Strategic Management in Business

Study Notes

Strategic management combines insights from multiple subjects to analyze, formulate, and implement strategic decisions that improve performance.

Corporate strategy focuses on where to compete and the company's scope in terms of markets and industry, directed by the top management team.
Business strategy focuses on how to compete, using a competitive approach in an industry and market, and is steered by management of specific market/industry branches.
Functional area strategy focuses on implementing the chosen business strategy, guided by the heads of different functional areas (marketing, R&D, supply chain).

Strategy is NOT about operational effectiveness, best practices, or benchmarking, but about choosing activities that align with the company's interests and focus on long-term goals.
Strategy involves choosing to perform activities differently or performing different activities than competitors.

Strategy is the overarching direction set by managers, plus competitive moves and business approaches to compete successfully, improve performance, and grow the business.

Analysis: identifying fundamental issues in the competitive environment that the company must address through its strategy.
Decision: formulating a strategy that addresses these issues and leads to a decision (what to do and not do).
Actions: creating a plan for implementing the chosen strategy (what functional area will do what).

Strategic analysis evaluates the match between the company's internal and external environment.
Internal analysis focuses on strengths (features or resources that give a company an advantage) and weaknesses (features or resources that put a company at a disadvantage).
External analysis focuses on opportunities (external elements that a company can exploit) and threats (external elements that pose a challenge or risk).

SWOT analysis helps companies organize internal and external insights to develop strategic decisions and actions.

Competitive advantage is achieved when a company meets its customer's needs more effectively or efficiently than its competitors thanks to its successful strategy.
Sustainable competitive advantage is connected to elements that give customers a reason to return continuously and stay loyal to the company.