Summary Introduction to business management Chapter 16

Chapter 16 - Strategic management

Strategic management is the set of managerial decision and action that determines the long-run performance of a corporation

Importance of Strategic Management
 Shapes the Future of Business:
 Helps anticipate trends, use opportunities, and adapt to changes, shaping direction and future business.

 Effective Strategic Ideas:
 Facilitates generation of innovative and forward-thinking ideas, aligning them with organisation’s long-term goals

 Encourages Innovation and Creativity:
 Inspires managers and employees to be innovative, creative, active in problem-solving and strategy formulation

 Decentralised Management:
 Encourages a decentralised approach, empowering managers at different levels to make decisions, fostering agility and
responsiveness

 Increases Productivity:
 Ensures resources are used efficiently, improving overall productivity and ensuring efforts contribute directly to the
organisation’s strategic goals

 Ensures Discipline:
 Establishes framework for discipline, helping to align daily operations with broader strategic objectives of business

 Guides Organisational Direction:
 Provides a clear roadmap for where the organisation is heading and how it plans to get there

 Enhances Decision-Making:
 Improves the quality of decisions by aligning them with long-term objectives and external opportunities

 Optimises Resources:
 Helps allocate resources effectively, ensuring time, money, and effort invested where they have greatest impact

 Facilitates Adaptation to Change:
 Helps organizations adapt to external changes like market shifts, technological advancements, regulatory updates

 Improves Competitive Advantage:
 Strengthens an organisation’s position in market by identifying unique opportunities and leveraging core strengths

 Controls Effort:
 Provides structure for monitoring progress, ensuring efforts are directed towards achieving strategic goals and
maintaining focus




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, Elements of Strategy
 The strategy has following four elements:
 Defining mission - establishing a clear, long-term objective that aligns with the organization's purpose
 Competitive advantage - striving to become a powerful player in the competitive environment
 Synergy - working together to achieve goals
 Vector - creating strong relationships within the business for growth



Strategic Direction
 Strategic direction is the framework guiding an organization's long-term goals, including its vision, mission, core values
 A clear strategic direction is essential for sustainable growth and competitive advantage

 Key Components:
 Vision Statement: ultimate goal of the organisation
 Mission Statement: defines the purpose and primary objectives
 Core Values: principles that guide behaviour and culture


Importance of Strategic Direction
 Provides clarity and focus for all stakeholders
 Aligns resources and efforts towards common objectives
 Facilitates effective decision-making and prioritisation


Vision Statement
 The vision statement provides a long-term perspective on where the organisation is headed
 It outlines what the organisation aims to achieve in the future, serving as a source of inspiration
 Purpose:
 Guides strategic planning and decision-making.
 Helps align organisational efforts towards a common goal.
 Enhances organisational identity and culture.
 A strong vision statement is crucial for fostering unity and purpose within an organisation


Mission Statement
 A mission statement is a summary of the aims and values of an organisation
 It shows the organisation's purpose and its primary objectives
 Purpose:
 Guides daily operations and decision-making
 Communicates the organisation's intentions to stakeholders
 Enhances employee engagement and alignment
 An effective mission statement is crucial for establishing a clear organisational identity and direction
 Helping to motivate employees and build stakeholder trust
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