Strategic Management of Business - Essay Example

?Running Head: Strategic Management of Business Strategic Management of Business and Gap Analysis Name Date of Submission Strategic Management of Business and Gap Analysis Introduction In the sphere of modern business management, we have to handle a global environment that offers very tough competition. At the corporate level, there are challenges from the rival companies, unpredictability of the market, dynamic consumer behaviour, etc. Moreover, political situation of the twenty-first century involves the working of complex democracies together with dynamic economic trends. The recent wave of economic slowdown has helped us to discern the importance of strategy setting and analysis in the context of corporate governance. Strategic management is thus increasingly involving an analytical approach to understand what a company actually does in relation to what it can potentially do. Executive Summary Gap analysis is the process of exploring certain questions in relation to the company’s present, potential and future performances. The paper will examine analytical instrument by interrelating it with the concepts of the strategic management of business. Strategic management and gap analysis are explained. Interrelations between the two processes are chalked out. Case examples are discussed to elucidate these interrelations. The Analytical and Strategic Approaches Introduction: The following discussion would explain and analyse gap analysis and strategic management. Discussion: In economics and business, gap analysis is a sort of tool which would help a corporation to compare its real time performance with the performance it is potentially capable of. This analytical approach is rather question answer based and from the perspective of the company, the questions are: 1. Where are we now? 2. Where do we want to be? 3. How can we get there? Gap analysis helps the company to obtain critical information so that the frontiers of production probabilities are not compromised (Cummins, 2008). The sphere of strategic management, on the other hand, deals with the principle emergent and intended initiations taken in the context of corporate governance which would involve resource allocation and utilisation, performance enhancement and adjustment with the external environments (Nag, Hambrick and Chen, 2007). Further, strategic management would refine the company affairs at the level of fierce corporate rivalry (Hamel and Prahalad, 1994). Summary: 1. Discussion on gap analysis 2. Discussion on strategic management Relation between Strategic Management and Gap Analysis Introduction: The following section explores that how gap analysis facilitates the implementation of the concepts of strategic management. Discussion: The main points of strategic management are: 1. Process of strategy development 2. Linking strategic capabilities with the external environment 3. Strategically designing the management, production and marketing processes 4. Optimisation of fiscal performance (Johnson, Scholes and Whittington, 2008) Gap analysis helps the process of strategy development by finding out the difference between the company’s present and potential performances. Gap analysis thus facilitates strategic improvement of HR, R&D, logistics, etc. Gap analysis also relates to the company’s behaviour with respect to the external environment by monitoring its performance in the contemporary circumstances. Gap analysis considers all the processes and project life cycles involved in the functionary of the organisation, hence it helps to improve the management, production, marketing and fiscal activities. When the crucial question of quality control arises, benchmarking for the quest of optimal performance becomes mandatory and thus gap analysis becomes supplementary to the strategic management of business. (Camp, 1989) Gap analysis provides the company with a graphical aid that is used to communicate areas where the firm does not meet a benchmark. Process optimisation, which is a key strategic management concept, thus can be directly related to the model of comparative presentation provided by gap analysis (Schniederjans, Schniederjans and Schniederjans, 2005). Gap analysis acts as a judgement tool while implementing the derivations of strategic management. It further consists of the critical techniques like routing and status checking, coupled with business activity monitoring and identifying process errors based on the precise calculation of process cycle times (Jeston and Nelis, 2006). Moreover, gap analysis would provide generalised testing of the risks, benefits, costs and time required to transform the current operations and conform them to the necessities of the service units defined by the strategic management of the business. Emphasis should be positioned on the kind of transformations that offer higher business values. Thus, gap analysis can modify the strategic architecture of the company. Gap analysis finds relation between this strategic architecture with the current architecture of the company. So, positive changes can be brought to the service oriented architecture (SOA) of the company which is imperative to effective business process management (Cummins, 2008). Also, gap analysis can immensely help in enhancing the capabilities of the staff of the company which would further help in the strategic management of the corporate training and development programs by analysing the training impacts and requirements (Franklin, 2006). Summary: The above section explains the relationships between gap analysis and key strategic management concepts like benchmarking, identification of process errors, transformation in strategic architecture and SOA, etc. Case Examples Honda Motor Company: Honda Motor Company is a Japanese establishment which has a stronghold in the US automobile market. It has a major market share in the US. Through strategic decisions, the company surpassed its competitors like Yamaha and Harley Davidson. Gap analysis helped it to evaluate its management processes with respect to the potential competition dynamics. The company has experienced steep learning curves of 75-87 percent that enabled it to achieve real price reductions of around 50 percent more over time. (Grant, and Neupert, 2003) Capital One Services Inc.: It is that specialises in consumer lending, credit card transactions, financial services, etc. Human resource management has been its major concern. With the help of FKA consultancies, it deployed performance gap analysis to strategically train its trainers and staffs so that it could ascertain and override its goals (Fka.com, n.d.). Gap analysis further helped the company to optimise its technological capabilities to retain and upgrade its employees to achieve corporate goals. The recruitment processes were also refined (Romeo, 2003). Conclusion Today, the global economy offers limited options to a company, particularly when the gradients of production, consumer behaviour and corporate governance are steep and challenging. Therefore, optimising quality, productivity and achieving competitive positions are the key activities involved in the strategic management of business (Deming, 1982). Gap analysis helps us to work harder on the concepts of strategic management since its aids us to understand that what a corporation is doing, what it can do and what it should do to obtain its optimal performance. In contemporary business administration, gap analysis can hardly be neglected as far as strategic management of business is concerned. Further, we can conclude that gap analysis would help strategy evaluation most by practically discovering suitability, feasibility and acceptability of the related processes. It appears to be aptly applicable from both industrial and organisational approaches of strategic management. Reference List Camp, R. (1989). Benchmarking: The Search for Industry Best Practices that Lead to Superior Performance. Milwaukee: American Society for Quality Control, Quality Press Cummins, F. (2008). Building the Agile Enterprise: With SOA, BPM and MBM. Massachusetts: Morgan Kaufmann Deming, W.E. (1982). Quality, Productivity and Competitive Position. Cambridge MA: MIT Center for Advanced Engineering Fka.com. (n.d.). Performance Gap Analysis Case Study. Available: http://www.fka.com/case-study-performance-gap-analysis.asp. Last accessed 3 April, 2011 Franklin, M. (2006). Performance Gap Analysis: Tips, Tools and Intelligence for Trainers. Alexandria VA: American Society for Training and Development Grant, R.M. and Neupert, K.E.(2003). Cases in Contemporary Strategy Analysis (3rd ed.). Hobokon: Wiley-Blackwell Hamel, G. and Prahalad, C.K. (1994). Competing for the Future. Boston: Harvard Business School Press Jeston, J. and Nelis, J. (2006). Business Process Management: Practical Guidelines to Successful Implementations. London: Butterworth-Heinemann Johnson, G., Scholes, K. and Whittington, R. (2008). Exploring Corporate Strategy, 8th Ed. Essex: FT Prentice Hall Nag, R., Hambrick, D.C. and Chen, M. (2007). What is strategic management really? Inductive derivation of a consensus definition of the field, Strategic Management Journal, 28 (9), pp. 935-955 Romeo, J. (2003). Answering the call: Capital One taps technology to improve recruiting and retention of call center employees – Special report – Capital One Financial Corp., HR Magazine, 48 (10), pp. 28-33 Schniederjans, M.J., Schniederjans, A.M. and Schniederjans, D.G. (2005). Outsourcing and Insourcing in an International Context. New York: ME Sharpe Read More