I. Strategic Management

8/13/2019 I. Strategic Management

1/23

StrategicManagement

PRELIMS

MILLET T. DE GUZMAN, MMT


2/23

Strategic Management

Can be defined as the art andscience of formulating ,

implementing, and evaluatingcross-functional decisions thatenable an organization toachieve its objectives.


3/23


4/23

Strategic Planning was originated inthe 1950s and was very popularbetween mid-1960s and mid 1970s.

Following that boom, however,

strategic planning was cast asideduring 1980s as various as planningmodels did not yield higher returns.

The 1990s, however, brought therevival of strategic planning, and theprocess is widely practiced today in

the business world.


5/23

3 Stages of StrategicManagement

1. Strategy Formulation2. Strategy Implementation3. Strategy Evaluation and

Control


6/23

Integrating IntuitionAnalysis

Intuition is essential to making goodstrategic decision. Intuition is

particularly useful for makingdecisions in situation of greatuncertainty or little precedent. It is

also helpful when highly interrelatedvariables exist or when it is necessaryto choose from several plausible

alternatives.


7/23


8/23

Key Terms in StrategicManagement

1. Competitive advantageis defined as anything that a

firm does especially wellcompared to rival firms.

2. Strategists are individuals whoare most responsible for thesuccess or failure of an

organization.


9/23

3. Vision and Mission Statements

Vision statements answer thequestion: What do we wantto become? Developing a Vision

statement is often considered the firststep in strategic planning, precedingeven development of a mission

statement. Mission statements are enduring

statements of purpose that distinguish

one business from other similar firms.


10/23


11/23

6. Long-Term ObjectivesObjectives can be defined as specificresults that an organization seeks toachieve in pursuing its basic mission.Long term means more than one year.

7. Strategies are the means by which long-term objectives will be achieved. Businessstrategies may include geographic

expansion, diversification, acquisition,product development, market penetration,retrenchment, divestiture, liquidation, and

joint venture.


12/23

8. Annual Objectives are short-termmilestones that organizations must

achieve to reach long-term objectives. Likelong-term objectives, annualobjectives should be measurable,quantitative, challenging, realistic,

consistent, and prioritized.9. Policies are the means by which annual

objectives will be achieved. Policiesinclude guidelines, rules, and proceduresestablished to support efforts to achievestated objectives. Policies are guides todecision making and address repetitive or

recurring situations.


13/23

The Strategic Management Model


14/23

The framework illustrated in Figure 1-1 is awidely accepted, comprehensive model of

the strategic-management process. Thismodel does not guarantee success, but itdoes represent a clear and practicalapproach for formulating, implementing,and evaluating strategies. The strategic-management process is dynamic andcontinuous. change in anyone of the majorcomponents in the model can necessitatea change in any or all of the othercomponents


15/23

Benefits of StrategicManagement

A. Financial BenefitsResearch indicates that organizationsusing strategic-management concepts aremore profitable and successful than those

that do not B. Nonfinancial Benefits

Besides helping firms avoid financial demise,strategic management offers other tangible

benefits, such as an enhanced awareness ofexternal threats, an improved understanding ofcompetitors strengths, increased employeeproductivity, reduced resistance to change,and a clearer understanding of performance-

reward relationships.


16/23

Why Some Firms Do noStrategic Planning

Some reasons for poor or no strategic planning are asfollows: Poor reward structures Fire fighting Waste of time Too expensive Laziness Content with success Fear of failure

Overconfidence Prior bad experience Self-interest Fear of the unknown

Honest difference of opinion Suspicion


17/23

PITFALL IN TRATE IPLANNING

Some pitfalls to watch for and avoid in strategicplanning are provided below:

Using strategic planning to gain control overdecisions and resources

Doing strategic planning only to satisfyaccreditation or regulatory requirements

Too hastily moving from mission development

to strategy formulation Failing to communicate the plan toemployees, who continue working in the dark


18/23


19/23


20/23

GUIDELINES FOR EFFECTIVE STRATEGIC MANAGEMENT

Failure to Follow Certain Guidelines in Planning CanCause Problems1.An integral part of strategy evaluation must be to

evaluate the quality of the strategic-managementprocess. Issues such as Is strategic management in

our firm a people process or a paper process?should be addressed.2. Strategic decisions require trade-offs such as long-

range versus short-range considerations ormaximizing profits versus increasing shareholders

wealth.3. Subjective factors such as attitudes toward risk,concern for social responsibility, and organizationalculture will always affect strategy-formulationdecisions, but organizations must remain as

objective as possible


21/23

BUSINESS ETHICS AND

STRATEGIC MANAGEMENT Business ethics can be defined as

principles of conduct withinorganizations that guide decisionmaking and behavior. Good businessethics are a prerequisite for goodstrategic management; good ethics is

just good business.


22/23

COMPARING BUSINESS AND

MILITARY STRATEGY A fundamental difference betweenmilitary and business strategy is

that business strategy isformulated, implemented, andevaluated with the assumption

of competition, while militarystrategy is based on anassumption of conflict.


23/23

The Nature of GlobalCompetition

A. International Firms orMultinational Corporations

1.Organizations that conduct business

operations across national borders arecalled international firms or multinationalcorporations.

2. The term parent company refers to a firm investing in international

operations; host country is the countrywhere that business is conducted

Documents

I. Strategic Management