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Strategic Management
Strategic Management Defined


The set of managerial decisions and actions that
determines the long-run performance of a corporation. It
includes:
    environmental scanning (internal & external)
    strategy formulation
    strategy implementation
    evaluation and control

It focuses on integrating management, marketing,
finance/accounting, production/operations, research and
development, and computer information systems to
achieve organizational success.
Benefits of Strategic Management


Clearer sense of strategic vision
Sharper focus on what is strategically
important
Improved understanding of rapidly
changing environment
Three Key Strategic Questions


Where is the organization now?
If no changes are made, where will the
organization be in one, two, five or ten
years? Are the answers acceptable?
If the answers are not acceptable, what
specific actions should management
undertake? What are the risks and payoffs
involved?
Strategic Management Model

Environmental                                Strategy                                                Strategy                  Evaluation
  Scanning                                  Formulation                                           Implementation               and Control

    External               Mission
                          Reason for
     Societal
                          existence
   Environment                         Objectives
  General Forces
                                       What results
                                       to
      Task                                            Strategies
                                       accomplish
   Environment
                                       by when        Plan to
 Industry Analysis
                                                      achieve the
                                                                      Policies
                                                      mission &
     Internal                                         objectives    Broad
                                                                    guidelines for   Programs
    Structure                                                       decision                                                   Process
Chain of Command                                                    making           Activities                                to monitor
                                                                                     needed to                                 performance
       Culture                                                                                       Budgets                   and take
                                                                                     accomplish
Beliefs, Expectations,                                                               a plan                                    corrective
                                                                                                    Cost of the
       Values                                                                                                                  action
                                                                                                    programs
                                                                                                                  Procedures
     Resources
                                                                                                                  Sequence
    Assets, Skills
                                                                                                                  of steps
   Competencies,
                                                                                                                  needed to
     Knowledge                                                                                                    do the job   Performance




                                                                        Feedback/Learning
Environmental Scanning


Monitoring, evaluating and disseminating information
from the environment to key people within the
corporation.

Scan via SWOT analysis:
   Look for opportunities/threats in the external
   environment

   Look for strengths/weaknesses in the internal
   environment
Strategy Formulation


The process of developing long-range plans to deal
effectively with environmental opportunities and threats in
light of corporate strengths and weaknesses.

Composed of:

  Mission
  Objectives
  Strategies
  Policies
Mission


The purpose or reason for the corporation’s
existence. It tells who the company is, what they
do as well as what they’d like to become.
Objectives


The end results of planned activity. They state
WHAT is to be accomplished by WHEN. They
should be quantified, if possible.

Should be specific, measurable and obtainable.
Strategies


A strategy is a comprehensive master plan stating HOW the
corporation will achieve its mission and objectives. There are three
types:

Corporate - a corporation’s overall direction and the management of
its businesses.

Business - emphasizes improving the competitive position of a
corporation’s products or services in a specific industry or market
segment.

Functional - concerned with developing a distinctive competence to
provide a company or business unit with a competitive advantage.
Hierarchy of Strategy

                              Corporate                               Corporate
                             Headquarters                             Strategy




                Strategic     Strategic       Strategic               Business
                                                                      (Division
                Business      Business        Business
                  Unit          Unit            Unit                   Level)
                                                                      Strategy




                                             Research      Human      Functional
Manufacturing      Finance    Marketing        and        Resources    Strategy
                                            Development
Policies


Broad guidelines for making decisions.

E.g. - 3M’s policy requiring researchers to spend
15% of their time working on something other
than their primary project.
Strategy Implementation


The process of putting strategies and policies into action
through the development of:

       Programs - statements of activities or steps needed to
       accomplish a single-use plan.

       Budgets - statements of a corporation’s
       programs in dollar terms.

       Procedures - systems of sequential steps or techniques
       that describe in detail how to perform particular tasks
       or jobs.
Evaluation and Control




The process of monitoring corporate
activities and performance results so that
actual performance can be compared with
desired performance.
Strategic Decision-Making Process

                                                 3(a)             3(b)

                                                  Scan and         Analyze
                                                  Assess           External
                                                  External         Factors:
                                                  Environment:     • Opportun-
                                                  • Societal         ities
                                                  • Task           • Threats



1(a)           1(b)            2                                  5(a)            5(b)            6(a)          6(b)            7                  8

                Examine and        Review                           Select                          Generate
                Evaluate the       Corporate                        Strategic      Review and       and          Select             Implement
 Evaluate                                                                          Revise as                     and                Strategies:        Evaluate
 Current        Current:           Governance:                      Factors                         Evaluate
                • Mission          • Board of                       (SWOT)         Necessary:       Strategic    Recommend          • Programs         and
 Performance                                                                       • Mission                     Best               • Budgets          Control
 Results        • Objectives         Directors                      in Light of                     Alterna-
                • Strategies       • Top Man-                       Current        • Objectives     tives        Alternative        • Procedures
                • Policies           agement                        Situation



                                                 4(a)             4(b)
                                                  Scan and
                                                  Assess           Analyze
                                                  Internal         Internal
                                                  Environment:     Factors:
                                                  • Structure      • Strengths
                                                  • Culture        • Weak-
                                                  • Resources        nesses




                                                               Strategy                                                           Strategy    Evaluation
                                                             Formulation:                                                      Implementation    and
                                                              Steps 1 – 6                                                          Step 7      Control:
                                                                                                                                                Step 8

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Strategic management ppt

  • 2. Strategic Management Defined The set of managerial decisions and actions that determines the long-run performance of a corporation. It includes: environmental scanning (internal & external) strategy formulation strategy implementation evaluation and control It focuses on integrating management, marketing, finance/accounting, production/operations, research and development, and computer information systems to achieve organizational success.
  • 3. Benefits of Strategic Management Clearer sense of strategic vision Sharper focus on what is strategically important Improved understanding of rapidly changing environment
  • 4. Three Key Strategic Questions Where is the organization now? If no changes are made, where will the organization be in one, two, five or ten years? Are the answers acceptable? If the answers are not acceptable, what specific actions should management undertake? What are the risks and payoffs involved?
  • 5. Strategic Management Model Environmental Strategy Strategy Evaluation Scanning Formulation Implementation and Control External Mission Reason for Societal existence Environment Objectives General Forces What results to Task Strategies accomplish Environment by when Plan to Industry Analysis achieve the Policies mission & Internal objectives Broad guidelines for Programs Structure decision Process Chain of Command making Activities to monitor needed to performance Culture Budgets and take accomplish Beliefs, Expectations, a plan corrective Cost of the Values action programs Procedures Resources Sequence Assets, Skills of steps Competencies, needed to Knowledge do the job Performance Feedback/Learning
  • 6. Environmental Scanning Monitoring, evaluating and disseminating information from the environment to key people within the corporation. Scan via SWOT analysis: Look for opportunities/threats in the external environment Look for strengths/weaknesses in the internal environment
  • 7. Strategy Formulation The process of developing long-range plans to deal effectively with environmental opportunities and threats in light of corporate strengths and weaknesses. Composed of: Mission Objectives Strategies Policies
  • 8. Mission The purpose or reason for the corporation’s existence. It tells who the company is, what they do as well as what they’d like to become.
  • 9. Objectives The end results of planned activity. They state WHAT is to be accomplished by WHEN. They should be quantified, if possible. Should be specific, measurable and obtainable.
  • 10. Strategies A strategy is a comprehensive master plan stating HOW the corporation will achieve its mission and objectives. There are three types: Corporate - a corporation’s overall direction and the management of its businesses. Business - emphasizes improving the competitive position of a corporation’s products or services in a specific industry or market segment. Functional - concerned with developing a distinctive competence to provide a company or business unit with a competitive advantage.
  • 11. Hierarchy of Strategy Corporate Corporate Headquarters Strategy Strategic Strategic Strategic Business (Division Business Business Business Unit Unit Unit Level) Strategy Research Human Functional Manufacturing Finance Marketing and Resources Strategy Development
  • 12. Policies Broad guidelines for making decisions. E.g. - 3M’s policy requiring researchers to spend 15% of their time working on something other than their primary project.
  • 13. Strategy Implementation The process of putting strategies and policies into action through the development of: Programs - statements of activities or steps needed to accomplish a single-use plan. Budgets - statements of a corporation’s programs in dollar terms. Procedures - systems of sequential steps or techniques that describe in detail how to perform particular tasks or jobs.
  • 14. Evaluation and Control The process of monitoring corporate activities and performance results so that actual performance can be compared with desired performance.
  • 15. Strategic Decision-Making Process 3(a) 3(b) Scan and Analyze Assess External External Factors: Environment: • Opportun- • Societal ities • Task • Threats 1(a) 1(b) 2 5(a) 5(b) 6(a) 6(b) 7 8 Examine and Review Select Generate Evaluate the Corporate Strategic Review and and Select Implement Evaluate Revise as and Strategies: Evaluate Current Current: Governance: Factors Evaluate • Mission • Board of (SWOT) Necessary: Strategic Recommend • Programs and Performance • Mission Best • Budgets Control Results • Objectives Directors in Light of Alterna- • Strategies • Top Man- Current • Objectives tives Alternative • Procedures • Policies agement Situation 4(a) 4(b) Scan and Assess Analyze Internal Internal Environment: Factors: • Structure • Strengths • Culture • Weak- • Resources nesses Strategy Strategy Evaluation Formulation: Implementation and Steps 1 – 6 Step 7 Control: Step 8