17/9/2009 Nakato Ruth Chapter one Introduction and review of strategic management

17/9/2009 Nakato Ruth

Chapter one

Introduction and review of strategic management


What is strategic management?

• Strategic management can be defined as the art and science

• of formulating, • implementing, • and evaluating cross functional decisions that

enable an organisation to achieve its objectives.


• Strategic management focuses • on intergrating management, • marketing ,• finance/accounting,• operation,• research and development and • computer information systems, • to achieve organisational success.


What is Strategic management?...

Stream of decisions taken over time by top managers which when understood as a whole reveal the goals they are seeking and the means used to reach those goals.– Strategic management emphasizes top management point

of view – strategic management is long term and futureristic;

strategic managers compete for long term survival.


The Strategic The Strategic Management ProcessManagement Process

Define the Define the Business andBusiness andSet a MissionSet a Mission

StatementStatement

Step 1Step 1

Set StrategicSet StrategicGoalsGoals

Step 2Step 2

FormulateFormulatea Strategya Strategy

Step 3Step 3

ImplementImplementthe Strategythe Strategy

Step 4Step 4

EvaluateEvaluateand Correctand Correctas Neededas Needed

Step 5Step 5


Strategic management process…

• Step 1. Define the business (current business) and set a mission statement

This involves the following;

• The mission statement;

– the mission statement explains the reason as to why you exist as an organization.

– asking the question ‘What is our business?’ is the same as asking the question

– ‘What is our mission?’ A business is defined by its mission.



• Step1 Define the business (contd)– The mission defines the long-term vision of the

organization in terms of what it wants to be and whom it wants to serve

– A company's mission is its reason for being. The mission often is expressed in the form of a mission statement, which conveys a sense of purpose to employees and

– potrays a company’s image to customers. – In the strategy formulation process, the mission statement

sets the mood of where the company should go.



• Step 1 Define the business (contd)• A good mission statement will contain the following

• the purpose of the organization – a statement of the principal activities of a business or organization;

• its principal business aims – its mission as regards the position it aims to achieve in its chosen business;

• the key beliefs and values of the company;• definitions of who are the major stakeholders in the

business;• the guiding principles that define the code of conduct

that tells employees how to behave.



– Step 1 Define the business …– b) Look at the products & services

• Who are the customers ie the present & the previous ones

– c) Look at compitence; • what can you do & what cant you do? • Do you have the capacity? • Business that don’t have the capacity fail! ie the

capacity to run a sch—teachers,



• Step 2 Setting strategic goals. – Top management’s broad vision and mission are

translated into operational strategic objectives.– Objectives are rules and guidelines i.e mile stones; – set objectives that are inline with the business. – Objectives should be smart; – when setting objectives look at the environment

( swot analysis),– look at your strenghts & weaknesses.– Look at your opportunities in the environment and

your threats.



• Step 3 Formulating a strategy to achieve the strategic objectives.

• A strategy is a course of action that explains how the enterprise will move from the business it is in now to the business it wants to be in– , given external opportunities and threats and

internal strengths and weaknesses.


• A strategy enables you achieve your objectives & target.• E.g. what should be done to increase the market share, • or want to increase on the customer care;• you have to evaluate the strategies and drop those that

are not useful and avoid drop error.• Incremental (old) using the strategy you used earlier to

solve the current problem.• Emergent (new developing a new strategy thus solving a

problem you never faced be4 or developing new strategy.



• Step 4; Implementing the strategy.

– Drawing upon the functions of the management process allows management to translate strategy into actions and results.

• Actualizing the strategy.

• A good strategy with poor implementation is as good a poor strategy.


Strategy implementation

• Strategy implementation means mobilizing employees and manager to put formulated strategies into action.

• Strategy implementation requires a firm to establish annual objectives, – devise policies,


• motivate employees, – and allocate resources so that formulated strategies

can be executed.– Strategy implementation includes 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.



• Step 5; Strategy evaluation, monitoring and control– Evaluating performance and correcting as required. – Strategic control involves assessing the firm’s

progress toward its strategic objectives and making corrections as needed.

– Strategic control keeps the company’s strategy up to date.


Strategy evaluation is the final stages in strategic management. There are three fundamental strategy evaluation activities:

• Reviewing external and internal factors that are the bases for current strategies.

• Measuring performance.• Taking corrective actions.• Strategy formulation, • implementation and evaluation activities • occur at three hierarchical levels in a large organization:

– corporate,• divisional or strategic business unit,• and functional.• By fostering communication and interaction among managers and

employees across hierarchical levels, • strategic managements help a firm function as a competitive team.



• Step 5; Strategy evaluation (contd)

• Rumelt suggests that three questions are central to the challenge of strategy evaluation:

1. Are the objectives of the business appropriate?

2. Are the major policies and plans appropriate?

3. Do the results obtained to date confirm or refute critical assumptions on which the strategy rests?


Key questions in strategic management

• These questions help you to follow the process well


Key questions …

• Question 1• Where are we now as a business?• Here you are looking at the current position.

– Do it by SWOT analysis.

– If you are in the right position then you are doing the right things.

– If it is worse than before then find out where the problem is. This question answers, business definition, current position.


Key questions…

• Question 2

• Where do we want to be?

• Where are we going? As a business you want to be better than you were before!


Key questions…

• Question 3• How do we get there?• Here you are looking at the strategies. You have to be

efficient and effective. You must do the right things (effective).

• You must do things right (efficient)


Key questions…

• Question 4

• How do we ensure arrival (Do it)?– This is implementation.


Key questions…

• Question 5• How do we measure our progress?• Have we reached there? Have we achieved what we

wanted to achieve? Or we boarded a wrong bus? You can use your objectives to monitor your progress. You can also bench mark; looking at what you are doing and what your competitors are doing.


Thank you

Documents

17/9/2009 Nakato Ruth Chapter one Introduction and review of strategic management