Strategic management and strategic planning
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Strategic management and strategic planning



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Strategic management and strategic planning Strategic management and strategic planning Presentation Transcript

  • Contents Definition What is strategic management? Key terms Difference between strategic management and strategic planning Basic strategic planning process Different models of strategic management Importance of strategic planning
  • Contents (continued) Why some firms do not do strategic management Key benefits Limitations Guidelines for successful strategic planning
  • Definition“Strategic management can be defined as the art andscience of formulating, implementing and evaluating cross-functional decisions that enable an organization to achieveits objectives.”by David, F.R. Strategic Management: Concepts and Cases“An integrative management field that combinesanalysis, formulation, and implementation in the quest forcompetitive advantage.”by Rothaermel, F. T. (2012). Strategic Management: Concepts and Cases
  • Definition (cont.)“Strategic planning is defined as the process by whichmanagers of the firm analyze the internal and externalenvironments for the purpose of formulating strategies andallocating resources to develop a competitive advantage inan industry that allows for the successful achievement oforganizational goals.”by Cox, Daspit, McLaughlin and Jones (2012)“Strategic management includes understanding thestrategic position of an organisation, making strategicchoices for the future and managing strategy in action.”by Johnson, Scholes and Whittington (2008)
  • What is Strategic Management?The general purpose of strategic planning is tocombine the energy of organization’s functional areasinto one focused effort to achieve superiorperformance. It is usually done through the manysteps of the process. Strategy Initial Situation Strategy Implementa Strategyassessment Analysis Formulation Monitoring tion
  • What is Strategic Management? (continued)In essence, it answers the following 3 questions: Where the organization is at the moment? Where does it want to go? How it will get there?
  • Key termsCompetitive advantage
  • Key terms (cont.) StrategistsThe people who craft strategies and execute them in an organization.
  • Key terms (cont.) Vision and mission statementsVision – what do we want to become?Mission – what is our business?
  • Key terms (cont.) SWOT MatrixS – StrengthsW – WeaknessesO – OpportunitiesT - Threats
  • Key terms (cont.) External forces
  • Key terms (cont.) Internal forcesValue chain activities Organizational cultureCore competencies Human resources Management Capabilities Firm Marketing Operations Assets Finances R&D
  • Key terms (cont.) ObjectivesObjectives – the goals that organization wants to achieve in short or long-term
  • Key terms (cont.) PoliciesPolicies – are the tools usedto achieve objectives. Theyinclude guidelines, rulesand procedures.
  • Difference between strategic management and strategic planningBoth, strategic management and strategic planning, termsmean the same! Strategic Management is used in Strategic Planning is used in Academic environment Business environment
  • Basic strategic planning process Initial Assessment Situation Analysis Strategy Formulation Strategy Implementation Strategy Monitoring
  • Different models of strategic management David’s model
  • Different models of strategic management (2) Rothaermel’s model
  • Different models of strategic management (3) Thompson’s model
  • Importance of strategic planning Requirement for sustained competitive advantage Views things from broader perspective Facilitates collaboration
  • Importance of strategic planning (cont.) Requirement for sustained competitive advantageSome companies may achieve competitive advantagewithout thorough strategic planning but for the mostbusinesses out there it is vital to plan strategically, i.e.analyze, create, implement and monitor theirstrategy, and do this continuously.
  • Importance of strategic planning (cont.) Views things from broader perspectiveThe other reason why the organizations don’t simplyrely on their finances, marketing or operationsfunctional areas to bring the competitive advantage isthat managers of each area often view things only fromtheir own specific angle, which is too narrow view forthe whole organization to rely upon.Only the managers (e.g. CEOs or strategic planners)who see the whole picture of the company and itssurrounding environments can make the decisionsthat bring the competitive advantage.
  • Importance of strategic planning (cont.) Facilitates collaborationNowadays, most companies involve middle managersof functional areas into the process of formulatingstrategic plan. Middle managers are the people whoimplement the strategies set out in a plan and if theyaren’t involved in making the plan, then they aren’t socommitted to support it.
  • Why some firms do not do strategic management Poor reward structures Waste of time Too expensive Laziness Fear of failure Overconfidence Prior bad experience Difference in opinions
  • Key benefits1. Defines company’s vision, mission and future goals.2. Identifies the suitable strategies to achieve the goals.3. Improves awareness of the external and internal environments, and clearly identifies the competitive advantage.4. Increases managers’ commitment to achieving the company’s objectives.5. Improves coordination of the activities and more efficient allocation of company’s resources.
  • Key benefits (cont.)6. Better communication between managers of the different levels and functional areas.7. Reduces resistance to change by informing the employees of the changes and the consequences of them.8. Strengthens the firm’s performance.9. On average, companies using strategic management are more successful than the companies that don’t.10. Strategic planning allows the organization to become more proactive than reactive.
  • Limitations The costs of engaging in strategic management are huge. The process is complex. Success is not guaranteed.
  • Guidelines for successful strategic planning It should be implemented in the organization rather than left on paper. Managers and employees must understand the process and be involved in it. It cannot become too bureaucratic, formal and too rigid process Managers involved in strategic management must know all the required information as soon as possible and use it to strengthen firm’s strategic efforts.
  • Thank you for reading To download this presentation visit our website: gic-management/strategic-management-and- strategic-planning.html For more on strategic management process: gic-management/strategic-management-and- strategic-planning-process.html More of our slideshows can be found in our profile!