Strategic Management and Strategic Thinking - Essay Example

? Strategic Management Contrary to popular assumption, strategic management is not a process that is exclusively done at the beginning and end of every other financial session; it is an ongoing process in which the firm is always actively involved. The process involves the development of a mission and vision for the firm which as well as crafting and implementation of various strategies; this is a process that involves both thoughts and action. At certain times in the process, the firm will evaluate its strategies and whenever they fall below expectations appropriate action will be taken to mitigate and correct them. In strategic thinking a firm primarily should concern itself with the answering of three important question, these are; where we are? Where we are headed and how we intend to get there? The first question is vital because by understanding its current position, a firm can define itself in the present tense and thus prepare strategy that can be launched from the position. The second question is in a way a continuation of the first since it can only be practically answered after the first has been determined, where is the firm headed in the market? A firm must interrogate the market and business positions it intends to hold and occupy in the, the firm also needs must consider who its potential target customers are in addition to figuring out the needs it aims to satisfy and fulfill for these customer groups. A firm should also under the question of where we are going; consider what it seeks to achieve in its particular business. After asking and answering the above question, the firm will have established its position and intention, at this point the third question emerges, how are we going to get there? The next consideration of the presentation was the definition of strategy; according to the speaker, a company’s strategy is comprised of the sort of competitive moves and actions business managers engage in in order to successfully run the company. To use a sporting analogy, a strategy can be described as the game plan in which the maneuvers and plans intended to be applied in bringing eventual success are contained (courseonline3000, n.d.). This game plan comprises of information on what sort of company they want to run, the characteristics, expectations of the target customers, and the means by which they will be attracted and maintained. It is in the strategy that the firm’s market position is staked out so it may curve out for itself a niche in its particular industry in the interests of maintaining relevance. The strategy must also indicate the type of operations that management wishes to conduct, the means by which they will be completed successfully, as well as the individuals expected to work on the same. All this is done with the ultimate goal of achieving the organizational objectives and this will depend on what sort of objectives, which should have also been specified in the strategy. Business models are other critical considerations that companies make; a business model addresses the issue of how a company should make money, which is the ultimate objective of majority of firms. In the setting up of a business model, firms must determine whether the business in which they are engaged provides an equitable return in investment. To determine the effectiveness of a particular business model the managers must consider several factors in the business front; first they must consider the revenue that a particular strategy is expected to produce after implementation. Secondly, they should consider the cost involved in forms of structures and resources and compare it with the potential profit margin, finally they must consider if the resulting earning are indicative of a viable strategy and thus practical model. These are important because the resulting revenues and other benefits that follow its implementation will only determine the validity of a model. A business model and strategy work toward the same end; nevertheless, in their structure and definition they are markedly different (courseonline3000, n.d.). Strategy is concerned with the firms competitive initiatives as well a business approaches, ergo, this has to do with how a company is operated as well as its relationship with external and internal stakeholders. On the other hand, a business model has to do with whether the revenues and cost that result from the strategy are demonstrative of the profitability and vitality of the business. Thus, in the long run, the model is largely influenced by the strategy since the viability of the latter is validated by the positive results in the former and when strategy is weak, this will be reflected in the model. Strategies are necessary in companies because they enhance its pro-activeness that in turn is influential in shaping the means by which business is conducted. This is opposed to a reactive company; the latter only changes when it is forced to do so by environmental factors such as market forces or technological advancements. Conversely, a firm with a proactive strategy looks ahead and anticipates situations; with the benefit of hindsight, it can then strategically place itself in a position to exploit future conditions or avoid possible ill effects on their productivity. Such a visionary firm will be aware of the products that customers may require in posterity and either stock up or develop them, this way the firm remains dynamic and stands to increase its relevance and profitability (courseonline3000, n.d.). Another reason why a strategy would be needed would be to unify the efforts of all the employees in the firm into a coordinated unit in order to get the best out of the collective efforts. Without such a strategy in place, there will be disorganization and workers will not have enough coordination, eventually the firm may end up wasting a lot in terms of human resource since the staff will lack harmony. With a good strategy in place, the managers can ensure there is minimal waste of effort and the human resource channels all its effort in the same direction towards similar objectives. Reference courseonline3000. (n.d). Strategic Management. Youtube. Retrieved on 24 March, 2013. From http://www.youtube.com/watch?v=we6qhkaPjR8&feature=youtu.be Read More