strategic Management 1. You are the CEO of a firm that has chosen to close a maj
ID: 447664 • Letter: S
Question
strategic Management
1. You are the CEO of a firm that has chosen to close a major division (40% of last year’s revenues, 10% of profits; 320 employees) focused on research, development, and commercialization of product innovations. After ten years of trying to become a leading product innovator, your firm just was unable to commercialize enough breakthrough products to make this division feasible. Your sole focus toward the future is on the current cost-leadership strategy in your core supply and distribution business (60% of last year’s revenues, 90% of profits; 700 employees). Describe some key guidelines you would follow and/or actions you would take to try to make this reorganization and strategic change move smoothly.
Explanation / Answer
Cost leadership strategy is the strategy adopted by the management so as to achieve the competitive advantage through minimizing the operations cost to the lowerest in the industry so that the price of the product or services can be reduced. Here the proposed organization has decided to close its Research and development division as it is not profit generating in the past 10 years. It is going to focus on its supply and distribution business which is reliable for it. For implementing this strategic change the CEO should follow som specific guidelines which is mentioned below.
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