Strategic Management: Creating and Maintaining Competitive Advantage

Strategic Management: Analyses, Decisions, and Actions

Strategic management involves the analyses, decisions, and actions an organization undertakes to create and maintain competitive advantages.

Strategic Management Process

• Strategy analysis
• Strategy formulation
• Strategy implementation

Strategic Levels

• Corporate level
• Business level (Cost leadership, differentiation, specialization)
• Operational level

Mission and Vision

• Mission: Current picture of the company.
• Vision: Goal of the company in the long term.

Criteria for Selecting Meaningful Objectives

• Timely: Defined time frame.
• Realistic: Achievable goals.
• Appropriate: Consistent with the mission and vision.
• Measurable: Includes key performance indicators (KPIs).
• Specific: Clear and concise message.

Organizational Resources

Four Categories of Organizational Resources

• Physical: Machines and infrastructure.
• Financial: Capital and cash flow.
• Human: Skills and knowledge of employees.
• Intellectual: Patents and proprietary information.

Value Chain Analysis

The value chain views the organization as a sequential process of value-creating activities. It helps identify where competitive advantages are created.

Primary Activities

Primary activities contribute to the physical creation of the product and its transfer to the buyer.

• Inbound logistics: Receiving and distributing inputs.
• Operations: Transforming inputs into the final product.
• Outbound logistics: Distributing products to buyers.
• Marketing and Sales: Purchases and inducements for purchases.
• Services: Actions to maintain the value of the product.

Support Activities

Support activities add value by themselves or through relations with primary activities.

• Procurement: Purchasing inputs.
• Technology development: Use of knowledge to improve processes and products.
• Human resource management: Recruiting, hiring, and training employees.
• General administration: General management supporting the value chain.

Tangible Resources

• Financial: Capacity to raise equity.
• Physical: Plants and facilities.
• Technological: Innovation capabilities.
• Organizational: Planning and execution processes.

Intangible Resources

• Human: Capabilities and knowledge of employees.
• Innovation: Ability to develop new products and processes.
• Reputation: Brand name and customer loyalty.

Organizational Capabilities: Competencies to transform inputs into outputs.

Growth Strategies

• Concentration Strategy: Focuses on the main lines of business (risky).
• Vertical Integration: Expansion towards suppliers to save costs.
• Horizontal Integration: Merging two organizations at the same level of the value chain.
• Diversification: Moving to a different industry or seeking new opportunities.

Development Modes

• Internal Development: The organization starts a new business using its own resources.
• External Development: Mergers and acquisitions.
• Hybrid: Strategic partnerships, joint ventures, long-term contracts, strategic alliances.