MGT 107 Handout # 1

Chapter 1: The Nature of Strategic Management

Strategic Management Defined. Strategic management can be defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

It focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success

Stages of Strategic Management. Strategy formulation includes developing a vision and mission, identifying an organization’s external opportunities and threats, determining internal strengths and weaknesses, establishing long-term objectives, generating alternative strategies, and choosing particular strategies to pursue.

Strategy implementation requires a firm to establish annual objectives, devise policies, motivate employees, and allocate resources so that formulated strategies can be executed.

Three fundamental strategy-evaluation activities are (1) reviewing external and internal factors that are the bases for current strategies, (2) measuring performance, and (3) taking corrective actions.

Integrating Intuition and Analysis. Intuition is particularly useful for making decisions in situations of great uncertainty or little precedent. It is also helpful when highly interrelated variables exist or when it is necessary to choose from several plausible alternatives

Adapting to Change. The strategic-management process is based on the belief that organizations should continually monitor internal and external events and trends so that timely changes can be made as needed.

Competitive Advantage Strategic management is all about gaining and maintaining competitive advantage. This term can be defined as “anything that a firm does especially well compared to rival firms.”

Many organizations