Study sheet: Strategic Management Frameworks

📋 Course Outline

1. Strategic Statements and Direction
2. External Analysis and Alignment
3. Strategic Business Units
4. Generic Competitive Strategies
5. OKRs and Strategic Initiatives
6. Business Models and Innovation

📖 1. Strategic Statements and Direction

🔑 Key Concepts & Definitions

• Vision : a vivid statement describing the organization's desired future state and serving as its North Star for organizational direction
• Mission : the core purpose of a company and defines its reason for existence
• Level of Ambition : translates the long-term vision and mission into measurable goals using key performance indicators
• Values : fundamental guiding principles that shape company culture, guide decision-making, unify the organization, and influence employee behavior

💡 Memory Hook

Vision as the North Star, with mission and values guiding the organization beneath it

📖 2. External Analysis and Alignment

🔑 Key Concepts & Definitions

• Competitive Environment : the external landscape in which a business operates, including competitors and market dynamics
• Key Success Factors : critical elements that determine an organization's success within its industry

★ Must-know

• PESTEL analysis examines these influences:
  • Political
  • Economic
  • Social
  • Technological
  • Environmental
  • Legal

Further detail

• Developing strategic statements involves defining the vision, establishing the mission, and identifying the values.

💡 Memory Hook

PESTEL: Political, Economic, Social, Technological, Environmental, Legal

📖 3. Strategic Business Units

🔑 Key Concepts & Definitions

• Strategic Business Unit : a distinct unit within a corporation that supplies goods or services for a specific domain of activity

★ Must-know

• Strategic Business Units allow decentralization within large corporations and enable tailored strategies for different market needs.

• 🔄 Identifying core challenges involves:

  1. Connect external opportunities and threats with internal strengths and weaknesses
  2. Define core challenges with a clear direction
  3. Focus on a few fundamental choices

Further detail

• Cost leadership is achieved through lower input costs, economies of scale, accumulated experience, and efficient product process and design.

💡 Memory Hook

Corporate strategy sets direction, while each SBU adapts strategy to its specific domain

📖 4. Generic Competitive Strategies

🔑 Key Concepts & Definitions

• Cost Leadership : a strategy focused on becoming the lowest-cost producer in an industry
• Differentiation : a strategy that offers unique products or services valued by customers and capable of justifying a price premium
• Focus Strategy : concentrates on a narrow market segment and tailors products or services to that segment

📝 Essential Points

📌 A company becomes stuck in the middle when it pursues multiple generic strategies without a clear focus and therefore cannot compete effectively.

💡 Memory Hook

Cost leadership minimizes cost, differentiation maximizes uniqueness, and focus narrows the target segment

📖 5. OKRs and Strategic Initiatives

🔑 Key Concepts & Definitions

• OKR : a framework for defining and tracking objectives and their outcomes
• Strategic Initiatives : projects aimed at achieving complex transformational goals based on a company's vision

📝 Essential Points

• The OKR process flows from executive communication of company OKRs to departmental definition, monthly evaluation, and quarterly reporting and adjustment.

📌 Department OKRs must align with company OKRs so that all organizational levels work toward the same goals.

💡 Memory Hook

Company OKRs → department OKRs → individual OKRs → monthly review → quarterly adjustment

📖 6. Business Models and Innovation

★ Must-know

• The Business Model Canvas consists of nine building blocks (Alexander Osterwalder, 2010):

  • Customer Segments
  • Value Propositions
  • Channels
  • Customer Relationships
  • Revenue Streams
  • Key Resources
  • Key Activities
  • Key Partnerships
  • Cost Structure

• The innovation process involves identifying a market need, generating solution ideas, developing prototypes, testing and refining the product, and launching it to the market.

📐 Formula — Total revenue is calculated as $Revenue = Price \times Quantity\ Sold$.

Further detail

📌 Sustaining innovation improves existing products, whereas disruptive innovation creates new markets.

• A smartphone company can create a value proposition by offering a unique camera feature that provides customers with an enhanced photography experience.

💡 Memory Hook

Customer need → idea → prototype → test → launch

📊 Synthesis Tables

Generic Strategies Compared

Strategy	Primary focus	Typical positioning
Cost leadership	Lowest cost	Compete through efficiency
Differentiation	Unique customer value	Justify a price premium
Focus	Narrow market segment	Tailor offerings to a specific segment

Innovation Types Compared

Type	Main change	Strategic use
Sustaining innovation	Improves existing products	Incremental improvement
Disruptive innovation	Creates new markets	Radical market change