Strategic Management Concepts

Defining Strategy

• Strategic goals are known as long-term or strategic objectives.
• Strategic actions help achieve strategic goals, creating a competitive advantage that leads to long-term survival.

Successful Strategic Management

• Striving for consistency in strategic direction, internal consistency, external consistency, and dynamic consistency is vital.
• Strategic direction means aligning the organization's long-term goals with its future vision.
• Internal consistency involves understanding the external environment to align with opportunities and threats effectively.
• External consistency refers to knowing the organization's key resources and capabilities and leveraging them for a competitive advantage.
• Dynamic consistency ensures alignment of organizational structure, systems, culture, and management to effectively implement strategic plans and initiatives.

Strategic Management

• Aligning the organization consistently with both its internal and external environments is crucial.
• Strategic control involves environmental scanning to ensure the planned strategy is on track and to identify external signals that might influence strategy formation.

Organizational Architecture

• A management tool that describes how an organization works, emphasizing the alignment of strategy and the organization.
• Culture significantly influences strategy implementation, so aligning strategy with organizational culture is essential.
• Leadership and governance are critical aspects that impact the implementation of strategy.
• Structure refers to the physical manifestation of the organization, including its geographical distribution, positions, reporting lines, and communication channels.

Resources and Capabilities

• Successful organizations possess unique strategic resources and valuable capabilities that provide a foundation for growth.

Origins of Strategic Management

• Strategic management emerged in the late 1970s.
• Initially, focus was on competition as the primary driver of the business environment and profit maximization as the organization's main goal.
• Attention was on positioning the organization within its chosen markets relative to competitors to achieve a competitive advantage.
• The resource-based view (RBV) shifted the focus to understanding how organizations differed from competitors based on their capabilities and leveraging these differences for a competitive advantage.

Universal Principles of Strategic Management

• There are consistent principles across different views of strategic management.

Bidvest's Corporate Strategy

• Bidvest is a South African corporation focusing on diversification and innovation to grow its portfolio of successful, cash-generating businesses.
• They aim to achieve dominant market positions with broad product offerings in each sector.
• Bidvest invests in a mix of defensive, cyclical, and growth assets.

Discovery's Corporate Strategy

• Discovery is a financial services institution operating through various businesses, including Discovery Health, Discovery Life, Discovery Invest, and the popular Discovery Vitality wellness loyalty program.
• They are credited with the invention of the medical savings plan widely used by medical schemes.

Principle 1: Strategy Is About Positive Change

• The goal of strategic management is to bring about positive change for the entire organization.
• Positive change includes superior performance, competitive advantage, shareholder wealth creation, value creation for stakeholders, and even survival during difficult times.

Principle 2: Strategy Takes a Long-Term View

• Strategic management takes a long-term perspective, prioritizing wealth creation and sustainability over short-term gains.

The Big Picture

• The strategic management process involves continuous alignment with the external and internal environment.
• The African context heavily influences strategy development.
• Responsible competitiveness is a key objective for organizations.

Strategic Management Framework

• This framework guides organizations in achieving long-term success.
• The framework includes:
  • Defining the organization's vision and mission
  • Analyzing the external and internal environments
  • Creating strategic goals and objectives
  • Developing strategic initiatives and action plans
  • Implementing strategies and monitoring progress
  • Evaluating performance and making adjustments as needed.

Key Learning Outcomes

• Understanding the origins and key principles of strategic management.
• Defining strategy and its significance for organizations.
• Identifying the characteristics of strategic decision-making and providing guidelines for effective decision-making.
• Measuring the success of strategies and applying that knowledge in practical settings.
• Explaining a contemporary strategic management framework.