Strategic Management / Strategy Formulation Unit 3 DB

Running Head : Strategic Management / Strategy Formulation

Strategic Management / Strategy Formulation

Introduction

Home Appliances has done an extensive research to identify the product positioning of its appliances and electronics divisions . Based on the results of the recent study and using the BCG 's growth-share matrix , HA found that the electronics division was placed in the upper right quadrant which means it is a question mark and consumes disproportionate amount of cash while the appliances division was placed in the lower left quadrant which means it is a cash cow . Based on this

, the cash generated from the appliances division should be used to invest in the electronics division for developing market share and making it a market leader . When the growth slows , the electronics division can become a cash cow . However , if the electronics division doesn 't turn out to be a market leader , it will become a dog after years of consumption of excessive cash . While the use of BCG matrix is useful as a starting point for the strategic decision making , it may not be completely relied upon because of the fact that there are other factors / variables . It also relies heavily on definition of the breadth of the market and assumes that the business units are independent of each other (NetMBA 2007

Many companies in their quest to become successful , use various strategies like mergers and acquisitions for quick expansion define growth in terms of finance or markets or products alone forgetting the fact that all the growth and success need to be wrapped around customers , employees and stockholders (HBR ,1983 . Sometimes companies are unprepared or under prepared in terms of the appropriate organization structure . They do not evaluate the advantages of a project structure versus a traditional structure of business around functions like Finance , Marketing etc . In essence a strategy should include appropriate structure with goals and policies defined so that the needs of customers , employees and all other stakeholders are addressed sufficiently and satisfied

References

Henderson , B (1970 . The BCG Growth-Share Matrix . Boston Consulting Group . Cited in HYPERLINK "http /www .netmba .com " www .netmba .com Retrieved May 17th 2008

HBR (1983 . Strategic Management . Harvard Business Review . John Wiley Sons , Inc

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