Post on 05-Apr-2018
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Strategic Management
Strategy : The unifying theme that gives coherence anddirection to the decisions of an organization
Strategic Management : Consisting of the analysis,decisions, and actions an organization undertakes inorder to create and sustain competitive advantages.
Strategic Management basically seeks to answer the question:How and why do some firms outperform others?
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1950s: Strategy was largely introduced in business schools as a way of
analyzing the competitive environment and setting organizational goalsand objectives to fit that environment. Since then, major developments include:
Kenneth Andrews SWOT Analysis was developed still in use today. Theodore Levitts Marketing Myopia argued that when companies fail it
typically is because firms focus on the product rather than the changingpatterns of consumer needs and tastes.
Igor Ansoff argued, in response to Levitt, that a firms mission should exploitan existing need in the market, rather than using the consumer as the commonthread in business. In reality a given type of customer will frequently have arange of product missions or needs. Corporate Strategy , 1965.
BCG developed the experience curve and portfolio analysis concepts. McKinsey & Companys development of SBUs and the nine-block matrix. Mintzberg s Deliberate, Emergent & Realized Strategies Porter s Generic Strategies
More Historical Development
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Evolution of strategic management
From his extensive work in the field, Bruce Henderson of the Boston ConsultingGroup concluded that intuitive strategies cannot be continued successfully if (1) thecorporation becomes large, (2) the layers of management increase, or (3) theenvironment changes substantially.
Phase 1 - Basic financial planning: Seek better operational control by trying tomeet budgets.
Phase 2 - Fore-cast based planning: Seeking more effective planning for
growth by trying to predict the future beyond next year. Phase 3. Externally oriented planning (strategic planning): Seeking increasing
responsiveness to markets and competition by trying to think strategically. Phase 4. Strategic management: Seeking a competitive advantage and a
successful future by managing all resources. Phase 4 in the evolution of the strategic management includes a consideration of
strategy implementation and evaluation and control, in addition to the emphasis onthe strategic planning in Phase 3.
General Electric, one of the pioneers of the strategic planning, led the transitionfrom the strategic planning to strategic management during the 1980s.
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BCGs Growth -Share Matrix
Star
Question
Mark
Cash
CowDog
HighShare
LowShare
High
Growth
Slow
Growth
?
Bark!!
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Forms of Strategy
RealizedStrategyUnrealized
Strategy
Emergent
Strategy
**Normally emergent strategy comes from
learning and dissemination within the organization.
Mintzbergs Critique of Formal Strategic Planning: The fallacy of prediction the future is
unknown The fallacy of detachment -- impossible todivorce formulation from implementation The fallacy of formalization --inhibits flexibility,spontaneity, intuition and learning.
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Differing Perspectives of the StrategicManagement Process
External Environment
Industry Attractiveness
Strategy Formulation
I/O Model
Assets/Skills Assessment
Implementation
Resources
Capability
Sustainable CA
RBV Model
Strategy Formulation
Implementation
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Strategy, Survival and Success
The ultimate goal of the organizations is tobe successful success is GAS :
Goal Achievement Above average returns/Profitability
(probably most important, because itdetermines the ability to achieve theabove two)
Survival (long-term success)
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The Balanced Scorecard
L e a d i n
g
L a g gi n
g
S of t
H ar d
Vision&
Strategy
CUSTOMER
To achieve our vision, howshould weappear to ourcustomers?
Objectives Measures Targets Initiatives
FINANCIAL
To succeedfinancially, howshould weappear to ourshareholders?
Objectives Measures Targets Initiatives
INTERNAL BUSINESS PROCESSES
To satisfy our shareholdersand customers,what businessprocesses mustwe excel at?
Objectives Measures Targets Initiatives
INNOVATION AND LEARNING
To achieve our vision, how willwe sustain ourability tochange andimprove?
Objectives Measures Targets Initiatives
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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 marketpositions we want to stake out
Buyer needs and groups we want to serve
Outcomes we want to achieve
3. How will we get there?
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S t r a t e g
i c C o n
t r o
l ( 6 )
Formulating Directions - Develop Vision/Mission (1)
-Set Objectives (2)
Organizational CultureStakeholder Influence
Values / Ethics
Strategic Analyses (3)
Strategy Formulation (4)-Formulate and Consider
Alternatives
-Make Strategy Choice
Opportunities and Threatsfrom Economic, Political,Technological etc Sources
Opportunities and Threatsfrom Competition and
Key Stakeholders
Organizational CultureStakeholder Influence
Values / Ethics
Internal Organization
Competitor/Stakeholder
External Environment
Context of Strategy(type of organization, culture, values,
life cycle competitive position)
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Hambrick & Fredrickson, 2001
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The Strategy Concept Levels of Analysis
CorporateStrategy
BusinessStrategy
FunctionalStrategy
Choice of ProductsChoice of Markets
Choice of Competitors
Where to Compete?
How to Compete?
How to Contribute?