Overview

1
Overview

• Why do some firms succeed while others fail?
• A central objective of strategic management is to
  learn why this happens.
• What is strategy?
• An action a company takes to attain superior
  performance.
• What is the strategic management process?
• The process by which managers choose a set of
  strategies for the enterprise to pursue its
  vision.

2
Strategic Planning

• Rational planning by top management?

Basic Strategic Planning Model
Defining the Mission and Setting Top-Level Goals
External Analysis of Opportunities and Threats
Internal Analysis of Strengths and Weaknesses
Selection of Appropriate Strategies
Implementation of Chosen Strategies
3
The Main Components of the Strategic Planning
Process
FIGURE 1.1
4
Mission and Goals

• Mission
• Sets out why the organization exists and what it
  should be doing.
• Major goals
• Specify what the organization hopesto fulfill in
  the medium to long term.
• Secondary goals
• Are objectives to be attained that lead to
  superior performance.

5
External Analysis

• Identify strategic opportunities and threats in
  the operating environment.

Immediate (Industry)
Macroenvironment
National
6
Internal Analysis

• Identify strengths
• Quality and quantity of resources available
• Distinctive competencies
• Identify weaknesses
• Inadequate resources
• Managerial and organizational deficiencies

7
SWOT and Strategic Choice

• Strengths and Weaknesses
• Opportunities and Threats(SWOT Analysis)

Strategic ChoiceBusinessFunctionalGlobalCorpor
ate
8
Business-Level Strategies

• Cost leadership
• Attaining, then using the lowest total cost basis
  as a competitive advantage.
• Differentiation
• Using product features or services to distinguish
  the firms offerings from its competitors.
• Market niche focus
• Concentrating competitively on a specific market
  segment.

9
Functional-Level Strategies

• Focus is on improving the effectiveness of
  operations within a company.
• Manufacturing
• Marketing
• Materials management
• Research and development
• Human resources

10
Global-Level Strategies

• Multidomestic
• International
• Global
• Transnational

11
Corporate-Level Strategies

• Vertical integration
• Diversification
• Strategic alliances
• Acquisitions
• New ventures
• Business portfolio restructuring

12
Strategy Implementation

• Designing organizational structure
• Designing control systems
• Market and output controls
• Bureaucratic controls
• Control through organizational culture
• Rewards and incentives
• Matching strategy, structure, and controls
• Congruence (fit) among strategy, structure, and
  controls

13
Managing Strategic Change

• The only constant is change.
• Success requires adapting strategy and structure
  to a changing world.
• The feedback loop in strategic planning.

14
Strategic Leadership

• Vision, eloquence, and consistency
• Commitment to the vision
• Being well informed
• Willingness to delegate and empower
• Astute use of power
• Emotional intelligence

15
Strategy as an Emergent Process

• Strategy making in an unpredictable world
• Creates the necessity for flexible strategic
  approaches.
• Strategy making by lower-level managers
• Strategy evolves through autonomous action.
• Serendipity and strategy
• Accidental discoveries and happenstances can have
  dramatic effects on strategic direction.
• Intended and emergent strategies
• Realized strategies are combinations of intended
  and emergent strategies.

16
The Strategic Management Process for Intended and
Emergent Strategies
FIGURE 1.4
17
Strategic Planning in Practice

• Planning under uncertainty
• Scenario planning for dynamic environmental
  change
• Ivory tower planning
• Lack of contact with operational realities
• The importance of involving operating managers
• Procedural justice in the decision-making process
• Engagement, explanation, and expectations
• Planning for the present Strategic Intent
• Recognition of the static nature of the strategic
  fit model
• Strategic intent in focusing the organization on
  winning by achieving stretch goals