Concepts and terminology used in Strategic Management.

Full Answer Section

Evolution of Strategic Management

Strategic management typically evolves in a corporation through a cyclical process involving:

1. Strategic planning: Setting long-term goals and objectives, analyzing the external environment, and formulating strategies.
2. Implementation: Developing action plans, allocating resources, and executing strategies.
3. Evaluation: Assessing the effectiveness of strategies and making necessary adjustments.

Example: A corporation like Apple might initially focus on product innovation (e.g., the iPod, iPhone). As the market matures, the company may shift its strategy to emphasize ecosystem development (e.g., the App Store, Apple Services).

Board of Directors and Corporate Governance

A board of directors is essential for corporate governance because it provides oversight and accountability, ensuring that the company acts in the best interests of its shareholders and stakeholders. The board's responsibilities include:

• Setting strategic direction: Approving the company's overall strategy and goals.
• Oversight: Monitoring the company's performance and ensuring compliance with laws and regulations.
• Hiring and evaluating management: Selecting and evaluating the CEO and other senior executives.
• Fiduciary duties: Acting in the best interests of the company and its shareholders.

Corporate governance and social responsibility are closely intertwined. Companies that prioritize social responsibility are more likely to build trust with stakeholders, attract and retain top talent, and enhance their reputation. For example, companies like Patagonia and Ben & Jerry's have integrated social and environmental responsibility into their core business strategies, leading to strong brand loyalty and financial success.

Forces Driving Industry Competition in the Saudi Market

Saudi Telecom Company (STC) is a leading telecommunications company in Saudi Arabia. The industry it operates in is highly competitive, driven by several forces:

• Rivalry among existing firms: STC competes with other major telecom operators in Saudi Arabia, such as Mobily and Zain Saudi.
• Threat of new entrants: While there are barriers to entry, new players could potentially enter the market, increasing competition.
• Bargaining power of buyers: Consumers have a moderate level of bargaining power, as there are multiple options available.
• Bargaining power of suppliers: Suppliers of equipment and services have moderate bargaining power, as STC has multiple options.
• Threat of substitute products: There are limited substitutes for telecommunications services, but alternative communication technologies (e.g., messaging apps) could pose a threat.

These forces collectively shape the competitive landscape for STC and other telecommunications companies in Saudi Arabia, influencing their strategic decisions and performance.

Sample Answer

Strategic management is crucial for a corporation's competitive advantage because it provides a systematic framework for setting goals, analyzing the environment, formulating strategies, and implementing and evaluating initiatives. By effectively aligning organizational resources and capabilities with market opportunities and threats, strategic management enables companies to:

• Differentiate themselves: Develop unique value propositions that set them apart from competitors.
• Gain market share: Attract and retain customers by offering superior products or services.
• Improve financial performance: Increase profitability and shareholder value.
• Enhance organizational effectiveness: Foster a culture of innovation, adaptability, and employee engagement.