Экзамен 3 курс / Unit10

Unit 10.

STRATEGY

Nowadays a word “strategy” is used by practically all businessmen in the world, but definitions of this term are various. My point of view is that strategy is “having a clear plan and putting it into action”. But as we speak about business strategy, it’s necessary to point out an exact definition from a Longman dictionary, which says, that a business strategy is a company’s aims in a particular market and the way it hopes to achieve them. It’s a well known fact that a strategy is very important for the company, that’s why mostly shareholders, boards of directors and sometimes senior managers are involved in deciding it. It goes without saying that in most cases government and trade union representatives, suppliers and customers influence on that decision, but actually they’re not involved in decision-making. Of course there are some particular types of strategies which should be spoken about. The most popular of them are cost cutting, a sell off, a disposal, a merger, takeover, acquisition.

Every organisation exploits particular resources, or assets – physical, technological and human - to achieve its goals .A company might have the 'strategy' of entering the market and becoming a world leader. But even one with massive resources at its disposal would find it impossible to enter a field dominated by key players. Key players are the companies, which have large market share. A profitable industry is attractive, but in some cases wishing to enter it may just be wishful thinking, and in practice there are no new entrants because the barriers to entry are so high. The rules of the game were established years ago, and will remain pretty much the same until something new comes along to upset them, like a new technology, which other companies may be better equipped to develop. In brand-new industries, the rules of the game have not yet emerged. The traditional scenario is for a new industry with high growth to have a large number of competitors in the beginning: barriers to entry are equally low for start-ups (brand new companies), and for established companies also wanting to participate, perhaps by setting up a new subsidiary or business unit. The start-ups have the potential benefit of doing things in new ways. They don't inherit a culture from another industry that may not be suitable for the new one, and that may even be a handicap to competing successfully.

Smaller competitors with higher costs drop out or are bought by the larger companies in a process of consolidation or shakeout, leaving an elite with the resources to dominate the industry, which is now mature. That is why emerging industries are so attractive. Companies want to get in before the rules of the game become fixed, and be able to influence how they are fixed.

A profitable company may buy firms in unrelated industries, including emerging industries, perhaps hoping that some of their acquisitions will turn out to be leaders in their fields and become money-spinners. But it may just end up as a conglomerate of more or less profitable companies, and some unprofitable ones.

Corporate history is full of examples of takeovers and mergers. Even a company buying another in its own industry in the same country faces problems in making the acquisition work. The problems in acquiring a company in a different industry or in another culture are enormous (huge). This may not be the best use of resources.

Recently the trend for groups has been towards selling non-core assets, using the proceeds to invest in core activities and concentrate, or focus, on them. This is sometimes referred to as sticking to your knitting. The mission statements in the main course unit are attempts by companies to say what their knitting actually is. Shareholders naturally want the highest possible return on capital. The job of every, company is to allocate that capital in the most judicious way. They should invest in the most profitable activities or products for which they have appropriate resources, or for which they can realistically acquire or develop the resources.

Ultimately (напоследок) I want to stress that every company should have good plan and clear strategy if it wish to have good results and achieve their aims. Managers are responsible for determinating strategy and follow it. And don’t forget that every mistakes can lead to multi-billion dollar losses.