The Concept of Strategy and Strategic Management

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THE CONCEPT OF STRATEGY AND STRATEGIC MANAGEMENT
G. Tyge Payne, PhD

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Strategic Management
Strategy: The unifying theme that gives coherence and direction to the decisions of an organization Strategic Management: Consisting of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. Or, the Strategic Management Process is: The full set of commitments, decisions, and actions required for a firm to create value and earn aboveaverage returns. (Hitt, Hoskinson, & Ireland, 2004, p. 4)
Strategic Management basically seeks to answer the question:

How and why do some firms outperform others?
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Other Definitions of Strategy
Oxford Dictionary: The art of war, especially the planning of movements of troops and ships etc., into favorable positions; plan of action or policy in business or politics etc. Chester I. Barnard: Strategy is intended to focus on the interdependence of the adversaries’ decisions and on their expectations about each other’s behavior. Alfred D. Chandler Jr.: The determination of the long run goals and objectives of an enterprise, and the adoption of courses of action and the allocation of resources necessary for carrying out these goals. Kenneth Andrews: Strategy is the pattern of objectives, purposes or goals and the major policies and plans for achieving these 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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The Origins of Strategy
Know the other and know yourself: Triumph without peril. Know Nature and know the Situation: Triumph completely.
- Sun Tzu (~360 B.C.)

• Business strategy is a relatively young field of study – but its roots go back to early military strategy. • Strategy comes from the Greek word strategos, which is formed from stratos, meaning army, and –ag, meaning to lead. • Carl von Clausewitz wrote in the early 1800’s that “tactics…[involve] the use of armed forces

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