What is Strategic
Management
 Strategic Management is what managers do to
develop the organization’s strategies.
 Strate...
Why is Strategic
Management Important?
There are three reasons
 The most significant one is that it can make a
difference...
Strategic Management
Process

External Analysis
•
Opportunities
•
Threats
Identify the
organization’s current
mission, goa...
Components of a Mission
Statement
Components

Questions

Customers

Who are the firm’s customers?

Markets

Where does the...
Corporate Strategies
 Corporate Strategy is one that determines what
business a company is in or wants to be in, and
what...
Types of Organizational
Strategies

Multibusiness
Corporation

Corporate

Strategic
Business Unit
1

Competitive

Function...
What are the Types of
Corporate Strategy?
The three main types of corporate strategies are:
 Growth
 Stability
 Renewal
How Are Corporate
Strategies Managed?
High

Low

Low

Anticipated Growth Rate

High

Market Share

Stars

Question
Marks

...
Competitive Strategies
 A competitive strategy is a strategy for how an
organization will compete in its business(es).
 ...
The Role of Competitive
Advantage
 Competitive advantage is what sets an organization
apart – that is, its distinctive ed...
Quality as a Competitive
Advantage
 Emphasis on quality is still important today
 If implemented properly, quality can b...
Sustaining Competitive
Advantage
 Every organization has resources (assets) and
capabilities (how work gets done)
 Not e...
Five Forces Model
Threat of New
Entrants

New
Entrants

Bargaining
Power of Buyers
Suppliers

Bargaining
Power of
Supplier...
Choosing a Competitive
Strategy
 Cost Leadership Strategy is when an organization competes on
the basis of having the low...
The Need for Strategic
Leadership
 Strategic Leadership is the ability to anticipate,
envision, maintain flexibility, thi...
Effective Strategic Leadership
Determining the organization’s
purpose or vision
Exploiting and maintaining the
organizatio...
The Need for Strategic
Flexibility
 Strategic Flexibility is the ability to recognize major
external changes, to quickly ...
Developing Strategic
Flexibility
 Encourage leadership unity
 Keep resources fluid
 Have the right mindset
 Monitoring...
Important Organizational
Strategies for Today’s
Environment
Three strategies that are important in today’s
environment:
 ...
E-Business Strategies
 Use e-business strategies to develop a sustainable
competitive advantage
 A cost leader can use e...
Customer Service
Strategies
 Having effective customer communication system is
an important customer service strategy
 A...
Innovation Strategies
 The organization is going to focus their innovation efforts
on basic scientific research, product ...
First-Mover
Advantages

Disadvantages

Reputation for being innovative and
industry leader

Uncertainty over exact directi...
Strategic management overview
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Strategic management overview

  1. 1. What is Strategic Management  Strategic Management is what managers do to develop the organization’s strategies.  Strategies are the plans for how the organization will do whatever its in business to do, how it will compete successfully, and how it will attract and satisfy its customers in order to achieve its goal. Stephen P. Robbins and Mary Coulter, “Management Eleventh Edition”, 2012
  2. 2. Why is Strategic Management Important? There are three reasons  The most significant one is that it can make a difference in how well an organization performs  The fact that managers in organizations of all types and sizes faces continually changing situations  Organizations are complex and diverse
  3. 3. Strategic Management Process External Analysis • Opportunities • Threats Identify the organization’s current mission, goals, and strategies SWOT Analysis InternalAnalysis • Strengths • Weaknesses Formulate Strategies Implement Strategies Evaluate Results
  4. 4. Components of a Mission Statement Components Questions Customers Who are the firm’s customers? Markets Where does the firm compete geographically? Concern for survival, growth, and profitability Is the firm committed to growth and financial stability? Philosophy What are the firm’s beliefs, values, and ethical priorities? Concern for public image How responsive is the firm to societal and environmental concerns? Products or services What are the firm’s major products or services? Technology Is the firm technologically current? Self-concept What are the firm’s major competitive advantage and core competencies?
  5. 5. Corporate Strategies  Corporate Strategy is one that determines what business a company is in or wants to be in, and what it wants to do with those businesses.
  6. 6. Types of Organizational Strategies Multibusiness Corporation Corporate Strategic Business Unit 1 Competitive Functional Research and Development Strategic Business Unit 2 Strategic Business Unit 3 Manufacturing Marketing Human Resources Finance
  7. 7. What are the Types of Corporate Strategy? The three main types of corporate strategies are:  Growth  Stability  Renewal
  8. 8. How Are Corporate Strategies Managed? High Low Low Anticipated Growth Rate High Market Share Stars Question Marks Cash Cows Dogs
  9. 9. Competitive Strategies  A competitive strategy is a strategy for how an organization will compete in its business(es).  When an organization is in several different business, those single business that are independent and that have their own competitive strategies are referred to as strategic business units (SBUs)
  10. 10. The Role of Competitive Advantage  Competitive advantage is what sets an organization apart – that is, its distinctive edge.  That distinctive edge can come from the organization’s core competencies by doing something that others cannot do or doing it better that others can do it.
  11. 11. Quality as a Competitive Advantage  Emphasis on quality is still important today  If implemented properly, quality can be a way for an organization to create a sustainable competitive advantage  That’s why many organizations apply quality management concepts
  12. 12. Sustaining Competitive Advantage  Every organization has resources (assets) and capabilities (how work gets done)  Not every organization is able to effectively exploit its resources and to develop the core competencies that can provide it with a competitive advantage  It’s not enough simply to create a competitive advantage  The organization must be able to sustain that advantage
  13. 13. Five Forces Model Threat of New Entrants New Entrants Bargaining Power of Buyers Suppliers Bargaining Power of Suppliers Intensity of Rivalry Among Current Competitors Buyers Threat of Substitutes Substitutes
  14. 14. Choosing a Competitive Strategy  Cost Leadership Strategy is when an organization competes on the basis of having the lowest costs (costs or expenses, not prices) in its industry  Differentiation Strategy is when an organization competes by offering unique products that are widely valued by customers  Focus Strategy involves a cost advantage (cost focus) or a differentiation advantage (differentiation focus) in a narrow segment or niche  Stuck in the middle is what happened if an organization can’t develop a cost or a differentiation advantage  Functional Strategy is the strategy used by an organization’s various functional departments to support the competitive strategy
  15. 15. The Need for Strategic Leadership  Strategic Leadership is the ability to anticipate, envision, maintain flexibility, think strategically, and work with others in the organization to initiate changes that will create a viable and valuable future for the organization
  16. 16. Effective Strategic Leadership Determining the organization’s purpose or vision Exploiting and maintaining the organization’s core competencies Establishing appropriately balanced organizational controls Emphasizing ethical organizational decisions and practices Effective Strategic Leadership Reframing prevailing views by asking penetrating questions and questioning assumptions Creating and maintaining organizational relationships Developing the organization’s human capital Creating and sustaining a strong organizational culture J.P.Wallman, 2010
  17. 17. The Need for Strategic Flexibility  Strategic Flexibility is the ability to recognize major external changes, to quickly commit resources, and to recognize when a strategic decision isn’t working
  18. 18. Developing Strategic Flexibility  Encourage leadership unity  Keep resources fluid  Have the right mindset  Monitoring and measuring results  Open about disclosing and sharing negative information  Have multiple alternatives  Lear from mistakes Y.L. Doz and M. Kosonen, 2010
  19. 19. Important Organizational Strategies for Today’s Environment Three strategies that are important in today’s environment:  E-Business Strategies  Customer Service Strategies  Innovation Strategies
  20. 20. E-Business Strategies  Use e-business strategies to develop a sustainable competitive advantage  A cost leader can use e-business to lower cost in a variety ways  A differentiator needs to offer products or services that customers perceive and value as unique  A focuser targets a narrow market segment with customized products and common interest  A clicks-and-bricks strategy is an important e-business strategy
  21. 21. Customer Service Strategies  Having effective customer communication system is an important customer service strategy  An organization’s culture is important to providing excellent customer service
  22. 22. Innovation Strategies  The organization is going to focus their innovation efforts on basic scientific research, product development, or process improvement  Two types of innovation strategies  Innovation emphasis, is focus on process development  Innovation timing, is focus on becoming first mover  First mover is an organization that’s first to bring a product innovation to the market or to use a new process innovation
  23. 23. First-Mover Advantages Disadvantages Reputation for being innovative and industry leader Uncertainty over exact direction technology and market will go Cost and learning benefits Risk of competitors imitating innovations Control over scarce resources and keeping competitors from having access to them Financial and strategic risks Opportunity to begin building customer relationships and customer loyalty High development costs

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