Strategic management is comprised of five essential components, termed “VOSIC”: vision, objectives, strategy, implementation, and correction.
A firm that lacks any or all of the components of VOSIC is like a ship adrift without a rudder; it has no direction and is likely to go under.
Strategic management is a deliberative process that looks forward, not backward; unfortunately, many companies have a reactive, ad-hoc approach to dealing with strategic issues.
Strategic management studies the firm as a whole—rather than as individual parts—and takes a long-range view of its prospects.
Although executive managers are charged primarily with developing a strategic plan, all employees must take responsibility for successfully executing it.
The problem at many firms is that they have a poorly crafted strategic vision and have failed to communicate it to rank-and-file employees.
A well-developed strategy can be nullified by poor implementation; similarly, top-notch strategy execution can often compensate for less-than-perfect strategy formulation.
All companies have core competencies, but few have distinctive competencies. The goal of all firms must be to develop distinctive competencies.
The concept of competitive advantage is at the core of strategic management; no discussion of strategic management is complete without it.
There are numerous ways to gain a competitive advantage; being the low-cost leader is not the only one.
A strategic vision indicates what business activities the organization intends to pursue, the market arenas in which the company will participate, and the course management has charted for the future.
Competitive advantages are often hard to maintain for very long; indeed, building sustainable competitive advantage is a major challenge for most firms.
The best way to ensure sustained competitive advantage is to pursue actions that strengthen a company's long-term competitiveness and business position.
Kenneth Porter’s Five Forces approach is a very useful tool for performing industry and competitive analysis.
Key success factors (KSF) are those strategy elements, product attributes, resources, competencies, competitive capabilities, and business outcomes that spell the difference between profit and loss and, ultimately, between competitive success and failure.
SWOT analysis allows companies to match strategy to their resource capabilities and external situation; however, SWOT should not be used too broadly or indiscriminately.
Benchmarking is a very useful tool for determining whether a company is performing particular value chain activities and functions as efficiently as other companies.
All employees should judge their actions against one primary criterion: “Is what I’m doing helping to build competitive advantage?” If not, they should cease from those activities.
Although unrelated diversification makes sense in certain instances, companies are advised to diversify into industries that represent good strategic and resource fits.
A company has a strong work culture when it conducts business according to a clear and explicit set of principles and values, management devotes considerable time to communicating these principles and values to organizational members, and the principles and values are widely shared by company personnel.
Managers must make every effort to develop and propagate a strategy-supportive culture. If the culture is inimical to the strategy, then either change the strategy, the culture, or both.