Strategic Management

Strategic Management

Expectations for the Course:

Struggle with shaping what to do Be prepared to participate in planning for your organizations Study real business situation

Strategic Management
Why????????????? Many largest companies are no more identifiable in the map business world of today! !! In a recent year, many businesses filed for bankruptcy and many more businesses failed!!! Competitive success is temporary...unless care is taken to preserve competitive position
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Why Strategy?
Its about how businesses compete. How to earn above average returns. Selection of industries Selection of segment Choice of tactics How to IMPLEMENT!

Concepts in Strategic Management

Strategy: An action a company takes to attain superior performance.

Strategic Management: The set of managerial decisions and actions that determines the longrun performance of an organisation. Vision Statement What do we want to become? Mission Statement What is our business?
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Concepts in Strategic Management

strategic plan: In real meaning, the strategic plan is a companys game plan.Plans must remain

current as changes occur inside and outside the company Strategic Planning: The process of determining a
company's long-term goals and then identifying the best approach for achieving those goals strategic management process: The process by which managers choose a set of strategies for the enterprise to pursue its vision.
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Concepts in Strategic Management

Long-term Objectives Mission-driven pursuit of specified results more than one year out
Essential for ensuring the firms success Provide direction

Aid in evaluation
Create synergy Focus coordination

Basis for planning, motivating, and controlling

Concepts in Strategic Management

Strategies Means by which long-term objectives are achieved
Some Examples Geographic expansion Diversification Acquisition Market penetration Retrenchment Liquidation Joint venture
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Concepts in Strategic Management

Annual Objectives Short-term milestones that firms must achieve to attain long-term objectives Policies Means by which annual objectives will be achieved

Importance of strategic management?

A central objective of strategic management is to learn about success and failure of business offers each person a role creates a diversity in performance levels Provides systematic approach to uncertainties Focus on fundamental nature of competition that is Coordinates and focuses on employees New keys to success Flexibility, Innovation, Speed &
Integration
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ever changing

Strategic Management Approach----Basics of Strategic Management

Formulation

Developing the strategic plan DirectionSetting:Vision,Mission,goals &Values External Analysis (External Environment) Internal Analysis (Internal Environment) Generate,Evaluate,andSelect,Strategies

Implementation Putting the formulated plan to work. Allocate and Manage Resources . Build Relationships & Design Structures Evaluation Continuously evaluating and updating the strategic plan. Develop Control Systems, Measure and Evaluate Performance

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Formulating Strategy
Take advantage of External Opportunities Avoid/minimize impact of External Threats Developing the grand- and business-level strategies to be used by the company Companys strengths/weaknesses and threats/opportunities shape the strategies First step is to understand the current position of the company
Identify mission, identify past and present strategies, diagnose the companys past and present performance, set objectives for the companys operation

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Formulating Strategy
Identify the mission statement
Outlines why the company exists Describes the companys basic products and/or services and defines markets and sources of revenue Designed to accomplish several goals and ensures a common purpose within the company

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Formulating Strategy
Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone.
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Whos Mission Statements?

1. Nike."To bring inspiration and innovation to every athlete in the world." 2. Microsoft "To enable people and businesses throughout the world to realize their full potential. 3. Amazon.com. . .seeks to be the worlds most customer-centric company, where customers can find and discover anything they may want to buy online at a great price.
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Identifying Past and Present Strategies

Companies need to understand and appreciate their corporate history Strategic managers should ask
Has past strategy been developed?
If not, can past history of the company be analyzed to identify the strategy that has evolved? If yes, has the strategy been recorded in writing?

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Diagnosing Past and Present Performance

A corporate planner must decide if past strategies worked and if strategic changes are needed by asking:
How is the company currently performing? How has it performed during the past few years? Is the performance trend moving up or down?

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Setting Goals
Concise statements that provide direction employees and set standards for achieving the companys strategic plan Established in many areas (see handout) Goals must be reevaluated as the environment and opportunities change Multiple goals are used to reflect the desired performance
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Policies, Procedures, and Rules

Policies are broad general guides to action that establish boundaries within which employees must operate
answering all written customer complaints in writing within 10 days Procedures are detailed series of related steps/tasks written to implement a policy
Define methods through which policies are achieved the customer service representative must note the complaint of Form 622 and forward the yellow copy of the form

Rules detail specific and definite corporate actions that employees must follow
Leave little doubt about what is to be done no smoking in the conference room
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SWOT Analysis
Strengths, Weaknesses, Opportunities, Threats
Process that allows companies to evaluate overall health
Internal (SW) and external (OT)

Most important result of a SWOT analysis is the ability to draw conclusions about the attractiveness of the companys situation and the need for strategic action
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Issues in Strategy Formulation

New business opportunities Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover
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Strategy Implementation
Action Stage of Strategic Management Most difficult stage Mobilization of employees & managers Interpersonal skills critical Consensus on goal pursuit

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Implementing Strategy
Action stage of strategic management Managers determine and implement the most appropriate company structure, motivate employees, develop short-range goals, and establish functional strategies Strategy must fit with current company policies
Or conflicting policies must be changed

A. T. Cross Company
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Strategy Evaluation
Final Stage of Strategic Management Subject to future modification Todays success no guarantee of future success New & different problems Complacency leads to demise
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Evaluating and Controlling the Strategic Plan

Process of continuously monitoring the companys progress toward its long-range goals and mission Managers should ask:
Does the grand strategy need revising? Where are problems likely to occur?

Basic strategy evaluation strategies:

Review external and internal factors that are the bases for current strategies Measure performance Take corrective action

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Evaluating and Controlling the Strategic Plan

Emphasis is making the companys managers aware of the problems that are likely to occur and of the actions to take if they do arise Plan ahead and avoid disaster Strategic planning and evaluation should be done on a predetermined schedule and as frequently as necessary, determined by internal and environmental factors

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Prime Task of Strategic Management

Peter Drucker: -- Think through the overall mission of a business. Ask the key question: What is our Business?

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Benefits of Strategic Management

Proactive in shaping firms future

Initiate and influence firms activities

Formulate better strategies
Systematic, logical, rational
Financial Benefits

Improvement in sales
Improvement in profitability Productivity improvement
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Benefits of Strategic Management

Non-Financial Benefits

Improved understanding of competitors strategies Enhanced awareness of threats

Reduced resistance to change

Enhanced problem-prevention capabilities

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