Strategic Management Essentials Explained
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ScribdTranslationsChapter 9: Strategic Management (Robbins)
What is strategic management?
Strategic management: What managers do to develop the
strategies of organizations. Involves the basic functions
management: planning, organizing, directing, and controlling.
Strategies: Plans that determine how the organization will achieve its
business purpose, how it will compete successfully and how it will attract and satisfy
your clients to achieve their goals.
Business model: Set of actions that is implemented
company to generate economic income.
Por qué es importante la administración estratégica? (3 razones)
1. It can make a difference in terms of how well a performance is.
organization. Organizations that use strategic management
they have higher performance levels
[Link] of all types of organizations are affected by constant
changes in circumstances. In order to face uncertainty
resulting, they use the strategic management process to examine the
relevant factors and decide which actions to put into practice.
3. Organizations are complex and diverse, and each of their parts must
work together with others to achieve the general objectives. For example:
Using it to coordinate and focus the workforce's work on that
that, according to corporate objectives, has greater relevance.
THE PROCESS OF STRATEGIC MANAGEMENT
Strategic management process: A six-step procedure that
it covers the planning, implementation, and evaluation of strategies.
Step 1: Identification of the mission, objectives, and current strategies
of the organization
- Mission: Statement of the organization's purpose -> managers see themselves
forced to identify their business purpose.
Step 2: Conducting an external analysis
Managers must conduct an external analysis (analyzing the components...
the economic, global components, etc.) to find out, for example,
What is the competition doing, what pending laws are awaiting approval
they could affect their organizations. It is done with the purpose of detecting
any changes or trends. Then it should identify the
opportunities and threats
Opportunities: Positive trends present in the external environment
Threats: Negative trends present in the external environment
Step 3: Conducting an internal analysis
Resources: Assets that the organization uses to develop, manufacture and
deliver products to their customers.
Capabilities: Skills and abilities that the organization has to
carry out the tasks required by your business activity.
- Fundamental competencies: The main abilities with which
The organization accounts for creating value and what its tools represent.
competitive. (the resources and the fundamental compe., together, determine
what are the competitive tools
Strengths: Any activities in which the execution stands out
organization or the unique resources it has at its disposal.
Activities that the organization does not carry out adequately.
also the resources it requires but lacks.
SWOT Analysis: Analysis of strengths, opportunities, weaknesses, and
threats from the organization.
Step 4: Formulation of strategies
- Design strategies to achieve your goals. There are 3 types: corporate,
competitive and functional.
Step 5: Implementation of strategies
Regardless of how effectively they have been planned, the performance of the
organization will be affected if the strategies are not implemented.
proper form.
Step 6: Evaluation of results
Development of questions about how effective the strategy was, if it needs
settings.
CORPORATE STRATEGIES
Corporate strategy: Organizational strategy that determines in what
business lines the company operates or wishes to operate and what it wants to achieve
participate in them.
What are the types of corporate strategies?
1. GROWTH: Corporate strategy used when an organization
wants to expand the number of markets it serves or the products
what it offers, whether through its current business lines or by putting in
march other new ones -> the organization could see the amount increased of
its income, the number of its employees or its market share.
It grows in various ways
a. Concentration: The organization focuses on its main line of
business and increase the number of products it offers or seeks to serve
more markets with her.
b. Backward vertical integration: The organization becomes its
own supplier, which allows him to control his inputs.
c. Vertical integration forward: The organization takes on the role
from its own distributor and, therefore, can control the destination of its
production.
d. Horizontal integration: Companies grow by merging with their
competitors. In different industrial sectors such as financial services
or consumer products.
e. Related diversification: It occurs when the company partners with
companies that operate in different but related industries
f. Unrelated diversification: It occurs when the company merges
with others that belong to different or unrelated industries.
2. STABILITY: Corporate strategy in which the organization adheres to
his current activity. The company focuses on continuing to serve the same
clients, offering them the same products or services, in preserving their
market share. The organization does not grow, but it also does not lag behind.
3. RENEWAL: Corporate strategy designed to try to solve a
debilitation of performance when setbacks occur. There are 2 types:
- Rationalization strategy: Short-term renewal strategy,
used to solve not very complex performance issues -> the
organization stabilize its operations, revitalize its resources and
capacities.
Recovery strategy: It is used when problems persist.
and be more serious, complex -> the measures are more radical
How are corporate strategies managed?
BCG Matrix: A strategic tool that serves as a guide for decision-making
resource allocation based on market share and rate
of growth of the strategic business units.
COMPETITIVE STRATEGIES
Competitive strategy: Organizational strategy that determines how
the organization would compete in its lines of business.
Strategic business unit (SBU): Each of the lines of business
of the organization that operates independently and formulates its
own competitive strategies.
The role of competitive advantage
Competitive advantage: That which distinguishes an organization in relation to
all the others; their hallmark (doing something that the rest cannot do).
QUALITY AS A CORPORATE ADVANTAGE
If a company is capable of continuously improving quality and
reliability of its products, it could have a significant corporate advantage
difficult to undermine.
DESIGN THINKING AS A CORPORATE ADVANTAGE
Use the thoughts of customers and workers to form a new
strategy
SUSTAINING THE COMPETITIVE ADVANTAGE
Not all organizations are capable of exploiting their resources effectively,
One must create an advantage to maintain it.
FIVE FORCES MODEL
Those that set the rules of competition in the industry
Overall, it determines the attractiveness and profitability of the industry
Threat of new competitors (competitors in the industry)
2. Threat of substitutes (they replace our product)
3. Bargaining power of buyers
4. Negotiation power of the negotiators
Current rivalry
Choice of a competitive strategy (3 types)
Leadership strategy: When the organization's competitive advantage
it is based on having the lowest costs in its industry (general market)
Differentiation strategy: If the company competes by offering products
unique and highly valued by customers. (general market)
Focus strategy: Involves a cost advantage or a advantage of
differentiation within a limited segment.
Caught in the middle: When, in a company, its costs are
too high to compete with the low-cost leader or when their
products and services are not differentiated enough to compete
with truly exceptional products.
FUNCTIONAL STRATEGY
Functional strategy: Strategy used by the various departments
from the organization to support the competitive strategy.
CURRENT TOPICS IN STRATEGIC MANAGEMENT
Need for strategic leadership
Ability to anticipate, visualize, maintain flexibility, think
strategically and work with other members of the organization to
implement the changes that will generate a viable and valuable future for the
company.
Need for strategic flexibility
Ability to recognize relevant external changes, mobilize without
delays the necessary resources to confront them and realize when a
The strategic decision is not working.
Important organizational strategies in the current environment
E-commerce strategies
Customer service strategies
Innovation strategies
Pioneer: Organization that is distinguished by being the first to carry out a
product innovation in the market or in using an innovation in their
work processes.
Common questions
Powered by AIE-commerce strategies can enhance strategic management by expanding market reach, improving customer engagement, and increasing operational efficiency. These strategies enable organizations to offer personalized customer experiences, streamline supply chains, and utilize data analytics for deeper insights into customer behaviors and preferences. E-commerce is increasingly necessary due to the growing digital economy, changing consumer expectations for convenient service, and global competition forcing organizations to adopt technology-driven solutions to remain competitive and responsive to market demands .
A SWOT analysis in strategic management includes four essential components: 1) Strengths, which are internal activities or resources where the organization excels; 2) Weaknesses, internal areas needing improvement or lacking resources; 3) Opportunities, positive trends or external conditions the organization can exploit; and 4) Threats, external factors that could negatively impact organizational success. This analysis guides decision-making by providing a comprehensive overview of internal capabilities and external environment, helping managers develop strategies to leverage strengths, address weaknesses, capitalize on opportunities, and mitigate threats .
The strategic management process is a systematic approach involving six steps: 1) Identifying the mission, objectives, and current strategies of the organization, which requires defining the business purpose; 2) Conducting an external analysis to detect changes and identify opportunities and threats; 3) Conducting an internal analysis to assess resources, capabilities, strengths, and weaknesses; 4) Formulating strategies to achieve goals, which includes corporate, competitive, and functional strategies; 5) Implementing strategies effectively to influence organizational performance; 6) Evaluating results to determine the effectiveness of the strategy and identify necessary adjustments .
Strategic leadership is crucial in effectively implementing organizational strategies as it involves the ability to anticipate future trends, visualize a clear direction, and maintain flexibility in operations. Strategic leaders facilitate the adoption of change, inspire alignment with company goals, and foster collaboration across departments. They ensure the organization is responsive to external changes and mobilize resources timely. Additionally, they recognize when strategic decisions are not working and swiftly adjust strategies to maintain a viable future for the organization .
Sustaining a competitive advantage requires an organization to continuously leverage its unique resources and capabilities. It can be maintained by improving product quality and reliability, adopting innovative practices like design thinking, and tailoring strategies based on customer and employee insights. Nonetheless, it is challenging to sustain because competitors may imitate or surpass advantages, market dynamics shift, and internal resources may become obsolete. The Five Forces model, which evaluates industry attractiveness and profitability, can provide insights into maintaining competitiveness by addressing threats from new competitors and substitutes, bargaining power of buyers and suppliers, and current rivalry .
Strategic management contributes to the performance of an organization by aligning various organizational functions with its goals, effectively managing resources, and enabling adaptability to change. The three key reasons for its importance are: 1) Strategic management can significantly impact the organization's performance, often resulting in higher performance levels; 2) It helps managers navigate the constant changes and uncertainties in the environment by examining relevant factors and determining appropriate actions; 3) It enables different parts of a complex and diverse organization to work cohesively towards the overall objectives, facilitating coordination and focus among the workforce .
The BCG Matrix helps organizations manage their corporate strategies by providing a framework for allocating resources among different business units based on two key factors: market share and growth rate. It categorizes business units into four types: Stars (high growth, high market share), Cash Cows (low growth, high market share), Question Marks (high growth, low market share), and Dogs (low growth, low market share). By identifying where each business unit falls in the matrix, organizations can strategically decide where to invest, divest, or develop new initiatives to maximize profitability and growth .
According to the Five Forces model, the three types of competitive strategies are: 1) Cost Leadership, which involves achieving the lowest costs in the industry to offer competitive pricing; 2) Differentiation, wherein a company provides unique, highly valued products or services to stand out; 3) Focus strategy, which targets a specific market segment to develop cost advantages or differentiation within that segment. These strategies differ in their approach: cost leadership focuses on efficiency and scale, differentiation emphasizes innovation and brand loyalty, and focus strategy involves specialization and niche marketing .
Strategic flexibility benefits an organization by allowing it to quickly adapt to external changes, minimizing risks associated with uncertainty, and seizing emerging opportunities. It requires the capability to recognize relevant changes, promptly mobilize resources, and reassess strategic decisions as needed. This adaptability allows for effective responses to evolving markets, technological advancements, and regulatory environments. Strategic flexibility is essential for sustaining competitive advantage and ensuring long-term organizational success .
Corporate strategies define the scope and direction of an organization across different business lines. The main types are: 1) Growth strategy, which involves expanding market presence, increasing product offerings, and entering new markets, potentially through concentration, vertical integration, horizontal integration, related diversification, and unrelated diversification. This strategy can increase revenue, employee count, and market share; 2) Stability strategy, where the organization maintains its current operations, focusing on serving the same clients with the same products, thereby preserving market share without significant growth; 3) Renewal strategy, which addresses performance issues through rationalization for short-term fixes or recovery measures for more severe problems, ultimately stabilizing and revitalizing operations .