Strategic factors supporting improved profitability.

University essay from Lunds universitet/Produktionsekonomi

Abstract: Background: A common indicator of company long time survival and performance is its profitability. What then lies behind a company’s profits is a popular field of study, although more prescriptive than inquisitive literature has been published. One of the main reasons is that identification of what has led to an increase in profitability is extremely complex, as companies work in different micro and macro environments and that these change over time. Studies are usually performed in retrospective, and what was applicable to one company at one time, might not be so to a different company at a different time and in a different environment. Few studies have been conducted summing up the current knowledge base within the field of Strategic Management in an accessible manner. Purpose: The purpose of this thesis was to identify strategic factors in companies that had improved their profitability and evaluate their impact and difficulty to change, combining them into a theoretical framework displaying their perceived relative importance in a presentation possible to use as a foundation for a more practically useful model. Method: Qualitative studies of Strategic management literature, both of an academic and popular nature. Identification of relevant sources was done mainly through meta-studies. Sources and findings were summarised and analysed, with regard to concepts and their connections. Conclusions: Through study Strategic Management literature, 13 concepts, split into four main categories were singled out as being most important in affecting profitability. The categories and respective concepts are: Current operation – Control measures, Evaluation, Rewards and Motivation Organization – Focus on competencies and Strategic organisation Foundation – Culture, Purpose, Communication and Leadership Forward operation – Flexibility, Creativity and Learning Furthermore it was concluded that in-between the many sources studied, there was no major contradictory ideas found. Some contradictory views of academics and practitioners brought value to the end result.

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