"Explain the concept of strategic management and the notion of competitive advantage".
Strategic management is a concept that assists management to focus on the key issues of the organisation that will help it develop a competitive advantage. The concept of strategic management and the notion of competitive advantage are therefore inextricably linked.
Often the implicitly assumed objective in any organisation is its dependence on effective management for ongoing survival - to ensure that there is still an organisation to manage in the future! Management must therefore make many important decisions to determine where the organisation should be heading and how it will get there. However, this is an ongoing process, for as market trends and internal factors change, so should an organisation's goals. Thus as part of the planning process, managers need to first understand the intricacies of their own organisation, as well as the external and competitive environment in which they operate. .
The most common approach is to use a SWOT analysis as the starting point, which involves analysing the internal strengths and weaknesses of the organisation as well as the opportunities and threats in the external environment. Evaluating an organisation's internal strengths and weaknesses assists in determining the competitive advantage of an organisation's resources and capabilities. This can include financial resources such as debt and equity, physical resources such as buildings and machinery, human resources such as skills and experience, and organisational assets of goods and services (Bartol et al, Management, A Pacific Rim Focus, 2003, pg 211). Bartol et al (pg 266) argues that the most important aspect of analysing an organisation's internal strengths and weaknesses is to identify how these intrinsic strengths are distinctive from its competitors. This could be achieved by asking the question: what makes an organisation different from the competition? The most ideal scenario is to possess a product or service that no other organisation could offer competitively and thus minimise the exposure to external threats.
