Derived from the Greek word strategos which means “the general’s view” (the CEO’s view). In business context, the idea of strategy, therefore, suggests a big perspective on the firm and its context. It is a comprehensive master plan that states how the corporation will achieve its mission and objectives
Policy is a broad guideline for decision making that links the formulation of strategy with its implementation whereas a strategy is a comprehensive plan that states how a corporation will achieve its mission. Policies are the means by which annual objectives will be achieved whereas strategies are the means by which long term objectives will be achieved.
Policies are guides to decision making and address repetitive/recurring situations whereas strategies are potential actions that require top management decisions and large amount of the firm’s resources. Policies include guidelines, rules & procedures established to achieved stated objectives whereas strategies (business) include, geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation and joint venture.
It is defined as the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives. It is synonymous with the term “strategic planning” which is commonly use in the business world.
The Evolution of Strategic Management The Evolution of Strategic Management 1950s 1960s Early-mid Late1970s Late 1980s Late 1990s 1970s early 1980s early 1990s early 2000sDOMINANT Budgetary Corporate Corporate Analysis of Quest for Strategic THEME planning & planning strategy industry & competitive innovation control competition advantage The “New Economy” MAIN Financial control Planning growth Diversifica- Positioning Competitive Innovation & ISSUES ion advantage knowledge Budgeting Forecasting & Portfolio Analysis of Resource DynamicCONCEPTS project appraisal investment planning. industry & analysis. sources of & planning Synergy competition Case advantageECHNIQUES market competences Knowledge share management cooperation Emphasis on Rise of Diversifi- Industry/market Restructuring Virtual orga-MPLEMENT- financial corporate planning cation. selectivity. BPR. nization. ATION management departments Quest for Active asset Refocusing Alliances & formal global management Outsourcing Quest for planning market share critical mass
The process of conducting research and gathering and assimilating external information. It is also called “industry analysis”.
Vision & Mission Opportunities & Threats Strengths & Weaknesses Long Term Objectives Alternative Strategies Strategy Selection(for reading)
Issues include: • What new businesses to enter • What businesses to abandon • How to allocate resources • Expand operations or diversify • Enter international markets • Merge or form joint venture • Avoidance of hostile takeover
Programs Strategy Budgets/Implementation Resource Allocation Policies and Procedures
Action Stage of strategic management: • Most difficult stage • Mobilizing employees and managers • Interpersonal skills are critical • Consensus on pursuing goals
Final stage of strategic management: • All strategies subject to future modification • Success today is no guarantee of success tomorrow • Success creates new and different problems • Complacency leads to demise
Allows company to be more proactive Allows company to initiate and influence activities It promotes unity to the organization It helps the employees and managers understand other’s view and what the organization is doing and why. Thus, commitment to the company becomes stronger.(require more reading)
More profitable and successful Shows significant improvement in sales, profitability and productivity. Exhibit long term financial performance Good anticipation of short and long term consequences.