1. Why is strategic management important for a corporation’s competitive advantage?

Strategic management is crucial for a corporation’s competitive advantage because it provides a systematic approach to setting objectives, formulating strategies, and allocating resources to achieve sustainable performance. By carefully analyzing the external environment and internal capabilities, a well-crafted strategy can help a company:

• Identify market opportunities: Strategic management enables companies to identify and capitalize on emerging market trends and opportunities.
• Differentiate from competitors: By developing unique value propositions, companies can distinguish themselves from competitors and attract customers.
• Allocate resources effectively: Strategic planning helps companies allocate resources efficiently to support their strategic priorities.
• Adapt to change: A well-developed strategy can help companies anticipate and respond to changes in the external environment.

2. How does strategic management typically evolve in a corporation? Give examples

Strategic management typically evolves in a corporation through a cyclical process known as the strategic management process. This process involves the following steps:

1. Environmental scanning: Analyzing the external environment to identify opportunities and threats.
2. Internal analysis: Assessing the company’s strengths, weaknesses, opportunities, and threats (SWOT analysis).
3. Strategy formulation: Developing strategic objectives and plans to achieve them.
4. Strategy implementation: Putting the strategy into action and allocating resources.
5. Strategy evaluation and control: Monitoring performance and making adjustments as needed.

Example: A company like Apple might initially focus on product innovation and differentiation. As the market matures, the company may shift its strategy to focus on customer experience and brand loyalty.

3. Why does a corporation need a board of directors? What is the relationship between corporate governance and social responsibility? Give examples from the actual market.

A board of directors is essential for a corporation because it provides oversight and guidance to the company’s management. The board is responsible for:

• Setting strategic direction: The board helps to define the company’s overall direction and strategic goals.
• Overseeing management: The board monitors the performance of the company’s management team and ensures that they are acting in the best interests of the shareholders.
• Ensuring compliance: The board is responsible for ensuring that the company complies with all relevant laws and regulations.

Corporate governance and social responsibility are closely linked. Good corporate governance practices can help to ensure that a company is socially responsible by promoting transparency, accountability, and ethical behavior. For example, companies that have strong corporate governance standards are more likely to be socially responsible by addressing issues such as environmental sustainability and human rights.

Example: In recent years, there have been numerous scandals involving companies that have engaged in unethical or illegal behavior. These scandals have highlighted the importance of good corporate governance and social responsibility.

4. Choose any corporation from the Saudi market and discuss the forces driving its industry competition (review chapter 4-slide 18).

Saudi Arabian Oil Company (Saudi Aramco)

Saudi Aramco is a leading global energy company and a major player in the oil and gas industry. The forces driving competition in this industry include:

• Rivalry among existing firms: There are several major players in the oil and gas industry, including ExxonMobil, Shell, and BP. These companies compete for market share through price competition, product differentiation, and innovation.
• Threat of new entrants: While there are significant barriers to entry in the oil and gas industry, new entrants, such as independent oil and gas producers, can pose a threat to established players.
• Bargaining power of buyers: Buyers, such as governments and large oil refiners, have significant bargaining power and can demand lower prices.
• Bargaining power of suppliers: Suppliers of equipment, technology, and services have moderate bargaining power.
• Threat of substitute products: There are a few substitutes for oil and gas, such as renewable energy sources. However, these substitutes are still relatively expensive and have not yet fully replaced fossil fuels.

These forces of competition have shaped the competitive landscape of the oil and gas industry and have influenced Saudi Aramco’s strategic decisions.