Introduction to Strategic Management

• The strategic management process is the framework used by managers to make decisions that will enable their organizations to achieve long-term goals.
• The competitive advantage of an organization is based on various activities within the company, including creating, producing, selling, and delivering a product or service
• Operational effectiveness means performing these activities better than rivals in terms of speed, input efficiency, and defect reduction
• Operational effectiveness can lead to lower costs and improved value, but best practices are easily emulated by competitors
• Strategic positioning aims to achieve sustainable competitive advantage by performing different activities from rivals or performing similar activities in different ways
• A strategy is a set of actions that managers take to increase their company's performance relative to rivals, resulting in a competitive advantage
• Strategy is a unifying idea that links purpose and action, involving the determination of long-term goals, objectives, and the allocation of resources
• Strategy involves a coordinated series of actions deploying resources to achieve a given purpose over a significant period of time
• The four elements of strategy are opportunity, systematic action, intent, and mobilization of resources
• Strategy involves vertical (rational) thinking and lateral (intuitive) thinking to address convergent and divergent problems
• Strategic perspectives emphasize looking to the future, balancing flexibility and stability, asking pertinent questions, and being holistic and interactive
• Levels of strategy making range from the functional level within an enterprise to the level of government in a country
• Strategy making involves a group activity, often done by a large number of people, and is usually implicit rather than explicit
• The concept of strategy has a long history, dating back to Greek and Chinese military thinkers, and has evolved over time
• Strategy needs to be efficiently implemented, involving careful preparation, good training, and the use of effective tactics
• Attention is often focused on the effective use of tactics by historical figures like Julius Caesar, Alexander the Great, or Napoleon
• The core of strategy is the repeated concentration of strength in the right place at the right time
• Many see parallels between military strategy and business strategy, drawing connections between tactics and management
• Alfred Sloan of General Motors was one of the first real practitioners of strategy in a systematic way
• Alfred Chandler chronicled the history of the modern business enterprise and explored the implications for strategy
• Four general approaches to defining strategy:

  • Classical
  • Evolutionary
  • Processual
  • Systemic
• Classical approach:

  • Deliberate, explicit, rational analysis
  • Emphasizes profit maximization
  • Leadership is key
• Evolutionary approach:

  • Emphasizes emergence of strategy from market competition
  • Profit maximization is imposed by market forces
• Processual approach:

  • Emphasizes bounded rationality and political bargaining
  • Views strategy as defined by the strategy-making process
• Systemic approach:

  • Views strategy as culturally conditioned
  • Reflects the nature of the social system
• Strategic management involves formulating, implementing, and evaluating decisions to achieve organizational objectives
• Strategic management sets direction, improves operational efficiency, market share, and profitability
• Strategic management is based on understanding mission, vision, and values
• Five stages of the strategic management process:

  • Assessing current strategic direction
  • Identifying strengths and weaknesses
  • Formulating action plans
  • Executing action plans
  • Evaluating and making changes
• Implementation involves putting strategy into practice through coordinated actions taken at all levels of an organization.
• Strategy formulation refers to the development of specific courses of action or policies designed to attain organizational objectives.
• Tactics are specific actions taken to support the implementation of strategies.
• A strategy is an action plan designed to achieve specific organizational goals.
• Strategic planning involves setting objectives, identifying strategies, implementing plans, monitoring progress, and evaluating results.
• Strategies are plans or courses of action that an organization takes to achieve its goals.