STRATEGIC MANAGEMENT

Strategic Management
Strategic Management is concerned with the determination of the basic long-term goals and the objectives of an enterprise and the adoption of course of action and allocation of resources necessary for carrying out of these goals.

Strategic Management
Strategic management is a process of formulating, implementing and evaluating cross- functional decisions that enable an organization to achieve its objective. - Fed R David

 Strategic management is the set of decisions and actions resulting in the formulation and implementation of plans designed to achieve a companys objectives. - Pearce and Robinson

Characteristics of Strategic Management

Long-term Direction Recognizes Change Oriented towards the future External Emphasis Concerned with scope of the organization Major Impact on the Organization Significant Risk

Characteristics of Strategic Management

Major Financial or other resources implications Matching resources with the environment Stretching resources and competences Influenced by stakeholders Affect operational decisions Competitive Advantage Integrating Intuition and Analysis

Process of Strategic Management

Elements of Strategic Management: Strategic Analysis Strategic Choice Strategy Implementation Strategy Evaluation and Control

Strategic Management Process

Agreement on and initiation of the Strategic management process The organization determines vision, mission, goals and objectives The organization analyzes both external and internal environment

Strategic Management Process

The organization establishes long-term goals and objectives The organization chooses from alternative course of action The organization implements the choices to achieve strategic fit The organization monitors the implementation activity

Strategic Management Model

The components of the model are: Develop vision and mission statements Analyze external environment Analyze internal environment Establish long-term objectives Generate , analyze and select strategies Implement the chosen strategies Evaluate and control implementation

Strategic Management
Approaches: Entrepreneurial mode Adaptive mode Planning mode

Strategic Management
Prescriptive and Emergent Approaches: Companies argue that they need to have a Strategic Plan in order to plan ahead in terms of both the competitive environment and also of resources. This involves a formal planned process also called prescriptive process.

Strategic Management
Prescriptive and Emergent Approaches: Companies argue that it is important to sense what is happening in fast- changing markets and be able to respond to this. It is better to be more creative in strategy development and to take an emergent approach to the process of strategy development.

Strategic Management

Benefits: It reduces uncertainty It provides a link between long and short terms It facilitates control It facilitates measurement

Concept of Strategy

Elements of a strategy: Goals Scope Competitive Advantage Logic

Concept of Strategy

Levels of Strategy: Corporate- level strategy Business level strategy Functional strategy Operational strategy

Strategic Analysis and Choice

Strategic analysis and choice is essentially a decision making process. This involves generating feasible alternatives, evaluating those alternatives and choosing a specific course of action that could best enable the firm to achieve its mission and objectives.

Strategic Analysis and Choice

According to Glueck and Jauch, strategic choice is the decision to select from among the alternatives considered, the strategy which will best meet the enterprise objectives.

Strategic Analysis and Choice

This decision making process consists of four distinct steps: Focusing on a few alternatives Considering the selection factors Evaluating the alternatives Making the actual choice

Strategic Analysis and Choice

For deciding on a reasonable number of alternatives: Gap analysis desired performance - projected performance Business definition customer needs - customer groups - alternative technologies

Portfolio Analysis
Portfolio analysis is an analytical tool which views a corporation as a basket or portfolio of products or business units to be managed for the best possible returns.

Portfolio Analysis
The aim of portfolio analysis is: To analyze its current business portfolio and decide which business should receive more or less investment. To develop growth strategies for adding new businesses to the portfolio To decide which business should no longer be retained

Portfolio Analysis

Four basic concepts: Profitability Cash flow Growth Risk

 BCG Matrix GE Nine- cell Matrix two key variables: - Business strength - Industry attractiveness

The business strength is measured by: Relative market share Profit margins Ability to compete on price and quality Knowledge of customer and market Competitive strengths and weaknesses Technological capacity Caliber of management

Industry attractiveness is measured by: Market size and growth rate Industry profit margin Competitive intensity Economies of scale Technology Social, environmental, legal and human aspects