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Meaning
and Definition Characteristics of SM, A model of Strategic management Process Approaches to strategic decision making process Pitfalls in strategic Management Strategists and their role in strategic Management
Learning Outline
What is strategic management? Why is strategic management important? Who is involved with strategic management? Strategic management today
Meaning of Strategy
Goal-directed decisions and actions in which capabilities and resources are matched with the opportunities and threats in the environment.
The Plans, Ideas, Support required by a firm to Successfully compete with its rivals to create competitive advantage
The pattern and plan that integrates organizations major Goals, Policies, and action sequences into a cohesive whole James B Quinn
Strategy can be defined as the determination of basic long term goals and objectives of an enterprise and the adoption of courses of action and the allocation of resources for carrying out these goals - Chandler
What is Strategic Management? The set of decisions and actions that result in the formulation and implementation of plans designed to achieve a companys objectives.
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internal
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Select long-term objectives and grand strategies Develop annual objectives and short-term strategies Implement the strategic choices
6 Evaluate success of the strategic process
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Gives everyone a role Makes a difference in performance levels Provides systematic approach to uncertainties Coordinates and focuses employees
Due to change in external Environment Provide guidelines Better Performance Improved allocation of Resources Competitive advantage Improved Integration of various activities Systematize business Decisions.
Strategic Issues Warrant Top management decisions. Strategic issues involve the allocation of large amounts and resources. Strategic issues are future oriented Strategic Issues have consequences of multiBusiness. Strategic management stresses both efficiency and effectiveness.
Level of Strategies
A successful business model results from business-level strategies that create a competitive advantage over its rivals.
Corporate level
Business Level
Functional Level
level: board of directors, CEO & administration [Highest] level: business and corporate managers [Middle]
level: Product, geographic, and functional area managers [Lowest]
Business
Functional
Marketing
Human Resources
Finance
Business Level
Business 1 (Related)
Functional Level Research and Manufacturing Development
Business 2 (Related)
Business 3 (Related)
Marketing
Human Resources
Finance
An example of an Unrelated Product Business (Note: By itself, an SBU can be considered a related product business)
SBU: a single business or collection of related businesses that is independent and formulates its own strategy
A (Multi-business) Corporation
S.B.U. 2
Company 1
Co. 2
Co. 3
Division 1
Div. 2
Div. 3
Strategic Planning
(Rational planning by top management)
Basic Strategic Planning Model
Key Terms
Step 1: Identifying the organization's current mission, objectives, and strategies Mission: the firms reason for being Who we are, What we do, and Where we are now Examples for Mission statement :"To achieve our objectives in an environment of fairness, honesty, and courtesy towards our clients, employees, vendors and society at large. Infosys Facebook: Face book's mission is to give people the power to share and make the world more open and connected. Dell: Dells mission is to be the most successful computer company in the world at delivering the best customer experience in markets we serve.
Mission
Sets out why the organization exists and what it should be doing. Specify what the organization hopes to fulfill in the medium to long term. Are objectives to be attained that lead to superior performance.
Major goals
Secondary goals
The environmental scanning of specific and general environments Focuses on identifying opportunities and threats
Internal Analysis
Identify strengths
Quality and quantity of resources available Distinctive competencies
Identify weaknesses
Inadequate resources Managerial and organizational deficiencies
Develop and evaluate strategic alternatives Select appropriate strategies for all levels in the organisation that provide relative advantage over competitors Match organisational strengths to environmental opportunities Correct weaknesses and guard against threats
Implementation: effectively fitting organisational structure and activities to the environment Effective strategy implementation requires an organisational structure matched to its requirements.
How effective have strategies been? What adjustments, if any, are necessary?
Strategic Managers
General managers
Responsible for the overall (strategic) performance and health of the total organization. Responsible for specific business functions or operations.
Operations managers
Follow-up
Implementation
Real World
Take Action
Data Sources
Input of Data
Data Management
Users
Information for decision-making
Analysis
Financial Benefits
Improvement in sales Improvement in profitability Productivity improvement
Non-Financial Benefits
Improved understanding of competitors strategies
Not effective on real world situations Cognitive biases of the decision makers Misunderstanding due to vague and general strategic objectives Group think decisions are poor/ slow Not distinct quantitative attributes