Competitive status of the company, Level of strategic investments, Future effectiveness of the current strategy - Commercial law

Competitive firm status

CSF is determined by the level of strategic investments (K (), the degree of optimality (future effectiveness) of the current strategy (K2) and the level of capabilities (potential) of firm (K%):

Strategic Investments Level

The profitability of the company's activities in each of the SZHS will be proportional to the capital investments made in this zone in the basic production assets, in product development, provision of market positions and in management.

The graph in Fig. 1.7 shows that there is a certain critical amount of capital investment/k that does not generate revenue, and there is an optimal volume /, at which the return on capital reaches its maximum. Further investments do not bring an increase in profitability due to a slowdown in response to changes in the external environment and bureaucratization of a large company. The competitive status of the firm (a separate SZH) will depend on

Profitability and strategic capital investment

Fig. 1.7. Profitability and strategic investment

The network depends on the extent to which the level of optimal profitability is reached.

For the actual investment/p, the level of strategic capital investment is determined by the formula

Evaluation of this indicator begins with the definition of costs that are part of the investment. These are:

o investments in capacity (in fixed assets, R & D, sales and service networks, marketing);

o nesting I'm in the strategy (costs for strategic planning, market survey, development and production development of new products);

o Investing in the firm's potential (staffing and training, purchasing technology, creating and equipping management units).


If a project is chosen in which/k = 0,2/(, and the actual level of capital investments is increased to/φ = 0,6/о, we get:

If the actual investment in this project is increased to the value of the optimal capital investment/ф =/& quot ;, then

This example demonstrates that the closer the actual volume of investment to the optimal and the lower their critical volume, the higher the level of strategic capital investment and, consequently, the higher the profit potential.

Future effectiveness of the current strategy

The basis for assessing the future effectiveness of the current strategy in determining the position of the firm in competition is the evaluation of the effectiveness of specific growth strategies and competition in the market. Competitive strategy is largely characterized by product differentiation, defining the characteristics of the firm's products, and market differentiation, defining the characteristics of the enterprise's position in the market. The third component of the competitive strategy - ways to ensure sales growth - is common to a specific growth strategy.

Diagram 1.5 illustrates the competitive strategies of the company in two SZH, an example of & quot; textile & quot ;. This company to segment its operations by type of produced fabrics and types of customers in the four strategic areas of management:

o SZH & "Power structures & quot; - fabrics for military uniforms;

o SZH & quot; Uniform Clothes & quot; - fabrics for uniforms of various purposes;

o SZH & quot; Consumer Goods & quot; - fabrics for sewing production of consumer goods and for individual consumers;

o SZH & quot; Technical fabrics & quot; - fabrics intended for various technical needs of production purposes.

As can be seen from the diagram, each CZK has its own competitive strategy, although these strategies have common elements. A growth strategy is characterized by a policy of seizing a market share or expanding the market. All SZH conduct a policy of sales promotion. In general, the company

Defining the strategy of JSC

Schema 1.5. Defining the strategy of JSC "Textile" in competition

- SZK & quot; Power structures & quot ;; = СЗХ & quot; Consumer Goods & quot;

focuses on an active growth policy (without simultaneous expansion of the market).

In market differentiation, there is the greatest dispersion of policy objectives: from the conquest of a small market share to dominance on it. The company aims to gain dominance in the market of fabrics for power structures by the policy of price reduction. Realizing the same policy, she tries to attract consumers of technical fabrics, while having a small share in this market. All SZH focus on the release of goods of high demand.

In product differentiation, all SZH rely on innovation, high quality of the product and quality assurance. It is characteristic that in no one of the SZK the company considers it possible to follow the leader.

The above examples show that the effectiveness of the strategy can be achieved only if private sub-strategies are mutually compatible and support each other.

In order to determine the degree of optimality of the current strategy 5f, characterized by a set of factors of growth policy, product and market differentiation, it is necessary to form an optimal company strategy in the future 5 & quot; and compare these strategies. To form an optimal strategy, several alternative strategies 51, 52, 5s, ... should be formed and choose one of them that is closer to 5f, that is, to which the company can most easily go.

The chances for the future success of a strategy that the company is currently pursuing can be estimated using the following algorithm:

1. See Table. 1.6 and 1.7, in which the factors of growth and profitability of strategic economic zones are presented, after which it is expert to determine what factors will bring success to the enterprise in the next three to five years, and write them in column 1 Table. 1.2.

2. Using Scheme 1.5, select the factors that best characterize the current enterprise strategy (column 2 Table 1.2).

3. Given that there are usually several possible strategies that are logically connected with growth policy, market and product differentiation, two or three alternative variants of possible success strategies in the future (like scheme 1.5) should be built and these strategies included in the corresponding columns of Table. 1.2.

Table 1. .2. Determine the future effectiveness of the current strategy

Determining the future effectiveness of the current strategy

4. Assess the degree of identity (a, -) of each factor (group of factors) of the current strategy with factors of alternative success strategies in the future (1.0 & gt; a, -> 0). For example, given the long life cycle of demand and the short development time of new products, the strategy of achieving high quality without innovation and patent protection can not ensure the achievement of the required market share and product competitiveness, therefore the factor of the current strategy is "High Quality" in comparison with a set of factors "Innovation", "Patent protection", "High quality" strategy of success in the future (50 is estimated at 0.6, and the factor "Guarantee" in relation to the factors "Innovation" and "Patent protection" - a value of 0.7.

5. Determine the level of future effectiveness (optimality) of the current strategy in relation to each alternative variant of possible success strategies using the formula

where n - number of factors considered success of the current strategy; _/is the number of the alternative strategy for success in the future.

6. Choose from the alternative strategies one that is most focused on success factors in the future and to which the enterprise is ready to move (optimal strategy 5). In this example, the strategy 51 was chosen as the optimal one. The level of the future effectiveness of the current strategy with respect to it is 0.74, which indicates that the enterprise has significant reserves to improve the efficiency of the strategy (determining the indicator K> for success strategy 52 in Table 1.2 is not shown).

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