Basic Concept of Strategic Management

A strategy of a corporation forms a comprehensive master plan that states how the corporation will achieve its mission and objectives: - Corporate strategy: company’s overall direction - Business strategy: occurs at the business unit or product level - Functional strategy: at a functional area to achieve corporate and business objectives and strategies
Strategic Management: a set of managerial decisions and actions that determines the long-run performance of a corporation.
Includes:
Internal and external environment scanning
Strategy formulation
Strategy implementation
Evaluation and control

Phases of Strategic Management:

Phase 1: Basic financial planning
Phase 2: Forecast-based planning
Phase 3: Externally oriented strategic planning
Phase 4: Strategic management

Benefits of Strategic Management:

Clearer sense of strategic vision for the firm
Sharper focus on what is strategically important
Improved understanding of a rapidly changing environment

Improved organizational performance
Achieves a match between the organization’s environment and its strategy, structure and processes
Important in unstable environments

Strategic thinking
Organizational learning

Impact of Globalization:

Globalization: the integration and internationalization of markets and corporations

Impact of Environmental Sustainability:

Environmental Sustainability: the use of business practices to reduce a company’s impact on the natural, physical environment

Regulatory risk
Supply chain risk
Product and technology risk

Litigation risk
Reputational risk
Physical risk

Strategic flexibility: the ability to shift from one dominant strategy to another and requires:

Long-term commitment to the development and nurturing of critical resources
Learning organization

Learning organization: an organization skilled at creating, acquiring, and transferring knowledge and at modifying its