The Strategic Management Process

http://www.bized.co.uk

Copyright 2006 – Biz/ed

ByYais Mulya Aisyah

14411015

Management Rekayasa Industri



The Strategic Management Process



• Competitive advantage — operating with an attribute or set of attributes that allows an organization to outperform its rivals

• Sustainable competitive advantage — one that is difficult for competitors to imitate



Types of competitive advantage• Cost and quality• Knowledge and speed• Barriers to entry• Financial resources



Strategy a comprehensive action plan that identifies longterm direction for an organization and guides resource utilization to accomplish organizational goals with sustainable competitive advantage

Strategic intent focusing all organizational energies on a unifying

and compelling goal



Levels of strategies• Corporate

Sets long-term direction for the total enterprise• Business

How a division or strategic business unit willcompete in its product or service domain

• FunctionalGuides activities within one specific area of operations



Strategic Management Process:• Strategic management

the process of formulating and implementing strategies to accomplish long-term goals and sustain competitive advantage

• Strategic analysisprocess of analyzing the organization, the environment, its competitive position and current strategies



Strategic Management Process:• Strategy formulation

the process of crafting strategies to guide allocation of resources

• Strategy implementationputting strategies into action



Strategy formulation• The process of creating strategy• Involves assessing existing strategies,

organization, and environment to develop new strategies and strategic plans capable of delivering future competitive advantage



Strategy implementation• The process of allocating resources and

putting strategies into action• All organizational and management

systems must be mobilized to support and reinforce the accomplishment of strategies



SWOT Analysis

Examination of an organization’s current position by looking at

• Internal strengths and weaknesses• Environmental opportunities and

threats



External Environment

The general or macroenvironment — all of the background conditions in the external environment of the organization including:

• Economic : health of the economy• Legal-political : norms, customs, social values• Socio-cultural : philosophy/objectives of political party

running the government• Technological : development and availability of

technology• Natural environment : nature and conditions of

environment



The specific (task) environment – actual organizations, groups, and persons with whom an organization interacts and conducts business. Includes important stakeholders



Customer relationship managementestablishes and maintains high standards of customer service in order to strategically build lasting relationships with and add value to customers.

Supply chain managementstrategic management of all operations relating to an organization’s resource suppliers



Environmental uncertaintya lack of complete information regarding what exists and what developments may occur in the external environment

Two dimensions of environmental uncertainty:

• Degree of complexity• Rate of change



Decision-Making Process

Managers make decisions with various amounts of information

• Certain environment • offers complete information on possible action alternatives

and their consequences• Risk environment • lacks complete information but offers

probabilities of the likely outcomes for possible action alternatives

• Uncertain environment• lacks so much information that is difficult to assign

probabilities to the likely outcomes of alternatives



Five-step decision-making process:• Identify and define the problem• Generate and evaluate alternative

solutions• Make decision• Implement the decision• Evaluate results



Step 1 — Find and define the problem• Focuses on information gathering, information

processing, and deliberation• Decision objectives should be established• Common mistakes in defining problems:

– Defining the problem too broadly or too narrowly– Focusing on symptoms instead of causes– Choosing the wrong problem



Step 2 — generate and evaluate alternative courses of action

• Potential solutions are formulated and more information is gathered, data are analyzed ,the advantages and disadvantages of alternative solutions are identified

• Approaches for evaluating alternatives:– Stakeholder analysis– Cost-benefit analysis



Criteria for evaluating alternatives:• Benefits• Costs• Timeliness• Acceptability• Ethical soundnessCommon mistakes:• electing a particular solution too quickly• Choosing a convenient alternative that may have

damaging side effects or may not be as good as other alternatives



Step 3 — decide on a• preferred course of action

– Two different approaches– Behavioral model leads to

• satisficing decisions– Classical model leads to optimizing

decisions



Step 4 — implement the decision solution• Involves taking action to make sure the

solution decided upon becomes a reality• Managers need to have willingness and

ability to implement action plans• Lack-of-participation error should be

avoided



Step 5 — evaluate results• Involves comparing actual and desired• results• Positive and negative consequences of chosen

course of action should be examined• If actual results fall short of desired results, the

manager returns to earlier steps in the• decision-making process



Creative Decision making:• Creativity is the generation of a novel idea or

unique approach that solves a problem or crafts an opportunity– creativity is more likely when decision makers

are highly task motivated• Organizations should create an environment• that supports and encourages creativity



Situational creativity drivers• Team creativity skills• Management support for creative

ideas• Organizational culture