Overview of STR - Mgmt. Unit-1

Chapter 1 Overview of Strategic Management
STRATEGIC MANAGEMENT
Course 703
EMBA: 3 credit hours
Kantipur Valley College Lalitpur
Purbanchal University Nepal
Course Instructor : B. G. Bhattacharya
Ch 1 - 1
Strategic Management: Concept
Strategic management is a field that deals with the major intended and emergent initiatives taken by general managers on behalf of owners, involving utilization of resources, to enhance the performance of firms in their external environments.
Ch 1 - 2
Strategic Management: Concept

Strategic management entails specifying the organization's mission, vision and objectives, developing policies and plans, often in terms of projects and programs, which are designed to achieve these objectives, and then allocating resources to implement the policies and plans, projects and programs.
Ch 1 - 3
Strategic Management Defined
Art & science of formulating, implementing, and evaluating, cross-functional decisions that enable an organization to achieve its objectives
Ch 1 - 4
Strategic Management
In essence, the strategic plan is a companys game plan
Ch 1 - 5
Strategic Management Characteristics

Strategic management focuses on building a solid underlying structure to your business that will subsequently be fleshed out through the combined efforts of every individual you employ.
Strategic management hinges upon answering three key questions:

1. What are my businesss objectives? 2. What are the best ways to achieve those objectives? 3. What resources are required to make that happen?
Ch 1 - 6

The first key question: What are our business goals?
Answering the first question requires serious thought about what your ultimate aims are for the business.

What are you trying to make happen? What are you attempting to facilitate or enable?
What is the best possible outcome your company can aspire to?
Ch 1 - 7
Drilling down to uncover a companys core objectives can have several phases:
Assessing the landscape within which the company will operate, and formulating how the company sees its role within that landscape. This is commonly known as a mission statement. Establishing objectives to answer some of the unmet needs, taking both a long- and short-term view of what the company can offer. This is commonly known as a vision statement.
Stipulating the goals the company has for itself, both in terms of financial and strategic objectives.
Ch 1 - 8

The second key question: How best can we reach our goals?
Phase two of successful strategic management is formulating a plan by which the company can accomplish what it sets out to do. Within this phase, a chain of command should be put in place, pairing individuals with the right skills, knowledge, and experience with the businesss needs and objectives. Responsibilities for processes and tasks should be distributed across the full chain of command, delegating work to teams and individuals so that the companys goals can be attained through the combined efforts of all employees.
Ch 1 - 9

The third key question: How do we allocate our resources?
Finally, strategic management entails allocating the right amount of resources to the different parts of your business so that those assigned to particular goals have what they need to meet their objectives. This ranges from providing your workers with the right supplies to enacting systems by which employees receive the necessary training, all work processes are tested, and all information and data generated is documented.
Ch 1 - 10
Key Terms associated with Strategic Management Long-term Objectives
Mission-driven pursuit of specified results more than one year out
Ch 1 - 11
Key Terms associated with Strategic Management Annual Objectives
Short-term milestones that firms must achieve to attain long-term objectives
Ch 1 - 12
Key Terms associated with Strategic Management Policies
Means by which annual objectives will be achieved
Ch 1 - 13
Key Terms associated with Strategic Management Strategies
Means by which long-term objectives are achieved
Ch 1 - 14
Key Terms
Strategies: Some examples
Geographic expansion
Diversification Acquisition
Market penetration
Retrenchment Liquidation
Joint venture
Ch 1 - 15
Key Terms associated with Strategic Management Opportunities and Threats (External)
Largely beyond the control of a single organization
Ch 1 - 16
Key Terms associated with Strategic Management Strengths & Weaknesses (Internal)
Controllable activities performed especially well or poorly
Ch 1 - 17
Strategic Management achieves a firms success through integration:
Management
Marketing
Finance/Accounting
Research & Development
Production/Operations
MIS
Ch 1 - 18
Strategic Management Process
Components of Strategic Management Process
Ch 1 - 19
Environment Scanning
Information Collection Information Scrutinization Analyzing internal /external factors
Provide strategical information

Continuous Surrounding Evaluation
Plan and policy improvement
Ch 1 - 20
Environment Scanning
The initial step in St. Mgmt. Process of collecting, scrutinizing and providing information for strategic purposes It analyzes the internal and external factors influencing an organization Management evaluates the environment analysis on a continuous basis
Ch 1 - 21
Strategy Formulation
Vision & Mission External Opportunities & Threats Internal Strengths & Weaknesses
Long-Term Objectives
Alternative Strategies Strategy Selection
Ch 1 - 22
Issues in Strategy Formulation

New business opportunities
Businesses to abandon Allocation of resources Expansion or diversification International markets Mergers or joint ventures Avoidance of hostile takeover
Ch 1 - 23
Strategy Formulation
Ch 1 - 24
Strategy Implementation
Annual Objectives Policies Employee Motivation Resource Allocation
Ch 1 - 25
Strategy Implementation
Action Stage of Strategic Management
Most difficult stage Mobilization of employees and managers Interpersonal skills critical Consensus on goal pursuit
Ch 1 - 26
Strategy Evaluation
Internal Review External Review Performance Metrics Corrective Actions
Ch 1 - 27
Strategy Evaluation
Final Stage of Strategic Management Subject to future modification Todays success no guarantee of future success New & different problems Complacency leads to demise
Ch 1 - 28

The process by which managers make a choice of a set of strategies for the organization that will enable it to achieve better performance.
Dynamic & Continuous More formal in larger organizations
Ch 1 - 29
Ch 1 - 30
The Strategic management process consists of five components:
Selection of the mission and goals - It is the first and most important part to continue the whole process. Without mission and goals, it will be like you are passing through huge jungle and no destination to exit. Analysis of the organization's external competitive environment - This is done to identify opportunities and threats. Remember that external environment can beat you down or block your way before you go on.
Ch 1 - 31

Internal analysis - It's always important to analyze organization's internal operational process to identify strengths and weaknesses. There is no way to success without knowing internal sources. Strategic formulation - Select the ways or strategies to build on the organization's strengths and correct the weaknesses in order to take advantage of external opportunities and counter external threats. Result analysis and strategy control - The last point is to implement those selected ways and strategies to reach your mission and goals. At the same time, to control the process what the organization has implemented and analyze the result.
Ch 1 - 32
Prime Task of Strategic Management
Peter Drucker: -- Think through the overall mission of a business. Ask the key question: What is our Business?
Ch 1 - 33
Integrating INTUITION and ANALYSIS
The strategic management process attempts to organize quantitative and qualitative information under conditions of uncertainty
Ch 1 - 34
Integrating INTUITION and ANALYSIS

Intuition is based on: Past experiences Judgment Feelings
Intuition is useful for decision making in: Conditions of great uncertainty Conditions with little precedent
Ch 1 - 35
Integrating Intuition & Analysis

Intuition & Judgment
Involve Management at all levels
Influence all Analyses
Ch 1 - 36
Integrating Intuition & Analysis

Analytical Thinking
Intuitive Thinking
Ch 1 - 37
Adapting to Change
Organizations must monitor events:
On-going process Internal and external events Timely changes
Ch 1 - 38
Strategic Management is Gaining and Maintaining Competitive Advantage
Anything that a firm does especially well compared to rival firms
Ch 1 - 39
Achieving Sustained Competitive Advantage

1. Adapting to change in external trends, internal capabilities and resources
2. Effectively formulating, implementing & evaluating strategies

Ch 1 - 40
Adapting to Change
Rate & magnitude of change increasing dramatically
E-commerce Demographics
Technology
Ch 1 - 41
Adapting to Change
Effective Adaptation
Requires long-term focus
Ch 1 - 42
Adapting to Change Key Strategic Management Questions

What kind of business should we become? Are we in the right fields Are there new competitors? What strategies should we pursue? How are our customers changing?
Ch 1 - 43
Benefits of Strategic Management

Proactive in shaping firms future
Initiate and influence firms activities Formulate better strategies (plans/ policies)
Systematic, logical, rational
Ch 1 - 44

Financial Benefits
Improvement in sales Improvement in profitability Productivity improvement
Ch 1 - 45

Non-Financial Benefits
Improved understanding of competitors strategies Enhanced awareness of threats Reduced resistance to change Enhanced problem-prevention capabilities
Ch 1 - 46
Benefits of Strategic Management (Greenley)

1. Identification of Opportunities 2. Objective view of management problems
3. Improved coordination & control

4. Minimizes adverse conditions & changes 5. Decisions that better support objectives
Ch 1 - 47

6. Effective allocation of time & resources 7. Internal communication among personnel
8. Integration of individual behaviors

9. Clarify individual responsibilities 10. Encourage forward thinking
Ch 1 - 48
11. Encourages
favorable attitude toward
change
12. Provides
discipline and formality to the management of the business
Copyright 2007 Prentice Hall
Ch 1 -49
Why Some Firms Do No Strategic Planning (Risks involved)

Poor reward structures
Fire-fighting Waste of time
Too expensive
Laziness Content with success
Ch 1 - 50
Why Some Firms Do No Strategic Planning (Risks involved)

Fear of failure
Overconfidence Prior bad experience
Self-interest
Fear of the unknown Suspicion
Ch 1 - 51
Deliberate, emergent, imposed, and realized strategies
Ch 1 - 52

Deliberate strategy
A strategy conceived by senior managers as a planned response to the challenges confronting an organization. Often the result of a systematic analysis of the organizations environment and resources.
Ch 1 - 53

Emergent strategy A strategy that emerges from lower down the organization without direct senior management intervention.
Ch 1 - 54

Imposed strategy A strategy that an organizations managers would not otherwise have chosen, but is forced on them.
Ch 1 - 55

Realized strategy The strategy the organization actually ends up implementing. It may be deliberate, emergent or imposed.
Ch 1 - 56
Key Strategic Actions
Balanced Scorecard
Framework used to verify that the firm has established both strategic and financial controls to assess its performance
Prevents overemphasis of financial controls at the expense of strategic controls
Four perspectives of balanced scorecard

Financial Customer Internal business processes Learning and growth
Ch 1 - 57

Balanced Scorecard
Financial
Cash flow Return on equity Return on assets Assessment of ability to anticipate customer needs Effectiveness of customer service needs Percentage of repeat business Quality of communications with customers
Ch 1 - 58
Customer

Balanced Scorecard
Internal Business Processes Learning and Growth
Asset utilization improvements Improvements in employee morale Changes in turnover rates
Improvements in innovation ability Number of new products compared to competitors Increases in employees skills
Ch 1 - 59
Comprehensive Strategic Mgmt. Model

External Audit
Vision & Mission
Long-Term Objectives
Generate, Evaluate, Select Strategies
Implement Strategies: Mgmt Issues
Implement Strategies: Marketing, Fin/Acct, R&D, CIS
Measure & Evaluate Performance
Internal Audit
Ch 1 -60
Key Persons
Strategists Firms success/failure
Various Job Titles:
Chief Executive Officer (CEO) Chief Strategy Officer (CSO) President Owner Board Chair Executive Director
Ch 1 - 61
Key Persons
Strategists Characteristics expected
Tolerance for ambiguity Commitment to the firm and its desired strategic outcomes Interpersonal skills Aspiration level Degree of self-confidence
Ch 1 - 62
Top Management Teams

Composed of the key managers who are responsible for selecting and implementing the firms strategies.
A heterogeneous top management team:

Has varied expertise and knowledge

Can draw on multiple perspectives Will evaluate alternative strategies
Builds consensus
Ch 1 - 63
CEO and Top Management Team

Higher performance is achieved when board of directors are more directly involved in shaping strategic direction.
A powerful CEO may:
Appoint sympathetic outside board members

Have inside board members who report to the CEO Have significant control over the boards actions
May also hold the position of chairman of the board (CEO duality)
Ch 1 - 64
CEO and Top Management Team
Duality often relates to poor performance and slow response to change
CEOs of long tenure can also wield substantial power CEOs can gain so much power that they are virtually independent of oversight by the board of directors
The most effective forms of governance share power and influence among the CEO and board of directors
Ch 1 - 65
Managerial Labor Market
Organizations select managers and strategic leaders from two types of managerial labor markets:
Internal managerial labor market: advancement opportunities related to managerial positions within a firm External managerial labor market: career opportunities for managers in organizations other than the one for which they currently work
Ch 1 - 66
Advantages of internal managerial labor market include:
Experience with the firm and industry environment Familiarity with company products, markets, technologies, and operating procedures Produces lower turnover among existing personnel
Ch 1 - 67

Advantages of the external managerial labor market include:
Long tenured insiders may be stale in the saddle Outsiders may bring fresh perspectives
Ch 1 - 68

Effects of CEO Succession and Top Management Team Composition on Strategy
Ch 1 - 69
Exercise of Effective Strategic Leadership
Ch 1 - 70
Three levels of strategy
Ch 1 - 71

Corporate Level Strategy
Corporate strategy refers to the overarching strategy of the diversified firm. Such a corporate strategy answers the questions of "which businesses should we be in?" and "how does being in these businesses create synergy and/or add to the competitive advantage of the corporation as a whole?"
Ch 1 - 72

Business Level Strategy
Business strategy refers to the aggregated strategies of single business firm or a strategic business unit in a diversified corporation. A firm must formulate a business strategy that incorporates either cost leadership, differentiation, or focus to achieve a sustainable competitive advantage and long-term success.
Ch 1 - 73

Functional Level Strategy
Functional strategies include marketing strategies, new product development strategies, human resource strategies, financial strategies, legal strategies, supply-chain strategies, and information technology management strategies. The emphasis is on short and medium term plans and is limited to the domain of each departments functional responsibility.
Ch 1 - 74
Limitations of Strategic Mgmt.

Thirteen drawbacks of Strategic Management
1) 2)
Time consuming Ignorance of other managerial functions Unsatisfaction in employees Depression due to failure in target Protest of employees
7) 8) 9)
Dependability Non-practical planning Changes in technical factors gives only a guidance
3) 4)
10) It
11) Changes
in the attitude of employees attitude of trade pressure

Ch 1 - 75
5) 6)
12) Adverse
Demand for more rewards and facilities
unions
13) Political
Thank You
Ch 1 - 76

Overview of STR - Mgmt. Unit-1

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Overview of STR - Mgmt. Unit-1

Uploaded by

Copyright:

Available Formats

Chapter 1 Overview of Strategic Management

Kantipur Valley College Lalitpur

Purbanchal University Nepal

Course Instructor : B. G. Bhattacharya

Strategic Management: Concept

Course Instructor : B. G. Bhattacharya

Strategic Management: Concept

Course Instructor : B. G. Bhattacharya

Strategic Management Defined

Course Instructor : B. G. Bhattacharya

In essence, the strategic plan is a companys game plan

Course Instructor : B. G. Bhattacharya

Strategic Management Characteristics

Strategic management hinges upon answering three key questions:

Strategic Management Characteristics

Course Instructor : B. G. Bhattacharya

Strategic Management Characteristics

Course Instructor : B. G. Bhattacharya

Strategic Management Characteristics

Strategic Management Characteristics

Course Instructor : B. G. Bhattacharya

Key Terms associated with Strategic Management Long-term Objectives

Mission-driven pursuit of specified results more than one year out

Course Instructor : B. G. Bhattacharya

Key Terms associated with Strategic Management Annual Objectives

Short-term milestones that firms must achieve to attain long-term objectives

Course Instructor : B. G. Bhattacharya

Key Terms associated with Strategic Management Policies

Means by which annual objectives will be achieved

Course Instructor : B. G. Bhattacharya

Key Terms associated with Strategic Management Strategies

Means by which long-term objectives are achieved

Course Instructor : B. G. Bhattacharya

Course Instructor : B. G. Bhattacharya

Largely beyond the control of a single organization

Course Instructor : B. G. Bhattacharya

Controllable activities performed especially well or poorly

Course Instructor : B. G. Bhattacharya

Strategic Management achieves a firms success through integration:

Course Instructor : B. G. Bhattacharya

Strategic Management Process

Components of Strategic Management Process

Course Instructor : B. G. Bhattacharya

Provide strategical information

Plan and policy improvement

Course Instructor : B. G. Bhattacharya

Course Instructor : B. G. Bhattacharya

Course Instructor : B. G. Bhattacharya

Issues in Strategy Formulation

Course Instructor : B. G. Bhattacharya

Course Instructor : B. G. Bhattacharya

Annual Objectives Policies Employee Motivation Resource Allocation

Course Instructor : B. G. Bhattacharya

Course Instructor : B. G. Bhattacharya

Internal Review External Review Performance Metrics Corrective Actions

Course Instructor : B. G. Bhattacharya

Course Instructor : B. G. Bhattacharya

Strategic Management Process

Dynamic & Continuous More formal in larger organizations

Course Instructor : B. G. Bhattacharya

Strategic Management Process

Course Instructor : B. G. Bhattacharya