Chapter 1 Strategic Management

Four Phases of Strategic Management

Basic financial planning Forecast-based planning Externally-oriented planning (strategic) Strategic management

Strategic Management
Highly Rated Benefits:
Clearer sense of strategic vision for the firm Sharper focus on what is strategically important Improved understanding of a rapidly changing environment

Strategic Management
Three Key Strategic Questions:
Where is the organization now? (Not where do we hope it is!) If no changes are made, where will the organization be in 1 year, 2 years, 5 years, 10 years? What specific actions should management undertake? What are the risks and payoffs involved?

Challenges to Strategic Management

Globalization
Internationalization of markets and corporations
Global (worldwide) markets rather than national markets

Electronic Commerce
Use of the Internet to conduct business transactions
Basis for competition on a more strategic level rather than traditional focus on product features and costs

Adaptation to Changing Environmental Conditions

Strategic flexibility:
Demands a long-term commitment to the development and nurturing of critical resources Demands that the firm become a learning organization

Learning Organizations
Defined: An organization skilled at creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights.

Environmental Scanning
Defined: The monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the firm.

Strategy Formulation
Defined: Development of long-range plans for the effective management of environmental opportunities and threats in light of corporate strengths and weaknesses.

Strategy Formulation
Objectives
The end results of planned activity
What is to be accomplished Time in which to accomplish it Quantified when possible

Strategies
Defined: A strategy of a corporation forms a comprehensive master plan stating HOW the corporation will achieve its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantage.

Strategies
3 Types of Strategy Corporate strategy
Overall direction and management of its business

Business strategy
Emphasizes improving the competitive position of companys products or units

Functional strategy
Maximizes resource productivity

Policies
Defined: Broad guidelines for decision making that link the formulation of strategy with its implementation.

Strategy Implementation
The process of putting strategies and policies into action through : Programs Strategy Implementation Budgets Procedures

Definition of Evaluation and Control

Evaluation and Control The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance

Strategic Decision Making

Strategic Decisions
Rare Consequential Directive

Strategic Decision Making

Mintzbergs Modes Entrepreneurial mode Adaptive mode Planning mode Logical incrementalism