Textbook Notes (363,091)
Canada (158,185)
GMS 200 (566)
Chapter 7

Chapter 7 Strategy and Strategic Management.docx

8 Pages
Unlock Document

Ryerson University
Global Management Studies
GMS 200
Horatio Morgan

Chapter 7 Strategy and Strategic Management Strategic Management  Todays management environment places a great premium on “competitive advantage” and how it is achieved, or not, through “strategy” and “strategic management”. Competitive Advantage:  Competitive advantage is the ability to do something so well that one outperforms competitiors.  Typical sources of competitive advantage include: • Cost and quality- where strategy drives an emphasis on operating efficiency and product or service quality. • Knowledge and speed- where strategy drives an emphasis on innovation and speed of delivery to market for new ideas. • Barriers to entry- where strategy drives an emphasis on creating a market stronghold that is protected from enrty by others. • Financial resources- where strategy drives an emphasis on investment or loss absorption that competitiors can’t match.  The goal becomes creating sustainable competitive advantage, one that is difficult or costly for other to copy or imitate. Strategy and Strategic Intent:  A strategy is a comprehensive action plan that identifies the long-term direction for an organization and guides resources utilization to achieve sustainable competitive advantage.  It is a best guess about what must be done for future success in the face of rivalry and changing conditions.  A strategy helps ensure that resources are used with consistent strategic intent, that is, with all energies directed toward accomplishing a long-term target or goal. Level of strategy:  3 levels of strategy guide the activities of most enterprises: they are corporate strategy, business strategy, and functional strategy.  Corporate-Level Strategy: • The level of corporate strategy directs the organization as a whole toward sustainable competitive advantage. • The purpose of corporate strategy is to set direction and guide resources allocations for the enterprise. • In large, complex organizations, corporate strategy identifies how the company intends to compete across multiple industries and markets.  Business-Level Strategy: • Business strategy is the strategy for a single business unit or product line. • Typical business strategy decision include choice about product and service mix, facilities locations, new technologies, and the like. • In a single product enterprises, business strategy is the corporate strategy. But in large conglomerates , a varierty of business strategies will be followed. • The term strategic business unit (SBU) is often used to describe a single business firm within a large enterprises.  Functional Strategy: • Is guides the use of organizational resources to implement business strategy. • It focuses on activities within a specific functional area such as marketing, manufacturing finance, or human resources. The Strategic Management Process:  Strategic management is the process of formulation and implementing strategies to accomplish long-term goals and sustain competitive advantage.  The process begins with strategic analysis to assess the organization, its environment, its competitive positioning, and its current strategies.  Next is strategy formulation, developing a new or revised strategy with the goal of sustainable competitive advantage.  The final phase in the process is strategy implementation, using resources to put strategies into action, and then evaluating results. Essentials of Strategic Analysis Analysis of Mission, Value, and Objectives:  The strategic management process begins with a review and clarification of mission, values, and objectives.  Mission and Stakeholders: • A clear sense of mission helps managers keep organizations on track and use resources with strategic intent. • A clear sense of mission also helps managers inspire and respect of an organization’s stakeholders. • Stakeholders are individuals and groups who are directly affected by the organization and its accomplishments. • A strategic constituencies analysis is a useful tool in the strategic management process. It assesses the specific interest of each stakeholders, along with the organization’s record in responding to them.  Core Values: • Behavior in and by organizations will always be affected in part by core values, which are broad beliefs about what is or is not appropriate behavior. • Organizational culture is the predominant value system for the organization as a whole. • Core value and organizational culture should be assessed to determine how well they align with and support the organization’s mission.  Objectives: • Whereas a mission statement sets forth an organization’s purpose, and core values establish standards for accomplishing it, operating objectives direct activities toward key performance areas. • Although organizations pursue a wide variety of operating objectives, those typical of a business often include the following:  Profitability- operating with a net profit  Financial health- acquiring capital; earning positive returns  Cost efficiency- using resources well to operate at low cost  Customer service- meeting customer needs and maintaining loyalty  Product quality- producing high quality goods and services  Market share- gaining a specific share of possible customers  Human talent- recruiting and maintaining a high-quality workforce  Innovation- developing new products and processes  Social responsibility- making a positive contribution to society SWOT Analysis of organization and environment  SWOT analysis is an internal analysis of organizational strengths and weaknesses as well as the external analysis of environment opportunities and threats.  Organizational Strengths and Weaknesses: • A SWOT analysis begins with a systematic evaluation of the organization’s resources and capabilities- its basic strengths and weaknesses. • A major goal in assessing strengths is to identify core competencies- things that the organization has or does exceptionally well in comparison with competitiors.  Environmental Opportunities and Threats Analysis of Rivalry and Industry Attractiveness:  Porter’s Five Forces Model: 1) Industry competition 2) New entrants 3) Substitute products or services 4) Bargaining power of suppliers 5) Bargaining power of customers  Industry Attractiveness • The five competitive forces constitute what Porter calls the “industry structure”, and it establishes the industry’s attractiveness or potential to generate long-term returns. • The less attractive the industry structure, the harder it will be to make good strategic choice and realize a sustained competitive advantage relative to riva
More Less

Related notes for GMS 200

Log In


Don't have an account?

Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.