Strategic Management PDF

Characteristics of Strategic Thinking a strategic thinker, who possesses the six characteristics of strategic thinking: 1. Intent - focused 2. Comprehensive 3. Opportunistic 4. Long - term oriented 5. Built on the past and the present...

Characteristics of Strategic Thinking a strategic thinker, who possesses the six characteristics of strategic thinking: 1. Intent - focused 2. Comprehensive 3. Opportunistic 4. Long - term oriented 5. Built on the past and the present 6. Hypothesis - driven Characteristics of Strategic Thinking THE CONCEPT OF STRATEGY Different definitions for strategy: is a process by which an organization assesses the future prospects of the firm to achieve its objectives the approach of specifying the company's goals and objectives and the appropriate methods for accomplishing these predetermined  goals, it gives the company its identity in terms of the nature of business that the company is involved in or supposed to be involved in and the kind of the company itself can be perceived as a comprehensive master plan that clarifies how the corporation will accomplish its mission and objectives. It maximizes competitive advantage and minimizes competitive disadvantages THE STRATEGIC MANAGEMENT PROCESS THE STRATEGIC MANAGEMENT PROCESS The key activities in the strategic management process begin by providing: 1. A situation analysis of the broad and operating environments of the organization, including internal resources and both internal and external stakeholders 2. The establishment of strategic direction, reflected in mission statements and organizational visions 3. A formulation of specific strategies 4. Strategy implementation, which includes designing an  organizational structure, controlling organizational processes, managing relationships with stakeholders, and managing resources to develop competitive advantage THE STRATEGIC MANAGEMENT PROCESS An organization internal environment consists of a bundle of resources, which fall into the general categories of: 1. Financial resources , including all of the monetary resources from which a firm can draw 2. Physical resources , such as land, buildings, equipment, locations, and access to raw materials 3. Human resources , which pertains to the skills, background, and training of managers and employees, as well as the way they are organized 4. Organizational knowledge and learning 5. General organizational resources , including the firm ’ s reputation, brand names, patents, contracts, and relationships with external stakeholders  Situation Analysis The external environment includes groups, individuals, and forces outside of the traditional boundaries of the organization that are significantly influenced by or have a major impact on the organization. External stakeholders, part of a company ’ s operating environment, include competitors, customers, suppliers, financial intermediaries, local communities, unions, activist groups, and local and national government agencies and administrators. The broad environment forms the context in which the company and its operating environment exist, and includes sociocultural, economic, technological, political, and legal influences, both domestically and abroad. One organization, acting independently, may have very little influence on the forces in the broad environment; however, the forces in this environment can have a tremendous impact on the organization  ENVIRONMENTAL Analysis Situation Analysis The external environment includes groups, individuals, and forces outside of the traditional boundaries of the organization that are significantly influenced by or have a major impact on the organization. External stakeholders, part of a company ’ s operating environment, include competitors, customers, suppliers, financial intermediaries, local communities, unions, activist groups, and local and national government agencies and administrators. The broad environment forms the context in which the company and its operating environment exist, and includes sociocultural, economic, technological, political, and legal influences, both domestically and abroad. One organization, acting independently, may have very little influence on the forces in the broad environment; however, the forces in this environment can have a tremendous impact on the organization The Sociocultural Context  The Economic Context Strategic Surveillance The process of collecting information from the broad, operating, and internal environments is called strategic surveillance. Information gained through strategic surveillance becomes part of the business intelligence of the firm. Business intelligence is sometimes defined as “ the collection and analysis of information on markets, new technologies, customers, competitors, and broad social trends  THIRD LECTURE Patterns of Strategy the strategic management takes into consideration the initiatives that are realized either intentionally or unintentionally that the realized strategy in its final form results from the interaction between deliberate/intended and emergent strategies. This new type of strategy can be helpful in coping with the uncertainties in the business environment of the company. Emergent strategy Emergent strategies can be seen as responses to unexpected opportunities and problems that were unforeseen by those engaged in the deliberate strategy-making process, at the time they were doing their analysis and planning. It should be noted that, the essence of emergent strategy can be viewed as reacting to changing and emergent conditions in the dynamic environment that undergoes high level of competition  Deliberate strategy Traditional strategies can be considered as deliberate strategies. The major steps of a deliberate strategy include generating significant idea at the beginning, then converting this idea into a plan and finally putting the developed plan into action Programs and systems are built into the plan to ensure that every one acts in light of the intended strategy. For this type of strategic process to be effective the environment has to be characterized by stability or the organization has to be able to predict it with great accuracy Levels of strategy The hierarchical levels of strategy can be classified into three major levels: corporate strategy business strategy functional strategy The process of planning/formulating strategies is often divided into the corporate, business, and functional levels Levels of strategy One of the most important roles of corporate - level strategy is to define a company ’ s domain of activity through selection of business areas in which the company will compete. Business - level strategy formulation pertains to domain direction and navigation, or how businesses should compete in the areas they have selected. Functional - level strategies contain the details of how functional resource areas, such as marketing, operations, and finance, should be used to implement business - level strategies and achieve competitive advantage. Basically, functional - level strategies are for acquiring, developing, and managing organizational resources.  Levels of strategy "(1) at the corporate level, strategy is about asking questions about what business the firm is in or would like to be in, the firm’s potential to create value by being in the business or expanding into a new line of business, and the resources and capabilities the firm already has or needs to get to sustain/create competitive advantage in its business or businesses. (2) at the business level, firms need to ask themselves the following questions: How can we create competitive advantage in our product market domains in each strategic business unit (SBU)? How can we continue to be an overall cost leader or a broad differentiator, or, for that matter, have a cost focus or be a focused differentiator in our market domain? Note that SBU is defined as a unit within a given corporate identity that is distinctly different from other units within the corporation in terms of products and services, as well as the markets it serves (3) at the functional level, the firm’s objective is to sustain its advantage by focusing on efficiencies related to production, operations, administration, marketing, and other support functions. It also engages in constant innovation to ensure new product/service development rollout, while ensuring that the service and product qualities, as well as the customer satisfaction related to them, are at the highest level