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Strategic Management
Introducing the Concepts
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Learning Outline
Why is strategic management important? What is strategic management? Who’s involved with strategic management? Strategic management in today’s world
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Why is Strategic Management Important?
It gives a role to everyone in an organization to manage strategically.
It helps the organization perform well. It helps the organization to effectively cope with
the uncertainties in the external and internal environment.
It helps to coordinate various functions and activities
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What is Strategic Management
Strategy
Vs.
Strategic Management
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Definition of Strategy
Goal-directed decisions and actions in which its capabilities and resources are matched with the opportunities and threats in its environment
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Strategy involves
Organization’s goals Goal-directed actions Matching key internal strengths with
external opportunities and threats
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Definition of Strategic Management
The process of analyzing the current situation, developing appropriate strategies, putting those strategies into action and evaluating, modifying, or changing those strategies as needed
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Strategic Management Entails:
Planning Organizing Implementing Controlling
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Basic Activities of Strategic Management Figure 1.1
Situation Analysis
Strategy Implementation
Strategy Evaluation
Strategy Formulation
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Characteristics of Strategic Management
Four aspects that set apart Strategic Management
Interdisciplinary
External focus
Internal focus
Future direction
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Strategic Management in Action Figure 1.2
AnalyzingCurrent
Situation
Decidingon
Strategies
PuttingStrategiesin Action
Evaluating andChanging Strategies
SituationAnalysis
StrategyFormulation
StrategyImplementation
StrategyEvaluation
Chapter 2 Chapter 3
Chapter 4
ExternalAnalysis
InternalAnalysis
Organizational Context
Chapter 5 Chapter 6
Chapter 7
Functional Competitive
Corporate
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The Strategic Management Process
Situation Analysis entails scanning and evaluating
Organizational context
External environment
Organizational environment
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Levels of Strategies Figure 1.3
Competitive:How are we going to compete in
our chosen business(es)?
FunctionalWhat resources and capabilities do
we have to support the corporate and competitive strategies?
CorporateWhat direction are we going and
what business(es) are we in or do we want to be in?
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The Strategic Management Process
Strategy Implementation Putting the organization’s various strategies
into action
Strategy Evaluation Evaluating how the strategy has been
implemented as well as the outcomes of the strategy
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Looking at Strategic Management’s Past
Strategy’s Military Roots Battlefield strategies to gain an edge on the enemy Exploit enemy’s weak spots Attack enemy where most vulnerable
Academic Origins of Strategic Management Mainstream economic theory Scientific management (Taylor) Bureaucratic organizations (Weber) Administrative functions/open systems (Barnard)
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Looking at Strategic Management’s Past
The 1960s Strategic management established as separate
field, basic concepts established
The 1970s and 1980s Process researchers (“how” strategy is
formed) Content researchers (“what” of a strategic
decision)
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Misconceptions about strategy and strategic management
Strategy is strictly for top management Strategy is about planning Strategy is stable and constant Strategic management outlines
ultimate destination & route
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Who’s Involved with Strategic Management?
Board of Directors Elected representatives of stockholders Play significant role in corporate governance
Top Management Team Ultimately responsible for every decision and action of
every organizational employee Act as strategic leaders
Other Strategic Managers and Organizational Employees Responsible for strategy implementation and
evaluation
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Typical Board Responsibilities Table 1.1
Review and approve strategic goals and plans Review and approve organization’s financial standards and policies Ensure integrity of organization’s financial controls and reporting
system Approve an organizational philosophy Monitor organizational performance and regularly review
performance results Select, evaluate, and compensate top-level managers Develop management succession plans Review and approve capital allocations and expenditures Monitor relations with shareholders and other key stakeholdersOther responsibilities may be assigned depending on the unique culture
and needs of the organization
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Effective Strategic Leadership Involves Figure 1.5
EffectiveStrategic
Leadership
Exploiting andMaintaining
Core Competencies
DevelopingHumanCapital
Creating andSustaining Strong
Organizational Culture
EmphasizingEthical Decisions
and Practices
EstablishingAppropriately
Balanced Controls
DeterminingOrganizational
Purpose or Vision
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Strategic Management in Today’s World
Three important issues affecting strategic management in today’s world Globalization Corporate governance E-business
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Corporate Governance
Corporate governance is the determination of the broad uses to which organizational resources will be deployed and the resolution of conflicts among the myriad participants in organizations
Sarbanes-Oxley Act of 2002 – a U.S. federal law designed to protect investors by improving the accuracy and reliability of corporate disclosures
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Chapter One Takeaways
Why strategic management is important
Strategic management: characteristics, process, activities
Who is involved and what they do
Questions
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