Different Components of Strategy Management

A mission describes what the organization is now; a vision statement describes what the organization would like to become. ” Differentiate between corporate mission and strategic vision by taking corporate illustrations. Corporate mission refers to a long-term commitment to a type of business and a place in the market. It describes the scope of the firm and its dominant emphasis and values, based on a firm‘s history, current management preferences, resources, and distinctive competence

Corporate Mission is the essential purpose of the organization, concerning particularly why it is in existence, the nature of business(es) it is in and the customers it seeks to serve and satisfy A mission statement should be a short and concise statement of goals and priorities. It often focuses on customers, market and business Examples of mission statements: “We are a dynamic, enterprising, and creative university committed to providing an excellent education enriched by our focus on applied research. ” – Coventry University

Strategic vision on the other hand is a short, succinct and inspiring statement of what the organization intends to become and to achieve at some point in the future, often stated in competitive terms Vision is a long term view. It refers to the category of intentions that are broad, all-inclusive and forward-thinking. It is the image that a business must have of its goals before it sets out to reach them. It describes aspirations for the future without specifying the means that will be used to achieve those desired ends A strategic vision describes the route a company intends to take in developing and strengthening its business.

It delineates management’s aspirations for the business, provides a panoramic view of where the company is going, captures the motions of employees and steers them in a common direction. It gives the organization a sense of direction, moulds organizational identity Examples of vision statements: Be the world‘s premier food company, offering nutritious, superior tasting foods to people everywhere. Being the premier food company does not mean being the biggest but it does mean being the best in terms of consumer value, customer service, employee talent, and consistent and predictable growth. H. J. Heinz Company

Provide a global trading platform where practically anyone can trade practically anything. eBay Therefore strategic vision is design oriented while corporate mission is execution oriented. In fact, it is the corporate vision that determines its mission. The vision is bigger picture and future oriented while the mission is more immediately focused on the present. It is the vision that defines the end game and the mission is the road map that will take the company there. 2. Explain the concept of Porter’s generic strategies. Discuss cost leadership strategy, differentiation strategy and focus strategy with examples.

According to Porter, there are three generic strategies to build sustainable competitive Advantage and they are: These three generic strategies are defined along two dimensions: strategic scope and strategic strength. •Strategic scope is a demand-side dimension and looks at the size and composition of the market you intend to target. •Strategic strength is a supply-side dimension and looks at the strength or core competency of the firm. In particular he identified two competencies that he felt were most important: product differentiation and product cost Porter’s three generic strategies are:

This strategy involves attaining, then using the lowest total cost basis as a competitive advantage. It is based on the competence of the organization to produce and market a comparable product more efficiently than its competitors. Here the business works to achieve the lowest production and distribution costs so that it can price lower than competitors and win more market share. Firms pursuing this strategy must be good at engineering, purchasing, manufacturing, and physical distribution; they need less skill in marketing. Texas Instruments uses this strategy.

The problem is that rivals may emerge with still lower costs, hurting a firm that has rested its whole future on cost leadership. Cost leadership can be attained in the following ways: •Reduction of unit costs •Use of cheaper materials. •Increase in productivity. •Achieving economies of scale.This strategy is based using product features or services to distinguish the firm’s offerings from its competitors. It is the competence of the firm to provide unique and superior value to the buyer in terms of product quality, special features or after sales service.

Intel, for instance, differentiates itself through leadership in technology, coming out with new microprocessors at breakneck speed. Seeking to attain the lowest total overall costs relative to service for which customers will pay a premium. In e-business – Internet-based knowledge systems, on-line ordering and customer support. Similarly Mercedes Benz, because of its unique engineering and performance, stands out among other competitors in the motor industry. Differentiation can be achieved in the following ways: •Creation of products/services superior to competitors (e. g. design, performance, reliability). Offering superior after-sales service. •Creating superior supply chain. •Creating a strong brand.

Offering superior product/service packaging.  This strategy focuses on focusing on a narrow market niche and winning a competitive edge by doing a better job than rivals of serving the needs and preferences of buyers comprising the niche Here the business focuses on one or more narrow market segments, getting to know these segments intimately and pursuing either cost leadership or differentiation within the target segment. Airwalk shoes, for instance, came to fame by focusing on the very narrow extreme-sports segment.

Focus strategy uses a cost or differentiation advantage to exploit a particular market segment rather a larger market. In e-business – Chat rooms and discussion boards, targeted web sites. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others. Focus can be achieved in the following ways: •Identifying a suitable distribution channels across markets such as internet, chain stores, mail order catalogues. •Identifying the specific needs, requirements and expectations of those channels.

Identifying a suitable market customer group and its niche market (segment). Identifying the specific needs, requirements and expectations of that group. •Establishing that the specific market niche (segment) is large enough to sustain the business. •Analyzing competition of the niche market. •Producing products/services that meet the specific customer requirements. •Deciding whether to go for a differentiation of cost leadership within this market niche (segment). 3. Discuss basic model of strategic management. Explain four basic elements: Strategic management is a set of managerial decisions and actions an organization undertakes in order to create and sustain competitive advantage.

The Basic model of strategic management consists of four basic elements: •Environmental Scanning Environmental scanning can be defined as ‘the study and interpretation of the political, economic, social and technological events and trends which influence a business, an industry or even a total market’. The factors which need to be considered for environmental scanning are events, trends, issues and expectations of the different interest groups. Since organizations exist within the environment, there is need to be aware of external factors affecting the organization.