MGT 490 – Strategic

Management

Lecture Slides
Chapter 1
Strategic Management Defined
 Set of managerial decisions and actions
that determines the long-run performance
of a firm.
 Business policy
 General Management orientation and tends to
look inwards – concerns for proper integration
of functional activities
 Strategic management incorporates the
integrative concerns of business policy with a
heavier environmental and strategic emphasis
Levels of Strategy-Making in a
Company

Corporate- Corporate Company A

Level Strategy
Managers
Business-
Level Business Strategies SBU1 SBU2
Managers

Functional Finance & Acctg.

Functional Strategies Marketing
Managers
Human Resource

Operational Strategies
Four Phases of Strategic
Management
 Basic financial planning
 Initiates serious planning for next year’s budget
 Forecast-based planning
 Attemptsto propose five-year plans
 Externally-oriented planning (strategic planning)
 In addition to 5-yr plans, company seeks to increase
responsiveness to market & competition
 Strategic management
 Develops and integrates series of strategic plans
 Tries to incorporate input & commitment of lower level
managers
Strategic Management
 Highly Rated Benefits:
 Clearer sense of strategic
vision for the firm
 Sharper focus on what is
strategically important
 Improved understanding
of a rapidly changing
environment
 Additional Benefits
 Improved organizational
performance
 Achieves a match between
the organization’s
environment and its
strategy, structure and
processes
 Important in unstable
environments
 Strategic thinking
 Organizational learning
Globalization and Environmental
Sustainability
 Globalization
 the integration and
internationalization of
markets and corporations
 Environmental
Sustainability
 the use of business
practices to reduce a
company’s impact on the
natural, physical
environment
 Impact of
Environmental
Sustainability
 Risksof Climate
Change include:
 Regulatory risk
 Supply chain risk
 Product and technology
risk
 Litigation risk
 Reputational risk
 Physical risk
Theories of Organizational
Adaptation
 Population ecology  Strategic choice
perspective
 established  organizations adapt to
organizations are change and have the
unable to adapt to ability to reshape their
environment
change
 Organizational learning
 Institution theory theory
 organizations adapt by  organizations adapt
defensively and use
imitating successful knowledge to improve
organizations their relationship with the
environment
Basic Model of Strategic
Management
 Four Basic Elements
Strategic Management Model
The Business Environment
 Environmental
Scanning
 The monitoring,
evaluating, and
disseminating of
information from the
external and
internal
environments to
key people within
the firm.
Environmental Scanning
 Identify strategic factors
 SWOT Analysis
 Strengths, Weaknesses
 Opportunities, Threats
 External Environment
 Opportunities & Threats
 External to the organization
but not subject to short-run
control of management

 Internal Environment
 Strengths & Weaknesses
 Within the organization but
not subject to short-run
control of management
Strategy Formulation
 Defined:
 Development of long-range plans for the
effective management of environmental
opportunities and threats in light of corporate
strengths and weaknesses.
 Includes formulation of:
 Mission & Vision
 Objectives & Goals

 Strategies

 Policies
Mission Statement
 Purpose or reason for the organization’s
existence
 Promotes shared expectations among
employees
 Communicates public image important to
stakeholders
 Who we are, what we do, what we’d like to
become
Objectives & Goals
 Objectives  Goals
 The end results of A goal is an open-
planned activity ended statement of
 What is to be what one wants to
accomplished accomplish with no
 Time in which to quantification of what is
accomplish it to be achieved and no
 Quantified when time criteria for
possible
completion.
Strategies
 Defined:
A strategy of a
corporation forms a
comprehensive master
plan stating how the
corporation will achieve
its mission and
objectives. It
maximizes competitive
advantage and
minimizes competitive
disadvantage.
Policies
Defined:
Broad guidelines for decision making
that link the formulation of strategy
with its implementation.
Strategy Implementation

Programs
Strategy
Implementation Budgets

Procedures
Strategic Decision Making
 Strategic Decisions  Mintzberg’s Modes
 Rare – unusual and may  Entrepreneurial mode
not have precedent to follow  Made by powerful
 Consequential – individuals
requires substantial  Adaptive mode
resources and demands
great deal of commitment
 Reactive solutions to
existing problems
 Directive – sets
 Planning mode
precedents for lesser
decisions and future actions  Systematic approach:
includes both proactive
& reactive steps
 Logical incrementalism
The Strategic Decision Making
Process