Unit 6. Chapter 34. What is strategic management

Question 1

Corporate strategy

Answer 1

a long-term plan of action for the whole organisation, designed to achieve a particular goal

Question 2

Tactic

Answer 2

short-term policy or decision aimed at resolving a particular problem or meeting a specific part of the overall strategy

Question 3

Strategic management

Answer 3

the role of management when setting long-term goals and implementing cross-functional decisions that should enable a business to reach these goals.

Question 4

The need for strategic management (6)

Answer 4

1. Assess the current position of the company in relation to its market, competitors and the external environmet
   - > Decisions start from knowledge of ‘where the business is now’may be appropriate and effective
2. Setting the company’s mission, vision and objectives
   - > Clear and well-defined aims and objectives provide a clear sense of overall direction to the work
3. Taking important long-term decisions that will push the business towards the objectives set
   - > A new direction for a business will require key decisions to be taken about products and markets
4. Integrating and coordinating the activities of the different functional areas
   - > Implement successfully
5. Allocating sufficient resources to put decision into effect
   - > Right time, sufficient quantities to allow the new policies to work
6. Evaluate success - overall performance of the business and its progress towards objectives.
   - > Measured against original objectives set for it. Lesson learnt from success and failure

Question 5

Chandler’s assertion that strategy should determine organisational structure

Answer 5

• Structure follows strategy
  Case studies:
• acquired labour and raw materials to allow for growth that required build-up of marketing and distribution channels
• established a functional / departmental structure to improve specialisation and efficiency
• adopted growth-and diversification strategies - new markets and new products to overcome the limits of the original home market
• developed divisional organisational structures that allowed geographical regions/ product groups to be created (with considerable independence but controlled) -> M-form organisational structure.
  -> Companies are driven by market growth and technological change to develop greater diversity in market and products
• Delayer the organisational structures
• Decentralisation

Question 6

Business strategy and competitive advantage

Answer 6

• Competitive advantage: lower costs, differentiated products
• Strategies:
  + Automation: uses of operating equipment, machinery, reduce costs of manufacture, allows a flexible production system.
  + Rationalisation: Selling off or closing down some plants or units to reorganize a firm’s operations to be more in line with its core competencies, in the interest of efficiency, or as a cost cutting measure.
  + Research and development (R and D): allow diversification, focus on technology