Strategic management Essay Example | Topics and Well Written Essays - 2000 words - 7

Strategic management - Essay Example Strategic planning helps in formulating the business approach to a context. As shown in figures 1 and 2, it is seen that the strategy stems out of the context which influences the strategy and the actions that lead to a solution on the strategy and finally, provides the results which in turn leads to altering the context. The strategy should get altered based on the change in the context thus altered. Strategies are worked out using various tools. One of the oldest methods involved using the SWOT analysis for bringing out the strengths, weaknesses, opportunities and the Threats perceived by the company and the business2. The strategy would primarily enhance and capitalise on the strengths of the company for tapping the opportunities and to counter the threats perceived while at the same time would offset the weaknesses perceived. This would help the company to realise its objectives of enhancing the profitability of the company. Porter’s Five Forces helped the strategists to model the environment and the business is positioned in it to understand the effect of the environment. This was perceived to have been made up of the five forces that Porter projected. He further qualifies some of the approaches to strategy as generic. There are three types of generic strategies that are used by companies, employing the common economic forces that are in play in the market. These are: Cost Leadership by providing the best cost for a product or a service, product differentiation and thereby commanding higher prices and finally, identifying its own niche products for a specific product-segment thereby monopolising the entire business for that product or at least dominating it. While these strategies help the company to move forward, without a basic strategy the company stutters. As can be seen from the figure 2, the markets are created by companies which fall under any one of the strategies depicted in it, either consciously or otherwise. The perfect competition would