Strategic Management 2E

This open source textbook is derived from many sources, initially from the Principles of Management by Carpenter, Bauer, and Erdogan, but there is abundant new content as well. It is published under a Creative Commons license and as such there is no charge ever for this textbook.

The most important change from 1e is that static content was removed to make room for student-generated dynamic content. Throughout the book look for the names of contributing students in the red colored example boxes. As the term progresses, you will see new examples appear as fellow students research and summarize topics for current events, all are curated by the instructor.

What Is Strategic Management?

Strategic management, strategy for short, is essentially about choice — in terms of what the organization will do and won’t do to achieve specific goals and objectives, where such goals and objectives lead to the realization of a stated mission and vision. Strategy is a central part of the planning function in P-O-L-C. Strategy is also about making choices that provide the organization with some measure of a sustainable competitive advantage. For the most part, this chapter emphasizes strategy formulation (answers to the “What should our strategy be?” question) as opposed to strategy implementation (answers to question “How do we execute our strategy?”). The central position of strategy is summarized in Figure 1.1.

but not synonymous with, strategic management. The concept of strategic management reflects what a firm is doing to achieve its mission and vision as seen by its achievement of specific goals and objectives. A more formal definition tells us that strategic management “is the process by which a firm manages the formulation and implementation of its strategy.”
1
Using the definition of strategic management above then, the strategic management process is “the coordinated means by which an organization achieves its goals and objectives.”
2 Others have described strategy as the pattern of resource allocation choices and organizational arrangements that result from managerial decision making.
3 Planning activities that lead to the formulation of a strategy is sometimes called strategic planning. Strategy implementation then refers to the tasks and tactics managers must perform to put the desired strategy into action. See Figure 1.2 for a description of how strategy fits with planning.

Strategic Management in the P-O-L-C Framework

If vision and mission are the heart and soul of planning (in the P-O-L-C framework), then strategy, particularly strategy formulation, would be the brain. Figure 1.3 summarizes where strategy formulation (strategizing) and implementation fit in the planning and other components of P-O-L-C. We will focus primarily on the strategy formulation aspects of strategic management because implementation is essentially organizing, leading, and controlling P-O-L-C components. Unit 4: Internal Capabilities of this textbook will provide additional information regarding the implementation components (O-L-C).