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Strategic
Management
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Learning Objectives
1. Explain the concept of strategic management
2. Describe how strategic decisions differ from other
decisions that managers make
3. Name the benefits and risks of a participative approach
to strategic decision making
4. Understand the types of strategic decisions for which
different managers are responsible
5. Describe a comprehensive model of strategic decision
making
6. Appreciate the importance of strategic management as
a process
7. Give examples of strategic decisions that companies
have recently made
Strategic management:
The set of decisions and actions
that result in the formulation and
implementation of plans
designed to achieve a companys
objectives
What is Strategy?
Large-scale, future-oriented plan
Used to interact within competitive
environment to achieve company
goals
Provides a framework for managerial
decisions
Reflects a companys awareness of
the main elements of competition
6
Dimensions of Strategic
Decisions
Strategic issues require top-management team
decisions
Strategic issues require large amounts of the
firms resources
Strategic issues often affect the firms long-term
prosperity
Strategic issues are future oriented
Strategic issues usually have multifunctional or
multibusiness consequences
Strategic issues require considering the firms
external environment
7
Dimensions of Strategic
Decisions (contd.)
Strategic issues require large amounts of
the firms resources
They involve substantial allocations of
people, physical assets, and money
Strategic decisions commit the firm to
actions over an extended period
In highly competitive firms, achieving
and maintaining customer satisfaction
frequently involves commitment from
every facet of the firm
9
Dimensions of Strategic
Decisions (contd.)
Strategic issues often affect the firms
long-term prosperity
Strategic decisions commit the firm for a
long time, typically 5 years; however the
impact lasts much longer
Once a firm has committed itself to a
strategy, its image and competitive
advantages are usually tied to that
strategy
Firms become known for what they do
and where they compete. Shifting away
from that can jeopardize their previous
gains.
10
Dimensions of Strategic
Decisions (contd.)
Strategic issues are future-oriented
They are based on what managers
forecast, rather than what they know
Emphasis is on the development of
solid projections that will enable a
firm to seek the most promising
strategic options
A firm will succeed only if it takes a
proactive (anticipatory) stance
toward change
11
Dimensions of Strategic
Decisions (contd.)
Strategic issues usually have
multifunctional or multibusiness
consequences.
Strategic decisions have complex
implications for most areas of the
firm
Decisions about customer mix,
competitive emphasis, or
organizational structure involve a
number of the firms SBUs,
divisions, or program units
12
Dimensions of Strategic
Decisions (contd.)
Strategic issues require considering
the firms external environment
All businesses exist in an open
system. They affect and are
affected by external conditions that
are largely beyond their control
Successful positioning requires that
strategic managers look beyond
operations and consider what
relevant others are likely to do
13
Levels of Strategy
Corporate level: board of
directors, CEO &
administration [Highest]
Business level: business and
corporate managers [Middle]
Functional level: Product,
geographic, and functional
area managers [Lowest]
14
Alternative Strategic
Management Structures
Ex. 1.2
15
Ex. 1.4
16
Characteristics of Strategic
Management Decisions: Corporate
Characteristics of Strategic
Management Decisions: Functional
Characteristics of Strategic
Management Decisions: Business/SBU
19
20
Problems in the
Firm
Purpose of the
Planning System
Stage of Firms
Development
21
22
Entrepreneurial Mode
The informal, intuitive, and limited
approach to strategic management
associated with owner-managers
of smaller firms.
23
Planning Mode
The strategic formality associated
with large firms that operate under
a comprehensive, formal planning
system.
24
Adaptive Mode
The strategic formality associated
with medium-sized firms that
emphasize the incremental
modification of existing competitive
approaches.
25
Strategy Makers
Ideal strategic management planning
process includes decision makers from all
three levels
Top managers must give final approval
Strategic decisions coincide with
managers responsibilities
26
Ex. 1.5
30
Company Mission
External Analysis
Long-Term Objectives
Short-Term
Objectives
Policies Empowering
Action
Strategic Control &
Continuous
Improvement
Internal Analysis
Strategic Analysis &
Choice
Generic & Grand
Strategies
Action Plans &
Functional Tactics
Restructuring,
Reengineering &
Refocusing
31
32
33
Stakeholders
Influential people who are vitally
interested in the actions of the
business
36
Key Terms
Adaptive mode
Company mission
Continuous
improvement
Dynamic
Entrepreneurial mode
Feedback
Formality
Functional tactics
Generic strategies
Grand strategies
Long-term objectives
Planning mode
Policies
Processes
Short-term objectives
Stakeholders
Strategic control
Strategic management
Strategy
37