Question: Explaining the Strategic Management Process and how a Corporation can use this Process to Achieve Strategic Competitiveness
The strategic management process refers to a complete set of decisions, obligations, and actions needed for a corporation to attain strategic competitiveness and receive above-average returns (Hitt, Ireland & Hoskisson, 2014). The relevant strategic inputs resulting from analyzes of external and internal environments are essential for effective formulation and implementation of the strategy. In turn, effectual strategic actions are a precondition for the realization of the desired outcomes of strategic competitiveness and above-average returns. Accordingly, the strategic management process is utilized to match the ever-changing market conditions and competitive structure with the corporation’s constantly evolving capabilities, core competencies, and resources (Hitt, et al., 2014). The practical actions, which occur within the context of keenly integrated strategy formulation and implementation actions, bring about the desired strategic outcomes.
A corporation can utilize the strategic management process to attain strategic competitiveness and obtain above average returns. In this regard, the corporation can undertake the analysis of its internal organization and external environment, then formulate and carry out the implementation of a strategy to attain the desired performance level (Hitt, et al., 2014). The reflection of performance is given by the corporation’s performance level of strategic competitiveness and the level to which it obtains above average returns. Indeed, strategic competitiveness is realized when a corporation sets up and undertakes implementation of a value-creating strategy. The above-average returns, in a surplus of what the investors anticipate receiving for other investments having similar risk levels, offer the foundation required to simultaneously meet all the stakeholders’ needs.
The basic nature of competition differs in the present-day competitive landscape. Consequently, the firms that make strategic decisions have to take on a different mentality; one that enables them to learn how to engage in the competition in highly chaotic and turbulent environments, which creates immense uncertainty. The industry and market globalization, and significant and rapid technological advances are the two main factors that lead to the turbulence seen in the competitive landscape. Apparently, corporations utilize two main models to assist in developing their mission and vision and then select at least one strategy with an intention of pursuing strategic competitiveness, as well as above average returns (Hitt, et al., 2014). The main assumption of the I/O model is that the corporation’s external environment has a great influence on the strategy choice more than do the corporation’s internal capabilities, resources, and the core competencies.
Question 2: Comparing and Contrasting of the Analysis that a Company Undertakes to Analyze its Internal versus its External Environment
The internal conditions are several and varied, and these are dependent on the firm, the same way as the external factors in a particular industry. Nevertheless, management possesses some strategic control over how such different internal conditions relate. The attainment of synergy is the process that creates a competitive advantage. Whereas different business organizations have varied internal conditions, it is easier to see these potential traits as generalized classes. A value chain is found to be a common tool utilized in identifying each moving part. Indeed, it is a helpful mind map for the management to fill in during the deriving of internal weaknesses and strengths. In this regard, a value chain encompasses primary activities and support activities, each having its components. The support activities include the firm infrastructure, which is the organizational mission, organizational structure, and hierarch and top management. Moreover, other support activities include human resources management, procurement, and technology. On the other hand, primary activities include the inbound logistics, which involve deriving inputs for the operational process; and outbound logistics, which include warehousing, shipping, and inventorying of the final products. Other primary activities include sales and marketing and service.
On the other hand, the external environment is found to be even more complex and diverse in comparison with the internal environment. In this sense, there several effective models used to measure, discuss, and analyze the external environment including SWOT analysis, Porter’s Five Forces, and PESTEL framework among others. In this line, the focus is put on some general strategic concerns about threats and opportunities, which include markets, rivalry, technology, supplier markets, labor markets, the economy, and the regulatory environment. Whereas there are several other external considerations, which could be taken into account by an individual in the course of the strategic planning process; indeed, this list offers an outline of what has to be put into consideration to minimize missed opportunities or unexpected threats.
Having the external environment and internal value chain in mind, the top management of a particular organization can logically derive strategic principles, which internally leverage strengths, and at the same time capturing opportunities to facilitate the creation of profits, and possibly, competitive advantages.
Question 3: Business Level Strategy
I will help my boss by explaining:
What is a Business-Level Strategy
Available Business-Level Strategies, Business level considerations, and risks, and
Why select a Business Level Strategy
Defining a business-level strategy and Why to Select this Strategy
Business-level strategies represent methods, or plans business organizations utilize to carry out various functions in their operations. Larger corporations normally utilize more business strategies because they have various departments that perform different functions (Business-Level Strategy, 2016). On the other hand, small business organizations may adapt such strategies to their business operations and may assign them to different employees. Corporations normally utilize these strategies to offer guidelines for managers, employees, and owners to follow while working in the organization.
Available Business Level Strategies, Business level considerations, and Risks
There several generic strategies, which are utilized to assist organizations in building a competitive advantage over the competitors in the industry. Moreover, organizations may choose to compete in a focused market or a broad market.
One of the available strategies is cost leadership and in this case, corporations compete for a broad customer base by price. The price is based on the internal efficiency to have a profit margin, which will help to sustain above-average returns and cost to customers so that they can purchase the company’s product or service. The strategy works well when the product or service is standardized. In this regard, the company can offer generic products, which are acceptable to a large number of customers, and can charge the lowest price possible (Business-Level Strategy, 2016). Constant efforts to lower costs about the competitors is required to be a successful cost leader, and this may include minimizing the costs of R&D, service, and sales; maintain strict control over overhead and production costs; and creating state-of-art efficient facilities.
A cost leadership strategy may assist the company to remain profitable even in the presence of new entrants, rivalry, substitute products, buyer’s power, and suppliers’ power. Considering rivalry, there is the likelihood that the competitors will evade a price war because the low-cost corporation will go on earning profits after rivals contest away their profits. Considering customers or buyers, the powerful ones that force businesses to produce commodities or service at lesser revenues may leave the market instead of receiving below average profits; thus, leaving the low-cost firm in a monopoly position. Consequently, the buyers will then low substantial amount of their purchasing power. Moreover, regarding the suppliers, cost leaders can absorb higher price increases before they have to increase the price to the customers. Additionally, about the new entrants, the low-cost leaders facilitate the creation of barriers to new market entry via their constant focus on efficiency and cost reduction. Finally, concerning substitutes, the low-cost leaders have a higher likelihood of lowering costs to attract customers to continue buying their products, purchase patents, and invest in developing substitutes. Apparently, a cost advantage can be obtained by determining and controlling cost and reconfiguring the value chain as required. The risks involved in employing the cost leadership strategy include imitation, tunnel vision, and technology.
Differentiation Strategy
Under this strategy, the value is offered to customers via unique characteristics and features of the product of a company instead of offering the lowest price. Notably, this is carried out through improved customer service, high-quality features, image management, rapid product innovation, and advanced technology features among other measures. The companies that employ this strategy effectively can remain profitable even when the Porter's Five Forces tend to be unattractive. For instance, where there is a rivalry, brand loyalty implies that customers will become less sensitive to the price increases provided the company can meet the customers' needs. Regarding suppliers, since differentiators engage in charging a premium price, they are capable of affording to absorb increased costs, and the customers have the willingness to pay more too. Moreover, about the new entrants, loyalty offers a tough to overcome and concerning substitutes, brand loyalty assists in combating substitute products. The risks associated with employing a differentiation strategy include loss of value, imitation, and uniqueness.
Focused Strategies
Focused low-cost strategy
Business corporations do not just compete on price; they as well choose a small market segment to which they offer commodities and services.
Focused Differentiation
In this case, firms do not just compete on differentiation; they as well choose a small market segment to offer commodities and services.
Apparently, focused strategies are aimed at meeting the needs of a certain client segment. The companies that employ these strategies are capable of serving smaller segments in a better way in comparison with the competitors that have a broader customer base. Indeed, this is particularly true when the special need makes it hard for the industry-wide firms to satisfy the need needs of such customer group. However, the risks involved in utilizing the focused strategies are that the segment may turn out to be of interest to the wide market firms, and the market segment may be out focused by the competitors (Business-Level Strategy, 2016).
Integrated Low Cost/Differentiation Strategy
Ostensibly, this is a new strategy, which may turn out to be popular while there is an increase in the global competition. A business organization that utilizes this strategy may realize improvement in their capacity to learn new technologies and skills, adaptability to the environmental changes, and more efficiently engage in leveraging the core competencies across the business units and the product lines that ought to allow the organization create products having differentiated features at a reduced cost.
Question 4: Five Forces Model of Competition
Porter’s Five Forces refers to a tool for comprehending where power is within a particular business situation. Indeed, it is useful since it assists one to recognize both the strength of the company’s present competitive point and the strength that is being considered to move into. The Five Force Model analysis makes an assumption that there are five significant forces, which determine the competitive power in a business situation (Porter’s Five Forces, 2016). They include:
Supplier Power: In this, one assesses how easy it is for the suppliers to increase prices. Apparently, this is motivated by the number of suppliers of every key input, the product uniqueness, their control and strength over the company, and the cost of changing from one to another. The smaller the supplier selections the company has, the more it requires the assistance these of suppliers, the more stronger the suppliers are.
Buyer Power: Here the company asks how easy it is for the customers to drive down prices. Notably, this is driven by the number of customers or buyers, the significance of each customer to the business, the cost to them shifting from the company’s products to those of the competitors. In case, the company deals with a smaller number of powerful buyers, and then they are normally capable of dictating terms to the company.
Competitive Rivalry: Here, what is imperative is the number and ability of the competitors. In case there are many competitors, then the company will most probably have minimal power in the situation since the buyers and suppliers will go to the competitors if they do not get a favorable deal from the company. Conversely, in case the competitors are unable to do what the company does, then it can always have great strength.
The Threat of Substitution: Here, this is affected by the capability of the customers to obtain a different way of doing what the company does. In case the substitution is viable and easy, then the company’s power is weakened.
The Threat of New Entrants: The company’s power is as well affected by the capability of competitors entering the market. In case it costs less money or time to enter the market, then the company’s power can be weakened(Porter’s Five Forces, 2016).
Bonus Question: SWOT Analysis of Under Armour
Explanations
Strengths
Runaway Growth: The company has set up quite a track record beginning from the time it went public about ten years ago when its sales were below three hundred million dollars. In the course of this period, the company’s profits have increased at the rate of over twenty percent per year and its top line has increased beyond three billion dollars.
Trendy Advertising: two kinds of these marketing agreements, which have brought in huge returns of late, encompass one with Jordan Spieth and one with Stephen Curry. Indeed, such advertising collaborations, together with fresh digital and social campaigns are assisting the company to ensure maintenance of its “cool” factor with the influential consumers belonging to the young generation.
Weaknesses
Heavy investment spending: The heavy spending can curb the company in the future. Notably, this has not been the case with this company. However, the company ought to be capable of collecting invaluable data on the habits of the customers and their preferences and fine-tune its advertisement efforts to increase their market share from the competitors.
Opportunities
Direct-to-consumer distribution: whereas this company has been earning its stripes within the local wholesale market, it has been increasing its retail presence in the course of the recent years. Indeed, this has majorly involved opening of the factory outlet shops, which allowed the organization to clear its inventory position and extend to the untapped suburban and the rural United States markets. However, e-commerce is now turning out to be more significant to the company's direct-to-consumer strategy.
Overseas expansion: with the company expanding at an intense pace, it is continually looking for ways to expand its addressable market to ensure continual success. Accordingly, it needs to move to the overseas markets, and that is the reason for it to build out its factory outlets network.
Threats
Nike: Nike could exercise its power in several ways, starting from outbidding it for the endorsement deals to securing less costly plants within the emerging markets. Therefore, the company will be required to remain innovative in its approach.
Poor endorsement decisions: Making the prediction of the future sports stars is difficult; thus, it could be expected that there would be decline to the mean in the course of time.
References
Business-Level Strategy, (2016). Retrieved February 22, 2016. From, http://www.albany.edu/faculty/es8949/bmgt481/lecture4.html
Hitt, M. A. Ireland D, & Hoskisson R. E.. (2014). Strategic Management: Concepts: Competitiveness and Globalization> New York, NY: Cengage Learning.
Porter’s Five Forces, (2016). Retrieved February 22, 2016. From, https://www.mindtools.com/pages/article/newTMC_08.htm
