Strategic Management

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Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. It gives the organization a sense of its objectives and a sense of how it will achieve these objectives. For Michael Porter, one of the leading strategy gurus, strategy is about achieving competitive advantage through being different. This means offering buyers a unique value, to increase their number and keep them as customers. For example, Southwest Airlines, and Ikea have developed unique, internally consistent, and difficult to imitate systems that have provided them with sustained competitive advantage.. Analysis When the firm has specified its objectives, it starts to analyse…show more content…
Retrenchment, which means, for example, the reduction of labour or the withdrawal of products, can result from a decline in demand or changes in competition. It is usually used to save the company from insolvency and to secure its position in the market through concentrating on its core competencies. Stability, often chosen after rapid growth periods or also in terms of bad market conditions, is used to strengthen an organization�s position and its products in the market. The growth strategy is chosen to extent its position in the market, or to expand in new markets. Growth in terms of products and services can be achieved through fostering market penetration, product/market development or diversification. To explain diversification, the company Honda serves as a good example. The firm diversified forward when they started with producing motorbikes besides their Otto engines, in 1947. In 1963, when Honda started to produce cars additionally, it diversified horizontally. If the firm now started to produce tyres for their vehicles, it would be a backward diversification. In case they started to produce sweets, it would be an unrelated diversification. When the kind and direction of a strategy are clear, this information and its scope have to be clarified. Internally it is done through SMART objectives: Externally it is clarified through the mission statement, which doesn�t intend to make objectives measurable, but is more
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