PowerPoint PresentationCopyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
STRATEGIC MANAGEMENT
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Strategic Management
Strategic management is the study of why some firms outperform others.
How to create a competitive advantage in the market place that is unique, valuable, and difficult to copy
“Total organization” perspective, integrating across functional areas.
Two perspectives of leadership: romantic view and external control perspective.
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Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Definition of Strategic Management
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Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
Definition of Strategic Management
Internal and external environment of the firm
Decisions
How should we compete in those industries?
Actions
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Attributes of Strategic Management
Includes multiple stakeholders in decision making.
Needs to incorporate short-term and long-term perspectives.
Recognizes trade-offs between efficiency and effectiveness.
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Mintzberg’s Views of Strategy
Plan - consciously intended course of action
Ploy - maneuver to outwit opponent
Pattern - consistency in behavior
Position - location in environment
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Forms of Strategy
Formal versus informal - associated with size of firm and stage of development. Mintzberg’s distinction between entrepreneurial and planning mode.
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Forms of Strategy
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Strategic Management Process
Formulation
What business(es) should we be in?
For each, what is the basis for competitive advantage (low cost, differentiation, focus)?
Implementation
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Coherence in Strategic Direction
Fundamental statement of the organization’s
Values
Aspiration
Goals
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Coherence in Strategic Direction
More specific than vision
Focused on the means by which the firm will compete
Mission statements
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Coherence in Strategic Direction
Strategic objectives
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Levels of Strategy
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Does Strategic Planning Pay Off?
Original research showed mixed results. Planning might not pay off for firms in static or turbulent environments or for small firms.
Miller and Cardinal’s (1994) meta-analysis found that strategic planning affects firm growth and profitability. In particular, they found that:
Planning performance link true for formal and informal planning.
Planning performance link even stronger in turbulent environments.
Firm size unrelated to effectiveness of planning.
Operations
Marketing
Finance...
Manager