Strategic management important for a corporation's competitive advantage

Full Answer Section

     

• Risk Mitigation:

By anticipating potential challenges and opportunities, strategic management allows organizations to develop contingency plans and mitigate risks.   Innovation and Adaptability: Strategic thinking encourages innovation and adaptability, enabling organizations to respond effectively to changes in the market and industry.   Stakeholder Alignment: Strategic management helps align the interests of various stakeholders, such as shareholders, employees, customers, and suppliers, fostering a sense of shared purpose.   Evolution of Strategic Management:

Strategic management has evolved over time, influenced by various factors, including:

• Industry Dynamics: The nature of competition, market trends, and technological advancements have shaped strategic thinking.

  Theoretical Developments: Scholars like Alfred D. Chandler, Michael Porter, and Henry Mintzberg have contributed significantly to the field of strategic management.   Global Factors: Globalization, economic liberalization, and increased cross-border competition have necessitated more sophisticated strategic approaches.

Examples of the evolution of strategic management include:

• Shift from a focus on financial performance to a broader emphasis on sustainability and social responsibility.
• Increased use of data analytics and technology to inform strategic decision-making.

  A greater focus on strategic agility and adaptability to respond to rapid changes in the environment.   Board of Directors and Corporate Governance

A board of directors is essential for a corporation's governance and oversight. Its role includes:

  Providing strategic direction: The board sets the overall direction for the corporation, approves strategic plans, and monitors their implementation.   Overseeing management: The board monitors the performance of the CEO and senior management, ensuring that they are acting in the best interests of the corporation.   Ensuring accountability: The board is responsible for holding management accountable for their decisions and performance.   Protecting shareholder interests: The board represents the interests of shareholders and ensures that their rights are protected.   Corporate governance refers to the system of rules, practices, and processes that govern the operation of a corporation. It encompasses various aspects, including board oversight, executive compensation, and ethical conduct. Effective corporate governance is essential for building trust with stakeholders, attracting investors, and mitigating risks.     Saudi Arabian Market: Forces Driving Industry Competition

Saudi Arabia's Vision 2030 has significantly transformed the country's business landscape, creating new opportunities and challenges for businesses operating in the Saudi market. Some of the key forces driving industry competition include:

  Economic Diversification: The Saudi government's efforts to diversify the economy away from oil dependence have created new sectors and industries, such as tourism, renewable energy, and technology.   Foreign Direct Investment: Increased foreign investment has brought in new competition and spurred innovation in various sectors.

• Government Initiatives: Government policies and regulations, such as the privatization of state-owned assets and the introduction of free trade zones, have created new opportunities and challenges for businesses.
• Technological Advancements: Rapid technological advancements are disrupting traditional industries and creating new market opportunities.

  Consumer Behavior Changes: Changing consumer preferences and expectations are influencing market dynamics and competitive landscapes.   These forces are shaping the competitive landscape in Saudi Arabia, requiring businesses to adapt their strategies and operations to remain competitive.  

Sample Answer

       

Importance of Strategic Management:

Strategic management is crucial for a corporation's competitive advantage for several reasons:

• Direction and Focus: It provides a clear direction and focus, aligning the organization's resources and efforts towards achieving its goals.   
  1. Why Is Strategic Management Important? - Victoria University Online
• Resource Allocation: Strategic management helps in optimizing the allocation of resources, ensuring that they are used effectively to achieve the desired outcomes.