Question1: Explain the definition and scope of strategic management.

The word strategy is derived from the Greek word stratgos, which derives from two words: stratos (army) and Agein (ancient Greek for leading). Stratgos referred to a 'military commander' during the age of Athenian Democracy. In its purest form, strategy dealt solely with military issues. In earlier societies, a king or political leader was often the same person as the military leader.Strategy was understood to govern the prelude to a battle in order to execute the enemy. In nowadays economic view strategies strive for dominating or coexisting ones competitors rather than eleminating them. Strategic management as a business economics discipline originated in the 1950s and 60s in the course of game theory discussions. Although there were numerous early contributors to the literature, the most influential pioneers were Alfred D. Chandler, Jr., Philip Selznick, Igor Ansoff, and Peter Drucker.
Strategic management analyzes the major initiatives taken by a company's top management on behalf of owners, involving resources and performance in internal and external environments.[1] It entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.
Strategies are geared to long-term competitive advantages. Due to an organisations situation the strategy will be formulated diffent. Especially in tourism business the environment is instable and dynamic. Therefore strategy has to be checked and adapted permanently. Strategy evolves over time by responding to dynamics of competition, changing customer needs, changes in trade barriers or new regulations.

Strategic management is the process of examining both present and future environments, formulating the organization's objectives, and making, implementing, and controlling decisions focused on achieving these objectives in the present and future environments(Garry D. Smith, Danny R. Arnold, Bobby G. Bizzell). Strategic management is a continuous process that involves attempts to match or fit the organization with its changing environment in the most advantageous way possible (Lester A. Digman).

SCOPE: J. Constable has defined the area addressed by strategic management as "the management processes and decisions which determine the long-term structure and activities of the organization". This definition incorporates five key themes: * Management process. Management process as relate to how strategies are created and changed. * Management decisions. The decisions must relate clearly to a solution of perceived problems (how to avoid a threat; how to capitalize on an opportunity). * Time scales. The strategic time horizon is long. However, it for company in real trouble can be very short. * Structure of the organization. An organization is managed by people within a structure. The decisions which result from the way that managers work together within the structure can result in strategic change. * Activities of the organization. This is a potentially limitless area of study and we normally shall centre upon all activities which affect the organization. These all five themes are fundamental to a study of the strategic management field and are discussed further in this chapter and other part of this thesis.

5 How does it work?

The strategic management process comprises the following phases:

5.1 1. Developing the vision, mission statement and objectives

Vision and mission statement mark the distinction and uniqueness between an organisation and its competitors. They are quite unspecific but build the basis for determining strategies, objectives and measures. By deriving strategic long-term objectives the vision is converted into concrete specific and measurable performance outcomes. According to the principle what you cant measure you cant manage complex long-term objectives often need to be broken down into measurable short-run objectives which provide benchmarks for judging organisational performance.

5.2 2. Analysing the internal and external business environment

Precondition for formulating the strategy is to analyse the direct and indirect business environment in order to learn about the specific opportunities and threats for the organisation. A firms strategy must be well matched to its internal strengths and weaknesses and competetive capabilities. Analyzing the external business environment means to find out how the global environment with its societal, political, regulatory and citizenship considerations may influence the organisation in future. It also means to analyse the industry attractiveness and competitive conditions. With the help of Porters Five-Forces scheme the relevant competitive branch factors - which are threats because of provider, supplier, market power of customers, substitutes and competitors - can be surveyed. Within the scope of an internal business analysis an organisation finds out about it s strengths and weaknesses. Organisational resources and competences regarding personal ambitions, business philosophies and ethical principles of key executives are evaluated by their potential to gain competitive advantages. Results of both external and internal business analysis can be summarized into a SWOT diagram. By reflecting the before analysed strengths and weaknesses as well as the opportunities and threats it gives good starting point for deriving the strategy.

5.3 3. Formulating and chosing the strategy

Finding the right strategy is the core phase of strategic management. Based on the results of the strategic analysis you can draw conclusions about how internal/external factors matter to reach the objectives. A well conceived strategy aims at capturing a companys best gro wth opportunities and defending against external threats to ist well-being and future performance. Matching objectives and strategies is called strategic fit. By doing a strategic fit the question What do we have to do in order to achieve our objectives? is answerd. In order to achieve the objectives strategies can regard to content or structure. Strategies on the content level can regard to: growth (according to Ansoff this can be divided into: market penetration, diversification, market development, product development), stabilisation and shrinkage. Strategies on the structural level can regard to: corporate

level, business unit level, functional area level. By setting scenarios, identification and evaluation of different strategy alternatives you finally find out the right strategy for your organisation.

5.4 4. Implementing the strategy

Implementation involves the communication of vision, mission and objectives to each element of the organisation. It means to allocate the sufficient amount of resources in terms of financial, personnel, time, technology support. Further it means to establish an organisational structure for implementation and managing the process of implementation by assigning responsibility of specific tasks or processes to specific individuals or groups

5.5 5. Controlling of the strategys outcome

Evaluation means measuring the effectiveness of the implemented organizational strategy. Task of a strategic controlling is to assess the level of performance achievment by permanent target-performance comparisons. Also the development of internal and external business environment has to be observed continuously in order to predict changes and react to them by adapting strategy.

6 Related topics/tools