Strategic Management Revision PDF 2024-2025

Strategic Management Revision semester fall 2024-2025  What is Strategic Management? Strategic Management: Art and science of 1) formulating, 2) implementing, and 3)evaluating cross-functional decisions that enable the organization to achieve its objectiv...

Strategic Management Revision semester fall 2024-2025  What is Strategic Management? Strategic Management: Art and science of 1) formulating, 2) implementing, and 3)evaluating cross-functional decisions that enable the organization to achieve its objectives. Formulating:  Starts with mission and vision  External Analysis ( EFE)  Internal analysis ( IFE)  Long term objectives  Alternative strategies  Ends with Strategy selection 8-2 Copyright © 2011 Pearson Education  What is Strategic Management? Strategic Management: Art and science of 1) formulating, 2) implementing, and 3)evaluating cross-functional decisions that enable the organization to achieve its objectives. Implementing:  Annual objectives  Policies  Employee motivation  Resources allocation Evaluation:  Internal & external review  Performance measurement  Corrective action if needed. 8-3 Copyright © 2011 Pearson Education  Why Is Strategic Management Important? 1. It results in higher organizational performance. 2. It requires that managers examine and adapt to business environment changes. 3. It coordinates diverse organizational units, helping them focus on organizational goals. 8-4 Copyright © 2011 Pearson Education  Exhibit 8–1 The Strategic Management Process 8-5 Copyright © 2011 Pearson Education  Step 1: Identifying the Current Mission, Goals, and Strategies  Mission: a statement of the purpose of an organization The scope of its products and services answers the question of why do we exist?  Vision: answer the question of what we want to become? 8-6 Copyright © 2011 Pearson Education  Exhibit 8–2 Components of a Mission Statement 8-7 Copyright © 2011 Pearson Education  Step 2: Doing an external analysis  The environmental scanning of specific and general environments Focuses on identifying opportunities and threats 8-8 Copyright © 2011 Pearson Education  Environmental scanning: includes Task environment and General environment. Task environment: Affect organization operations in a direct way. ( 5 porter forces). Such as: Competitors Customers Suppliers Employees Managers Government Creditors New entry Substitute products 8-9 Copyright © 2011 Pearson Education  Environmental scanning: includes Task environment and General environment. General environment: affecting the organization in an indirect way Such as: 8-10 Copyright © 2011 Pearson Education  The process of doing an external audit:  First gain information about competitive intelligence.  Competitive intelligence: it is a systematic process for gathering and analyzing information about competitors within ethical considerations. Sources of competitive intelligence  consultant  Internet  employee and managers  Customers surveys  Trade journals  Asking former employees within ethical consideration  Supplier and distributors  Secondly, after gathering info, a meeting of managers should be held to list the opportunities and threats to take advantage from opportunities and avoid threats. 8-11 Copyright © 2011 Pearson Education  Step 3: Doing an internal analysis  Assessing organizational resources, capabilities, and activities: Strengths create value for the customer and strengthen the competitive position of the firm. Weaknesses can place the firm at a competitive disadvantage.  Analyzing financial and physical assets is fairly easy, but assessing intangible assets (employee’s skills, culture, corporate reputation, and so forth) isn’t as easy. 8-12 Copyright © 2011 Pearson Education  part of internal audit is RBV The resource-based view (RBV) is a model that sees resources as key to superior firm performance. If a resource exhibits VRIO attributes, the resource enables the firm to gain and sustain a competitive advantage. Example: The competition between Apple Inc. and Samsung The two companies operate in the same industry and face the same external market forces. However, the companies achieve different organizational performance due to the resources differences. 8-13 Copyright © 2011 Pearson Education  VRIO Model : stands for Valuable, Rare, Inimitable, and Organized, and it serves as a powerful framework for identifying and capitalizing on competitive advantages that can propel a business to new heights. 8-14 Copyright © 2011 Pearson Education  Step 5: Implementing strategies  Implementation: effectively fitting organizational structure and activities to the environment.  The environment dictates the chosen strategy; effective strategy implementation requires an organizational structure matched to its requirements. 8-15 Copyright © 2011 Pearson Education  Step 6: Evaluating results  How effective have strategies been?  What adjustments, if any, are necessary? 8-16 Copyright © 2011 Pearson Education  The evaluation step contains 3 steps: 1- Review IFE and EFE ( Measure actual performance) 2- compare actual performance with standards and goals in the formulation stage 3- corrective action if needed ( if there is any gap between basic IFE and revised IFE ). Organizations mostly use a balanced scorecard matrix to measure and evaluate performance. - It contains from 4 perspectives ( financial, customer, learning and growth, internal process) 8-17 Copyright © 011 Pearson Education  What is a Corporate Strategy? A corporate strategy is one that specifies what businesses a company is in or wants to be in and what it wants to do with those businesses. Integrative strategies: 1. forward integration  Gain ownership or increase control over distributors. 2. Backward integration:  Increase control over suppliers. 3. Horizontal integration: - Increase control over competitors - Such as :acquisitions. 8-18 Copyright © 2011 Pearson Education  What is a Corporate Strategy? A corporate strategy is one that specifies what businesses a company is in or wants to be in and what it wants to do with those businesses. Intensive strategies 1. Market penetration: - Increase market share for the present product in present market through greater marketing efforts. - 2. market development: - - introduce the present product into new geographic areas. - 3. product development : - - increased sales by improving or modifying the present product. 8-19 Copyright © 2011 Pearson Education  What is a Corporate Strategy? A corporate strategy is one that specifies what businesses a company is in or wants to be in and what it wants to do with those businesses. 1. Diversification strategies - Related diversification: - When their value chain possesses competitive value across business strategic fit ( the same industry) - - Unrelated diversification: - When the values are dissimilar, that no competitively valuable across business relationships ( different industry) 8-20 Copyright © 2011 Pearson Education  What is a Corporate Strategy? A corporate strategy is one that specifies what businesses a company is in or wants to be in and what it wants to do with those businesses. - Defensive strategies: - 1. Retrenchment : when the organization regroups to reduce the cost of operations. - 2. divestiture: selling a division or part of the organization to rid off the part that is unprofitable. - 3. liquidation: selling all of the company assets. 8-21 Copyright © 2011 Pearson Education  Choosing a Competitive Strategy Business or Generic. Cost Leadership Strategy Seeking to attain the lowest total overall costs relative to other industry competitors. Differentiation Strategy Attempting to create a unique and distinctive product or service for which customers will pay a premium. Focus Strategy ( cost focus or differentiation focus) Using a cost or differentiation advantage to exploit a particular market Niche rather than a larger market. 8-22 Copyright © 2011 Pearson Education