Podcast
Questions and Answers
What is strategic management?
What is strategic management?
The art and science of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieve its objectives.
What is the purpose of strategic management?
What is the purpose of strategic management?
To exploit and create new and different opportunities for tomorrow.
In essence, what is a strategic plan?
In essence, what is a strategic plan?
A company's game plan.
What are the three stages of the strategic management process?
What are the three stages of the strategic management process?
Signup and view all the answers
What are some attributes of strategy formulation?
What are some attributes of strategy formulation?
Signup and view all the answers
What are some attributes of strategy implementation?
What are some attributes of strategy implementation?
Signup and view all the answers
What are some steps in strategy implementation?
What are some steps in strategy implementation?
Signup and view all the answers
According to Peter Drucker, what is the prime task of strategic management?
According to Peter Drucker, what is the prime task of strategic management?
Signup and view all the answers
The strategic management process is purely analytical, relying solely on quantitative data.
The strategic management process is purely analytical, relying solely on quantitative data.
Signup and view all the answers
What is intuition based on?
What is intuition based on?
Signup and view all the answers
In what conditions is intuition particularly useful for decision-making?
In what conditions is intuition particularly useful for decision-making?
Signup and view all the answers
What is competitive advantage?
What is competitive advantage?
Signup and view all the answers
How can a firm sustain a competitive advantage?
How can a firm sustain a competitive advantage?
Signup and view all the answers
Study Notes
Strategic Management
- Strategic management is a process of formulating, implementing, and evaluating cross-functional decisions to achieve organizational objectives.
- Its purpose is to create and exploit opportunities for the future.
- A strategic plan is a company's game plan.
- The process has three stages: formulation, implementation, and evaluation.
Strategy Formulation
- Key attributes include vision and mission statements, external opportunities and threats, internal strengths and weaknesses, long-term objectives, and alternative strategies.
- The stage emphasizes taking advantage of external opportunities and avoiding threats.
Strategy Implementation
- Key components are annual objectives, policies, employee motivation, and resource allocation.
- Steps involve creating a supportive culture, effective organizational structure, redirected marketing efforts, budget preparation, and information systems development.
Strategy Evaluation
- Components include internal and external reviews, performance measurement, and corrective actions.
- The evaluation process assesses whether the strategy is still achieving its objectives.
Intuition and Analysis
- The management process combines quantitative and qualitative information under uncertainty.
- Intuition relies on past experiences, judgment, and feelings.
- Intuition is valuable in situations of uncertainty, limited precedent, complex variables, and multiple alternatives.
Competitive Advantage
- Competitive advantage is anything that a firm does particularly well compared to competitors.
- Sustaining competitive advantage relies on adapting to external and internal changes, and implementing strategies that leverage those factors.
Strategists' Role
- Strategists gather, analyze, and organize information.
Vision and Mission Statements
- A vision statement answers "What do we want to become?"
- A mission statement answers "What is our business?"
Internal Factors
- Internal factors include financial ratios, performance measures, and industry averages, along with survey data.
Long-Term Objectives
- Long-term objectives are specific results a company seeks, often over a year or more.
Strategies
- Strategies are the methods to achieve long-term objectives.
Annual Objectives
- These are short-term milestones to reach long-term objectives.
Policies
- Policies outline how annual objectives will be achieved.
Strategic Management Model
- The model is dynamic and continuous, becoming more formalized in larger organizations.
- Communication is key to successful strategic management.
Benefits of Strategic Management
- Enhanced communication, understanding, and commitment are key benefits.
- Non-financial benefits include improved awareness of threats, understanding of competitor strategies, increased employee productivity, reduced resistance to change, and better problem prevention.
Reasons for Lack of Strategic Planning
- Lack of knowledge, poor reward structures, time constraints, costs, and laziness can lead to a lack of strategic planning in some firms.
Business and Military Strategies
- Business strategy assumes competition; military strategy assumes conflict.
Operating, Industry, and Remote Environments
- The firm's external environment includes operating, industry, and remote factors.
- The operating environment includes competitors, creditors, labor, supplies, and customers.
- The industry environment includes entry barriers, supplier power, buyer power, substitute availability, and competitive rivalry.
- The remote environment includes economic, social, political, technological, and ecological factors.
External Audit
- The purpose is to identify opportunities and threats.
- Steps include gathering competitive intelligence, assimilating information, and evaluating it.
External Factors
- External factors should be long-term oriented, measurable, applicable to competing firms, and hierarchical.
I/O View and Industry Properties
- The I/O view emphasizes industry factors over internal factors.
- The industry properties include economies of scale, barriers to entry, market differentiation, and the economy itself.
Economic Forces
- These include GDP, dollar value trends, and unemployment rates.
Government Regulation
- Antitrust legislation, tax rates, lobbying activities, and patent laws are important opportunities and threats that firms encounter.
Political, Governmental, and Legal Forces
- These include government regulation and protectionist policies.
Technological Forces
- Technologies are critical in making strategic choices.
Competitive Forces
- Collecting and evaluating competitor data is important.
Characteristics of Competitive Firms
- Market share, recognizing the specific business, problem-solving skills, innovation, acquisitions, people, and quality are key.
Competitive Intelligence
- Competitive intelligence is a systematic and ethical process for gathering and analyzing information to understand competitors and industry trends.
Sources of Competitive Intelligence
- Information comes from diverse sources like the internet, employees, consultants, trade journals, and managers.
Objectives of Competitive Intelligence
- Competitive intelligence aims to understand competitors, identify vulnerabilities, and predict moves.
Market Commonality and Resource Similarity
- Market commonality is the extent to which firms compete in the same markets.
- Resource similarity is the extent to which resources and capabilities are comparable between competitors.
Five Forces Model
- The model analyzes industry rivalry, supplier power, buyer power, and threat of substitutes to determine potential profitability.
Profitability Determination
- The process involves identifying each force's key elements, evaluating their impact, and determining if the industry is profitable.
Consumer Buyer Power
- Consumer power is high when products are standard or undifferentiated.
Backward Integration
- Backward integration is gaining control of a supplier.
Sources of External Information
- External information comes from both published and unpublished sources.
- Unpublished sources include customer surveys, market research, and speeches.
- Published sources can be found on websites.
Forecasting
- Forecasting is an educated estimate of future trends.
Quantitative and Qualitative Techniques
- Quantitative techniques use historical data.
- Qualitative techniques use descriptive methods.
Assumptions
- Assumptions are estimates of future events based on available information.
External Factor Evaluation (EFE)
- This matrix analyzes external factors (economic, social, cultural, political, governmental).
Competitive Profile Matrix (CPM)
- The CPM identifies competitors' strengths and weaknesses in relation to the firm's strategic position.
Internal Audit
- An internal audit focuses on internal strengths/weaknesses and assesses opportunities/threats relative to the mission.
Distinctive Competencies
- Distinctive competencies are firm strengths that competitors cannot easily match or imitate.
Resource-Based View (RBV)
- RBV emphasizes the importance of internal resources in achieving competitive advantage.
Categories of Resources (RBV)
- Physical, human, and organizational resources.
Identifying Valuable Resources
- Identifying valuable, rare, inimitable, and non-substitutable (VRIN) resources is key to competitive advantage.
Organizational Culture
- Organizational culture is a pattern of behaviors developed over time in response to external and internal challenges.
- It encompasses heroes, symbols, myths, rituals, and beliefs.
Management Functions
- The four key management functions are planning, organizing, motivating, staffing, and controlling.
- Each function is relevant to particular stages of the strategic management process.
Motivating Employees
- Leadership, group dynamics, communication, and organizational change are critical to motivating employees.
Marketing Functions
- Marketing functions include customer analysis, selling products and services, and product/service planning.
Customer Analysis
- Customer analysis involves surveys, market research, and marketing positioning strategies to understand customers.
Financial Ratios
- Liquidity ratios, leverage ratios, activity ratios, and profitability ratios provide insight into a company's financial health.
Production/Operations Functions
- Production/operations functions include process, capacity, inventory, workforce, and quality management.
Management Information Systems (MIS)
- MIS aims to improve managerial decision-making in enterprises.
Value Chain Analysis
- Value chain analysis helps identify core competencies and distinctive competences; benchmarking is often included.
Studying That Suits You
Use AI to generate personalized quizzes and flashcards to suit your learning preferences.
Description
This quiz covers fundamental concepts of strategic management, including the processes of formulation, implementation, and evaluation of strategies. It emphasizes the importance of aligning organizational objectives with external opportunities and internal strengths. Engage with key attributes that define effective strategic plans.
