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STRATEGIC MANAGEMENT

Chapter 1
THE STRATEGIC MANAGEMENT PROCESS

An Introduction to Strategy
What Is Strategic Management?

Why Is Strategic Management Important?

Who Is Involved in Strategic Management?

Chapter Outline
Five Tasks of Strategic Management
Developing a Strategic Vision and Mission

Setting Objectives
Crafting a Strategy Implementing and Executing the Strategy Evaluating Performance and Initiating Corrective Adjustments

Why Strategic Management Is a Process?

What is Strategy?
Definition
An organisations strategy consists of the moves and approaches devised by management to produce successful organisation performance. (Thompson & Strickland) Strategy is managements action plan to Attract and satisfy its customers Run its operations Compete successfully against rival firms Achieve organizational objectives and targets
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The 3 Big Strategic Management Questions


1.

Where are we now?( the companys present situation)

2. Where do we want to go?( business or markets, buyers

and groups to target)


3. How do we get there?(the co.s answer to how to get there

is its strategy)

Why is Strategy Important?


- To proactively shape how a companys business will be conducted.

- To mold the independent actions and decisions of managers and employees into a coordinated, companywide plan.
- Charts the companys direction.

Strategic Management Concept


Competent execution of a well-conceived strategy is the best test of managerial excellence and a proven recipe for organizational success!

Good Strategy + Good Strategy Execution = Good Management

Who is Involved in Strategic Management?


Crafting and executing strategy are core management functions.

Senior Corporate Executives Managers of Subsidiary Business Units Functional Area Managers Operating Managers

The 5 Tasks of Strategic Management


Task 1
Develop a Strategic Vision and Mission

Task 2

Task 3
Craft a Strategy to Achieve Objectives

Task 4
Implement and Execute Strategy

Task 5
Monitor, Evaluate, and Take Corrective Action

Set Objectives

Revise as Needed

Revise as Needed

Improve/ Change

Improve/ Change

Recycle as Needed

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Developing a Vision & Mission


The first task of strategic management The first direction setting task

Offers a big picture perspective of WHO we are, WHAT we do and

WHERE we are headed

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Strategic Vision

Effective strategy making begins with a vision of where the organisation needs to head.

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Strategic Vision (cont)


Forming a vision of the firms future in 5-10 years.
Tasks include:
Creates a roadmap for the future Provide long term direction

Give firm a strong identity

Concerns a firms future business path -where we are going

Markets to be pursued Future technology-product-customer focus Kind of company that management is trying to create

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Example of a Strategic Vision

Our vision: Getting to a billion connected computers worldwide,millions of servers, and trillions of dollars of e-commerce.

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Mission Statement
A mission statement focuses on current business activities. Concerns who we are and what we do
Current product and service offerings

Customer needs being served Technological and business capabilities

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Example of a Mission Statement

Intels core mission is being the building block supplier to the Internet economy and spurring efforts to make the Internet more useful. Being connected is now at the center of peoples computing experience. We are helping to expand the capabilities of the PC platform and the Internet.

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Setting Objectives
The 2nd Task of Strategic Management The 2nd Direction Setting Task Represent managerial commitment to achieve specific &

measurable performance targets by a certain time.


Spell-out how much of what kind of performance by when Direct attention & energy to what needs to be accomplished

Establishing objectives converts firms mission into concrete performance outcomes


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Setting Objectives (cont)


Provides benchmarks for judging organisational performance The firm is more focused over what needs to be accomplished

Objectives need to be set for every key result area


Objectives are required both for the long term term and short

term Types of Objectives required:


Financial Objectives Strategic Objectives
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Crafting a Strategy
3rd Task of Strategic Management 3 rd Direction Setting Task A firms strategy consists of combined actions that management has

taken and intends to take in

Achieving strategic and financial objectives Pursuing organisations mission Strategy-making is all about HOW to Reach performance targets Out-compete rivals Achieve sustainable competitive advantage Capture market opportunities Strengthen firms long term competitive position Make the strategic vision a reality
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Crafting a Strategy (cont)


Strategy involves determining whether to Concentrate on a single business or several businesses
(diversification) Cater to a broad range of customers or focus on a particular niche Develop a wide or narrow product line Pursue a competitive advantage based on Low cost or Product superiority or Unique organizational capabilities

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Understanding a Firms Strategy


Actions to diversify Actions to strengthen resources & capabilities How functional activities are managed Efforts to pursue new opportunities or defend against threats Actions to form strategic alliances and collaborative partnerships
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Actions to outcompete rivals Responses to changing external circumstances Actions to alter geographic coverage

Pattern of Actions That Define Strategy

Why do Strategies Evolve?

There is always an ongoing need to react to


Shifting market conditions

Fresh moves of competitors New technologies Evolving customer preferences Political and regulatory changes New windows of opportunity Crisis situation

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Executing and Implementing Strategy


The 4th Task of Strategic Management Taking actions to put a freshly-chosen strategy into place Supervising the ongoing pursuit of strategy Improving the competence and efficiency with which the

strategy is being executed


Showing measurable progress in achieving the targeted

results and objectives

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What does Strategy Implementation and Execution Include?


Building a capable organization Allocating resources to strategy-critical activities Establishing strategy-supportive policies Motivating people to pursue the target objectives Tying rewards to achievement of results Creating a strategy-supportive corporate culture Installing needed information, communication, and operating systems Instituting best practices and programs for continuous improvement Exerting the leadership necessary to drive the process forward and keep improving

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Monitoring, Evaluating and Taking Corrective Actions as Required


The 5th Task of Strategic Management


The tasks of crafting, implementing, and executing a strategy are not a one-time exercise

Customer needs and competitive conditions change New opportunities appear; technology advances; any number of other outside developments occur One or more aspects of executing the strategy may not be going well New managers with different ideas take over Organizational learning occurs

All these trigger the need for corrective actions and adjustments
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Characteristics of the Strategic Management Process


Need to do the five tasks never goes away

Strategizing is not isolated from other managerial activities

The big challenge: To get the best strategy-supportive

performance from employees, perfect current strategy, and improve strategy execution

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Benefits of Strategic Thinking and a Strategic Approach to Managing


Guides entire firm regarding what it is we are trying to do and

to achieve
Makes managers more alert to winds of change, new

opportunities, and threatening developments


Unifies numerous strategy-related decisions and organizational

efforts
Creates a proactive atmosphere Promotes development of an evolving business model focused

on bottom-line success
Provides basis for evaluating competing budget requests

HELPS A COMPANY PREPARE FOR THE FUTURE!

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