Strategıc Management (ENG) — Ünite 6 Soru-Cevap

The strategy selection process is a process that can help the continuation of the firm’s lives in the future by covering all the activities of the firms.

It is the stage where the company collects information from the internal environment, external environment, business environment, and primary competitor analysis.

"W" represents weakness. The weakness of the firm is the factors that cause it to fall behind in the competition and decrease its performance. Weaknesses are areas that need improvement or development. A weak brand, lack of capital, lack the resources, being new to the industry, bad location, and the high turnover rate can be regarded as weaknesses. For example, the lack of organizational culture that makes a firm innovative is a weakness. Because of the absence of an organizational climate that supports innovativeness negatively affects the competitiveness of the firm.

ST strategies, on the other hand, use the firm’s strength to deal with external threats. An example of an ST strategy is that a firm with a strong capital structure lowers prices to beat its new competitor. Thanks to its strong capital structure, the firm can put its competitor under price pressure by reducing its profit margin. In this way, it can eliminate the threat by forcing the opponent to withdraw from the market.

SO strategies are suitable for using the strengths of the firm to take advantage of opportunities. Managers, in particular, do not want to miss opportunities in their environment. A firm that wishes to grow, increase its profitability, or want to increase its market value should take advantage of the opportunities. To be successful in new investments and new markets, the firm should use its strengths effectively. The most common strength of firms is their core competencies. Firms should use what they do best on other business opportunities. Opportunities will provide firms with a competitive advantage and increase their profitability. For example, the white goods industry is expanding in India, as in many developing countries. Arçelik, a Turkish white goods firm, having experience in many different countries, entered the Indian market by forming a joint venture with an Indian firm. Arçelik used the knowledge of doing business in the white goods sector to capitalize on the opportunity and implemented a SO strategy.

WO strategies aim to eliminate weaknesses and make use of opportunities. Firms intend to maximize opportunities while minimizing their weaknesses. For example, a firm operating in the retailing sector may not have a good web infrastructure, which may be the weakness of the firm. At the same time, this firm may want to take advantage of e-commerce opportunities. In this case, it is a WO strategy for the firm to establish a new web infrastructure and receive professional consultancy. Thanks to this strategy, the firm can both develop its weaknesses and benefit from the opportunity.

WT strategies aim to minimize weaknesses and threats. Strategies to overcome them at the same time are developed by considering weaknesses and threats. For example, a firm with a weak brand value may need to compete with firms with stronger brand value in the same market. e rival firm with strong brand value is a threat, while the weak brand value of the firm is weakness. In this case, the firm can increase its marketing activities, which will increase its brand value and recognition. is a strategy that the firm will implement is an example of a WT strategy.

BCG matrix is an analytical management tool for firms to allocate resources in their portfolio correctly.

The purpose of the BCG matrix is to minimize the costs of the decisions taken and make the right investments in the right firm.

Units that have a relatively low market share in a slow-growing market are dogs. These units, in general, do neither profit nor loss. Units in this area are unlikely to generate cash ow in the future. If the investment is required to maintain the share of a dog, it may be better to divest it and reallocate funds to a star or question mark. In practice, they may absorb cash because of the investment required to hold their position. Berefore, they are unattractive in the long run.

Stars: They are the units with a relatively high market share in fast-growing markets. These units are likely to generate cash flows in the future and increase in asset value. Stars require high investment to maintain growth rates. When the market growth slows down, the stars turn into cash cows. ere is also the risk of turning into dogs if they lose their market share. The primary strategy recommended for the stars is growth.

Cash Cows: If a product or unit has a high market share in a slow-growing market, it is called a cash cow. These units generally provide high cash. Firms want to have this product or unit because of their cash-generating features. e primary purpose is to transfer the cash ow from here to a product with high growth potential. Since these products provide constant cash ow, they are likened to the milked cow continuously. ey demand little investment and they give a lot of cash ow in return. Cash cows do not invest much in the future as their markets do not grow. It is mostly aimed at maintaining its current status. A stagnant strategy is generally followed for these products.

Question Marks: Units operating in markets with high growth rates and low market shares are defined as question marks. Question marks have the potential to grow and acquire market share and become stars. If the growth rate of the market decreases in the future, they have the potential to become cash cows. In case the market shrinks and they cannot increase their relative market shares, they will turn into dogs. Various alternative scenarios and investments in these units will shape their future situations according to the strategies developed. These are the units that should be analyzed well when investing in these units. Generally, a growth strategy is recommended for these units.

These strategies are built, hold, harvest, and divest.

Build: The purpose of this strategy is to improve the unit’s position in the market. e best way to do this is to transfer the funds from cash cows to competitive units with high potential. For example, transferring funds from cash cows to the stars and then to question marks are examples of this strategy. In this way, question marks are tried to be moved to star status.

Step 1: List key external and internal factors.

These are the business culture, intra-business political factors, and the structure of the board of directors

Business culture is a crucial factor that affects the motivation and creativity of the employees. Since business culture affects the success of the firms in their activities, it should be taken into consideration while generating and selecting a strategy.

Taking Counsel, Alliances, Maneuverability, Communication, Compromising.

The Board of Directors (BoD) is the Board that is legally responsible for the management of a firm. The BoD has responsibilities towards firms’ shareholders. This responsibility includes the individual responsibilities of the board members. Distribution of the boards of directors may vary by firm. Each member is expected to bring different powers and abilities to the BoD. Vision and mission are the strategic directions of the BoD that are expected to be fulfilled by the Board. The most important strategic decisions about the firm are taken by this Board. For this reason, the coherence of the Board and its power relations affect the strategic choices of the firm firsthand. 

Realizing the Mission and Vision of the Organization, Executive Director-Selecting, Supporting, Reviewing, Organizational Planning, Monitoring and Managing Financial Resources and Recruitment of New Board Members.