1-1

Session 2

The Strategic Management

Model

1-2

Learning Objectives

1. Understand the different levels of strategy: corporate, business and functional

2. Describe a comprehensive model of strategic decision making that will provide the framework for our semester

3. Appreciate the importance of strategic management as a process

1-3

Three Levels of Strategy

• Corporate level: board of directors, CEO & administration [Highest]

• Business level: business and corporate managers [Middle]

• Functional level: Product, geographic, and functional area managers [Lowest]

1-4Alternative Strategic Management

Structures

1-5Strategic Management Decisions: Corporate Level Strategy

• Domain Definition: Where to Compete?• Defines Scope of Firm• In Which Industries Will We Compete?• Must Be Reflected in Mission• Choice of businesses, entry (diversification)

and exit (divestiture) decisions, resource allocation/ priorities for growth

• Corporate Financial: Dividend Policies, Sources of Long-term Financing

1-6Strategic Management Decisions: Business Level Strategy

• Domain Navigation: How to Compete?• Competitive Strategy • Help bridge decisions at the corporate and

functional levels• Less costly, risky, and potentially profitable

than corporate-level decisions• More costly, risky, and potentially profitable

than functional-level decisions• Include decisions on plant location, marketing

segmentation, and distribution

1-7Strategic Management Decisions: Functional Level Strategy

• Implement the overall strategy formulated at the corporate and business levels

• AKA Tactics• Involve specific action-oriented and

operational issues • Relatively short range (typically within the

coming year) and low risk• Modest costs: depend upon available resources• Relatively concrete and quantifiable

1-8

Strategic Management Process

• Businesses vary in formulation and other processes

• The basic components of the models used to analyze strategic management are similar

• Strategic management is a process—a flow of information through interrelated stages of analysis toward the achievement of some goal

1-9Phases of Strategic Management Process

• Formulation

• Implementation

• Control

1-10

Strategic Management Model

1-11

Word (Acronym) of the Day

SWOT ANALYSIS

Strengths

Weaknesses

Opportunities

Threats

1-12Components of Strategic

Management Model• Company Mission

• External Analysis

• Long-Term Objectives

• Short-Term Objectives

• Policies Empowering Action

• Strategic Control & Continuous Improvement

• Internal Analysis• Strategic Analysis &

Choice• Generic & Grand

Strategies• Functional Tactics• Restructuring,

Reengineering & Refocusing