Business Management Ch1 "The Strategic Management Process" Solutions

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Chapter 1

The Strategic Management Process

Synopsis of Chapter

This is an introductory chapter. Its purpose is to define critical concepts and introduce the main components of the strategic management process. The chapter serves to establish the context within which subsequent chapters fit.

This chapter begins with a discussion of the concept of strategy. The strategies an organization pursues have a major impact upon its performance relative to its peers. The firm’s top managers have direct responsibility for choosing strategies that will lead to superior performance and provide competitive advantage.

Next, the chapter equates superior performance with profitability, for profit-seeking enterprises. Sustained competitive advantage occurs when a firm is able to maintain above-average profitability over an extended period of time. Strategic management is just as crucial to nonprofits as it is to profit-seeking businesses.

A discussion of the roles of strategic managers and the function of strategic leadership in an organization follows. It examines the roles and responsibilities of strategic managers at three main levels within an organization: the corporate, business, and functional level. It also points out the attributes of sound strategic leadership.

The chapter gives an overview of the formal strategic management process. The process consists of two phases. The first phase, formulation, includes the establishment of corporate mission, values, and goals; analysis of the external environment; analysis of the internal environment; and selection of an appropriate functional-, business-, or corporate-level strategy. The second phase, implementation, consists of the actions taken to carry out the chosen strategy.

The traditional concept of the strategic planning process is one that is rational and deterministic, and orchestrated by senior managers. However, strategies may also emerge through other mechanisms.

Next, the chapter presents a...