Introduction to Strategic Management
Strategy and its levels
Strategic management is the set of decisions and actions that determine long-run direction, scope and competitive position. The exam tests the hierarchy and the process sequence, plus the ability to classify a decision.
- Corporate level: portfolio, diversification, acquisitions, geographic entry, resource allocation.
- Business level: how to compete in a defined market: cost, differentiation, focus.
- Functional level: operations, marketing, HR and finance policies supporting the business strategy.
Process: vision and mission, environmental and internal analysis, strategy formulation, implementation, evaluation and control. Vision states the desired future; mission states present purpose and scope; objectives are quantified, time-bound targets. Intended strategy may be reshaped into emergent strategy as events unfold; Mintzberg's 5Ps are plan, ploy, pattern, position and perspective.
Worked example
A cement company decides to acquire a ready-mix concrete business in a neighbouring country. That is corporate-level strategy, because it changes the portfolio and geographic scope. The acquired unit's decision to compete on reliable delivery rather than lowest price is business-level. Its choice of preventive maintenance schedules is functional or operational. Stating the level and the reason earns the mark; naming the decision alone does not.
Traps
Do not call a mission statement a vision, or treat a slogan as an objective: objectives need measures and dates. Strategy is not the same as a policy or a tactic. Hierarchy questions often hinge on who allocates capital, which is corporate. Avoid describing the process as strictly linear without noting feedback.