The Corporate Strategy Model

The embodied outline ModelUnderstanding the strategicalalalal position is concerned with identifying the impact on schema of the orthogonal environment, an establishments strategic capability and the expectations and go through with(predicate) of stakeholders. The sort of questions this raises ar central to incoming strategies.The Environment Environment plays an weighty role in descriptoring up the strategies and how it affects the organisation strategies and goals tone out for the opportunities and threats from the outer world. thus it is very(prenominal) important to evaluate the environmental impacts on the face.The capabilities Capabilities depends upon the resources and dealnces within the organization. whiz port of thinking round the strategic capability of an organization is to turn over its strengths and weaknesses. Look for the summation competences and USPs which the competitors give scram difficult to imitate.Purpose The study(ip) influence s of stakeholder expectations is organizations sterns. Purpose is summarized in an organisations imaging, mission and shelters. This is important since it clarifies who should the organization serve and how should it work. this reflects the merged social responsibilities and ethics.Culture These influences directly either on organizational, sectoral or national.Corporate GovernanceCorporate Governance is concerned with the structures and systems of control by which managers atomic number 18 held account suitable to those who act upon believe legitimate stake in an organization. (4) in that respect atomic number 18 more than than roughly opposite reason which has made its presence an important fuck for the organization. Out of which the trio master(prenominal) reasons ar as followsThe separation of monomania and anxiety control which sum that the organization works with hierarchy or within the chain of governance. This chain fundamentally re put forwards those groups that influence an organization by dint of their involvement in either ownership or management of an organization.S push asidedals by the somatic wipe out increased a lot of overt deliberate about diametric air divisionies in the governance chain should interact and influence apiece new(prenominal). Most nonable here is the likenessship amidst sh beholders and the boards of logical argumentes as well as relationship amid brass or humans funding bodies and public sector organizations.Increased accountability to wider Stakeholder sidelines has in any case total to be increasingly advocated in particular the argument that thrones wish to be more visibly accountable and responsive , not only to owners and managers in the governance chain but to wider social interest.Governance Structurestrategic PurposeSocial responsibility and ethicsStakeholder expectationsFigure 4.0 Influences on strategic purpose (4)The governance chain explains terminately the roles an d relationships of varied groups which argon present in the governance of an organization. The chain is very simple to lowstand it is like like a family tree. It has shargonholders, family members, managers and a board. It is a large and publicly quoted organization with more investors layers as well.Hence good unified governance tolerate be achieved only if it is an embedded part of corporate life part of the DNA of the organisation, its internal processes and the substance it makes information available externally.In many countries nigh companies argon run mostly for the benefit of the sh atomic number 18holders, the rightful owners. scarce there is another model, where companies ar run for the benefit of other satisfying groupings as well such(prenominal) as customers, the general public or employees. This is the stakeholder model.Choosing a board for each of these models or virtuallything in between requires stack with different backgrounds and outlooks. The foll owing table compares the shareholder and stakeholder modelsShareholdersStakeholdersMaximize shareholder set and look after shareholder interestsLook after all stakeholder interests, in particular publicSeek goodability and efficiencyLook for survival, long circumstance growth, and stabilityHard-nosed and mercantileLess concerned with profit than nurse for m oneyA Stakeholders mapping endure be utilise fittingly to understand the stakeholders influence. Stakeholder mapping can define his expectations and power and helps in soul political priorities. It emphasizes the immenseness of deuce issuesInterest of the stakeholder group on organizations purposes and pickaxe of strategiesPower of stakeholders to actually do itThey are described in a quadrant of four different types based on take of interest and their power, as followsNon Profit OrganizationsA non-profit organization is an organization which does not dole out its surplus funds to owners or shareholders, but instea d uses them to help watch its goals. Examples of NPOs include charities (i.e. charitable organizations), lot unions, and public arts organizations. Most governments and government agencies meet this definition, but in most countries they are considered a crystalize type of organization and not counted as NPOs. They are in most countries exempt from income and suitablety valuateation.Profit OrganizationsAn organization is a social array which pursues collective goals, controls its own accomplishment, and has a boundary separating it from its environment. It is a strain which has a primary goal of making profit and a proposed goal such as helping the environment.Differences between Profit and Non-profit OrganizationOwnership is the quantitative digression between for- and not-for-profit organizations. For-profit organizations can be privately owned and whitethorn re-distribute taxable wealth to employees and shareholders. By contrast, not-for-profit organizations do not devo ur owners. They have controlling members or boards, but these bulk cannot sell their shares to others or in person benefit in any taxable style.While they are able to earn a profit, more accurately called a surplus, such hire must be retained by the organization for its self-preservation, expansion and future plans. Earnings may not benefit individuals or stake-holders. While about non-profit organizations put substantial funds into hiring and rewarding their internal corporate leadership, middle-management force-out and workers, others employ unpaid volunteers and purge executives may work for no compensation. However, since the posthumous 1980s there has been a growing consensus that nonprofit organizations can achieve their corporate targets more effectively by using approximately of the same methods veritable in for-profit enterprises. These include effective internal management, ensuring accountability for results, and monitoring the performance of different divisio ns or projects in order to interrupt benefit from their peachy and workers. Those require satisfied management and that, in turn, begins with the organizations missionThere are a classification of perspectives, models and approaches used in strategic cookery. The way that a strategic plan is give riseed depends on the nature of the organizations leadership, last of the organization, complexness of the organizations environment, size of the organization, expertise of planners, etc. For example, there are a variety of strategic planning models, including goals-based, issues-based, organic, scenario (some would assert that scenario planning is more of a technique than model), etc. Goals-based planning is probably the most common and starts with focus on the organizations mission (and vision and/or ranges), goals to work toward the mission, strategies to achieve the goals, and action planning (who will do what and by when). Issues-based strategic planning often starts by examin ing issues facing the organization, strategies to address those issues and action plans. Organic strategic planning capacity start by articulating the organizations vision and pass judgments, and then action plans to achieve the vision while adhering to those values. Some planners prefer a particular approach to planning, eg, grateful inquiry. Some plans are scoped to one year, many to three years, and some to tail fin to ten years into the future. Some plans include only top- train information and no action plans. Some plans are five to eight pages long, while others can be considerably longer.For-profit and nonprofit communication channel plans have many standardisedities. For that reason, nonprofit personnel would benefit from reading the links in the section above, For-Profit argumentation Planning. Some of the terms are different, but in most display cases they can readily be translated into words more commonly used in the nonprofit sector. For example, balance sheet is what nonprofit call a narration of financial position, profit and loss statement (or income statement) is essentially the same as a statement of financial activities, and so on.One of the get a line difference between a for profit and a non profit plan is the merchandising section. In a for profit agate line, the served customers are mostly those who come through the revenues needed to cover expenses and continue operations. For a non profit, often the served constituents do not provide this sustaining funding, and it must be sought from a third party donors. This means the marting plan must describe both how the organization will drop dead its services to its service target market and how it will communicate its need for funding to its funding target market. This means detailing these two separate marketing messages and two strategies for marketing. Another key difference is the non profit part of the line of products plan. Financial plans for a non profit do not have to s how net profit, and, if they do, there must be some explanation of what those retained earnings will be used for. They cannot be distributed as dividends, as the organization is technically owned by the public and not by the directors or board. However, profits can be stack away for the purposes of creating an endowment or capital fund for future expenditures. An accountant should be consulted for any decisions of this nature. world(prenominal) dimensions of strategic business management and planning issue globose is one of the key visions of most of the organizations. Choosing orbiculateization increases the option for the organizations assert of outputs or services and how to manage across the borders. Through international scheme framework it set outs achievable in a better way. International system as the core theme, depends upon two things, the external environment and organizational capabilities. If you see the visualise 6.0 it focuses more on internationalisation drivers and on the capabilities side it emphasises on international and national sources of good.Figure 6.0 International dodging framework internationalisation driversMarket selectionSources of competitory advantageMode of entryInternational strategy(4)Market DriversSimilar customer needs international customers mobile marketingInternationalisation DriversFigure 7.0 Internalisation DriversInternational StrategiesCost Drivers outmatch economicCountry-specific differencesFavorable logistics establishment DriversTrade PoliciesTechnical StandardsHost Government Policies agonistic DriversInterdependence between countriesCompetitors spheric strategies(4)Market globalization driversThere is a general belief that several markets are converging around the world. There are several reasons for this. First, the convergence of Gross National proceeds (GNP) per capita in the commenceed world is leading to a convergence in markets sensitive to wealth and train of income such as passenge r cars, picture sets, and computers.Second, there is evidence to suggest that in some industries, customers tastes, perceptions, and buying behaviours are converging, and that the world is moving towards a single global market that is basically Western and, more specifically, North American. In a landmark expression titled The globalization of markets Levitt (1983) predicted that globalization drivers such as forward-looking technology would lead to homogenization of consumer desires and needs across the world. He argued that this would happen because generally consumers would prefer standard products of high gear quality and low price to more customized but higher(prenominal)-priced products.Third, in the quest to build a global crack and troupe image, transnational unfalterings are increasingly favouring a global calibration of marketing and publicize efforts. This does not mean identical marketing and advertising campaigns, but the use of similar themes that send the sa me message across the world. Recent learnings in all-inclusivecast media, particularly direct-broadcast satellite and international media, are making this more possible. CNN, for example, broadcasts standard adverts around the world.Cost globalization drivers some(prenominal) key cost drivers may come into play in ascertain an industry globalization level. One key agent is global eggshell leaf economies. That is, the costs of producing a particular product or service are often subject to economies or dis-economies of scale. Generally, economies of scale arise when a product or a process can be performed more tattily at great volume than at less(prenominal)er volume. This is often the case when the product or service is standardized hence it becomes hard for multinational steadfastlys to differentiate themselves, and cost becomes key in achieving and sustaining a private-enterprise(a) advantage. Producing different products for different countries leads to higher cost per u nit. This is because multinational firms serving countries with separate products may not be able to reach the most economic scale of production for each countrys unique product. Multinational firms could reduce the cost by using common parts and components produced in different countries.Another factor is sourcing efficiencies. Global sourcing efficiencies may push multinational firms towards a global strategy. The prices of key resources used in the production process have a unanimous impact on the cost of the product or service, the cost of inputs depends on the bargaining power of the firm with their suppliers. For example, large firms purchasing large volumes have more clout with their suppliers than their small rivals. Hewlett-Packard (HP) is a good example. In the past, country-level subsidiaries used to solicit bids for amends coverage independently. Each subsidiary chose the local provider who bid less than the competition. However, HP now belongs to a global insurer-insu red pocket billiards which provides rebates based on business volume.In addition, as noted earlier, some countries provide a cost advantage because of low cost of mad material, low cost of labour, or low cost of transport because of location. thusly multinational firms locate their activities in different countries to benefit from these advantages.Further, in sectors where expat cost is low, closeness to customers is not important, and urgency to distribute the product is low, multinational firms tend to concentrate their production in large plants producing large-scale products. Finally, high cost of product development drives multinational firms to focus on core products that have universal appeal to control cost.Government globalization driversGovernments have different policies for different industries. While (as discussed above) the general trend is lower trade barriers and less regulation, for a few sectors trade barriers are prohibitive and super regulated by governments .In addition to trade barriers and regulations, technical standards are becoming similar around the world. For example, several countries have accepted new international accounting norms and standards. In Europe, the International Accounting Standards (IAS) are apace becoming the norm. This will allow direct cross-border comparison of financial statements, and hurry communication between subsidiaries and the centre. Companies like Nokia, the Allianz group, and Novartis are working to bring about a convergence of US accounting standards with IAS.Competitive driversBecause of tight interlinks between key world markets, intense competition across countries, and the continuous increase in the number of global competitors, multinational firms are adopting a globally centred rather than nationally centred strategy. According to George Yip, the increase in interactions between competitors from different countries requires a globally integrated strategy to monitor moves by competitors in different countries. He notes that by pursuing a global strategy, competitors bring in competitive interdependence among countries. This interdependence forces multinational firms to engagein competitive battles and to subsidize attacks in different countries. Cross-subsidization is only possible if the multinational firm has a global strategy that monitors competitors centrally rather than on a country-by-country basis. Globalized competitors drive industries to adopt a global strategy. Yip noted that when major competitors, eespecial(a)ly first movers, use a global strategy to inaugurate customers to global products, late movers adopt the same strategy so as to achieve economies of scale or scope and other benefits associated with adopting a global strategy. Last, the ability to transfer competitive advantage globally drives multinationals to adopt a global strategy. For example, IKEA succeeded in transferring its locally developed advantage to a global market. Conversely, secto rs where the competitive advantage is locally rooted and hard to transfer across countries, multinationals tend to adopt an international strategy rather than a global one. (8)strategic ManagementStrategic Management is a term which underlines the importance of managers with regards to the company strategy. Strategy needs to be defined by the people especially the managers who also implement them. Strategic Management involves a greater scope than that of any one area of operational management. It is characterised in way it makes easy for the managers to make decision and judgement based on the preparation of difficult issues. Corporate strategy is defined as the identification of the purpose of the organization and the plans and actions to achieve that purpose. Corporate strategy consist of two main elements corporate level strategy and business level strategy .See figure 7.0At Corporate train All the decisions need to be taken over what business the company is in or should be i n. The culture and leadership of the organization are also important at this broad general level. Corporate strategy is the pattern of major objectives, purpose or goals and essential policies or plans for achieving those goals, stated in such a way as to define what business the company is in or be in and the kind of company it is or be. (9)At byplay direct corporate strategy is more alarmed with the competing for customers, generating value from the resources and the underlying prescript of the sustainable competitive advantages of those resources over rival companies.Figure 8.0 The essence of corporate strategyAt the individual business levelHow do we complete prosperously? What is our sustainable competitive advantage?How can we acquaint?Who are our customers?What value do we add?At the general corporate levelWhat business are we in?What business we should be in?What business our basic directions for the future?What is our culture and leadership style?What is our attitude to strategic change? What should it be? What is the purpose of the organization? And what are our strategies to achieve this?(10)The three main areas of strategyAt both the levels of corporate strategy any organization has to manage its strategies in three main areasOrganizations internal resources outside(a) environment within the area of organization operatesOrganizations ability to add value to its organizations process.Resources StrategyResources of any organization includes human resource skills, investors and the capital. Organizations need to build a good strategies to optimise the use of the resources. In particular, it is essential to check over the sustainable competitive advantage that will allow the organization to withstand and prosper against competition.Environmental strategyEnvironment encompasses all the aspect external to the organization itself not only the economic and political circumstances, which depends place to place but competitors, customers and supplie rs, who may vary widely around the world, but also competitors, customers are particularly important here. Hence organizations therefore needs to develop corporate strategies that are best suited to their strengths and weakness in relation to the environment in which they operate.Adding ValueApart from environment and resources organizations still need to add value to the supplies brought into the organization. For long term survival, an organization take their supplies mischievously and then deliver its output to its customers.The main purpose of corporate strategy is to make the organization create and add vital values to make sure the organization adapts the changes and continue to add value in future. gist areas of Corporate StrategyThere are three core areas of corporate strategy are strategic analysis, strategy development and strategy implementation.Strategic analysis The organization, its mission and objectives have to be examined and faild. Corporate strategy provides val ue for the people involved in the organization, its stakeholders but its the managers who decide the objectives of the organization. They also analyse the resources and examine the objectives as well as the relationship with the environment.Strategy development A strategy options has to be developed and then the right has to be selected. To be successful, the strategy is build upon a particular skills of the organization and the special relationship that it has or can develop with the other outside suppliers, customers, distributors and government.Strategy implementation The selected options now has to be implemented and the organization will find many other difficulties in terms of motivation, power relationships, government negotiations, company acquisitions and many other matters.Hierarchical Characteristics of StrategyStrategy can be formulated on three different levelsCorporate levelBusiness unit levelFunctional or Operational level,While strategy may be about competing and sur viving as a rum, one can argue that products, not corporations compete, and products are developed by business units. The role or the corporation then is to manage its business units and products so that each is competitive and so that each continues to corporate purposes.While the corporation must manage its portfolio of businesses to grow and survive, the success of a diversified firm depends upon its ability to manage each of its product lines, While there is no single competition to Textron, we can talk about the competitors and strategy of each of its business units. In the finance business segment, for example, the chief rivals ate major banks providing commercial financing. Many matagers consider the business level to be the proper focus for strategic planning.Corporate Level StrategyCorporate level strategy fundamentally is concerned with the selection of businesses in which the company should compete and with the development and coordination of that portfolio of businesses. It is concerned withReach Defining the Issues that are corporate responsibilities this expertness include identifying the overall goals of the corporation. The types of businesses In which the corporation should be involved and the way in which businesses will be integrated and managed .Competitive Contact delineate where in the corporation competition is to be localized. Take the case of insurance In the mid-1990s, Aetna as a corporation was clearly identified with its commercial and property casualty insurance products.Managing Activities and Business Interrelationships Corporate strategy seeks to develop synergies by sharing and coordinating staff and other resources across business units. investing financial units across business unit to complement other corporate business unit.Management Practices Corporations decide how business units are to be governed through direct Corporate intervention (centralization) or through more or less autonomous government (decentralization) that relies on persuasions and rewards.Corporations are liable for creating value through their businesses. They do so by managing their portfolio of businesses. ensuring that the businesses are successful over the long-term. developing business units. and sometimes ensuring that each business is matched with others in the portfolio.Business Level StrategyA strategic business unit may be a division, product line, or other profit centre that can be planned independently from the other business units of the firm.At the business unit level. the strategic issues are less about the coordination of operating units and more about developing and sustaining a compititive advantage for the goods and services that are produced. At the business level the strategy reflexion phase deals withpositioning the business against rivalsanticipating changes in demand and technologies and adjusting the strategy to admit theminf1uencing the nature of competition through strategic actions such as upen ded integration and through political actions such as lobbying.Functional Level StrategyThe functional level of the organization is the level of the operating divisions and departments. The strategic issues at the functional level are related to business processes and the value chain. Functional level strategies in marketing, finance, operations, human resources and RD involve the development and coordination of resources through which business unit level strategies can be executed expeditiously and effectively.Functional units of an organization are involved in higher level strategies by providing input into the business unit level and corporate level strategy such as providing information on resources and capabilities on which the higher level strategies can be based.Figure 9.0 Levels of Strategy(10)Global StrategiesGlobal strategies have been deliberately pursued in some industries to integrate cosmopolitan strategy. Essentially, strategy is centralised for the whole world, wit h an integrated network of production and market positions in all the leading countries on a broadly similar platform.The need for strategic business management planning can be easily understood by the porters diamond model.The diamond model is an stinting model developed by Michael Porter in his book The Competitive Advantage of Nations, where he published his theory of why particular industries become competitive in particular locations.The phenomena that are analysed are classified into half-dozen broad factors incorporated into the Porter diamond, which has become a key dent for the analysis of competitivenessFactor conditions are human resources, physical resources, experience resources, capital resources and infrastructure. Specialized resources are often specific for an industry and important for its competitiveness. Specific resources can be created to compensate for factor disadvantages.Demand conditions in the home market can help companies create a competitive advantag e, when sophisticated home market buyers pressure firms to innovate faster and to create more advanced products that those of competitors.related and supporting industries can produce inputs which are important for foundation and internationalization. These industries provide cost-effective inputs, but they also get into in the upgrading process, thus stimulating other companies in the chain to innovate. devoted strategy, structure and aspiration constitutes the fourth determinant of competitiveness. The way in which companies are created, set goals and are managed is important for success. But the presence of intense rivalry in the home base is also important it creates pressure to innovate in order to upgrade competitiveness.Government can influence each of the above four determinants of competitiveness. Clearly government can influence the lend conditions of key production factors, demand conditions in the home market, and competition between firms. Government interventions c an occur at local, regional, national or supranational level.Chance events are occurrences that are outside of control of a firm. They are important because they create discontinuities in which some gain competitive positions and some lose.The Porter thesis is that these factors interact with each other to create conditions where innovation and improved competitiveness occurs. (11)Figure 10.0 Porters Diamond ModelGovernmentRelated andsupporting industriesDemand ConditionsFactor Conditions(11)ConclusionNo nonprofit entrepreneur should launch prior to completing a strategic business management planning. This is where entrepreneurs perform the well-known SWOT analysis to determine the Strengths, Weaknesses, Opportunities and Threats (SWOT) associated with their nonprofit business proposition. Strengths and weaknesses identify factors that are under their control, such as what they do better or worse than the competition. Opportunities and threats are external or not under their contro l. For example, an opportunity may be a new foundation looking to fund nonprofit organizations within a specific time frame. A threat may be the lack of philanthropic donations due to a recent tax increase or the reduction of the nonprofit tax deduction.Many nonprofits fail because they fail to complete their SWOT strategic analysis.The strategic planning process depends on the nature and needs of the organization and the its adjacent external environment. For example, planning should be carried out frequently in an organization whose products and services are in an industry that is changing rapidly . In this situation, planning might be carried out once or even twice a year and done in a very comprehensive and detailed fashion (that is, with attention to mission, vision, values, environmental scan, issues, goals, strategies, objectives, responsibilities, time lines, budgets, etc). On the other hand, if the organization has been around for many years and is in a fairly stable marke tplace, then plann