AGENDA 09/09 & 09/10
Nature of Strategic Challenge & Strategic Management
The Strategy Concept and ProcessStrategic Plan - Team Meetings
Strategic ChallengeStrategic Challenge
To survive To grow
To die
In order to survive and to prosper (meet the strategic challenge) every organization must:
Develop and maintain an alignment with the environment Create the future
Define and growInternal Competencies
Meeting the Strategic Challenge
1950s
Finding a profit-producing match between products/services of the organization and the needs of the market.
1960s
Transforming the internal structure and competencies of the organization.
1970s & 1980s
Planning interfaces with suppliers because of limited resources.
Acknowledging power of society/environment to impact an organization.
Recognizing the global nature of competition.
1990s
Realizing that the speed of change is often greater than the speed of strategic response.
Focusing competitive advantage on information.
2000s
Arenas that need to be addressed if the organization is to meet
the strategic challenge Products/Services Competencies Inputs Society Globalization Change Information Future
What is
Strategic Management?
Early Definition Determination of basic long-term goals and
objectives Adoption of courses of action Allocation of resources necessary for carrying out
these goals
Chandler, A. 1962. Strategy & Structure: Chapters in the History of the Industrial Enterprise, Cambridge: M.I.T. Press, p.13
Another way of saying it Art and Science Formulating, Implementing, and Evaluating Cross-Functional Decisions Enabling an Organization To set and achieve its
Mission and Objectives MissionObjectives
DecisionsActions
Environmental Scanning
Evaluation
Art and Science
Intuition (art)– past experiences, judgment, feelings– particularly useful for making decisions in
situations of great uncertainty or little precedent. Analysis (science)
– logical, systematic approach – organization of quantitative information/data to
be used for decision making.
Emphasis of Strategic Management
VALUE CREATION– What is Value?
CONFIGURATION– Multimarket scope
product, geographic, and vertical boundaries COORDINATION
– Management of activities and businesses within company
Strategic Management is a Process
Process: flow through interrelated stages toward the achievement of an aim
The flow of information involves historical, current, and forecasted data on the environment and operations of an organization.
Never finished.
Implications of viewing Strategic Management as a Process
Inter-relatedness– A change in one part affects several others
Formulation and Implementation are often interwoven
Allowance for continuous feedback and updates
Communication & Commitment
Strategic Management
involves long-term, future-oriented, complex decision making
requires considerable resources participation at all levels of an organization
– Top management is essential
Specifics
I. Strategy Formulation 1. Developing a business vision/mission
– Mission = enduring statements of purpose that distinguish one business from other firms.
2. Establishing long-term objectives– Specific results - more than one year.– Challenging, measurable, reasonable, clear.– Established for overall corporation and each
division
3. Identifying external opportunities and threats...could benefit or harm an organization in the future.– Macro Environment– economic, social, cultural, demographic, environmental,
political, legal, governmental, and technological– largely beyond the control of the organization – Micro Environment– Industry – Competitive trends & events
4. Determining internal strengths and weaknesses– Controllable activities within an organization
that are performed especially well or poorly.– Competencies (skills) – Functional activities are areas where strengths
or weaknesses arise.
Strategy Formulation Con’t
5. Generate and choose corporate strategies– Means by which long-term objectives will be
achieved.
II. Strategy Implementation Establish annual objectives
– Short-term milestones that organizations must achieve to reach long-term objectives.
– Measurable and established at corporate, business, and functional levels.
Devise policies– Guidelines, rules, procedures
Structure alignment Mobilizing all functions to put formulated strategies into
action.
III. Strategy Evaluation
Assess the outcomes of formulation and implementation.
Three fundamental activities– reviewing external and internal factors– measuring performance– taking corrective actions
Who usesStrategic Management
Profit– Big Corporations– Medium Size Corporations– Small Businesses
Government Nonprofit Individual Career ManagementLevels of FORMALITY will vary
Whenis
Corporate Strategy Practiced? Real Time Always
Wherein Larger Organizations is
Strategic Management Practiced? Corporate Level
– Board of Directors; CEO; Administrative Officers– Determine mission; set objectives and strategies
Business Level– How Firm will compete in selected
product/market arenas Functional Level
– Execute the plans
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