Chapters 4-7 in the book Strategic Management and Business Policy: Toward Global Sustainability by Thomas L. Wheelen and J. David Hunger dwell upon the specifics of company analysis. Starting the discussion in the 4th chapter with specifying the environmental scanning and industry analysis, the authors consider internal scanning as one of the ways of the organizational analysis.
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Then, the authors refer to the strategy formulation discussing the situation analysis and business strategy along with corporate strategy. Each of these strategies highlights many important issues, but some of the problems underlined in the reading are the most important.
Studying about environmental scanning and industry analysis, the problem of defining potential markets in developing nations is one of the main priorities in the sphere. The trigger point is to be considered in order to make sure that the company is ready to enter a new market.
The trigger point is “the time when enough people have enough money to buy what a company has to sell but before competition is established” (Wheelen, & Hunger, 2011, p. 107). Such strategy is used by all companies which have successfully entered the international market, otherwise, the companies failed to perform efficiently.
Further, flexible manufacturing for mass customization was used in order to make sure that the manufacturing is effective. The utilization of the larger and mass production is not effective as flexible one as there are cases when the production rate is to be lowered in order to apply to another strategy or model and increase production. In this case the economies of scope are referred to.
For example, Microsoft Company applies to such mass customization strategy and the company success is obvious (Pollard, Chuo, & Lee, 2008).
Strategy formulation dwells upon several main issues, SWOT analysis, corporate strategy, directional strategy, portfolio analysis, and corporate parenting as the main methods which are to be used in order to improve the company functioning and increase the production and sales.
SWOT analysis also called TOWS Matrix is a specific list of company issues which are to be considered in order to improve the effectiveness of the company performance. Dwelling upon company strengths and weaknesses, it is possible to define its threats and opportunities and further detect the measures which are to be applied to in order to realize company potential.
Corporate strategy is defined as “the choice of direction for a firm as a whole and the management of its business or product portfolio” (Wheelen, & Hunger, 2011, p. 206) and it does not matter whether a small company is considered or a huge corporation. Directional strategy consists of three key issues, growth, stability, or retrenchment.
It is impossible to meet a company which does not strive for these issues, therefore, it may be stated that each company directed at financial benefit applies to directional strategy. Portfolio analysis is one of the ways according to which company may be analyzed in accordance with a particular order.
Corporate parenting is based on the principle of the company resources and capabilities which may be successfully utilized for building business. According to Campbell, Goold, and Alexander, “multibusiness companies create value by influencing — or parenting—the businesses they own.
The best parent companies create more value than any of their rivals would if they owned the same businesses. Those companies have what we call parenting advantage” (in Wheelen, & Hunger, 2011, p. 227).
Pollard, D., Chuo, S., & Lee, B. (2008). Strategies for Mass Customization. Journal of Business & Economics Research, 6(7), 77-86.
Wheelen, T., & Hunger, L. J. D. (2011). Strategic Management and Business Policy: Toward Global Sustainability. London: Pearson College Division.