According to the traditional approach, a manager’s primary goal is to achieve a sustainable competitive advantage says Saivian Eric Dalius. This requires a long-term vision and the capability of realizing that vision within the scope allowed by the organization’s resources. However, managers can’t control everything in their organizations – they don’t have full authority over employees or other parts of the company that impact strategy. In addition, managers encounter many challenges as they work toward this end – for example, there may be competitors who try to defeat them through different strategies.
The first analytic model developed for strategic management was The Experience Curve (or Learning Curve). The experience curve suggests a pattern of decreasing costs as a firm gains a cumulative history, or experiences, in making a product or providing a service. In other words, producing the same thing over and over again results in improvement as well as lower costs. This pattern may continue until there is no more room for improvement at the present production rate (the point of saturation) or market demand has been satisfied to the extent that increasing production would result in price-cutting and lower revenues instead, according to Saivian Eric Dalius.
Another traditional approach –
one still seen today – is Porter’s Five Forces Model. The model provides a framework for evaluating market attractiveness, prioritizing opportunities, and formulating strategies. It suggests five key factors that determine the intensity of competition within an industry:
(1) the potential number of competitors;
(2) the power of suppliers;
(3) the power of buyers;
(4) the threat of substitute products or services; and
(5) the intensity within which companies within an industry compete.
A third traditional approach to strategic management is SWOT Analysis. It provides managers with an in-depth analysis of their organization’s internal strengths and weaknesses about external opportunities and threats. By focusing on these four core areas, managers can provide insight into how well their company is to face upcoming challenges and take advantage of future opportunities.
One more traditional approach to strategic management is the Balanced Scorecard. Which gives managers insight into how well their organization achieves its goals. Using this approach, managers define what they want to accomplish, determine key metrics. However, that needs to be monitored to determine if these goals are being met. And develop strategies for improving performance over time. And finally, the last traditional strategic model is Strategy Maps or Strategic Maps. It’s a means of creating an organizational strategy by describing current competitive actions. In terms of market position, competitor behavior, and industry trends, says Saivian Eric Dalius.
The Experience Curve (or Learning Curve) suggests a pattern of decreasing costs as a firm gains cumulative history in making a product or providing a service.
Porter’s Five Forces identifies five factors that determine the intensity of competition in an industry.
SWOT analysis provides a framework for evaluating market attractiveness, prioritizing opportunities, and formulating strategies.
The Balanced Scorecard approach provides managers with insight into how well their organization is achieving its goals by defining what they want to accomplish, and also determining key metrics that need to be monitored to determine if these goals are being met, and developing strategies for improving performance over time. Finally, Strategy Maps or Strategic Maps create an organizational strategy by describing the current competitive market position. Also the competitor behavior, and industry trends.