Discuss how is environmental uncertainty an important concept in strategic management.
With globalization and rapidly changing economic environments, strategic managers find it difficult to effectively develop long-term strategic plans and to make strategic decisions to keep their business in tune with its external environment.
As corporations become more global, the issues a company must face in making strategic decisions become more complex and challenging. Because technologies and specific markets change at a rapid pace, products and/or services must change with them.
The degree of complexity and degree of change existing in an organization’s external ...view middle of the document...
Scenarios are often used in combination with other forecasting techniques.
According to Porter, what determines the level of competitive intensity in an industry? Discuss how each of the forces affect the level of competitive intensity within an industry.
Just as corporate strategy dictates what industry a corporation should compete in, business strategy asks how a corporation or its business units are going to compete and cooperate in each industry.
Porter proposes two competitive business strategies. First, should the corporation compete on the basis of lower costs, which results in lower prices, or should a corporation differentiate their products and/or services on some basis other than cost, such as quality or service? Another alternative is for corporations to compete head to head for the biggest, most sought after part of the market, or focus on the least sought after, but profitable, part of the market.
Porter proposes two competitive strategies for outperforming other corporations in a particular industry: lower-cost and differentiation.
The lower cost strategy affords the corporation the opportunity to design, produce, and market a comparable product more efficiently than its competitors. The differentiation strategy allows the corporation to provide unique and superior value to the customer in terms of product quality, special features, or after sale service offerings.
In addition, Porter proposes that a corporation’s competitive advantage in an industry is determined by its competitive scope, defined as the breadth of the corporation’s target market. When the lower-cost and differentiation strategies are applied to a broad mass market, they are called cost leadership and differentiation. When the strategies are applied...