Summary: Strategic Management

Read the summary and the most important questions on Strategic Management

• Chapter 1

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• What are the characteristics of the 'strategy as a plan' view?

  1. Strategy is viewed as as a conscious and rational course of action that is based on a clear mission & objective. 
  2. Implies having loads of data to be analysed to decide on investments

• What are the characteristics of the 'strategy as a pattern' view?

  1. Strategy vs viewed as partly conscious and purposeful, and partly random 
  2. Firm has clear mission & objective, but more flexible with changing it to adapt to new circumstances  
  3. Formulation and implementation may differ

• What are the characteristics of the 'strategy as a position' view?

  1. Strategy is viewed as a positioning decision on where and how to compete
  2. It implies selecting a niche market and defending the position smartly

• What are the characteristics of the 'strategy as a perspective' view?

  1. Strategy is viewed as creating an identity for the firm, as it affects learning
  2. Seen identically by everyone and can be managed in response to changes in context

• What are the steps of the I/O model?

  1. External environment - Study the environment (especially industry one)
  2. An attractive industry - Locate an industry with high potential for above-average returns 
  3. Strategy formulation - Identify the strategy called for by the attractive industry to earn above-average returns
  4. Assets and skills - Develop or acquire assets and skills needed to implement strategy
  5. Strategy implementation -  Use the firm's strengths  (developed assets and skills) to implement the strategy

• What are the steps of the resource model?

  1. Resources - Identify the firm's resources. Study its strengths and weaknesses compared with those of competitors
  2. Capability - Determine firm's capabilities, what do they allow the firm to do better than its competitors 
  3. Competitive advantage - Determine the potential of the firm's resources and capabilities in terms of a competitive advantage
  4. An attractive industry - Locate an attractive industry
  5. Strategy formulation and implementation - Select strategy that best allows firm to utilise its resources and capabilities relative to opportunities in external environment

• Chapter 2

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• What are the 3 layers of the environment?

  1. Micro-environment - parties directly linked to company. E.g. customers and creditors
  2. Industry environment - parties connected to the industry. E.g. competitors, buyers, suppliers, etc.
  3. Macro environment - comprised of social, economic, political and technological dynamics.

• What are the segments of the industry environment dimension?

  1. Demographic - concerned with population's size, age, etc. 
  2. Economic - nature and direction of the economy in which a firm competes
  3. Physical - refers to changes in the physical environment
  4. Sociocultural - concerned with society's attitude and cultural values

• What are the segments of the competitor environment segments?

  1. Global - includes relevant new global markets and changes in the existing ones
  2. Technological - includes the institutions and activities involved with creating new knowledge and translating that knowledge into new outputs  
  3. Political/legal - concerned with the legal boundaries of a firm when competing for political attention for resources

• What is the 6th force that has been identified in the Porter model?

  Complements.