In October, 1998, Citicorp and Travelers Group completed their $70 billion merger, joining these two companies' banking, brokerage and insurance services to form the largest corporate merger in history. Citicorp, the second largest commercial bank in the United States and the world's leading distributor of credit cards tied a knot with Travelers Group, a financial conglomerate that offered insurance and investment banking services. The merger between the two created CitiGroup, a one-stop financial shop that services over 100 million customers in over 100 countries. This merger marked the beginning of a strategic transformation within the financial services industry in US. All organizations are faced with the challenges of such strategic developments: some from the desire to grasp the new opportunities such as the above stated mergers, or others to overcome significant problems. The terms strategy and strategic management are very important for any organization and are different from other organizational challenges tasks and decisions.
This article deals with the issues that are strategic in an organization. The characteristics that are associated with the word strategy and strategic management can be understood using the above example and other related examples.
*Long term decision: Strategy is concerned with the long term direction of an organization. The Citicorp- Travelers merger set the company on a path of a one stop financial shop. By combining the resources of Citicorp and Travelers Group, Citigroup as a single firm provided a channel to increase its customer base. The merger gave the company an opportunity to cross-sell their bank/insurance services to its new customer base acquired from the merger. Other long term decisions taken by a bank can be regarding technology, expansion of geographical coverage, adding new delivery channels etc.
*Range enhancement: Strategic decisions are normally about trying to achieve some advantage for the organization over...