Time: 45 hours
Strategic management involves two processes: first, the process of identifying specific goals for a firm and designing strategies to achieve those goals, and second, the process of implementing those strategies. It is easy to say that your goal is to increase sales by 50% in three years, but how do you achieve that goal? Are you going to lower prices, acquire a competitor, move into other businesses, or something else? Assuming you are going to lower prices, how will you do so and keep profits up? These are the sorts of questions that strategists must answer.
This course is the capstone of Saylor Academy's Business Administration program because it incorporates elements from all of the other courses in the program. If you have taken those courses already, almost every topic in this course should be familiar to you, but Strategic Management ties them all together. This course begins with an introduction to the field and defines some important terms and concepts. You will then identify goals and formulate strategies before addressing implementation. This course concludes with strategies for the 21st century.
First, read the course syllabus. Then, enroll in the course by clicking "Enroll me in this course". Click Unit 1 to read its introduction and learning outcomes. You will then see the learning materials and instructions on how to use them.
Before designing a winning strategy for your organization, let's first review some definitions. This unit will define key terms related to the course. You will see the terms explained in more detail as you navigate the course. However, it is critical to start with a good solid foundation. A few key terms discussed in this unit are strategy, markets, firms, and management. This unit describes how firms must navigate the marketplace and remain competitive. Management often wants to identify their competitors; however, this would be a risky mistake. There are vast considerations companies need to address to create a winning strategy.
A great example of how corporations make moves in the marketplace comes from Microsoft and Google, two well-known tech companies. They are competitors, but they do not compete in all of the same markets. Google primarily competes in the search engine market, where Microsoft has also started to devote more resources with a new "decision engine" called Bing. Likewise, Microsoft competes in the operating system market, and Google has recently diverted resources to compete in this market with Chrome OS. However, competitors do not always compete in the same markets. For example, Apple competes in many markets with Google and Microsoft but makes these companies' products available on its platform. Apple does not have a search engine, so it allows Google and Microsoft to compete on the iPhone. Identifying markets and industries gives a firm the foundation to develop goals and strategies. Microsoft may aim to take 5% of the search engine market from Google and then create a plan to accomplish this.
This unit focuses on topics such as those mentioned above. However, the course will also look at how other smaller businesses and departments might design strategies at different levels within a firm.
Completing this unit should take you approximately 2.5 hours.
Strategic planning is the phase of strategic management that comes after goals are defined but before the strategy is implemented. In this phase, you must take your firm's financial situation into account. For example, if your firm wants to grow, this usually involves additional capital investment. If your firm does not have the cash or the means to raise money to spend, then the goal may be dead in its tracks.
Likewise, there are external issues that must be taken into consideration. Google cannot grow much in the advertising space market without facing reviews from the Department of Justice for anti-trust issues. These are political issues, but economic, social, and technological concerns are also at play. By considering these factors, strategic planners can design a strategy that can be implemented without being stalled or shut down by unforeseen issues.
There are many ways to analyze a system and develop a strategic plan. Hopefully, you will study the methods in this course and then further research systems that may best cater to your desired industry.
Completing this unit should take you approximately 6 hours.
The success of a strategy depends on the firm's competitive advantage, or whether its position in a competitive market allows it to achieve its goals, which might include higher returns on investments, greater efficiency, or superior effectiveness compared to competitors. What sets your product or service apart from the competition? Two generic strategies for developing a competitive advantage are cost leadership and differentiation. Cost leadership is a strategy that Walmart follows. This company aims to offer the lowest prices to draw in customers. Differentiation is a strategy designed to make your product or service so unique that it stands out from the competition in a desirable way to a target market. Nintendo launched the Wii video game console by differentiating its product with motion-sensitive controllers. This company pursued a cost leadership strategy in conjunction with this differentiation strategy.
There are many ways to achieve a competitive advantage, and they all require a focus on the competitors. It is essential to keep this in mind when studying this unit. This unit's primary takeaway should be the concept of sustainable competitive advantage. As soon as your competitors see your strategy working, they will either copy or leapfrog it. Sony immediately attempted to copy Nintendo by developing its own motion-sensitive controllers, and Microsoft has moved to motion recognition via cameras. Sustainable competitive advantage involves not only jumping ahead but staying there.
Completing this unit should take you approximately 2 hours.
Understanding an organization's corporate strategy is essential, as it helps managers and leaders set the metrics by which all other strategies are formed within the company. For example, BMW focuses on quality vehicles that they can sell for a premium. If a business unit of BMW decides to pursue a cost leadership strategy that will not work well with the overall firm strategy, it would be challenging and could tarnish BMW's brand image – although this does not mean it is impossible.
The subject of corporate strategy is vast; however, corporate strategies are usually based around one central goal: growth. Growing is not just about buying the competition, because that is not always possible or expeditious. It is up to the management to determine the best way to achieve growth. Some prefer to integrate into the value chain. For BMW, this would mean pursuing opportunities to produce parts for its cars instead of paying contractors. Other firms may want to grow by diversifying. While a firm like GE, which produces engines, financial products, and entertainment programming, can diversify across industries, most diversify with closely-related industries. BMW also makes motorcycles and owns the Mini and Rolls-Royce brands, which cater to different markets than BMW.
Companies may create subsidiaries, different branches of a major company, to cater to these other markets. For example, in educational textbook publishing, a company like Pearson Education once had the subsidiaries Prentice Hall and Addison-Wesley to focus on specific fields, such as mathematics and economics, to market textbooks. At one point, these subsidiaries competed against each other, while at the same time, both brought in market share for the Pearson Education company as a whole. Pearson Education has since merged these subsidiaries, although it has kept the names for branding and now focuses on selling its products without this internal competition. This unit focuses on the methods a firm can use to pursue growth.
Completing this unit should take you approximately 3.5 hours.
Researchers' interest in strategy has grown recently. The focus of many researchers has centered on the serious impact of using strategies in their organizations. For example, many organizations rely on psychology, specifically industrial psychology, to understand strategic planning in the business sector. In the past, managers assumed that all employees were motivated by the same factors. Therefore, leaders would offer the same rewards, such as paid time off or bonuses. They also assumed employees would behave similarly in the workplace based on motivation and encouragement. Managers now know that employees are unique and motivated by factors unique to their personalities and beliefs. Understanding a firm's culture and what motivates employees will allow strategic managers to extract more out of each individual.
Additionally, the idea of innovation as a strategic leader has complemented the competitive advantage strategy. There are issues with getting to the top of an industry by innovating and then falling behind to rising competitors. Collectively, these issues are known as the innovator's dilemma, and technology companies have been divided on how to avoid falling victim to this problem (as have many other industries). Companies may try to approach this dilemma by maintaining a high level of capital and simply acquiring other companies. Google and Microsoft used two well-known examples of this strategy. From 2007 through 2009, Google acquired 24 companies, and Microsoft acquired 34.
Finally, the diverse culture around the world is dramatically changing how we conduct business. Globalization encourages the world to recognize the importance of our global economy. Organizational leaders and managers must continually adapt to new strategies to create an inclusive and equitable workforce. The strategic manager must go beyond the borders of their own country to understand culture and diversity. Strategic management will require leaders to consider how to support their human capital beyond race and ethnicity. Strategic managers need to create space for diversity, including race, ethnicity, gender, sexual orientation, religion, age, disability, and socioeconomic status. The changes in technology have enabled even small companies of just a few people to outsource work to all corners of the world. A global view is critical for 21st-century leaders.
Completing this unit should take you approximately 2 hours.
This study guide will help you get ready for the final exam. It discusses the key topics in each unit, walks through the learning outcomes, and lists important vocabulary. It is not meant to replace the course materials!
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