Strategic Management: A Comprehensive Guide

Strategy: Adding Value to Your Business

Three Horizons of Growth

Horizon 1: Extend and defend core business.
Horizon 2: Build emerging businesses.
Horizon 3: Create viable options.

PESTEL Analysis

Political: Role of the state, government policies.
Economic: Interest rates, exchange rates, unemployment rates.
Social: Changing cultures and demographics.
Technological: New discoveries and technology developments.
Ecological: Environmental issues (pollution, waste, climate change).
Legal: Legislative and regulatory constraints or changes.

Porter's Five Forces

Threat of Entry: High barriers to entry equate to a low threat of entry.
Threat of Substitutes: Products or services offering similar benefits but with different maturity.
Bargaining Power of Buyers: Powerful buyers can demand lower prices or product/service improvements, reducing profits.
Bargaining Power of Suppliers: Strong supplier power can reduce organizational profit.
Rivalry Between Existing Competitors: Organizations with similar products and customer groups are direct competitors.

Strategic Capabilities

Capabilities contributing to long-term survival or competitive advantage:
Resources: What we have.
Competences: What we do well.

Dynamic Capabilities

The ability to renew and recreate strategic capabilities to meet changing environments.

Threshold Capabilities

Capabilities needed to compete in a given market.

Distinctive Capabilities

Capabilities required to achieve a competitive advantage, difficult for competitors to imitate.

VRIO Framework

Value: Take advantage of opportunities.
Rarity: Capabilities possessed uniquely by one organization.
Inimitability: Difficult or costly to imitate?
Organizational Support: Appropriately organized?

Benchmarking

Understanding how an organization compares with others.

The Value Chain

Describes the activities within an organization that create a product or service.

SWOT Analysis

Internal Analysis: Strengths and weaknesses.
External Analysis: Opportunities and threats.

Stakeholders

Individuals or groups who depend on an organization and on whom the organization depends.

Strategic Business Unit (SBU)

Supplies goods or services for a distinct domain of activity.

Hybrid Strategy

Simultaneously achieving higher benefits through differentiation and lower prices relative to competitors.

Scope and Integration

Scope: The diversification degree in terms of products and markets.
Horizontal Integration: Expanding into new products and markets.
Vertical Integration: Becoming your own supplier or customer.

International Strategies

Market Drivers: Similar customer needs, global customers, transferable marketing.
Cost Drivers: Scale economies, country-specific differences, favorable logistics.
Government Drivers: Trade policies, technical standardization, host government policies.
Competitive Drivers: Interdependence, global competitors.

Invention vs. Innovation

Invention: Converting new knowledge into a new product, process, or service.
Innovation: Putting an invention into actual use.

Technology Push vs. Market Pull

Technology Push: New knowledge from technologists drives innovation.
Market Pull: User demand drives innovation.