STRATEGIC MANAGEMENT

MODELS OF STRATEGY

The major models outline the process of what strategy is and how it should be developed. The
first, the industrial organization model. This traditional model formed the basis of strategic
management throught the 1980. The industrial organization model argues that the primary determinant
of an organizations strategy should be the external environment in which the organization operates
made by managers. Second, major model is the resource based model, sometimes referred to as the
resource based view of the firm. The resource based model argues that the organizations resources and
capabilities, rather than environmental conditions, should be the basis for organizational decisions.

THE PROCESS OF STRATEGIC MANAGEMENT

1 : mission statement

The first stage of strategic management is for the organization to establish or examine, if it
currentlt has one, its mission statement. Virtually all organization have a mission statement that explain
is very simple terms the organizations purpose and reason for existence. Mission statement are usually
very broad and generally limited to n more than a couple sentences. Although the statement appears to
be simple, it is often very difficult to construct because it serves as the foundation for everything that
the organization does.

2 : analysis of environment

Upon establishing a mission statement, the next step is to analyze the external environment in
which the organization operates consistent with the industrial organization model of strategic
management. Decision makers need to analyze a variety of different components of the external
organization, identify key players within those domains and be very cognizant of both threats and
opportunities within the environment.

3 : organization self-assesment

Once organization has scanned its external environment and identified any threats and
opportunities,it then to the third stage of strategic management: asseing the internal environment of
the organization.

Resource : financial resource can significantly affect an organizations competitive advantage. An

organization that has the ability to generate internal funds and or borrow significant sums is able to
convert these funds into other assets. Viatually all components of an organizations business can be
purchased, so the presence or absence of financial resource canhave a significant impact on an
organizations performance
Management systems : in assessing culture, an organization needs to understand the core values and
philosophies that guide its day to day activities. Many aspects of culture are converts and not cleary
articulated but are rather assumptions that individuals in the organization make about the company.

4 : establishing goals and objectives

Once the organization has established and articulated its mission, assessed its external
environtement and identified internal resource and management systems that affect its performance, it
is then ready to establish its goals and objective for the next period. Goals should be specific and
measureable in fact, at the same time they are established, decision makers should also identify how
performance toward these goals will be measured and evaluate. In the planning process, measurement
of goals is often overlooked. It serves little purpose to set goals and subsequently have no means to
measure performance toward them.

5 : setting strategy

once goals have been defined, an organization is then ready todetermine its strategy. Strategy,
very simple, is how the organization intends to achieve its goals. The means it will use, the courses of
action. It will take, and how it will generally operate and compete constitude the organizations strategy.
The close involvement of the HR function throught all stage of strategic management is essential for the
success of both planning and implementation efforts. The value of and unique contributions which the
HR function makes to strategic decision is outlined.

CORPORATE STRATEGIC

Different types of organization strategies require different types of HR programs. In essence

there are three different generic organization strategic and each would require a significantly different
approach to managing people.

The first strategies is growth. Growth can allow an organization to reap the benefits of
economies of scale, to enhance its position in the industry vis--vis its competitors. And the provide
more opportunities for professional development and advancement to its employees. Growth can be
persued internally or externally. Growth can be achieved internally by futher penetrating existing
markets, developing new markets or developing new product or service to sell in existing and or new
market.

The second strategic HR issue involves the fact that mergers and acquisitions usually result in
the dismissal of employees. Critical decisions will need to be made conserving who is retained and who
is let go and a well developed retention program should be developed that is cognizant of all legal
obligations to organization might have.

The third type of overall strategy is a turnaround or retrenchment strategy. Here, there
organization decides to downsize or streamline its operations in an attempt to fortify its basic
competency. Decisions makers may see the environment as offering far more threats than opportunities
and the organizations weakness as exceeding its strengths.
BUSINESS UNIT STRATEGIES

The first of these business unit strategies is cost leadership. An organization pursuing this
strategy attemptd to increase it efficiency, cut cost and pass the savings on the consumer. It assumes
that the price will significantlt affect customer demand. It also assumes that consumers are more price
sensitive than brand loyal or in other words, they see the product or service of each organization as
being nondistinguishable. Suave has successfully utilizied this strategy in the shampoo market. Knowing
that a large segment of consumers are price sensitive in shampoo purchase decisions has allowed Suave
to compete quite successfully in a very competitive industry.

The second business unit strategy is differentiation. An organization pursuing this strategy
distinguishes its product or service from those of competitiors or, at least, attempts to make consumers
perceive that there are differences. This allows the organization to demand a premium price over the
price charged by competitiors and attempts to gain the loyalty of consumers toward a particular brand.
Nike has successfully utilized this strategy to gain tremendous loyalty among its customers. Whether
there are actual or perceived performance benefits for athletes or some status identification with the
brand name, many consumers will not wear any other brand of athletic footwear.

The third business unit strategy is a focus strategy. An organization pursuing the strategy
realizes that different segment of the market have different needs and attempts to satisfy one particular
group. For example, this might involve a restaurant that targets families, is cloathing store that targets
larger individuals or a retail business that targets a particular ethnic group.