SM Chap1 - Strategic Management Chapter 1 Creating...

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Strategic Management Chapter 1 – Creating Competitive Advantages What is Strategic Management? Given the many challenges and opportunities in the global marketplace, today’s managers must do more than set long-term strategies and hope for the best. They must go beyond what some have called incremental management, whereby they view their job as making a series of minor changes to improve the efficiency of their firm’s operations. Rather than view their role as mere custodian of the status quo, today’s leaders must be proactive, anticipate change, continually refine and, when necessary, make significant changes to their strategies. Defining Strategic Management Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. Competitive advantage is what makes a company’s offerings superior to those of its competitors. The above definitions of strategic management and competitive advantage capture two main elements that go to the heart of the field of strategic management. First, the strategic management of an organization entails three ongoing processes; o Analysis of strategic goals (vision, mission, and strategic objectives) along with the analysis of the internal and external environment of the organization. o Decisions address two basic questions; What industries should we compete in? How should we compete in those industries? o Actions must be taken. Firms must take the necessary actions to implement their strategies. This requires leaders to allocate the necessary resources and to design the organization to bring the intended strategies to reality. Second, the essence of strategic management is the study of why some firms outperform others. Thus, managers need to determine how a firm is to compete so that it can obtain advantages that are sustainable over a period of time. The Four Key Attributes of Strategic Management Four attributes distinguish strategic management form the other functions such as accounting, marketing, or operations, which are performed inside an organization. 1. Directs the organization toward overall goals and objectives 2. Includes multiple stakeholders in decision making 3. Incorporates short-term and long-term perspectives 4. Recognizes trade-offs between efficiency and effectiveness The Strategic Management Process We have identified 3 ongoing processes (analysis, decisions, and actions) that are central to strategic management. In practice, these 3 processes often referred to as strategy analysis, strategy formulation, and strategy implementation are highly interdependent. Moreover, these 3 processes do not take place one after the other in a sequential fashion. Strategy Analysis
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This note was uploaded on 09/22/2010 for the course SM ADMN4106 taught by Professor Stevenmoore during the Spring '10 term at AIB College of Business.

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SM Chap1 - Strategic Management Chapter 1 Creating...

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