Strategic Management Tools
TOPIC 2
Give a critical consideration of five strategic management process tools and their contribution to strategic management and strategic thinking.
It has been argued that management needs the resources to create core competencies to develop a strategy that has sustainable competitive advantage (Marti, 2004, p1), so the definition of a strategy as an ‘integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage’ fits this argument. The strategic management process follows the lines of strategy, while also earning above-average returns (Hanson et al, 2008, p4, 25). Strategy, strategic management, and strategic thinking are all important factors that contribute to the reaching of goals, the gaining of competitive advantage, and the successful management of an organisation. There are many different models and tools available to organisations which support decisions by strategic managers; tools that are continuously growing and changing. This essay will give critical consideration of five strategic management process tools: SWOT Analysis, Financial Ratio Analysis, Benchmarking, Core Competencies and Value Chain Analysis; and how these contribute to strategic management and strategic thinking in an organisation.
A SWOT analysis is generally used in decisions about the direction a company is taking. It is a tool also used regularly to develop a strategic plan for an organisation. The major focus of SWOT analysis is to ‘recognise opportunities and avoid threats, while weighing an organisations strengths and weaknesses’ (Morris, 2005, p53). It has also been explained that it ‘achieves correct interaction of business management with its internal and external environment’ (Mayer, 2008, p36) whilst emphasising the monitoring and evaluation of strengths, weaknesses, opportunities and threats in both these environments (Paquin, 2007, p28). Strengths may include a firm having a reputable
Give a critical consideration of five strategic management process tools and their contribution to strategic management and strategic thinking.
It has been argued that management needs the resources to create core competencies to develop a strategy that has sustainable competitive advantage (Marti, 2004, p1), so the definition of a strategy as an ‘integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage’ fits this argument. The strategic management process follows the lines of strategy, while also earning above-average returns (Hanson et al, 2008, p4, 25). Strategy, strategic management, and strategic thinking are all important factors that contribute to the reaching of goals, the gaining of competitive advantage, and the successful management of an organisation. There are many different models and tools available to organisations which support decisions by strategic managers; tools that are continuously growing and changing. This essay will give critical consideration of five strategic management process tools: SWOT Analysis, Financial Ratio Analysis, Benchmarking, Core Competencies and Value Chain Analysis; and how these contribute to strategic management and strategic thinking in an organisation.
A SWOT analysis is generally used in decisions about the direction a company is taking. It is a tool also used regularly to develop a strategic plan for an organisation. The major focus of SWOT analysis is to ‘recognise opportunities and avoid threats, while weighing an organisations strengths and weaknesses’ (Morris, 2005, p53). It has also been explained that it ‘achieves correct interaction of business management with its internal and external environment’ (Mayer, 2008, p36) whilst emphasising the monitoring and evaluation of strengths, weaknesses, opportunities and threats in both these environments (Paquin, 2007, p28). Strengths may include a firm having a reputable
References: Hanson, D., Dowling, Peter J., Hitt, Michael A., Ireland, R. Duane and Hoskisson, Robert E., (2008) Strategic Management: Competitiveness and Globalisation, Asia Pacific Third Edition, Thomas Publishing, South Melbourne, Australia. Horngren et. al., Gitman et. al., and Atrill et. al., (2008) Accounting and Finance for Decision Making, University of Newcastle, Pearson Education Australia Custom Book, Frenchs Forrest, Sydney, NSW. Marti, Jose Maria Viedma (2004). Strategic knowledge benchmarking system (SKBS): a knowledge-based strategic management information system for firms. Journal of Knowledge Management, 8(6), 31-49. Retrieved August 12, 2008, from ABI/INFORM Global database. (Document ID: 769492501). Mayer, P., Vambery, R. (2008) ALIGNING GLOBAL BUSINESS STRATEGY PLANNING MODELS WITH ACCELERATING CHANGE. Journal of Global Business and Technology, 4(1), 31-48. Retrieved August 12, 2008, from ABI/INFORM Global database. (Document ID: 1524926851). Morris, D. (2005) A new tool for strategy analysis: the opportunity model. The Journal of Business Strategy, 26(3), 50-56. Retrieved August 12, 2008, from ABI/INFORM Global database. (Document ID: 850072681). Paquin, J., Koplyay, T. (2007) Force Field Analysis and Strategic Management: A Dynamic Approach, Engineering Management Journal, 19(1), 28-37. Retrieved August 12, 2008, from ABI/INFORM Global database. (Document ID: 1238458261). Stone, R., (2006) Managing Human Resources, First Edition, John Wiley & Sons Ltd, Brisbane, Australia.