Devising a Strategy Should Be a Product of Logical and External Analysis, Yet Often Appears to Be a Product of the Power of Stakeholders. Discuss Using Recent Business Examples.

Devising a Strategy Should Be a Product of Logical and External Analysis, Yet Often Appears to Be a Product of the Power of Stakeholders. Discuss Using Recent Business Examples.

  • Submitted By: neither
  • Date Submitted: 02/01/2009 12:27 AM
  • Category: Business
  • Words: 1686
  • Page: 7
  • Views: 1217

The concept of strategic grouping addresses the criticism of Porter’s model where an industry is considered to be too generic to provide a basis for understanding the competitive environment by applying the Five Forces framework. Johnson and Scholes, 2002, p122 define strategic groups as “organisations within an industry with similar strategic characteristics following similar strategies or competing on similar bases.” These firms are not homogeneous within the industry and follow strategies common to the group, but different to firms in other groups in the same industry. An example is a pharmaceutical manufacturer with a unique medication product protected by patent serving a common market using a similar strategy. (Davis, 2005)

Understanding the competitive environment together with current and potential customer needs and wants will determine the success or failure of an organisation. Porter suggests that there are two generic strategies: cost or differentiation. Marketing segmentation identifies similarities and differences between individual and customer groups based on geographic, demographic lifestyle and benefit segmentation. An appreciation of customer values in a market segment and matching needs against the organisation’s capacity to meet those needs, is a critical aspect of determining strategic capability. (Pitt, 1997) The emergence of global firms suggests that traditional models are limited in application and that there is a need for the development of a broader integrative international strategic business model framework. (Ricart et al, 2004)

Strategic capability involves the identification and evaluation of an organisation’s strengths and weaknesses in the functional areas of the business in the context of the external environment analyses. It is typically recorded in a SWOT framework. It represents an understanding of customer’s perceptions of value, the critical success factors through which that value is realised and unique...

Similar Essays