The paper "Basic Concept of Strategic Management - Virgin Group Organization " is a good example of a business case study. Due to the changing business environment, companies are trying to assess their business situation and performance in order to survive (Frost, 2003). In order to gain a competitive environment, organizations are taking steps to develop new business models and strategies; produce new products and services; expand into new markets and satisfy its customers. To do this, organizational leaders are searching for tools and methods that will enable them to investigate their internal and external environment, their market information, customer needs and preferences, strengths and weaknesses and product costs (Afonina and Chalupsky, 2012).
Value addition and organizational performance are important elements in strategic management research. There is a strong relationship between strategic management tools and value addition. Strategic management has been studied by many scholars through numerous conceptual models (Afonina and Chalupsky, 2012). According to Frost (2003), strategic management and planning are termed as the process that entails the execution of plan and management that is created using comprehensive analysis. Strategic management tools are able to assist organizations to act positively and achieve their future expectations.
Through the use of strategic management tools, companies can analyze their competitive positions and develop strategies that can close the gap between the current position and future plans (Frost, 2003). Companies are being faced with rapid changes in the business environment and therefore, there is an increasing need for strategic management which guarantees survival and competitive advantage. Strategic management enables companies to understand and acknowledge their environment and come up with plans that fit that environment. Using strategic management tools allows businesses to avoid potential challenges and take advantage of many opportunities presented to them (Afonina and Chalupsky, 2012).
Strategic management is often possible through the use of analytical tools such as SWOT Analysis, Porter’ s Five Forces, Gap Analysis, balance score-card, value chain analysis, and Pestle Analysis among others. This paper will first review some strategic management tools and their role in organizations. It will also present the relationship between strategic management tools and value addition. In addition, the paper will describe how the use of strategic management tools and techniques add value to organizations. Basic Concept of Strategic Management Strategy can be termed as the process of developing a unique strategic position in the market.
Good strategies are developed from ideas and initiatives from people in the company. Ideas can also come from people outside the company such as the competitors, suppliers and customers (Afonina and Chalupsky, 2012). Leaders are the ones who bring about strategic management in business. They are able to do this by establishing an organizational environment including culture, performance systems, organizational structure etc.
Leaders establish the values and beliefs that differentiate an organization from the competitors (Afonina and Chalupsky, 2012). Strategic management process entails determining what is to be done to attain business goals and objectives and examining both the organization as well as the competitive environment. It also involves swotting and revising the strategic plan and inaugurating an ideal fit between a business and its environment (Mintzberg et al. , 2009). Strategic management specifies the direction of an organization. There are a number of different frameworks for strategic management. Although there is no right framework, many frameworks go through the same basic phases (Mintzberg et al. , 2009).
They start with analysis or evaluation where there is an understanding of the external as well as the internal environment. The second phase is the strategic formulation. It involves the development of high-level strategy needed for an organization (Hitt, Ireland and Hoskisson, 2001). The third phase involves strategy execution where the chosen strategy is interpreted into action items. The last phase involves evaluation or sustainment where the strategic management issues occur.
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