Strategic Management Engineering Management ELE 2EMTPresentation Transcript
Strategic Management Engineering Management ELE 2EMT George Alexander [email_address] http://www.latrobe.edu.au/eemanage/ Lecture 7 14 September 2007
The planning process
Major comp onents
Nature of organisational goals
Benefits of goals, levels of goals
Goals and performance
Goal content, goal commitment, work behaviour, other process components
Possible problems with goals
Linking goals and plans
Levels of plans, extent of recurring use, time spans of goals and plans, plans and promoting innovation, possible obstacles to planning
Management by Objectives
Steps in the MBO process
Strengths and weaknesses of MBO
The concept of strategic management
Competitive analysis in strategy formulation
Formulating corporate level strategy
Formulating business level strategy
Business Planning Framework
Where are we now?
What business are we in?
Where do we want to go?
What is necessary to close the gap?
How do we make it all happen?
The Concept of Strategic Management
Most well-run organisations try to develop and follow strategies, which are large-scale action plans for interacting with the environment to achieve long-term goals ( Jauch & Glueck 1988; Pearce & Robinson 1988 ).
It is important to recognise that strategic management is oriented towards:
Achieving long-term goals,
Weighs important environmental elements,
Considers major internal organisational characteristics, and
Involves specific strategy development.
The Strategic Management Process
Identify organisational mission and strategic goals
Perform competitive situation analysis, considering both external environment and internal organisational factors.
Develop the strategies to reach the strategic goals
Effective implementation of the strategic plan
Brilliantly formulated strategies will not succeed if they are implemented ineffectively
The Importance of Strategic Management
The process helps organisations to identify and develop a competitive advantage.
It provides direction such that the organisation knows where to expend its efforts.
It demonstrates the need for innovation in the organisation – new ways of thinking and doing things.
It can involve managers at various levels in the planning process. This makes it more likely that the plans will be understood and committed to.
Identify current mission and strategic goals
Conduct competitive analysis:
Develop specific strategies:
carry out strategic plans maintain strategic control assess organisational factors assess environmental factors Strategy implementation Strategy formulation
Conducting Competitive Analysis
Strengths on which to capitalise,
Weaknesses you need to address,
Opportunities available to you, and
Threats that could adversely affect you.
SWOT Analysis Key Strengths Key Weaknesses Key Opportunities Key Threats Most Likely Possible Possible Unlikely Internal Factors External Factors
Organisational Assessment Organisational culture Information systems (up-to-date)? Liquidity (and other financial dimensions) Skills levels (competency profiles ) Organisational structure (flexibility ) Tangible assets (buildings and equipment) Sales and distribution channels The organisation’s strengths and weaknesses:
Environmental Assessment The organisation Social Analysis Political & Regulatory Analysis Human Resources Analysis Industry and Market Analysis Competitor Analysis Economic Analysis Technological Analysis
Levels of Strategy
the businesses an organisation will operate
co-ordination of strategies
allocation of resources
strategic business units
focusing on a particular business
managing functional area to support business-level strategy
the day-to-day management of business
Formulating functional-level strategy
Functional level strategies spell out
how functional areas can bolster
Example: An R&D department might accelerate innovation to provide new products before competitors.
CORPORATE STRATEGY Operations Management Strategy R & D Strategy Financial/ Accounting Strategy Marketing Strategy Human Resources Strategy Business 1 Strategy Business 2 Strategy Business 3 Strategy Corporate Level Functional Level Business Level
Co-ordinating Levels of Strategy
Co-ordinating strategies across the levels is critical to maximising strategic impact
Business-level strategy is enhanced when functional-level strategies support it.
Corporate-level strategy will have more impact when supported by business-level strategies complementing each other.
Thus, the three levels must be co-ordinated as part of the Strategic Management.