Strategic Management Mid Term Study Guide

Chapter 1

Strategic Management Process and its Components
- Definition: o Art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
- Involves the full set of: o Commitments o Decisions o Actions
- Required to achieve o Competitive advantage o Superior performance
- Components o Vision o Strategy o Implementation

Industrial Organization Model
- External Environment o Examine the external environment
- Attractive Industry o Locate and industry with high profit potential
- Strategy Formulation o Identify a strategy fit with the industry to achieve superior performance
- Assets and Skills o Develop or acquire the assets and skills needed for the strategy implementation
- Strategy Implementation o Leverage the firm’s strengths to implement the strategy
- Superior Performance o Monitor the sustainability of the superior performance

Resource Based View Model
- Resources o Identify firm resources, and study strengths, and weaknesses relative to rivals
- Capability o Determine what firm capabilities allow it to do better than rivals
- Competitive Advantage o Determine how a firm’s resources and capabilities may create a competitive advantage o Ability of a firm to outperform its rivals

- Attractive Industry o Locate an attractive industry
- Strategy Formulation and Implementation o Select a strategy that best exploits resources and capabilities relative to opportunities in the environment
- Superior Performance o Monitor the sustainability of the superior performance

Pitfalls in the Strategic Management Process
- Involvement related o Delegating to a “planner” as opposed to involvement of managers o Top management not supportive of the process o Failing to create a collaborative environment o Failing to involve key personnel and communicating to employees
- Politic related o Used to gain control over decisions and resources
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