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LEARNING GOALS
Key learning goals: The major purpose of this topic is to discuss the definition of strategy, the process of strategic planning, and the contingency plans in crisis management. State the definition of strategy State the three major types of strategy for a business State the general strategic planning process State the six types of crisis in a business State the contingency plans a business may develop to solve these crisis problems.
1. 2. 3. 4. 5.
Strategy formerly refers to planning and managing an operation for a particular purpose such as in a war. A businesss strategy is the pattern of decisions and actions that are taken by the business to achieve its goals. A business may have a variety of goals or objectives, but for many businesses, the major goal is to improve performance so that profits increase through designing and implementing strategies.
Examples of such a strategy Marketing strategy HR strategy Production strategy R&D strategy
Cost leadership strategy Differentiation strategy Focus strategy Withdrawal strategy Market penetration strategy New product development strategy . Internal development strategy Takeover and merger strategy Strategic alliances .
Business strategy
Corporate strategy
Importance:
Crisis (unexpected problems) may occur at times for a business. However, effective planning should reduce the impact of the crisis on a business. So companies often need to have some contingency plans or strategies to deal with unexpected conditions. Types of crisis: There are at least the following crisis which may take place in a business and which are explained in the following table:
Financial crises
Lack of working capital to pay its debt Lack of money to pay salary Unable to collect large amount of money owed to the business Breakdown of machines Fire damages to the stock of raw materials Failure to deliver products or goods to the buyer on time Inferior quality products produced Employee strike High level of staff turnover Poor staff motivation Waste affecting the local residents life Noise affecting the people around Operations in the factory leading to the pollution of air and water in the local area Faulty or dangerous products breaking the law A childs toy causing harm to children Food causing health problems Many of the above problems may affect the image of a business. Customers may lose their confidence for the product. And sales may be seriously affected
Copyright 2002 by Harcourt, Inc. All rights reserved.
Production crises
Environmental crises
Legal crises
Image crises
Financial crises
Production crises
HR crises
Image crises
Act quickly when faced with the problem of image Withdraw the faulty products immediately Promote the fact that the problem has been found and will be solved soon. Spend some money for improving the damaged environment or compensating those who have suffered.
Copyright 2002 by Harcourt, Inc. All rights reserved.