Strategic Management Essay Example | Topics and Well Written Essays - 1500 words - 2

Strategic Management - Essay Example Apart from the tangible benefits in terms of financial loss, the firm also faced huge crisis in terms of losing intangible losses such as that of skills and experiences. Along with these losses, the firm also faced problem that was in the form of diversion of attention from better opportunities for avoiding risk. The decision of selling out the unprofitable business units was generated as renovating plans for the 21st century. Fundamentally, four aims were set for this era that included the following: (a) reduction of operational holdings that failed to either achieve the short-term goals or are not fit for the firms long-term sustainable strategy and a targeted profit of 600 to 700 million Dollars was anticipated from their sales; (b) reinvestment of the accumulated profits from these sales to profitable business areas of the firm; (c) improvement of equity return from these reinvesting strategies in the long run; and (d) strengthening of the firm’s financial position in term s of reviewing balance sheet and position of credit. The firm followed the benchmarking technique with the help of BCG matrix utilization and derived that the structure of the firm would be designed as such that it would be comprising of mainly four business units: financial services, energy, packaging and forest products. Following the designed strategies, the firm insisted on selling the unprofitable business units but in this case also the firm faced the same problem of being unable to achieve strategic targets. It failed to generate the targeted 700 million Dollars sales from those units and achieved a figure which was around 250 million Dollars lesser than that was targeted. Prior to providing recommendation based on the analysis of the current situation of the firm in the form of a strategic plan of five years, it is essential to present a brief outlook of each of the positions of business units or the exact situation that the firm at present is facing. Lockwood Group’s financial services unit is believed to be strongly positioned within the industry. It is due to the efficiency of the management that this business unit has become able to enhance their targeted segment of the market and also have become successful in avoiding any grave situation of cut throat competition with huge and potent competitors. Avoidance of competitors was essential for the business units holding a brand new position within the industry. With regard to the business position of energy, the firm is in a strong position in spite of being an initial operator within the industry but taking into account the firm’s abilities in production and exploration of energy, its position is not that strong. The unit of production and exploration is believed to be at a risky position as the firm does not hold strong position of investing huge amounts of money in exploration activities and also are reluctant in taking risk through exploring in adverse situations. In the packaging se gment of the firm’s business, it is holding an uncertain position as in order to become successful in this segment, the firm would have to remain updated along with the