Strategy Formulation: Concepts & Tools Quiz and Flashcards

Study Notes

Definition and Importance

Strategic management is the process of specifying an organization's mission, vision, and objectives, and allocating resources to achieve them.
It involves analyzing the internal and external environment, identifying opportunities and threats, and making decisions to achieve competitive advantage.
Strategic management is important because it helps organizations to:
- Adapt to changing environments
- Achieve sustainable competitive advantage
- Increase efficiency and effectiveness
- Improve decision-making

Key Components

Environmental Scanning: analyzing the internal and external environment to identify opportunities and threats
- Internal environment: resources, capabilities, and competencies
- External environment: market, industry, competitors, customers, and stakeholders
Strategy Formulation: developing a strategy based on the analysis of the environment
- Corporate strategy: defines the organization's overall direction and scope
- Business strategy: defines how the organization will compete in a specific market
- Functional strategy: defines how the organization will allocate resources to achieve its objectives
Strategy Implementation: putting the strategy into action
- Allocating resources
- Assigning responsibilities
- Establishing performance metrics
Strategy Evaluation: monitoring and evaluating the performance of the strategy
- Measuring performance metrics
- Identifying areas for improvement
- Making adjustments to the strategy

Types of Strategies

Cost Leadership: becoming the lowest-cost producer in the industry
Differentiation: creating unique products or services that differentiate the organization from its competitors
Focus: focusing on a specific market segment or niche
Diversification: expanding into new markets or industries
Innovation: creating new products, services, or processes

Strategy Tools and Techniques

SWOT Analysis: identifying an organization's strengths, weaknesses, opportunities, and threats
Porter's Five Forces: analyzing the competitive forces in an industry
- Threat of new entrants
- Bargaining power of suppliers
- Bargaining power of buyers
- Threat of substitutes
- Competitive rivalry among existing competitors
Value Chain Analysis: analyzing the activities that create value for an organization
Balanced Scorecard: measuring performance from four perspectives: financial, customer, internal processes, and learning and growth

Description

Test your understanding of strategic management, including its importance, key components, types of strategies, and tools and techniques used in the process. Learn about environmental scanning, strategy formulation, implementation, and evaluation, as well as different strategies and analysis tools like SWOT, Porter's Five Forces, and value chain analysis.