LS LT 1 - Chapter 1 Essays

Business and military strategy are very similar. A key aim of both business and military strategy is "to gain competitive advantage." They both also try to use their own strengths to exploit competitor's weaknesses. Success is not the happy result of accidental strategies in either business or military organizations. The element of surprise provides great competitive advantages in both military and business strategy. Information systems that provide data on opponents' or competitors' strategies and resources are also vitally important. Finally, both business and military organizations must adapt to change and constantly improve to be successful. While business and military strategy are the same in many ways, they have one major difference-business strategy is formulated, implemented and evaluated with an assumption of competition, whereas military strategy is based on an assumption of conflict.

Compare and contrast business and military strategy.

Strategic planning is more often used in the business world, whereas strategic management is often used in academia. Sometimes, strategic management is used to refer to strategy formulation, implementation and evaluation, with strategic planning referring only to strategy formulation. The purpose of strategic management is to exploit and create new and different opportunities for tomorrow; long-range planning, in contrast, tries to optimize for tomorrow the trends of today.

Compare and contrast strategic planning with strategic management.

Many organizations today develop a vision statement that answers the question "What do we want to become?" Developing a vision statement is often considered the first step in strategic planning, preceding even development of a mission statement. Many vision statements are a single sentence. For example, the vision statement of Stokes Eye Clinic in Florence, South Carolina, is "Our vision is to take care of your vision." Mission statements are "enduring statements of purpose that distinguish one business from other similar firms. A mission statement identifies the scope of a firm's operations in product and market terms." It addresses the basic question that faces all strategists: "What is our business?" A clear mission statement describes the values and priorities of an organization. Developing a mission statement compels strategists to think about the nature and scope of present operations and to assess the potential attractiveness of future markets and activities. A mission statement broadly charts the future direction of an organization.

Define and discuss the differences between vision and mission statements.

Strategists are individuals who are most responsible for the success or failure of an organization. They help an organization gather, analyze and organize information. They track industry and competitive trends, develop forecasting models and scenario analyses, identify business threats and develop creative action plans. Strategic planners usually serve in a support or staff role. Usually found in higher levels of management, they typically have considerable authority for decision making in the firm.

Define what strategists are. Describe what they do in an organization.

Firms that compete in complex, rapidly changing environments, such as technology companies, tend to be more formal in strategic planning. Firms that have many divisions, products, markets and technologies also tend to be more formal in applying strategic-management concepts. Greater formality in applying the strategic-management process is usually positively related with the cost, comprehensiveness, accuracy and success of planning across all types and sizes of organization.

Discuss some forces that influence the formality of strategic-management systems.

Even the most technically perfect strategic plan will serve little purpose if it is not implemented. Many organizations tend to spend an inordinate amount of time, money, and effort on developing the strategic plan, treating the means and circumstances under which it will be implemented as an afterthought! Change comes through implementation and evaluation, not through the plan. A technically imperfect plan that is implemented well will achieve more than the perfect plan that never gets off the ground.

Discuss the importance of the implementation phase of strategic management.

Most organizations can benefit from strategic management, which is based upon integrating intuition and analysis in decision making. Choosing an intuitive or analytic approach to decision making is not an either-or-proposition. Managers at all levels in an organization inject their intuition and judgment into strategic-management analyses. Analytical thinking and intuitive thinking complement each other. Operating from the" I've-already-made-up-my-mind-don't-bother-me-with-the-facts" mode is not management by intuition; it is management by ignorance. Drucker says, "I believe in intuition only if you discipline it. 'Hunch' artists, who make a diagnosis but don't check it out with facts, are the ones in medicine who kill people, and in management kill businesses." In a sense, the strategic-management process is an attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business, and to couple it with analysis.

Discuss the value of integrating intuition and analysis.

Strategic management is all about gaining and maintaining competitive advantage. Competitive advantage is anything a firm does especially well compared to rival firms. When a firm can do something that rival firms cannot do, or owns something that rival firms desire, that can represent a competitive advantage. Getting and keeping competitive advantage is essential for long-term success of an organization. A firm must strive to achieve sustained competitive advantage by 1) continually adapting to changes in external trends and events and internal capabilities, competencies and resources, and by 2) effectively formulating, implementing and evaluating strategies that capitalize upon those factors.

Explain the relationship between strategic management and competitive advantage for firms. How can a firm achieve sustained competitive advantage?

1. lack of knowledge or experience in strategic planning, 2. poor reward structures, 3. firefighting, 4. waste of time, 5. too expensive, 6. laziness, 7. content with success, 8. fear of failure, 9. overconfidence, 10. prior bad experience, 11. self-interest, 12. fear of the unknown, 13. honest difference of opinion, 14. suspicion.

Give at least seven reasons why some firms do no strategic planning.

1) it allows for identification, prioritization and exploitation of opportunities; 2) it provides an objective view of management problems; 3) it represents a framework for improved coordination and control of activities; 4) it minimizes the effects of adverse conditions and changes; 5) it allows major decisions to better support established objectives; 6) it allows more effective allocation of time and resources to identified opportunities; 7) it allows fewer resources and less time to be devoted to correcting erroneous or ad hoc decisions; 8) it creates a framework for internal communication among personnel; 9) it helps integrate the behavior of individuals into a total effort; 10) it provides a basis for clarifying individual responsibilities; 11) it encourages forward thinking; 12) it provides a cooperative, integrated and enthusiastic approach to tackling problems and opportunities; 13) it encourages a favorable attitude toward change; and 14) it gives a degree of discipline and formality to the management of a business.

List 10 major benefits of strategic management, as stated by Greenley.

Some of the opportunities and threats are: availability of capital can no longer be taken for granted; consumers expect green operations and products; marketing is moving rapidly to the Internet; consumers must see the value in all that they consume; global markets offer the highest growth in revenues; too much debt can crush even the best firms; layoffs are rampant among many firms as revenues and profits fall and credit sources dry up; the housing market is depressed; demand for health services does not change much during a recession; borrowers are faced with much bigger collateral requirements than in years past; equity lines of credit often now are not being extended; firms that have cash or access to credit have a competitive advantage over debt-laden firms; discretionary spending has fallen dramatically; the business world has moved from a credit-based economy to a cash-based economy; there is reduced capital spending in response to reduced consumer spending.

What are some opportunities and threats that face many firms during a global economic recession?

1) using strategic planning to gain control over decisions and resources; 2) doing strategic planning only to satisfy accreditation or regulatory requirements; 3) too hastily moving from mission development to strategy formulation; 4) failing to communicate the plan to employees, who continue to work in the dark; 5) top managers making many intuitive decisions that conflict with the formal plan; 6) top managers not actively supporting the strategic-planning process; 7) failing to use plans as a standard for measuring performance; 8) delegating planning to a "planner" rather than involving all managers; 9) failing to involve key employees in all phases of planning; 10) failing to create a collaborative climate supportive of change; 11) viewing planning to be unnecessary or unimportant; 12) becoming so engrossed in current problems that insufficient or no planning is done; and 13) being so formal in planning that flexibility and creativity are stifled.

What are the pitfalls in strategic planning that management in an organization should watch out for or avoid? Identify any five pitfalls.

Strategy implementation is the most difficult stage in the strategic-management process because it requires personal discipline, commitment and sacrifice. Successful strategy implementation hinges upon managers' ability to motivate employees, which is more of an art than a science.

Which stage in the strategic-management process is most difficult? Explain why.