Strama

• Strategic management


  A set of managerial decisions and actions that help determine the long-term performance of an organization
• Phases of strategic management

  • Basic financial planning
  • Forecast-based planning
  • Externally oriented (strategic) planning
  • Strategic management
• Basic financial planning


  • Managers initiate serious planning when they are requested to propose the following year's budget
  • Projects are proposed on the basis of very little analysis, with most information coming from within the firm
  • Normal company activities are often suspended for weeks while managers try to cram ideas into the proposed budget
  • The time horizon is usually one year
• Forecast-based planning


  • As annual budgets become less useful at stimulating long-term planning, managers attempt to propose five-year plans
  • At this point, they consider projects that may take more than one year
  • This phase is also time consuming, often involving a full month or more of managerial activity to make sure all the proposed budgets fit together
• Externally oriented (strategic) planning

  • Top management takes control of the planning process by initiating a formal strategic planning system
  • The company seeks to increase its responsiveness to changing markets and competition by thinking and acting strategically
• Strategic management


  • Top management forms planning groups of managers and key employees at many levels, from various departments and workgroups
  • They develop and integrate a series of plans focused on emphasizing the company's true competitive advantages
  • Strategic plans at this point detail the implementation, evaluation, and control issues
• Benefits of strategic management

  • A clearer sense of strategic vision for the firm
  • A sharper focus on what is strategically important
  • An improved understanding of a rapidly changing environment
• Innovation


  New products, services, methods, and organizational approaches that allow the business to achieve extraordinary returns
• Aspects of sustainability management

  • The management of traditional profit/loss
  • The management of the company's social responsibility
  • The management of its environmental responsibility
• The company has a relatively obvious long-term responsibility to the shareholders of the organization. That means that the company has to be able to thrive despite changes in the industry, society, and the physical environment.
• Learning organization


  • Skilled at solving problems systematically
  • Experimenting with new approaches
  • Learning from their own experiences and past history as well as from the experiences of others
  • Transferring knowledge quickly and efficiently throughout the organization
• Basic elements of strategic management


  • Environmental scanning
  • Strategy formulation
  • Strategy implementation
  • Evaluation and control
• Environmental scanning


  The monitoring, evaluating, and disseminating of information from the external and internal environments to key people within the corporation
• SWOT approach


  A way to represent the outcomes of environmental scanning
• Strategy formulation


  The process of investigation, analysis, and decision making that provides the company with the criteria for attaining a competitive advantage
• Mission


  The purpose or reason for the organization's existence
• Objectives


  The end results of planned activity
• Strategy: Defining the competitive Advantage

  Defining the competitive advantages
• The typical larger business addresses three

  types of strategy:

  • Corporate strategy
  • Business strategy
  • Functional strategy
• Policy: Setting Guidelines


  A broad guideline for decision making that links the formulation of a strategy with its implementation
• Strategy implementation


  A process by which strategies and policies are put into action through the development of programs, budgets, and procedures
• Programs and tactics: defining actions


  A statement of the activities or steps needed to support a strategy
• Budgets


  A statement of a corporation's programs in terms of dollars
• Procedures


  A system of sequential steps or techniques that describe in detail how a particular task or job is to be done
• Evaluation and control


  A process in which corporate activities and performance results are monitored so that actual performance can be compared with desired performance
• Initiation of strategy


  • New CEO
  • External intervention
  • Threat of a change in ownership
  • Performance gap
• Mintzberg's modes of strategic decision making

  • Entrepreneurial mode
  • Adaptive mode
  • Planning mode
  • Logical incrementalism
• Board of directors


  Has an obligation to approve all decisions that might affect the long-term performance of the corporation
• Responsibilities of the board

  • Effective board leadership
  • Strategy of the organization
  • Risk vs. initiative and the overall risk profile of the organization
  • Succession planning for the board and top management team
  • Sustainability
• Role of the board in strategic management

  • Monitor
  • Evaluate and influence
  • Initiate and determine
• Agency theory


  Concerned with analyzing and resolving two problems that occur in relationships between principals (owners/shareholders) and their agents (top management)
• Stewardship theory


  Suggests that executives tend to be more motivated to act in the best interests of the corporation than in their own self-interests
• Top management responsibilities


  Involve getting things accomplished through and with others in order to meet the corporate objectives
• Executive leadership


  The directing of activities toward the accomplishment of corporate objectives
• Strategic vision


  A description of what the company is capable of becoming
• Social responsibility


  A private corporation has responsibilities to society that extend beyond making a profit
• Friedman's traditional view of business responsibility

  • Argued against the concept of social responsibility as a function of business
• Carroll's four responsibilities of business

  • Economic responsibilities
  • Legal responsibilities
  • Ethical responsibilities
  • Discretionary responsibilities
• Stakeholder analysis


  The identification and evaluation of corporate stakeholders
• Steps in stakeholder analysis


  • Identify primary stakeholders
  • Identify secondary stakeholders
  • Estimate the effect on each stakeholder group from any particular strategic decision