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Organizations use strategic planning to define their development strategy, corporate directions and decision making. Strategic planning was initiated by organizations over three decades ago and has been helping companies to allocate resources, including finances and people, so as to pursue their long term business strategies. In order to beat the growing competition in the contemporary corporate environment, companies need to make precise long term decisions that ensure growth and profitability for periods of as long as ten years. This paper will discuss concepts of strategic planning to determine its popularity and importance.
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Strategic management has been a dynamic concept that has adapted to the constant change in the corporate marketplace. Businesses have been pursuing higher profits for survival since the 1960’s and 1970’s. However, in the 1980’s, the popularity of strategic management somehow faltered. Initially, business was all about gaining market share and premium positioning. As global competition between companies grew stiffer, companies were made to restructure and improve the quality of their products and services. However, most consultants and clients had not expected this globalization and didnot do much to respond to the implications of the change (Byrne). This tendency made the strategic field ineffective and somehow unpopular for some time.
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Nevertheless, the 90’s saw companies struggling to hike productivity and increase efficiency and realized that this could only be achieved through streamlining their operations. Therefore, strategy consultants were brought back to help companies plan for higher revenues and to aid adopting the technology revolution. The increased globalization of marketplace has led to increased popularity of strategic management for profit maximization in the long term. Growth opportunities have to be attached to existing business units and planning expertise through merging of talents and vital skills.
New themes have developed in corporate strategy. For instance, white space opportunity refers to growth opportunities that are not matched to current business units but can be tapped through cross-merging existing synergies. On the other hand, value migration is the transfer of capital and market share to more competitive markets so as to serve customers more efficiently while gaining new ones. Business ecosystem is the environment created by competing organizations and stakeholders to learn and react to market demands. Competitors develop products collaboratively to compete in a collective business ecosystem. Organizations have to ensure future sustainability by streamlining their leadership, knowledge management and information sharing. Strategic management helps them to achieve this and secure their places in the market for future growth.
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The contemporary business strategy model has changed since the 90’s and new factors have come to shape strategic management. Today, social networking and marketing, mobile customization and advertising and sharing of experiences in social media has taken the globe in a storm. Organizations have fast adopted these factors in their strategies to reach the growing numbers of social media consumers to grow market share and profitability. Latest tools in technology are indispensible when making long-term planning decisions. Convergence has also brought seamlessness in integration of online and offline resource management. Hence, companies are collaborating globally to adopt vital tools in technology to support information management for business development. An article written today on strategic management would therefore have to include these trends and concepts.
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