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Questions and Answers
What does sustainable competitive advantage refer to?
Synergy exists when a firm's components do not complement each other.
False
What are the three environments included in environmental analysis?
Remote external environment, industry environment, internal environment
The acronym PESTLE refers to Political, Economic, Social, Technological, Legal, and __________ factors.
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Match the aspects of organizational objectives with their descriptions:
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What is a key feature of a mission statement?
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Strategies are primarily focused on routine operations.
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Why is strategy considered significant in a business context?
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Which of the following is NOT a feature of well-made goals?
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A vision statement should be broad enough to encompass all aspects of an organization.
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What is the primary purpose of environmental scanning in the strategic management process?
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A goal is a desired future state or __________ that an organization tries to achieve.
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Match the components of the strategic management process with their descriptions:
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What is a major component of strategic management?
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Strategic management primarily concerns day-to-day operational decisions.
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What does the scope of a strategy refer to?
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Strategy is an interpretative plan formulated to give meaning to other plans in light of specific __________.
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Match the components of strategy with their definitions:
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What should organizations do when desired results from action plans are not produced?
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The development and implementation of strategy are independent of an organization's strategic capability.
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Identify one key external factor that strategic decisions are concerned with.
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Study Notes
Strategic Management
- Strategic management is the process of planning, implementing, and evaluating actions to achieve a company's goals.
- It involves analyzing the company's internal and external strengths and weaknesses.
- It also involves formulating action plans, executing those plans, and evaluating their effectiveness.
The Importance of Strategic Management
- Strategic management helps companies stay competitive by adapting to changing environments.
- It helps companies anticipate and respond to external forces and trends.
- It ensures that the company's resources are used effectively to achieve its goals.
Components of Strategy
- Scope: This refers to the breadth of a firm's strategic domain, meaning the number and types of industries, product lines, and markets it competes in or plans to enter.
- Goals and Objectives: These specify desired outcomes such as volume growth, profit contribution, or return on investment over a specific period.
- Resource Deployment: Strategy should outline how resources are to be obtained and allocated across businesses, product/markets, financial departments, and activities.
- Sustainable Competitive Advantage: Identifying and leveraging distinctive strengths relative to competitors.
- Synergy: Exists when the firm's businesses, products, markets, resource deployments, and competencies complement one another.
Organizational Objectives
- Profitability: Achieving financial success.
- Customer Service: Focusing on meeting customer needs and exceeding expectations.
- Employee Wellbeing and Welfare: Creating a positive and supportive work environment for employees.
- Social Responsibility: Operating in an ethical and sustainable manner, considering the broader social impact.
Strategy Formulation
- This involves analyzing the organization's environment and making strategic decisions about how it will compete.
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Environmental Analysis:
- Remote External Environment: Political, Economic, Social, Technological, Legal, and Environmental (PESTLE) factors.
- Industry Environment: Competitive behavior of rivals, bargaining power of buyers/customers and suppliers, threats from new entrants, and product substitution.
- Internal Environment: Strengths and weaknesses of the organization's resources (people, processes, IT systems).
Features of a Mission Statement
- Feasible: Attainable and achievable.
- Clear: Easy to understand and guide action.
- Inspiring: Motivating for management, staff, and the wider society.
- Precise: Neither too broad nor too narrow in scope.
- Unique: Distinctive and memorable.
- Analytical: Examines key components of the strategy.
- Credible: Believable and trustworthy to all stakeholders.
The Vision Statement
- Describes the organization's desired future state.
- Outlines dreams and aspirations for the future, aligned with stakeholder needs.
Goals and Objectives
- Goals are desired future states or objectives that an organization aims to achieve.
- They make the mission more concrete and specific.
- Well-defined goals:
- Precise and Measurable: Quantifiable and trackable.
- Critical and Significant: Focus on important areas.
- Realistic and Challenging: Ambitious but achievable.
- Time-Bound: Defined deadlines for achievement.
- Financial and Non-Financial Components: Cover both financial and non-financial aspects of success.
Strategic Management Process
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Environmental Scanning: Gathering, analyzing, and monitoring information relevant to the organization's strategic decisions.
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Strategy Evaluation: Regularly assessing the effectiveness of implemented strategies.
- Appraising Internal and External Factors: Understanding the root causes of current strategies.
- Measuring Performance: Tracking progress against goals and objectives.
- Corrective Actions: Making adjustments to strategies based on evaluation findings.
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Description
Explore the essential concepts and components of strategic management, including planning, implementation, and evaluation of actions to achieve company goals. Understand the importance of adapting to external forces and how to effectively utilize resources for competitive advantage.
