Learning unit 1: Introduction to Strategic Management
Introduction:
In this learning unit we introduce you to strategic management as an exciting approach to leading and managing
organisations in today's rapidly changing environment of the global ”information economy”. You will undoubtedly
learn why it has become imperative for leaders and managers to be innovative if their organisations are to remain
competitive, prosper and grow.
The origins and evolution of strategy:
Study section 1.1 in chapter 1 in the prescribed book
The origins of the word “strategy” can be found in military science, and a key aim of both a military and business
strategy is to “gain a competitive advantage.” The Oxford pocket dictionary (2007) defines the term “strategy”
according to both the military and business context as follows:
Strategy: The art of war, especially the planning of movements of troops and ships, etcetera, into favourable
positioning; a plan of action or policy in business, etcetera.
The word “strategy” is derived from the Greek word strategos, meaning military leader or general, and is a
combination of two words, stratos (the army) and ago (to lead). However, a major difference between military
conflict and business competition is that while the objective of war is to defeat the enemy, rivalry in business is
seldom that aggressive, essentially striving to gain a competitive advantage instead of total destruction.
In both business and the military, strengths are used to exploit competitors' weaknesses. According to David
(2013:49), business or military success is the product of continuous attention to changing external and internal
conditions, and the optimal deployment of resources and capabilities. In both military and business strategy,
information systems are vitally important, and it is therefore not surprising that the term ”competitive intelligence”,
which is widely used in business to obtain information on competitors, has its roots in military intelligence.
Strategy first emerged as a management concept in the 1950s and early 1960s in the United States of America (USA).
Chandler describes strategy as a pattern of objectives and the major policies and plans to achieve them. Of
importance, however, is that the term “strategic decisions”, whether in business or military contexts, shares the
following common characteristics. Strategic decisions are concerned with long-term direction and sustainable
success involve exploiting the links between the internal and external environments require major resources are
likely to affect the whole organisation are shaped by the values and expectations of stakeholders are directed by
vision.
The concept of strategy:
Study sections 1.2, 1.3 and 1.4 in chapter 1 in the prescribed book.
Strategy has generally been acknowledged as the result or outcome of fundamentally important pre-emptive,
innovative management decisions about an organisation’s strategic direction and strategic action plans to attain a
sustainable competitive advantage and achieve its long-term objectives in rapidly changing and competitive external
business environments.
Even at this early stage one needs to realise that the purpose of strategy from a business perspective means
outcompeting an organisation's rivals through effective interaction with its external environment and meeting the
changing needs of consumers better than the organisation’s rivals do. This, in turn, requires strategic thinking, the
development of viable and innovative competitive strategies, and the effective implementation and execution of
such strategies. Strategic thinking is discussed in learning unit 2, while the focus of learning unit 7 is the choice of
optimal competitive strategies.
Now consider the following definitions that reflect the thinking on strategy:
“What business strategy is all about is, in a word, competitive advantage – the sole purpose of strategic planning is
to enable a company to gain, as efficiently as possible, a sustainable edge over its competitors, which implies an
attempt to alter a company's strength relative to that of its competitors in the most efficient way” (Ohmae 1982:3).
“The art of making the most intelligent choices – those that will help us to use our limited resources to win the
competition for value creation – greater value for your customers and greater profit for your company” (Pietersen
2002:44-47).
“A company's strategy provides direction and guidance, in terms of not only what the company should do, but also
what it should not do. Knowing what not to do can be as important as knowing what to do, strategically” (Thompson,
Peteraf, Gamble & Strickland 2012:52-53).
Introduction:
In this learning unit we introduce you to strategic management as an exciting approach to leading and managing
organisations in today's rapidly changing environment of the global ”information economy”. You will undoubtedly
learn why it has become imperative for leaders and managers to be innovative if their organisations are to remain
competitive, prosper and grow.
The origins and evolution of strategy:
Study section 1.1 in chapter 1 in the prescribed book
The origins of the word “strategy” can be found in military science, and a key aim of both a military and business
strategy is to “gain a competitive advantage.” The Oxford pocket dictionary (2007) defines the term “strategy”
according to both the military and business context as follows:
Strategy: The art of war, especially the planning of movements of troops and ships, etcetera, into favourable
positioning; a plan of action or policy in business, etcetera.
The word “strategy” is derived from the Greek word strategos, meaning military leader or general, and is a
combination of two words, stratos (the army) and ago (to lead). However, a major difference between military
conflict and business competition is that while the objective of war is to defeat the enemy, rivalry in business is
seldom that aggressive, essentially striving to gain a competitive advantage instead of total destruction.
In both business and the military, strengths are used to exploit competitors' weaknesses. According to David
(2013:49), business or military success is the product of continuous attention to changing external and internal
conditions, and the optimal deployment of resources and capabilities. In both military and business strategy,
information systems are vitally important, and it is therefore not surprising that the term ”competitive intelligence”,
which is widely used in business to obtain information on competitors, has its roots in military intelligence.
Strategy first emerged as a management concept in the 1950s and early 1960s in the United States of America (USA).
Chandler describes strategy as a pattern of objectives and the major policies and plans to achieve them. Of
importance, however, is that the term “strategic decisions”, whether in business or military contexts, shares the
following common characteristics. Strategic decisions are concerned with long-term direction and sustainable
success involve exploiting the links between the internal and external environments require major resources are
likely to affect the whole organisation are shaped by the values and expectations of stakeholders are directed by
vision.
The concept of strategy:
Study sections 1.2, 1.3 and 1.4 in chapter 1 in the prescribed book.
Strategy has generally been acknowledged as the result or outcome of fundamentally important pre-emptive,
innovative management decisions about an organisation’s strategic direction and strategic action plans to attain a
sustainable competitive advantage and achieve its long-term objectives in rapidly changing and competitive external
business environments.
Even at this early stage one needs to realise that the purpose of strategy from a business perspective means
outcompeting an organisation's rivals through effective interaction with its external environment and meeting the
changing needs of consumers better than the organisation’s rivals do. This, in turn, requires strategic thinking, the
development of viable and innovative competitive strategies, and the effective implementation and execution of
such strategies. Strategic thinking is discussed in learning unit 2, while the focus of learning unit 7 is the choice of
optimal competitive strategies.
Now consider the following definitions that reflect the thinking on strategy:
“What business strategy is all about is, in a word, competitive advantage – the sole purpose of strategic planning is
to enable a company to gain, as efficiently as possible, a sustainable edge over its competitors, which implies an
attempt to alter a company's strength relative to that of its competitors in the most efficient way” (Ohmae 1982:3).
“The art of making the most intelligent choices – those that will help us to use our limited resources to win the
competition for value creation – greater value for your customers and greater profit for your company” (Pietersen
2002:44-47).
“A company's strategy provides direction and guidance, in terms of not only what the company should do, but also
what it should not do. Knowing what not to do can be as important as knowing what to do, strategically” (Thompson,
Peteraf, Gamble & Strickland 2012:52-53).
