Q. 4 Justify the role of Environment Scanning Strategic management process.
Course: Management Strategies in Educational Institutions
Course Code 8615
Topics
- Environment Scanning
- Role of Environment Scanning
- Strategic management process.
- Benefits of Strategic Decisions
- Concept of SWOT analysis in strategic management
Answer:
Strategic decisions are the decisions
that are concerned with the whole environment in which the firm operates the entire
resources and the people who form the company and the interface between the
two.
Benefits of Strategic Decisions
Strategic decisions have major
resource propositions for an organization. These decisions may be concerned
with possessing new resources, organizing others or reallocating others. Strategic
decisions deal with harmonizing organizational resource capabilities with the
threats and opportunities.
Strategic decisions deal with the
range of organizational activities. It is all about what they want the
organization to be like and to be about. Strategic decisions involve a change
of a major kind since an organization operates in an ever-changing environment. Strategic
decisions are complex in nature.
Strategic decisions are at the topmost level, are uncertain as they deal with the future, and involve a lot of
risk. Strategic decisions are different from administrative and operational
decisions. Administrative decisions are routine decisions that help or rather
facilitate strategic decisions or operational decisions.
Operational decisions are technical
decisions that help the execution of strategic decisions. Reducing cost is a
strategic decision which is achieved through the operational decision of reducing
the number of employees and how we carry out these reductions will be an administrative decision.
Concept of SWOT analysis in strategic management:
SWOT can be done by one person or a
group of members who are directly responsible for the situation assessment in
the company. Basic Swot analysis is done fairly easily and comprises only a few steps:
Step 1. Listing the firm’s key strengths and
weaknesses
Step 2. Identifying opportunities and
threats
Strengths and Weaknesses
Strengths and weaknesses are the
factors of the firm’s internal environment. When looking for strengths, ask
what you do better or have more valuable than your competitors have? In case
of the weaknesses, ask
What could you improve and at least catch up with your
competitors?
Where to look for them?
Some strengths or weaknesses can be
recognized instantly without deeper studying of the organization. But usually, the process is harder and
managers have to look into the firm’s:
Resources: land, equipment, knowledge, brand
equity, intellectual property, etc. Core competencies Capabilities
Functional
areas:
management, operations, marketing, finances, human resources, and R&D Organizational
culture Value chain activities
Strength or weakness?
Often, a company’s internal factors are
seen as both, strengths and weaknesses, at the same time. It is also hard to tell
if a characteristic is a strength (weakness) or not. For example, a firm’s
organizational structure can be a strength, a weakness, or neither! In such cases,
you should rely on:
Clear
definition. Very often
factors that are described too broadly may fit both strengths and weaknesses.
For example, “brand image” might be a weakness if the company has poor brand
image. However, it can also be a strength if the company has the most valuable
brand in the market, valued at $100 billion.
Therefore, it is easier to identify
if a factor is a strength or a weakness when it’s defined precisely. Benchmarking.
The key emphasis in doing swot is to identify the factors that are the
strengths or weaknesses in comparison to the competitors. For example, a 17%
profit margin would be an excellent margin for many firms in most industries
and it would be considered a strength. But what if the average profit margin
of your competitors is 20%? The company’s 17% profit margin would be
considered as a weakness. VRIO framework. A resource can be seen as a strength
if it exhibits VRIO (valuable, rare, and cannot be imitated) Framework
characteristics. Otherwise, it doesn’t provide any strategic advantage for the
company.
Opportunities and threats
Opportunities and threats are the external uncontrollable factors that usually
appear or arise due to the changes in the macro environment, industry or competitors’
actions. Opportunities represent the external situations that bring a
competitive advantage if seized upon. Threats may damage your company so you
would better avoid or defend against them.
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