Business Environment: PEST Analysis & Porter’s Five Forces
The Economic and Social Business Environment
A company is an open system that is related to the economic environment and social context in which it operates. Therefore, it is affected by variations that occur around them, such as changes in social customs or economic status. The study of external factors affecting the company begins by distinguishing between the generic environment and the specific environment, or closest to the organization. The generic environment is determined by the social and
Read MoreStrategic Management: Definition, Process, and Implementation
Strategic Management: Definition
Strategic management is the process where managers establish the long-term direction of an organization, set specific performance objectives, develop strategies to achieve these objectives considering all relevant internal and external circumstances, and undertake to execute the chosen action plans. The modern definition includes the analysis, decisions, and actions an organization undertakes to create and sustain competitive advantages.
Key Attributes of Strategic
Read MoreStrategic Business Units: Analysis, Management, and Environment
Strategic Business Units
Strategic Business Units (SBUs) are sets of activities that are sufficiently self-contained to formulate a separate competitive strategy. They are characterized by heterogeneity and different environments per activity.
Phases of Strategic Management
The phases of strategic management include strategic analysis, formulation, and implementation.
Responsibility: Top management has specific duties, including guiding the process and obtaining resources.
Rationality in Decision-Making
The
Read MoreBusiness Strategy: Understanding Strategic Fit, VRIO, and Porter’s Diamond
What is a Strategy?
Strategy is “the dynamics of the firm’s relation with its environment for which the necessary actions are taken to achieve its goals and/or to increase performance by means of the rational use of resources”.
Reasons for Strategic Failure
- A poor analysis or diagnosis of the problem: Due to the complexity and uncertainty associated with strategic decisions, the limited rationality of the people making the decisions may lead to a wrong diagnosis or to the failure to identify