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💼intro to business review

key term - Strategic Management

Citation:

Definition

Strategic management is the process of identifying an organization's long-term goals and objectives, and then making and implementing decisions to achieve those goals. It involves analyzing the organization's internal and external environment, formulating strategies, and allocating resources to execute those strategies effectively.

5 Must Know Facts For Your Next Test

  1. Strategic management helps organizations adapt to changing environments and maintain a competitive edge.
  2. The strategic management process typically includes environmental scanning, strategy formulation, strategy implementation, and strategy evaluation.
  3. Effective strategic management requires aligning an organization's internal capabilities with external market opportunities.
  4. Strategic decisions are typically made by top-level management and have long-term, organization-wide implications.
  5. Successful strategic management can lead to improved financial performance, increased market share, and enhanced stakeholder value.

Review Questions

  • Explain how strategic management differs from operational management and its importance in the context of an organization.
    • Strategic management focuses on the long-term direction and overall performance of an organization, while operational management deals with the day-to-day activities and processes. Strategic management is crucial as it helps organizations adapt to changing market conditions, identify and capitalize on new opportunities, and maintain a competitive edge. It involves setting the organization's vision, mission, and goals, and then aligning the allocation of resources and implementation of policies to achieve those strategic objectives. Effective strategic management can lead to improved financial performance, increased market share, and enhanced stakeholder value for the organization.
  • Describe the key components of the strategic management process and how they contribute to an organization's success.
    • The strategic management process typically includes four main components: environmental scanning, strategy formulation, strategy implementation, and strategy evaluation. Environmental scanning involves analyzing the organization's internal strengths and weaknesses, as well as the external opportunities and threats it faces. This information is then used to formulate strategies that align the organization's capabilities with market conditions. Strategy implementation involves allocating resources, designing organizational structures, and developing policies and procedures to execute the chosen strategies. Finally, strategy evaluation assesses the effectiveness of the implemented strategies and makes necessary adjustments. By following this comprehensive process, organizations can make informed decisions, adapt to changing environments, and achieve their long-term goals and objectives.
  • Analyze how the strategic management process can help an organization achieve a sustainable competitive advantage in the market.
    • The strategic management process can help an organization achieve a sustainable competitive advantage by enabling it to identify and capitalize on unique resources, capabilities, and market opportunities. Through the environmental scanning phase, the organization can assess its internal strengths and weaknesses, as well as external market trends and competitor actions. This information is then used to formulate strategies that leverage the organization's core competencies and differentiate it from rivals. The effective implementation of these strategies, supported by the allocation of resources and the alignment of organizational structures and processes, can lead to the creation of a sustainable competitive advantage. This advantage may be based on factors such as cost leadership, product differentiation, or a focus on a specific market segment. By continuously evaluating and adapting its strategies, the organization can maintain its competitive edge and ensure long-term success in the market.