Strategic management

is a field that deals with the major intended and emergent initiatives taken by general managers on

behalf of owners, involving utilization ( zužitkovanie) of resources, to enhance ( zlepšiť ) the performance of

firms in their external environments.

8.Strategy formation( formovanie stratégie)

• Strategic formation is a combination of three main processes which are as follows :

• Performing a situation analysis, self-evaluation and competitor analysis: both internal and external; both micro-environmental and macro-environmental.

• Concurrent with this assessment, objectives are set. • These objectives should be parallel to a time-line; some are in the

short-term and others on the long-term. • This involves crafting vision statements (long term view of a

possible future), mission statements (the role that the organization gives itself in society), overall corporate objectives (both financial and strategic), strategic business unit objectives (both financial and strategic), and tactical objectives.

8.Strategy evaluation and choice

• An environmental scan will highlight all pertinent aspects that affects an organisation, whether external, sector/industry-based, or internal.

• Such an occurrence will also uncover areas to capitalise on, in addition to areas in which expansion may be unwise.

• These options, once identified, have to be vetted and screened by an organisation.

• In addition to ascertaining the suitability, feasibility and acceptability of an option, the actual modes of progress have to be determined.

The basis of competition

• The basis of competition relates to how an organisation will produce its product offerings, together with the basis as to how it will act within a market structure, and relative to its competitors. Some of these options encompass:

• A differentiation approach, in which a multitude of market segments are served on a mass scale. An example will include the array of products produced by Unilever, or Proctor and Gamble, as both forge many of the world's noted consumer brands serving a variety of market segments.

• A cost-based approach, which often concerns economy pricing. An example may be dollar stores in the United States.

• A focus (or niche) approach. In this paradigm, an organisation would produce items for a niche market, as opposed to a mass market. An example is Aston Martin cars.

Mode of action

• Measuring the effectiveness of the organizational strategy, it's extremely important to conduct a SWOT analysis to figure out the internal strengths and weaknesses, and external opportunities and threats of the entity in business.

• This may require taking certain precautionary measures or even changing the entire strategy.

• In corporate strategy, Johnson, Scholes and Whittington present a model in which strategic options are evaluated against three key success criteria

• Suitability (would it work?)• Feasibility (can it be made to work?)• Acceptability (will they work it?)

Suitability( udržateľnosť,vhodnosť)

• Suitability deals with the overall rationale of the strategy. The key point to consider is whether the strategy would address the key strategic issues underlined by the organisation's strategic position.

• Does it make economic sense?• Would the organization obtain economies of scale or

economies of scope?• Would it be suitable in terms of environment and

capabilities?• Tools that can be used to evaluate suitability include:• Ranking strategic options• Decision trees

Feasibility- vhodnosť

• Feasibility is concerned with whether the resources required to implement the strategy are available, can be developed or obtained. Resources include funding, people, time and information.

• Tools that can be used to evaluate feasibility include:

• cash flow analysis and forecasting• break-even analysis• resource deployment analysis

Acceptability(akceptovanosť)

• Acceptability is concerned with the expectations of the identified stakeholders (mainly shareholders, employees and customers) with the expected performance outcomes, which can be return, risk and stakeholder reactions.

• Return deals with the benefits expected by the stakeholders (financial and non-financial). For example, shareholders would expect the increase of their wealth, employees would expect improvement in their careers and customers would expect better value for money.

• Risk deals with the probability and consequences of failure of a strategy (financial and non-financial).

• Stakeholder reactions deals with anticipating the likely reaction of stakeholders. Shareholders could oppose the issuing of new shares, employees and unions could oppose outsourcing for fear of losing their jobs, customers could have concerns over a merger with regards to quality and support.

• Tools that can be used to evaluate acceptability include:• what-if analysis• stakeholder mapping

The direction of action

• Strategic options may span a number of options, including:• Growth-based (inspired by Igor Ansoff's matrix - market

development, product development, market penetration, diversification)

• Consolidation• Divestment ( rozdelenie, zrušenie)• Harvesting ( krátkodobý zisk pred stahnutím výrobku z trhu)• The exact option depends on the given resources of the firm, in

addition to the nature of products' performance in given industries.

• A generally well-performing organisation may seek to harvest (,i.e. let a product die a natural death in the market) a product, if via portfolio analysis it was performing poorly comparative to others in the market.

These points range from:

• Additionally, the exact means of implementing a strategy needs to be considered. These points range from:

• Strategic alliances• CAPEX• Internal development (,i.e. utilising one's own strategic capability in a

given course of action)• M&A (Mergers and Acquisitions)• The chosen option in this context is dependent on the strategic capabilities

of a firm. • A company may opt for an acquistion (actually buying and absorbing a

smaller firm), if it meant speedy entry into a market or lack of time in internal development.

• A strategic alliance (such as a network, consortium or joint venture) can leverage on mutual skills between companies. Some countries, such as India and China, specifically state that FDI in their countries should be executed via a strategic alliance arrangement.