BUS501: Strategic Management

1a. Define strategy in its many forms

• How is strategy defined?
• What strategic contexts should be considered when developing strategy?
• How do a business model, value proposition, and strategic portfolio influence an organization's strategy?

Strategy is defined as the determination of an organization's basic long-term goals and objectives and the courses of action adopted to carry out the goals and objectives – for example, reallocating resources. Key terms related to strategy include business model, which is the overall approach to competing in an industry. Value propositions are the reasons customers choose to do business with one firm rather than other acceptable alternatives. Strategies are sustained and purposeful initiatives in pursuit of specific organizational goals. The strategic portfolio is the market presence created by the sum of a firm's business activities. Strategic contexts are those aspects that impact how strategic decisions are made, which include economic factors, societal factors, internal factors (such as strengths and weaknesses), and external factors (such as industry opportunities and threats). Strategic contexts are important to keep in mind because no organization makes strategic decisions while only considering one context; they must consider multiple contexts to be successful.

To review, see Introduction to Strategic Management, Identifying Strategy, and Porter's Five Forces.

 

1b. Discuss the participants in strategy as a hierarchy

• What are the aspects of a strategic hierarchy?
• How do mission, values, objectives, and metrics relate to the hierarchy?
• What importance do metrics play in the strategic hierarchy?

In simple terms, a strategic hierarchy is a model that illustrates the relationship of corporate strategy to an organization's business units and management strategies. In other words, the organization has several strategies that tie into their overall strategy. For example, Yum! Brands, Inc is an organization that owns Kentucky Fried Chicken, Taco Bell, and other food chains – these units have different strategic missions and management styles. The aspects of the strategic hierarchy include the global strategy, then the sub-strategies: marketing strategy, financial strategy, human resources strategy, information strategy, material resource strategy, and organizational development strategy. Within each of these, there should be a mission, values, and objectives tied to each strategy and the overall global strategy. There should also be metrics within each strategy that ask how to know if the strategy worked. This is important because when we develop a strategy, we want to be sure we can measure the success of the strategy later.

To review, see The Hierarchy of Strategies.

 

1c. Analyze market structures

• What are the four types of market structures?
• What elements of each market structure make it different from the rest?
• What company/product examples can you think of that would be considered pure competition?

There are four main market structures: pure competition, imperfect or monopolistic competition (not to be confused with a monopoly), oligopoly, and monopoly. A market structure in economics refers to how different industries are classified based on their degree of competition. Pure competition is a market in which many sellers exist, products are homogeneous, and there is an ease of entry into the market (for example, agricultural products). Imperfect or monopolistic competition is when there are many sellers, the products are differentiated, and there is ease of entry (for example, a hair salon or restaurant) – not to be confused with a monopoly. Oligopoly is when few sellers exist, products are identical, and entry into the market is difficult (because it may be expensive, such as in the oil industry). A monopoly exists when there is only one seller, no close substitutes, and difficult entry into the market (such as an electric company).

To review, see Market Structure and Other Market Structures.

 

Unit 1 Vocabulary

This vocabulary list includes terms you will need to know to successfully complete the final exam.

• business model
• imperfect/monopolistic competition
• market structure
• monopoly
• oligopoly
• pure competition
• strategic hierarchy
• strategic portfolio
• strategy
• value proposition