Strategic Management PDF

Strategic Management Muge Ozman  Syllabus: What will we do? – develop the knowledge and skills necessary to effectively formulate and implement strategy; – to develop strategic thinking by equiping the students with the concepts, models and tools of strategic analysis...

Strategic Management Muge Ozman  Syllabus: What will we do? – develop the knowledge and skills necessary to effectively formulate and implement strategy; – to develop strategic thinking by equiping the students with the concepts, models and tools of strategic analysis; – To apply the concepts of strategic analysis in complex business environments through... – developing the communication, problem solving and presentation skills of the student and her ability to participate in team work.  Syllabus: What will we do? Textbook 1. Henry, A. (2021) Understanding Strategic Management, Oxford University Press. 2. R. GRANT , Contemporary Strategy Analysis, Blackwell Publishing, 2016  Outline What is strategy? Effect of strategy on success The Strategic Management Model Examples from company websites: mission and values A brief history of strategic management as a discipline Schedule of the course  Strategy is…. about achieving a competitive advantage Meeting customer needs better than rivals about being different (Porter, 1996)  Strategy is concerned with the questions of… Who should the organization target as customers? What products or services should be offered? How can the organization do this efficiently?  Challenges to strategic management Globalization Electronic commerce ICTs, platforms New technologies: IoT, AI, nanotech, etc. Rapid change in consumer tastes Reduced product life cycles An ever increasing competitive environment Environmental concerns, climate change Social problems, rising inequality  The Role of Strategy in Sucess Succesful strategy Effective implementation Goals that are Objective appraisal of the simple, internal resources consistent long term Very good understanding of the competitive environment Strategic Management Model  Environmental Scanning General environme nt Sociocultural forces Economic forces Internal Technological Environment Resources forces Political - legal Capabilities Core competencies Competitive environmen t competitorslabor unions Strategy formulation FIRM customers creditor s Interest groups  Environmental Scanning Kay (1993) an organization’s strategy is ‘…the match between its internal capabilities and external relationships’ Internal: what the organization is capable of doing External: Its relationship with employees, customers, shareholders, and suppliers.  Strategy Formulation  Mission: Purpose or reason for the existence of the organization. What does it provide to the society? Offers a pointer to the overall direction that strategy will take the company. Why does the organization exist?  Vision: Concerned with the future plans of the organization  Strategy Formulation  Objectives and Goals: what is to be accomplished by when? Examples:  Profitability (net profits)  Efficiency (low costs)  Growth (increase in total assets etc;)  Shareholder wealth (dividends and stock price appreciation)  Utiliization of resources  Reputation  Contributions to employees (security wages etc.)  Contributions to society (charity work, etc)  Market leadership  Technological leadership  Survival  Strategy Formulation ategies:how will the corporation achieve its mission and ob Corporate Strategy: concerned with the management of various businesses and product lines / diversification / acquisition / new ventures Business Strategy: occurs at the business level, concerned with improving competitive position within a particular industry / segment of the market Functional Strategy: by a functional area, to achieve corporate and business unit objectives  Strategy Formulation Corporate strategy is concerned with which markets an organization wants to compete in Business strategy deals with how an organization will compete in its chosen industry or market Functional strategy occurs according to functional lines such as R&D, marketing and finance  Strategy Formulation Policies: Broad guideline for decison making that links the strategy formulation and implementation Southwest airlines « offers no meals or reserved seating on airplanes » (suppoerts low cost strategy)  Strategy Implementation Putting strategies into action… Program: statement of activities to accomplish a plan Budget: How much does the program cost? Procedures: how is a particular task going to be done within the program.  not all strategies work out… mind the gap between formulation and implementation why strategies don’t always succeed?  A failure to communicate strategy throughout the organization  Inconsistency between management talk and management action  Lack of top management support for strategic initiatives  Evaluation and Control Comparison of actual and desired performance: pinpoint weaknesses in previous plans Adjustment of strategies… Strategy setting is a continuous process…  Corporate Strategy vs Industrial Economics  Industrial Economics takes an industry sector view. And also : Industrial Economics has primarily a descriptive approach Initially, it was designed for policy makers in charge of sector & industrial policies. Some terms used frequently in SM Market share, in strategic management it is the percentage or proportion of the total available market or market segment that is being serviced by a company. Competitive advantage is a position a firm occupies against its competitors, allowing it to earn revenues higher than costs, Revenue: total amount of money that comes into aour business from sales for a particular period of time Income: Revenue minus cost of goods/services we have sold for the period Profit: difference between revenue and costs  A Brief History of Strategic Management A discipline which evolved through practical needs of business Through time, significant changes in business studies took place. These changes occured because of changes in social, economic, technological changes.  A Brief History of Strategic Management 50s – 60s – Concept of corporate planning – Based on long range forecasts of demand, and adjusting production, inventories, investments, etc. – Those days things were more predictable, industrial change occured slowly…  A Brief History of Strategic Management 60s – 70s – Importance of diversification in corporate planning – Deciding the product mix  A Brief History of Strategic Management 70s-80s Several events, like: – oil shock of 74, 79 – Macroeconomic instability – Increased international competition (Japan, Europe, South Asia) – Turbulent business environment END OF CORPORATE PLANNING…..  A Brief History of Strategic Management 70s-80s A Shift from planning to strategy making because of increasing focus on competition as the central characteristic of the business environment Competitive advantage as the primary goal of strategy  A Brief History of Strategic Management 70s-80s: Focus on external environment Which industries are profitable? Boston Consulting Group – Impact of market share on profits Determination of profit differences between industries  A Brief History of Strategic Management 90s: Focus on internal environment Resources and capabilities of the firm as the main source of competitive advantage Identify how they are different from competitors… Porter: competitive strategy is not about being better, it is about being different  A Brief History of Strategic Management Late 90s: digitization, mobile telephony, internet Knowledge based economy New business opportunities New business models developed Like: ebay, e-commerce etc.  A Brief History of Strategic Management 2000s: Strategy has become managing uncertainty, rapidly changing markets, technology… Corporate social responsibility: environment Innovation Looking into emerging countries like India, China, as sources of future growth  History of strategic management 50s – 60s 70s – 80s 90s Corporate External Internal Planning Environment Environment How much to Profitable Who are we? produce? industries 2000s Late 90s New millenium New economy CSR Innovation, Ethics uncertainty Global strategies  Thinking exercise Think of a company you know. Write a mission statement for it. Visit companies website, see what their mission is in reality.  Some web sites Some Useful Web Sites http://knowledge.wharton.upenn.edu/ Business Source Complete, DataMonitor Industry and Company Reports. accessed from mediatheque http://www.wired.com/ http://www.economist.com/ http://www.businessweek.com/