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Achieving competitive advantage results from a firm's ability to cope with the five forces better than its rivals. Porter wrote: '[A]chieving competitive advantage requires a firm to make a choice The focus strategy has two variants, cost focus and differentiation focus. The concept of choice was a different perspective on strategy, as the s paradigm was the pursuit of market share size and scale influenced by the experience curve.

Companies that pursued the highest market share position to achieve cost advantages fit under Porter's cost leadership generic strategy, but the concept of choice regarding differentiation and focus represented a new perspective. Porter's description of the value chain refers to the chain of activities processes or collections of processes that an organization performs in order to deliver a valuable product or service for the market.

These include functions such as inbound logistics, operations, outbound logistics, marketing and sales, and service, supported by systems and technology infrastructure. By aligning the various activities in its value chain with the organization's strategy in a coherent way, a firm can achieve a competitive advantage.

Porter also wrote that strategy is an internally consistent configuration of activities that differentiates a firm from its rivals. A robust competitive position cumulates from many activities which should fit coherently together. Porter wrote in 'Competitive advantage cannot be understood by looking at a firm as a whole. It stems from the many discrete activities a firm performs in designing, producing, marketing, delivering and supporting its product.

Each of these activities can contribute to a firm's relative cost position and create a basis for differentiation Gary Hamel and C. Prahalad described the idea of core competency in , the idea that each organization has some capability in which it excels and that the business should focus on opportunities in that area, letting others go or outsourcing them.

Further, core competency is difficult to duplicate, as it involves the skills and coordination of people across a variety of functional areas or processes used to deliver value to customers. By outsourcing, companies expanded the concept of the value chain, with some elements within the entity and others without. Peter Drucker wrote in about the 'Theory of the Business,' which represents the key assumptions underlying a firm's strategy. These assumptions are in three categories: a the external environment, including society, market, customer, and technology; b the mission of the organization; and c the core competencies needed to accomplish the mission.

He continued that a valid theory of the business has four specifications: 1 assumptions about the environment, mission, and core competencies must fit reality; 2 the assumptions in all three areas have to fit one another; 3 the theory of the business must be known and understood throughout the organization; and 4 the theory of the business has to be tested constantly.

He wrote that organizations get into trouble when the assumptions representing the theory of the business no longer fit reality. He used an example of retail department stores, where their theory of the business assumed that people who could afford to shop in department stores would do so.

However, many shoppers abandoned department stores in favor of specialty retailers often located outside of malls when time became the primary factor in the shopping destination rather than income. Drucker described the theory of the business as a 'hypothesis' and a 'discipline. Strategic thinking involves the generation and application of unique business insights to opportunities intended to create competitive advantage for a firm or organization.

It involves challenging the assumptions underlying the organization's strategy and value proposition. Mintzberg wrote in that it is more about synthesis i. It is about 'capturing what the manager learns from all sources both the soft insights from his or her personal experiences and the experiences of others throughout the organization and the hard data from market research and the like and then synthesizing that learning into a vision of the direction that the business should pursue.

General Andre Beaufre wrote in that strategic thinking 'is a mental process, at once abstract and rational, which must be capable of synthesizing both psychological and material data. The strategist must have a great capacity for both analysis and synthesis; analysis is necessary to assemble the data on which he makes his diagnosis, synthesis in order to produce from these data the diagnosis itself--and the diagnosis in fact amounts to a choice between alternative courses of action.

Will Mulcaster [44] argued that while much research and creative thought has been devoted to generating alternative strategies, too little work has been done on what influences the quality of strategic decision making and the effectiveness with which strategies are implemented. For instance, in retrospect it can be seen that the financial crisis of —9 could have been avoided if the banks had paid more attention to the risks associated with their investments, but how should banks change the way they make decisions to improve the quality of their decisions in the future?

Mulcaster's Managing Forces framework addresses this issue by identifying 11 forces that should be incorporated into the processes of decision making and strategic implementation.

Strategic planning is a means of administering the formulation and implementation of strategy. In other words, strategic planning happens around the strategy formation process. Porter wrote in that formulation of competitive strategy includes consideration of four key elements:.

The first two elements relate to factors internal to the company i. There are many analytical frameworks which attempt to organize the strategic planning process. Examples of frameworks that address the four elements described above include:. A number of strategists use scenario planning techniques to deal with change. The way Peter Schwartz put it in is that strategic outcomes cannot be known in advance so the sources of competitive advantage cannot be predetermined.

Instead, scenario planning is a technique in which multiple outcomes can be developed, their implications assessed, and their likeliness of occurrence evaluated. According to Pierre Wack, scenario planning is about insight, complexity, and subtlety, not about formal analysis and numbers.

Some business planners are starting to use a complexity theory approach to strategy. Complexity can be thought of as chaos with a dash of order. Complexity is not quite so unpredictable.

It involves multiple agents interacting in such a way that a glimpse of structure may appear. Once the strategy is determined, various goals and measures may be established to chart a course for the organization, measure performance and control implementation of the strategy. Tools such as the balanced scorecard and strategy maps help crystallize the strategy, by relating key measures of success and performance to the strategy.

These tools measure financial, marketing, production, organizational development, and innovation measures to achieve a 'balanced' perspective.

Advances in information technology and data availability enable the gathering of more information about performance, allowing managers to take a much more analytical view of their business than before. Strategy may also be organized as a series of 'initiatives' or 'programs', each of which comprises one or more projects. Various monitoring and feedback mechanisms may also be established, such as regular meetings between divisional and corporate management to control implementation.

A key component to strategic management which is often overlooked when planning is evaluation. There are many ways to evaluate whether or not strategic priorities and plans have been achieved, one such method is Robert Stake's Responsive Evaluation.

In expanding beyond the goal-oriented or pre-ordinate evaluation design, responsive evaluation takes into consideration the program's background history , conditions, and transactions among stakeholders. It is largely emergent, the design unfolds as contact is made with stakeholders. While strategies are established to set direction, focus effort, define or clarify the organization, and provide consistency or guidance in response to the environment, these very elements also mean that certain signals are excluded from consideration or de-emphasized.

Mintzberg wrote in 'Strategy is a categorizing scheme by which incoming stimuli can be ordered and dispatched. As such, Mintzberg continued, 'Strategy [once established] is a force that resists change, not encourages it. Therefore, a critique of strategic management is that it can overly constrain managerial discretion in a dynamic environment. In , Gary Hamel coined the term strategic convergence to explain the limited scope of the strategies being used by rivals in greatly differing circumstances.

He lamented that successful strategies are imitated by firms that do not understand that for a strategy to work, it must account for the specifics of each situation.

Strategy should be seen as laying out the general path rather than precise steps. There will usually be only a small number of approaches that will not only be technically and administratively possible, but also satisfactory to the full range of organizational stakeholders. In turn, the range of feasible implementation approaches is determined by the availability of resources.

Various strategic approaches used across industries themes have arisen over the years. These include the shift from product-driven demand to customer- or marketing-driven demand described above , the increased use of self-service approaches to lower cost, changes in the value chain or corporate structure due to globalization e. One theme in strategic competition has been the trend towards self-service, often enabled by technology, where the customer takes on a role previously performed by a worker to lower costs for the firm and perhaps prices.

One definition of globalization refers to the integration of economies due to technology and supply chain process innovation.

Companies are no longer required to be vertically integrated i. In other words, the value chain for a company's product may no longer be entirely within one firm; several entities comprising a virtual firm may exist to fulfill the customer requirement.

For example, some companies have chosen to outsource production to third parties, retaining only design and sales functions inside their organization.

The internet has dramatically empowered consumers and enabled buyers and sellers to come together with drastically reduced transaction and intermediary costs, creating much more robust marketplaces for the purchase and sale of goods and services.

Examples include online auction sites, internet dating services, and internet book sellers. In many industries, the internet has dramatically altered the competitive landscape. Services that used to be provided within one entity e. Author Phillip Evans said in that networks are challenging traditional hierarchies. Value chains may also be breaking up 'deconstructing' where information aspects can be separated from functional activity.

Data that is readily available for free or very low cost makes it harder for information-based, vertically integrated businesses to remain intact. Evans said: 'The basic story here is that what used to be vertically integrated, oligopolistic competition among essentially similar kinds of competitors is evolving, by one means or another, from a vertical structure to a horizontal one.

Why is that happening? It's happening because transaction costs are plummeting and because scale is polarizing. The plummeting of transaction costs weakens the glue that holds value chains together, and allows them to separate. In the recent decade, sustainability—or ability to successfully sustain a company in a context of rapidly changing environmental, social, health, and economic circumstances—has emerged as crucial aspect of any strategy development.

Research focusing on corporations and leaders who have integrated sustainability into commercial strategy has led to emergence of the concept of 'embedded sustainability' — defined by its authors Chris Laszlo and Nadya Zhexembayeva as 'incorporation of environmental, health, and social value into the core business with no trade-off in price or quality—in other words, with no social or green premium.

In , Peter Senge, who had collaborated with Arie de Geus at Dutch Shell, popularized de Geus' notion of the 'learning organization'. To do this, Senge claimed that an organization would need to be structured such that: [65]. Geoffrey Moore and R. Frank and P. Cook [66] also detected a shift in the nature of competition.

Markets driven by technical standards or by 'network effects' can give the dominant firm a near-monopoly. Examples include Internet Explorer's and Amazon's early dominance of their respective industries. IE's later decline shows that such dominance may be only temporary. Moore showed how firms could attain this enviable position by using E. Rogers' five stage adoption process and focusing on one group of customers at a time, using each group as a base for reaching the next group.

The most difficult step is making the transition between introduction and mass acceptance. See Crossing the Chasm. If successful a firm can create a bandwagon effect in which the momentum builds and its product becomes a de facto standard.

In , Peter Drucker coined the phrase Age of Discontinuity to describe the way change disrupts lives. But according to Drucker, we are now in an age of discontinuity and extrapolating is ineffective. He identifies four sources of discontinuity: new technologies, globalization, cultural pluralism and knowledge capital. In , Alvin Toffler in Future Shock described a trend towards accelerating rates of change. In past eras periods of change were always punctuated with times of stability.

This allowed society to assimilate the change before the next change arrived. But these periods of stability had all but disappeared by the late 20th century.

In in The Third Wave , Toffler characterized this shift to relentless change as the defining feature of the third phase of civilization the first two phases being the agricultural and industrial waves.

In , Derek F. Abell Abell, D. This led some strategic planners to build planned obsolescence into their strategies. In , Noel Tichy wrote that because we are all beings of habit we tend to repeat what we are comfortable with. He developed a systematic method of dealing with change that involved looking at any new issue from three angles: technical and production, political and resource allocation, and corporate culture.

In , Charles Handy identified two types of change. By contrast, 'transformational change' is sudden and radical. It is typically caused by discontinuities or exogenous shocks in the business environment. The point where a new trend is initiated is called a 'strategic inflection point' by Andy Grove. Inflection points can be subtle or radical. In , Richard Pascale wrote that relentless change requires that businesses continuously reinvent themselves.

It will help you to understand question paper pattern and type of strategic management question and answer asked in mba strategic management exam. Strategic Management Courses is considered one of the most important courses that you will take during MBA postgraduate degree as it integrates other courses, builds on them, and acts as a stepping-stone to the real world of business.

The purpose of this course is to enhance your capacity to do the job of a general manager responsible for strategic performance. This course helps to develop the ability to think strategically about a business organization, its business position, and how it can gain sustainable competitive advantage.

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The Strategic Management Journal also has a high level of citations. There are more than 1 Million Books that have been enjoyed by people from all over the world. Always update books hourly, if not looking, search in the book search column. Strategic Management Syllabus A detailed strategic management syllabus as prescribed by various Universities and colleges in India are as under. This course helps to develop the ability to think strategically about a business organization, its business position, and how it can gain sustainable competitive advantage.

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Come on! Strategic Management Syllabus A detailed strategic management syllabus as prescribed by various Universities and colleges in India are as under. Explain the strategic management, its importance and limitations. Explain the strategic management process. Define and differentiate between vision, mission, goals objectives and policies. Explain the 3 levels of strategic management and illustrate with an organizational chart. Explain the qualitative and quantitative tools means for strategic control.

Explain in detail Michael Porter Model.