Strategic Management Overview

The process of choosing what needs to be done in the future and creating action plans to achieve specific goals.

A comprehensive game plan that guides the company towards achieving its overall objectives.

Plans that outline the specific steps and resource allocation to achieve organizational goals. These plans are typically developed by middle and lower-level management.

The ability to effectively carry out a chosen strategy, involving learning, adapting, and making adjustments as needed.

A proactive approach to identify and address any shortcomings in strategy or execution, ensuring continual improvement.

Setting clear, measurable goals for each year that align with the overall strategic direction.

Formal guidelines that dictate how to handle specific situations like a product return policy.

Allocating financial, human, and other resources needed to support the implementation of strategic plans.

Modifying the organizational structure to better support new strategic directions.

Implementing significant changes to processes and systems to improve efficiency and effectiveness.

Developing a system of rewards and incentives that align with and motivate employees to reach strategic goals.

Addressing employee concerns, anxieties, and resistance to change implementation effectively.

Cultivating a company culture that supports the chosen strategic direction.

A company's formal setup including roles, processes, governance, authority, and decision-making.

A structure best for small companies with a single product and market, often used for cost leadership or differentiation strategies.

The owner-manager is responsible for all decisions and operations, with staff acting as executors.

Limited specialization, few rules, informal, unsophisticated communication systems, and direct owner involvement characterize simple structures.

Fast communication and quick product launches are advantages of simple structures.

Growth challenges simple structures as information demands increase, putting pressure on owner-managers to cope.

When companies grow, they often need to evolve their structure to manage information and complexity effectively.

The simple structure may be suitable for small companies, but it can become inadequate as a company grows and becomes more complex.

New behavior must completely replace the old one for change to be successful and lasting.

Continuous reinforcement is needed for new behavior to stick and not fade away.

The change process is ongoing, not just a one-time event. It adapts to the dynamic environment.

The process of unfreezing, changing, and refreezing is a cycle that continues indefinitely.

Digital transformation involves utilizing digital tech to create new, improved, or completely different company processes, products, or services.

Change management is crucial for guiding and managing transformations within an organization.

This is a set of tools and practices used to manage changes within an organization effectively.

Change management helps in ensuring that changes happen in a controlled and safe way, minimizing negative impacts.

A strategic business unit (SBU) is a semi-autonomous unit within a larger organization that operates in a specific product-market area.

The degree of relatedness between SBUs within a corporation can be determined by considering factors like technology, products, services, markets, and shared competencies.

A company can diversify its operations by acquiring or creating SBUs that share similar technologies, products, or services.

SBUs serving similar or different markets can also contribute to diversification. Even if the products are different, a company might benefit from serving similar customer segments.

Companies can diversify by leveraging the shared competencies across different SBUs. This can include marketing skills, branding expertise, or distribution networks.

The matrix structure combines functional and product/project forms at the same organizational level, allowing employees to report to both a functional manager and a product manager.

The matrix structure is most appropriate when neither functional nor divisional structures alone effectively support the organization’s strategic goals.

In a matrix structure, functional units (e.g., engineering, manufacturing, marketing) are typically permanent, while product/project units are often temporary, focused on specific product-market needs.

A Strategic Business Unit (SBU) is a distinct group of related products or businesses within a larger corporation. It is managed independently, having its own set of goals, strategies, and resources.

SBUs are created by grouping related businesses together based on their shared functionality or market characteristics. This helps a corporation streamline its strategic planning process.

By grouping businesses into distinct SBUs, the corporation can allocate resources, set priorities, and develop strategies more effectively for each unit.

Each SBU operates with its own unique mission, goals, competitive landscape, and strategic approach, allowing for a more focused and tailored approach to strategic planning.

By treating each SBU as a separate entity, the corporation can analyze and manage its performance more precisely, identifying areas for improvement and growth.

Each SBU is led by a CEO responsible for developing and executing strategies for its specific business area, ensuring its profitability and success.

The SBU approach eliminates confusion and vagueness that can arise in multi-business corporations by providing a clear framework for strategic planning and resource allocation.

Using the SBU structure eliminates the need for inefficient territorial grouping of businesses, which can hinder strategic planning and resource allocation.