STRAT 2 QUIZ#1

• Strategic management is the process of decision making and planning which leads to the development of an effective strategy to help achieve organizational objectives
• Strategists determine objectives and make strategic decisions
• Strategic management focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success
• Strategic management can be defined as a decision-making process that leads to the development of the strategic position which helps to determine the future sustainability and profitability of the organization
• It synergizes the strategic and operational orientation and provides an overall framework for resource allocation among different units and time horizons
• The purpose of strategic management is to exploit and create new and different opportunities for tomorrow
• The strategic management process involves strategic analysis of an organization, strategy-focused objective-setting, strategy formulation, strategy implementation, and strategic evaluation and control
• Strategic analysis involves analyzing the industry in which the organization operates and analyzing external and internal environmental factors
• Strategy-focused objective-setting establishes long-range objectives for the organization to achieve the vision and mission
• Strategy formulation entails making decisions about selecting the strategy to achieve long-range objectives
• Strategy implementation is concerned with putting the formulated strategy into action through deployment of necessary resources and aligning the organizational structure, systems, and processes with the selected strategy
• Strategic evaluation and control establish standards of performance, monitor progress in strategy implementation, and initiate corrective adjustments if needed
• Strategic management is complex due to uncertainty about the future, different priorities among managers in different departments, and the need for major multifarious changes in the organization
• The strategic management process results in the articulation of strategic intent, corporate strategy, business-level strategy, and functional strategy
• Organizations exercise operational control as well as strategic control in the strategic management process
• The strategic management process has 3 distinct phases: planning, implementation, and evaluation
• Formulation phase involves deliberations and decisions about the broad scope of business, corporate strategy, and core values and commitments based on SWOT factors and managerial aspirations
• Implementation phase involves resource allocation decisions, strategic change, and the need for soft skills to steer the implementation
• Strategy implementation requires:

  • Developing an “execution” mind-set
  • Integration among different units’ processes and functions
  • Creation of a sense of ownership among managers for the decisions
  • Implementation requires different skills, attitudes, knowledge, and abilities
  • Facilitating new learning
  • Preparation for implementation precedes implementation, with the groundwork done well before
  • Communicating clearly and effectively is important
• • Designing an appropriate arrangement that fits the organization’s new or emerging plans and activities would also require developing new key managers
• The objective of the evaluation phase is to check if there is any fundamental flaw in the strategy that can be corrected

  • Strategic evaluation and control help in avoiding suicidal mistakes and building flexibility in strategic decisions
  • Judging performance through operating results helps in making course corrections sooner
  • Deviation in results compared to the desired outcome can imply the need for revision of standards, reconfiguration of resource allocation, or upgrading of employee skills
  • Broad qualitative criteria can be the guidelines to develop quantitative criteria for evaluation
• Basic concepts and issues in Strategic Management include:

  • Organizational philosophy
  • Organizational policy
  • Functional strategy and competitive strategy
  • Environmental scanning
  • Core competency
  • Code of ethics
  • Levels of strategy-making
  • Value chain
  • Competitive advantage
• Managers face the challenge of ensuring sustainability and profitability amid unpredictable and novel circumstances from the external environment

  • Business conditions have become more complex with disruptive technologies, changing geopolitical situations, and emergence of dominant economic forces like BRIC countries
  • Managers need systems for decision-making that enable them to capture uncertainties and factor in major unpredictable changes
  • Empowerment, collaborations, and partnerships between departments are necessary for success
• • Organizations need to anticipate the impact of the environment and have the requisite resources to make good of opportunities
• Benefits of a strategic approach to managing include:

  • Providing better guidance to the entire organization
  • Making managers more alert to changes in the external environment
  • Providing a rationale for evaluating competing budget requests
  • Unifying strategy-related decisions by managers across the organization
  • Creating a more proactive management posture
• Strategies help managers to plan properly by guiding them to make operational decisions

  • Strategies and policies must be clearly understood and implemented in practice for a consistent and effective framework for enterprise plans
  • Detailed plans, also called tactics, are the action plans through which strategies are pursued and implemented
  • Strategies must be supported by effective tactics
• Economic Development is an extension of traditional economics and political economy
• Traditional economics focuses on efficient resource allocation and optimal growth of resources over time
• Political economy deals with social and institutional processes through which economic and political elites influence resource allocation
• Economic development focuses on mechanisms to bring about rapid improvements in standards of living for the masses in developing nations
• Development economics is concerned with formulating public policies for economic, institutional, and social transformations
• Economic development leads to an improvement in economic welfare of the poorest segment of the population
• Economic growth should result in changes in educational level, output distribution, and economic structural change
• Development is measured by:

  • Income per capita
  • Gross domestic product (GDP)
  • Gross national income (GNI)
• Income per capita should grow faster than the population growth rate for economic development
• Amartya Sen argues that poverty should be measured by a person's capabilities and freedoms, not just income or utility
• Alternative measures of welfare include the Physical Quality of Life Index (PQLI) and the Human Development Index (HDI)
• Three Core Values of Development:

  • Sustenance: basic goods and services necessary for a minimum level of living
  • Self-esteem: feeling of worthiness promoted by social, political, and economic systems
  • Freedom: society having a variety of alternatives to satisfy wants and individuals enjoying real choices
• Objectives of Development:

  1. Increase availability and distribution of basic life-sustaining goods

  2. Raise levels of living, provide more jobs, better education, and enhance cultural and human values

  3. Expand economic and social choices by freeing individuals and nations from servitude and dependence
• Historical View of Economic Development:

  • Capitalism rose in the West from the 15th to 18th centuries
  • Economic growth primarily occurred in capitalist West and Japan in the last century
  • Japanese, South Korean, and Taiwanese approaches to economic development involved government-business cooperation and interventions for infrastructure, education, and stability