1.0 summary of unit 1

8/8/2019 1.0 Summary of Unit 1

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Concepts of Strategic Management

"Effective managers live in the present but concentrate on the future."


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A combination of the words stratos,

which meant army, and agein

meaning to lead.

What is Strategy?


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A strategy is a comprehensive action plan that

identifies:

Long-term direction and

Guides resource utilization to accomplishOrganizations goals with sustainable

competitive advantage.

What is Strategy?


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Process of formulating, implementing, and

evaluating, strategies to accomplish long-termgoals and sustain competitive advantage.

Strategic Management


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Strategic Audit

Challenges in Strategic Management

Process is more an art than

science

Should strategies be visible orhidden from stakeholders

Should process be more top-down

or bottom up


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Basic financialplanning:

-little analysis;

-info coming fromwithin the firm;

-only managers areinvolved;

-takes 2-3 weeks;

- one year plan

Forecast-basedplanning:

-more thoroughanalysis;

-internal info +environmental data;

-only managers areinvolved;

-takes one month;

-three to five years-plan

Strategicplanning:

-more thorough-analysis;

-internal info +environmental data +forecast future trends;

-made by planningstaff (top managers)+ consultants;

-meet once a year;

- five-year plans

Strategicmanagement:

-analysis of externaland internal

environment;

-implementation,evaluation and control;

-made by lower levelmanagers+

top managers+consultants;-throughout the year;

- five-year plans

Phases of Strategic Management


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Clear sense of strategic vision of the firm

Sharper focus on what is strategically important

Improved understanding of a rapidly changingenvironment

Benefits of Strategic Management


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Where is organization now?

If no changes are made, where will the

organization be in 1,2,5 years?

If the answers are not acceptable, what

specific actions should management

undertake?

What are risks and payoffs involved?

Main Questions


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EnvironmentalScanning

StrategyFormulation

StrategyImplementation

Evaluationand

Control

Basic Model of Strategic Management


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External: Social Environment

Environmental Scanning

External: Task Environment

Internal: Structure

Internal: Culture

Internal: Resources


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Opportunities & Threats (External)

Analysis of Trends:

Economic Social

Cultural

Demographic/Environmental

Political, Legal, Governmental

Technological

Competitors



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Strengths & Weaknesses (Internal)

Typically located in functional areas of the firm

Management

Marketing

Finance/Accounting

Production/Operations

Research & Development

Computer Information Systems



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Vision & Mission

Strategy Formulation

Objectives

Strategies

Policies


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Vision Statement

What do we want to become?

Mission Statement

What is our business?



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What is our business mission?

Who are our customers?

What do our customers consider value?

What have been our results?

What is our plan?

Key Strategic Questionsby Peter Drucker



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To be the happiest place on earth to stay (Taj Hotels)

To be the worlds best quick service restaurant.

Vision Examples


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We should build good ships here

at a profit if we can

at a loss if we must but always good ships

Mission Statement Example

-- Newport News Shipbuilding

(since foundation in 1886)


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Importance of Mission

MissionResource Allocation

Unanimity of Purpose

Organizational Climate

Focal point for workstructure

Benefits from a strong mission


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MissionElements

CustomersMarkets

Employees

PublicImage

Self-Concept Philosophy

SurvivalGrowthProfit

ProductsServices

Technology


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The end results of planned activity:

what is to be accomplished

by when it should be quantified if possible

increase profits 10% over last year

Objectives



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Types of Strategies

Operational Level

Functional Level

Division Level

CorpLevel

A Large Company



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Corporate strategy directs the organization as a

whole toward sustainable competitive advantage.

Business strategy sets the strategic direction for a

single business unit or product line.

Functional strategy guides the use of resources to

implement business strategy.

Strategies



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Being Better versus Being DifferentPlaying the Game Better

Focus on your existingstrategic position and try to

improve it and make it better.

Practices such as

restructuring, refocusing,

process reengineering, quality

programs, empowering

employees, and the like, all

aim to achieve this

Playing the Game Differently

Try to identify: new or unexploited customersegments to focus on (a new

WHO)

new customer needs that no

competitor is currently satisfying

(a new WHAT)

new ways of producing,delivering, selling or distributing

your products or services (a newHOW)

to be successful, a company must be able to do BOTH!

Constantinos Markides


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A policy is a broad guideline for decision making that

links the formulation of strategy with its implementation.

Maytag Company: Maytag will not approve any cost reduction proposalif it reduces product quality in any way.

3M: Researches should spend 15% of their time working on somethingother than their primary project.

GE: GE must be number one or two wherever it competes.

Intel: Intel cannibalizes its own product line with better products beforea competitor does so.

Policies



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Strategy Implementation

Programs

Budgets

Procedures


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A program is a statement of the activities or steps

needed to accomplish a single-use plan.

A budget is a statement of a corporations

program in terms of dollars.

Procedures are a system of steps or techniques

that describe in detail how a particular task or job

is to be done.

Strategy Implementation


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Strategy Evaluation & Control

Internal Review

External Review

Measuring Performance

Strategic audit


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Feedback/Learning Process

Internal/External Review

Revision of Decisions

Corrective Actions


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Rare: strategic decisions are unusual and typically haveno precedent to follow

Consequential: strategic decisions commit substantialresources and demand a great deal of commitmentfrom people on all levels.

Directive: strategic decisions set precedents for lesserdecisions and future actions throughout anorganization.

Strategic Decisions Characteristics:

IMPACT OF GLOBALISATION & e-Commerce


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IMPACT OF GLOBALISATION & e-CommerceDefinition: E-commerce (electronic commerce or EC) is the buying and sellingof goods and services on the Internet, especially the World Wide Web. Inpractice, this term and a newer term, e-business, are often usedinterchangeably. For online retail selling, the term e-tailing is sometimes used.

E-commerce can be divided into:

E-tailing or "virtual storefronts" on Web sites with online catalogs,sometimes gathered into a "virtual mall"

The gathering and use of demographic data through Web contacts

Electronic Data Interchange (EDI), the business-to-business exchangeof data

E-mail and fax and their use as media for reaching prospects andestablished customers (for example, with newsletters)

Business-to-business buying and selling

The security of business transactions
http://searchcio.techtarget.com/definition/e-businesshttp://searchcio.techtarget.com/definition/e-tailinghttp://searchdatacenter.techtarget.com/definition/EDIhttp://searchmobilecomputing.techtarget.com/definition/e-mailhttp://searchnetworking.techtarget.com/dictionary/definition/212098/fax.htmlhttp://searchnetworking.techtarget.com/dictionary/definition/212098/fax.htmlhttp://searchmobilecomputing.techtarget.com/definition/e-mailhttp://searchmobilecomputing.techtarget.com/definition/e-mailhttp://searchmobilecomputing.techtarget.com/definition/e-mailhttp://searchmobilecomputing.techtarget.com/definition/e-mailhttp://searchdatacenter.techtarget.com/definition/EDIhttp://searchcio.techtarget.com/definition/e-tailinghttp://searchcio.techtarget.com/definition/e-tailinghttp://searchcio.techtarget.com/definition/e-tailinghttp://searchcio.techtarget.com/definition/e-businesshttp://searchcio.techtarget.com/definition/e-businesshttp://searchcio.techtarget.com/definition/e-business


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Theories of Organisation Adaptation

Adaptation theory, also known as survival theory or survivalof the fittest, is an organism's ability to adapt to changes inits environment and adjust accordingly over time.Adaptations occur over generations of a species with those

traits that help an individual animal eat and mate mostprofusely being passed down from generation to generationuntil the whole species changes to be better suited to theirenvironment.

Similarly Organisation do requires to Adopt to Internal &External changes from time to time.


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Creating a Learning Organisation

Learning organizations are organizations where people continually

expand their capacity to create the results they truly desire, where newand expansive patterns of thinking are nurtured, where collectiveaspiration is set free, and where people are continually learning to see thewhole together.

Learning organizations are characterized by total employee involvementin a process of collaboratively conducted, collectively accountablechange directed towards shared values or principles.

Provide continuous learning opportunities.

Use learning to reach their goals.

Link individual performance with organizational performance. Foster inquiry and dialogue, making it safe for people to share openly

and take risks. Embrace creative tension as a source of energy and renewal.

Are continuously aware of and interact with their environment.


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Firm / Organisation & Its Environment

A firm or organisation environment is a disciplinedand a struggled environment where every personhas got its own responsibility to do the work

efficiently and make the environment attractive, sothat other team member can be encouraged.


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QUESTIONS PLEASE??

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