CHAPTER SUMMARY – CHAPTER 8The Importance of Strategic Management
Define strategic management, strategy, and business model.
Explain why strategic management is important.Strategic management is what managers do to develop the organization’s strategies.Strategies are the decisions and actions that determine the long-run performance of theorganization. A business model is a strategic design for how a company intends to profitfrom its strategies, work processes, and work activities.Strategic management is important for four reasons. First, it makes a difference inhow well organizations perform. Second, it’s important for helping managers cope withcontinually changing situations. Third, strategic management helps coordinate diversedivisions, departments, functions, and work activities, and keeps all focused on achievingthe organization’s goals. Finally, it’s important because it’s involved in many of thedecisions that managers make.
The Strategic Management Process
List the six steps in the strategic management process.
Describe what managers do during external and internal analyses.
Explain the role of resources, capabilities, and core competencies.
Define strengths, weaknesses, opportunities, and threats.The six steps in the strategic management process are: (1) identify the currentmission, goals, and strategies; (2) do an external analysis; (3) do an internal analysis – steps 2 and 3 collectively are known as SWOT analysis; (4) formulate strategies; (5)implement strategies; and (6) evaluate strategies. (See Exhibit 8-1.)During an internal analysis, managers assess the organization’s resources (assets) andcapabilities (how work is done). The major value-creating skills and capabilities are the