STRAMAN

• Strategic management overview:

  • CEOs of U.S. automakers were sent home to develop a clear strategic plan when they asked for bailout money without one
  • Strategic management focuses on integrating management, marketing, finance, accounting, production, operations, R&D, and information systems to achieve organizational success
  • Strategic management is used synonymously with strategic planning, which focuses on strategy formulation, implementation, and evaluation
  • The purpose of strategic management is to gain and sustain competitive advantage
• Stages of strategic management:

  • Strategy formulation: developing a vision, mission, identifying opportunities/threats, determining strengths/weaknesses, establishing objectives, generating alternative strategies, and choosing specific strategies
  • Strategy implementation: establishing objectives, devising policies, motivating employees, allocating resources, creating a strategy-supportive culture, and linking compensation to performance
  • Strategy evaluation: reviewing external/internal factors, measuring performance, taking corrective actions
• Integrating intuition and analysis in strategic management:

  • Strategic management is an objective, logical, systematic approach for making major decisions
  • Intuition is essential for making good strategic decisions, especially in uncertain or unprecedented situations
  • Intuition is useful when highly interrelated variables exist or when choosing from several plausible alternatives
  • Some managers rely on intuition alone for devising strategies, acknowledging its importance in decision-making
• Key Terms in Strategic Management
• Competitive advantage is all about gaining and maintaining competitive advantage
• Competitive advantage can be defined as any activity a firm does especially well compared to activities done by rival firms, or any resource a firm possesses that rival firms desire
• Having fewer fixed assets than rival firms can provide major competitive advantages
• Strategists are the individuals most responsible for the success or failure of an organization
• Strategists help an organization gather, analyze, and organize information
• Strategists track industry and competitive trends, develop forecasting models and scenario analyses, evaluate corporate and divisional performance, spot emerging market opportunities, identify business threats, and develop creative action plans
• Strategists differ in their attitudes, values, ethics, willingness to take risks, concern for social responsibility, concern for profitability, concern for short-run versus long-run aims, and management style
• Many organizations develop a vision statement that answers the question "What do we want to become?"
• Vision statements are often considered the first step in strategic planning
• Mission statements are enduring statements of purpose that distinguish one business from other similar firms
• A mission statement identifies the scope of a firm's operations in product and market terms
• Developing a mission statement compels strategists to think about the nature and scope of present operations and to assess the potential attractiveness of future markets and activities
• External opportunities and external threats refer to trends and events that could significantly benefit or harm an organization in the future
• Opportunities and threats are largely beyond the control of a single organization
• Some general categories of opportunities and threats include economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events
• External opportunities and threats are factors beyond the control of a single organization, categorized in Table 1-2
• Opportunities and threats must be quantified with dollars, numbers, percentages, ratios for strategists to assess magnitude
• External trends and events create a different type of consumer and a need for different products, services, and strategies
• Identifying, monitoring, and evaluating external opportunities and threats are essential for success
• Internal strengths and weaknesses are controllable activities performed well or poorly by an organization
• Strengths and weaknesses are determined relative to competitors and can be based on ownership of natural resources or reputation for quality
• Internal factors should be stated specifically with numbers, percentages, dollars, and ratios for effective strategy formulation and resource allocation
• Long-term objectives are specific results that an organization seeks to achieve in pursuing its mission
• Objectives should be challenging, measurable, consistent, reasonable, and clear
• Objectives are essential for organizational success as they provide direction, aid in evaluation, and reveal priorities
• Strategies are the means by which long-term objectives will be achieved
• Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, and joint ventures
• Strategies affect an organization's long-term prosperity and require consideration of external and internal factors
• Annual objectives are short-term milestones that organizations must achieve to reach long-term objectives
• Annual objectives should be measurable, quantitative, challenging, realistic, consistent, and prioritized
• Annual objectives are especially important in strategy implementation and provide the basis for allocating resources
• Policies are the means by which annual objectives will be achieved
• Policies include guidelines, rules, and procedures established to support efforts to achieve stated objectives
• Policies are guides to decision making and address repetitive or recurring situations within an organization
• Policies are especially important in strategy implementation as they outline expectations of employees and managers
• Three important questions to answer in developing a strategic plan:

  • Where are we now?
  • Where do we want to go?
  • How are we going to get there?