Summary Of Chapter 8 by Usama Sultan

Strategic Management

Strategic Management: Strategic management is what managers do to develop the organizational strategies.

Strategies: Strategies are the decisions and actions that determine the long run performance of an organization.

Business Model: A strategic design for how a company intends to profit from its strategies, work processes and work activities.

Why is Strategic Management important?

• One of the most significant reasons is that it can make a difference in how well an organzation performs.
• Organzations of all types and sizes face continually changing situations. Using the strategic management managers decide what actions to take.
• Strategic management is also important because of the nature of the organizations. They are composed of diverse divisions and to manage them all, strategic management plays a vital role.
• Strategic Management is important because it is invloved in many decisions that managers make.

Types Of Organzational Strategies

Corporate Strategies: An organizational strategy that determines what buisnesses a company is in, should be in or wants to be in and what it wants to do with those buisnesses. There are three main types of corporate strategies:

• Growth
• Stability
• Renewal

Growth Strategy: A growth strategy is used when an organization wants to grow and does so by expanding the number of products offered or markets served, either through its current buisnesses or through new buisnesses.

Related Diversification: When a company grows by combining with firms in different, but related industries.

Unrelated Diversification: When a company grows by combining with firms in different but unrelated industries.

Stability Strategy: A stability strategy is a corporate strategy characterized by an absence of significant change in what the organization is currently doing.

Renewal Strategy: A renewal strategy is a corporate strategy designed to address the organizational weaknesses that lead to performance declines. There are two main types of renewal strategies:

• Retrenchment Strategy
• Turnaround Strategy

Retrenchment Strategy: A short-run renewal strategy.

Turnaround Strategy: A turnaround strategy is a renewal strategy that is used when a n organization's performance problems are more serious.

Business Strategy: A business strategy is an organzational strategy which focuses on how the organization will compete in each of its businesses.

Competitive Advantage: Competitive Advantage is what sets an organzation apart.

Cost Leadership Strategy: A competetive strategy in which an organzation competes on the basis of having low costs in the industry.

Differentiation Strategy: A differentation strategy is a competetive strategy in which an organzation competes on the basis of unique products that are widely valued by customers.

Focus Strategy: A focus strategy is a competetive strategy in which an organzation competes on the basis of a cost or differentiation advantage in a narrow industry.

Functional Strategy: The funtional strategy is a strategy used by organzation's various functional departments to support the business.