Strategic Management in Action

1
Strategic Management in Action
1
Overview of Strategic Management
2
WHAT IS STRATEGIC MANAGEMENT?
Strategy Planning vs. Strategic Management
3
The Basics of Strategy Strategic Management

• Definition of Strategy

A series of goal-directed decisions and actions
matching an organization's skills and resources
with the opportunities and threats in its
environment
4
The Basics of Strategy Strategic Management

• Strategy Involves

Organizations goals Goal-directed
action Related decisions and actions Internal
strengths External opportunities and threats
5
The Basics of Strategy Strategic Management

• Definition of Strategic Management
• Decisions and actions where organizations

Analyze current situation Develop appropriate
strategies Put strategies into
action Evaluate, modify, or change strategies
6
The Basics of Strategy Strategic Management

• Strategic Management entails

Basic managerial functions Planning Orga
nizing Implementing Controlling
7
The Strategic Management Process

• Strategic Management in Action

Analyzing Current Situation
Deciding on Strategies
Putting Strategies in Action
Evaluating and Modifying Strategies
Situation Analysis
Strategy Formulation
Strategy Implementation
Strategy Evaluation
Change
8
The Strategic Management Process

• Situation Analysis

Scanning and evaluating context External
environment Organizational environment
9
The Strategic Management Process

• Strategy Formulation
• Three organizational levels

Functional strategies Competitive
strategies Corporate strategies
10
The Strategic Management Process

• Strategy Implementation

Process of putting strategies into
action Strategy Evaluation
Process of evaluating
How the strategy has been implemented Outc
omes of the strategy
11
The Strategic Management Process

• Continuing Process of
• Strategic Management in Action
• Ongoing and continuous cycle of

Strategy formulation Strategy
implementation Strategy evaluation
12
WHOS INVOLVED WITH STRATEGIC MANAGEMENT?

• The Role of the Board of Directors

Elected representatives of the companys
stockholders Legally obligated to represent and
protect stockholders interest The Role of Top
Management Responsible for every decision and
action of every employee Providing effective
leadership Other Strategic Managers and
Organizational Employees Implement put the
strategies into action and monitor
performance Evaluatedo the actual evaluations
and take necessary actions Open book management
13
The Role of the Board of Directors
Table 1-2 Typical Board Responsibilities


Review and approve strategic goals and
plans Review and approve organization's
financial standards and policies Ensure
integrity of organization's financial controls
and reporting systems Approve an organizational
philosophy Monitor organizational performance
and regularly review performance
results Select, evaluate, and compensate
top-level managers Develop management
succession plans Review and approve capital
allocations and expenditures Monitor relations
with shareholders and other key
stakeholders Other responsibilities may be
assigned depending on the unique culture and
needs of the organization
14
The Role of Top Management

• Top Management

CEO Chief Executive Officer COO Chief
Operating Officer CFO Chief Financial
Officer CIO Chief Information Officer
15
The Role of Top Management
Determining Organizational Purpose or Vision
Establishing Appropriately Balanced Controls
Exploiting and Maintaining Core Competencies
Effective Strategic Leadership
Developing Human Capital
Emphasizing Ethical Decisions and Practices
Creating and Sustaining Strong Organizational
Culture
16
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE

• Managing Strategically
• Make decisions and implement strategies
• that develop and maintain competitive
  advantage

Recognize impact of dynamic external
factors Capitalize on organizational resources
and capabilities
17
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE

• Competitive Advantage
• (or competitive edge)

Sets an organization apart Having something
other competitors don't Doing something better
than other organizations Doing something that
others can't Necessary for long-term success
and survival
18
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE
Three Views of Competitive Advantage
I/O View Resource-Based View Adaptive View
Competitive Positioning Possessing
unique Temporary Advantage in industry organizatio
nal assets Determinants Characteristics Type,
amount, Ability to change and of of
industry and nature of radically
surprise Profitability firms position firms
resources competitors with within
industry strategic actions Focus of
Analysis External Internal External and
internal Major Competition Resources Continual,
radical, and Concern competencies chaotic
conditions Strategic Choosing Developing Rapidly
and repeatedly Choices attractive unique
resources disrupting current situation industry
and capabilities and surprising competitors
Positioning in industry Characteristics of
industry firms position within
industry External Competition Choosing attractive
industry
Possessing unique organizational assets Type,
amount, and nature of firms resources Internal Re
sources competencies Developing unique
resources and capabilities
Temporary Ability to change and radically
surprise competitors with strategic
actions External and internal Continual, radical,
and chaotic conditions Rapidly and
repeatedly disrupting current situation and
surprising competitors
19
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE

• Industrial Organization (I/O) View
• Focus of the strategic analysis is external

Structural forces Competitive
environment Michael Porter
20
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE

• Resource-Based View (RBV)
• Exploiting resources
• develops and maintains advantage

Difference in culture, experiences, assets, and
capabilities Link internal assets and
capabilities with environment Key assets
(resources) give a firm sustainable
advantage Financial, Physical,
Human, Intangible, Structural-cultural
Resource must be unique
21
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE
Does it add value?
Is it rare?
Organizational Resources as Competitive Advantage
Can firm exploit it?
Is it easily imitated?
22
MANAGING STRATEGICALLY COMPETITIVE ADVANTAGE

• Adaptive View
• Competitive advantage is only temporary

Changes that characterize environment Continu
al Radical Revolutionary Successful
organizations must be adept at Rapid and
repeated disruptions of current
situation Radical surprises keep competitors
off balance
23
REALITIES OF THE NEW BUSINESS ENVIRONMENT
Drivers of the New Business Environment
Drivers of the New Business Environment
Information revolution Technological
advances and breakthroughs Globalization
Implications Continual turbulence and
change Reduced need for physical
assets Vanishing distance Compressed time
Critical Success Factors Ability to embrace
change Creativity and innovation capabilities
Being a world-class organization
24
Drivers of the New Business Environment
The Information Revolution
Information readily available Information as
the essential resource of production Technological
Advances and Breakthroughs
Perform tasks with equipment, materials,
knowledge, and experience
Four major technological trends
25
Drivers of the New Business Environment
Technological Innovation

• Increasing rate of change and diffusion
• Increasing commercialization of innovations
• Increasing dependence on knowledge intensity
• Advent of increasing returns

26
Drivers of the New Business Environment
Globalization
Specific ways global factors impact Global
marketplace Global competitors Globalization
Solves customer needs Segments markets on a
global basis
27
Implications of These Driving Forces
Continual Turbulence and Change

• Change
• Any alteration in external environmental factors
• or
• internal organizational arrangements

• Organizational change
• Any alteration in what an organization does and
  how it does it

28
Implications of These Driving Forces
Reduced Need for Physical Assets
Traditionally, massing physical assets led to
power Today, physical impedes flexibility,
value in intangible
Yesterday Today Physical Nonphysical
Manufacturing facilities
Customer databases
Office buildings Equipment Inventory
Online ordering systems Process
innovation Employee knowledge sharing
29
Implications of These Driving Forces
Vanishing Distance
Boundaries dont determine customers and
competitors Compressed Time E-mail
interactive Web sites instantly deliver
info Instant interactivity creates dynamic
environment
30
Critical Success Factors
Ability to Embrace Change
Change agents Creativity and Innovation
Capabilities Create and innovate or
lose! Creativitya unique ability Innovative
organization channels creativity
31
Critical Success Factors
Strong Customer Focus
Continual Learning and Improvement
Significant Technological Support
World-Class Organization
Flexible Organization Structure
Egalitarian Climate
Creative Human Resource Management
32
Critical Success Factors
Shareholders
Political Action Groups
Governments
Organization
Trade Associations
Customers
Social Action Groups
Suppliers
Employees
Communities