Strategic Management Overview

A situation of perfect competition is a hypothetical market structure where competition is at its highest level. It assumes a large number of buyers and sellers, homogeneous products, and free entry and exit.

A company's theory about how to gain a competitive advantage. It outlines how a firm will compete in the marketplace and achieve superior performance.

The process of analyzing the external and internal environments, setting goals, choosing the best strategic options, implementing those options, and evaluating the results.

The purpose of the company, stating its reason for existence and what it aims to achieve.

A clear articulation of the company's desired future achievements, outlining what it wants to become.

A set of guiding principles that define how employees should conduct themselves, shaping the company's culture and values.

A precise and measurable desired future state, setting specific targets for the company to achieve.

They provide a foundation for allocating company resources, establish a general tone and organizational climate, specify organizational purposes, and guide the strategy process, starting with the mission statement.

A statement that describes the company's purpose, including aspects like its customers, main products, target markets, technology, philosophy, self-concept, public image, and concern for employees.

A strategic positioning that focuses on offering products at the lowest cost within a market, seeking to achieve a cost advantage.

Objectives should be SMART: Specific, Measurable, Achievable, Relevant, and Time-Bound. This ensures clear goals that can be tracked and evaluated.

Analyzing external factors that can influence a company's success, identifying opportunities and threats. Examples include interest rates, demographics, social trends.

Reviewing a company's internal resources and capabilities to assess its strengths and weaknesses.

A strategic choice that involves deciding how to position a business within a specific market or industry.

A strategic choice that involves deciding which business to enter or exit, determining the overall portfolio of businesses a company will pursue.

Translating strategic plans into concrete actions, involving the implementation of strategies at functional, business, and corporate levels.

A feedback loop provides information to corporate-level managers about the achievement of strategic goals, the degree of competitive advantage gained, and the effectiveness of chosen strategies.

Executives responsible for overseeing strategy development for the entire organization, ensuring that business strategies contribute to overall profitability and growth.

Managers tasked with translating statements of intent into concrete actions for individual businesses, taking the overall strategy and making it operational.

Executives responsible for specific business functions, such as marketing, finance, or operations, who develop functional strategies to support the achievement of strategic objectives.

When a company's profitability exceeds the average profitability of companies in its industry. It arises from doing something better than competitors, either by having a cost advantage or by differentiating its products.

Strategies that enable a company to maintain above-average profitability for several years. It is a long-term, sustainable advantage over competitors.

Strategies that lead to high profits in the short term but are not sustainable. Competition usually emerges and erodes the advantage.

A competitive advantage that is difficult for competitors to imitate. It is often based on unique resources, capabilities, or a combination of both.

When a company's offerings are average, and customers have no preference for its products or services. The company has no cost advantage compared to others.

When a company faces disadvantages compared to its competitors. Customers may have an aversion to its offerings, it may have higher costs than rivals, or it may have a negative reputation.

Competitive advantage cannot be measured directly. It is often inferred from a company’s economic performance, looking at profitability as a key indicator. Accounting measures like ROA, ROS, and ROE and economic measures like earnings and returns in excess of the cost of capital are used.

Strategies that emerge from the formal strategic management process, reflecting the planned approach to competitive advantage.

Strategies that arise spontaneously or unexpectedly in response to changing conditions, involving unplanned shifts in direction or emerging from the actions of individuals or groups within the company.

Guideline for effective leadership, a set of related actions to increase a company’s performance, and a crucial element of strategic leadership, shaping the company's direction and enabling it to create a competitive advantage.

The ability to create a competitive advantage by effectively managing the strategy-making process. It involves vision, communication, and the ability to align resources and actions toward achieving the company's strategic goals.

Focusing on the overall direction of the company with a long-term perspective.

Focusing on doing things right, efficiently, and effectively, ensuring the smooth execution of operational details.

It's about discovering and exploiting differences to create a competitive advantage. By identifying unique capabilities or positioning, companies can differentiate themselves and gain an edge in the marketplace.