, switching costs, diversity of rivals, brand identity, etc. All these factors determine the level of competition rivalry in the industry and the market (Parnell 2003).
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