INTRODUCTION TO MANAGEMENT ASSIGNMENT

CHAPTER 8 STRATEGIC MANAGEMENT

by:

1. Melia Ananda Sari 2. Gebrie Dwi Irhamna 3. M.Fadhil Imanuddin 4. Dyane

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INTERNASIONAL ECONOMIC UNIVERSITAS ANDALAS 2013

Strategic management consists of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages. This definition captures two main elements that go to the heart of the field of strategic management. First, the strategic management of an organization entails three ongoing processes: analysis, decisions, and actions. That is, strategic management is concerned with the analysis of strategic goals (vision, mission, and strategic objectives) along with the analysis of the internal and external environment of the organization. Next, leaders must make strategic decisions. These decisions, broadly speaking, address two basic questions: What industries should we compete in? How should we compete in those industries? These questions also often involve an organizations domestic as well as its international operations. And last are the actions that must be taken. Decisions are of little use, of course, unless they are acted on. Firms must take the necessary actions to implement their strategies. This requires leaders to allocate the necessary resources and to design the organization to bring the intended strategies to reality. As we will see in the next section, this is an ongoing, evolving process that requires a great deal of interaction among these three processes. Second, the essence of strategic management is the study of why some firms outperform others. Thus, managers need to determine how a firm is to compete so that it can obtain advantages that are sustainable over a lengthy period of time. That means focusing on two fundamental questions: How

should we compete in order to create competitive advantages in the marketplace? For example, managers need to determine if the firm should position itself as the low-cost producer, or develop products and services that are unique which will enable the firm to charge premium prices-or some combination of both. WHY STRATEGIC MANAGEMENT IS IMPORTANT ?? Because its involved in many of the decisions that managers make. Most of significant current business events reported in the various business publications involve strategic management. THE STRATEGIC MANAGEMENT PROCESS 1. Identifying the organizations current mission objectives and strategis. Defining the organizations mission forces managers to carefully identify the scope of its products ar services. 2. Analyzing the enviroment. In analyzing the external enviroments to see what trends and changes are occuring. 3. Analyzing the organizations resources and capabilities. The core competencies are the organizations major value creating skills, capabilities, and resources that determine the organizations competitive weapon. 4. Identifying strenghts and weakness. Any activities the organization does well or any unique resources that it has are called strengths. Weakness are activities the

organization does ot do well or resources it needs but does not process. 5. Formulating strategies. The formulating of strategies follows the decision-making process. 6. Implementing strategies. The environment dictates the chosen strategy; effective strategy implementation its requires an organizational structure matched to requirements. 7. Evaluating results. To see How effective have strategies been? What adjustments, if any, are necessary?

LEVEL OF ORGANIZATIONAL STRATEGY

SWOT ANALYSIS and GRAND STRATEGIES

BCG Matrix Developed by the Boston Consulting Group Considers market share and industry growth rate Classifies firms as: Cash cows: low growth rate, high market share Stars: high growth rate, high market share Question marks: high growth rate, low market share Dogs: low growth rate, low market share

BUSINESS-LEVEL STRATEGY

A business-level strategy seeks to determine how an organization should compete in each of tis businesses. The role of competitive advantage developing an effective business-leve competitive strategy requires an understanding of competitive advantage, a key concept in strategic management. Competitive advantages is what sets an organization apart, that is, its distinct edge.