Chapter 16

Question 1

Define strategic management.

Answer 1

Strategic management is the ongoing process of developing, implementing and monitoring appropriate strategies.

Question 2

What is the responsibility of strategic management?

Answer 2

The strategic management is responsible for ensuring that all functional areas are working towards the same goal.

Question 3

Why do organisations have to adapt to change continuously?

Answer 3

Because of changing demands of consumers and competition from other organisations for market share.

Question 4

What do organisations must adapt to?

Answer 4

Organisations must adapt to:
• Changes in the external environment.
• Changes in the internal environment.
• The extent to which the chosen strategy has been successful.

Question 5

What are the steps in the process of strategic management?

Answer 5

1) Strategic direction
2) Strategic objectives
3) External environmental analysis
4) Internal environmental analysis
5) Selection of strategies
6) Strategy implementation
7) Strategic control

Question 6

Explain strategic direction.

Answer 6

Strategic direction of an organisation set out key ideas about what organisation does and what the organisation wants to be in the future. It is contained within the vision and mission statements.

Question 7

A good vision statement should:

Answer 7

• Provide motivation to all employees in an organisation.
• Short enough to remember but contain enough detail to direct organisation.
• Closely aligned to the organisation.
• Describe the organisation in the future state.

Question 8

A good mission statement answers the following three questions:

Answer 8

1) What is our business?
2) Which customer/markets do we serve?
3) How do we provide our product/service in a way that separate us from the competition?

Question 9

Explain strategic objectives.

Answer 9

Strategic objectives or goals are long-term and are drived from the mission and vision statements, these should be SMART.

Question 10

What is the duration of long-term goal?

Answer 10

Three years or longer depending on the specific industry or organisation

Question 11

What is the hierarchy of objectives?

Answer 11

Strategic objectives are derived from the mission and vision statement.

Startegic objectives are broken down into functional objectives which are executed by middle management.

The functional objectives are further broken down and executed by the management.

Question 12

The business environment is made up of two external environments, what are these?

Answer 12

Macro and Market environment.

Question 13

Why is external environmental analysis necessary?

Answer 13

External environmental analysis is necessary to identify the factors in the environment which can impact an organisation in a positive or negative way.

Question 14

What is the purpose of an internal environmental analysis?

Answer 14

The purpose of an internal environmental analysis is to identify the strengths and weaknesses of the organisation.

Question 15

In order to complete successfully an organisation needs to select one of a few basic ‘generic strategies’ the first decision they have to make is…

Answer 15

Whether they will follow a differentiation or low cost strategy.

Question 16

Explain differentiation strategy.

Answer 16

Differentiation strategy is based on producing a product or service that is unique and for which customers are willing to pay a premium

Question 17

Explain a low cost strategy.

Answer 17

A low cost strategy means that organisation produces its products cheaper than competitors with a focus on cost reduction and efficiency.

Question 18

Explain focus strategy.

Answer 18

A focus strategy is when the organisation aims to achieve dominance within a specific segment.

Question 19

How is a strategy implemented?

Answer 19

When implementing a strategy, the various levels of the organisation and the functional areas have to be aligned. Leadership plays a vital role in strategic implementation.

Question 20

What are the qualities that an effective strategic leader should possess?

Answer 20

1) Make productive contributions through skills, talent and knowledge.
2) Contribute towards the success of groups and work effectively in a team.
3) Organise people in a way that achieve objectives in a productive way.
4) Obtain commitment to a clear vision and stimulate a group to perform at a high standard.
5) Build enduring success through professional will and personal humility.

Question 21

What are the elements of the cultural web?

Answer 21

1) Routines
2) Rituals
3) Stories
4) Symbols
5) Power structures
6) Control systems
7) Organisation structure

Question 22

What is the significance of strategic control?

Answer 22

Strategic control measures the success of a strategy.

Question 23

How is strategic control done?

Answer 23

Strategic control is done through measuring the performance of the business against a stated goal, this is done through business intelligence systems.

Question 24

Explain strategic alignment.

Answer 24

Strategic alignment means to ensure that the chosen strategy aligns well with the organisation, the business environment and the various functional areas.