AGENDA 09/09 & 09/10

Nature of Strategic Challenge & Strategic Management

The Strategy Concept and ProcessStrategic Plan - Team Meetings

Strategic ChallengeStrategic Challenge

To survive To grow

To die

In order to survive and to prosper (meet the strategic challenge) every organization must:

Develop and maintain an alignment with the environment Create the future

Define and growInternal Competencies

Meeting the Strategic Challenge

1950s

Finding a profit-producing match between products/services of the organization and the needs of the market.

1960s

Transforming the internal structure and competencies of the organization.

1970s & 1980s

Planning interfaces with suppliers because of limited resources.

Acknowledging power of society/environment to impact an organization.

Recognizing the global nature of competition.

1990s

Realizing that the speed of change is often greater than the speed of strategic response.

Focusing competitive advantage on information.

2000s

Arenas that need to be addressed if the organization is to meet

the strategic challenge Products/Services Competencies Inputs Society Globalization Change Information Future

What is

Strategic Management?

Early Definition

Determination of basic long-term goals and objectives

Adoption of courses of action Allocation of resources necessary for carrying out

these goals

Chandler, A. 1962. Strategy & Structure: Chapters in the History of the Industrial Enterprise, Cambridge: M.I.T. Press, p.13

Another way of saying it Art and Science Formulating, Implementing, and Evaluating Cross-Functional Decisions Enabling an Organization To set and achieve its

Mission and Objectives MissionObjectives

Decisions

Actions

Environmental Scanning

Evaluation

Art and Science

Intuition (art)– past experiences, judgment, feelings

– particularly useful for making decisions in situations of great uncertainty or little precedent.

Analysis (science)– logical, systematic approach

– organization of quantitative information/data to be used for decision making.

Emphasis of Strategic Management

VALUE CREATION– What is Value?

CONFIGURATION– Multimarket scope

product, geographic, and vertical boundaries

COORDINATION– Management of activities and businesses within

company

Strategic Management is a Process

Process: flow through interrelated stages toward the achievement of an aim

The flow of information involves historical, current, and forecasted data on the environment and operations of an organization.

Never finished.

Implications of viewing Strategic Management as a Process

Inter-relatedness– A change in one part affects several others

Formulation and Implementation are often interwoven

Allowance for continuous feedback and updates

Communication & Commitment

Strategic Management

involves long-term, future-oriented, complex decision making

requires considerable resources participation at all levels of an organization

– Top management is essential

Specifics

I. Strategy Formulation

1. Developing a business vision/mission– Mission = enduring statements of purpose that

distinguish one business from other firms. 2. Establishing long-term objectives

– Specific results - more than one year.– Challenging, measurable, reasonable, clear.– Established for overall corporation and each

division

3. Identifying external opportunities and threats...could benefit or harm an organization in the future.– Macro Environment– economic, social, cultural, demographic, environmental,

political, legal, governmental, and technological

– largely beyond the control of the organization

– Micro Environment– Industry

– Competitive trends & events

4. Determining internal strengths and weaknesses– Controllable activities within an organization

that are performed especially well or poorly.– Competencies (skills) – Functional activities are areas where strengths

or weaknesses arise.

Strategy Formulation Con’t

5. Generate and choose corporate strategies– Means by which long-term objectives will be

achieved.

II. Strategy Implementation Establish annual objectives

– Short-term milestones that organizations must achieve to reach long-term objectives.

– Measurable and established at corporate, business, and functional levels.

Devise policies– Guidelines, rules, procedures

Structure alignment Mobilizing all functions to put formulated strategies

into action.

III. Strategy Evaluation

Assess the outcomes of formulation and implementation.

Three fundamental activities– reviewing external and internal factors– measuring performance– taking corrective actions

Who usesStrategic Management

Profit– Big Corporations– Medium Size Corporations– Small Businesses

Government Nonprofit Individual Career Management

Levels of FORMALITY will vary

Whenis

Corporate Strategy Practiced?

Real Time Always

Wherein Larger Organizations is

Strategic Management Practiced? Corporate Level

– Board of Directors; CEO; Administrative Officers– Determine mission; set objectives and strategies

Business Level– How Firm will compete in selected

product/market arenas Functional Level

– Execute the plans