Conceptually, a firm’s strategy (what we plan to do) and organizational identity (who we are) are deeply linked. This nexus has drawn more attention recently because of the changing environment of businesses in the last two decades. When a firm’s external environment is unstable, it finds difficulty in coping with it, and therefore, the firm’s […]
Because fierce competition erodes a firm’s competitive advantage, firms should continuously move fast and build new advantages to counteract the advantages of competitors. To survive and prosper in today’s fiercely competitive market environment, firms need effective functional strategies to continuously add value to their offerings and build multiple layers of added value in different areas […]
Strategic management has developed from corporate planning (1960) to shareholder value maximization (1980-2000) to stakeholder value maximization (2000-2023), which also incorporates the sustainability issues of society and the environment. Until the end of the 20th century, the scope of value creation and hence competitive advantage were narrowly defined in terms of profit. Today, companies are […]
Multibusiness firms typically use multidivisional structures that comprise separate businesses, which are organized as strategic business units, divisions, or subsidiaries, and are controlled and coordinated by corporate management to create value. These businesses are arranged according to product groups, geographical locations and markets, or different vertically integrated stages. The primary characteristic of a multibusiness firm […]
During the 1970s, a more turbulent and unpredictable business environment started emerging. Before this, the external environment of businesses used to be stable, which ensured stable industry structures. As today’s business environment has become more unstable, it has moderately, or severely affected the industry structures of many industries, resulting in the unsustainability of the built […]
Collaboration is a key feature of a growing ecosystem today. Collaborative Partners of an ecosystem are mostly business enterprises that collaborate with the company to create customer value. There are two aspects of collaboration: (1) Creating customer value and (2) Building collaborative relationships with ecosystem partners to enhance company value and sustain relationships. In this […]
The 21st century business environment has even become more turbulent and uncertain, and therefore unpredictable. Every firm deals with uncertainty in its lifecycle. Uncertainty impedes the ability of management to make strategic decisions. There are many sources of uncertainty, but the most important ones are related to the firm’s external environment and black swan events. […]
Diversification remains a critical issue for diversified and multi-business companies today. The most important trends of diversified companies in the past two decades have been on transformational change activities including “refocusing on core businesses” and “splitting” to form separate companies-to resolve the strategic issues that will have a powerful effect on improving future business performance. […]
The challenges and uncertainties of the 21st century have continued to change the basic concepts and practice of strategic management. The rapidly changing environment has created environmental uncertainty, which is a threat to strategic managers because it impairs their ability to develop long-range plans and make effective strategic decisions to keep the firm stable with […]
The rapidly changing business environment of businesses has given rise to a new name for the firm’s task environment, the “ecosystem” in some industries, particularly the technology-based. The ecosystem is an expanded name of an organization’s traditional task environment, which is typically the industry within which the firm is operating. The firm’s ecosystem broadly looks […]
The primary purpose of strategic management is to maximize the firm’s performance in the long-run. In financial terms, this means maximizing the enterprise value of the firm by maximizing the net present value of the stream of profits (cash flows) over the long-run. Enterprise value is equal to shareholder value plus the value of the […]
The negative forces of coronavirus (COVID-19) temporarily disrupted normal business activities and paralyzed the forces of market-the demand and supply that made the market economies freeze. The lockdown stagnated the revenues and profits suddenly turned into losses. COVID-19 has caused heavy economic destruction with rapid change in the business environment, resulting in profound shock to […]
A company’s successful innovation outcome doesn’t necessarily result in successful commercialization. When the product progresses from idea generation to the development process into the marketplace is called innovation but can be an unsuccessful one. Kodak developed the Kodak Disc Camera, but it was not commercially successful. To generate profits from innovation your firm should be […]
Innovation, competition, and acquisitions are closely interlinked. Innovation is the only way that has the potential to create an enormous amount of shareholder value. Once the firm profitably grows internally through innovation, it opens many opportunities for it to grow further externally through acquisitions and alliances. Most innovative companies today, such as Google, Apple, 3M, […]
This blog article attempts to describe the complex transition phase of the old and weak 3-state strategic change model in terms of two elements of the new and strong strategic management model: strategy formulation and implementation: which incorporates the portfolio management framework to facilitate and provide clarity to the implementation process. Basically, organizations undergo two […]
In general, all firms have a desire to grow, and, for that reason, they use various growth strategies as they perceive to expand their firm’s activities. Growth can be achieved in several dimensions of corporate strategy: growth in sales, growth in assets (ROA), growth in equity (ROE), and growth in profitability, or some combination of […]
According to the punctuated equilibrium model, organizations evolve through relatively long periods of equilibrium (stability), which then get disrupted by shorter periods of instability to accommodate more fundamental revolutionary change. These revolutionary periods then attempt to re-stabilize the organization into a new equilibrium period. From this perspective, organizations resist change because resistance to change establishes […]
Just as project management is necessary to successfully manage new product development (NPD) efforts, strategic management is an indispensable tool to manage innovation. Strategic management can hold the reins of innovation to give it a purpose and direction to make the innovation outcome successful and profitable. Innovation is an umbrella term that means it is […]
The fundamental purpose of strategic management is to keep the firm in tune (strategic fit) with its unstable, unpredictable, and competitive business environment. Any form of change in the firm’s external environment, including technological change, is a problem for established firms because these firms find difficulties in coping with it. The reason for this is […]
Why do companies engage in innovation? The main reason for this is companies in search of competitive advantage cause them to invest in innovation. However, the answer to this question also depends on how these companies are strategically oriented. Not all strategic types of firms engage in innovation, but there are two general types known […]
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