Strategic Management: Strategy Development

Choose a study mode

Play Quiz
Study Flashcards
Spaced Repetition
Chat to Lesson

Podcast

Listen to an AI-generated conversation about this lesson
Download our mobile app to listen on the go
Get App

Questions and Answers

According to Michael Porter, what fundamental choice underlies effective strategy formulation?

  • Expanding into as many market segments as possible to diversify risk.
  • Maximizing resource allocation across all possible ventures.
  • Choosing what *not* to do, focusing on strategic exclusions. (correct)
  • Adopting every innovative technology available to maintain a competitive edge.

What primary role does strategy play in an organization?

  • It primarily serves to minimize operational costs.
  • It directs how an organization fulfills its objectives and needs. (correct)
  • It mainly handles day-to-day employee management.
  • It focuses on short-term financial gains.

A company's strategic plan includes selecting which actions to undertake. How does this benefit the organization?

  • It helps the organization focus its efforts and resources on key activities. (correct)
  • It allows the company to react unpredictably to market changes.
  • It ensures that all departments operate independently for maximum efficiency.
  • It enables the company to reduce its overall operational costs immediately.

What is the main purpose of a strategic plan for an organization?

<p>To outline why the organization exists, its goals, and how to achieve them. (D)</p>
Signup and view all the answers

Why is it important for a strategic plan to be adaptable?

<p>To accommodate changes and new information as they arise. (D)</p>
Signup and view all the answers

What are the first three steps an organization should take when developing a strategy?

<p>Assess environment using SWOT/PESTLE, develop vision and mission, then agree on priorities. (D)</p>
Signup and view all the answers

What is the role of environmental assessment in strategic planning?

<p>To help an organization understand external and internal factors via methods like SWOT and PESTLE. (C)</p>
Signup and view all the answers

What should be the key focus when implementing effective strategic planning?

<p>Concentrating efforts on the most critical issues facing the organization. (A)</p>
Signup and view all the answers

In the Impact-Effort Grid, what actions are classified as 'wow'?

<p>High impact and easy to do. (D)</p>
Signup and view all the answers

How do vision and mission statements relate to organizational objectives?

<p>Objectives help achieve the vision and mission statements. (A)</p>
Signup and view all the answers

A company sets objectives that are 'strategic orientated'. What does this indicate?

<p>The objectives are designed to achieve long-term strategic goals. (A)</p>
Signup and view all the answers

How do goals differ from objectives in strategic planning?

<p>Goals represent the broader purpose, while objectives are specific actions to achieve goals. (D)</p>
Signup and view all the answers

What does the 'M' stand for in 'SMART' objectives?

<p>Measurable (D)</p>
Signup and view all the answers

What critical element should be included when setting SMART objectives to foster growth and high performance?

<p>Objectives should include a 'stretch' to encourage individuals to exceed their typical performance. (A)</p>
Signup and view all the answers

How do organizational strengths and weaknesses affect strategy creation?

<p>They are combined with other factors to shape strategic decisions. (C)</p>
Signup and view all the answers

According to the content, what three components combine to give direction to ‘Strategic Decisions’?

<p>Strategic Investment, Functional Area Strategies, Sustainable Competitive Advantage (D)</p>
Signup and view all the answers

In Michael Porter's generic strategies, what is the primary focus of a firm pursuing a 'cost leadership' strategy?

<p>Achieving the lowest operational costs in the industry. (C)</p>
Signup and view all the answers

What defines a 'focused differentiation' strategy according to Michael Porter?

<p>Concentrating on a narrow market segment and offering highly customized products. (C)</p>
Signup and view all the answers

What is the key characteristic of a company employing a 'best-cost provider' strategy?

<p>Balancing high quality with competitive pricing. (C)</p>
Signup and view all the answers

If a business decides to focus on providing a unique product within a niche market, which of Porter's generic strategies are they employing?

<p>Focused Differentiation (D)</p>
Signup and view all the answers

Flashcards

What is strategy?

How an organization meets its needs and objectives by establishing priorities, choosing actions, creating a plan, allocating resources, and being proactive.

What is a strategic plan?

A document that explains why an organization exists, its aims, and how it intends to achieve them. It helps focus the organization's vision and priorities.

Strategic Plan: Living Document

A plan that is continuously updated to reflect new information.

Keys to effective strategic planning

Focus only on the most important issues, be willing to question, and produce a document.

Signup and view all the flashcards

Vision statement vs. Mission statement

Vision statements are longer term and mission statements are shorter term.

Signup and view all the flashcards

What is a Goal?

A broad, long-term purpose that may not be easily measurable.

Signup and view all the flashcards

What is an Objective?

A specific, short-term action that contributes to achieving a goal and must be measurable.

Signup and view all the flashcards

What are SMART Objectives?

An objective that is Specific, Measurable, Attainable, Realistic, and has a Time period.

Signup and view all the flashcards

Broad Cost Leadership

Achieving competitive advantage through lower costs.

Signup and view all the flashcards

Broad Differentiation

Achieving competitive advantage through differentiation

Signup and view all the flashcards

Focused Cost Leadership

Offering the lowest costs to a specific segment of customers.

Signup and view all the flashcards

Focus Differentiation

Offering unique products to a specific segment of customers.

Signup and view all the flashcards

Best-Cost Provider

Give customers more value for the money.

Signup and view all the flashcards

Study Notes

  • Strategic management involves developing a strategy for an organization to meet its needs and objectives

What is a strategic plan?

  • A strategic plan is a document outlining why an organization exists
  • It describes what the organization aims to achieve and how it intends to do so
  • It helps focus the organizations vision and priorities

Strategic planning

  • Strategic planning does not predict the future
  • It does not replace good leadership and judgement
  • It doesn't involve following a smooth, straightforward process
  • A strategic plan is a living document that can and must adapt as needed

Steps in Strategic Planning

  • Start with a new or existing organization
  • Assess the environment using tools like Porter's Five Forces, SWOT analysis, and PESTLE analysis
  • Develop a vision and mission statement
  • Agree on priorities
  • Develop a strategy
  • Implement the strategy
  • Monitor and evaluate the results

Keys to Effective Strategic Planning

  • Focus only on the most important issues
  • Be willing to question assumptions
  • Produce a document outlining the plan

Impact Effort Grid

  • The Impact-Effort Grid is a tool to visualize and prioritize tasks based on their effort and impact
  • It allows for quick decisions on what activities to tackle
  • The grid is split into four quadrants, "No-Go", "How?", "Now", and "Wow!"

Setting Objectives

  • Objectives must be specific to achieve a vision statement (longer term) and a mission statement (shorter term)
  • Requires setting strategic orientated objectives and operational objectives

Goals vs Objectives

  • A goal is a greater purpose and a long-term outcome that may not be easy to measure
  • An objective is a specific, short-term action that contributes to achieving a goal and must be measurable

Setting SMART Objectives

  • SMART objectives focus on important issues
  • Specific: Objectives should be well-defined and clear
  • Measurable: Progress should be quantifiable
  • Attainable: Objectives should be realistically achievable
  • Realistic: Objectives should be relevant to the organization's goals
  • Time period: Objectives should have a defined timeframe for completion
  • Reflect the potential capability for success
  • Ensure successful performance tracking
  • Requires "stretch" to bring out the best in people

Crafting a Strategy

  • To craft a strategy consider organizational strengths and weaknesses
  • Consider competitor strengths and weaknesses
  • Consider market needs, attractiveness, and key success factors

Strategic Alternatives

  • Michael Porter's 5 Competitive Strategies are:
    • Broad Cost Leadership
    • Broad Differentiation
    • Best Cost Provider
    • Focused Cost Leadership
    • Focused Differentiation

Studying That Suits You

Use AI to generate personalized quizzes and flashcards to suit your learning preferences.

Quiz Team

Related Documents

Strategic Management: Develop a Strategy - Lecture Notes

More Like This

Use Quizgecko on...
Open
Browser
Browser