Strategic Management in Business

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Questions and Answers

What is the primary objective of strategic management?

To align with short-term goals

To improve performance regarding strategic issues (correct)

To focus on best practices and benchmarking

To do everything and avoid choosing

What is the primary focus of strategic management?

To create a competitive advantage for a short period

To only focus on internal analysis of the company

To create and maintain a sustainable competitive advantage (correct)

To only focus on external analysis of the company

What level of management is typically responsible for corporate strategy?

Top management team (CEO, CFO) (correct)

Middle management

Functional area heads

Market/industry branch managers

What is the purpose of strategic analysis?

To evaluate the match between the company's internal and external environment Signup and view all the answers

What is the focus of business strategy?

How to compete Signup and view all the answers

What are the two main internal factors analyzed in internal analysis?

Strengths and weaknesses Signup and view all the answers

What is the main essence of strategy according to Michael Porter's definition?

Choosing to perform activities differently Signup and view all the answers

What is the purpose of SWOT analysis?

To organize internal and external insights and develop strategic decisions and actions Signup and view all the answers

What is the primary goal of operating strategy?

To execute business and functional area strategy Signup and view all the answers

What is achieved when a company meets its customer's needs more effectively or efficiently than its competitors?

Competitive advantage Signup and view all the answers

Who is responsible for guiding functional area strategy?

Heads of different functional areas (marketing, R&D, supply chain) Signup and view all the answers

What is required for a successful strategy?

A long-term focus and thorough analysis Signup and view all the answers

What is the definition of strategy according to Thompson?

The overreaching direction set by managers, plus competitive moves and business approaches Signup and view all the answers

What is NOT a characteristic of strategy according to Michael Porter's definition?

Benchmarking and best practices Signup and view all the answers

What is the first step in the strategy process?

Strategic analysis Signup and view all the answers

What is the result of a company's successful strategy?

Customers return continuously and stay loyal to the company Signup and view all the answers

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.

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Description

This quiz covers the fundamentals of strategic management, including corporate strategy and business strategy. It explores the key concepts and decisions involved in improving business performance.