Strategic Management Concepts Quiz

Strategic Management and Business Policy

• Strategic management is a set of managerial decisions and actions that determines the long-run performance of an organization.
• Strategic management includes internal and external environmental scanning, strategy formulation (strategic or long-range planning), strategy implementation, and evaluation and control.

Phases of Strategic Management

• Firms generally evolve through four phases of strategic management:
  • Basic financial planning
  • Forecast-based planning
  • Externally oriented strategic planning
  • Strategic management

Benefits of Strategic Management

• Matching an organization's environment with its strategy, structure, and processes positively affects its performance.

• Strategic planning grows more important in unstable and uncertain environments.

• A survey of large corporations showed that the top three benefits of strategic management are: a clearer sense of strategic vision, a sharper focus on what is strategically important, and an improved understanding of a rapidly changing environment.

Impact of Globalization

• Globalization means integrated internationalization of markets and corporations.

• Globalization has changed how modern corporations conduct business.

Impact of Innovation

• Innovation, in business, describes new products, services, methods, and approaches that provide extraordinary returns.

• Innovation drives business opportunities.

• Implementing potential innovations is essential for businesses to be remarkable.

Impact of Sustainability

• Sustainability refers to using business practices to manage the triple bottom line.

• The triple bottom line involves managing: -Traditional profit/loss. -Social responsibility. -Environmental responsibility.

Theories of Organizational Adaptation

• Population ecology theory: Organizations successfully established in a niche struggle to adapt to changing conditions because of inertia.

• Institutional theory: Organizations may adapt to change by imitating successful organizations.

Strategic Choice Perspective

• This perspective complements the adaptation perspective by proposing that organizations can reshape their environment.

Creating a Learning Organization

• Strategic flexibility: The ability to change from one dominant strategy to another.

• A learning organization learns from its experiences and transfers that knowledge.

• Organizational learning is a critical component for competitiveness.

Basic Model of Strategic Management

• Strategic management consists of four basic elements: environmental scanning, strategy formulation, strategy implementation, and evaluation and control.

Basic Model of Strategic Management

• Environmental scanning: Monitoring, evaluating, and disseminating information from internal and external environments to key people within a corporation.

Strategy Formulation

• Strategy formulation involves analysis, decisions, and actions that provide criteria for getting a competitive advantage. Defining competitive advantage, crafting the corporate mission, setting objectives, and creating policies are key parts of this.

Basic Model of Strategic Management

• Mission: The purpose or reason for an organization's existence.

• Vision: What an organization wants to become.

• Objectives: Measurable results of planned activity.

Strategic Management Strategy

• Corporate strategy lays out the overall direction, focusing on growth of the business and management of various businesses and product lines.

• Business strategy aims to improve competitive position at the business unit or product level.

• Functional strategy guides functional areas to reach corporate/business unit goals, maximizing productivity.

Hierarchy of Strategy

• A hierarchy of strategy encompasses one strategy nested within another, supporting each other. Corporate, business, and functional strategies are examples.

Basic Model of Strategic Management

• Policy: A broad guideline for choices to link strategy development and implementation.

• Strategy implementation: Putting strategies into action.

• Evaluation and Control: Monitoring actual performance against desired performance.

Initiation of Strategy: Triggering Events

• A triggering event is a stimulus for a change in strategy. Examples include a new CEO, significant performance gaps, external intervention, and others.

Strategic Decision-Making

• Strategic decisions are unique, result in significant resource commitments, and set precedents.

Mintzberg's Modes of Strategic Decision-Making

• Entrepreneurial mode: Strategy developed by a single powerful individual.

• Adaptive mode: Reactive solutions to problems rather than proactive opportunity seeking.

• Planning mode: Systematic information gathering, alternative generation, and rational choice.

• Logical incrementalism: A synthesis of planning, adaptive, and entrepreneurial modes.

Strategic Decision-making Process

• The 8 Steps: -Evaluate current performance -Review corporate governance -Scan and assess external environment -Scan and assess internal environment -Analyze strategic factors -Generate, evaluate, and select strategies -Implement strategies -Evaluate strategies

Strategic Audit

• A checklist of questions categorized by corporate function to systematically assess the organization.

• Questions include whether strategic CSR initiatives drive performance and lead to competitive advantage.