Untitled Quiz

Strategic Management Overview

• Strategic management is a managerial process that involves forming a strategic vision, defining objectives, crafting a strategy, implementing and executing the strategy, and making corrective adjustments over time to align with the firm's vision and objectives. It involves analyzing the external and internal environments and making choices among alternatives to achieve organizational objectives.

The Strategic Management Process

• The process comprises three main components : Formulation, Implementation and Feedback.
• Strategy Formulation includes: Corporate-level Strategy, Business-level Strategy, and Functional-level Strategy
• Strategy Implementation entails: Corporate Governance, Organizational Structure and Controls, and Strategic Leadership
• Feedback helps in making necessary adjustments to align with the organization's vision and objectives.

What is Strategy?

• A company's strategy is its game plan to define its market position, conduct operations, attract and satisfy customers, and achieve organizational objectives.
• It involves managerial choices of alternatives and signals organizational commitment to particular markets, approaches, and operating procedures.

Tasks of Strategic Management

• Developing a strategic vision and business mission
• Setting objectives
• Crafting strategies to achieve objectives
• Implementing and executing the strategy
• Evaluating performance and initiating corrective actions

Strategic Vision and Mission

• Vision: A picture of what the firm wants to be and what it wants to ultimately achieve, in broad terms.
• Mission: Specifies the business in which the firm intends to compete and to whom it intends to serve.

Objectives

• Objectives are performance targets, representing the results and outcomes the organization seeks to achieve.
• They act as benchmarks for tracking performance and are crucial for ensuring organizational well-being and long-term success.
• Financial and strategic objectives are both critical to overall success.

A Company's Strategy

• A company's strategy involves proactive, deliberate actions, as well as reactive measures to unexpected developments and competitive pressures.
• It addresses fundamental business questions, including whether to focus on a single business area or on a diversified portfolio of businesses, target a broad customer base or a specific niche, and differentiate its offerings or pursue a cost-leadership strategy.

Strategy and Strategic Plan

• A strategy and strategic plan guide the organization and define its direction, short-term and long-term performance targets, competitive moves, internal approaches to achieving targets, and expected actions of key players, challenges, and obstacles to success.

Competitive Advantage

• A firm achieves competitive advantage through implementation of strategies that create superior value for customers and that are difficult to imitate or duplicate at a cost-effective price.

Risk, Average Returns, and Above-Average Returns

• Risk: Uncertainty about the economic outcomes of an investment.
• Average Returns: Returns expected from investments with similar risk levels.
• Above-Average Returns: Returns exceeding the expected returns from investments with similar risk levels.

Industrial Organization Model (I/O)

• This model emphasizes the influence of the external environment on organizational performance. It suggests strategies to achieve above-average returns in industries displaying strong structures.

I/O Model Steps:

• 1. Study the external environment, emphasizing the industry environment.
• 2. Locate an attractive industry with strong potential for above-average returns.
• 3. Design a strategy to exploit the attractive industry.
• 4. Gather or develop the assets and skills necessary to implement the chosen strategy.
• 5. Use the firm's competitive strengths to implement the strategy.

Resource-Based Model

• This model highlights the importance of internal factors in creating competitive advantage by identifying and leveraging unique firm resources and capabilities.

Resource-Based Model Steps:

• 1. Identify strengths and weaknesses comparing to competitors.
• 2. Understand firm's capabilities.
• 3. Evaluate the potential of resources and capabilities to compete.
• 4. Locate strategically attractive industries.
• 5. Choose an appropriate strategy to implement.

Stakeholders

• Stakeholders are parties with an interest in the success of the firm, including shareholders, suppliers, customers, employees, and the community.
• Keeping stakeholders engaged is critical for maintaining sustained firm performance.

Strategic Leaders

• Strategic leaders are individuals in different areas and levels of the firm who guide decisions and actions for achieving the organization's vision and mission, promote innovation, and consider business implications of strategic options.