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The Strategic Management Process

Strategic management refers to the managerial process which forms a strategic


vision, mission, set objectives, craft and execute the strategy and then take any
corrective adjustments to the process.

THE VISION:
Definition
The vision provides long-term direction. It is a commitment to a dream. It
involves asking “what do we want to be like in a few years?” It reflects
management’s aspirations for the organization and its business.

Importance of a Vision:

Without a vision, companies are prone to drift aimlessly and lose any claim to
being an industry leader. Managers need to think strategically about the impact
of new technologies, how customer needs and expectations are changing, and
what will it take to overtake competitors. Thus, the vision serves as a beacon to
guide resource allocation and also as a basis for crafting a strategy to get the
company where it needs to go.

Characteristics of the Vision:

THE MISSION

SETTING OBJECTIVES

The purpose of setting objectives is to convert managerial statements of strategic


vision and business mission into specific performance targets the organization
wants to achieve.

Importance

These are important because they push an organization to be more inventive;


more focused in its actions.

Types:

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Financial – signals commitment to growth earnings, return on investments,
dividend growth

Strategic – is concerned with competitiveness, exercising technology, leadership,


improve business position.

CRAFTING A STRATEGY

How to achieve the objectives. Strategy is proactive and reactive. To achieve


objectives involves collective learning of the organization overtime.

Crafting involves actively searching for opportunities to do new things or to do


existing things in new ways. The faster a company’s business environment is
changing, the more critical it becomes for its managers to be good entrepreneurs
in making both predictions and timely strategic adjustments.

It entails studying market trends, listening to customers and anticipating their


changing needs and expectations, scrutinizing the business possibilities that
spring from technological developments, building the firms market position via
acquisitions.

Strategy and Entrepreneurship

This involves actively searching for opportunities to do new things or do existing


things in new ways. The faster a company’s business environment is changing,
the more critical it becomes for its managers to be good entrepreneurs in making
both predictions and timely strategic adjustments

Implementing and Executing the Strategy

The focus is what will it take to develop the needed organizational capabilities
and to reach the targeted objectives on schedule. It includes thefollowing
principal aspects
Motivating people in ways that induce them to purse the target objectives
energetilly
Tying the reward structure to the achievement of targeted results, creating a
company culture and work climate conducive to successful strategy
implementation and executive; exerting internal leadership

Good strategy execution involves creating a strong “fit” between the way things
are done internally and what it will take for the strategy to succeed.

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Evaluating Performance, Monitoring New Developments, and Initiating Corrective
Adjustments

This invlolves revising budgets, changing policies, reorganizing, making


personnel changes.

How Strategies Get Crafted:

Chief Architect Approach – this is characteristic of companies that have been


founded by the company’s present CEO.
Dis: caliber (degree of worth) of the strategy depends heavily on one person’s
entrepreneurial acumen (keen judgement/insight); it also breaks down in
enterprises with diverse product lines since one person cannot orchestrate the
strategy-making process.

Delegation Approach – a team of consultants brought in specifically to help


develop new strategic initiatives. This allows for broad participation from many
managers and personnel with specialized expertise and on the scene knowledge.
However, with this approach, subordinates may deal more with how to address
today’s problems than with positioning the enterprise to capture tomorrow’s
opportunities.
Dis: lack of sufficient top-down direction on part of senior executives; runs the
rise that the outcome will be shaped by influential subordinates that have a
common interest in promoting their particular version of what the strategy ought
to be.

Collaborative/Team Approach – enlists the assistance and advice of key peers


and subordinates in hammering out a consensus strategy. This is well satiated
were strategic issues cut across departments, product lines etc.
Dis: conducive to political strategic choices; there is slower reaction and
response times as group members meet to debate the merits of what to do.

Corporate Entrepreneur Approach – top management encourages individuals


and teams to develop and champion proposals for new product lines and new
business ventures. This approach works well in enterprises where technological
advances are coming at a fast and furious pace.
Dis: may not result in achieving clear strategic direction for the company

Benefits of a Strategic Approach to Managing

Provides better guidance to the organization on what they are trying to do


Management more alert to new opportunities and threats
Unites the organization
Creates proactive management posture

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Promote development of a constantly evolving business model

Today’s managers have to think strategically about their company’s


position and about the impact of changing conditions. They have to
monitor the company’s external environment and internal
capabilities closely enough to know when to institute strategy
changes. They have to know the business well enough to
determine what kinds of strategic changes to initiate. Simply said,
the fundamentals of strategic management need to drive the whole
approach to managing organizations. The chief executive officer of
one successful company put it well when he said:

In the main, our competitors are acquainted with the same


fundamental concepts and techniques and approaches that we
follow, and they are as free to pursue them as we are. More often
than not, the difference between their level of success and ours lies
in the relative thoroughness and self-discipline with which we and
they develop and execute our strategies for the future.

The advantages of first-rate strategic thinking and conscious


strategy management (as opposed to freewheeling improvisation,
gut feel, and hoping for good luck) include

(1) providing better guidance to the entire organization on the


crucial point of “what it is we are trying to do,”

(2) making managers and organizational members more alert to


new opportunities and threatening developments,

(3) helping to unify the organization,

(4) creating a more proactive management posture,

(5) promoting the development of a constantly evolving business


model that will produce sustained bottom-line success for the
enterprise, and

(6) providing managers with a rationale for evaluating competing


budget requests—a rationale that argues strongly for steering
resources into strategy-supportive, results-producing areas.

Trailblazing strategies can be the key to better long-term

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performance. Business history shows that high-performing
enterprises often initiate and lead, not just react and defend. They
launch strategic offensives to out-innovate and out-maneuver
rivals and secure sustainable competitive advantage, then use their
market edge to achieve superior financial performance. Aggressive
pursuit of a creative, opportunistic strategy can propel a firm into a
leadership position, paving the way for its products and services to
become the industry standard. High-achieving enterprises are
nearly always the product of astute, proactive management, rather
than the result of lucky breaks or a long run of good fortune.

Two factors separate the best-managed organizations from the


rest:

(1) superior strategy making and entrepreneurship, and

(2) competent implementation and execution of the chosen


strategy.

There’s no escaping the fact that the quality of managerial strategy


making and strategy implementing has a significant impact on
organization performance. A company that lacks clear-cut
direction, has vague or undemanding objectives, has a muddled or
flawed strategy, or can’t seem to execute its strategy competently
is a company whose performance is probably suffering, whose
business is at long-term risk, and whose management is lacking. In
short, the better conceived a company’s strategy and the more
proficient its execution, the greater the chances the company will
be a leading performer in its markets and truly deserve a
reputation for talented management.

Management's direction-setting tasks involve (1) charting a company's


future strategic path, (2) setting objectives, and (3) crafting a
strategy.

STRATEGIC VISION

Early on in the direction-setting process, managers need to address


the question "What is our business and what will it be?" Management's
views and conclusions about the organization's future course, the

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market position it should try to occupy, and the business activities to
be pursued constitute a strategic vision for the company.

A strategic vision indicates management's aspirations for the


organization, providing a panoramic view of "what businesses we want
to be in, where we are headed, and the kind of company we are trying
to create."

It spells out a direction and describes the destination. Effective visions


are clear, challenging, and inspiring; they prepare a firm for the
future, and they make sense in the marketplace.

A well-conceived, well-worded mission/vision statement helps


managers manage-serving as a beacon of the enterprise's long-term
direction, helping channel organizational efforts and strategic
initiatives along the path management has committed to following,
building a strong sense of organizational identity and purpose, and
creating employee buy-in.