StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...

Strategic Management - Understanding a model - Essay Example

Cite this document
Summary
Strategic Management Customer inserts his/her name Institution’s name Department’s name Date Contents References Appendices 1. PART A 1.1 Introduction The concept of strategy in business has matured in the last few decades…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER97.4% of users find it useful
Strategic Management - Understanding a model
Read Text Preview

Extract of sample "Strategic Management - Understanding a model"

Download file to see previous pages

Strategy has, therefore, been defined as a unifying theme bringing coherence and direction to the organization towards its goals (Grant, 2010). These goals have expanded beyond the traditional realm of profit maximization towards economic value creation, disruptive innovation or techniques as well as considering the social and environmental impact of firms’ activities. Strategy, therefore, aligns stakeholders (shareholders, investors, personnel, suppliers, etc) with respect to organizational goals and facilitates their attainment. 1.2 Porter’s five forces model- History The figure (see Appendix 1) shows that, in the 1950’s and 1960’s, strategic management was focused on corporate planning and growth along with tighter financial controls and budgeting (Grant, 2010).

Medium-term horizons, including 5-year plans, were set and used to develop macro-economic forecasts (Grant, 2010). The market players were relatively independent and were governed primarily by the macro-economic forces, with little regard to the strategy of other players. The 70’s, with the internationalization of economy and events such as surge in oil prices further emphasized macro-economic volatility (Grant, 2010). Strategists approached a more granular level of analysis to find the best direction for the firm.

Porter’s model of the Five Forces highlighted the economic implications on industry structure which put knowledge-based innovation and strategy at the forefront (Ryall, 2013). The model goes beyond the traditional “narrowly” defined view of competition as competing merely for profits to encompass other competitive forces such as suppliers, buyers, substitutes and threat of new entrants in the market (Porter, 2008). The model provides insight into the competitiveness of an industry, demonstrating that not all industries are equally profitable (see Appendix 2).

It is rooted in the notion of creating and maintaining a competitive advantage (Nilsson & Rapp, 2005). Though (corporate) planning remains part of strategic design, the Five Forces model places this exercise in a more realistic industry-specific context. 1.2.2 Porter’s Five Forces Model - Definition 1.2.2.1 New Entrants It is important to consider that the threat of new entrants will depend on barriers to entry, and even barriers to exit as well as the reaction from incumbents. The theory identifies typical barriers to entry as: i.

Economies of scale which result in lower production costs for already established players owing to their large volumes. ii. Significant investment is required for differentiation to override customer loyalty towards already established brands. iii. Capital requirement to build the business (plants, facilities, R&D efforts etc.) or equivalent acquisition of an existing business. iv. Experience in the business as well as patent protection provides a cost advantage to incumbents v. Regulations and laws prescribing business policies that impact costs or result in delay to enter the market (Henry, 2008).

Furthermore, the reaction of incumbents creates additional threat to the shares of newcomers. i. Retaliation ii. Slow growth of industry or over-capacity: The lack of capacity may make it difficult to absorb new entrants. This can occur in several phases of an industry’s cycle. iii. The price conditions must enable the newcomer to be profitable. In this case, the total costs of entry should be lower than the market price

...Download file to see next pages Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Strategic Management - Understanding a model Essay”, n.d.)
Retrieved from https://studentshare.org/management/1494487-strategic-management-understanding-a-model
(Strategic Management - Understanding a Model Essay)
https://studentshare.org/management/1494487-strategic-management-understanding-a-model.
“Strategic Management - Understanding a Model Essay”, n.d. https://studentshare.org/management/1494487-strategic-management-understanding-a-model.
  • Cited: 0 times

CHECK THESE SAMPLES OF Strategic Management - Understanding a model

Economy: Strategic Management Process

The main of writing this paper is to discuss the strategic management process that is followed by a reputed company which in our case is Gillette.... The paper gives a brief overview about strategic management, perspectives given out various researchers and strategic management authorities.... After all these discussions, the process of strategic management followed at Gillette is discussed in detail throwing light on various issues involved in the field of strategic management. strategic management can be defined as the set of decisions and actions resulting in formulation and implementation of strategies designed to achieve the objective of an organization....
15 Pages (3750 words) Essay

Understanding Strategic Management

In this… Effective decision making process must take into account the basic elements of strategic management.... Increasing competition and changing nature of demand are the two prime reasons behind the increasing demand of strategic management process in the contemporary world.... This paper will attempt to assess a company by using strategic management tools and models.... Tesco Plc has been selected for the purpose of strategic management analysis....
9 Pages (2250 words) Essay

Models of Strategic Human Resource Management

What implications does this have for our understanding of the Strategic Human Resource Management field? Strategic human resource management… It recounts how well the human resource management department has been aligned with regards to achieving objectives and goals, and then goes on to meet these Having said that this is not an easy task to begin with, since a great amount of learning is required both by the top management working within the organization and the human resource management department that essentially has to enact pathways and find alternate solutions to meet those very goals and objectives....
8 Pages (2000 words) Essay

Strategic Human Resource Management enhances organisational performance in both good and bad economic times

These activities include and are not limited to hiring of staff, maintaining of the staff,… remunerations, compliance to the set standards, creating and transmitting the organizational culture, making important decisions, management, marketing, and other organizational factors (Townsend and Lee, 2010).... Generally, human resource management concerns itself with the The sensitivity of this department is so significant that no organization can exist in its absence, requires ultimate professionalism, ethical discipline, wide knowledge on human relations, and the drive to success....
11 Pages (2750 words) Essay

Models for Strategic Planning

Porter's Five Forces: a model for Industry Analysis.... The first strategic management model relevant to Apple, Inc.... Apple utilizes this strategic management model to understand whether switching costs for consumers are high or low, which can lead to revenue declines when consumers select competing products (Porter, 2012).... This model of strategic management allows the organizational leadership to examine whether new competitors in this industry will potentially seize market share and also serves as a template to observe the competitive marketing strategies being undertaken by main competitors....
2 Pages (500 words) Essay

Strategic Management- Reinventing Business Model

The implementation of effective business model along with other variables acts as strong determinants for the success of organisations in the current volatile… Business model is a plan, which assists business organisations to survive in the highly competitive environment, keeping in view its resources, structural aspects, customer interfaces and profitability.... It helps the business to create value and increase its In other words, it can be stated that business model helps in recognising the fundamental changes for innovation and deliver value to the people....
12 Pages (3000 words) Coursework

Dunning's Model

In this paper, the strengths of the OLI (ownership, location, internalization) model developed by John Dunning to the study of FDI are appreciated whiles examining the limitations of the model in designing an international corporate strategy for firms.... meanwhile, Douma and Schreuder (2012) noted that as far foreign direct investment (FDI) is the approach to internationalization a company seeks, the eclectic paradigm, also known as the OLI (ownership, location, internalization) model developed by John Dunning is one important framework that provides general paradigm for knowing the determinants of the FDI....
7 Pages (1750 words) Literature review

The Relationship between Business Models, Theories and Techniques

A business model is designed by articulating variables.... Value Proposition model.... According to Amit and Zott (2001), they also have to find the best revenue model to maximize the innovations in the products and services (Amit, R.... he literature that follows is based mostly on the work of Chesbrough and Rosenbloom, which according to Rasmussen (2002) is the only work of quality to date regarding the understanding of business models and how they are, developed (Rasmussen, B....
12 Pages (3000 words) Dissertation
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us