Chapter 1: Strategic Management

Strategy: the formulation of organizational missions, goals, and objectives, as well as

action plans for achievement that explicitly recognizes the competition and the impact of
outside environmental forces. This is the plan for how the organization intends to achieve
its goals.

Mintzbergs 5 Ps of strategy:
Plan: an intended course of action a firm has selected to deal with a situation
Purpose: a consistent stream of actions that sometimes are the result of a deliberate plan
and sometimes the result of emergent actions based on reactions to environmental
changes of shifting of assumption
Ploy: a specific maneuver at the tactical level with a short time horizon
Position: the location of an organization relative to its competitors and other
environmental factors
Perspective: the personality of the organization

Emergent Strategy: (logical incrementalism) The plan that changes incrementally due to
environmental changes. Strategic planning is a dynamic process that involves moving,
shifting and evolving, as conditions require changes. This is the process of redirecting
strategy to accommodate these changes. For example, a new CEO, or a performance gap
where sales targets are not being met, etc.

Intended Strategy: the formulated plan; one that was formulated at the beginning of the
period

Realized Strategy: the implemented plan; what actually happened. This is some planned
and some emergent strategy

- A company can start out with an intended strategy (one that was created and agreed
upon through formal planning). Then parts of that strategy can become discarded
strategy if it is seen as inappropriate due to changing circumstances. As new ideas and
conditions emerge, there can be an addition of an emergent strategy. This all results to
a realized strategy.
- Although there can be changes to a strategy, this does not change the overall focus of
the desired result. For example, a flight going from Toronto to New York has a strategy.
However due to environmental changes such as strong winds. There may be changes
made to the plan. Although there will be changes, this does not require changes to the
focus of the desired result which is arriving at New York.

There are 2 types of strategies: corporate and business strategies

Corporate Strategy: focused on overall strategy for the company and organizational-level
decisions that focus on long-term survival. For example, includes decisions to compete
internationally. Corporate strategies includes restructuring, growth and stability.

1) Restructuring Strategies: This is the corporate strategy that tries to deal with such
problems when an organization is not achieving its goals such as business goals of not
making enough profit or social goals of helping rehabilitate prisoner

Turnaround Strategy: an attempt to increase the viability of an organization. This is
when organizations try to restore money losing businesses or government agencies to
viability. This can be done through layoffs, getting rid of unprofitable products, etc.

Divestiture: The sale of a division or part of an organization. A business could be a
financially and managerially independent company or it could be sold outright. For
example, Quaker Oats sole Snapple for a whole lot less than they paid for. Its important
that companies divest themselves into companies that they have the KSAOs for

Liquidation: the termination of a business and the sale of its assets. This is the least
attractive alternative as plants are closed, employees released and goods are auctioned
off. There is little return to shareholders, but an early liquidation can allow some
resources to be saved

Bankruptcy: a formal procedure in which an appointed trustee in bankruptcy takes
possession of a businesss assets and disposes of them in an orderly fashion. This occurs
when a company can no longer pay its creditors. The company quits and its assets are
divided among its creditors.

2) Growth Strategies: When a company targets growth, they focus on growth in sales,
market share, customers, orders, etc. They engage in job creation, aggressive recruitment
and selection, rapidly rising wages, etc. This can be achieved Incrementally,
internationally or by mergers and acquisitions.

Incremental Growth: This can be achieved by expanding the client base, increasing the
products or services, changing the distribution networks, or using technology. For
example Proctor and Gamble expanded their client base by introducing a baby line skin
care, they increased their products by adding Pringles, changed the distribution networks
to drugstores and grocery stores, etc.

International growth: this is when a company wants to grow by seeking new customers
or market by expanding internationally.

Mergers and Acquisitions: A merger is when two organizations combine resources
and become one. An acquisition is the purchase of one company by another. This
impacts HR as many functions have to be molded together.

3) Stability Strategies: Some organizations choose stability over growth to maintain the
status quo and because they are content with how the business stands currently.
Companies may also take on a stability strategy after growing very rapidly.

Business Strategy: plans to build a competitive focus in one line of business. It focuses on
one line of business while corporate strategy examines questions about which
competitive strategy to choose. There is a difference between an organization and a
business. Many organizations operate several businesses under the same name or
different names and each of these businesses may need their own strategy. For example,
Alcan operates 2 business where one focuses on metals and other on fabrication.
Corporate strategies focus on long term survival and growth and business strategies
focuses on how they can build a strong competitive position.

The Strategic Planning Process
1) Establish the mission, vision, and values:
Mission Statement: an articulation of a view of a realistic, credible and
attractive future for the organization. This outlines the purpose or the reason why
an organization exists
Vision Statement: a clear and compelling goal that serves to unite and
organizations efforts. It must challenge and stretch the organization
Values: the basic beliefs that govern individual and group behaviour in an
organization. This portrays how employees should bhave and gives them an
identity

2) Develop Objectives
- Objectives are expressions in measurable terms of what an organization intends
to achieve.
- Hard goals are ones that are specific as they include numbers relative to its
competition or based on performance from last year.
- Soft goals are the targets for the social conduct of business suc as being ethical
and environmentally responsible, etc.

3) Analyze the External Environment:
- Being aware of threats and opportunities in the external environment by
scanning the economy, monitoring technology, overseeing laws and regulations,
changing demographics etc.
- They can do this through SWOT analysis. Strengths are what the company does
well that makes it competitive. Weakness is something done poorly or a
disadvantage they have such as location. Opportunities and threats are
environmental conditions that may be harmful or beneficial.

4) Determine the Competitive Position:
- Managers must determine who the customers are, where they are located, and
what product or service characteristics these customers value
Value propostion: a statement of the fundamental benefits of the products or
services being offered in the marketplace

Michael Porters 5 competitive strategies:
A) Low-cost provider strategy: to probide a product or service for a price power
than competitors
B) Braod differentitation strategy: to differentiate its products from competitors
products in ways that will attract a range of buyers
C) Best-cost provider strategy: give customers more value for their money; more
bang for their buck
D) Focused or market niche strategy based on lower cost: offer a low cost
product to a select group of customers
E) Focused or market niche strategy based on differentiateion: to offer a niche
product or service customized to the tastes and requirements of a narrow
market

5) Identify the Competitive Advantage:
Competitive Advantage: the characteristics of a firm that enable it to earn
higher rates of profits than its competitors
- They can be competitive through their resrouces being tangible or intangible
assets
- Tangible assets: economic resources such as land, inventory, building, cash
- Intangible assets: assets generated from past organizational events such as
goodwill, copyright, franchiesse, leases
Capabilities: a complex combination of people and processes that represent the
firms capacity to exploit resources that have been purposefully integrated to
achieve a desired result. This is the collective skills, abilities and expertise of an
organization. For example, employees with specialized skills
Core Competencies: resources and capabilities that serve as a firms
competitieve advantage. This si a core competenc that is a competitively
important activity that a company performs better than others

6) Implement the Strategy:
Strategic implementation: the process by which a strategy is put into action.
Thie consists of programs, budgets and prcedures
Program: the steps or activities nexessary to accomplish a goal. For example if
a goal is to be invative, how can HR recruit, select, and train a suuportive culture?
Procedures: sequence of steps that are required to get a job done

7) Evaluate the Performance:
- evaluate the performance to see if the strategy has been successfully
implemented by looking if financial targets are met, looking at the effectiveness
of expenses, etc.