16 Questions
According to Michael Porter's definition of strategy, what is strategy NOT about?
Operational effectiveness, best practices, and benchmarking
What is the primary focus of corporate strategy?
Where to compete, and the scope of the company in terms of markets and industry
Which level of management is typically responsible for guiding operating strategy?
Middle management (managers of production facilities)
What is the primary goal of strategic management?
To create and maintain a sustainable competitive advantage
What is the main essence of strategy according to Michael Porter's definition?
Choosing to perform activities differently or performing different activities than competitors
What is the main focus of internal analysis in strategic analysis?
Evaluating the company's resources, capabilities, values, goals, systems, and structure
What is the primary focus of business strategy?
How to compete in an industry and market
What do opportunities refer to in external analysis?
External elements that a company can exploit
What is strategic management primarily concerned with?
Analyzing and implementing strategic decisions
What is the purpose of SWOT analysis in strategic management?
To organize internal and external insights and develop strategic decisions and actions
According to Thompson's definition of strategy, what is the primary role of managers?
Setting the overreaching direction and making competitive moves
What is the primary focus of functional area strategy?
How to implement the chosen business strategy
What is a sustainable competitive advantage connected to?
Elements that give customers a reason to return continuously
What is the first step in the strategy process?
Strategic analysis
What is the main focus of strategic analysis?
Evaluating the match between the company's internal and external environment
What is the main difference between a competitive advantage and a sustainable competitive advantage?
A competitive advantage is short-term, while a sustainable competitive advantage is long-term
Study Notes
Strategic Management
- Strategic management combines insights from multiple subjects to analyze, formulate, and implement strategic decisions that improve performance.
Corporate, Business, and Functional Strategies
- 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).
Michael Porter's Definition of Strategy
- 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.
Thompson's Definition of Strategy
- Strategy is the overarching direction set by managers, plus competitive moves and business approaches to compete successfully, improve performance, and grow the business.
3 Parts of Strategy
- 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
- 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
- SWOT analysis helps companies organize internal and external insights to develop strategic decisions and actions.
Competitive Advantage
- 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.
Explore the importance of strategic management in business, including corporate strategy, business strategy, and its role in improving performance.
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