Chapter 1 Strategic Management: Creating Competitive Advantages

Summary/Objectives

PowerPoint Slide 2: Learning Objectives

At the heart of strategic management is the question: “How and why do some firms outperform others?” The challenge to managers is to develop and implement strategies that will provide competitive advantages that will be sustainable over time. This chapter is divided into five sections.

1. The first section addresses the broad question: “What is strategic management?” Here, we define strategic management as “consisting of the analysis, decisions, and actions an organization undertakes to create and sustain competitive advantages.” We also address the four key attributes of strategic management: concern with overall objectives; involvement of multiple stakeholders; incorporation of short- and longterm perspectives; and recognition of tradeoffs between effectiveness and efficiency. We also introduce the concept of “ambidextrous behaviors” the need to combine alignment and adaptability.

2. The second section discusses the strategic management process. Here, we present the three processes analysis, formulation, and implementation that provide the framework for the overall organization of the thirteen chapters of the book.

3. The third section focuses on the vital role of corporate governance, which is essential to ensuring that the actions of a firm’s management are consistent with the goals of its owners the shareholders. We also address stakeholder management. It must be taken into account throughout the strategic management process. Although the interests of stakeholders may, at times, conflict, we discuss how firms are able to achieve “symbiosis” among stakeholders wherein various interests are considered interdependent and can be attained simultaneously. We address the importance of social responsibility, including environmental sustainability, as well as challenges associated with making the case for sustainability initiatives.

4. The fourth section addresses today’s greater need for a strategic management perspective throughout the organization. With the emergence of the knowledge of economy and globalization, leaders must mobilize people throughout the organization.

5. The fifth section discusses the need for organizations to attain consistency in their vision, mission, and strategic objectives. Collectively, they form a hierarchy of goals.

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