Stratagic Managemenlklmt Process

7/27/2019 Stratagic Managemenlklmt Process

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The Strategic Management Process


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Overview

Why do some firms succeed while others fail? A central objective of strategic management is tolearn why this happens.

What is strategy? An action a company takes to attain superior performance.

What is the strategic management process?The process by which managers choose a set of strategies for the enterprise to pursue its vision.


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Defining the Mission and Setting Top-Level Goals

External Analysis of Opportunities and Threats

Internal Analysis of Strengths and Weaknesses

Selection of Appropriate Strategies

Implementation of Chosen Strategies

Strategic Planning

Rational planning by top management?Basic Strategic Planning Model


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FIGURE 1.1

The MainComponents of the StrategicPlanning Process


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Mission and Goals

MissionSets out why the organizationexists and what it should be doing.

Major goalsSpecify what the organization hopesto fulfill in the medium to long term.

Secondary goals Are objectives to be attained that lead to superior performance.


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External Analysis

Identify strategic opportunities and threats inthe operating environment.

Macroenvironment National

Immediate (Industry)


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Internal Analysis

Identify strengthsQuality and quantity of resources availableDistinctive competencies

Identify weaknessesInadequate resourcesManagerial and

organizational deficiencies


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Strengths and WeaknessesOpportunities and Threats

(SWOT Analysis)

Strategic Choice BusinessFunctional

GlobalCorporate

SWOT and Strategic Choice


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Business-Level Strategies

Cost leadership Attaining, then using the lowest total cost basis as acompetitive advantage.

DifferentiationUsing product features or services to distinguish thefirms offerings from its competitors.

Market niche focusConcentrating competitively ona specific market segment.


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Functional-Level Strategies

Focus is on improving the effectiveness of operations within a company.

Manufacturing

MarketingMaterials managementResearch and development

Human resources


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Global-Level Strategies

MultidomesticInternationalGlobalTransnational


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Corporate-Level Strategies

Vertical integrationDiversificationStrategic alliancesAcquisitions

New venturesBusiness portfoliorestructuring


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Strategy Implementation

Designing organizational structureDesigning control systems

Market and output controlsBureaucratic controlsControl through organizational cultureRewards and incentives

Matching strategy, structure,

and controlsCongruence (fit) among strategy,structure, and controls

Structure

Strategy

Controls


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Managing Strategic Change

The only constant is change.Success requires adapting strategy andstructure to a changing world.

The feedback loop instrategic planning. Corporate

Functional

BusinessOperational


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Strategic Managers

General managersResponsible for the overall (strategic) performanceand health of the total organization.

Operations managersResponsible for specific businessfunctions or operations.


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Strategic Managers for All Levels

FIGURE 1.2


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Strategic Leadership

Vision, eloquence, and consistencyCommitment to the vision

Being well informedWillingness to

delegate and empower Astute use of power

Emotional intelligence


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Strategy as an Emergent Process

Strategy making in an unpredictable worldCreates the necessity for flexible strategic approaches.

Strategy making by lower-level managersStrategy evolves through autonomous action.

Serendipity and strategy Accidental discoveries and happenstances can have dramaticeffects on strategic direction.

Intended and emergent strategiesRealized strategies are combinations of intended andemergent strategies.


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FIGURE 1.3

Intended and Emergent Strategies

Source: Reprinted from Strategy Formation in an Adhocracy,by Henry Mintzberg and Alexandra McGugh, published in

Administrative Science Quarterly , Vol. 30, No. 2, June 1985, bypermission of Administrative Science Quarterly .


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FIGURE 1.4

The Strategic Management Processfor Intended and Emergent Strategies


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Strategic Planning in Practice

Planning under uncertaintyScenario planning for dynamic environmental change

Ivory tower planningLack of contact with operational realities

The importance of involving operating managersProcedural justice in the decision-making process

Engagement, explanation, and expectations

Planning for the present: Strategic IntentRecognition of the static nature of the strategic fit modelStrategic intent in focusing the organization on winning byachieving stretch goals


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Improving Strategic Decision Making

Cognitive biases systematically influence therationality of decision makers.

FIGURE 1.5


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Copyright 2001 Houghton Mifflin Company. All rights reserved. 1-23

Groupthink and Strategic Decisions

Pitfalls of groupthink Failing to question underlying assumptions.Coalescing around a single person or policy.

Filtering out conflicting information.Developing after-the-fact rationalizations.Having an emotional (nonobjective)

commitment to an action.


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C ight 2001 H ght Miffli C All ight d 1 24

Techniques for Improving Decision Making

Two decision-making processesthat counteractcognitive biasesand groupthink.

FIGURE 1.6

Documents

Stratagic Managemenlklmt Process