Tuesday, September 17, 2013

Developing Corporate Strategies

As the market becomes chaotic the need to change the strategic formation models becomes apparent to match this need. Strategic behavior is associated with capital resources and the competencies of the corporation. A paper by EL Namiki in the Ivey Business Journal (2013) helps in furthering the Systemic Strategy Analysis Model (SSAM) of strategic thinking which understands the flows of thought formation within companies in order to analyze a company’s competitive position.

Strategic behavior is seen as a process of developing and enacting choices. Systematic strategic behavior focuses more on the developing and enacting of choices that are in alignment with the structural and environmental constraints of an organization. Strategic business choices, by their nature, are more confined than those enacted by individuals. Proper analysis is needed to define corporate strategy.

Where resources and company attributes meet each other there is a strategy that could be developed to full bloom.  When the attributes and resources change there would be a shift in the overall strategic trajectory. The path would adjust based upon the most advantageous route to achieving objectives. It is possible to map these concepts and draw out possible strategies. Consider the following four concepts when developing a strategy: 

Seeking Concentration: 

Concentration relates to the overall concept of market saturation. When a small amount of firms dominate an industry, it is said to have high concentration. If a large amount of entrepreneurial or boutique firms exist within an industry, there is a low level of concentration. The success of achieving a level of market presence will depend on the ability to meet the challenges of the environment based upon competing companies. 

Seeking Competencies:

Competency is a level of strong and competitive performance in a particular domain. It could be anything that furthers a strategy such as distribution, product design, technology, etc… Organizations seeking to enhance a competency either hire the right people or train them with competitive skills. Successful firms like Google have attracted the right talent to further their strategic competencies.

Seeking Focus:

At times it is necessary for companies to narrow down their efforts and focus on core offerings in order to enhance those things they excel in and remove activities they do not excel in. This may mean selling off brands that do not enhance core competencies or outsourcing internal functions that distract from the core strategy. Improving upon core competencies creates higher levels of competitive advantage. 

End Game:

When a company has maximized profits and a period of low profits sets into product lines or services they should consider an end game. This end game occurs when competitive offerings decline and there is little hope of recovery or the products have lost their market luster. Generally, this is a result of root misalignment between the offerings and current market needs. A strategy should include when to get out of the market and move onto new products and services. 

El Namaki, S. (2013). Strategic thinking for turbulent times. Ivey Business Journal, 77 (4).

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