Strategic Management Chapter 1

Chapter 1

• Strategic management is the analysis, decisions, and actions taken by an organization to create and maintain a competitive advantage.
• Four key attributes of strategic management: directed at overall organizational goals, involves multiple stakeholders, includes short- and long-term perspectives, incorporates trade-offs between efficiency and effectiveness.
• Three principal activities in strategic management: strategy analysis, strategy formulation, and strategy implementation.
• Corporate governance is the relationship among various participants in determining the direction and performance of corporations.
• Internal governance mechanisms: shareholders, management, and the board of directors.
• External control: auditors, banks, analysts, business press, and threat of takeovers.
• Five key stakeholder groups: owners, customers, suppliers, employees, and society at large.
• Social responsibility recognizes that businesses must respond to society's expectations regarding their obligations to society.

Chapter 2

• Many firms are becoming more innovative by incorporating socially responsible behavior and environmental sustainability.
• A triple bottom line approach evaluates a firm's performance through financial, social, and environmental considerations.
• PESTEL analysis: considers political, economic, social, technological, environmental, and legal factors that affect a firm.
• Five forces analysis: assesses the intensity of competition within an industry considering rivalry within the industry, threat of new entry, threat of substitutes, supplier bargaining power, and buyer power.

Chapter 3

• Assess how well a company's strategy is working by evaluating financial performance and market position.
• Monitor key success indicators to measure effectiveness.
• Conduct a SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) in order to evaluate internal advantages, vulnerabilities, and external factors and challenges.
• Explain how a company's resources and capabilities create a competitive advantage.
• Apply VRIN tests to identify tangible and intangible resources and functional capabilities.

Chapter 4

• Recognize major avenues for achieving a competitive advantage based on cost, differentiation, and best-cost strategies.
• Cost-effective value chain management: minimizing costs
• Innovative cost reduction: identifying and eliminating unnecessary costs.
• Use key drivers to reduce costs like supply chain management.
• Market conditions favorable for low-cost strategies like price competition, identical products from rivals, low buyer switching costs, and price-sensitive customers.
• Understand which strategies distinguish each of the five generic strategies.

Chapter 5

• Identify reasons for diversification efforts failure, including paying an excessive premium for acquired businesses and a failure to integrate acquired businesses.
• Explain how managers can create value through diversification initiatives. Strategies: leveraging core competencies, sharing activities, achieving economies of scope, market power.
• Related diversification occurs when a company enters into businesses that have strategic similarities with its existing operations.
• Unrelated diversification refers to entering businesses that have no significant operational connection to the company's existing businesses.

Chapter 6

• The four-step innovation process: idea, invention, innovation, and imitation.
• Summarize how entrepreneurship and innovation work closely with strategic management concepts
• Differentiate between incremental and radical innovations based on market and technology.
• Categorize how innovations are performed in the markets and technology framework via incremental, radical, architectural, and disruptive innovations.

Chapter 7

• Strategic control systems are essential for ensuring strategies are effectively implemented and adjusted.
• These systems help coordinate actions, respond to environmental changes, and provide feedback mechanisms.
• Contemporary control systems are more dynamic and interactive compared to traditional sequential systems, which are better suited for stable environments.
• Unpredictable competitive environments, need for adaptability are reasons why contemporary control systems are crucial.

Chapter 8

• Corporate governance mechanisms ensure that management aligns with the best interests of shareholders.
• Agency problem: separation of ownership (shareholders) and control (management).
• Mechanisms to align interests: board oversight, shareholder activism, and managerial incentives.
• Governance challenges in different countries considering principal-principal conflicts, concentrated family ownership, weak legal protection for minority shareholders.
• Ethics in business is no different from ethics in general and concerns right and wrong, honesty, fairness, and respect for others.

Chapter 9

• Ethical considerations can arise from faulty oversight, pressure to meet short-term targets, profit-driven culture, and role of culture.
• Costs of failures can include visible costs (fines, penalties, and lost stock valuation) and intangible costs (damage to reputation, loss of customer loyalty).
• Corporate social responsibility (CSR) refers to a company's duty to operate ethically and contribute to societal goals beyond profit.
• Key components of CSR include providing good working conditions, promoting diversity, being an ethical steward, and supporting philanthropy.
• TBL (Triple Bottom Line) evaluation of companies assesses economic, social, and environmental performance.

Chapter 10

• Sustainability in business refers to practices that meet current needs without compromising the potential for future generations to meet their needs.
• Balancing corporate social responsibility (CSR) and environmental sustainability with economic responsibilities for shareholders as they can be competitive advantages.