ABSTRACT
Both firms in the previous example have demonstrated that the task of strategic management has become increasingly difficult, due to greater turbulence, complexity and competitiveness of the firm’s environment. To cope with this change, the firm must continually innovate and re-invent itself if it is to survive and prosper. Consequently, the firm will be in a state of continuous change. But the firm is always under pressure for performance in both financial and product markets. Here, then, is a fundamental challenge of strategic management. Throughout the ongoing change process, managers must ensure that the firm delivers current value, earning a return greater than its cost of capital, as well as establishing the strategies and organizational architecture required to create future value. To achieve these outcomes
This chapter explores in some detail the fundamentals underlying strategic management. In the preceding chapter we distinguished strategic decisions, strategy and strategic management, and we commence by exploring these in depth. We first examine the characteristics of strategic decisions – those decisions which have the feature of affecting the future of the business. Such decisions, for example, require a long-term focus and major resource commitments, which distinguishes them from more tactical, short-term decisions. This discussion leads us to an exploration of the distinguishing characteristics of strategy. Is the strategy incremental or revolutionary? Can major improvements in value creation be accomplished by incremental strategies or must they of necessity be revolutionary? One feature of strategy which is given emphasis is the need to build new capabilities within the firm. In a rapidly changing world, the basis of success in the future is likely to be different from what it was in the past, illustrating the complexity of the strategic management tasks.
