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Summary Strategic Management 344 Summaries

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Strategic Management 344

Institution
Stellenbosch University (SUN)

Strategic Management 344 summaries of the textbook Strategic Management (third edition): Developing Sustainability in Southern Africa by Lynette Louw & Peet Venter Extremely thorough & clear summaries of the chapters needed for the upcoming test: chapter 1, 3, 4, 5, 6

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Uploaded on August 27, 2018
Number of pages 90
Written in 2018/2019
Type Summary

strategic
management
344
strategic management 344
strategic man
strat man
test
test summaries
3rd year
strategic management
third edtiion
louw
venter
oxfor
developing sustainability in southern afirca

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STRATEGIC MANAGEMENT SUMMARIES
Chapters 1, 3, 4, 5, 6

,PART 1: STRATEGY. STAKEHOLDERS & STRATEGIC DIRECTION
CHAPTER 1: INTRODUCTION – THE NATURE OF STRATEGIC
MANAGEMENT
1.1 INTRODUCTION
 Managing an organisation in the competitive landscape of the 21st century is a highly
complex task & has an impact on organisational leadership, strategies & organisational
architecture
 Reasons for heightened complexity: increasingly competitive business practices, the
inclination towards strategic flexibility to accommodate change, the emergence of
networked organisations and the concern for sustainability & business ethics in the
global arena
 It is vital that leaders think strategically about how they achieve a competitive
advantage for the organisation
- Leaders need to understand where they fit into the global competitive landscape,
what it means to be a sustainable global organisation & how they can contribute
towards strategic development, change & transformation
 When thinking strategically about their organisation’s current situation & future
prospects in a competitive landscape, management is faced with 4 critical questions:
1. Where are we now?
- To answer this question, management should consider an organisation’s:
o Competitive positioning
o Resources & dynamic capabilities
o Appeal & innovative value added to its products & services
o Extent to which it meets the needs & expectations of its customers &
stakeholders
o Environmental integrity
o Current performance
2. Where do we want to go?
- Refers to the strategic direction that management believes the organisation should
adopt
- E.g.: vision: “To be the world’s best platinum-producing company, delivering
superior returns to stakeholders relative to their peers”  to achieve the vision of
being the most efficient & low-cost primary producers, the company is a good
corporate citizen, acting with integrity & openness, has human resources that are
highly skilled & technologically proficient
3. How will we get there?
- Depends on:
o How strategy is formulated at the different organisational levels based on
customer needs, stakeholder expectations, integration with the environment &
ethical perspectives

, o The influence of leadership, values, organisational culture & organisational
architecture on strategy implementation
4. How are we doing?
- Requires that strategic leaders manage the performance of the organisation by
means of strategic control measures & appropriate feedback
 In the future, the extent to which an organisation successfully implements its strategies
will be determined by the approach towards sustainability that it adopts
- There is a growing need for organisations to manage their own resources while at
the same time being responsible, sustainable, global corporate citizens
- There is a positive association between economic & environmental performance,
while corporate social responsibility is closely linked to economic performance
 It is NB to note that:
- all organisations require strategies to achieve their purpose, whether they are in
developed or developing countries, large or small, profit-seeking or not-for-profit,
private or from the public sector
- sustaining a competitive advantage is influenced by the organisation’s engagement
with government, environmental focus (process improvement &products/services)
& socio-economic development
- sustainable development is a challenge & the business community, ranging from
small organisations to multinational corporations has an important role to play

1.2 THE ESSENCE OF STRATEGY
 Overview of the conceptualisation of strategy & the historical perspectives of strategic
development

1.2.1 Strategy conceptualised
 The concept of strategy dates back to ancient Athens of 500 BC, and the documentation
of Sun Tzu’s ‘The art of war’, written about 500 BC.
 Strategy has always been considered to be a key element of managerial activity
 Selected definitions of strategy:

Table 1.1: Selected definitions of strategy
Strategy: a plan, method or series of actions designed to achieve a specific goal or effort
The determination of the LR goals & objectives of an enterprise, & the adoption of
courses of action & the allocation of resources necessary for carrying out these goals.
A strategy is the pattern or plan that integrates an organisation’s major goals, policies &
action sequences into a cohesive whole. A well-formulated strategy helps marshal &
allocates an organisation’s resources into a unique & viable posture based upon its
relative internal competencies & shortcomings, anticipated changes in the environment,
& contingent moves by intelligent opponents.
What business strategy is all about is, in a word, competitive advantage… The sole
purpose of strategic planning is to enable a company to gain, as efficiently as possible, a
sustainable edge over its competitors. Corporate strategy thus implies an attempt to alter
a company’s strength relative to that of its competitors in the most efficient way.
Without strategy, the organisation is like a ship without a rudder, going around in circles.

, Strategy is the direction & scope of an organisation over the LT which achieves advantage
in a changing environment through its configuration of resources & competencies with
the aim of fulfilling stakeholder expectations.

 Strategy can be regarded as a game plan indicating the choices a manager needs to
make for example about how to:
- Attract & meet customer needs
- Compete successfully
- Develop the necessary dynamic capabilities
- Grow the organisation
- Manage the organisational architecture
- Achieve performance targets by implementing strategy successfully

1.2.2 The historical origins of the concept of strategy
 The concept of strategy derives from the Greek word strategos, meaning ‘a general’.
- Strategos, in turn, derives from stratos (the army) and agein (to lead).
 So, originally, strategy was associated with the military – the ‘art of leading the army’.
 Sun Tzu’s primal work, ‘The art of war’, written about 500 BC, is regarded as the first
formal article on strategy
 However, it was only in the 20th century that the concept of strategy gained importance
in the business world
 Military & business operations share some common concepts & principles, particularly
strategy & tactics.
- A tactic: a plan for a specific action
- Strategy: the overall scheme for leveraging resources to obtain a competitive
advantage
 Strategic decisions, whether in the military or business sphere, share common
characteristics:
- Strategy is concerned with LT direction & sustainable success
- Strategy exploits the links between the internal & external environments – the so-
called strategic link
- Strategies require major resources
- Strategies are likely to affect the whole organisation
- Strategies are shaped by the values & expectations of stakeholders
- Strategies are directed by visions – the ability to move forward

1.2.3 Strategy development in the 20th & 21st centuries
 During the early 20th century managers began to explore & define the management task,
e.g.:
- FW Taylor in the USA: identified best way for employees to perform a task
- Henri Fayol in France: emphasised formal structures & processes for the adequate
performance of all NB tasks
- Henry Ford (1908–1915): focused on innovative technology, mechanisms, quality
standards, redesign & cost cutting
- 1912 Harvard Business School: introduced business policy capstone courses

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