STRATEGIC MANAGEMENT

• Strategic management


  The art and science of formulating, implementing, and evaluating cross-functional decisions that enable an organization to achieve its objectives
• Stages of Strategic Management

  • Strategy Formulation
  • Strategy Implementation
  • Strategy Evaluation
• Strategy Formulation


  1. Developing a vision and mission

  2. Identifying an organization's external opportunities and threats

  3. Determining internal strengths and weaknesses

  4. Establishing long-term goals

  5. Generating alternative strategies

  6. Choosing particular strategies to pursue
• Strategy Formulation


  • Deciding what new business to enter
  • Deciding what business 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
  • How to avoid a hostile takeover
• Strategy Implementation


  • Often called as the "action stage"
  • Developing a strategy-supportive culture
  • Creating an effective organizational structure
  • Redirecting marketing efforts
  • Preparing budgets
  • Developing and utilizing information systems
  • Linking employee compensation to organizational performance
• Strategy Implementation


  1. What must we do to implement our part of the organization's strategy?

  2. How best can we get the job done?
• Strategic-management process


  An attempt both to duplicate what goes on in the mind of a brilliant, intuitive person who knows the business and to couple it with analysis
• Strategy Evaluation


  Primary means for obtaining information on knowing when particular strategies are not working well
• Competitive Advantage


  • Anything that a firm does especially well compared to rival firms
  • Something that a firm can do that rival firms cannot do
  • Something that a firm own that rival firms desire
• Strategist


  • The individuals who are most responsible for the success or failure of an organization
  • They help the organization gather, analyze, and organize information
• Vision Statement


  What do we want to become?
• Mission Statement


  What is our business?
• External Opportunities and Threats


  Economic, social, cultural, demographic, environmental, political, legal, governmental, technological, and competitive trends and events that could signify benefit or harm an organization in the future
• Internal Strengths and Weaknesses


  • Organization's controllable activities that are performed especially well or poorly
  • Superiority or deficiency relative to competitors
• Long-Term Objectives


  Specific results that an organization seeks to achieve in pursuing its basic mission
• Strategies


  Means by which long-term objectives will be achieved
• Annual Objectives


  Short-term milestones that organizations must achieve to reach long term objectives
• Policies


  • Means by which annual objectives will be achieved
  • It includes guidelines, rules, and procedure established to support efforts to achieve stated objectives
• External audit


  Focuses on identifying and evaluating trends and events beyond the control of a single firm
• Industrial Organization


  Approach to competitive advantage that advocates external (industry) factors are more important than internal factors in a firm achieving competitive advantage
• External Factor Evaluation (EFE) Matrix


  Allows strategists to summarize and evaluate economic, social, cultural, demographic, environmental, political, governmental, legal, technological, and competitive information
• Competitive Profile Matrix (CPM)


  Identifies a firm's major competitors and its particular strengths and weaknesses in relation to a sample firm's strategic position
• Internal audit


  Focuses on identifying and evaluating a firm's strengths and weaknesses in the functional areas of business, including management, marketing, finance/accounting, production/operations, research and development, and management information systems
• Distinctive competencies


  A firm's strengths that cannot be easily matched or imitated by competitors
• Resource-Based View (RBV)


  Approach to competitive advantage contends that internal resources are more important for a firm than external factors in achieving and sustaining competitive advantage
• Internal Factor Evaluation (IFE) Matrix


  Summarizes and evaluates the major strengths and weaknesses in the functional areas of a business, and it also provides a basis for identifying and evaluating relationships among those areas
• Criteria for a resource to be valuable

  • Rare
  • Hard to imitate
  • Not easily substitutable
• RBV view

  Organizational performance will primarily be determined by internal resources that can be grouped into three all-encompassing categories: physical resources, human resources, and organizational resources
• Empirical indicators


  Enable a firm to implement strategies that improve its efficiency and effectiveness and lead to a sustainable competitive advantage
• Strategic Management


  • Allows an organization to be more proactive than reactive in shaping its own future
  • Allows an organization to initiate and influence (rather than just respond to) activities
  • Allows an organization to exert control over its own destiny