Achieving Strategic Fit

strategical find out express the pointedness to which an organization is matching its resources and capabilities with the opportunities in the external environment. The matching takes place through and through strategy and it is therefore vital that the company have the actual resources and capabilities to execute and support the strategy. Strategic expire ass be apply actively to evaluate the underway strategic situation of a company as well as opportunities as M&A and divestitures of organizational divisions.Strategic fit is related to the Resource-based view of the degenerate which suggests that the key to gainability is not only through positioning and industry selection but quite an through an internal focus which seeks to utilize the incomparable characteristics of the companys portfolio of resources and capabilities. 1 A unique conclave of resources and capabilities can eventually be developed into a competitive advantage which the company can profit from. Howeve r, it is important to differentiate between resources and capabilities.Resources relate to the inputs to end product owned by the company, whereas capabilities describe the accumulation of learning the company possesses. Resources can be classified two as tangible and intangible Tangible m bingletary (Cash, securities) Physical (Location, plant, machinery) Intangible Technology (Patents, copyrights) Human resources record (Brands) Culture Several tools have been developed one can use in order to crumple the resources and capabilities of a company.These include SWOT, value chain analysis, coin flow analysis and much. Benchmarking with relevant peers is a useful tool to assess the relative strengths of the resources and capabilities of the company compared to its competitors. Strategic fit can also be used to evaluate specific opportunities like M&A opportunities. Strategic fit would in this case pay heed to how well the potential acquisition fits with the planned agency (s trategy) of the acquiring company. In order to justify harvest-home through M&A relationss the transaction should ield a better return than Organic growth. The differential coefficient Efficiency Theory states that the acquiring besotted pull up stakes be able increase its efficiency in the areas where the acquired firm is superior. In addition the theory argues that M&A transactions give the acquiring firm the possibility of achieving positive synergism effects significance that the two merged companies are worth more together than the sums of their parts individually. 2 This is because merging companies may eff from economics of scale and economics of scope.However, in globe many M&A transactions fails payable to different factors, one of them being lack of strategic fit. A CEO survey conducted by Bain & party showed that 94% of the interviewed CEOs considered the strategic fit to be vitally influential in the victor or failure of an acquisition. 3 A racy degree of stra tegic fit from can potentially retrovert many benefits for an organization. Best case scenario a high degree of strategic fit may be the key to a successful merger, an efficient organization, synergy effects or cost reductions.