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Business Strategy: Theoretical and Contemporary Approaches

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Introduction

Business Strategy: Theoretical and Contemporary Approaches Duygu Seckin Halac Abstract The aim of this study is to understand the business strategy; its background and mostly used forms in today's organizations. At first, the four basic market structure and their strategies are reminded in a nutshell and emphasized on oligopoly as the widely seen market structure. Secondly, the contemporary approaches on business strategies are studied. Importance and the process of business strategy are studied. Understanding of what strategies can be used is in which levels of business considering the corporations strong and weak points and the environmental factors was the biggest benefit gained. Keywords: strategies on oligopoly, business strategy, strategic analysis, corporate level strategies, business level strategies 1. Introduction As more industries become global, business strategy and strategic management is becoming an increasingly important way to keep track of international developments and position the company for long-term competitive advantage. Knowledge is becoming a key asset and a source of competitive advantage. The Internet and new technologies are forcing companies to transform themselves. Strategy is a continuous process. There is no start and finish for the process of strategy. Instead, once up and running, organizations should be continually analyzing and reviewing their strategies and implementing these, along with any changes. Organizations are aware that, as the environment and their market(s) change, strategies become outdated and require alteration. 2. Basic concepts and definitions Market structure: interconnected characteristics of a market such as the number and relative strength of buyers and sellers and degree of collusion among them, level of forms of competition, extent of product differentiation, and ease of entry into and exit from the market. Oligopoly: a market structure that dominated by a small number of firms. Collusion: an agreement among firms to divide the market, set prices, or limit production. Strategy: the direction and scope of an organization over the long-term. SWOT analysis: SWOT is an acronym used to describe the particular Strengths, Weaknesses, Opportunities and Threats that are strategic factors for a specific company. ...read more.

Middle

Strategic Business Units (SBUs) are a modification of the divisional structure. The idea is to decentralize on the basis of strategic elements rather than on the basis of size, product characteristics, and to create horizontal linkages among units previously kept separately. 4.1.2. External Analysis External analysis means analysis of the environment in which the organization is operating. There are many variables within a corporation's natural, societal, and task environments. Natural environment includes physical resources, wildlife, and climate that are inherent part of existence on Earth. The societal environment is mankind's social system that includes general forces that can influence the organization's long-run decisions. These factors affect multiple industries and are economic forces, technological forces, political-legal forces, and sociocultural forces. The task environment includes those groups that directly affect a corporation and in turn, are affected by it: Governments, local communities, suppliers, competitors, customers, creditors, employees, interest groups. A corporation's task environment is the industry within which it operates. Some important variables in societal environment: Economic: GDP trends, interest rates, money supply, inflation rates, unemployment levels, wage/ price controls, energy alternatives, energy availability and cost, disposable and discretionary income, currency markets, global financial systems Technological: Total government and industry spending for R&D, focus of technological efforts, patent protection, new products, internet availability, telecommunication infrastructure Political-legal: Antitrust regulations, environmental protection laws, immigration laws, tax laws, foreign trade regulations, stability of government, attitudes towards foreign companies Sociocultural: Lifestyle changes, career expectations, consumer activism, growth rate of population, age distribution of population, life expectancies, birthrates, pension plans, level of education, living wage, health care The origin of competitive advantage lies in the ability to identify and respond to environmental change well in advance of competition. No firm can successfully monitor all external factors. Choices must be made regarding which factors are important and which are not. Personal values and functional experiences of managers as well as current strategies are likely to bias both their perceptions and interpretations. ...read more.

Conclusion

The readiness of the organization to implement the strategy and its current ability to do so are very important. Resource analysis, cultural and stakeholder analysis are useful tools to ascertain the organization's current position. Formulation of new teams, or reorganization of existing teams, may be also necessary. Additionally, the implementation stage requires there to be key players and leaders with ownership of the new strategy and the workforce must also feel ownership. To monitor the ongoing success of the implementation at various stages, all those involved need to be aware of the key performance criteria, and the manner and timing of their measurement. In most instances, change is managed in stages across the organization. 5. Conclusion In business world, it is getting harder to be successful or to achieve sustainability in an unstable and fast changing global environment. Regardless of the size or the content of the organization, all managers must be well aware of the business strategy in such an environment. At first, organization should understand the environment around them- external and internal. It is important to understand what a corporation is capable of doing and what opportunities they can match to use these capabilities while eliminating the effects of weaknesses and threats. Then, managers need to understand and evaluate the alternative strategies in corporate, business and functional levels. What strategies can be used in which levels of the corporation is also an important point and managers' knowledge and experiences can make a difference in this situations. After analyzing and evaluating the alternatives, they need to choose the best alternative. Once strategies have been chosen, it is time to put them into action. This process might involve changes within the overall culture, structure, and/or management system of the entire organization. Thus, beside theoretical knowledge and technical experience, a manager has to have good communication skills and possibly should be a leader to manage change well and motivate people. After implementing the strategy, performance results are monitored so that actual performance can be compared with desired performance. The resulting information is used to take corrective action and resolve problems. 6. ...read more.

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