Strategic Management Chapter 1 Quiz

Strategic Management Concepts: A Competitive Advantage Approach

• The text is about Strategic Management Concepts: A Competitive Advantage Approach, Seventeenth Edition
• Includes chapter 1, titled "The Nature of Strategic Management"
• Presents learning objectives for the chapter

Learning Objectives (1 of 2)

• Describe the strategic-management process
• Discuss the three stages of strategy formulation, implementation, and evaluation activities
• Explain the need for integrating analysis and intuition in strategic management
• Define and give examples of key terms in strategic management

Learning Objectives (2 of 2)

• Describe the benefits of engaging in strategic management
• Explain why some firms do not engage in strategic planning
• Describe the pitfalls in doing strategic planning
• Discuss the connection between business and military strategy
• Explain how this course can enhance a student's employability

Defining Strategic Management (1 of 3)

• Strategic Management defined as the art and science of formulating, implementing, and evaluating cross-functional decisions.
• These decisions enable an organization to achieve its objectives

Defining Strategic Management (2 of 3)

• Strategic management is synonymous with strategic planning in this course
• Strategic management sometimes refers to formulating, implementing, and evaluating strategies, while strategic planning refers only to strategy formulation

Defining Strategic Management (3 of 3)

• A strategic plan is a company's game plan
• This plan results from choices made by management based on numerous alternatives, thus signalling commitment to markets, policies, procedures, and operations

Figure 1.1 The Strategic Management Model

• Illustrates the cyclical process of strategic management
• Shows the connection between various chapters of the book

The Strategic-Management Model

• Key questions include: Where are we now?, Where do we want to go?, and How are we going to get there?

Stages of Strategic Management (1 of 4)

• The stages of strategic management are formulated as formulation, implementation, and evaluation

Stages of Strategic Management (2 of 4)

• Strategy formulation includes: developing a vision and mission, identifying external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing strategies to pursue

Strategy Formulation Decisions

• Decisions include: what new businesses to enter, what businesses to abandon/diversify, whether to expand operations or diversify, whether to enter international markets, whether to merge or form joint ventures, how to avoid hostile takeovers

Stages of Strategic Management (3 of 4)

• Strategy Implementation requires establishing annual objectives, devising policies, motivating employees, and allocating resources to execute formulated strategies
• This stage is often considered the action stage

Stages of Strategic Management (4 of 4)

• Strategy evaluation includes determining which strategies are not working well
• Activities include reviewing external and internal factors to current strategies, measuring performance, and taking corrective actions

Key Terms in Strategic Management (1 of 6)

• Competitive advantage is any activity a firm excels at compared to rivals, or any resource the firm possesses that rivals desire
• A firm must seek sustained competitive advantage

Key Terms in Strategic Management (2 of 6)

• Strategists are the individuals most responsible for the success or failure of an organization
• They help gather, analyze, and organize information
• Vision and mission statements articulate the organization's future aspirations ("What do we want to become?") and its core purpose ("What is our business?")

Key Terms in Strategic Management (3 of 6)

• External opportunities and threats include economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends that benefit or harm an organization
• Internal strengths and weaknesses are an organization's activities that are well or poorly performed relative to competitors

Some Opportunities and Threats

• Examples of opportunities and threats are provided
• These include consumer expectation for green operations, internet marketing growth, commodity food price change, oil and gas price change, and computer hacker problems

Key Terms in Strategic Management (4 of 6)

• Long-term objectives are specific results an organization seeks, lasting more than a year
• These objectives should be challenging, measurable, consistent, reasonable, and clear

Key Terms in Strategic Management (5 of 6)

• Strategies are the means to achieve long-term objectives
• They may include expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint ventures

Figure 1.2 The Basic SWOT Matrix Format

• Describes a matrix for performing SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to inform strategy development

Key Terms in Strategic Management (6 of 6)

• Annual objectives are short-term milestones to reach long-term objectives
• They should be measurable, quantitative, challenging, realistic, consistent, and prioritized
• They should be set at corporate, divisional, and functional levels
• Policies are the means to achieve annual objectives

Benefits of Strategic Management

• Proactive management allows the organization to shape and control its own future, instead of just reacting to circumstances
• This proactive approach helps the organization exert control over its destiny

Figure 1.3 Benefits to a Firm That Does Strategic Planning

• Shows the relationship between improved communication, deeper understanding, greater commitment, and the results of strategic planning

Financial Benefits

• Organizations using strategic management generally show improvement in sales, profitability, and productivity compared to those without systematic planning

Nonfinancial Benefits

• Strategic management enhances awareness of external threats and competitors' strategies
• It increases employee productivity and reduces resistance to change
• It facilitates clearer understanding of performance-reward relationships

Why Some Firms Do No Strategic Planning (1 of 2)

• Lack of formal training in strategic management is a frequent reason for non-planning firms.
• They may not understand the benefits of planning; lack monetary rewards for good plans or punishment for not planning
• Other reasons include time constraints and perceived irrelevance

Why Some Firms Do No Strategic Planning (2 of 2)

• Often firms are too lazy to do strategic planning
• They may be content with their current success, believing it ensures future success
• Overconfidence and prior bad experiences in strategic planning can hinder implementation

Pitfalls in Strategic Planning (1 of 2)

• Strategic planning is used as a means to gaining control when it's not.
• Planning is used to satisfy others rather than to be actively supported by management.
• Lack of communication and employee engagement can be a barrier
• Intuitive decision-making by top management can lead to problems

Pitfalls in Strategic Planning (2 of 2)

• Delegating planning to a planner instead of involving all managers can cause problems
• Not involving key employees hinders cooperation and support for change
• Planning might be seen as unimportant or unnecessary
• Overfocus on existing issues can prevent sufficient planning

Comparing Business and Military Strategy

• Business strategy typically assumes competition, unlike military strategy, which often assumes conflict
• Both adapt to change to be successful

Excerpts from Sun Tzu's The Art of War Writings

• Strategic planning is of critical significance for survival
• Knowing the enemy and self leads to strategy success
• Effective leaders facilitate creative counter-movement

Examples of Employability Skills From Using Text

• The text highlights useful employability skills, such as critical thinking, collaboration, knowledge application, business ethics, information technology, and data literacy

Figure 1.4 How to Gain and Sustain Competitive Advantage

• Provides a visual representation of a cyclic process involving planning, executing strategies, gaining competitive advantage, and adapting to changes.

Copyright

• Copyright information for the text

Test your understanding of the key concepts in Chapter 1, 'The Nature of Strategic Management,' from the text 'Strategic Management Concepts: A Competitive Advantage Approach.' This quiz covers the strategic-management process, stages of strategy formulation, and the integration of analysis and intuition in strategic management.