Strategic Management: The 4 Dimensions and Core Concepts

What is strategic management?

It is the process of setting long-term goals, analyzing the internal and external environment, choosing a strategy, and planning actions to reach lasting success.

How did strategic management begin in the 1960s and 70s?

As a structured planning method focused mainly on financial targets, often driven by SWOT analysis and budget allocation.

What was the CEO’s role in early strategy planning?

To define the company’s long-term goals and allocate resources via a once-a-year “master plan.”

Why is defining strategy as only a ‘vision’ not enough?

Because visions are vague and don’t explain what to do or how to create competitive advantage.

Why is having a detailed plan alone not a real strategy?

A plan may show what to do, but it doesn’t ensure success or uniqueness in the market.

What’s the danger of defining strategy as “best practices”?

It leads to copying competitors, which creates sameness and prevents differentiation.

Can SWOT, BCG Matrix, and NPV help in creating strategy?

They help analyze certain aspects but cannot tell you where to play or how to win.

What happens if you use all the tools without strategic clarity?

You get lots of data but no focused, actionable insights.

What does it mean to analyze 'The Industry' in strategy?

It means understanding how the industry is structured: who the players are, how competitive it is, how profitable it could be, and what future trends or risks exist. This helps you choose which parts of the industry are attractive.

What are industry 'segments,' and why do they matter?

Segments are smaller parts of an industry based on geography, price levels, customer types, or distribution channels. Studying segments helps you decide where your company has the best chance to succeed.

What does it mean to analyze 'The Customer'?

It means discovering what different types of customers value most—like price, quality, convenience, speed, or brand image. This lets you design an offer that truly matches their expectations.

What’s the difference between channel customers and end consumers?

Channel customers (like retailers or distributors) care about profit margin, service, and reliability. End consumers care about price, quality, features, and brand. Understanding both is critical for a full strategy.

What does analyzing 'Your Position' mean in strategy?

It means comparing your company to others based on:
Capabilities (what you do well)
Costs (how efficiently you operate)
This shows whether you can be a cost leader, a differentiator, or if your current position is weak.

What should you do if you have neither strong capabilities nor low costs?

You should rethink your strategy—because you are in a vulnerable position with no clear advantage.

What does it mean to analyze 'Your Competitors'?

It means predicting how rivals will respond to your actions. Will they fight back? Copy you? This analysis ensures your strategy is defensible and hard to imitate.

Why is it risky to assume competitors won’t change?

Because if they do—even slightly—it can break your entire strategy. A good strategy must work even if competitors react.

How did Colgate change the oral care industry in the 1990s?

By launching "Colgate Total," focusing on full mouth health, not just cavity protection—creating a new segment based on customer needs.

What was P&G’s response to Colgate?

They expanded into "Oral Care" with Crest products like whitening strips and flavored options, making the segment even broader.

How did Pepsi respond to Coca-Cola’s global dominance?

Instead of competing directly in soda, PepsiCo diversified into snacks and breakfast foods, becoming larger in revenue overall.

What is Four Corners Analysis?

A tool to predict how competitors might act by examining:
Their goals (drivers)
Their beliefs (assumptions)
Their current strategies
Their abilities (capabilities)

Why is Four Corners useful?

It helps you prepare for rival actions and make your strategy more resistant to threats.

What is a 'prescriptive' view of strategy?

It sees strategy as a clear, planned process with fixed goals and structured steps.

What is an 'emergent' view of strategy?

It sees strategy as something that evolves over time by learning, experimenting, and reacting to market changes.

What is the industry-based theory?

It says success comes from choosing the right industry and competing better than others.

What is the resource-based theory?

It says competitive advantage comes from using your own unique resources and capabilities.

What is the cooperative/network theory?

It argues that working with other firms (even competitors) through alliances or partnerships can create advantage.

What is the survival-based theory?

It says only the strongest or most adaptable firms survive in changing markets.

What is the uncertainty-based theory?

It focuses on the fact that the business world is unpredictable, so flexible, adaptive strategies are key.

What is the innovation-based theory?

It argues that constant learning and new ideas drive long-term success.