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Strategic Management Process


What is Strategic Management?

Application of the basic planning process at the highest levels of the company Top management sets goals for the performance of the company
Carefully formulating, implementing, and evaluating plans and strategies

What is Strategic Management?

Most important part is developing strategic plans
Plans must remain current as changes occur inside and outside the company

Involves many levels of management

Top level formally develops basic plans Different departments may be asked to develop plans for their own areas A solid plan guarantees that plans are coordinated and are supported by everyone in the company

Strategic Management Approach

Three phases critical to the success of the process
Developing the strategic plan

Putting the formulated plan to work

Continuously evaluating and updating the strategic plan

Formulating Strategy
Developing the grand- and business-level strategies to be used by the company Companys strengths/weaknesses and threats/opportunities shape the strategies First step is to understand the current position of the company
Identify mission, identify past and present strategies, diagnose the companys past and present performance, set objectives for the companys operation

Formulating Strategy
Identify the mission statement
Outlines why the company exists Describes the companys basic products and/or services and defines markets and sources of revenue Designed to accomplish several goals and ensures a common purpose within the company

Apples Mission Statement

Apple ignited the personal computer revolution in the 1970s with the Apple II and reinvented the personal computer in the 1980s with the Macintosh. Today, Apple continues to lead the industry in innovation with its award-winning computers, OS X operating system and iLife and professional applications. Apple is also spearheading the digital media revolution with its iPod portable music and video players and iTunes online store, and has entered the mobile phone market this year with its revolutionary iPhone.

Whos Mission Statements?

1. "To bring inspiration and innovation to every athlete in the world." 2. "To enable people and businesses throughout the world to realize their full potential." 3. . . .seeks to be the worlds most customercentric company, where customers can find and discover anything they may want to buy online at a great price."

Identifying Past and Present Strategies

Companies need to understand and appreciate their corporate history Strategic managers should ask
Has past strategy been developed?
If not, can past history of the company be analyzed to identify the strategy that has evolved? If yes, has the strategy been recorded in writing?

Diagnosing Past and Present Performance

A corporate planner must decide if past strategies worked and if strategic changes are needed by asking:
How is the company currently performing? How has it performed during the past few years? Is the performance trend moving up or down?

Setting Goals
Concise statements that provide direction employees and set standards for achieving the companys strategic plan Established in many areas (see handout) Goals must be reevaluated as the environment and opportunities change Multiple goals are used to reflect the desired performance

Policies, Procedures, and Rules

Policies are broad general guides to action that establish boundaries within which employees must operate
answering all written customer complaints in writing within 10 days

Policies, Procedures, and Rules

Procedures are detailed series of related steps/tasks written to implement a policy
Define methods through which policies are achieved the customer service representative must note the complaint of Form 622 and forward the yellow copy of the form

Rules detail specific and definite corporate actions that employees must follow
Leave little doubt about what is to be done no smoking in the conference room

SWOT Analysis
Strengths, Weaknesses, Opportunities, Threats
Process that allows companies to evaluate overall health
Internal (SW) and external (OT)

Most important result of a SWOT analysis is the ability to draw conclusions about the attractiveness of the companys situation and the need for strategic action

Implementing Strategy
Action stage of strategic management Managers determine and implement the most appropriate company structure, motivate employees, develop short-range goals, and establish functional strategies Strategy must fit with current company policies
Or conflicting policies must be changed

A. T. Cross Company

Evaluating and Controlling the Strategic Plan

Process of continuously monitoring the companys progress toward its long-range goals and mission Managers should ask:
Does the grand strategy need revising? Where are problems likely to occur?

Basic strategy evaluation strategies:

Review external and internal factors that are the bases for current strategies Measure performance Take corrective action

Evaluating and Controlling the Strategic Plan

Emphasis is making the companys managers aware of the problems that are likely to occur and of the actions to take if they do arise Plan ahead and avoid disaster Strategic planning and evaluation should be done on a predetermined schedule and as frequently as necessary, determined by internal and environmental factors