Strategic management: the process of thinking strategically, setting objectives for the organization, planning and implementing the necessary changes, and measuring the outcomes.
Central objective of strategic management is to create differentiation between the organization and its competitors.
Modern approach to strategy formulation: combining emergent and planned approaches in the development of strategy.
Emergent strategies: strategies resulting from decisions made by managers in the organization in response to external events or conditions within the organization.
Strategic intent: focuses on how the organization compete and what it will become in the future. Strategic intent is a set of aspirations intended to motivate and inspire the organization.
Strategic intent: the broad outline of a strategy leading to a set of challenging objectives.
Differentiation: creating an observable difference between products, services and the way in which a business operates, relative to competitors.
Competitive advantage: a characteristic, feature or opportunity that an organization possesses that will make it more attractive than its competitors.
Competitive advantage is defined as any resource of difference between one organization and its competitors that will assist the organization to achieve its objectives.
Cost advantage: supplying an equivalent product or service at a lower cost
Differentiation: differentiating its product or service in such a way that customers are willing to pay a price premium that exceeds the cost of creating the differentiation.
Corporate-level strategy: the selection of businesses in which a company should compete and the development and coordination of the selected businesses.
Broad purpose of the organization and the interests of its owners or major stakeholder.
Define the scope of the organization’s activities
Business-level strategy: the action that a company implements to create a competitive advantage over rivals in a chosen market or industry.
Refers to how the organization will compete within a particular market
Functional-level strategy: the development and coordination of resources through which business-level strategies can be executed effectively and efficiently.
Macro environment is the environment external to the organization, its operations and its industry. Macro environmental factors strongly influence the medium and long –term features of the strategy the organization must adopt to compete successfully within its markets and remain profitable/ viable.
Micro external environment (industry environment): the conditions in the organization’s industry, has more direct effect on the firm’s strategic competitiveness and above-average returns.
Bargaining power of suppliers
Bargaining power of buyers
Threat of new entrants
Threat of substitutes
Rivalry among existing firms
Strategic group: a group of organizations in an industry that adopt a similar strategy
Strategic group analysis: an analysis of organizations in an industry using pairs of key variables selected for that industry, indicating how organizations group on the basis of the strategies they have adopted.
Sell in same price/quality range
Cover same geographic areas
Be vertically integrated to same degree
Have comparable product line breath
Emphasize same types of distribution channels
Offer buyers similar services
Use identical technological approaches
Focus strategy: a focus strategy allows companies to concentrate their resources on the chosen target market and advantage is achieved by a better understanding of the customers’ needs and the ability to satisfy them.
Integrated approach of cost advantage and differentiation:
Porter argued that an attempt to create advantage via low costs and differentiation would lead companies to the position of ‘stuck in the middle’ where companies achieve neither cost leadership nor differentiation. Indeed, differentiation adds to cost. The direct costs of differentiation include higher-quality