The report talks about the strategic management process and generic strategies. It explains the goals, mission, and vision of the firm. In addition, it describes that how the company is using diversification strategy to beat the competitors globally.
Strategic management process
Strategic management may be defined as a process of formulation and implementation of major goals and objectives within the organization. These goals and objectives are decided by the top management of the company. Strategic management provides rights direction to the organization in order to meet the long-term mission and vision of the company. There are four steps involved in the strategic management process which has been discussed below (L?pez-Nicol?s and Mero?o-Cerd?n, 2011).
Environmental scanning: The Company gathers various types of information to accomplish the goals and objectives of the firm. Thus, environmental scanning is conducted by the company. It also helps to evaluate and analyze the macro-environmental factors in the global market.
Strategy formulation: It is the process of deciding the best course of actions to determine the long-term success and growth of the company. After conducting environmental scanning, the company formulates various policies and strategies within the organization.
Strategy implementation: After formulating the policies and strategies, the company needs to execute these strategies and policies in the global market. Strategy implementation includes organizational structure, natural resources, and decision-making process.
Strategy evaluation: It is the final step of the strategic management process. The company must focus on the external environmental factors to beat the competitors in the global market. The firm should also measure the performance of the employees. Now it is assumed that strategic management process is used by the many companies to maximize and increase the revenue and profit and to maintain sustainability within the organization (Wheelen and Hunger, 2011).
Organizational vision, mission, and goals
The organizational mission is the general statement to accomplish the vision of the firm. Vision is made for the long time period and mission is made for short time period. The mission statement is related to the business activities and operations of the company. Further, a vision statement defines the desired and expected future position and image of the company. The mission and vision statement are related to the goals, values, and purposes of the firm. The main aim of the organization is to maximize the revenue and profit of the organisation with maintaining sustainability within the organization (Cady et al, 2011).
Apart from this, organizational goals are the strategic and dynamic objectives of the company. Goals and objectives are measurable and specific. A mission statement is essential to meet the long-term vision of the company. It also helps to make the effective and unique decisions within the organization. It provides a guideline to the shareholders, employees, and leaders in the organization. On the other hand, vision statement provides direction as well as corporate values also. It inspires and motivates the employees for doing work effectively and efficiently. There is a close relationship between a vision statement and mission statement. In addition, goals are considered the plans of the company to attain the profitability and growth of the company. In this way, the organization can expand and explore its trading activities and operations globally (Lee, Barker and Mouasher, 2013).
How the value chain is used to maximize the organizational performance
The value chain is a set of activities to operate and manage the specific industry for delivering valuable and dynamic products and services to the market. The value chain analysis is a technique and tool which is used by the company to analyze and evaluate the internal activities of the firm. It also provides various competitive advantages in the global market. The value chain analysis includes operations, outbound logistics, inbound logistics, services, marketing, and sales. The value chain analysis is the flexible strategy to improve and enhance the efficiency and performance of the employees. It also helps to understand and evaluate the issues and key challenges of the organization. Along with this, it helps to reduce the cost of the company. Apart from this, value chain helps to provide satisfaction to the customers across the world. Through value chain analysis, the company is able to evaluate and identify the strengths and weaknesses of the organization (Merschmann and Thonemann, 2011).
The company is using value chain analysis to build and develop an effective and dynamic relationship with customers across the world. Along with this, it reduces the delivery times of the company and maintains an optimum level of inventory within the organization, Further, it enhances and increases the revenue and profit of the firm. In addition, value chain analysis is used by the company to improve and enhance the performance of the organization as well as employees. It is the effective tool to attain the long-term success and growth within the organization (Seuring and Gold, 2012).
Generic strategies are developed by the Michel porter to gain the competitive benefits in the global market. These strategies are essential in order to attain the mission and vision of the firm. There are three types of generic strategies which include cost leadership, differentiation, and focus strategy. The generic strategies have been discussed below (Tanwar, 2013).
Cost leadership strategy: This strategy is used by the company to gain the competitive benefits in the global market. This strategy is related to the cost of the company. The company evaluates and analyzes the lower cost of the production to gain the long-term growth and success within the organization.
Differentiation strategy: The firm uses differentiation strategy to differentiate the products, goods and services from the competitors across the world. The company selects most appropriate and effective strategy to differentiate the products from the competitors in the global market. The company set the appropriate and suitable prices of the products and services to overcome on the rivalries in the market.
Focus strategy: The organization also uses focus strategy to measure and evaluate the plans, policies, and strategies of the competitors globally. Under this strategy, the company selects a group of segments to meet the needs, requirements, and desires of the customers around the world. Now it is assumed that generic strategies are used by the many companies to beat the competitors in the global market and to increase the profit and revenue of the company (Kumar, Subramanian and Strandholm, 2011).
Related and unrelated diversification
A company uses diversification strategy to improve and enhance the performance and efficiency of the company. Further, the company uses diversification strategy to explore and flourish its business activities and operations globally. The firm uses related and unrelated diversification to improve and enhance the productivity and efficiency of the organization. A related diversification occurs when a business and trade expands and explores its product lines or markets globally. The company sells similar products and provides similar services to the new customers and clients (Boschma and Capone, 2015). For example, a furniture store can flourish and expand its business activities and operations by purchasing another furniture store in the different city. In this way, related diversification is connected with related products and services while unrelated diversification occurs when a trade or business explores and expands its new and unrelated products and services in the global market. Related diversification helps to improve and enhance the return on investment and it increases the revenue and profit of the company. It reduces the costs and investments to enhance the growth and success of the company. It also helps to make the good brand position in the global market. Further, the company achieves the economies of scale within the organization. On the other hand, unrelated diversification helps to manage and allocate the cash flow in the organizations. It also reduces the risks and challenges of the market. In this way, diversification helps to provide cross-cultural training to the employees within the organization (Zhou, 2011).
Advantages and disadvantages of competing in international markets
There are various benefits of the competing in the international markets which have been discussed below (Blocker et al, 2011).
Access to new customers: If the company competes and participates in the international market then it provides various benefits to the customers in the market. It helps to maintain effective and unique contacts with customers in the global market (Nielsen and Nielsen, 2011).
Lowering cost: It is another important benefit of the international market. It helps to reduce the cost of the company. Further, it increases the sales volume of the organization by entering into the international market. It also provides competitive advantages in the global market.
Diversification of the business risk: It also helps to the diversification of the operation and business risks and challenges in the market. In this way, the company is able to beat the competitors across the world. Now it is assumed that international market provides various benefits to the organization.
There are some disadvantages of the competing in the international market which have been discussed below.
Political risk: The political risk affects the business activities and operations of the firm. Therefore, the company needs to focus on the political risk to gain the long-term success and growth in the market.
Economic risk: This type of risk is related to the economic conditions, currency exchange rates and policies of the country. It is the biggest disadvantage of the international market.
Cultural risk: The cultural risk also exists in the global market. Therefore, the company needs to control and overcome on this risk in order to attain the long-term goals and objectives of the firm (Michaelidou, Siamagka, and Christodoulides, 2011.)
On the above discussion, it has been evaluated that strategic management process plays a significant role in each and every company. Further, generic strategies and value chain analysis are used by the company to overcome on the competitors in the market. Diversification also provides benefits to the organization.
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