Discussion (In groups of 5s)

Why should we even study/embark on strategic planning. What makes a decision strategic? What is strategic management?

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Definitions of strategy (1)

..a pattern in a stream of decisions Henry Mintzberg ..the long-term direction of an organisation Exploring Strategy
Competitive strategy is about being different. It means deliberately choosing a different set of activities to deliver a unique mix of value Michael Porter
Sources: H. Mintzberg, Tracking Strategy: Toward a General Theory, Oxford University Press, 2007, p. 3

Strategic Management: a set of managerial decisions

and actions that determines the long-run performance of a corporation.

Includes:
Internal and external environment scanning Strategy formulation Strategy implementation Evaluation and control

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Basic Elements of Strategic Management Mission- the purpose or reason for the organizations
existence

Vision- describes what the organization would like to

become

Objectives- the end results of planned activity

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Basic Elements of Strategic Management Strategies- form a comprehensive master plan that
states how the corporation will achieve its mission and objectives Corporate Business Functional that links the formulation of a strategy with its implementation

Policies- the broad guidelines for decision making

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Strategic decisions

Benefits of Strategic Management: Clearer sense of strategic vision for the firm Sharper focus on what is strategically important Improved understanding of a rapidly changing environment

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Additional Benefits of Strategic Management:

Improved organizational performance Achieves a match between the organizations environment and its strategy, structure and processes Important in unstable environments Strategic thinking Organizational learning

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Strategic flexibility: the ability to shift from one

dominant strategy to another and requires:

Long-term commitment to the development and nurturing of critical resources Learning organization

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Learning organization: an organization skilled at

creating, acquiring, and transferring knowledge and at modifying its behavior to reflect new knowledge and insights

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Main activities of a learning organization include:

Solving problems systematically Experimenting with new approaches Learning from past experience, history and experiences of others Transferring knowledge quickly and easily throughout the organization

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Basic Elements of Strategic Management

1. 2. 3. 4. Environmental scanning Strategy formulation Strategy implementation Evaluation and control

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Basic Elements of Strategic Management Environmental Scanning is the monitoring, evaluating

and disseminating of information from the external and internal environments to key people within the organization

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Basic Elements of Strategic Management

Strategy Formulation: the development of long-range

plans for the effective management of environmental opportunities and threats in light of organizational strengths and weaknesses (SWOT)

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Basic Elements of Strategic Management Strategy implementation: the process by which

strategies and policies are put into action through the development of: Programs Budgets Procedures

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Basic Elements of Strategic Management

Evaluation and control: the process in which

corporate activities and performance results are monitored so that actual performance can be compared to desired performance

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Basic Elements of Strategic Management

Performance: the end result of organizational activities

Feedback/Learning Process: revise or correct

decisions based on performance

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Triggering event: something that acts as a stimulus for

a change in strategy and can include:

New CEO External intervention Threat of change of ownership Performance gap Strategic inflection point

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Strategic Decision Making Process:

1. Evaluate current performance results 2. Review corporate governance 3. Scan and assess the external environment 4. Scan and assess the internal corporate environment
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5. Analyze strategic (SWOT) factors 6. Generate, evaluate and select the best alternative strategy 7. Implement selected strategies 8. Evaluate implemented strategies

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Strategic audit provides a checklist of questions, by

area or issue, that enables a systematic analysis to be made of various corporate functions and activities

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Levels of strategy (1)

Corporatelevel strategy
Business-level strategy Operational strategy
News Corporation diversifying from print journalism into social networking.
Website and marketing improvements at My Space to attract more users.

MySpace engineers increasing processing Capacity.

Levels of strategy
Corporate-Level Strategy is concerned with the overall purpose and scope of an organisation and how to add value to business units. Business-Level Strategy is concerned with the way a business seeks to compete successfully in its particular market. Operational Level Strategy is concerned with how different parts of the organisation deliver the strategy in terms of managing resources, processes and people.

Strategy statements
Strategy statements should have three main themes: the fundamental goals that the organisation seeks, which draw on the stated mission, vision and objectives the scope or domain of the organisations activities and the particular advantages or capabilities it has to deliver all these.

Working with strategy (1)

All managers are concerned with strategy: Top managers frequently formulate and control strategy but may also involve others in the process. Middle and lower level managers have to meet strategic objectives and deal with constraints. All managers have to communicate strategy to their teams. All managers can contribute to the formation of strategy through ideas and feedback.

Working with strategy (2)

Organisations may also use strategy specialists: Many large organisations have in-house strategic planning or analyst roles. Strategy consultants can be engaged from one of many general management consulting firms (e.g. Accenture, IBM Consulting, PwC). There are a growing number of specialist strategy consulting firms (e.g. McKinsey &Co, The Boston Consulting Group).

1. Why has strategic management become so important to todays corporations? 2. How does strategic management typically evolve in a corporation? 3. What is a learning organization? Is this approach to strategic management better than the more traditional top-down approach in which strategic planning is primarily done by top management? 4. Why are strategic decisions different from other kinds of decisions?

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Summary of todays Lectures

Thank you

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