Session2: Basic concepts of Strategy

Question 1

Benefits of Strategic Management

Answer 1

• The attainment of an appropriate match, or “fit,” between an organization’s environment and its strategy, structure, and processes has positive effects on the organization’s performance.
• Strategic planning becomes increasingly important as the environment becomes more unstable.
• Clearer sense of strategic vision for the firm
• Sharper focus on what is strategically important
• Improved understanding of a rapidly changing environment

Question 2

Forces Influencing Strategy

Answer 2

• Globalization
  –> the integrated of markets and corporations
  –> has changed the way internationalization modern corporations do business
• Innovation
  –> describes new products, services, methods, and organizational
  approaches that allow the business to achieve extraordinary returns
  –>It is the implementation of potential innovations that truly drives businesses to be remarkable.
• Sustainability
  –> the management of the company’s economic, social, and environmental sustainability.

Question 3

Creating a Learning Organization

Answer 3

• Strategic flexibility
  –> the ability to shift from one dominant strategy to another
  –> demands long-term commitment to development and nurturing of
  critical resources
  –> also demands that the company become a learning organization
• Learning organization
  –> an organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge
  and insights
  –> Organizational learning is a critical component of competitiveness in a
  dynamic environment.

Question 4

Skills of Learning Organizations

Answer 4

1. Solving problems systematically
2. Experimenting with new approaches
3. Learning from the organization’s own experiences and past history
   as well as from the experiences of others
4. Transferring knowledge quickly and efficiently throughout the
   organization

Question 5

Basic Model of Strategic Management

Answer 5

• Environmental Scanning
  –> the monitoring, evaluating and disseminating of information from the external and internal environments to key people within the organization
  –> SWOT analysis: simple way to conduct environmental scanning
• Strategy formulation
  –> process of investigation, analysis, and decision-making that provides the company with the criteria for attaining a competitive advantage
  –> includes defining the competitive advantages of the business, crafting the corporate mission (purpose or reason for the organization’s existence) and vision (what the organization would like to become), specifying achievable objectives (results of planned activity), and
  setting policy guidelines (a broad guideline for decision-making that links formulation of a strategy with its implementation)
• Strategy implementation
  –> process by which strategies and policies are put into action through the development of programs, budgets, and procedures
• Performance
  –> result of activities
  –> includes actual outcomes of the strategic management process
• Feedback/learning process
  –> revise or correct decisions based on performance

Question 6

Triggering Events Acting as Stimuli for Strategic Change

Answer 6

• Triggering event
  –> something that acts as a stimulus for a change in strategy and can include:
• new CEO
• external intervention
• threat of change of ownership
• performance gap
• strategic inflection point

Question 7

Characteristics of Strategic Decisions

Answer 7

• Rare
  –> Strategic decisions are unusual and typically have no precedent to follow.
• Consequential
  –> Strategic decisions commit substantial resources and demand a great deal of commitment from people at all levels.
• Directive
  –> Strategic decisions set precedents for lesser decisions and future actions throughout an organization.

Question 8

Modes of Strategic Decision-making

Answer 8

• Entrepreneurial mode
  –> strategy is made by one powerful individual
• Adaptive mode
  –> characterized by reactive solutions to existing problems, rather than a proactive search for new opportunities
• Planning mode
  –> involves the systematic gathering of appropriate information for situation analysis, the generation of feasible alternative strategies, and the rational selection of the most appropriate strategy
• Logical incrementalism
  –> a synthesis of the planning, adaptive, and, to a lesser extent, the entrepreneurial modes

Question 9

What is strategy?

Answer 9

Strategy is the direction and scope of an organization over the long term, which achieves advantage in a changing environment through its configuration of resources and competences with the aim of fulfilling stakeholder expectations.