The story of Nintendo’s decline and the raise of Sony’s Play station illustrates the importance of strategic planning. Managers at Sony formulated and implement strategies that have made Play station to be the best player in the video console business while Nintendo’s, managers failed to respond to increased competition and changing customer expectation. Satoru Iwata is analysing the situation and considering strategies that can ignite growth and revive the declining company.
Every company is concerned with strategy. Japan’s Fuji Photo Film Company developed a strategy of being a low cost provider to compete with Kodak. Fuji’s relentless internal cost cutting enabled the company to offer customers lower prices and gradually again market share over the giant US firm, McDonald’s devised a new strategy of downsizing its menu items in response to changes in the environment. Supersize French fries and drinks were eliminated to counter public accusation that the fast food icon was responsible for Americans’ expanding waistlines and growing health problems. In the auto industry, PSA Peugot Citrocin SA adopted a strategy of being a fierce product innovator coming out with 25 new models between the 1999 to 2002. Strategic blunders can hurt a company. Consider Mattel, which has suffered in recent years by losing sight of its core business and trying to compete as a maker of computer games.
Managers, at Mattel, McDonald’s Fuji and Peugeot are all involved in strategic management. They are finding ways to respond to competitors cope, with difficult environmental changes customer needs and effectively use available resources. Research has shown that strategic thinking and planning positively affects a firm’s performance and financial success . Strategic planning has taken on new importance in today’s world of globalization deregulation, advancing technology and hanging demographic and lifestyles. Managers are responsible for positioning their organizations for success in a world that is constantly changing. Today’s top companies thrive by changing the rules of an industry their advantage or by creating entirely new industries. For example, when Lindsay Owens Jones was running L’Oreal’s US division in the early 1980s he was told by colleagues that European brands like Lancome could not compete with the established US brands. Owens Jones refused to accept that, his strategies and decisions changed the whole face of US’s cosmetic counter. Today as CEO, Owens Jones, is aggressively promoting L’Oreal brands globally gaining huge market share in Asia, Africa and other parts of the world.
In this article we focus on the topic of strategic management. First we define components of strategic management and then discuss a model of the strategic management process. Next we examine several models of strategy formulation. Finally, we discuss the tools managers use to implement their strategic plans.
An overview of the types of goals and plans that the organizations use. We will explore strategic management, which is considered one specific type of planning. Strategic planning for profit business organizations typically pertains to competitive actions in the market place. In not-for-profit organizations such as the Red Cross, strategic planning pertains to events in the external environment. The final responsibility for the strategy rests with top managers and the chief executive. For an organization’s success the CEO must be actively involved in making the tough choices and trade offs that define support strategies. However, senior executives at such companies as General Electric, 3M and Johnson & Johnson ask middle and low level managers to think strategically.
Some companies are also finding ways to get front line workers involved in strategic thinking and planning. Strategic thinking means to take the long term view and to see the picture including the organization and the competitive environment and to consider how they fit together. Understanding the strategy concept, the levels of strategy formulation versus implementation is an important start towards strategic thinking.
Source: Strategic Management