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Strategic Management > Chapter 1: About strategic management > Flashcards

Chapter 1: About strategic management Flashcards

1
Q

Strategy:

A

greek ‘strategos’ which means ‘office or command of a general, generalship’.

Stratus= army, ag= leader)

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2
Q

Andrews (1965)

A

‘pattern of major objectives, purposes, goals and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be.’

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3
Q

Definition of strategy

A

strategy is the dynamics of the firm’s relation with its environment for which the necessary actions are taken to achieve its goals and/or to increase performance by the rational use of resources”.

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4
Q

Elements of strategy

A
  • Strategy is the manner firm and environment are linked.
    Link between firm and environment: mutual influence
  • Many strategic decisions exist, but all share common purpose of seeking to make the firm more competitive. Improving performance is key when choosing strategy.
  • Stakeholders: paties prenantes
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5
Q

Content of strategy:

A
  • Long term management
  • Creation of opportunity
  • Definition of the scope of the firm (key component)
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6
Q

Main characteristics of a strategic decision: (6)

A
  1. complex
  2. high uncertainty
  3. impact the whole firm on all levels
  4. organization must adopt a holistic approach
  5. firm creates/maintains network of outside relations
  6. tend to require changes in the organization
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7
Q

LEVELS OF STRATEGY (3)

A
  1. corporate
  2. competitive
  3. functional
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8
Q
  1. Corporate strategy
A

Purpose is to establish a firm’s general guidance in the identification of the operations it wants to pursue.
Must know well things like mission, vision, goals.
Examples of corporate decisions: launching new business, taking over other company, internationalization.

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9
Q

Competitive strategy / Strategic business unit

A

Purpose: to compete more effectively in a series of activities, businesses or strategic business units*.
Examples: improve quality of product, investing in technology, etc.
*Strategic business units, or business units (SBUs)= homogeneous set of activities from a strategic perspective.
A diversifies corporation needs SBUs because its heterogeneity of different businesses makes it impossible to have one single strategic approach, so SBUs put in place.

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10
Q
  1. Functional strategies
A

Involves how to use and apply resources and capabilities within each operational area in each business unit. Level at which goals from previous level are achieved.
Purpose: maximizing the productivity of these resources.
Examples of such areas: marketing, HR, operations, financing.

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11
Q

To resume levels of strategy

A
  • Higher-level strategies condition lower-level strategies
  • Need for interaction, coherence and coordination between levels
  • Different aspects of the same strategic problem
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12
Q

THE PROCESS OF STRATEGIC MANAGEMENT AND ITS RESPONSIBILITY: 2 issues:

A
  1. define activities required to pursue strategy
  2. identify key people responsible for the process
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13
Q

PHASES OF THE STRATEGIC MANAGEMENT PROCESS (3)

A
  1. analysis
  2. formulation
  3. implementation
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14
Q

Strategic analysis consists of 3 parts:

A
  • Mission and goals: give consistency to business operations as a whole
  • External analysis: identify threats and opportunities in environment
  • Internal analysis: identify strengths and weaknesses of the firm
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15
Q

Strategic formulation

A

Based on strategic analysis. At all 3 levels (corporate, competitive, functional)

  • Corporate strategies: used to define a firms future directions of development (specialization, diversification), the methods of development (internal, external), or the most appropriate level of internationalization and what channels to use accordingly
  • Competitive strategies: cost leadership, differentiation
  • Functional strategies: implementation of strategies in the firm’s different operations.
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16
Q

Strategic implementation:

A

completed through strategic planning and control

17
Q

Representation of the process of strategic management:

A
18
Q

RESPONSIBILITY FOR STRATEGIC DECISIONS

A

Identification of people involved in the adoption of strategic decisions. Certo and Peter say: senior management, board of directors, and staff involved in strategic planning or corporate development.

19
Q

Top management duties: (5)

A
  • Align strategic management with mission, vision and goals.
  • Obtain, develop, mobilize resources and capabilities, and coordinate them.
  • Seek corporate returns (create value for the capital invested)
  • Handle conflicts of interest between firms stakeholders
  • Liaise between agents and environment to seek opportunities and avoid threats.
20
Q

Board of directors:

A
  • Responsible for overall supervision of the process and control of top managers in their tasks.
21
Q

Staff:

A
  • Group of specialists, who gather information, processes it, analyses it, and gives recommendations.
22
Q

Adoption of a rational strategic process:

A
  • More systematic, logical and rational analysis of the decision to be adopted
  • Firm will be more proactive
  • Gives understanding to all the organisations members
  • Helps evaluate lower level decision-making
  • Facilitates assessment and control of strategy and its progress in future
  • Allows more involvement of more people in the process
23
Q

Rational process takes place under 3 conditions:

A
  1. uncertainty
  2. complexity
  3. conflict.
24
Q

Critical view about rational strategic process:

A
  • The rationality of the decision-maker: incomplete information, search for alternatives, process feedback
  • Learning in the process: learn from your failures, process of trial and error, fragmented process
  • Political aspects of the process: all people involved, conflicts may arise, groups with different objectives
  • Chance: always a margin for unforeseen circumstances, luck, intuition, uncontrollable aspects
25
Q

FIT AND CHANGE IN THE STRATEGIC MANAGEMENT PROCESS

A

Strategic management process must be consistent: match between strategic and organisational. Meaning there must be a match between context and strategy itself.

26
Q

Strategic fit=

A
  • exploiting opportunities and drawing upon firms strengths.
  • l’exploitation des opportunités et tirant parti des forces de l’entreprise.
27
Q

organisational fit

A

match between chosen strategy and the organisational characteristics of the firm.

28
Q

strategic change

A

When/if goals, environment, allocation of resources and capabilities change, then that invalidates the firms traditional strategies.

In which case need to do an organisational change too.

Strategic Management (7 decks)

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