Strategic Management

• the art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives.

  Strategic management
• integrating management, marketing, finance/accounting, production/operations, research and development, and information systems to achieve organizational success.

  Strategic management focus
• The term strategic management in this text is used synonymously with the term

  strategic planning
• strategic management- academia

  strategic planning- business world
• is used to refer to strategy formulation,

  implementation, and evaluation

  strategic management
• referring only to strategy formulation

  strategic planning
• is to exploit and create new and different opportunities for tomorrow; long-range planning, in contrast, tries to optimize for tomorrow the trends of today.

  purpose of strategic management
• strategic management process consists of three stages:

  strategy formulation

  strategy implementation

  strategy evaluation
• • developing a vision and mission,

  • identifying an organization’s external opportunities and threats,

  • determining internal strengths and weaknesses,

  • establishing long-term objectives,

  • generating alternative strategies, and

  • choosing particular strategies to pursue.

  Strategy formulation
• • deciding what new businesses to enter,

  • what businesses to abandon

  • how to allocate resources,

  • whether to expand operations or diversify,

  • whether to enter international markets,

  • whether to merge or form a joint venture,

  • and how to avoid a hostile takeover.

  Strategy formulation issues
• Because no organization has unlimited resources, strategists must decide which alternative strategies

  will benefit the firm most.
• Strategy-formulation decisions commit an organization to specific

  products, markets, resources, and technologies over an ________

  period of time.
• For better or worse, __________________ have major

  multifunctional consequences and enduring effects on an organization.

  strategic decisions
• They have the best perspective to understand fully the ramifications of strategy-formulation decisions;

  They have the authority to commit the resources necessary for implementation.

  Top Managers
• requires a firm to

  • establish annual objectives,

  • devise policies,

  • motivate employees, and

  • allocate resources

  so that formulated strategies can be executed.

  Strategy implementation
• • developing a strategy-supportive culture,

  • creating an effective organizational structure,

  • redirecting marketing efforts,

  • preparing budgets,

  • developing and utilizing information systems, and

  • linking employee compensation to organizational performance.

  Strategy implementation
• often called the “action stage” of strategic management.

  Implementing strategy means mobilizing employees and managers to put formulated strategies into

  action.

  Strategy implementation
• Often considered to be the most difficult stage in strategic management


  Strategy implementation
• hinges upon managers’ ability to motivate employees, which is more an art than a science.

  Successful strategy implementation
• Strategies formulated but not implemented serve

  no useful purpose
• which skills are critical for successful strategy implementation. Strategy implementation activities affect all employees and managers in an organization.

  Interpersonal skills
• Every division and department must decide on answers

  to questions, such as “What must we do to implement our part of the organization’s strategy?” and “How best can we get the job done?”
• The challenge of implementation is to stimulate managers and

  employees throughout an organization to work with _____ and __________ toward achieving stated objectives.

  pride and enthusiasm
• is the final stage in strategic management.


  Strategy evaluation
• • Managers desperately need to know when particular strategies are not working well;

  • strategy evaluation is the primary means for obtaining this information.


  Strategy evaluation
• All strategies are subject to future modification because ________ and ________ factors are constantly changing.

  external and internal
• (1) reviewing external and internal factors that are the bases for current strategies,

  (2) measuring performance, and

  (3) taking corrective actions.

  fundamental strategy evaluation
• is needed because success today is no guarantee of success tomorrow!


  Strategy evaluation
• three hierarchical levels in a large organization:

  corporate, divisional, functional
• Most small businesses and some large businesses do not have _________ they have only the corporate and

  functional levels.

  divisional
• Strategy implementation activities affect all _________ and ________

  employees and managers