FINAL ASSESSMENT IN STRATEGIC MANAGEMENT

1. Explain why the concept of competitive advantage is central to the study of strategic
management.
Ans.
Competitive advantage is central to the study of strategic management. Few
reasons are as follows:
 Competitive advantage strengthens the position of a company in the tough
market conditions.
 Competitive advantage help in the strategic development of organizational
functions like HR, Marketing, production, and so on.
 Competitive advantage provide possible solutions to potential problems of
a company.

2. Distinguish between long-range planning and strategic planning. Provide examples to

illustrate your point.
Ans.
Long-range planning is usually considered to assume present knowledge about
future conditions. It looks to make certain the plan's exact results over the period
of its implementation. Also, it's about aligning the business' long-term goals and
developing action plans in line with the strategic plan. An example of which is by
making vision and mission that states the long-term goals and objectives of a
company.

On the other hand, strategic planning assumes that your organization must be
quick to respond to a dynamic, changing environment, which may require
changes in the future. It points out the importance of making decisions that will
ensure your organization's ability to successfully respond to changes in the
environment. An example of this are the action plans laid down by the
organizations to accomplish those that are stated in the company’s vision and
mission.

3. Identify the pitfalls in strategic planning for which management should watch out, then
pick any five and discuss, in detail, the strategic implications of this risk.
Ans.
The 13 Pitfalls to watch out for and avoid in strategic planning:
1. Using strategic planning to gain control over decisions and resources
2. Doing strategic planning only to satisfy accreditation or regulatory
requirements
3. Too hastily moving from mission development to strategy formulation
4. Failing to communicate the plan to employees, who continue working in the
dark
 5. Top managers making many intuitive decisions that conflict with the formal
plan
6. Top mangers not actively supporting the strategic-planning process
7. Failing to use plans as standard for measuring performance
8. Delegating planning to a “planner” rather than involving all managers
9. Failing to involve key employees in all phases of planning
10. Failing to create a collaborative climate supportive of change
11. Viewing planning as unnecessary or unimportant
12. Becoming so engrossed in currents problems that insufficient or no planning
is done
13. Being so formal in planning that flexibility and creativity is stifled
Out of the 13 pitfalls laid down, the first pitfall that I chose is number 1, using
strategic planning to gain control over decisions and resources. Sometimes, all
decisions made by an organizations are based or beneficial to the strategic plan
made. However, it shouldn’t be that way, all occurring and current circumstances
should take priority than the future plans. Second, failing to communicate the plan
to employees, who continue working in the dark. All plans shouldn’t stay only to
the top management and must be communicated up to the lower management
since all operations were done by lower-level employees. Third, failing to involve
key employees in all phases of planning. In connection to the aforementioned
pitfall, non-involvement of key personnel, which are the on-the-ground and
hands-on employees, would render such strategic plan to be unattainable since
those employees do all the operations of the management. Fourth, failing to create
a collaborative climate supportive of change. Since strategic plans were costly and
time consuming, it cannot be updated from time-to-time especially when there are
significant and rare transactions. Lastly, being so formal in planning that
flexibility and creativity is stifled. Since strategic plans were presented to top-
level management, such plan should be formal and detailed to avoid loopholes.
Thus, when there are slight changes, another plan should be made starting from
the beginning, which we can conclude that strategic plans were not adaptive to
changes, whether significant or insignificant.
4. Compare and contrast vision statements with mission statements. Describe why a mission
statement is so important in the strategic-management process.
Ans.
In simple words, a mission statement describes what a company wants to do now,
a vision statement outlines what a company wants to be in the future. The Mission
Statement concentrates on the present; it defines the customer(s), critical
processes and it informs you about the desired level of performance. The Vision
 Statement focuses on the future; it is a source of inspiration and motivation. Often
it describes not just the future of the organization but the future of the industry or
society in which the organization hopes to effect change.
Mission statement is so important in the strategic-management process because it
points us in the right direction. Our strategic and operational plans become the
road map. Our goals and objectives help us measure success along the way.
Without the guidance of our mission statement, programmatic priorities would be
difficult to establish and the corporate strategy process would become muddled.
Therefore, it provides the basis for judging the success of an organization and its
goals. It helps the organization verify if it is on the right track and making the
right decisions.
5. Identify and discuss 10 external forces that must be examined in formulating strategies:
economic, social, cultural, demographic, environmental, political, governmental, legal,
technological, and competitive. Give examples of each.
Ans.
 Economic – How economic conditions shift supply and demand to directly affect
a company. This includes economic growth or decline, and changes in interest and
inflation rates.
 Social – Emerging trends and patterns in population analytics, demographics, and
customer behavior may indicate changes in customer needs and wants; it may also
reveal a need for change in the workplace.
 Cultural – People value their customs, so product and service designing should be
coherent.
 Demographic – There is constant change in the make-up of the population. Some
of these changes include an increasing proportion of elderly citizens, increasing
number of two-income families, the age at which people marry is increasing,
increasing ethnic diversity, suburbs which were once dominated by young
families now have few. These demographic changes can have a significant effect
locally. For example, a sport club which once prospered can begin to decline as
the local area has less and less children.
 Environmental – The ecological and environmental aspects that affect a
company’s operations or consumer demand. This includes access to renewable
resources, weather or climate changes, and corporate responsibility initiatives.
 Political – The extent to which a government may influence the economy and
thereby impact organizations within a certain industry. This includes government
policy, political stability, and trade and tax policy.
 Governmental – Recent events that have jarred the global economy—and are too
early to predict the long-term outcomes of—are the United Kingdom’s exit from
the European Union, wars in the Middle East, policies that question and disrupt
free trade, health-care reform, and immigration—all of which increase uncertainty
for businesses while creating opportunities for some industries and instability in
others.
 Legal – The current legal allowances or requirements within countries or
territories in which an organization operates. This includes health and safety
requirements, labor laws, and consumer protection laws.
 Technological – Technological change has been rapid in the last 50 years and is a
factor in the external environment that constantly exerts pressure on the business
or organization. If businesses do not adapt sufficiently quickly to technological
change, they risk losing market share. It's not just that technological change
affects the design of products, but even the delivery of services can change.
 Competitive – The strength of business competition is a constantly changing
factor in the external business environment. Not only will competitors come and
go, but they will also change marketing strategies, product lines and prices. Often
such changes are not heralded and business managers must be alert as to what
competitors are doing.

Example of economic forces- Interest rate, Loan offering etc.

Example of social, cultural, demographic, and environmental forces- Particular

beliefs, ideology, in particular regions thought patterns, lifestyles, age, gender
ratio, occupation, marital status etc.

Example of political, legal, governmental forces: Particualr law, policies of

different government in a country etc.

Example of technological forces: Change in technology, Innovations etc.

Example of competitive forces: It includes bargaining power of buyers,

bargaining power of suppliers, threat of new entrants, rivalry among existing
companies.