Strategic Management Introduction

Strategic Management Overview

• Strategic management involves analyzing, deciding, and acting to create and sustain competitive advantages.
• A successful strategy begins with a thorough diagnosis of competitive challenges faced by an organization.
• Strategy is defined as goal-directed actions that help achieve superior performance compared to competitors.

Levels of Strategic Decisions

• Strategic Decisions:

  • Made by senior leaders.
  • Affect the entire organization.
  • Focus on long-term objectives and sustainable competitive advantage.
  • Involve complex evaluations based on uncertain or incomplete information.

• Tactical Decisions:

  • Concern how to meet strategic objectives and implement strategies.
  • Dependent on overall strategy, requiring fine-tuning and adjustments.

• Operational Decisions:

  • Focus on short-term objectives and day-to-day management.
  • Dependent on broader strategies and tactics of the organization.

Organizational Vision and Mission

• Vision Statement:

  • An inspiring and long-term goal that answers "What do we want to become?" and is pivotal in strategic planning.

• Mission Statement:

  • Encompasses the company’s purpose, basis of competition, and competitive advantage.

Analyzing the External Environment

• Environmental scanning and monitoring are crucial for accurate forecasting and strategic decision-making.
• The general environment significantly impacts a firm's strategies and overall performance.

PESTEL Framework

• A strategic tool for analyzing macro-environmental factors affecting a business.

  • Political Factors:

    • Influenced by government regulations and geopolitical considerations, impacting opportunities and risks in markets.

  • Economic Factors:

    • Include metrics like inflation, unemployment, economic growth, and trade, affecting strategic planning.

  • Social Factors:

    • Assess consumer mentality and demographic trends influencing market dynamics.

  • Technological Factors:

    • Recognize potential advancements that can enhance efficiency and prevent obsolescence.

  • Environmental Factors:

    • Address environmental impact and sustainability, with governments and consumers favoring responsible firms.

  • Legal Factors:

    • Involve awareness of regulations to avoid legal issues and costs, often linked to political factors.

Competitive Environment: Porter's Five Forces Model

• Tool for analyzing the competitive pressures within an industry, influencing business strategy.

  • Threat of New Entrants:

    • Low in the airline industry due to high barriers such as massive operational costs and complex regulations.

  • Industry Competition:

    • High in the airline sector, leading to price parallels and similar service offerings among major airlines.

  • Bargaining Power of Buyers:

    • High buyer power enhances competitive challenges, as consumers easily switch between airlines, aided by price comparison tech.

  • Bargaining Power of Suppliers:

    • High due to reliance on specific inputs like fuel, aircraft (Airbus, Boeing), and labor, influencing overall costs.

  • Threat of Substitutes:

    • Low to moderate, with alternatives like trains or buses having limited impact unless new technologies emerge.

Comparison of Five Forces and SWOT

• The Five Forces model focuses on competitive environment analysis and specific market viability, while SWOT provides a broader assessment of strengths and weaknesses.
• SWOT helps outline future strategic options, but Five Forces analysis emphasizes external competitive factors affecting an organization's position.

This quiz covers the basics of Strategic Management, emphasizing its importance in tourism, hospitality, and events organizations. You'll explore the analyses, decisions, and actions essential for creating and sustaining competitive advantages in various sectors. Test your understanding of the foundational concepts introduced in the course.