STRAMA Strategic Management PDF

STRAMA Strategic management Strategists - are the individuals who are most responsible for the success or failure of an  can be defined as the art and science of formulating, implementing, and evaluating orga...

STRAMA Strategic management Strategists - are the individuals who are most responsible for the success or failure of an  can be defined as the art and science of formulating, implementing, and evaluating organization. Strategists have various job titles, such as chief executive officer, president, cross-functional decisions that enable an organization to achieve its objectives. owner, chair of the board, executive director, chancellor, dean, or entrepreneur.  involves the formulation and implementation of the major goals and initiatives taken by an organization's top managers on behalf of owners, based on consideration of External Opportunities and Threats - External opportunities and external threats refer to resources and an assessment of the internal and external environments in which the economic, social, cultural, demographic, environmental, political, legal, governmental, organization operates. technological, and competitive trends and events that could significantly benefit or harm an  consist of analyses, decisions and actions in the organization in order to create and organization in the future. sustain competitive advantage.  a set of managerial decisions and actions that determines the long-run performance of Internal Strengths and Weaknesses - Internal strengths and internal weaknesses are an a company. organization’s controllable activities that are performed especially well or poorly. They arise The concept of Strategic Management has its roots on 1950’s economic theory based on in the management, marketing, finance/accounting, production/operations, research and industrial-organizational approaches. development, and management information systems activities of a business. Peter Drucker- the father of Modern Management Theory, believed that setting objectives and monitoring company growth should permeate the entire organization, top to bottom. Long-Term Objectives - objectives can be defined as specific results that an organization seeks to achieve in pursuing its basic mission. Long-term means more than one year. KEY STRATEGIC MANAGEMENT QUESTIONS: Objectives are essential for organizational success because they state direction; What kind of business would like we become? Are we in the right fields? Annual Objectives - Annual objectives are short-term milestones that organizations must Are there new competitors? achieve to reach long-term objectives. Like long-term objectives, annual objectives should What strategies should we pursue? be measurable, quantitative, challenging, realistic, consistent, and prioritized. How are our customers changing? Strategies - Strategies are the means by which long-term objectives will be achieved. KEY TERMS IN STRATEGIC MANAGEMENT: Business strategies may include geographic expansion, diversification, acquisition, product development, market penetration, retrenchment, divestiture, liquidation, and joint Competitive Advantage - this term can be defined as “anything that a firm does especially ventures. Strategies currently being pursued by some companies. well compared to rival firms.” A firm must strive to achieve sustained competitive advantage by: STAGES OF STRATEGIC MANAGEMENT 1. continually adapting to changes in external trends and events and internal capabilities, competencies, and resources; and by The strategic-management process consists of three stages: strategy formulation, strategy 2. effectively formulating, implementing, and evaluating strategies that capitalize implementation, and strategy evaluation. upon those factors. Strategy formulation includes developing a vision and mission, identifying an organization’s Vision and Mission Statements - Many organizations today develop a vision statement that external opportunities and threats, determining internal strengths and weaknesses, answers the question “What do we want to become?” establishing long-term objectives, generating alternative strategies, and choosing particular Mission statements are “enduring statements of purpose that distinguish one business from strategies to pursue. other similar firms. A mission statement identifies the scope of a firm’s operations in product and market terms.” It addresses the basic question that faces all strategists: “What is our business?” Strategy implementation requires a firm to establish annual objectives, devise policies, also involve identifying the best ways to overcome the challenges and exploiting new motivate employees, and allocate resources so that formulated strategies can be. Strategy opportunities. implementation includes designing the organization’s structure, distributing resources, 5. Ensuring that the organizations cope with the competition in a dynamic environment and developing decision making process, and managing human resources. survives in an uncertain market. 6. Helping in the identification and maximization of the organization’s competitive Strategy evaluation is the final stage in strategic management. Managers desperately need advantages and core competencies. These are responsible for the business’ survival and to know when particular strategies are not working well; strategy evaluation is the primary future growth. means for obtaining this information. All strategies are subject to future modification because external and internal factors are constantly changing. BENEFITS OF STRATEGIC MANEMENT  Strategic Management helps organizations formulate better strategies through the use of more systematic, logical and rational approach  Strategic Management helps management to make better decisions  Through Strategic Management improvement in sales productivity and productivity in employees.  Enhanced awareness of external threats.  Better understanding of competitors strategies  Increased employee productivity and reduced resistance to change  Clearer understanding of performance reward system FINANCIAL BENEFITS Improvement in Sales Improvement in Profitability Productivity Improvement NON-FINANCIAL BENEFITS Improved understanding of competitors strategies THE ROLE OF STRATEGIC MANAGEMENT PROCESS Enhanced awareness of threats Reduced resistance to change 1. Point of reference for any major decisions of the organization. Enhanced problem-prevention capabilities 2. Guiding the business to chart its future and move in that direction. SMP involves formulating the organization’s goals, fixing realistic and achievable objectives, and ensuring STRATEGIC MANAGEMENT ACHIEVE A FIRM’S SUCCESS THROUGH INTEGRATION that they are all aligned with the company’s vision. 3. Assisting the business to become proactive, not reactive. With the SMP, the business can Human Resources analyze the competitor’s actions vis-à-vis market trends and come up with the steps that Finance/Accounting must be taken to compete and succeed in the market. Research and Development 4. Preparing the organization for any potential challenges and explore possible Marketing opportunities that the business must pioneer in. The strategic management process steps Production/Operations Management Information System (MIS) Why some firms do NO strategic planning? Fire-fighting Waste of time Too expensive Laziness Content with success Fear of Failure Overconfidence Prior bad experience Self-Interest Fear of the unknown Suspicion STRATEGIC MANAGEMENT CHALLENGES - Earning above the average return on investments and achieving the desired competencies are challenges that the business must be able to contain in the world of competition. - Research and development of new products that will satisfy customer needs and wants. THE LANDSCAPE OF THE BUSINESS IN THE NEW CENTURY - The competitiveness of the world’s market is in the continuous process of change whose pace is relentless and increasing overtime. - New opportunities are taken over by big companies as they spread their resources into new ventures that would generate greater return on investments. - The new century business is the field of hyper-competition that results from the dynamics of strategic maneuvering of global and innovative businesses. - Companies are aggressively challenging their competitors in the hope of improving their competitive advantage and product positioning. - JANUS’S NOTES