OL 215 Chapter 5-Strategic Management
Acknowledging the decisions that companies make in pursuit of objectives is strategic
management. The method through which a company oversees the formation of its strategy is
known as strategic management. Since the formulation helps define what the corporation should
do, planning and strategy formulation, also known as business planning or strategic planning,
share many similarities. The brain of planning is strategy. With the vision and objective comes
planning. There are two components to strategy: Corporate strategy provides answers to strategic
issues pertaining to the industry that the company should be in. Corporate strategy is rationalized
by the ideas of convergence and diversity. When two or more actions interact to provide a higher
combined impact, this is known as synchronicity.
When a company engages in various industries, it is diversifying. A method for helping firms
evaluate their internal strengths and weaknesses is the SWOT analysis (strengths, weaknesses,
opportunities, and threats). In the early 1970s, Ken Andrews of Harvard Business School
developed it. It was a process used in organizational analysis to evaluate strengths and
deficiencies. A smart place to start is by examining what a company does poorly. It's important to
understand macro reality. Advantages and shortcomings are identified using internal analytical
techniques. The value chain and VRIO are two resources for internal analysis. The value chain
analyzes the company to pinpoint areas that need special attention. Value, rarity, imitability, and
organization are abbreviated as VRIO. It is a paradigm that implies that a skill or resource, such a
patent, is likely to result in an advantage over competitors.
Philosophical, socioeconomic, social, technical, ecological, and regulatory contexts are together
referred to as PESTEL. Administrators are instructed under this framework to gather data on
each dimension and recognize a broad variety of hazards. Industry analysis charts the many
connections that a firm may have, Top management teams come up with intended strategies.
Realized strategy: The strategy that is actually put into practice has only a tenuous connection to
its original intent. Radical innovation, or the choice made as a result of the intricate processes via
which individual managers interpret the planned strategy and modify it to fit shifting external
conditions, is the main factor influencing realized strategy. Profitable entrepreneurs all have the
trait of strategic focus. When a company is very explicit on its aims and goals, it demonstrates
specific planning.
