Abstract
In recent times world economy has witnessed a lot of dynamism and challenges. The success in corporate sector will depend on management’s recognition of the following functions: analyzing the environmental changes, selecting the strategists, helping them to think creatively, setting objectives, establishing strategies to achieve objectives, assign responsibilities and implementing the strategies, measuring success and evaluating results. Strategic management has been the subject of a substantial literature since the 1950s but has principally focused on the large corporation. By contrast the literature relating to strategic management within the small firms sector has remained limited. Much of the existing literature has dealt with business planning rather than strategic management. This paper outlines a proposed framework for understanding the strategic management of small entrepreneurial firms and draws upon the literature to illustrate aspects of the proposed model. Future directions for research using the framework are discussed.
Table of Contents
1. Introduction 6
1.1 Strategic Management Model 6
1.2 COMPETITIVE ADVANTAGE 6
1.3 Competitive Strategy 6
1.4 Sustainable Competitive Advantage 6
1.4.1 Creating Sustainable Competitive Advantage 6
1.5 Building Competitive Advantage 7
1.6 Five Major Competitive Strategies 7
1.7 Low-Cost Strategy 8
1.7.1 When to opt for Low-Cost Provider Strategy 8
1.7.2 How to Gain Competitive Advantage via Low-Cost Provider Strategy 8
1.7.3 Competitive Advantages 9
1.7.4 Cost Drivers 9
1.7.5 Pitfalls to Avoid in Pursuing Low-Cost Provider Strategy 10
1.7.6 Keys to Being a Successful Low-Cost Provider 10
1.8 Broad Differentiation Strategies 10
1.8.1 When a Differentiation Strategy works Best 11
1.8.2 Value Drivers 11
1.8.3 Cost-Efficient Management of Value Chain Activities 11
1.8.4 Managing the Value Chain Create the Differentiating Attributes 12
1.8.5 Pitfalls to Avoid in Pursuing a Differentiation Strategy 12
1.8.6 Delivering Superior Value via Broad Differentiation Strategy 12
1.9 Focused Low-Cost and Focused Differentiation Strategies 12
1.10 Best Cost Provider Strategies 13
1.10.1 Best-Cost Provider Strategy works Best 13
2. STRATEGIC MANAGEMENT PROCESS 14
2.1 Strategic Management 14
2.2 Strategy is About Competing Differently from Rivals 14
2.3 Strategic Management Process 14
2.4 Action Patterns for Strategies 15
2.5 A Company’s Strategy is Partly Proactive and Partly Reactive 16
2.6 Relationship between A Firm’s Strategy and Business Model 16
2.7 What Makes A Strategy Winner 17
3. VISION, MISSION AND OBJECTIVES 18
3.1 Why Vision Statement is Important 18
3.1.1 Dos and Don’ts of a Vision Statement 19
3.2 Developing a Company Mission Statement 19
3.3 Core Values 19
3.4 Objectives 19
3.4.1 Purposes of Setting Objectives 19
3.5 Classification of Objectives 19
3.5.1 Financial Objectives 19
3.5.2 Strategic Objectives 19
3.5.3 Short-Term Objectives 20
3.5.4 Long-Term Objectives 20
3.6 The Need for a Balanced Approach to Objective Setting 20
4. EXTERNAL ANALYSIS 20
4.1 PESTEL Analysis 20
4.2 Five Forces Model 21
4.2.1 Competitive Pressures Increase Rivalry among Competitive Sellers 22
4.2.2 Common “Weapons” for Competing with Rivals 23
4.3 The Threat of New Entrants 23
4.3.1 Market Entry Barriers for New Entrants 24
4.4 Competitive Pressures Stemming from Supplier Bargaining Power 24