Strategic Management - is the process through which
organization analyze and learn from their internal and
external environment, establish strategic direction,
create strategies that are intended to help achieve
established goals, and execute those strategies, all in an
effort to satisfy key organizational constituencies, which
are called stakeholders.
5 Process of SM
1. External and Internal Environmental Analysis
2. Strategic Direction
3. Strategy Formulation
4. Strategy Implementation and Control
5. Strategic Restructuring
1. External and Internal Environmental Analysis
Broad Environment - consists of domestic and global
environment forces such as STLPE (socio-cultural,
technological, logical, political and economic trends).
Forms the context within which the firm and task
environment exist.
Task environment- consists of external stakeholders.
External stakeholders- are groups and individual outside
the organization that has significant influence on the
organization (e.g. customers, competitors, government
agencies, suppliers, unions, activist groups, local
communities, financial intermediaries and others that
have stake on the organization)
Internal stakeholders or Organization - include the
managers, employees, and the owners and their
representative (BOD)
2. Strategic Direction
Strategic Direction - pertains to the longer-term goal and
objectives of the organization
Strategy - is an organizational plan of action that is
intended to move an organizational toward the
achievement of its shorter-term goals and ultimately,
toward the achievement of its fundamental purposes.
3.Strategy Formulation – results in a plan of action for the
organization and its various levels.
Strategy Formulation consists of three (3) levels:
1. Functional- contains the details of the how the
functional areas such as marketing, operations, finance
and research should work together to achieve the
business-level strategy.
2. Business- pertains to domain direction and
navigation, how business compete in the areas they have
selected.
3. Corporate - refers primarily to domain
definition, or the selection of business areas in which the
organization will compete.
Tip: to determine what level it is. You should base it
where the decision was made.
4. Strategy Implementation and Control
Strategy Implementation – represents a decisions and
actions that are intended to carry out the plan.
- Involves creating the functional strategies,
systems, structures, and processes needed by
the organization in achieving strategic ends.
Organizational Systems – are developed to train
and compensate employees; assist in planning
efforts; reinforce organizational values and
gather and analyze and convey information.
Organizational Structure – reflect the way
people and work organized, which includes
reporting relationships and formation into work
groups, teams and departments.
Processes – such standard operating procedures
(SOP) are developed to create uniformity across
the organization and promote efficiency.
Strategic Control – refers to the processes that lead to
adjustments in strategic direction, strategies, or the
implementation plan when necessary.
Managers may re-evaluate their assessment to new
environment.
5. Strategic Restructuring
- involves on renewed emphasis on the things the
organizational does well, combined with variety of tactics
to revitalize the organization and strengthen its
competitive position.
IDEAS AND THEORIES REGARDING THE SM MODEL
Situation Analysis
- Traditional process for developing strategy,
consisting of analyzing the internal and external
environment of the organization to arrive at
organizational strengths, weaknesses,
opportunities and threats (SWOT). The results
form the basis for developing mission, goals, and
strategies.
SWOT >>>> Vision, Mission, Goals and Strategies
Environmental Determinism – submission to existing
forces
- Management is to determine which strategy will
best fit environmental, technical and human
forces at a particular point in time.
Principle of Enactment
- Not need to submit to existing forces. May
create own environment through strategic
alliances with stakeholders, advertising, political
lobbying and variety of other activities.
Deliberate Strategy
- Managers plan to pursue an intended strategic
course. Strategy is deliberate.
Emergent Strategy
- Strategy simply emerges from a stream of
decisions. Managers learn as they go.
Stakeholder Management
- The organization is viewed from the perspective
of the external and internal constituencies that
have a stake in the organization. Stakeholder
analysis is used to guide the strategy process.
- Stakeholder analysis involves in identifying and
prioritizing key stakeholders, assessing their
needs, collecting ideas from them and
integrating this knowledge into strategic
management process.
- Is central to development of mutually beneficial
relationships and alliances with external
stakeholders.
Resource- Based View
- Acquire and manage resources in such a way that
the organization achieves sustainable
competitive advantages leading to superior
performance.
- Sustainable competitive advantage is an
advantage that is difficult to imitate by
competitors and thus lead to higher than
average organizational performance over a long
time period.
ETHICS AND SOCIAL RESPONSIBILITY
Ethics are personal value system that helps determine
what is right or good. Associated with a system of beliefs
that supports a particular moral code or view.
Organizational Ethics- are a value system that has been
widely adopted by members of an organization.
Note: To know the ethics, one should study the pattern
of decisions in the organization to discover what or who
is given priority.
4 Major Components of Social Responsibility
1. Economic – profitable and meet the consumer
needs a society
2. Legal- achieve economic goals within the
confines of written law
3. Moral- abide by unwritten codes, norms and
values implicitly derived from society
4. Discretionary- volitional and philanthropic in
nature.
The case of Going GLOBAL
- Many trends and influences are pushing firms to
increase their involvement in international
markets. Most larger firms have substantial
global investments.
- Ultimately, firm’s strategy reflects more on what
they do than what it says. Strategic management
processes are concerned with aligning intention
with action.