Professional Documents
Culture Documents
Strategic Management
Strategy: The unifying theme that gives coherence and direction to the decisions of an organization Strategic Management: Consisting of the analysis, decisions, and actions an organization undertakes in order to create and sustain competitive advantages.
Or, the Strategic Management Process is: The full set of commitments, decisions, and actions required for a firm to create value and earn aboveaverage returns. (Hitt, Hoskinson, & Ireland, 2004, p. 4)
Strategic Management basically seeks to answer the question:
Business strategy is a relatively young field of study but its roots go back to early military strategy. Strategy comes from the Greek word strategos, which is formed from stratos, meaning army, and ag, meaning to lead. Carl von Clausewitz wrote in the early 1800s that tactics[involve] the use of armed forces in the engagement, strategy [is] the use of engagements for the objects of war.
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Wartime (WWI and WWII) efforts also impacted strategic thinking and use of formal strategic tools and concepts:
Allocation of scarce resources Use of quantitative analysis in planning The concept of learning curves The concept of distinctive competence - first mentioned by Philip Selznick, a sociologist, in a debate about whether or not to combine the military forces into a single unit (i.e., no Army, Navy, Air Force, Marines, just the US Military).
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Mid-70s-mid-80s Positioning
MAIN ISSUES
Selecting sectors/markets. Positioning for leadership Industry analysis Segmentation Experience curve Portfolio analysis
Resources & Cooperative capabilities. strategy. Shareholder Complexity. value. Owning E-commerce. standards. Knowledge Management Alliances & networks Self -organiz ation & virtual organization 7
MANAGEMENT IMPLICATIONS
New Mission
Slow Growth
Cash Cow
Bark!!
Dog
Forms of Strategy
Mintzbergs Critique of Formal Strategic Planning: The fallacy of prediction the future is unknown The fallacy of detachment -- impossible to divorce formulation from implementation The fallacy of formalization --inhibits flexibility, spontaneity, intuition and learning.
Unrealized Strategy
Realized Strategy
Emergent Strategy
**Normally emergent strategy comes from learning and dissemination within the organization.
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Cost Leadership
Strategy 3A
Differentiation
Strategy 3B
Narrow Target
Cost Focus
Differentiation Focus
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Why is SM, as a field of study, necessary? Why are all these theories/tools needed ?
Provides a framework for thinking about the business Creates a fit between the organization and its external environment. Provides a process of coping with change and organizational renewal Fosters anticipation, innovation, and excellence Facilitates consistent decision-making Creates organizational focus Acts as a process of organizational leadership. Finally and most importantly: To help the organization to succeed (outperform) against its competition!!
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Strategy can help achieve success, but it doesnt guarantee itcertain features of strategy directly contribute to success:
1. 2. 3. 4. Goals that are simple, consistent, and long-term. Profound understanding of the competitive environment. Objective appraisal of resources. Effective implementation.
These observations concerning the role of strategy can be made in relation to most human endeavors be it warfare, chess, politics, sport or business. 13
Thinking Strategically:
The Three Big Strategic Analysis Questions 1. Where are we now? What is our situation? 2. Where do we want to go?
Business(es) we want to be in and market positions we want to stake out
RBV Model
Resources Capability Sustainable CA
Assets/Skills Assessment
Implementation
Strategy Formulation
Implementation
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Competitor/Stakeholder
Internal Organization
Strategy Formulation (4) -Formulate and Consider Alternatives -Make Strategy Choice
Context of Strategy
(type of organization, culture, values, life cycle competitive position) 19
Business Strategy
Functional Strategy
INDUSTRY ATTRACTIVENESS
CORPORATE STRATEGY
COMPETITIVE ADVANTAGE
BUSINESS STRATEGY
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