Strategic Management: Concepts and Implementation
Chapter 3: Strategic Management
Strategic Management enables an organization to transition from its current state to a desired future state, aligning with its objectives and the operating environment. While the objective may be clear, the path to achievement can be ambiguous and complex. The term originates from the Greek word “strategos,” meaning “general,” drawing a parallel between business and warfare.
Characteristics of Strategic Management
- Fundamental (Long-Term): Focuses on long-term goals and sustainability.
- Sense of Direction (Looking Ahead): Anticipates future trends and challenges.
- Sense of Purpose (Search for Competitive Advantage): Strives to outperform competitors.
- Positioning (Scope of Activities): Defines the organization’s domain and activities.
- Strategic Fit (Stretching and Leverage): Aligns resources and capabilities with opportunities.
Strategic Options
Strategic management defines an organization’s position, objectives, and methods for achieving them. It provides stability even amidst significant changes. Ideally, it involves a formal, written strategic plan, moving from abstract concepts to concrete actions.
Corporate Strategy
Key elements of corporate strategy include:
- Mission Statement or Vision: Defining the core business.
- Corporate Objectives, Goals, and Aims: Specifying desired outcomes and methods.
- Market Research: Identifying customer needs and preferences.
- Audit of External Environment: Assessing threats and opportunities (e.g., PESTLE analysis).
- Analysis of Resources: Evaluating strengths and weaknesses (e.g., SWOT analysis).
- Marketing Objectives: Aligning resources to achieve objectives.
- Strategic Plan: Integrating objectives and resources.
- Action Plan: Defining specific steps to achieve objectives.
The Strategic Plan
Mission statements typically address:
- What business are we in?
- Who is to be served?
- What benefits are to be achieved?
- How are consumers to be satisfied?
Types of Strategy
- Planned Strategy: A predetermined course of action or strategic plan.
- Intended Strategy: A strategy based on a specific decision pattern.
- Deliberate Strategy: An intended strategy that is successfully implemented.
- Imposed Strategy: A strategy dictated by an external entity.
- Realized Strategy: A strategy that has been successfully executed.
- Unrealized Strategy: An intended or deliberate strategy that fails.
- Emergent Strategy: A strategy that evolves organically over time.
Stakeholder Strategy
Stakeholders have a vested interest in the company and may influence its future strategy.
Typical Business Stakeholders
- Shareholders: Owners who receive dividends.
- Financial Bodies: Funders who receive interest.
- Employees: Provide labor and skills, receiving pay.
- Managers: Provide organization and control, receiving pay.
- Government: Legislates, regulates, and receives taxes.
- Customers: Consume products and receive benefits.
- Suppliers: Provide raw materials and receive payment.
Competitive Forces Strategy
Porter’s Five Forces framework suggests that a company can gain a competitive advantage by addressing competitive forces through differentiation, cost leadership, or a focused approach targeting a specific strategic segment.