Strategic Management Model PDF

TOPIC 1 STRATEGIC MANAGEMENT MODEL A strategic management model determines the development of strategies required to define an organization's mission and accomplish it. The process of strategic management has five components –...

TOPIC 1 STRATEGIC MANAGEMENT MODEL A strategic management model determines the development of strategies required to define an organization's mission and accomplish it. The process of strategic management has five components – situation analysis, strategic decision making, strategy formulation, strategy implementation, and strategy evaluation or control. THE REALITY OF DYNAMISM The 21st century epitomizes the reality of dynamism. In fact, today's milieu is in a state of fluidity. It is not static. Rather, changes and fluctuations are constantly happening in the surroundings. These actualities are characterized by the occurrence of phenomenal situations, continuous challenges, and triggering forces that provoke corresponding reactions. The certainty of change is universal and this foregone conclusion is largely experienced by all nations and peoples—whether developed undeveloped, large or small, powerful or weak. As a result, the current landscape of competition is highly threatening and daunting. With an environment that is characterized by unpredictability drive, pursuit and transformation, and volatility is a ruthless reality. Impermanence and unpredictability are certainties. Nothing is stable; neither regularity a logical expectation. Competition has gone beyond nations, peoples, cultures, geographic frontiers, and industries. As the global economy expands, blurring boundaries, any business needs to create its own impact in any part of the world. Thus, it is urgent for organizations and businesses to strategize. Page 1 of 10 HYPER-COMPETITION Hyper-competition is a fundamental feature of the new economy. As the word implies carries a note of overexcitement and agitation. Hyper-competition occurs when product or service offerings and technologies are so new that standards become unstable and competitive advantage not sustainable. It is a condition where strategic maneuverings have escalated to bigger business exposure, more sophisticated marketing positioning, aggressive selling, and innovative products and services. Doing business has become intense and more deliberate. It seems like a big waste not to discern and take advantage of every opportunity. The business atmosphere is characterized by activities such as outdoing each other, surpassing sales, taking competitors by surprise, capturing a bigger market share, winning the business battle, and seizing the number one slot. In a strict sense, hyper-competition is a situation where both globalization and technology collaborate to create a heightened cut-throat situation. It means that businesses compete with each other whether they have same products, similar products, substitute products, and different products. Competitors continuously strive to outplay and outsmart each other. They need to devise ways and means to survive and deal with this super competitive and turbulent reality. New value creation, competitive pricing, innovation in supply chain management, and high degrees of quality are logical responses of companies. In short, the name of the game today is tougher and smarter competition, quantitative and qualitative organizational changes, and sustainable competitive advantage. In this hyper-competitive environment, only the most adaptive and nimble organizations will survive. Thus, there is the need to strategize. Page 2 of 10 STRATEGIC MANAGEMENT DEFINE Strategic management is a continuous process of strategy creation. It involves strategic processes like strategic analysis and decision-making, strategy formulation and implementation, and strategy control with the primary objectives of achieving and maintaining better alignment of corporate policies, priorities, and success. Strategic analysis consists of a systematic evaluation of variables currently existing in the external and internal environments while strategic decision-making is deliberately bringing together the right resources for the right markets at the right time, Strategy formulation is designing strategies on the business and corporate levels. Strategy implementation is employing these crafted strategies to achieve organizational set goals and objectives while strategic control is the application of an appropriate monitoring and feedback system. It is defined as the science of creating, executing, and evaluating cross-functional decisions to enable an organization to achieve its goals and objectives, the components of the strategic management process have to be effective. If strategic analysis is accurately conducted, organizations can develop strategic intelligence. Like an antenna, strategic intelligence is the capability of an organization to possess relevant and related knowledge, abilities, foresight, and systems pressing thinking, challenges such that it is able to assess its own strengths and vulnerabilities, the confronting the organization, as well as the trends and opportunities existing in the environment. If strategic decision-making is correctly effected, organizations can acquire the capability of thinking strategically. Strategic thinking is the cognitive process of competently and Page 3 of 10  analytically weighing factors and arriving at critical decisions in the context of the current milieu of which an organization is part. If strategy formulation is uniquely designed and effectively communicated, organizations have greater possibilities of attaining organizational competitiveness. Organizational competitiveness pertains to the ability of any business or company to utilize its resources optimally and sustainably for maximum performance and productivity. If strategy implementation is efficiently employed, organizations can achieve comparative advantage. Comparative advantage refers to the ability of an organization to produce a particular good or services at lower marginal and opportunity costs than its competitors. If strategic control is productively monitored, organizations can realize strategic performance. Strategic performance is the accomplishment of a high level of productivity that is characterized by efficiency in the context of lean and quantifiable management. STRATEGIC MANAGEMENT PROCESS Strategic Analysis Strategic Intelligence Strategic Decision Making Strategic Thinking Strategy Formulation Organizational Competitiveness Strategy Implementation Comparative Advantage Strategic Control Strategic Performance Page 4 of 10  STRATEGIC MANAGEMENT MODEL Strategic management Organizational Success Organizational Input Process Strategic Management/ Strategic intelligence employees analysis Strategic Financial Strategic thinking Resources decision making Organizational Facilities/ Strategy competitiveness Equipment formulation Comparative Infrastructures Strategy advantage Processes implementation Strategic Strategic control performance The strategic management model shows the relationships between and among the input, process, and output. The input in this model includes organizational variables like management and employees, financial resources, facilities and equipment, infrastructures, and processes. The strategic management process consists strategic analysis, strategic decision making, strategy formulation, strategy implementation, and strategic control. When these specific processes are executed and manage creatively, distinctly, and strategically, timidly achieve organizational success. In particular, the output is exhibited in the strategic intelligence acquired, strategic thinking more developed, organizational competitiveness advantage, and strategic performance obtained by the organization. STRATEGIC PLANNING Oftentimes, the word strategic planning is more popular than strategic management. Essentially, these two words are the same. In terms of purpose, both strategic management and strategic planning have the same goals and objectives, that is, the device strategic mode of preparing, addressing, and steering organizations to where they want to go. Particularly, both undertakings and a strategic position of organizations preferred choices, Furthermore, both strategic management and strategic planning use the same processes to attain their goals. Page 5 of 10 Hence, strategic planning is defined as a continuous, repetitive, and competitive process of setting the goals and objectives that an organization aims to attain, defining the means to achieve them, and assessing the best way to realize them in the context of the prevailing environment while measuring performance set standards, and periodically but continuously conducting reassessments. STRATEGIC PLANNING EXHIBITS THE FOLLOWING PROPERTIES 1. It generates the blueprint of what organizations intends to accomplished. 2. The strategic plan presents the grand scheme of the organization and outlines all the set activities, ranging from the organizational to the Department that level. It formalizes all plans with respect to type and extent. 3. It is the process of developing in strategic fit between the organization's goals and capabilities in the context of changing opportunities. 4. It is a process that involves carefully delineated steps. As stated in the definition, strategic planning is structured, in that it begins with reviewing the environment, setting goals, adopting and monitoring strategies, and continuously redesigning them as the needs arise. 5. It is proactive, in that it is written in the context of anticipated future realities. Strategic planning does not make future decisions. Instead, plans are made in anticipation of future changes and developments. 6. It is a philosophy because it involves a dynamic way of conducting and managing an organization. Strategic planning involves a unique way of thinking and doing things better. 7. It links the organizational plan with functional and operational plans. 8. It is intricately interwoven within the defined managerial functions of organizing, directing, stuffing, and controlling. Although strategic planning is strictly formal and separate function of management, it is subtly intertwined in all the other functions and responsibilities of a manager. In other words, no manager can fully accomplish his/her responsibilities effectively if strategic planning is disregarded or overlooked. 9. It necessitates the leadership and support of top management and, at the same time, employee participation and commitment. Successful implementation of strategic Page 6 of 10  planning is largely dependent on responsibility, support, and sustained leadership coupled with acceptance and involvement of employees. There should be synergetic interrelationships between departments and intra relationships within departments. TYPES OF STRATEGIC PLANS There are two principal types of plans: 1. Medium/Long-range Plan - prepared in the context of the coming 3 to 5, 10 or more years period. It describes the major factors or forces that affect organization’s long-term objectives, strategies, and resources required. 2. Annual/Yearly Plan – short term; succinctly describes the organization's present situation, its goals and objectives, strategies, monitoring mechanisms, and the budget for the year ahead. Whether the plan is long range or annual, it can be strategic when the organization formulates its action plans and takes advantage of opportunities in the constantly changing environment while maintaining a tactical alignment between the organization’s goals, capabilities, and opportunities. NEEDS FOR TRATEGIC PLANNING Why is there a need for strategic planning? As earlier stated, the reality of dynamism, complexity, and hyper-competition characterizes today's environment. To survive, organizations need to carefully plan their strategic approaches. Therefore, strategic plans have to be prepared purposefully for effective and efficient implementation, thus, leading to the attainment of their set objectives. The benefits of designing and putting into effect a strategic plan cannot be overemphasized. STRENGTHS AND LIMITATIONS OF STRATEGIC PLANNING STRENGTHS: A strategic plan helps to define the direction in which an organization must travel, and aids in establishing realistic objectives and goals that are in line with the vision and mission charted out for it. But it also creates a sense of collaboration and collective responsibility. It helps Page 7 of 10 organizations to stay focused. When clearly, and proactively undertaken, it provides leverage and competitive advantage to the organization. It makes things happen. LIMITATIONS: Strategic planning requires lot of knowledge, training and experience. Managers should have high conceptual skills and abilities to make strategic plans. If they do not have the knowledge and skill to prelate strategic plans, the desired results will not be achieved. These limitations of planning include issues such as uncertainty, complexity, and resource constraints, which can affect the accuracy and effectiveness of a plan. Additionally, the changing nature of the environment, as well as unforeseen events, can also impact the success of a plan. STRATEGIC ALIGNMENT: THE KEY TO SUCCESSFUL BUSINESS STRATEGY Strategic alignment plays a critical role for the sustainability of a strategy. For any strategy to be successful and sustainable, an organization must develop an offering that attracts buyers; it must create a business model that enables the company to make money out of its offering; and it must motivate the people working for or with the company to execute the strategy. Based on the above-mentioned context, strategic alignment is the process of working with various teams and individuals to connect their efforts to the organization’s overall goals. To be effective, alignment must begin at the top with senior leaders who share the enterprise strategy throughout the organization. In high-performing, strategically aligned organizations, every team member has: Understanding of the overall enterprise strategy Knowledge of where they fit into that strategy Understanding of why their work matters in the bigger strategic picture Page 8 of 10 When organizations have strategic alignment, every member of the team is on the same page and can make decisions and take actions that are consistent with the overall strategy. While good strategy content is based on a compelling value proposition for buyers with a robust profit proposition for the organization, sustainable strategy execution is based largely on a motivating people proposition. Motivating people requires more than overcoming organizational hurdles and winning people’s trust with fair process. BENEFITS OF STRATEGIC ALIGNMENT Strategically aligned organizations operate more efficiently and achieve better outcomes because their teams are working on common goals and objectives. Improved efficiency Organizations that understand the importance of strategic alignment tend to be more efficient. Wasting time on efforts that don’t match the organization’s strategic goals leads to inefficiency and a lack of productivity. However, when teams are strategically aligned, everyone is on the same page about which projects are worthy of investment because everyone is working towards a unified goal. As a result, teams work more effectively and wasted efforts are minimized. Working more efficiently and effectively can lead to an increased confidence in strategic investments. It creates more confidence in decisions around allocating resources, because there’s an understanding that those resources will be used to achieve strategic outcomes. Increased focus on driving value Strategic alignment helps teams see the bigger picture so they can understand how their work fits into the company strategy. Strategically aligned teams focus on creating value rather than output. That means the work is furthering company goals and driving value for the company, rather than simply producing work for the sake of productivity. As a result of this focus, it’s easier for strategically aligned organizations to quickly identify high-value projects and low-value ones. This also helps to ensure that time and resources are Page 9 of 10  spent delivering work that makes sense from a strategic point of view. Teams can prioritize important work more easily, and deprioritize or abandon work that doesn’t make sense strategically. That way, they’re better equipped to focus on driving business value while helping to avoid sunk costs due to strategic drift. Better planning and work delivery Aligned teams have a better understanding of company goals, decision-makers can focus on the steps, practices, and deliverables that contribute to the long-term organizational strategy when planning for the future. Furthermore, strategic alignment makes sure teams are aligned to common goals, empowering them to make rapid decisions that help reach those goals. That autonomy and understanding of their work’s value to the organization can also create more motivated teams. In a rapidly changing business environment, successful enterprises often need to be flexible and adaptable. Strategic alignment allows every team member to make adjustments in response to market changes without compromising productivity or efficiency, because they remain focused on strategic goals. The reason for this is that teams constantly measure successes from the perspective of enterprise goals. Strategically aligned organizations can update practices and respond to changes with nimbleness and agility. [end] Page 10 of 10