Historical development of Strategic Management

Historical development of Strategic Management1. Birth of strategic managementOriginated in the 1950s and 60sAlfred D. Chandler. Jr.;Philip Selznick;Igor Ansoff;Peter F. Drucker1950 - 1960 Alfred Chandler(strategy and structure)Important taking a long term perspective when looking to the future

Strategy was necessary to give a company structure, direction and focusPhilip Selznick, 1957SWOT AnalysisMatching internal factors organization with external environment

Strengths and weaknesses : Company environment

Opportunity and threats : business environment

Igor Ansoff, 1965(Corporate Strategy)Mengembangkan suatu strategy yang membandingkan market penetration strategies, product development strategy, market development strategy, and horizontal and vertical integration and divestification strategies.Ansoff Matrix/Growth Strategies

Ansoff's matrix provides four different growth strategies:

Market Penetration - the firm seeks to achieve growth with existing products in their current market segments, aiming to increase its market share.Market Development - the firm seeks growth by targeting its existing products to new market segments.Product Development - the firms develops new products targeted to its existing market segments.Diversification - the firm grows by diversifying into new businesses by developing new products for new markets.

Druckers Seven Key Ideas Management Will Be - Management by Objectives and Self Control (MbO) Decentralisation as the Preferred Structure The Integration of Productivity by Automation and Profit 4. Managers Must Measure 5. The Entrepreneurial Function is: The Purpose of a Business which is to create a customer6. People are Central to the Organisation7. The Managers Job is Total Integration2. Corporate Planning

(GROTH ANd PORTOFOLIO Theory)In the 60s early 70s - Harvard School- Schumacher

1960 1970, Harvard SchoolPIMS Study (Profit Impact Marketing Strategies) :

Keterkaitan antara profit dan strategy dengan ukuran, pertumbuhan dan teori portofolio

Diversifikasi, Franchise, Merger, Akuisisi dan joint venture, etc.Growth and portfolio theory Profit Impact of Marketing Strategies (PIMS)

effect of market share

Started at General Electric, moved to Harvard in the early 1970s, and then moved to the Strategic Planning Institute in the late 1970s, it now contains decades of information on the relationship between profitability and strategy

"PIMS provides compelling quantitative evidence as to which business strategies work and don't work" - Tom Peters. Bruce Henderson, 1968-BCG Matrix

Schumacher, 1973A low market share strategy could also be very profitable

3. Positioning

In the mid 70s mid80s- Harry Markowitz (1970-1980)- Jact Trout & Al Ries (1979)

1970 1980, Harry MarkowitzPortfolio theory (a broad portfolio of financial assets could reduce specific risk.

Boston Consulting Group/BCG Analysis(teknik yang dikembangkan untuk menganalisis hubungan antara elemen-elemen dalam suatu portfolio)Jact Trout & Al Ries, 1979Strategy not must judged by internal factors company but its how customer see companies in competition.

Strategy implementation its created a position in mindset consumer.

4. Competitive AdvantageIn the late 80s 90s- Michael Porter (1980-1990)- Ellen-Earle Chaffee, 1985- Tom Peters, Nancy Austin, 1985- Henry Mintzberg , 1988- Robert Kaplan, 1992- McKinsey, 1995

1980 1990, Michael Porter

(Competitive advantage andSustainable Competitive Advantage)Paradoksal,High market share and Low market share companies were often very profitable

5 Force analysis generic strategies, value chain and Strategic business units

The five Force Porter (1980)

Michael Porter in 1985 Competitive Advantage: Creating and Sustaining Superior Performance."

Ellen-Earle Chaffee, 1985The main elements of strategy management theory

Strategy management involve adapting the organization to its business environment

Strategy management is fluid and complex. Change creates novel combinations of circumstances requiring instructured non repetitive responses

continueStrategy management affects the entire organization by providing direction

Strategy management involved both strategy formulation (content) and also strategy impelemtation (process)

Strategy management is partially planned and partially unplannedcontinueStrategy management is done at several levels overall corporate strategy and individual business strategies

Strategy management involves both conceptual and analytical thought processes

Tom Peters, Nancy Austin, 1985Management By Walking Around (WBWA) they spent most of their days visiting employee, customers and suppliers

System, 3 actual : place, thing and situation

1988, Henry Mintzberg strategic planning. Instead he concludes that there are five types of strategies. They are: Strategy Process

Strategy as plan - a direction, guide, course of action - intention rather than actual Strategy as ploy - a maneuver intended to outwit a competitor Strategy as pattern - a consistent pattern of past behavior - realized rather than intended Strategy as position - locating of brands, products, or companies within the conceptual framework of consumers or other stakeholders - strategy determined primarily by factors outside the firm Strategy as perspective - strategy determined primarily by a master strategist

BALANCE SCORECARD1992, Robert Kaplan dan David Norton dalam Harvard Business Review edisi Januari-Pebruari 1992,metode pengukuran :

The Balanced Scorecard Measures That Drive Performance.

1996 Balance ScoreCard direvisi dengan munculnya istilah strategy map / peta strategi.

lebih lanjut tahun 2004 Balance ScoreCard lebih diperbaharui dengan pembahasan lebih rinci mengenai peta strategi dengan terbitnya buku :strategy maps, converting intangible assets into tangible assets 1995, McKinsey (7S Framework) They divided management into 7 aspects Hard Factors : Strategy, Structure, Systems

Soft Factors :Skills, Staff, Style, and Supraordinate goals (which we would now call shared values )

5. Strategy InnovationIn the 2000s- Knowledge ManagementThe 21 stcentury competitive landscape

globalization of industries and their markets

rapid and significant technological changes Firms use the strategic management process to achieve strategic competitiveness and earn above-average returns. Strategic competitiveness is achieved when a firm has developed and learned how to implement a value-creating strategy.

THE STRATEGIC MANAGEMENT PROCESSA strategy is

an integrated and coordinated set of commitments and actions designed to exploit core competencies and gain a competitive advantage.

Finally The End