Ch 37 What is strategic management? (A Level)

Question 1

Define corporate strategy

Answer 1

a long term plan of action for the whole organisation, designed to achieve a particular goal

Question 2

Define tactic

Answer 2

short-term policy or decision aimed at resolving a particular problem or meeting specific part of the overall strategy

Question 3

Define strategic management

Answer 3

the role of management when setting long term goals and implementing cross-functional decisions that should enable a business to reach these goals.

Question 4

Benefits of strategic management

Answer 4

Assessing the current position of the company in relation to its market, competitors and external environment

Taking important long term decisions that will push business towards the objectives set

Integrate and coordinate the activities of different functional areas

Provide a clear end purposes to work towards to. This enables everyone in the organisation to focus on the work, check on progress and make improvements

Allocating sufficient resources to put decisions into effect

Evaluate success

Question 5

4 key features of strategic management

Answer 5

Strength of the business: applying specialised skills/capabilities that the businesses have to differentiate itself from the competitors and ensure higher chances of success with future strategies.
Resources available: resources are finite => scarcity imposes an opportunity costs and force firms to choose which strategies to proceed with
Competitive environment: competitors’ actions are major constraint on business strategy as innovations made by competitors may be difficult to copy or to better
Objectives: provide a clear end purposes to work towards to and thereby, evaluate effectiveness/efficiency in order to make improvements

Question 6

What is the relationship between corporate strategy and organisational structures?

Answer 6

Alfred Chandler - thesis of “structure follows strategy” - investigating 4 companies Du Pont (chemicals) GM (vehicles). Sears Roebuck (retailing) and Standard Oil

Results:

Acquired labour and raw materials to allow for growth that required the buildup of marketing and distribution channels
Established a functional/departmental structure to improve specialisation and efficiency
Growth-and-diversification strategies - new markets and new products to overcome the limits of the original home market
Developed divisional organisational structures → geographical and product groups gain independence but are controlled by a centralised headquarters . This is the M-form organisational structure
e.g. merger with the strategic objetive of creating product-focused profit centres, strategy of conglomerate to cut costs and increase flexibility - automation, rationalisation, research and development

Question 7

The link between strategy and competitve advantage

Answer 7

Lower costs - helps to identify possible opportunities that have not yet been exploited
Differentiated product - helps to identify the strength of the business and the resources needed to do so
Clear corporate strategy helps focus on plans that should allow the achievement of long term goals