1.

Strategic management become so important to today’s corporations because there will be

so many challenges and opportunities that companies will face every day followed by
technological developments or globalization issues. For example, the challenges that
followed by technological developments are when there are some jobs that was
previously carried out by human power, nowadays can be replaced with machine power
or robot. If the company can keep up with changes and apply technology to its business,
then the opportunity that can be obtained by the company is, in terms of cost it can be
more efficient for company’s financial, in terms of time, the time needed for the machine
to complete the works can faster than human labor. Because the processing time is faster,
then the machine can produce more products. In terms of quality, machine can produce
products with good quality and can be more consistent. These opportunities and
challenges must become the center of attention for the company and must become the
factors that must be considered. Also become the basis for making decisions so that the
company can continue to grow and develop. Besides that, the company can achieve its
long-term goals and objectives.
Therefore in determining decisions, it must be depth analysis of the company’s internal
capabilities, opportunities, and obstacles that come from company’s business
environment. The development of the company in the future is largely determined by the
accuracy of the strategic decisions that taken by company. If the decisions made related
to strategic decisions are wrong, the impact can be fatal because in addition to the
company will suffer continuous losses, competitors will take advantage of the company’s
weaknesses due to those errors. Strategic management should identify the business that
company wants to be in and differentiated from others in its marketplace.

2. Strategic management typically evolve in a corporation through the following four

phases:
Phase 1 – Basic Financial Planning
Managers initiate serious planning when they are requested to propose the following
year’s budget. Projects are proposed on the basis of very little analysis, with most
information coming from within the firm. In this phase, many elements of plan may be
hidden or neglected. A budget presents only the allocation of resources for some plan.
The emphasis is short term and the primary focus is on the internal aspects of the
organization. The time horizon is usually one year.
Phase 2 – Forecast Based Planning
As annual budgets become less useful at stimulating longterm planning, managers
attempt to propose five-year plans. Company must decide which goals to pursue. In this
phase, a plan is formulated in addition to the budget, and the plan emphasizes forecasts of
sales and target profits. Top management usually extend of the time frames covered by
the budgeting process. Forecast based planning are an attempt to anticipate the longer
term financial future of the corporation. This phase also time consuming, often involving
a full month of managerial activity to make sure all the proposed budgets fit together.
Endless meetings take place to evaluate proposals and justify assumptions. The time
horizon is usually three to five years.
Phase 3 – Externally Oriented Strategic Planning
Top management takes control of the planning process by initiating strategic planning.
The company seeks to increase its responsiveness to changing markets and competition
by thinking strategically. Planning is taken out of the hands of lower level managers and
concentrated in a planning staff whose task is to develop stratefic plans for the
corporation. Consultans often provide the sophisticated and innovative techniques that
the planning staff uses to gather information and forecast future trends. This phase
addresses the external environments that determine the basis of forecasts. This phase try
to understand the basic marketplace phenomenon that is creating changes such as changes
in the regulatory, financial, changes in technology, changes in life style, etc. The
corporate planners are expected to generate a number of alternative courses of action for
top management. Top management begins to evaluate strategic alternatives in formalized
manner to planning and actions.
Phase 4 – Strategic management
Realizing that even the best strategic plans are worthless without the input and
commitment of lower level managers, top management forms planning groups of
managers and key employees at many levels, from various departments and workgroups.
They develop and integrate a series of strategic plans aimed at achieving the company’s
primary objectives. Strategic plans at this point detail the implementation, evaluation, and
 control issues. The sophisticated annual five year strategic plan is replaced with strategic
thinking at all levels of the organization throughout the year. Strategic management is a
planning procedure for identifying and focusing on the major changes to a corporation
that affect more than one profit center. This phase combine external reality and internal
resources to improve financial position.

3. Learning organization is a way to understand how everything is interconnected such as

people, the ideas, the context, history, goals etc. This is the practice of collaboration,
support, and developing capacity in everyone in the organization. The strategic choice
perspective goes one step further by proposing that not only do organizations adapt to a
changing environment, but they also have the opportunity and power to reshape their
environment. This perspective is supported by research indicating that the decisions of a
firm’s management have at least as great an impact on firm performance as overall
industry factors. Because of its emphasis on managers making rational strategic
decisions, the strategic choice perspective is the dominant one taken in strategic
management. Its argument that adaptation is a dynamic process fits with the view of
organizational learning theory, which says that an organization adjusts defensively to a
changing environment and uses knowledge offensively to improve the fit between itself
and its environment. This perspective expands the strategic choice perspective to include
people at all levels becoming involved in providing input into strategic decisions.
This approach to strategic management is better than the more traditional top-down
approach in which strategic planning is primarily done by top management because this
approach prospers all members share a common vision. Top-down approach relies on
higher authority figures to determine larger goals that will filter down to the tasks of
lower level employee. To be competitive in dynamic environments, corporations are
becoming less bureaucratic and more flexible. This means that corporations must develop
strategic flexibility (the ability to shift from one dominant strategy to another). People at
all levels, not just top management, participate in strategic management, helping scan the
environment for critical information, suggesting changes to strategies and programs to
take advantage of environmental shifts, and working with others to continuously improve
work methods, procedures, and evaluation techniques. Top managements are willing to
 consider alternative points of view. In agreement with the concept of organizational
learning theory, an increasing number of companies are realizing that they must shift
from a vertically organized, top-down type of organization to a more horizontally
managed, interactive organization. They are attempting to adapt more quickly to
changing conditions by becoming learning organizations.

4. Strategic decisions different from other kinds of decisions because strategic decisions are
formulated to achieve the company’s mission and objectives which determine the long
run direction of the company. It taken in accordance with organizational mission and
vision which deal with organizational growth. Strategic decisions have major resource
implications for an organization. It must be deal with harmonizing organizational
resource capabilities with the threats and opportunities. Some strategic decisions are
made in a flash by one person (often an entrepreneur or a powerful chief executive
officer) who has a brilliant insight and is quickly able to convince others to adopt his or
her idea. Other strategic decisions seem to develop out of a series of small incremental
choices that over time push an organization more in one direction than another. Unlike
many other decisions, strategic decisions deal with the long-run future of an entire
organization and have three characteristics:
a. Rare: Strategic decisions are unusual and typically have no precedent to follow.
b. Consequential: Strategic decisions commit substantial resources and demand a great
deal of commitment from people at all levels.
c. Directive: Strategic decisions set precedents for lesser decisions and future actions
throughout an organization.

5. The planning mode of strategic decision making is superior to the entrepreneurial and
adaptives modes when the environment is difficult to understand and as the organizations
grow large. While the entrepreneurial mode is focus on opportunities and adaptive mode
is characterized by rective solutions to existing problems, rather than a proactive search
for new opportunities. The planning mode involves the systematic gathering of
appropriate informatioan for situation analysis, the generation of feasible alternative
strategies, and the rational selection of the most appropriate strategy to develop feasible
options and select the best available options based on various environmental factors. It
includes both the proactive search for new opportunities and the reactive solution of
existing problems. In this mode, analyst or planner plays a major role in strategy making.
They focus on systematic analysis, particularly in the assessment of the costs and benefits
of competing proposals. In most situations, the planning mode is a more rational and thus
better way of making strategic decisions. Research indicates that the planning mode is not
only more analytical and less political than the other modes, but it is also more
appropriate for dealing with complex, changing environments.

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