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Strategic Management - Functional Strategy

Strategies to Avoid and Selecting the Best Strategy - Finance Marketing, Human Resource, Management Information Systems and logistics

   Posted On :  26.06.2018 10:52 pm

Perhaps the most important criterion is the ability of the proposed strategy to deal with the specific strategic factors developed earlier in the SWOT analysis.

Strategies to Avoid

 
If managers lack analysis and creativity they may get trapped into weak strategies leading to failure. The following strategies should be avoided.

Follow the Leader

 
Imitating a leading competitor’s strategy might seem to be a good idea, but it ignores a firm’s particular strengths and weaknesses and the possibility that the leader may be wrong.
 

Hit Another Home Run

 
If a company is successful because it pioneered an extremely successful product, it tends to search for another super product that will ensure growth and prosperity. Like betting on long shots at the horse races, the probability of finding a second winner is slight. Polaroid spent a lot of money developing an “instant” movie camera, but the public ignored it in favor of the camcorder.
 

Arms Race

 
Entering into a spirited battle with another firm for increased market share might increase sales revenue, but that increase will probably be more than offset by increases in advertising, promotion, R&D, and manufacturing costs. Since the deregulation of airlines, price wars and rate “specials” have contributed to the low profit margins.
 

Do Everything

 
When faced with several interesting opportunities, management might tend to lead at all of them. At first, a corporation might have enough resources to develop each idea into a project, but money, time, and energy are soon exhausted as the many projects demand large infusions of resources.
 
Ex:- Walt Disney
 

Losing Hand

 
A corporation might have invested so much in a particular strategy that top management is unwilling to accept its failure. Believing that it has too much invested to quit, the corporation continues to throw” good money after bad”.
 
Ex:- Indian Airlines is one such company.

Selecting the Best Strategy

 
Perhaps the most important criterion is the ability of the proposed strategy to deal with the specific strategic factors developed earlier in the SWOT analysis. IF the alternative doesn’t take advantage of environmental opportunities and corporate strengths / competencies, and lead away from environmental threats and corporate weaknesses, it will probably fail.
 
Another important consideration in the selection of a strategy is the ability of each alternative to satisfy agreed – on objectives with the least resources and the fewest negative side effects. It is, therefore, important to develop a tentative implementation plan so that the difficulties that management is likely to face are addressed.

Tags : Strategic Management - Functional Strategy
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