Strategic Management and Core Competence

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MB0052-Strategic Management and Business Policy
1. Explain the corporate strategy in different types of organization.

A Well-formulated strategy is vital for growth and development of any organization—whether it is a small business, a big private enterprise, a public sector company, a multinational corporation or a non-profit organization.

Small business, for example, generally operates in a single market or a limited number of markets with a single product or a limited range of products. The nature and scope of operations are likely to be less of strategic issue than in larger organizations. Not much of strategic planning may also be required or involved; and, the company may be content with making and selling existing products and generating some profit. In many cases, the founder or the owner himself forms the senior/top management and his (her) wisdom gives direction to the company.

In large businesses or companies—whether in the private sector, public sector or multinationals—the situation is entirely different. Both the internal and the external environment and the organizational objectives and priorities are different. For all large private sector enterprises, there is a clear growth perspective, because the stakeholders want the companies to grow, increase market share and generate more revenue and profit.Multinationals have a greater focus on growth and development, and also diversification in terms of both products and markets. This is necessary to remain internationally competitive and sustain their global presence. For example, multinational companies like General Motors, Honda and Toyota may have to decide about the most strategic locations or configurations of plans for manufacturing the cars. They are already operating multi location (country) strategies, and, in such companies, roles of strategic planning and management become more critical in optimizing manufacturing facilities, resource allocation and control.

In public sector companies, objectives and priorities can be quite different from those in the private sector. Generation of employment and maximizing output may be more important objectives than maximizing profit. Stability rather than growth may be the priority many times. Accountability system is also very different in public sector from that in private sector. The corporate planning system and management have to take into account all these factors and evolve more balancing strategies.

In non-profit organizations, the focus on social responsibilities is even greater than in the public sector. In these organizations, ideology and underlying values are of central strategic significance. Many of these organizations have multiple service objectives and the beneficiaries of service are not necessarily the contributors to revenue or resource. All these make strategic planning and management in these organizations quite different from all other organizations. The evaluation criteria also become different.

2. What is the role consultants play in the strategic planning and management process of a company? Is it an essential role?

Management consultants can play very useful roles in the strategic planning process of a company. Consultants render services in different functional areas of management including the strategic planning and management process. In companies with no separate planning division or unit, consultants can fill that gap. They can undertake planning and strategy exercises or consultancies. Even in companies with a corporate planning division/unit, consultants may provide specialized inputs or insights into identified management or strategy areas. Top strategic consultants like McKinsey & Company use or develop latest tools, techniques or models to work out solutions to specific strategic management problems or issues—be it productivity, cost efficiency, restructuring, long-term growth or diversification. Consultants bring with them diversified...
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